Friday, January 16, 2009

The European Union's Troubled Frontier

When many of the states of the former Warsaw Pact joined the European Union in 2004, followed by the addition of Bulgaria and Romania in 2007, nobody dared think that a return to the tumultuous days of the “Wild East” is possible. Certainly, it seemed like the stuff of surreal James Bond action movies—sooo 20th century.

Well, think again.

Within a span of four days in the last week alone, protests were in full blaze across Eastern Europe: first in the Baltic stag party hub of Riga on January 13 (pictured), followed by a mutiny in gas-deprived Sofia in the Balkans, and culminated by a failed coup de grace, or at least for the moment, in the Baltic cepilinai-devouring city of Vilnius—the capitals of Latvia, Bulgaria, and Lithuania, respectively.

The world, and Europe in particular, watched these events unfold. But there was little the European Union could immediately do in these small countries that have been hit exceptionally hard by the tsunami-like global economic meltdown.

The protestors’ qualms and demands were straight forward enough: corruption and low living standards in Bulgaria (not to mention a dearth of heating gas), a diminishing quality of life and rising unemployment (temporarily alleviated by a multi-billion euro IMF bailout) in Latvia, and a failure of the new majority in the Seimas (Parliament) to fulfill its economic promises in Lithuania. Most of the protestors—and the greater citizenry—rightfully want their governments to step down or hold early elections.

The rest of the world, and first and foremost the politicians of the aforementioned countries, should heed their restive citizens’ outcries, not least because such problems have been years in the making. To ignore protests of the kind experienced this past week may by easy in countries with a combined population of 14 million people, but it would be an unforgivable mistake in the long run. So what should the leaders of these states—and heads of other countries in the greater region—actually do (besides holding early elections if that is what the majority of their people indeed demand)?

First, the governments should be held more accountable than they have been. For example, the embarrassment that Bulgaria suffered by having had billions of euros in aid from the EU withheld due to a failure to effectively clamp down on corruption is a problem that has festered too long in this Balkan state. Quite understandably, this money could have been used to raise pensions or increase the minimal wage in such a turbulent economic climate. Intriguingly, the Turkish squat toilet that the Czech presidency has used to stereotype Bulgaria may have actually had an underlying jibe to it: this is where money that could have been yours has gone. Thus, is it really surprising that Bulgarians want an answer later rather than never?

Second, economic prudence and responsibility should be paramount for countries with such breakneck rates of growth. The “Baltic Tigers,” on average, have been growing at some 8% per annum for most of the last decade—and Estonia and Latvia often faster than that. Unfortunately, the prophecy that what comes up must come crashing down rang hollow to politicians’ ears. Nearly two years ago, the International Monetary Fund and other economic statistical organizations labeled as worrisome the Baltic states’ twin success story: surging economies (largely thanks to cheap and increasingly available credit) and their resulting booming property markets. It warned Estonia and Lithuania—and, chiefly, Latvia—that hard landings were all to real if competent policies were not enacted soon. Hence it is not surprising that particularly Latvia, the EU’s fastest growing economy at (+)10% in 2007, will be its most lethargic in 2009: its economy is expected to contract by about (-)5%. Its politicians paid little attention to such warnings, quite sure that EU membership would result in untold economic miracles and aid. This has proven to be a painful blunder.

Third, the region’s politicians have to learn how to compromise. This may have been exemplified without blemish by the failure of Russia and Ukraine’s leaders to reach a gas deal in a conflict that was first manifested in 2006, but one whose seeds were sown during Ukraine’s Orange Revolution one year earlier (read the post below for more background history). True, neither country is an EU member, but the failure of leaders to represent their people’s interests is only too true in neighboring EU member states. Hungary’s unstable government, which has been running budget deficits seemingly forever, was embroiled in political chaos since 2006 when Ferenc Gyurcsany, its Prime Minister, admitted to having lied to his people. For others such as Poland and Slovakia, at present the EU’s healthiest economies, the governments of both countries are increasingly acrimonious (the former) or downright racist (the latter). Even the Czech Republic, with a pro-EU parliament but eurosceptic President, has come to represent the EU’s eastern half as a Pandora’s box of political indecisiveness rather than being a paragon of political efficiency.

Indeed, the ground was always ripe for such (un)popular rebellions if economic growth had slowed sharply, as it has now. Yes, the parliamentary coalitions in Eastern Europe are almost always motley (Poland), tenuous (Latvia), or downright xenophobic (Slovakia), if not a combination of all of the above. Perhaps this is what we should expect from new democracies. Alas, pan-European problems such as these cannot help the European Union’s bigwigs but question if they made a mistake in accepting the eastern region’s countries as full-fledged members too early.

Luckily, at least they can rest assured that such bedlam will not break out in Estonia. If judging by stereotypes is anything to go by, as the Czech presidency unproductively poked fun at last week, then Estonians’ super slow action-cum-reaction demeanor to all things not overtly Russian may result in them noticing that the Baltic Tiger economic miracle is gone just as things start improving again.

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