Quo Vadis, Poland?

Source: Wikipedia
The Polish Parliament

Poland, the biggest EU state in Central and Eastern Europe, is going through a strong nationalist revival in the last two years, rising many questions and worries about the future of the country within the Union. Poland is the second, after Hungary, to join the new wave of nation-centered politics from the former communist block, but by far the most important from the point of view of the decision making processes within the Union. 

The dramatic changes took place after May 2015 presidential elections, when  Lech Kaczynski won the elections and the Party for Right and Justice (PiS) gained control over the both chambers of the Parliament. Lech's twin brother, Jaroslaw, former prime minister, died in a controversial airplane accident in 2010, together with more than half of the Polish political leadership at the time. 

PiS is the first party to govern the country alone since the end of communism, a situation which gives considerable leverage in the internal decision making process. This rule of the unique party comes after the disappointment brought by many of the post-communist coalitions. 

Policy of thought

With 4 out of 10 people living in the countryside and over 90% of the population of Catholic faith, Polish politicians started an aggressive campaign, both on the home and foreign front aimed to reinstate a different leadership. Many observers assume that such a return to identity politics is the consequence of a total and non-critical adhesion to the Western values after the fall of communism.

Kaczynski - and not only - are often building their discourses by blaming the German influence into their media and politics. Cultural happenings that do not comply with the overall directions confirmed through the religious channels are welcomed with protests and threats of outlaw. The public TV and broadcast were purged by bringing people close to the establishment. The Polish leaders categorically refused to accept any refugees. This February, Patrik Jaki, deputy minister for Justice proposed baning the sentence 'Polish death camps' under the threat of a 3-year sentence. And the examples can continue...

Where to?

Poland joined the EU in 2004, and since then the country's economic situation improved permanently. The unemployment was reduced, the highway network extended from 76.5 to 3000 km. The current government made more economic promises too, one of them being to increase the child subsidy to around 129$, an encouragement for extended families too. From the same family register, the authorities seek to completely outlaw abortions and birth control, a decision that rose protests in the country.

The Venice Commission, a legal body in charge with overviewing the constitutional changes within the EU, warned the country that many of the previsioned constitutional changes are contrary to human rights.

As the EU's sixth largest country, Poland is important from a strategical point of view too, for its border with Russia and for its voted and influence on the climate change policy of the Union, as the biggest coal producer in the EU.  

This July, NATO is supposed to have its regular summit in Poland and the current situation worries both sides of the Atlantic.

Within the EU, Poland can be subject to the rule of law mechanism adopted in 2014, leading to the suspension of the voting rights, following successive breaches of the EU Treaty. Kaczynski is trying to play hard the Hungarian card, whose far-right leader Orban he met recently. 

He wants to keep Poland in the EU, but without the euro, dreaming to be, maybe, the UK of the East. Meanwhile, it risks to be more isolated within the democratic partners. On the other side of the border, the man from Kremlin may be just a little bit happier.  

Roots of corruption: the episode Pfizer

One of the main incentives of corruption is when you know that you will always find people keen to pay you more in exchange of a basic service. The more bureaucratic and obscure the system, the more temptations for companies and individuals to accept the extra fees for quality.

The health system is one of the main targets of corrupt people: in many countries form all over the world, the medicine and normal medical service cannot be obtained for free, despite the fact that some of those going to the doctor are life-long tax payers. You need to bribe the nurses for a good meal and the pharmacist for the basic medicine. 

As in the case of the fight for resources in Africa, the fight for survival in many former communist countries implies the presence of many big international companies. By paying bribes - many included in the category of 'protocol' and 'local maintenance costs' - the big companies operating at the local level have the guarantee of a successful business. And, it is enough that one big player accepts the rules of the local games: later, it will be difficult to play otherwise.

The recent bribery case of Pfizer reminded me of all those unacceptable situations that are very often the norm overseas. The bribes were paid for gaining regulatory approval from authorities in, among others, Russia, China, Croatia, Bulgaria and Kazahstan. I wish more it is written about how those countries - many of them EU members - are rotten by the corruption that viciates completely the perspectives of life and politics for a long time from now. Media is corrupt by journalists accepting to write (only) in exchange of small attentions, the international companies are fuelling the underground economy by supporting local politicians, the MPs are ready to support only the cause of the big lobbysts that paid them accordingly. 

Maybe at least for a couple of generations, it is not too much to be done there? I expect that Pfizer is only the top of the iceberg of corruption in Eastern Europe.

What to do in the case of Greece? Some lessons learned as well

Since a couple of months already, Greece is facing a debt deficit problem. Greece is an EU member and its problems are directly or indirectly affecting the whole European members of the Union. In the same time, the situation, including from the point of view of the history of the relations between Bruxelles and Athens, is offering lots of warnings regarding the future expansions of the European Union.

Trust?

These relations are concerning the trust between the Hellenic national institutions and the European bodies. The politics of expansions are decided on the basis of various factors: from strong lobby - political, individual, economic - from the part of the candidate countries, from political interests - as it was the case after the end of the Cold War, with so many countries once part of the other side of the Iron Curtain reclaiming their right to be "Europeans", or economic interests. The weights of these interests are varying and are not always very clear.

The final decision for entering the EU is took in accordance with the level of fulfillement of the so-called "Copenhagen Criteria", laid down at the June 1993 European Council in Copenhagen. Shortly, these criteria are requiring to the candidates countries: functional democratic governance, respect of the rule of law, respect for human rights and the protection of minorities, fulfilling the criteria for a functional market economy, legislative alignement with the communitarian legislation. More or less, these criteria are imposing various subjective definitions and, probably, should request careful rephrasing on the basis of recent lessons learned. But, by now, there were the main standards followed in deciding the fate of a candidate.

The annual progress of the candidate countries are evaluated in detailed reports, benchmarks for the local political decision makers. The reports are made in accordance with the information provided by local institutions - in the area of judiciary, or economy - as well as non-governmental association and individuals directly involved in the political processes. The key-word for gaining respect is reliability of the sources. Without reliable and transparent information you cannot build policies and, the degree of openness of various public institutions is an important denominator for the free societies, in comparison with the attitudes encountered in totalitarian states.

