The EU is facing an historic moment as it expands to include Eastern European countries but the task is still only half done, says Carl Bildt.
It is truly history in the making. The European Union is in the process of expanding from its previous number of 15 member nations to 25. The history of European integration has its roots in the immediate post-war experience of some of the countries that had been most affected by the two world wars. At its source, it was an attempt to achieve a lasting reconciliation between France and Germany – the enemies of 1870, 1914 and 1940.
Over time, other strategic tasks were added. After a decade and half the UK joined, indicating a strategic shift in its orientation that some might say hasn’t been fully completed yet. And as the authoritarian regimes in Athens and on the Iberian Peninsula fell, the consolidation of democracy in Southern Europe was added to the great tasks of the process.
But the truly seismic shift in European history was the one that happened in 1989 [the fall of the Iron Curtain]. Since then, I believe it is appropriate to talk about an entirely new phase of European integration.
It was in Maastricht in the Netherlands in late 1991 that the leaders of Europe redefined, retargeted and relaunched the efforts at European integration. Since then, the Maastricht agenda has dominated the politics of Europe.
Eastward expansion
A major effort at financial consolidation paved the way for a much wider common currency from 1999 onwards than most had anticipated.
And the magnetism and model of the EU was critical to the success of the most significant peaceful regime change that modern history has seen, as 10 former Soviet-bloc countries of approximately 100 million people set up, step by step, the institutions of the rule of the law, pluralist democracy and modern market economies.
It is easy to underestimate the magnitude of this task. To topple a dictatorship and organise an election is relatively straightforward. But here we have seen a comprehensive reshaping of societies, institutions and economies in little more than a decade that is without historical parallel.
Only a decade ago, few thought that this was going to be possible.
Not everything is perfect. Administrative structures in the new member countries are sometimes not as stable as one could have wished for. In some, there are open issues of corruption. In others, political stability still leaves something to be desired, creating room for the politics of populism. But taking the broader view, there is no doubt that it is the positive that dominates the picture.
Western reforms
At the same time as this is happening, the nation states of Europe are seeking agreement on a constitutional treaty – more than the four treaties so far, but still somewhat less than a constitution – that will define their common system of governance for the future.
The task is a formidable one. We are setting up a system of common governance that will cover up to 30 self-aware nations, more than half a billion people, the world’s largest integrated market, as well as the world’s second most important currency. And it must also meet high standards of both efficiency and legitimacy.
The 1989 agenda is by no means finished. I belong to those that believe that we are – at the best – half way towards fulfilling the tasks that history has thrown upon us in that important year. The nature of the task will remain – to build structures of peace through the sharing of sovereignty on a regional base, and to improve the conditions for prosperity by a commitment to open markets and ongoing reforms.
I belong to those who firmly believe that there is no real alternative – if we are truly interested in a genuine peace lasting for generations to come – than to build a federation of nation states, encompassing all of Europe to the west of Russia and the Ukraine, stretching from the Arctic to the Mediterranean.
It will be important in the years ahead to refocus on the issues of economic reform. The new members are entering at an economic level where per capita GDP is 40% of the average of the “old Union”. It should be a firm goal to make it possible for them to effectively close that gap within a generation.
The experience of the European Union so far – with Ireland being the star performer – has clearly showed what is possible, although the early decades of Greece also demonstrated that opportunities could be missed as well.
Mixed progress
We already see some new European economic tigers appearing. Early reforms in Estonia put that small country on a path that successive changes in governments have not fundamentally affected. On the trends of the last few years, Estonia could well overtake Finland – which is one of the European success stories of the 1990s – within a decade and a half.
Recently, Slovakia has given radical reform efforts in the new member states a new impetus with its 19% tax on everything, thus producing a system of predicable and low taxes. It has become the new magnet for investments by the global automotive industry: in just a few years Slovakia will be producing more cars per capita than any other country in the world.
If successful over a slightly longer period, it can be expected that the Slovak model, in this respect, will have a profound impact on other countries, primarily in Central Europe. The Baltic countries are in many respects already there.
In other countries, the situation looks somewhat more problematic. After a spectacular period during the 1990s, Poland has entered a period of uncertainty in economic policy.
It is important that the policies of the EU, in the coming years, are shaped in such a way as to create the maximum possible room for the necessary reform and growth policies in the new members. Efforts to try to put different social standards on the agenda will, in effect, be efforts to endanger the economic possibilities of the new Europe and preserve the existing economic and social divisions in Europe.
Wider horizon
The enlargement process goes on. According to plans, accession negotiations with Romania and Bulgaria should be concluded by the end of this year, making it possible for them to accede in 2007. Croatia is hoping to be able to enter within the next few years. Macedonia has also applied for membership.
The great issue on the horizon is Turkey. Although a decision on opening accession negotiations is likely towards the end of the year, the actual process of accession is likely to take a long time. It is easy to see some of the pitfalls, but apart from the strategic objective of trying to bridge the divide with the Muslim world, one should not overlook the economic potential. The demographic future of the EU of 25 is a future with a declining workforce, in contrast to the United States. With an expanding Turkey as a member, that picture will start to change.
It is an enormous amount of work that has been accomplished since 1989 – but we are, at the best, half of the way there. There are no guarantees that the next few years will be plain sailing in every respect. We are likely to face a number of referendums on the constitutional treaty, and it is more likely than not that there will be setbacks that will have to be dealt with. For some countries, it might even involve making the fundamental decision on whether to remain in the union at all. Ratification might well take a longer time than most people anticipate at the present.
Slowing down
On the economic front, there is a risk that if reforms are not successful in dealing with the high structural unemployment, and relatively modest growth rates currently affecting key areas of Europe, enlargement fatigue might set in, slowing down the rate of progress towards the ultimate goal. With the conflict-ridden countries of the Balkans and Turkey on the agenda for the next few years, it is obvious that we are entering much more difficult terrain.
This is the year of great transition in Europe. A new European Parliament, new member states and a new Commission means that all the cards in Brussels are reshuffled in an unusually profound way. We have never before seen change of this magnitude.
In this period of transition and change, it is important to have the compass oriented in the right direction. The extension of open societies and open economies to the former dictatorships of Central Europe and the Baltic area is a truly historic achievement that we have every reason to be proud of. But the task is not completed. In some sense, the ultimate success will be decided by how we handle the rest of this decade.
Carl Bildt is a former Swedish prime minister and was the European Union’s special representative to the Former Yugoslavia. He is now involved in international public policy, while also serving on a number of company boards.
