Eastern Europe politics: A chill wind from the West

The resounding “No” votes in the French and Dutch referendums almost certainly spell the end of the EU’s constitutional treaty. This has thrown the new member states (NMS) from eastern Europe into confusion over where they stand within the EU, and worried about the implications of a possibly prolonged paralysis of the Union. For many of the states still clamouring to join, the referendum results risk closing off any membership prospects for the foreseeable future.

The treaty was essentially a clumsy compromise among 25 governments and between different visions of the nature of the EU. There is little political appetite or energy to undertake new institutional initiatives to replace the constitution, which itself took more than two years to draw up. The EU is thus entering a period of considerable uncertainty.

The referendum results represent a serious setback for those who hoped that the constitution would lay the basis for a better-functioning (and more transparent) EU, for further enlargement, and for the possibility of yet deeper integration. Even many Eurosceptics—who have generally welcomed the results of the French and Dutch votes as putting a stop to the seemingly inexorable march towards an “ever-closer” federated Union—acknowledge the possible dangers ahead: of a loss of credibility and direction, and of a risk that the present situation could descend into a European crisis.

The EU may muddle through for some time on the basis of its existing arrangements, especially the Treaty of Nice. The experience of the first year after enlargement may be seen as encouraging in this regard. The feared gridlock did not happen and no great increase in the already-existing Brussels inefficiency seems to have occurred—although the EU undertook few new initiatives during this period and the Commission was preoccupied during much of this time with a change in leadership. In any case, the technical arrangements for the EU's workings are at this point of far less significance than the potentially far-reaching political fallout for the EU stemming from the French and Dutch votes and the knock-on implications.

The situation has clear repercussions for eastern Europe—both the eight new members that joined in May 2004 and still more for all those countries in the Balkans and further afield that are queuing up to join. For the NMS the fact that an anti-enlargement backlash featured so clearly in both the French and Dutch votes after only one year of membership is perturbing, and hardly augurs well for the future functioning of the Union. French fears about the impact of globalisation and loss of employment focused on the proverbial ‘Pawel the plumber’—the fear that a huge influx of cheap labour from the East would greatly exacerbate the already existing threat to their jobs and wages.

That the electorates of two of the founding members of the EU appear to be so profoundly dissatisfied with the organisation that the NMS have over the past decade striven so hard and unquestioningly to join may puzzle the elite and populations in the east, and have a disheartening (and possibly sobering) effect.

In common with other EU members, the NMS will now be worried about the possible negative consequences for the EU. Opinion polls in the region had pointed to strong support for the constitution. With the exception of Poland, the Czech Republic and Estonia all the NMS have already given parliamentary approval. Poles and Czechs have been promised referendums to ratify the treaty, either late this year or mid 2006, but it is highly uncertain whether these will now go ahead.

Many NMS leaders will be concerned about one possible end-result of any ensuing turmoil—the creation ultimately of a multi-tiered EU with most NMS (who do not have the euro and are not members of Schengen yet) inevitably being outside of any inner core.

There is a possibility of an adverse impact on European business confidence that could deal a further blow to the already shaky economic performance of the biggest euro zone economies, on which the NMS are so dependent. Growth in many NMS is slowing perceptibly and weak governments in the region—many of which are faced with the need for politically difficult fiscal consolidation—will dread further weakening of the pace of growth in their countries. The outlook for EU reforms, arguably also a key requirement for buoyant NMS growth over the medium term, now looks very poor as the UK and France slug it out to standstill over the future direction of the EU.

It seems even less likely now than before that any of big euro zone economic laggards will initiate structural reforms to boost growth, while the prospects for pushing on with the EU’s Lisbon Agenda of reform now look even bleaker than before.

The referendum results mean that any chances for a generous treatment of NMS in the 2007-13 budget have now receded even further. The leaders of the biggest EU countries may try to rebuild confidence in the EU by reaching a quick agreement on the budget (assuming the vexing issue of the UK rebate can be resolved). But any such agreement is very unlikely to entail provision for more funding to the east.

Mounting speculation about the future of the euro—even if the concerns turn out to be greatly exaggerated—could weaken NMS efforts aimed at preparing for EMU and thereby undermine the main reform anchor in the NMS following membership. This may also dampen financial markets’ enthusiasm for these countries, as much of it has been driven by “convergence plays” and expectations that NMS will all join the euro zone over the next few years (although for some countries the abatement of upward, competitiveness-threatening pressure on their currencies will be a welcome by-product).

