Twenty years after the Maastricht Treaty, the EU has achieved impressive results, many of which have had a direct impact on Russians. These include the introduction of the euro in the majority of EU states, the opening of borders between the Schengen states, the coordination of regulatory acts and policies, including on the international stage, and the stabilization of Europe through the enlargement of the EU.
Because of its success, the EU has developed a “straight A complex.” For example, the EU believes that its legislation – which it generously offers to its partners, candidate states and neighbors – is nothing short of ideal, even though it is the result of the arduous process of reconciling the views of 28 member states. The EU also believes that it has the power to stabilize neighboring countries. But it also dreads defeat, which would damage its image as the perfect student and perceptions of its regulatory power.
In my opinion, the EU integration format largely suits all its member states. However, they have benefitted in different ways. Large EU countries were able to maintain their seats in the global club of the chosen few while also benefitting economically from a common market. Small countries improved their international standing by joining a highly respected trade bloc and an important, though less well coordinated, political player. New EU members settled disputes and received the prerequisites for steady development.
All this comes at a price, which no country likes. But it is impossible to calculate the exact balance of pros and cons of EU membership. Germany, or more precisely, German companies, gained a great deal from the common currency, but its price was the obligation to stabilize the southern European countries that buy German products.
Another illustration of the cost of closer integration is the inevitable loss of some freedom and greater dependence on the actions taken by neighboring countries.
The EU’s internal problems
The main reason behind the current EU crisis is political. Economic integration should go hand in hand with closer political interaction and the pledge to cede part of one’s sovereignty. It is not true that political integration can only begin after the creation of an economic and currency union. Quite to the contrary, national governments must cede part of their powers at each stage of integration. In a customs union this concerns relatively few issues, though, to be fair, it requires some coordination of foreign policy, as economic tools are often used to achieve political goals. The curtailment of sovereignty has a bigger impact on domestic markets, and the number of political functions ceded to the supranational authority further increases with the transition to a common currency. The problems of the currency union were above all caused by an inability to combine economic integration with political integration, in particular budget coordination and spending oversight.
Another political problem of the EU was the decision to complete integration by adopting more flexible methods of operation in the 1980s. For example, Brussels opted against adopting common norms, and instead focused on harmonizing national laws and regulations, which member countries had to mutually respect, and developing common rules only for the most important issues. In the early 2000s, the EU actively used the so-called open method of coordination (OMC), which amounts to voluntary harmonization of national practices. Meanwhile, the EU’s internal heterogeneity was growing, and these flexible methods encouraged greater diversity in national practices and ultimately undermined the stability of the economic and currency union.
In the late 1990s and the 2000s, the EU countries’ immigration policies were not designed to preserve cultural homogeneity but to meet social obligations (such as the pension system) and the ideals of openness and multiculturalism. This has accelerated social stratification in the EU countries, and this problem can only be addressed comprehensively, including economic, social and educational issues.
The southern European countries avoided collapse thanks to the assistance of the EU, and primarily Germany and France. But the crisis is not over yet. Recession and high unemployment persist in the countries that destabilized the common currency, and the situation in the EU as a whole is far from rosy. Significant mistakes were made in the efforts to rescue Greece, as EU experts have recently admitted.
The reform debates have produced a very interesting picture. Germany has advocated the position I classify as federalism for the rich – tough reforms and further curtailment of national powers in return for EU assistance. While France, especially after Francois Hollande was elected president, argued that first the EU should help southern European countries overcome the crisis and only then discuss reforms, or federalism for the poor. And lastly, Britain has tried to use the crisis to win back some supranational powers for national governments. Personally, I view this as empty rhetoric, because the UK is unlikely to walk away from the advantages of the common market and any return of powers would ultimately restrict London’s right to participate in EU decision making.
Also noteworthy is the degree to which the crisis has disrupted the alignment of forces in the EU. In the past, France and Germany were the driving force behind the EU. France provided political leadership and Germany showed the way on economic progress. But the role of France has diminished, and Germany has laid claim to both economic and political leadership. This is not always acceptable to the other integration partners, who criticize the “Germanization” of European integration.
The crisis has also moved the fault line in the EU. It used to be between old and new members, but now it’s between integration leaders and euro zone underachievers (southern European countries). At the same time, the divide between euro zone countries and outsiders is also deepening.
The EU and Ukraine: An optimal scenario
The Eastern Partnership program launched for six post-Soviet states, including Ukraine with which the EU plans to sign an association agreement, is definitely a political project. It is designed to showcase the union’s importance during the crisis and its appeal to partners. Second, it is an extension of the enlargement policy in a new context and the embodiment of the EU’s regulatory power to reform its partners’ economy and politics. Unfortunately, it has not offered them any rewards, such as the promise of accession, which has seriously undermined the program’s effectiveness.
The EU-Ukraine Association Agreement, if signed, will only take effect after its ratification by the European Parliament and the member states’ legislatures. Given Ukraine’s inconsistency, this will not be quick or easy. If and when the agreement comes into force, the prices of imports from the EU will decline in the medium term, benefitting Ukrainian consumers. But Ukrainian producers are in for a shock, and not all of them will overcome it. Neither will the EU lift anti-dumping sanctions from Ukraine. Who then will help Ukraine during the transition period?
I believe that the optimal development scenario requires joint efforts by Ukraine, the EU and Russia, which should analyze possible ways to streamline economic relations in Europe. But the Ukrainian government clearly wants to be able to bargain by maneuvering between Brussels and Moscow. This is shortsighted and will keep Ukraine off the path of sustained development in the near future.
On the other hand, Russia needs to strengthen its economic, political and cultural appeal to post-Soviet countries to ensure that its integration projects attract attention and achieve success.
Russia-EU partnership: The key to Europe’s sustainable development
Russia would be badly impacted by the collapse of the euro and the breakup of the EU, its main trade and economic partner and closest neighbor. Russia also keeps a considerable share of its international reserves in euros, and so it has an interest in helping the EU achieve sustainable and predictable development.
Personally, I don’t believe the apocalyptic predictions of the imminent demise of the EU and the euro zone. But neither do I expect major improvements in relations between Russia and the EU, though not because the conditions aren’t right for this. Quite the contrary, they are close neighbors and economic and cultural partners. But their biggest problem is that neither side has development plans for the medium term, so it is difficult to say what they could accomplish together. This is why all their debates are limited to implementation mechanisms.
Besides, neither Russia nor the EU has set a deadline for choosing what form their future cooperation will take. This inaction is undermining the desire to compromise and their negotiators’ creativity. And lastly, their relationship largely depends on their domestic policies. Russia has taken a tough stand towards the EU to show that it is an independent and self-sufficient country with a multipronged approach to the world. The EU refuses to relax over any issue, such as visa-free travel or economic ties, believing that this would be a concession to Putin’s government, whose policies are harshly criticized in the West.
It is obvious therefore that in the near future Russia-EU relations will be guided by the 1994 Partnership and Cooperation Agreement, the 2005 roadmaps for the creation of four common spaces, and the 2010 Partnership for Modernization. This is not bad, but these documents do not offer any opportunity to improve bilateral relations.
I would suggest devoting whatever time we have left to strengthening ties between lower- and mid-level officials and between our societies (businesses, NGOs and tourists), which is described in international parlance as “transgovernmental and transnational relations.” Such ties would increase our knowledge and understanding of each other and ultimately create the conditions for further improving international relations.
We can keep talking about Russia turning towards Asia, but Europe will remain a vital partner, and so both Russia and the EU should keep working to improve relations and draw closer to one another. Consensus and joint actions would ensure the sustainable development of Europe and maintain its competitiveness.
