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Jan 12, 2018 | 09:00 GMT

9 mins read

In the EU, East and West Are Falling Out of Tune

For countries in Central and Eastern Europe, the benefits of EU membership still outweigh the costs, but that may change.
(iStock)
Highlights
  • Increasing nationalism and persistent graft in several Central and Eastern European countries could deepen the divide between western and eastern members of the European Union.
  • For countries in Central and Eastern Europe, the benefits of EU membership still outweigh the costs, but that may change.
  • A looming debate on the next EU budget will deliver a stern test to intra-bloc relations.

In its mission to bring peace and prosperity to a landmass wracked by war, the European Union has always been a marriage of convenience. Between 2004 and 2007, the union incorporated several countries from Central and Eastern Europe into its expanding bloc. EU governments and institutions viewed enlargement as a path toward fostering the emergence of prosperous, democratic and stable nations on its eastern border after the collapse of the Soviet Union. In turn, the new member states regarded EU membership as a gateway to funds, investment, modernization and protection. In exchange for Brussels' financial largesse, new members introduced deep economic, political and institutional reforms to comply with EU standards. Now, however, the increasing unwillingness of eastern members to heed the EU's demands threatens to deepen the divide between the bloc's west and east.

Stopping the Rot

EU accession has aided countries from Estonia to Bulgaria in transitioning from command economies and authoritarian regimes to open markets and relatively transparent democracies within a few years (some countries, naturally, have made more progress than others). The optimism of enlargement, however, was quickly replaced by the pessimism of the financial crisis, which highlighted the shortcomings of the European project, created discord among member states and reduced the appeal of the union in the eyes of many voters across the Continent. As a consequence, nationalism has reared its head once more in Europe, as anti-globalization parties gained ground with demands for greater national control over policies that ran the gamut from public spending to immigration.

Nationalist parties in countries like France and the Netherlands might have stolen the headlines by running more centrist parties close in elections last year, but their ideological cousins actually succeeded in winning power in Hungary and Poland. Central European nationalists primarily appeal to citizens who have failed to benefit from globalization, including rural inhabitants and others who have suffered from deindustrialization. The parties also appeal to traditional values and national identities in a region that has historically been subject to foreign invasion. In some cases, they have taken advantage of a political culture that retains the vestiges of the not-too-distant authoritarian past.

The European Union and the eurozone

In recent weeks, EU institutions have expressed concern about political developments in the region. On Dec. 7, the European Commission brought Hungary before the European Court of Justice over a law that allegedly restricts foreign donations to civil society organizations. On Dec. 20, the commission also launched a procedure that could lead to sanctions against Poland because of recent reforms in the country's judiciary that could weaken rule of law, according to critics. Just two days later, the governments of Germany, France and five other EU member states sent a letter to the Romanian government expressing concern about planned reforms that could weaken the country's fight against corruption and increase political control over the judiciary.

The developments raise critical issues regarding the future of nations in the former communist bloc. First, it remains unclear whether countries on the union's eastern flank will continue to align their policies with those of their neighbors further west. Second, Western European countries could rapidly grow tired of attempting to integrate their eastern peers into EU structures.

Nationalism and Graft Make their Mark

Brussels is currently dealing with not one but two enfants terribles: Warsaw and Budapest. Poland and Hungary's respective ruling parties, Law and Justice and Fidesz, are skeptical of policies that strengthen the supranational components of the union and weaken the national sovereignty of its member states. To them, initiatives such as the commission's recent proposal to distribute asylum seekers across the Continent confirm that Brussels' policies are eroding national identity and threatening countries' security. Poland and Hungary often find support for their resistance against Brussels' policies from neighboring countries such as Slovakia and the Czech Republic, although the recent incorporation of the right-wing Freedom Party into the Austrian government suggests that Vienna may join the Central European nationalist camp on some issues.

In Southeast Europe, the union's worries center not so much on nationalism, but on weak political institutions and pervasive corruption. According to Transparency International, Romania and Bulgaria are among the most corrupt countries in the European Union. Bucharest and Sofia have made significant improvements in the fight against corruption since joining the bloc in 2007, but Brussels is worried that their efforts could be losing momentum. In a report released in November 2017, the commission admonished Romania for retreating from its fight against graft, while also urging Bucharest to continue implementing transparency reforms. The commission was less critical of Bulgaria, but still warned that many of its recommendations to make the country more transparent remain unfulfilled. Additionally, the commission registered concerns about proposed reforms that could undermine the independence of Bulgarian judges.

