States of the union - Polly Botsford

Despite the recently awarded Nobel Peace Prize, the position of the European Union looks precarious. As the debt crisis continues, tensions are mounting between Brussels and member states outside the eurozone.

When the EU was awarded the Nobel Peace Prize recently it raised a particularly EU-style dilemma: who should receive the award on behalf of the EU in Oslo? Should it be the current Commission President, Jose-Manuel Barroso? But that could be viewed as a prize for him rather than the EU itself; should it be the whole Council then? But that’s to brush aside the elected parliament. So should it be the parliament? But that is impractical and no one knows who any of the MEPs are. Someone even suggested it should be the EU citizens themselves represented by, say, a group of school children or Second World War veterans.

Such a quandary is not a real quandary, of course, but a symbolic one of a collective entity which is peculiarly self-conscious, renowned for not being very good at making decisions and, by definition, has to make awkward compromises (in the end the EU settled on the leaders of the three main EU institutions to go to Oslo).

With the debt crisis in the eurozone, however, the EU project has hit on a real, not symbolic, problem which has caused even the most avid europhile to call into question the shape and direction of the EU. And it is not only within the confines of the eurozone that EU relations look strained. In some member states outside of the eurozone (there are ten of them in total) tensions have mounted. There have been spats with the governments of the most recent joiners to the EU such as Hungary where its prime minister has spent the past year openly criticising the EU – and vice versa, and such as Romania and Bulgaria where ongoing EU monitoring is creating suspicion and resentment. Then there are the likes of the Czech President, Vaclav Klaus, whose negative views on the EU project are so strong that he has decided to write a book about it, and Britain’s Coalition Government whose education minister has reportedly told friends that he wants the UK to leave the EU altogether.  

It is no surprise that the debt crisis in the eurozone has had a significant impact over its borders into its non-euro EU neighbours: not only is it their biggest trading bloc, but there is also significant cross-border investment (the Greeks have invested heavily in Romania and Bulgaria, the Austrians into Hungary, for instance) and their own banks are inextricably linked with banks within the eurozone even if they have not been directly lending into it.  


We believe that the EU has reached a critical moment in its development
Open Europe think tank


Alongside the economic effects of the debt crisis there has been political turmoil in some of these countries too. In member states such as Hungary and Romania, as austerity measures and contracting economies have taken hold, so there have been power grabs at the top and protests on the streets. Criticism of the EU has come from governments and people alike – and the EU has had a few words to say back.

The starkest example of this has been Hungary which, under the guidance of the authoritarian Prime Minister, Viktor Orban, changed its constitution in an attempt to concentrate power in government hands.  This included reducing the compulsory retirement age of judges from 70 to 62 thereby enabling the regime to fill the vacated judicial posts (estimates are that over 200 judges were affected) with their own people. It also created a new post of president of the National Judicial Office into which many new powers have been poured.

The European Commission responded by launching infringement proceedings against Hungary at the beginning of this year. These proceedings are deliberately designed to allow parties to negotiate through a series of ‘notices’ and ‘letters’ before actual court proceedings are started. But in Hungary’s case, it went all the way to the European Court of Justice (ECJ). Hungary has backtracked on some of the issues, for instance, on the retirement age of judges whereby it has agreed to take the age back up to 65. But the Commission is still pursuing the country through the courts, and the ECJ recently decided to continue its investigations despite Hungary’s concessions.

There were similar concerns from the EU when the Romanian government, led by its Prime Minister, Victor Ponta, used a parliamentary majority to suspend Romania’s President, Traian Basescu, from office, and to change the impeachment rules to be able to impeach him more easily. There was public criticism from the influential German Foreign Minister, Guido Westerwelle, of Ponta’s actions (Westerwelle told the press that Ponta was acting in violation of ‘European values’) as well as from Merkel’s office.

Romania is still the subject of what was supposed to be temporary monitoring and reporting by the EU on matters of judicial reform and the fight against organised crime under the so-called ‘cooperation and verification mechanisms’. These were introduced at the time that the country acceded to the EU (and also for Bulgaria) and their continuance reflects ongoing concerns from Brussels.

Romania and Bulgaria are in almost permanent stand-off with the EU over them gaining Schengen status (the status which entitles citizens to cross EU borders without a passport). The EU had originally said that the countries had failed to meet various technical standards but then later the Commission, and in particular, the Dutch, stated that the countries had also failed to meet standards guarding against corruption and organised crime. In one particularly acute phase in these discussions, the Romanian authorities blockaded trucks of imported tulips on the Romanian border.  The EU has said in the latest round that until greater political stability is restored, Schengen status is off-limits, which, for Romania, means waiting, at the very least, until after its legislative elections this month.

