abhors its Balkan pedigree. Croatia megalomaniacally considers itself
German. The Czechs and the Slovaks regard their communist elopement a
sad aberration as do the Hungarians. The Macedonians are not sure
whether they are Serbs, Bulgarians, or Macedonians. The Moldovans wish
they were Romanians. The Romanians secretly wish they were Hungarians.
The Austrians are sometimes Germans and sometimes Balkanians. Many
Ukrainians and all Belarusians would like to resurrect the evil empire,
the USSR.
This identity crisis affects the European Union. Never has Europe been
more fractured. It is now a continent of four speeds. The rich core of
the European Union, notably Germany and France, constitutes its engine.
The mendicant members - from Greece to Portugal - enjoy inane dollops
of cash from Brussels but have next to no say in Union matters.
The shoo-in candidates - Poland, Hungary, the Czech Republic and,
maybe, Slovakia, if it keeps ignoring the outcomes of its elections -
are frantically distancing themselves from the queue of beggars,
migrants and criminals that awaits at the pearly gates of Brussels. The
Belgian Curtain -between central European candidates and east European
aspirants - is falling fast and may prove to be far more divisive and
effective than anything dreamt up by Stalin.
The fourth group comprises real candidates - such as Bulgaria - and
would be applicants, such as Romania, Macedonia, Albania, Yugoslavia,
Bosnia-Herzegovina and even Croatia. Some of them are tainted by war
crimes. Others are addicted to donor conferences. Yet others are
travesties of the modern nation state having been hijacked and
subverted by tribal crime gangs. Most of them combine all these
unpalatable features.
Many of these countries possess the dubious distinction of having once
been misruled by the sick man of Europe, the Ottoman Empire. In a
moment of faux-pas honesty, Valerie Giscard D'Estaing, the chairman of
the European Union's much-touted constitutional convention, admitted
last week that a European Union with Turkey will no longer be either
European or United. Imagine how they perceive the likes of Macedonia,
or Albania.
As the Union enlarges to the east and south, its character will be
transformed. It will become poorer and darker, more prone to crime and
corruption, to sudden or seasonal surges of immigration, to
fractiousness and conflict. It is a process of conversion to a truly
multi-ethnic and multi-cultural grouping with a weighty Slav and
Christian Orthodox presence. Not necessarily an appetizing prospect,
say many.
The former communist countries in transition are supposed to be
miraculously transformed by the accession process. Alas, the indelible
pathologies of communism mesh well with Brussels's unmanageable,
self-perpetuating and opaque bureaucracy. These mutually-enhancing
propensities are likely to yield a giant and venal welfare state with a
class of aged citizens in the core countries of the European Union
living off the toil of young, mostly Slav, laborers in its eastern
territories. This is the irony: the European Union is doomed without
enlargement. It needs these countries far more than they need it.
The strategic importance of western Europe has waned together with the
threat posed by a dilapidated Russia. Both south Europe and its
northern regions are emerging as pivotal. Enlargement would serve to
enhance the dwindling geopolitical relevance of the EU and heal some of
the multiple rifts with the USA.
But the main benefits are economic.
Faced with an inexorably ageing populace and an unsustainable system of
social welfare and retirement benefits, the EU is in dire need of young
immigrants. According to the United Nations Population Division, the EU
would need to import 1.6 million migrant workers annually to maintain
its current level of working age population. But it would need to
absorb almost 14 million new, working age, immigrants per year just to
preserve a stable ratio of workers to pensioners.
Eastern Europe - and especially central Europe - is the EU's natural
reservoir of migrant labor. It is ironic that xenophobic and
anti-immigration parties hold the balance of power in a continent so
dependent on immigration for the survival of its way of life and
institutions.
The internal, common, market of the EU has matured. Its growth rate has
leveled off and it has developed a mild case of deflation. In previous
centuries, Europe exported its excess labor and surplus capacity to its
colonies - an economic system known as "mercantilism".