As for the member states, the need to respect rules and criteria continue, mainly regarding the economic standards. One of the most important set in this respect are those set by the art. 121 (1) of thee European Community Treaty, the so-called Maastricht criteria of convergence. These regulations are available for the EU member states to enter the third stage of the European Economic and Monetary Union (EMU) and to adopt the euro as their currency. Greece wanted among the first to join the EU, hoping to tranfer the responsibility for some internal problems to the European Central Bank. The candidacy was kept in check for two years, but soon after Greece joined the euro, in 2001, it emerged that the Greek government lied about its deficit.

The EU opened its first investigation into Greece’s deficit in 2004 after a revision of data revealed that, contrary to previous indications, the deficit had exceeded the EU ceiling every year since the country adopted the euro. But, at stake it was a more serious matter, one of national pride: the gap reached a euro-area record 7.5 percent that year was swollen by costs for hosting the Olympic Games in Athens.

To-do-lists

A country could adopt euro if:

- The inflation rate should be no more than 1.5 percentage points above the rate for the three EU countries with the lowest inflation over the previous year; Budget deficit: This must generally be below 3% of gross domestic product (GDP)

- The national debt should not exceed 60% of GDP, but a country with a higher level of debt can still adopt the euro provided its debt level are falling steadily

- The long-term rate should be no more than two percentage points above the rate in the three EU countries with the lowest inflation over the previous year

- The national currency's exchange rate should have stayed within certain pre-set margins of fluctuation for two years.

But, as the case of Greece already showed, some serious loopholes could be open by the possibility to alternate the responsibility in terms of separation of monetary and fiscal politicies. Greece enjoyed monetary stability - enforced by the strength of the other EU member countries - but lacked completely a coherent fiscal policy. And, again, the matter of trust intervened: Athens authorites lied again about the budget deficit. Added to a national debt of 113 percent of the GDP, a huge lie of a deficit of 4 percent, instead of the real one, of 12.7 percent of the GDP, in 2009. The limit set is of 3 percent.

What to do?

The question is not so difficult: what EU should do in this respect? Plus: what is to be done in the next future, giving the fact that Greece is not the one and only country facing this kind of problems. In fact, with the exception of the big industrial countries, all of new members - from the Baltic to the last two Eastern European countries members Romania and Bulgaria, plus Spain and Portugal - could be exposed to serious economic risks.

As in the case of Greece it is more about serious system problem, but about accountability, helping Athens in this situation will risk to let unsanctioned a behavior creating serious problem to the economy of the European Union.

On the other side, what consequences to follow at the level of the Union if Greece will not benefit of the required help?

The EU informal summit from February 11, set a couple of lines concerning the "Greek file". According to the French President Nicolas Sarkozy, the European Union will monitor Greece's fiscal actions on a monthly basis, as the country bids to cut its massive public deficit. The objective set for 2010, according to Sarkozy, is to reduce the deficit by four percentage points of GDP.

A potential aid package might be delivered as well, with a German contribution of almost 20%. In this situation, apparently, a situation was already found. Greece will be saved and, maybe, due to the strict monitoring system announced, it will be able to correct the not-telling-the-truth-attitude in respect with the EU institutions. In the same time, strict and clever mecanisms of control and reporting, mainly in the area of economic parameters, are more than necessary. New countries from the Western Balkans are making small but strong steps to get closer to Bruxelles. Some of them are inheriting serious system disfunctionalities dued to the lack of institutional cultures. Greece could be a start for redefining and reanalysing the general and particular policies. Including regarding building trustworthy relationships among member countries.

Nobel Geopolitics

George Friedman

Stratfor

October 13

U.S. President Barack Obama won the Nobel Peace Prize last week. Alfred Nobel, the inventor of dynamite, established the prize, which was to be awarded to the person who has accomplished “the most or the best work for fraternity among nations, for the abolition or reduction of standing armies and for the promotion of peace congresses.” The mechanism for awarding the peace prize is very different from the other Nobel categories. Academic bodies, such as the Royal Swedish Academy of Sciences, decide who wins the other prizes. Alfred Nobel’s will stated, however, that a committee of five selected by the Norwegian legislature, or Storting, should award the peace prize.

The committee that awarded the peace prize to Obama consists of chairman Thorbjorn Jagland, president of the Storting and former Labor Party prime minister and foreign minister of Norway; Kaci Kullmann Five, a former member of the Storting and president of the Conservative Party; Sissel Marie Ronbeck, a former Social Democratic member of the Storting; Inger-Marie Ytterhorn, a former member of the Storting and current senior adviser to the Progress Party; and Agot Valle, a current member of the Storting and spokeswoman on foreign affairs for the Socialist Left Party.

The peace prize committee is therefore a committee of politicians, some present members of parliament, some former members of parliament. Three come from the left (Jagland, Ronbeck and Valle). Two come from the right (Kullman and Ytterhorn). It is reasonable to say that the peace prize committee faithfully reproduces the full spectrum of Norwegian politics.

A Frequently Startling Prize

Prize recipients frequently have proved startling. For example, the first U.S. president to receive the prize was Theodore Roosevelt, who received it in 1906 for helping negotiate peace between Japan and Russia. Roosevelt genuinely sought peace, but ultimately because of American fears that an unbridled Japan would threaten U.S. interests in the Pacific. He sought peace to ensure that Japan would not eliminate Russian power in the Pacific and not hold Port Arthur or any of the other prizes of the Russo-Japanese War. To achieve this peace, he implied that the United States might intervene against Japan.

In brokering negotiations to try to block Japan from exploiting its victory over the Russians, Roosevelt was engaged in pure power politics. The Japanese were in fact quite bitter at the American intervention. (For their part, the Russians were preoccupied with domestic unrest.) But a treaty emerged from the talks, and peace prevailed. Though preserving a balance of power in the Pacific motivated Roosevelt, the Nobel committee didn’t seem to care. And given that Alfred Nobel didn’t provide much guidance about his intentions for the prize, choosing Roosevelt was as reasonable as the choices for most Nobel Peace Prizes.