Another bone of contention is the meting out of IMF loans to member states. Because the actual financial bases of IMF loans derives from the EU, it has become inextricably linked with the granting of, and in some cases refusal of, IMF loans; member states such as Hungary, who have had a loan turned down, blame the EU as much as they blame the IMF for their misfortunes.


It is easy to blame the EU because it feels like a distant power. This involves no intellectual capital at all
Professor Jerzy Makarczyk
Former Polish Foreign Secretary; ECHR and ECJ judge


When Hungary’s loan was turned down (because Hungary had introduced a new law threatening the state capture of the country’s central bank by putting the appointment of its head in the government’s hands), Orban publicly accused the EU of treating it like ‘a colony’ and declared his refusal to ‘live according to the commands of foreign powers’; in October his government launched a nationwide ad campaign calling for a ‘nem’ against any demands for austerity by the IMF.

Professor Jerzy Makarczyk travelled to Hungary with the IBA as part of a fact-finding mission earlier in 2012. A former judge of the European Court of Human Rights and the European Court of Justice, and former Secretary of State for Foreign Affairs of Poland, Makarczyk believes that this anti-EU stance is to be expected:  ‘It is absolutely normal in every state that these governments are looking for the guilty ones and that is why there may be some anti-EU sentiment.  It is easy to blame the EU because it feels like a distant power. This involves no intellectual capital at all.’

But another leader in the region, known for his vociferous dislike of the EU, Klaus, would seize on the notion of ‘a distant power’.  His argument is that the EU does not feel like a distant power to member states, it really is one and, what’s more, it is a power with no legitimacy, as he proclaims on his website: the EU is ‘post-democratic’ and is witnessing ‘the undemocratic consequences of the denationalisation of Europe.’

Though Klaus is known in his country for having an eccentric standpoint, there are many who agree with him on his attitudes to the EU, as Tomas Rychly, managing partner of Austrian-based law firm, Wolf Theiss, and a member of the IBA European Regional Forum, says: ‘though the Czech Republic is a quiet nation, there has been criticism of the effects of the EU’s fiscal treaty as there has been elsewhere.’

For it is not only the leaders who are having strained relations with the EU; on the streets there has been a robust response to the eurozone crisis too. Romania and Bulgaria saw protests against EU-driven austerity measures; when the fiscal treaty was signed earlier this year, the unions organised protests in Romania’s capital, Bucharest; in Prague there were demonstrations in the streets for the first time since the 1989 revolution.


     

Will anyone still use the Eurostar if Britain le aves the EU? 

The crisis in the eurozone has created fertile ground for eurosceptics in the UK (as one tweeter so charmingly put it: ‘Unelected EU fools in their ivory towers with fat salaries and pensions supported by idiot Europhiles killing Europe’). Recent policy moves by the Coalition Government (such as opting out of the 135 EU measures relating to policing and crime) and comments in the press (such as when Michael Gove reportedly told friends that if there was a referendum on the EU he wou ld vote for the UK to leave it) have indicated a change in direction for Britain and its relations with the EU.

Opinions are, as one might expect, divided. Clara O’Donnell, research fellow at the think tank, the Centre for European Reform, says that this will hinder the UK’s ability to influence at the top level: ‘The Coalition Government has made a significant departure from previous governments. Until recently, Britain wanted to be in the room whilst decisions were being taken even if they were not part of the eurozone, and they were successful in that and influenced policy accordingly, such as the liberalisation of financial services. But now the Coalition has changed tack. They now say: “We know that for the eurozone to survive you will need greater integration and we won’t be part of that and we don’t even want to be in the room,” and it is that last bit which matters.’

On the other side of the fence is Open Europe, another think tank, also calling for reform of the European Union but in a slightly different direction, as it says: ‘We believe that the EU has reached a critical moment in its development. Globalisation, enlargement, successive ”No“ votes in EU referenda and the eurozone crisis have discredited the notion of an ‘ever closer union’ espoused by successive generations of political and bureaucratic elites.’
What is less clear is how Brussels views Britain as a result. O’Donnell says that the UK is held in ‘very high regard’ in Brussels and that many other member states look to Britain for support in negotiations and drafting.  She says EU wants to see Britain ‘engaged and constructive’ even if they are not in the eurozone.

 

Where once the EU was considered at worst a regulatory burden and at best a donor of substantial grants and funds, now it is seen as strangling suffering economies and the funds and grants may yet dry up. As Ruben Zaiotti, an assistant professor of Political Science at Dalhousie University in Canada, says: ‘These concerns on the streets, in the cafes and blogosphere, reflect a disappointment of an institution they believed in or an institution they were at best neutral about. Now that they are directly and negatively affected by the crisis in the eurozone, they do care about it.’