The markets of central, southern, and eastern Europe - West Europe's
hinterland - are replete with abundant raw materials and dirt-cheap,
though well-educated, labor. As indigenous purchasing power increases,
the demand for consumer goods and services will expand. Thus, the
enlargement candidates can act both as a sink for Europe's production
and the root of its competitive advantage.
Moreover, the sheer weight of their agricultural sectors and the
backwardness of their infrastructure can force a reluctant EU to reform
its inanely bloated farm and regional aid subsidies, notably the Common
Agricultural Policy. That the EU cannot afford to treat the candidates
to dollops of subventioary largesse as it does the likes of France,
Spain, Portugal, and Greece is indisputable.
But even a much-debated phase-in period of 10 years would burden the
EU's budget - and the patience of its member states and denizens - to
an acrimonious breaking point.
The countries of central and eastern Europe are new consumption and
investment markets. With a total of 300 million people (Russia
counted), they equal the EU's population - though not its much larger
purchasing clout. They are likely to while the next few decades on a
steep growth curve, catching up with the West. Their proximity to the
EU makes them ideal customers for its goods and services. They could
provide the impetus for a renewed golden age of European economic
expansion.
Central and eastern Europe also provide a natural land nexus between
west Europe and Asia and the Middle East. As China and India grow in
economic and geopolitical importance, an enlarged Europe will find
itself in the profitable role of an intermediary between east and west.
The wide-ranging benefits to the EU of enlargement are clear,
therefore. What do the candidate states stand to gain from their
accession? The answer is: surprisingly little. All of them already
enjoy, to varying degrees, unfettered, largely duty-free, access to the
EU. To belong, a few - like Estonia - would have to dismantle a much
admired edifice of economic liberalism.
Most of them would have to erect barriers to trade and the free
movement of labor and capital where none existed.
All of them would be forced to encumber their fragile economies with
tens of thousands of pages of prohibitively costly labor, intellectual
property rights, financial, and environmental regulation. None stands
to enjoy the same benefits as do the more veteran members - notably in
agricultural and regional development funds.
Joining the EU would deliver rude economic and political shocks to the
candidate countries. A brutal and rather sudden introduction of
competition in hitherto much-sheltered sectors of the economy, giving
up recently hard-won sovereignty, shouldering the debilitating cost of
the implementation of reams of guideline, statutes, laws, decrees, and
directives, and being largely powerless to influence policy outcomes.
Faced with such a predicament, some countries may even reconsider.
Switching Empires
By: Dr. Sam Vaknin
Also published by United Press International (UPI)
European Union (EU) leaders, meeting in Copenhagen, are poised to sign
an agreement to admit ten new members to their hitherto exclusive club.
Eight of the fortunate acceders are former communist countries: Czech
Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and
Slovenia. Bulgaria and Romania are tentatively slated to join in 2007.
The exercise will cost in excess of $40 billion over the next three
years. The EU's population will grow by 75 million souls.
In the wake of the implosion of the USSR in 1989-91, the newly
independent countries of the Baltic and central Europe, traumatized by
decades of brutal Soviet imperialism, sought to fend off future Russian
encroachment. Entering NATO and the EU was perceived by them as the
equivalent of obtaining geopolitical insurance policies against a
repeat performance of their tortured histories.
This existential emphasis shifted gradually to economic aspects as an
enfeebled, pro-Western and contained Russia ceased to represent a
threat. But the ambivalence towards the West is still there. Mild
strands of paranoid xenophobia permeate public discourse in central
Europe and, even more so, in east Europe.
The Czechs bitterly remember how, in 1938, they were sacrificed to the
Nazis by a complacent and contemptuous West. The Poles and Slovenes
fear massive land purchases by well heeled foreigners (read: Germans).
Everyone decries the "new Moscow" - the faceless, central planning,
remote controlling bureaucracy in Brussels. It is tough to give up hard
gained sovereignty and to immerse oneself in what suspiciously
resembles a loose superstate.
But surely comparing the EU or NATO to the erstwhile "Evil Empire"
(i.e., the Soviet Union) is stretching it too far? The USSR, after all,
did not hesitate to exercise overwhelming military might against
ostensible allies such as Hungary (1956) and the Czechoslovaks (1968)?
