To celebrate 10 years of EU enlargement was the purpose of a 2-day conference at the Austrian National Bank, organized with the Vienna Institute of Comparative Economics, the Federal Ministry for Europe, Integration and Foreign Affairs, the Austrian Federation of Industries and the Vienna Institute for Human Sciences. Instead, the audience was given a high dose of pervasive gloom, spread both by economists and political scientists. The high-caliber conference which hosted such eminent speakers as Timothy Snyder, Ivan Krastev, Holly Case, Lajos Bokros, Lilia Shevtsova, Herbert Stepic, Danuta Huebner, Loukas Tsoukalis, Gertrude Tumpel/Gugerell, Anton Pelinka, and many others, discussed the experiences of 10 years of EU membership, but also the very topical Ukraine crisis, EU foreign policy options, and more. Tenor: a “Zeitenwende” is looming, the post-Cold War era has come to an end, it is unclear where Europe will go from here.
The economists were gloomy insofar as they confirmed that for most of the CESEE countries the convergence process which had been successful up to the crisis of 2008 ff. had come to a standstill. Only Poland keeps closing its income gap, all other countries have slid back or stagnate. This is the same diagnosis which EBRD, the London-based public sector Bank founded after the demise of the Soviet Union, had already stated a number of years ago when it had to admit that “transition success” in moving towards a functioning market economy (and democracy) has shown up by the crisis to be much more tenuous than had been thought before. The realization that moves towards democracy and market economy are not a secure one-way street that they need to be nourished and pushed forward every day, that they even can reverse – this was brought out by many speakers.
It was not surprising that the panels represented by National Bank staffs from the new member states was mainly concerned about “nominal convergence”, i.e. price stability, exchange rate regimes and price competitiveness, and did not mention unemployment and the social costs of stringent monetary discipline, but a number of the audience still found this baffling. It was left to the concluding remarks by Tumpel-Gugerell to remind the speakers that sustainable development meant jobs, income, security, in addition to low inflation rates, that it was essential that the populations benefited from EU accession.
To an economist the most interesting parts were the political presentations and discussions. All the speakers maintained, using various arguments, that the present Ukraine crisis marked a completely new phase in Russia –Western relations. Russia was embarking on a “non-European” path, rejecting European values as decadent and inferior (this reminds me of the Islamic rejections of the Western way of life) and was in the process of developing a “new Russia” (the term Russian elites today use for the Eastern, Russian-speaking part of Ukraine) civilization which also enabled Russia to interpret its international obligations anew. The Ukraine was, in this view, used as a testing ground for this new way. But there was no consensus how far Russia would go in separating itself from “the West”. The lack of a coherent EU strategy towards this new development was lamented by many speakers and also blamed for some of these developments, having disregarded Russia’s security and cultural interests in this region.
Whether Russia would permit the May 25 election in the Ukraine to go ahead, is doubtful, some speakers maintain that Russia will impose a state of lingering limbo and insecurity on both the Ukraine and neighboring countries. There was unanimous consensus that EU’s neighborhood strategy had been shortsighted and naïve, disregarding Russia’s justified security interests. Whether at this time talks with Russia could be successful, which way they should go would also depend on a coherent EU strategy, which does not exist, also due to non-aligned interests of EU member states.
An interesting session dealt with the new nationalism arising in and around Europe. Pelinka made the pertinent point that nationalism in the “old” EU was of a secessionist character, while that in the new member states and beyond was directed against other states, for territorial gain, etc. Ozel pointed out that mid-Eastern developments were fashioned after the Yugoslav war, with the difference that in the middle East it is the artificial borders decided after World War I that are the object of “corrections” while in Yugoslavia it was the after World War II borders that were unravelled. His side remark that the self-proclaimed born-again Christian G.W.Bush had succeeded to wipe out Christianity in Iraq and Syria was a sad reminder of failed Western activities.
I found Krastev’s remark very convincing that the de-facto elimination of politics from economics in the EU (by setting strict budget rules and circumventing the within-treaty arrangements in ever more fields by “contractual arrangements”) was the cause and flipside of the ever stronger discussion about identity discussions and resurging nationalism, thus, in a way, brought on by national and EU elites themselves.
The upshot of all the discussions were that the geo-political environment for EU development had deteriorated drastically, that a new growth model needs to be found for the New Member States, in order to reenter a path towards convergence, that it is an absolute necessity to develop a coherent EU foreign policy, not only, but especially with Russia, but that ten years after the much-celebrated EU enlargement Europe is on the brink of new and grave uncertainties. Unpredictability rules the world. The triumphalism of the West after the dissolution of the Soviet Union and the Warsaw Pact that “the West has won”, is not only misguided, but has led the EU towards complacency and illusions about the irreversibility of its path.