In recent years, the awards have gone to political dissidents the committee approved of, such as the Dalai Lama and Lech Walesa, or people supporting causes it agreed with, such as Al Gore. Others were peacemakers in the Theodore Roosevelt mode, such as Le Duc Tho and Henry Kissinger for working toward peace in Vietnam and Yasser Arafat and Yitzhak Rabin for moving toward peace between the Israelis and Palestinians.

Two things must be remembered about the Nobel Peace Prize. The first is that Nobel was never clear about his intentions for it. The second is his decision to have it awarded by politicians from — and we hope the Norwegians will accept our advance apologies — a marginal country relative to the international system. This is not meant as a criticism of Norway, a country we have enjoyed in the past, but the Norwegians sometimes have an idiosyncratic way of viewing the world.

Therefore, the award to Obama was neither more or less odd than some of the previous awards made by five Norwegian politicians no one outside of Norway had ever heard of. But his win does give us an opportunity to consider an important question, namely, why Europeans generally think so highly of Obama.

Obama and the Europeans

Let’s begin by being careful with the term European. Eastern Europeans and Russians — all Europeans — do not think very highly of him. The British are reserved on the subject. But on the whole, other Europeans west of the former Soviet satellites and south and east of the English Channel think extremely well of him, and the Norwegians are reflecting this admiration. It is important to understand why they do.

The Europeans experienced catastrophes during the 20th century. Two world wars slaughtered generations of Europeans and shattered Europe’s economy. Just after the war, much of Europe maintained standards of living not far above that of the Third World. In a sense, Europe lost everything — millions of lives, empires, even sovereignty as the United States and the Soviet Union occupied and competed in Europe. The catastrophe of the 20th century defines Europe, and what the Europeans want to get away from.

The Cold War gave Europe the opportunity to recover economically, but only in the context of occupation and the threat of war between the Soviets and Americans. A half century of Soviet occupation seared Eastern European souls. During that time, the rest of Europe lived in a paradox of growing prosperity and the apparent imminence of another war. The Europeans were not in control of whether the war would come, or where or how it would be fought. There are therefore two Europes. One, the Europe that was first occupied by Nazi Germany and then by the Soviet Union still lives in the shadow of the dual catastrophes. The other, larger Europe, lives in the shadow of the United States.
Between 1945 and 1991, Western Europe lived in a confrontation with the Soviets. The Europeans lived in dread of Soviet occupation, and though tempted, never capitulated to the Soviets. That meant that the Europeans were forced to depend on the United States for their defense and economic stability, and were therefore subject to America’s will. How the Americans and Russians viewed each other would determine whether war would break out, not what the Europeans thought.

Every aggressive action by the United States, however trivial, was magnified a hundredfold in European minds, as they considered fearfully how the Soviets would respond. In fact, the Americans were much more restrained during the Cold War than Europeans at the time thought. Looking back, the U.S. position in Europe itself was quite passive. But the European terror was that some action in the rest of the world — Cuba, the Middle East, Vietnam — would cause the Soviets to respond in Europe, costing them everything they had built up.

In the European mind, the Americans prior to 1945 were liberators. After 1945 they were protectors, but protectors who could not be trusted to avoid triggering another war through recklessness or carelessness. The theme dominating European thinking about the United States was that the Americans were too immature, too mercurial and too powerful to really be trusted. From an American point of view, these were the same Europeans who engaged in unparalleled savagery between 1914 and 1945 all on their own, and the period after 1945 — when the Americans dominated Europe — was far more peaceful and prosperous than the previous period. But the European conviction that the Europeans were the sophisticated statesmen and prudent calculators while the Americans were unsophisticated and imprudent did not require an empirical basis. It was built on another reality, which was that Europe had lost everything, including real control over its fate, and that trusting its protector to be cautious was difficult.

The Europeans loathed many presidents, e.g., Lyndon Johnson, Richard Nixon, Ronald Reagan. Jimmy Carter was not respected. Two were liked: John F. Kennedy and Bill Clinton. Kennedy relieved them of the burden of Dwight D. Eisenhower and his dour Secretary of State John Foster Dulles, who was deeply distrusted. Clinton was liked for interesting reasons, and understanding this requires examining the post-Cold War era.

The United States and Europe After the Cold War

The year 1991 marked the end of the Cold War. For the first time since 1914, Europeans were prosperous, secure and recovering their sovereignty. The United States wanted little from the Europeans, something that delighted the Europeans. It was a rare historical moment in which the alliance existed in some institutional sense, but not in any major active form. The Balkans had to be dealt with, but those were the Balkans — not an area of major concern.

Europe could finally relax. Another world war would not erase its prosperity, and they were free from active American domination. They could shape their institutions, and they would. It was the perfect time for them, one they thought would last forever.

For the United States, 9/11 changed all that. The Europeans had deep sympathy for the United States post-Sept. 11, sympathy that was on the whole genuine. But the Europeans also believed that former U.S. President George W. Bush had overreacted to the attacks, threatening to unleash a reign of terror on them, engaging in unnecessary wars and above all not consulting them. The last claim was not altogether true: Bush frequently consulted the Europeans, but they frequently said 'no' to his administration’s requests. The Europeans were appalled that Bush continued his policies in spite of their objections; they felt they were being dragged back into a Cold War-type situation for trivial reasons.
The Cold War revolved around Soviet domination of Europe. In the end, whatever the risks, the Cold War was worth the risk and the pain of U.S. domination. But to Europeans, the jihadist threat simply didn’t require the effort the United States was prepared to put into it. The United States seemed unsophisticated and reckless, like cowboys.

The older European view of the United States re-emerged, as did the old fear. Throughout the Cold War, the European fear was that a U.S. miscalculation would drag the Europeans into another catastrophic war. Bush’s approach to the jihadist war terrified them and deepened their resentment. Their hard-earned prosperity was in jeopardy again because of the Americans, this time for what the Europeans saw as an insufficient reason. The Americans were once again seen as overreacting, Europe’s greatest Cold War-era dread.