Try telling this to the Serbs who were demonized by west European media
and then bombarded to smithereens by NATO aircraft in 1999.
Though keen on rejoining the mainstream of European history,
civilization and economy, the peoples of the acceding swathe are highly
suspicious of Western motives and wary of becoming second-class
citizens in an enlarged entity. They know next to nothing about how the
EU functions.
They are chary of another period of "shock therapy" and of creeping
cultural imperialism. Rendered cynical by decades of repression, they
resent what they regard as discriminatory accession deals imposed on
them in a "take it or leave it" fashion by the EU.
Anti-EU sentiment and Euroscepticism are vocal - though abating - even
in countries like Poland, an erstwhile bastion of Europhilia. Almost
two thirds of respondents in surveys conducted by the EU in Estonia,
Latvia, Slovenia and Lithuania are undecided about EU membership or
opposed to it altogether. The situation in the Czech Republic is not
much different. Even in countries with a devout following of EU
accession, such as Romania, backing for integration has declined this
year.
These lurking uncertainties are reciprocated in the west. The mostly
Slav candidates are stereotyped and disparaged by resurgent rightwing,
anti-immigration parties, by neo-nationalists, trade protectionists and
vested interests. Countries like Spain, France, Ireland, Greece and
Portugal stand to receive less regional aid and agricultural subsidies
from the common EU till as the money flows east.
Core constituencies in the west - such as farmers and low-skilled
industrial workers - resent the enlargement project. Anti-Slav
prejudices run rampant in Italy, Austria and Germany. The
incompatibilities are deepest. For instance, according to research
recently published by the Pew Center, the new members are staunchly
pro-American, though less so than ten years ago. In stark contrast, the
veteran core of the EU is anti-American.
Many of the denizens of the candidate countries regard the EU as merely
an extended Germany. It is the focus of numerous conspiracy theories,
especially in the Balkan. The losers of the second world war - Japan
and Germany - are out to conquer the world, this time substituting
money for bullets.
Germany, insist the Serbs and the Macedonians - instigated the
breakdown of the Yugoslav Federation to establish a subservient
Croatia. Wasn't Slobodan Milosevic, the Serb dictator, ousted in favor
of the German-educated Zoran Djindjic? - they exclaim triumphantly.
Germany is reasserting itself. United, it is the largest country in
Europe and one of the richest. Its forces are keeping the fragile peace
in Balkan hot spots, like Macedonia. It will contribute to the EU's
long-heralded rapid reaction force. It owns the bulk of the, frequently
overdue, sovereign debts of Russia, Ukraine and other east European
countries.
One tenth of Germany's trade is with the candidate countries, a
turnover comparable to its exchange with the United States. German
goods constitute two fifths of all EU trade with the new members.
Germans are the largest foreign direct investors throughout the region
- from Hungary to Croatia. German banks compete with German-owned
Austrian banks over control of the region's fledgling financial sector.
The study of German as a second or third language has surged.
Last year alone, German corporations plunged $3.6 billion into the
economies of the acceding countries. German multinationals like
Volkswagen and Siemens employ almost 400,000 people in central Europe -
for one tenth to one eighth their cost in the fatherland.
Quoted by the World Socialist, the German Chamber of Industry and
Commerce (IHK) estimates that the production costs in mechanical
engineering and plant construction are 20 percent lower in Poland than
in Germany, while quality is more or less the same.
Germany runs the EU rather single-handedly, though with concessions to
a megalomaniacally delusional France. In September, the German and
French leaders, meeting tte-
-tte in a hotel, dictated to other
members the fate, for the next 11 years, of half the EU's budget - the
portion wasted on the Common Agricultural Policy (CAP).
Germany's hegemonic role is likely to be enhanced by enlargement. Many
of the new members - e.g., the Czech Republic - depend on it
economically. Others - like Hungary - share with it a common history.
German is spoken in the majority of the candidates. They trade with
Germany and German businessmen and multinational are heavily invested
in their economies. A "German Bloc" within the EU is conceivable -
unless Poland defects to the increasingly marginalized French or to the
British.