Finally, the various NMS will all have their additional, specific concerns. A number of the NMS were hopeful that the EU was edging towards a tougher and united policy towards Russia, about which many of the states in the region are worried. This can essentially be now put on the backburner. In Hungary—ever concerned about the position of its large minorities in neighbouring countries—there is alarm about the demise of the constitution’s provisions on the protection of minorities, which Hungary’s representatives had played a big role in crafting. Countries now forming the EU's eastern border, worried about instability on the other side of the frontier, will worry that a long period of EU “contemplation” and navel-gazing will now distract attention from their concerns.

If the NMS are worried, then some of the east Europeans still queuing at the EU door are close to panic. The rejection of the treaty clearly poses potential problems for future enlargements. Given that a major cause of opposition to the constitution was the perceived negative impact of the new member states—namely through competition for jobs and investment--this raises concerns that future expansions may be harder or even impossible to push through (the French Constitution had already been amended earlier in 2005 to require referendums to ratify any enlargement after 2007).

The most obvious and immediate victim may be Turkey, but any hopes that Ukraine and other former Soviet states might one day join may have been dashed for good. At the other end of the spectrum are Bulgaria and Romania. Their membership is included in the Nice treaty, and they have already signed accession treaties. At worst, it seems their entry could be delayed from the planned 2007 by one year, as the EU takes a stricter line on them implementing the acquis communautaire (the EU body of law). The applicants may be “put on the rack and tortured a little”, says one Romania expert.

Yet, a short delay is not necessarily the worst-case scenario. Nerves are on edge in both Sofia and Bucharest because it is not inconceivable that an existing member state, facing an anti-EU groundswell from voters, could exercise its veto-something that would have seemed inconceivable just one week ago. For example, some leaders of Germany's opposition CDU, which looks set to win the next election there, are already arguing for an (indefinite) postponement to Bulgarian and Romanian entry.

More significant is the potential backlash with respect to the rest of the Balkans, which were pretty much promised eventual membership at the EU’s Thessaloniki summit in 2003. These countries have all struggled to come to terms with their post-war legacies, and view future EU membership as a beacon of hope for peace and economic development. Even more than in the case of the central Europeans, the hope of EU membership seems to be the main driver of political and economic reform in the region.

To say “yes” to Bulgaria and Romania, but “no” to candidate country Croatia, already on the verge of talks, would be harsh. On the other hand, to accept Croatia but close the door on EU applicant Macedonia (which is awaiting an Opinion on its application later this year) or Serbia would be seen as provocative and could clearly destabilise the region—not least Kosovo, Bosnia and Hercegovina and even Macedonia.

What is unlikely to happen is for the EU to set out clearly and quickly where it stands on future enlargement—who it will admit and who not, thus allowing left-outs to plan an alternative future (and possibly begin to even benefit from finally taking responsibility for their own fate). The EU would fear a nasty reaction in the Balkan states and renewed serious instability in the area; the EU has no substitute for its only effective foreign policy tool of a conditional offer of eventual membership. Instead, the EU could string the potential candidates along so tortuous and demanding an accession path that could amount to exclusion in practice, and ultimately with even worse consequences than outright rejection.

The NMS may now have to re-appraise many of their assumptions about the EU that they have just joined. A worst-case scenario involving an implosion of the EU is highly unlikely; too much political capital in every country has been invested in the EU. Even many Eurosceptics are aware of the destructive potential to their economies and the political environment of a collapse.

But it is also highly improbable that the EU will simply dust itself off and continue business as usual. The east Europeans, both in and especially those out of the EU, potentially stand to lose a lot. For those already in, these include future growth stimuli; large budget transfers, possibly Schengen travel rights and EU-wide working rights, and even an invitation to join the euro if an insular, inner core of members is formed. Those left outside, meanwhile, may miss out entirely.

EU in its present form is doomed. It's unwieldy bureaucratic structure, absense of checks and balances and other problems make it unviable. EU is largely bureacracy project intendent to give jobs and enrich the European "elites". Some other form of cooperation between European Countries should be found.

I agree. The worst part is that these so called "elites" still don't understand that Europeans don't want this so called constitution and generally rather aren't dreaming about one centralized European state. They still hope that they will push this thing forward (repeat referendum etc.). They are not only wrong, they are just morons. If they repeat referendum for example in France, there will be probably at least 80% No votes and in result anti European integration feelings in general. It wouldn't be good, because Europe must be integrated at least in economy and try to have similar foreign policy (without any structuralized regulations), because alone only 3 current EU members have something to say on the global level.

In my opinion some symbolic "European chart" (a few pages about democracy, civil rights etc.) could be ratified (through Parliaments) and next people should be asked If they really want any European constitution.

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