For Europe, prosperity had become an end in itself. It is ironic that the Europeans regard the Americans as obsessed with money when it is the Europeans who put economic considerations over all other things. But the Europeans mean something different when they talk about money. For the Europeans, money isn’t about piling it higher and higher. Instead, money is about security. Their economic goal is not to become wealthy but to be comfortable. Today’s Europeans value economic comfort above all other considerations. After Sept. 11, the United States seemed willing to take chances with the Europeans’ comfortable economic condition that the Europeans themselves didn’t want to take. They loathed George W. Bush for doing so.

Conversely, they love Obama because he took office promising to consult with them. They understood this promise in two ways. One was that in consulting the Europeans, Obama would give them veto power. Second, they understood him as being a president like Kennedy, namely, as one unwilling to take imprudent risks. How they remember Kennedy that way given the Bay of Pigs, the Cuban Missile Crisis and the coup against Diem in Vietnam is hard to fathom, but of course, many Americans remember him the same way. The Europeans compare Obama to an imaginary Kennedy, but what they really think is that he is another Clinton.

Clinton was Clinton because of the times he lived in and not because of his nature: The collapse of the Soviet Union created a peaceful interregnum in which Clinton didn’t need to make demands on Europe’s comfortable prosperity. George W. Bush lived in a different world, and that caused him to resume taking risks and making demands.

Obama does not live in the 1990s. He is facing Afghanistan, Iran and a range of other crises up to and including a rising Russia that looks uncannily similar to the old Soviet Union. It is difficult to imagine how he can face these risks without taking actions that will be counter to the European wish to be allowed to remain comfortable, and worse, without ignoring the European desire to avoid what they will see as unreasonable U.S. demands. In fact, U.S.-German relations already are not particularly good on Obama’s watch. Obama has asked for troops in Afghanistan and been turned down, and has continued to call for NATO expansion, which the Germans don’t want.

The Norwegian politicians gave their prize to Obama because they believed that he would leave Europeans in their comfortable prosperity without making unreasonable demands. That is their definition of peace, and Obama seemed to promise that. The Norwegians on the prize committee seem unaware of the course U.S.-German relations have taken, or of Afghanistan and Iran. Alternatively, perhaps they believe Obama can navigate those waters without resorting to war. In that case, it is difficult to imagine what they make of the recent talks with Iran or planning on Afghanistan.

The Norwegians awarded the Nobel Peace Prize to the president of their dreams, not the president who is dealing with Iran and Afghanistan. Obama is not a free actor. He is trapped by the reality he has found himself in, and that reality will push him far away from the Norwegian fantasy. In the end, the United States is the United States — and that is Europe’s nightmare, because the United States is not obsessed with maintaining Europe’s comfortable prosperity. The United States cannot afford to be, and in the end, neither can President Obama, Nobel Peace Prize or not.

Joe Biden in Central and Eastern Europe

He will visit Czech Republic, Poland and Romania at the end of October, shortly after the official announcement of renouncement of the implementation of the BMD project in this area.

Joe Biden in Central and Eastern Europe

at the end of October, shortly after the announcement of changing the BMD plans.

The surprises are coming from Eastern Europe

or how the Czech Republic could reverse the Irish success.

Europe's lost battle

A complacent strategy focusing on slow change rather than pressing crises is losing the EU its battle with Russia for influence in the eastern neighbourhood, according to a new report by the European Council on Foreign Relations. The report predicts dire consequences for the six eastern neighbours of the EU - Belarus, Ukraine, Moldova, Georgia, Azerbaijan and Armenia - as well as for the EU itself unless EU leaders improve their act and stop placing a lazy bet on a strategy of "enlargement-lite" - ignoring that the six countries are deep in the worst political and economic crisis since their independence. This irresponsible lack of attention means Europe risks another "August surprise" with Russia, like last year's Georgian war - this time over new elections in Moldova or another gas crisis in Ukraine. Yet the EU continues to pursue a strategy of incremental, long-term reform in the region, as most recently with the "Eastern Partnership" launched in May.
The report, entitled The limits of enlargement-lite: European and Russian power in the troubled neighbourhood, is based on extensive work by researchers mapping EU and Russian power in each of the six neighbourhood countries. The authors, Andrew Wilson and Nicu Popescu, argue that the EU urgently needs to rethink its approach to eastern Europe or face a ring of failing states and an increasingly active Russia rebuilding its sphere of influence.
Wilson and Popescu say:
The EU has reached the limits of its transformative power in eastern Europe. Without the accession carrot, the countries of the eastern neighbourhood will not naturally gravitate towards the EU, as Brussels policymakers seem all too often to assume. It's time for the EU to understand that if they do not help eastern European states to deal with the crises ravaging the region, Russia will.
Distrust and fatigue increasingly cloud the EU's relationship with its eastern neighbours. With Russia's influence growing, the EU must work to save the region from turning into a quagmire of half-reformed or failing states.
While the EU dithers, Russia has drastically overhauled its foreign policy since Ukraine's Orange Revolution in 2004 and has developed new and effective ways of using soft and hard power in the neighbourhood. All neighbourhood countries, other than Belarus, trade more with the EU than Russia. But Russia skillfully uses its smaller economic muscle to gain bigger political clout through strategic investments and realist politics. Countries can do without IKEA, but they can't do without gas.
The single biggest factor identified for tarnishing the EU's soft power and standing in the neighbourhood is the restrictive, discriminatory, and opaque nature of its visa polices. Whereas Russia provides visa-free access and encourages migration, citizens of Ukraine and Moldova can no longer visit Schengen EU without visas. The EU does nothing to act on its vague long-term promise of eventual visa-free travel. For many migrant workers from the neighbourhood, it is Russia not "fortress Europe" who provides an opportunity for a better life.