Germany's federalist instincts - its express plan to create a "United
States of Europe", central government and all - are, therefore,
understandable, though spurned by the candidate countries. Germany is
likely to press for even further enlargement to the east. The EU's
commissioner for enlargement is a German, Gunter Verheugen.
The dilapidated expanses of the former Soviet satellites are Germany's
natural economic hinterland - on the way to the way more lucrative
Asian markets. Hence Germany's reluctance to admit Turkey, a massive,
pro-American, potential competitor for Asian favors. Integrating Russia
would be next on Germany's re-emerging Ostpolitik.
This firmly places Germany on an economic and military collision course
with the United States. As Stratfor, the strategic forecasting
consultancy, put it recently: "In Washington's opinion, America's
obsessions should be NATO's obsessions." Germany, the regional
superpower, has other, more pressing priorities: "maintaining stability
in its region, making sure that Russian evolution is benign and
avoiding costly conflicts in which it has only marginal interest."
Moreover, there is an entirely different - and much less benign -
interpretation of EU enlargement. It is based on the incontrovertible
evidence that the German ends in Europe have remained the same - only
the means have changed. The German "September Plan" to impose an
economic union on the vanquished nations of Europe following a military
victory, called, in 1914, for "(the establishment of) an economic
organization ... through mutual customs agreements ... including
France, Belgium, Holland, Denmark, Austria, Poland, and perhaps Italy,
Sweden, and Norway".
Europe spent the first half of the 19th century (following the 1815
Congress of Vienna) containing a post-Napoleonic France. The Concert of
Europe was specifically designed to reflect the interests of the Big
Powers, establish the limits to their expansion in Europe, and create a
continental "balance of deterrence". For a few decades it proved to be
a success.
The rise of a unified, industrially mighty and narcissistic Germany led
to two ineffably ruinous world wars. In an effort to prevent a repeat
of Hitler, the Big Powers of the West, led by the USA, the United
Kingdom and France, attempted to contain Germany from both east and
west. The western plank consisted of an "ever closer" European Union
and a divided Germany.
The collapse of the eastern flank of anti-German containment - the USSR
- led to the re-emergence of a united Germany. As the traumatic
memories of the two world conflagrations receded, Germany resorted to
applying its political weight - now commensurate with its economic and
demographic might - to securing EU hegemony. Germany is also a natural
and historical leader of central Europe - the future lebensraum of both
the EU and NATO and the target of their expansionary predilections,
euphemistically termed "enlargement".
Thus, virtually overnight, Germany came to dominate the Western
component of anti-German containment - even as the Eastern component
has chaotically disintegrated.
The EU - notably France - is reacting by trying to assume the role
formerly played by the USSR. EU integration is an attempt to assimilate
former Soviet satellites and dilute Germany's power by re-jigging rules
of voting and representation. If successful, this strategy will prevent
Germany from bidding yet again for a position of dominance in Europe by
establishing a "German Union" separate from the EU.
If this gambit fails, however, Germany will emerge triumphant, at the
head of the world's second largest common market and most prominent
trading bloc. Its second-among-equal neighbors will be reduced to mere
markets for its products and recruitment stages for its factories.
In this exegesis, EU enlargement has already degenerated into the same
tiresome and antiquated mercantilist game among 19th century
continental Big Powers. Even Britain has hitherto maintained its
Victorian position of "splendid isolation". There is nothing wrong with
that. The Concert of Europe ushered in a century of globalization,
economic growth and peace. Yet, alas, this time around, it has thus far
been quite a cacophony.
Europe's Agricultural Revolution
By: Dr. Sam Vaknin
Also published by United Press International (UPI)
One of the undeniable benefits of the forthcoming enlargement of the
European Union (EU) accrues to its veteran members rather than to the
acceding countries. The EU is forced to revamp its costly agricultural
policies and attendant bloated bureaucracy. This, undoubtedly, will
lead, albeit glacially, to the demise of Europe's farming sector as we
know it.