This switch from positive to negative demonstrates that attitudes are closely linked to economic instability (regardless of whether EU policy is actually to blame for that instability). In Poland, for instance, where the economy had managed to avoid, until very recently, the problems in the eurozone (mainly because it is a relatively large economically independent market and not so dependent on exports), euroscepticism has not surfaced. But, as Dariusz Wasylkowski, partner at the Warsaw-based firm, Wardynski & Partners, and an advisory board member of the IBA European Regional Forum, warns, if the Polish economy goes into recession next year, then ‘the eurosceptic engine will gain momentum.

Yet looked at more closely most of these protests at their core were not against the EU pure and simple, more they were against their own national governments and their perceived incompetence or, worse, corruption. Protestors outside Budapest’s opera house carried a slogan on their march: ‘the phantom of the failure’. But the figure alongside that slogan was not Merkel or Barroso or Van Rompuy, but Orban.

And in Bucharest, protestors did complain of the ‘brutal’ austerity for which the EU is held responsible but they also waved a flag which they had deliberately defaced by cutting a circle out of the middle of it. This was not the EU flag which they had defaced but the Romanian flag and it was the Romanian’s ancient coat of arms which had been cut out. This disfigured flag was of huge significance for it was the same symbol which Romanians used during the revolution of 1989 against Ceausescu.  
It is also worth bearing in mind that protesters from former communist states look at the EU in relative terms, as Rychly says of the Czech people: ‘when we compare the EU with what we had before, the communists, we prefer the EU.’

Of course, these countries are destined to join the eurozone. Of the ten member states currently outside the eurozone, there are only two which have chosen to opt out of the euro indefinitely, namely the UK and Denmark. The rest, Hungary, Romania, Bulgaria, the Czech Republic and Poland in Eastern Europe, and Lithuania, Latvia and Sweden in the north, must sign up to the euro, (their Accession Treaty obliges them to do so) and are timetabled to join over the next few years.  For these eurozone-in-waiting countries, any criticism of the EU’s handling of the eurozone is with an eye to the future and how not to let it happen again.

And the future may look very different: perhaps the next generation of EU citizens will be more unambiguously EU-friendly than this one. Wasylkowski, for one, thinks so: ‘the younger generation see the advantages of a united Europe. They are often better educated and more open-minded but also more mobile and many will have seen other parts of Europe and may feel more “European”.’

Indeed, some see the EU as a safety net, as the only way to police their own national governments and are frustrated that the EU does not take a tougher line: the Hungarians expressed disappointment that when Angela Merkel took to the stage with Orban to make a joint press statement at the most recent EU summit, she did not take the opportunity to give him the public dressing down which they believe he deserves. As Professor Makarczyk says: ‘Hungary is in crisis by itself and the country needs the EU not only because of the funding but because it is Hungary’s only hope against the regime. Any good will can only be brought about through EU pressure. In Poland, when we had an authoritarian government, there might have been a coup but for the EU when the military knew they couldn’t act.’


When the Czech people compare the EU with what we had before, the communists, we prefer the EU
Tomas Rychly
Managing partner, Wolf Theiss


Bryan Jardine, a resident of Bucharest and managing partner of Wolf Theiss’s Romanian office, agrees. He says: ‘it would be helpful if the EU could continue to put pressure on Romania’s politicians to stop their games. In the upcoming elections in December, the ruling party may be punished for its attempted ousting of the president.’

Perhaps this pressure will come; perhaps much of the tension between Brussels and member states is frustration felt by Brussels at countries where the political culture is so very different: of authoritarian regimes where, for instance, altering voter registration is being used as a means of entrenching power. None of that has really mattered up until now, until the crisis in the eurozone; because the crisis brings to the fore the question of the ‘ever closer union’ (the aspiration written into the original treaty which created what is now the EU).  

In June 2012, the Gang of Four in the EU (which is the president of the European Council, Herman Van Rompuy, of the European Commission, Jose-Manual Barroso, of the European Central Bank, Mario Draghi, and of the Eurogroup, Jean-Claude Juncker) published a plan to federalise the eurozone. It was a bold and radical step and perhaps will never see the light of the day.  But if it is taken up, even in part, then greater political unity will result. When the member states of former eastern Europe join the euro over the next few years then they will be part of this federal plan; Brussels is acutely aware that there are aspects of the former communist countries which will fit uncomfortably in that federation.

The fact that the EU is often referred to as ‘the EU project’ tells us much about how it is viewed: for its proponents, it is as yet unfinished, work in progress. For its critics, it is a temporary structure whose time is up. Either way, the crisis in and outside of the eurozone has created one of the biggest challenges to that project, for all member states.

 



Polly Botsford is a freelance journalist. She can be contacted at polly@pollybotsford.com