The report's findings include:

Distrust between the neighbourhood and the EU is on the rise. Polling data analysed for the first time in this report shows that the EU needs to regain hearts and minds in the region. Moldova is the only neighbourhood country in which a majority of the population clearly favours integration with the EU over Russia. In Ukraine, the linchpin state of the region where EU approval is rapidly waning, 42% of the population is now in favour of integration with Russia, as opposed to 34% with the EU.
The neighbourhood is blighted by crises. Moldova's parliament has burned, Ukraine lives in fear of a Crimea flare-up, and Russian soldiers are less than 100 kilometers away from the Georgian capital. The damage caused by the economic crisis means there is a real risk of failed economies, if not failed states, on the EU border.
The consequences of the neighbourhood's crises for the EU are profound. A prolonged contest between the EU and Russia's ambitions for a "sphere of influence" over the neighbourhood is likely to increase tensions in EU-Russia relations and lead to further conflicts. Re-ignited hostilities and economic collapse could cause an influx of migrants. Several EU member states, notably Austria and Italy, are heavily exposed to the neighbourhood's imploding economies.
For the full text of the report: http://ecfr.eu/page/-/documents/ECFR_ENP_report.pdf

Recommendations to EU policymakers:
Bureaucratic strategies like the Eastern Partnership urgently need to be complemented by dynamic, country-specific measures, to help the neighbourhood states resist short-term political and economic pressures. In Ukraine, an EU "political troubleshooter" should be tasked with resolving the political conflict that is paralysing the country. In Georgia, the EU must maintain its monitoring mission and step up efforts to resolve the crippling tensions between Moscow and Tbilisi. In Moldova, which is in danger of sliding into authoritarianism following contested elections in April, the EU should couple generous offers of aid with tough demands for reform of security agencies and an end to harassment of the media and opposition groups.
The EU must rekindle its appeal to neighbourhood states. Visa regimes for citizens of the neighbourhood countries urgently need to be liberalised. Sweden - which along with Poland was the inspiration for the Eastern Partnership - should use its EU presidency to get a high level EU troika to embark on a "listening tour" throughout the region and initiate a "27+6" foreign ministers meeting. To counter the perception that it is the motherland of bureaucracy and red tape, the EU should invest in innovative ways of supporting media freedom, such as a "new media school", and offer financial assistance for wireless internet access in Moldova and Georgia.
Without sacrificing its own interests or principles, the EU must look for ways to work with Russia to make the region more stable. This will help quell notions that the EU, by striving for influence in the Eastern neighbourhood, is essentially waging an ideological war against Russia. The EU should express its support from Medvedev's proposals for a "new European security architecture".

NOTES TO EDITORS:
Nicu Popescu is a Research Fellow at ECFR. He holds a doctorate in International Relations from the Central European University in Budapest. In 2005-2007, Nicu was a research fellow at the Centre for European Policy Studies, Brussels and was previously a visiting fellow at the EU Institute for Security Studies, Paris. Nicu runs a blog on the EU's neighbourhood and Russia for the EU Observer (in English) and a foreign policy blog in Romanian. He can be reached at nicu.popescu@ecfr.eu or press@ecfr.eu, or on +44 7795 312467 .
Andrew Wilson is a Senior Policy Fellow at ECFR. Previously he was a Reader in Ukrainian Studies at the School of Slavonic and East European Studies (SSEES), University College London and an Honorary Fellow of the Royal Institute of International Affairs. His most recent books include Ukraine's Orange Revolution and Virtual Politics: Faking Democracy in the Post-Soviet World. He can be reached at andrew.wilson@ecfr.eu or press@ecfr.eu, or by telephone on +44 7920 421066 .
This report, like all ECFR publications, represents the views of its authors, not the collective position of ECFR or its Council Members.
For all media enquiries please email press@ecfr.eu or telephone +44 20 7031 1623 .
The European Council on Foreign Relations (ECFR) is the first pan-European think-tank. Launched in October 2007, its objective is to conduct research and promote informed debate across Europe on the development of coherent and effective European values based foreign policy. http://www.ecfr.eu/
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The European elections - The Europeans are making choices

When, what, and why?
Information for the media and for the voters

The nationalist movements are getting more votes and support, the expected success of the anti-immigration Dutch party being an example in this respect:

WSJ

Times on-line

Le Figaro

Anxious moments, waiting for the results in the Czech Republic and Ireland.

Media reports about candidates and general apathy.

Also, for the first time ODIHR is deploying a monitoring mission to 15 of the 27 EU countries.

In terms of e-politics, Europe is still at the beginning of a long way to catch up with the US.

Red Alert: Redefining the Global System

Stratfor

April 1

From Europe to Turkey, world leaders are coming together this week for a slew of global summits. There is much for these world leaders to discuss: the global financial infrastructure is now up for debate, the jihadist war continues to rage in South Asia, the Russians are locked into intractable negotiations with the Americans over the boundaries of the former Soviet sphere of influence, and the Turks are returning to their great power past.

These summits are not just about photo-ops and handshakes. Taken together, this array of diplomatic meetings constitute the greatest density of decision points in the modern world since the summits that brought about the end of the Cold War. This is a time when the true colors of nation-states come out, as each fights for their political, economic and security interests behind a thin veneer of global cooperation.

With geopolitical boundaries being redrawn across the world, STRATFOR has a responsibility to penetrate the media glitz and read through the lines of diluted joint statements and press conferences to explain to our readers the core issues at stake for each player involved. Through our extensive coverage in this week’s Global Summit series, our intent has been to do just that.

Midway through the bilateral summits, we have yet to see any major surprises deviating from our assessments. In the lead-up to the G-20 summit in London, the Americans and the Germans will be at the core of the debate over how to restructure the global financial system. The Americans, the British and the Japanese believe stimulus is the way to go to put the global economy back on track, while Germany, the economic heavyweight of Europe, prefers instead to export its way out of the recession. This is not a debate that will be resolved by the end of this summit (if at all), leaving G-20 members and the struggling economies watching from the outside with the impression that they have little choice but to fend for themselves in this severe economic environment.