In a separate report, the commission expressed alarm that the monetary policies of Romania's center-left government were endangering the country's fiscal stability. Since winning elections in late 2016, the administration has cut taxes and increased public spending, although such policies could seriously exacerbate the budget deficit, the International Monetary Fund warned last year.

The combination of corruption and expansive fiscal policies could create problems for Romania in the future. Widespread corruption typically hinders economic growth and generates popular dissatisfaction with the political system. At the same time, reversing profligate spending policies often results in a high political price for any party attempting to implement reforms. If the union pressures Bucharest to change direction and introduce austerity measures, it could foment social unrest. Popular dissatisfaction with traditional political parties, combined with unpopular austerity measures, could open allow anti-system political forces to gain ground in Romania.

The West's Siren Call

Despite the criticism some eastern members of the bloc have directed toward Brussels, the core geopolitical reasons that persuaded Central and Eastern European countries to apply for membership have not disappeared. Regional governments still see the union as an important source of money, and all of them are net recipients of bloc funds. In absolute terms, Poland and Romania are some of the biggest beneficiaries of EU money, although Estonia and Slovakia obtain the most per capita. The importance of EU funds is evident: for the 2014-2020 period, the EU has allocated $92 billion in funds to Poland, an economy of roughly $471 billion, and $27 billion to Romania, an economy of around $188 billion.

The European Union budget

The European Union has also retained its popularity in the region. According to the most recent Eurobarometer survey, 86 percent of Poles, 85 percent of Romanians and 84 percent of Hungarians hold a positive or neutral view of the bloc. The figure in all three countries is more than 10 points higher than the total in founding members such as France and Italy, in which the rating is 73 percent for both countries.

Eastern members also view the union as the best source of protection against aggression from the large neighbor on their doorstep, Russia. NATO membership might be more critical for defense than EU membership, but the union still offers political, economic and institutional protection for Central and Eastern European countries against Moscow. Countries like Poland and Romania are some of the strongest advocates of maintaining the economic sanctions that Western countries imposed on Russia because of its annexation of Crimea and the ongoing conflict in eastern Ukraine. At the same time, such nations have also defended EU policies that seek to reduce Europe's dependence on Russian natural gas. Moreover, they support projects such as the Eastern Partnership Initiative, an EU undertaking to increase political and economic cooperation with former Soviet states such as Ukraine and Moldova.

Because of their shared security priorities, area countries will remain interested in cooperating with the union and each other on issues such as defense and energy diversification, but integration with Western European nations on other political or economic issues could prove elusive. While they are unlikely to leave the union, these countries might be unwilling or unable to deepen their ties with it. There is little chance that countries such as Poland, Hungary and the Czech Republic will join the eurozone anytime soon because of nationalist tendencies, while there is equally little chance that countries such as Romania and Bulgaria will join the passport-free Schengen area due to the persistence of weak institutions.

Brussels Mulls a Carrot-and-Stick Approach

The most urgent challenge facing the union's Central and Eastern European members in the coming months will be to protect their share of EU funds. Discussions for the next multiyear EU budget, which will enter force in 2021, start this year. The negotiations will be heated, as the budget will be the first without British contributions. Eastern members will be fighting on two fronts: On one hand, they are expected to push the union's wealthiest nations to increase their national contributions to the common budget to compensate for the United Kingdom's departure. On the other, they are likely to fight tooth and nail to increase – or at least maintain – their existing share of development and agricultural funds. Such a strategy could even produce some friction among newer members intent on grabbing a greater share of EU funds.

The budget debate also will be important because EU institutions have said any future disbursements of money should be linked to members' respect for EU norms and principles. Accordingly, Brussels could adopt a carrot-and-stick approach to pressure rebel countries to fall into line. Brussels' bluster has yet to be translated into action, but if movers and shakers like Germany or France – the latter is already mulling whether the next phase of EU integration should be restricted to a select group of countries – offers backing, it could create headaches for the union's eastern members.

Such threats are not without risk for the European Union either. By severing funding for misbehaving members, Brussels could radicalize nationalists in the region and further unmoor them from the ties that bind them to the union. During a meeting with Hungarian Prime Minister Viktor Orban on Jan. 3, Polish Prime Minister Mateusz Morawiecki said the two countries were interested in plans to finance regional infrastructure projects – a possible sign that Warsaw and Budapest wish to reduce their dependence on EU money.

The benefits of EU membership still outweigh the costs for all Central and Eastern European countries, but there are no guarantees the situation is set in stone. If the union opts to cut funding for members in poor standing, Brussels makes demands that eastern countries view as incompatible with their aspirations or regional countries find new sponsors to replace the bloc, the dream of greater European integration is unlikely to ever become a reality.

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