Contrary to public misperceptions, Europe is far more open to trade
than the United States. According to the United Nations (UN), the
International Monetary Fund (IMF) and the Organization of Economic
Cooperation and Development (OECD), its exports amount to 14 percent of
gross domestic product (GDP) compared to America's 11.5 percent. It is
also the world's second largest importer. In constant dollar terms, it
is the world's largest trader.
A recent Trade Policy Review released by the World Trade Organization
(WTO) mentions two notable exceptions: farm products and textiles.
Europe's average tariff on agricultural produce is four times those
levied on non-agricultural goods. Yet, a number of trends conspire to
break the eerie stranglehold of 3 percent of Europe's population - its
farmers - on its budget and political process.
The introduction of the euro rendered prices transparent across borders
and revealed to the European consumer how expensive his food is. Scares
like the mishandled mad cow disease dented consumer confidence in both
politicians and bureaucrats. But, most crucially, the integration of
the countries of east and central Europe with their massive
agricultural sectors makes the EU's Common Agricultural Policy (CAP)
untenable.
The CAP guzzles close to half of the EU's $98 billion budget. Recent,
controversial reforms, introduced by the European Commission, call for
a gradual reduction and diversion of CAP outlays from directly
subsidizing production to WTO-compatible investments in agricultural
employment, regional development, environment and training and
research. Unnoticed, support to farmers by both the EU and member
governments has already declined from $120 billion in 1999 to $110
billion in 2000. This decrease has since continued unabated.
Still, the EU is unable to provide the candidate countries with the
same level of farm subsidies it doles out to the current 15 members.
Close to one quarter of Poland's population is directly or indirectly
involved in agriculture - ten times the European average. The agreement
struck between Germany and France in September and adopted in a summit
Brussels in October freezes CAP spending in its 2006 level until 2013.
This may further postpone the identical treatment much coveted by the
applicants. Theoretically, subsidies for the farm sectors of the new
members will increase and subsidies flowing to veteran members will
decrease until they are equalized at around 80 percent of present
levels throughout the EU by the end of the next budget period in 2013.
But, in reality, the entire CAP stands to be renegotiated in 2005-6. No
one can guarantee the outcome of this process, especially when coupled
with the Doha round of trade liberalization. The offers made now to the
candidate countries are not only mean but also meaningless.
A recent tweak by Denmark, the current president of the EU, to peg
support for farmers in the accession countries at two fifths the going
rate, won a cautious welcome by the applicants. Some of this novel
subventionary largesse will be deducted from a fund for rural
development in the new members. Additionally, national governments will
be allowed to top up inadequate EU dollops with governmental budget
funds.
Even this parsimonious offer - still disputed by the majority of
contemporary EU members - will cost the Union an extra $500 million a
year. It also fails to tackle equally weighty wrangles about production
quotas, EU protectionist "safeguard" measures, import tariffs imposed
by the applicant countries against heavily subsidized European farm
products, reduced value added taxes on agricultural produce and
referential periods and yields - the bases for calculating EU
transfers.
It also ignores the distinct - and thorny - possibility that the new
members will end up as net contributors to the budget. Quoted by Radio
Free Europe/Radio Liberty, Sandor Richter, a senior researcher with the
Vienna Institute for International Economic Studies, concluded that the
first intake of applicants will end up underwriting at least $410
million of the EU's budget in the first year of membership alone. With
the GDP per capita of most candidates at one fifth the EU's, this would
be a perverse, socially unsettling and politically explosive outcome.
Aware of this, the European Commission denies any intention to actually
accept cash from the candidates. Their net contributions would remain
theoretical, it pledges implausibly. Yet, as long as a country such as
Poland is incapable of absorbing - disseminating and utilizing - more
than 28 percent of the aid it is currently entitled to - veteran EU
members rightly question its administrative ability to tackle much
larger provisions - c. $20 billion in the first three years after
accession.
The prolonged and irascible debate has taken its toll. In some
candidate countries, pro-EU sentiment is on the wane. Leszek Miller,
Poland's prime minister, told the PAP news agency that Poland should
contribute to the EU less than it receives in agricultural subsidies.
And what if not? "Nobody would be overly concerned if Poland did not
enter the EU together with the first group of new members."