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Hi, this is Andrea Dudik in Prague. Welcome to our weekly newsletter on what’s shaping economics and investments from the Baltic Sea to the
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Hi, this is Andrea Dudik in Prague. Welcome to our weekly newsletter on what’s shaping economics and investments from the Baltic Sea to the Balkans. You can subscribe here.

Shakier Ground

Debrecen has been good to Viktor Orban. The city elected a mayor from his Fidesz party every time since 1998 and for the last 15 years helped keep the Hungarian leader in power. In return, Orban has been good to Debrecen, with more than $10 billion of investment going there as part of his vision to make the country the EV capital of Europe.

But rather than a loyal stronghold, Debrecen now looks more like a microcosm of everything that’s going awry for the man who just months ago was hoping for a boost from the return of his ally Donald Trump to the White House, our colleague Zoltan Simon reports.

A huge battery plant being built by China’s Contemporary Amperex Technology Co., or CATL, is the single biggest foreign investment in Hungarian history. It was meant to be emblematic of a prime minister at the peak of his powers. Instead, locals are complaining about the threat to the environment, the influx of Chinese workers in a country long known for its anti-immigrant rhetoric and Orban’s stewardship of the economy.

The backbone of Fidesz’s support has been the middle class in places like Debrecen, where property prices soared as did living standards. But that sense of increasing prosperity is long gone. Indeed, recent years have been more about navigating a cost of living crisis and watching to see if the economy goes back into recession. EVs and their batteries were supposed to be the savior. That hasn’t worked out yet.

In the meantime, Orban has been trailing in the polls before next year’s election, his once rock-solid grip on the country slipping. His challenger, Peter Magyar, has been touring Hungary looking to gain more ground. And last month, the crowds turned out in Debrecen as he mingled with protesters against the CATL plant and chatted with supporters. As one attendee put it: “This was unimaginable here in the past.”

A supporter holds a sign reading 'No Orban, No Battery, No Deal' at a Tisza Party campaign event near the CATL battery plant in Debrecen. Photographer: Akos Stiller/Bloomberg

Around the Region

Romania: The new prime minister, Ilie Bolojan, warned his country could face a default unless the government quickly reins in years of lavish spending. He said in an interview that the next six months will be as crucial for his administration to impose a series of radical austerity measures.

Poland: Finance Minister Andrzej Domanski, a former stock-fund manager, told Bloomberg he wants to rebuild the country’s ailing “equity culture”. He is also working on a new levy for the financial industry, sending bank shares tumbling

Ukraine: President Volodymyr Zelenskiy said he won’t cede the eastern region of Donbas to Russia and pushed for Kyiv to be included in talks as the US and Russian leaders prepare to meet on Friday.

Serbia: Months of anti-government rallies erupted into violence again as supporters of President Aleksandar Vucic clashed with his opponents in three of the biggest cities. 

Czech Republic: China said it will cease engagement with President Petr Pavel over his meeting with the Dalai Lama, escalating diplomatic tensions between the two countries.

Chart of the Week

Poland’s economy expanded faster than its peers in the region in the second quarter as its larger domestic market of nearly 39 million people made the country more resilient to the impact of higher US tariffs. There may be an additional boost if the central bank lowers interest rates further, possibly as soon as next month.

By the Numbers

  • Estonia’s initiative catering to digital nomads brought in a record €68 million ($79.2 million) in tax revenue and fees in the first half of the year.
  • Poland inked a $3.8 billion deal to modernize the country’s existing fleet of F-16 fighter jets to better deter potential Russian aggression. 
  • Romanian inflation accelerated to the fastest pace in almost two years after a jump in energy bills. Consumer prices rose 7.8% in July from a year earlier.

Things to Watch

  • Czech opposition leader Andrej Babis pledged to reverse the current government’s austerity measures if he returns to power after October elections.
  • Trump invited Poland’s new president, Karol Nawrocki, to the White House for a working meeting on Sept. 3. Nawrocki joined a call of European leaders with Trump this week after Prime Minister Donald Tusk was informed by the US side that they would prefer the president to represent Poland. 
  • Slovakia’s government is expected to present a package of measures aimed at narrowing one of the highest budget deficits in the EU.

Final Thought

The region’s old culture of trying to repair anything has come in handy in Ukraine. But rather than Soviet-era cars and washing machines, it’s broken receivers for Elon Musk’s Starlink satellite service that need fixing. The system has become a linchpin in Ukraine’s military operations and techies at Kyiv-based firm Stetman are part of a cottage industry of backstreet workshops. A large share of Stetman’s orders comes from frontline military personnel, who depend on Musk’s satellites. With Trump and Putin meeting on Friday, Ukraine might need any boost it can get.

A Stetman technician repairs a damaged Starlink satellite terminal board at an undisclosed location in Ukraine on July 14. Photographer: Andrew Kravchenko/Bloomberg

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