The Americans do not just disagree with the Europeans on economics — in spite of Europe’s enthusiasm for U.S. President Barack Obama, the EU members at the summit made clear their unwillingness to make any meaningful contributions to the U.S. war effort in Afghanistan beyond a few aid packages. With the Western coalition in Afghanistan looking more and more like a one-man show, the Americans are branching out of their post-World War II system of alliance in search of new strategic partners. The United States has found one such partner in Turkey, where Obama will be wrapping up his visit on April 6-7. This will demonstrate to allies and adversaries alike that Washington embraces a greater Turkish role in global affairs that stretch from the Islamic World to the Russian periphery.

The summits thus far have given the Russians plenty to chew on. Russian President Dmitri Medvedev came to the G-20 ready to negotiate with Obama on a slew of issues that revolve around a core Russian imperative of consolidating power in the former Soviet periphery. A look at the joint statement and press conferences from the Obama-Medvedev meetings might leave one with the impression that the Americans and the Russians are ready to cooperate, but in reality, all they could really boast about was a commitment to restart talks on nuclear disarmament, leaving a host of outstanding critical issues in limbo. It is quite apparent that the United States has its hands full, but Obama still let the Russians know that he does not intend sit back and allow Moscow to have its way with Eurasia. The Russians now have a better idea of Obama’s boundaries in these negotiations, but their priorities have not changed; Moscow still has ways of grabbing Washington’s attention.

It has been a roller coaster ride thus far, with still more to come. Before Obama makes his way to Turkey, he still has to touch base with his NATO allies in Prague. With the Russians ready to play hardball and the balance of the Eurasian landmass still in flux, these meetings will be anything but bland. Meanwhile, STRATFOR’s team of expert analysts will be working to provide their members with the analytical context to find significant meaning from these summits. A redefinition of global systems is taking place that will carry well into the future, and STRATFOR is here to provide the historical and analytical record.

Hungary's Ruling Party Picks Premier

Edith Balasz, Charles Forelle

The Wall Street Journal

March 30

Hungary's ruling Socialist Party nominated economy minister Gordon Bajnai to become the country's next prime minister, a step that would put him in charge of pressing tough spending cuts to pull Hungary from the brink of fiscal crisis.

Reuters

Gordon Bajnai was picked by the ruling Socialists to replace Prime Minister Ferenc Gyurcsány.

Mr. Bajnai, a close associate of outgoing Prime Minister Ferenc Gyurcsány, said at a news conference on Monday that the reforms needed would "have an impact on all Hungarian families and every Hungarian."

The economy "has no extra months to waste before implementing measures that radically change the way the government works," said the 41-year-old former businessman.

The main task for the prime minister-designate, who would take office April 14, will be to cut public spending, particularly on state employees and on social programs such as pensions. Crisis struck in October when Hungary was unable to sell bonds to finance those deficits.

An emergency lifeline from the International Monetary Fund and other bodies has helped the country pay its bills for the time being. But those failures eventually felled Mr. Gyurcsány.

On Monday, rating agency Standard & Poor's cut Hungary's debt to triple-B-minus, its lowest investment-grade rating, saying that the IMF support was "significant yet finite" and that Hungary still faced deeply entrenched problems. The agency predicted a 6% decline in Hungary's gross domestic product this year.

After S&P's move, buyers fled the government-bond market and the forint weakened against the euro, to 311.25 forint to the euro in afternoon trading, up 2.15% on the day.

Mr. Bajnai's nomination ends a week of scrambling to find a new prime minister and avoid early elections. The ruling Socialist Party and the liberal SZDSZ party had trouble agreeing on a successor after Mr. Gyurcsány offered his resignation March 21. Under Hungarian law, Mr. Bajnai would become prime minister if a no-confidence vote against Mr. Gyurcsány succeeds in Parliament.

Write to Edith Balazs at edith.balazs@dowjones.com and Charles Forelle at charles.forelle@wsj.com

See also:

Gordon Bajnai's CV

Eastern Europe: A Crisis of Confidence in Capitalism?

Pew Research
March 5


Hungarian Prime Minister Ferenc Gyurcsany caused a stir at last weekend's European Union summit in Brussels, warning his fellow leaders that they should not allow the current economic crisis to create "a new Iron Curtain" dividing the continent.

Gyurcsany is hardly alone in thinking that the financial meltdown poses a serious challenge to European solidarity, and in particular, many observers are worried about the social and political stability of Eastern European nations, several of which have been hit especially hard by the crisis.

Survey research shows that in recent years support for the free-market system has been on the rise in Eastern Europe, especially in countries such as Poland that have enjoyed impressive economic growth.

However, compared with other regions of the world -- and in particular, compared with their Western European counterparts -- Eastern Europeans embrace free markets somewhat tepidly.


Read the full report at PewResearch.org: http://pewresearch.org/pubs/1142/eastern-europe-crisis-capitalism-poll

EU leaders hold economic crisis summit

AFP

EU leaders struggled on Sunday to overcome divisions over the economic crisis as protectionism fears and appeals of help from poorer members prompted a warning of a "new iron curtain" in Europe.

Heads of state and government were holding an emergency summit in Brussels to thrash out a united front in the face of the worsening crisis after wrangling for weeks over what to do as Europe slips ever deeper into recession.

With eastern European countries particularly hard hit, Hungarian Prime Minister Ferenc Gyurcsany called for a new show of solidarity, recommending an international support fund for the region.

"We should not allow a new iron curtain to be set up and divide Europe in two parts," he warned, proposing a fund worth up to 190 billion euros (240 billion dollars).

That was far more than the 24.5 billion euros in aid that international institutions agreed on Friday to make available to eastern European countries to help them cope with the crisis.

German Chancellor Angela Merkel, who arrived late at the summit due to a technical problem with her plane, warned against lumping EU countries into groups.

Stressing that "the situation is very different" from one eastern European nation to another, she cautioned against launching into a debate on "massive figures" of aid for the region.

The financial and economic turmoil has clobbered eastern and central European countries particularly hard because their economies are highly dependent on a steady stream of credit from western sources, which has all but dried up recently.

While Austria has been urging measures to help eastern Europe, most other countries, including the European Union's current Czech presidency have ruled out special treatment for the region.

"I don't believe that it is necessary now to separate several countries in the European Union," Czech Prime Minister Mirek Topolanek told journalists as he arrived to chair the emergency EU summit.

"I will support an individual approach of the European Union to help and support any countries or European countries, (and) not especially eastern Europe."

Many eastern European countries are also growing increasingly concerned about the spectre of protectionism looming over Europe, especially after France made aid to its car sector conditional on companies not moving production to the region.

While the European Commission deemed the French auto package on Saturday to be free of protectionism, fears lingered on Sunday that as the crisis worsens governments will resort to bailing out their industries at the expense of other countries.

"Always we must resist the temptation of protectionism," Polish Prime Minister Donald Tusk told journalists after a pre-summit meeting of leaders from nine eastern European countries.

Swedish Prime Minister Frederik Reinfeldt said that in the specific case of the car industry bailouts did little to tackle the sector's underlying problem of massive overcapacity in the face of collapsing consumer demand.

"It's not possible with subventions to take jobs from each other without facing the main problem; the fact that we have an overcapacity on the manufacturing side."

According to a draft summit statement, the EU leaders will commit to putting their vast single market at the heart of their recovery plans and stress that the EU's efforts to promote open markets are reflected elsewhere.

EU nations must "make the maximum possible use of the single market as the engine for recovery, to support growth and jobs," said the draft statement, seen by AFP.

EU leaders were also to use the summit to hammer out a common position to take to a meeting of leaders from the 20 biggest economic powers in London in early April.

How to annoy someone from Central or Eastern Europe

Stefan Wagstyl

FT

February 27

Seen from London and other places that might still be called the commanding heights of global finance, the countries of eastern Europe look much of a muchness. With the big exception of Russia, the rest tend to merge when viewed by crisis-weary traders glued to their screens. Sell one, sell all has been the motto. And down they all have gone – the Polish zloty, the Romanian leu and the benighted Ukrainian hryvnia.

Journalists too, including this one, often put everything together under one headline. “Turmoil over eastern Europe”, “Eastern Europe fears trigger rush for safety”, and so on. With little space and time what else can be done?

All this irritates friends in Warsaw, Prague and Bucharest. They cannot understand why, if they take the trouble to distinguish Spain from Portugal and Belgium from the Netherlands, west Europeans struggle to separate Czechs from Slovaks and Ukrainians from Russians (though the last one can be tricky since there are Ukrainians who think they are Russians).

In the crisis this matters. Countries doing better than their neighbours – Poland, for example – hate to be lumped with those that are not, such as debt-laden Hungary. So they plead for differentiation from bankers (and journalists). But they cannot go too far in emphasising the distinctions for fear of criticising their neighbours’ policies – and finance officials are normally too polite to do that.

So, it was a bit surprising to hear Jacek Rostowski, the very polite Polish finance minister, last week comparing his nation’s finances with Hungary’s. Explaining why he was not relaxing the budgetary purse strings, he told parliament: “There is some danger that going in the direction of increasing the deficit, we would end up like Hungary.” To make sure dozy backbenchers got the message, he said: “We are looking for a Polish answer to a Polish problem.”

Mojmir Hampl, deputy governor of the Czech central bank, struck a similar note this week. Writing in the FT, he said: “Some countries east of the Danube are suffering under the burden of huge franc-, dollar- or euro-denominated debts, accumulated either by the government or by the private sector, or both.”

Even if they are being rude about the neighbours, they are right to say important distinctions are lost. In financial terms, the region divides into three categories. First come Poland, the Czech Republic, Slovakia and Slovenia (readers unfamiliar with the territory should note that the last two are not the same, even though one regional financial institution once mixed them up, illustrating a report on Slovakia with a map of Slovenia, or perhaps it was the other way around.) These four states insist they have their external and fiscal positions under control and believe they can contain emerging difficulties in banking. No way are they going to the International Monetary Fund.

Next come countries with potential difficulties financing their external deficits, including Romania, Bulgaria, Estonia and Lithuania. One or more may have to go to the IMF. Finally, there are Hungary, Latvia and Ukraine with problems so urgent they are already on IMF support.

All except Ukraine are inside the European Union, which is of considerable help, even when some rich western EU members have been unenthusiastic about a whip-round for eastern Europe. Slovakia and Slovenia are also in the eurozone. The rest would like to join them but may have to wait until the storm blows over, when, for some, it might be too late.

More is at stake than weathering the crisis. These countries have never liked being lumped together as eastern Europe. The phrase is geographically inaccurate as Europe’s cartographic centre lies in Poland, Lithuania or Belarus (depending on whom you ask). Central Europe suits the Poles, Czechs, and Hungarians quite well. But it cannot be stretched to include Ukraine or Bulgaria.

Historically, the region is divided by fault lines – between Slav and non-Slav peoples, between western Christendom and Orthodoxy, and between the region’s former empires – Russia, Germany, Turkey and Austria-Hungary.

In fact the only time the region was united was under communism, when the distinction between unfree eastern Europe and free western Europe was painfully real. After the fall of communism, countries are becoming diverse as the common socialist experience fades. Joining the EU has not blurred these distinctions any more than it has made Frenchmen out of Germans. Quite the opposite, the liberty to rediscover the past and build an independent future has increased the variety of life.

Even casual visitors, except perhaps the participants of British stag parties, cannot fail to appreciate each country’s special characteristics: the easy charm of Prague, the grandeur of Budapest, or the half-French half-Oriental corners of Bucharest. In remote places, each nation’s uniqueness is even more apparent – in the painted monasteries of northern Transylvania, the old mosque in Pecs, in Hungary, and the wooden churches of the Carpathian mountains in Poland. Hungry tourists cannot eat in an “East European” restaurant because there aren’t any. They must choose between Hungarian (or Romanian, Polish etc) and the ubiquitous Italian. Nor can they wash down their food with “East European” beer or “East European” wine.

In fact, among the few benefits of the “Crisis in Eastern Europe” is that currency swings have made these pleasures cheaper now for most west Europeans. Except, of course, for the British, but that is another story.

Eastern member states to hold own mini-summit

Leigh Phillips

EU Observer

February 23

The European Union's eastern members are to hold their own separate mini-summit ahead of an emergency summit of all EU premiers and presidents in order to co-ordinate their approach to the crisis.

Poland called the meeting in response to the larger, wealthier nations retreating into protectionist positions, particularly regarding their car sectors. It will take place in Brussels on 1 March on the morning of the wider summit to build a common front in defence of the single market.

Poland has called for a mini-summit of eastern European states. (Photo: EUobserver)

"We want to send a clear message that we support the European Union's position in favour of defending the common market and that we are against protectionism," Poland's Europe minister, Mikolaj Dowgielewicz, told Poland's PAP new agency.

France, Italy and Spain have in recent weeks each announced packages of billions of euros in public funds for their domestic auto industries.

The European Commission, normally quick to jump on such measures as market distortions, has said relatively little, although it is currently investigating Paris' €6 billion support measures for Renault and Peugeot-Citroen. Similar packages of public monies to support car companies in Italy and Spain are also under scrutiny.

The scrum of eastern nations will also consider the region's tottering banks, which have not been supplied with the re-capitalisation or loan guarantees that their western counterparts have been, as their governments have not been able to afford such moves.

Exacerbating the crunch in the east, the western parent banks of subsidiaries in the region have substantially reduced the credit available.

Western European banks have a financial engagement of some €1.1 trillion in the region, with Austria's financial institutions particularly exposed, being owed €220 billion - equivalent to around three quarters of the country's GDP.

Over the last fortnight, Vienna has been calling for a co-ordinated EU-level bail-out of the east out of fear its loans may not be able to be paid back.

Italy, Sweden, the Netherlands, France and Belgium are also among western Europe's big lenders to the east.

However, outside Hungary and the Polish Chamber of Commerce, Austria's request has fallen on deaf ears, and Germany, likely to get stuck with much of the tab for such action, has publicly said it is opposed to an eastern bail-out.

Speaking to reporters in Berlin on Sunday, Czech Prime Minister Mirek Topolanek hinted at a growing rift between the west and the east.

"Central and Eastern European countries [have] concerns about certain discrimination regarding for instance their access to financing by means of the European Central Bank," he said.

"There is certain fear that Europe - the old EU members and eurozone countries - may create a situation that will somehow secondarily affect Central and Eastern Europe," he continued, according to AFP.

European Commission President Jose Manuel Barroso is also to attend the eastern nations' mini-summit.

Separately, on Friday, the World Bank warned western EU member states not to deploy domestic counter-crisis measures that would hurt the economies of their neighbours to the east.

See also:

IHT - EU leaders turn to IMF amid financial crisis

EU's Klaus Slams Move to Centralize Oversight

Marc Champion, Brussels,

Nathalie Boschat and Gabriele Parussini, Paris

The Wall Street Journal

February 20

President Vaclav Klaus of the Czech Republic, which holds the European Union's rotating presidency, assailed the organization Thursday as undemocratic and said it should halt any further centralization of powers.

The global financial crisis and this week's acute turmoil in Eastern Europe have prompted calls across Europe and around the world for charting the opposite course, with many leaders -- and economists -- prescribing more centralized authority to help nations weather the crisis. However, the notion of establishing central oversight bodies also has run into resistance.

European Pressphoto Agency

Vaclav Klaus, president of the Czech Republic, before his address on Thursday to a formal session of the European Parliament in Brussels.

In the financial sector, French Finance Minister Christine Lagarde said Thursday that while tighter supervision of European cross-border banks is advisable, it should come not from the European Central Bank but through coordination among national supervisors.

ECB governors have repeatedly said that the zone's central bank would be prepared to take on greater responsibility in cross-border supervision.

In an interview Thursday, Ms. Lagarde said, "One of the options [to increase oversight on European banks] would be to entrust ... the ECB with this task. The problem is that the ECB doesn't have the authority on the whole of the EU."

"In particular," Ms. Lagarde added, "there would be a large chunk of the EU, namely the U.K., a large financial center, which would fall outside the remit of this institution."

ECB President Jean-Claude Trichet and Vice President Lucas Papademos said earlier in the year that the bank is mulling increasing its supervisory role to police the continent's largest banks.

Instead, the French finance minister said coordination between national regulators involved in the oversight of cross-border banking groups should be increased, with the supervisor from the bank's home country taking a leading role. At the same time, the lead supervisor should take into account the interests of the host country's watchdog, she said.

Mr. Klaus, a proponent of free-market economics, has long been hostile to the EU as an institution and has declined to fly the European flag over his office during the Czech Republic's six-month term as president of the 27-nation bloc. He denied that he is against the EU nations, but said fewer decisions should be made in Brussels.

In an address before the European parliament in Brussels, Mr. Klaus said he wasn't yet ready to say whether he would sign the so-called Lisbon Treaty. The pact would give the EU its first permanent president, boost the parliament's role, and make it easier to set common rules.

Mr. Klaus's speech came just a day after the lower house of the Czech parliament voted to ratify the agreement.

Proponents of the treaty say it would help redress a widely recognized lack of democratic accountability in the EU.

"The proposals to change the current state of affairs -- included in the rejected European Constitution or in the not-very-different Lisbon Treaty -- would make this defect even worse," Mr. Klaus said.

The Lisbon Treaty was vetoed last year by voters in Ireland -- the only nation to hold a referendum on the document. The pact still needs to be approved by the Czech Senate and signed by Mr. Klaus to be ratified.

The remaining 25 EU nations have approved the pact, which requires ratification by all members of the bloc. Ireland plans a repeat referendum by the end of October. In a poll released Sunday by the Irish Times, 51% of respondents said they would vote for a new version of the treaty, with 33% against. The balance were undecided.

See also:

The Full Speech of Vaclav Klaus

Vaclav Klaus - Profile