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EU Enlargement: Security Considerations

Claudiu Sonda

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The very recent results of the EU Parliamentary elections should determine us to reflect on the success of the European project so far. A large proportion of the good results  the radical right and left obtained have to do with the frustration and fears that member states’ citizens share in relation to the federalist idea. More than this, the propaganda and mythology associated with the damage that the enlargement waves brought to the Union, especially in security terms are to be ‘blamed’ for the rebellious voting behaviour.

Whenever it comes to discuss about the enlargement process of the EU and the security it brought with it, a strong debate emerges between promoters and skeptics. In this short writing, I will present a few reasons why I consider enlargement to be a policy full of security essence and also why I consider a larger EU as a more stable and safe project. Nevertheless, I am compelled to also share in the view that too much expansion in other political actors’ ‘backyard’ could become a source of bad external relations and regional or international instability.

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Source: President of the European [email protected]

I will begin with what I call the power of example of the EU. This first argument suggests in short that the EU proved how soft power can replace hard, violent power in achieving its goals. The consequence would be that the world could be a bit safer if the need for military is reduced. Why is that? First, because obviously if non-military action is enough, then it means that violent conflict was absent in the first place. Second, because a reduced use of weapons lightens the armament and security dilemma.

But is the EU a good example of soft power success? With regard to enlargement, the common understanding is that the EU did not force Central and Eastern European countries to join. They have been drawn into cooperation schemes by EU’s power of attraction. Accession to the EU represented a seat at the table of decision-making, access to funds, political legitimacy and economic credibility: ‘membership of this most exclusive European club’. This type of ‘civilian’ power politics can be seen as a pragmatic but peaceful foreign policy, one based on political negotiations, regulations, and economic leverage. One that could truly replace force.

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Source: Aleksander [email protected]

The second argument is that enlargement brought security by handling the neighbouring unstable countries. By adopting the aquis communautaire, these ex-Soviet countries became ‘European’ and were absorbed in a post-modern system characterised by security, transparency and interdependence. Enlargement was intended as a civilizing process, and by moving the level of relations between states from external to internal, actors became ‘domesticated’. The way to achieve this leveling among different member states was done through the so-called conditional accession and through a high level of EU intervention in the national affairs of the applicant countries.

Even the official aim of the enlargement was for Western Europe related to security, prosperity and democracy. There are strong reasons to believe in the success of such an objective, at least when thinking of security. For example, local conflicts based on ethnicity or territorial claims never took place in Central and Eastern Europe, which ought to be applauded more, considering its potential. Moreover, it was NATO that securitized the path the EU enlargement by expanding its protection to Central and Eastern Europe beforehand.

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NATO-EU summit Source: President of the European [email protected]

Finally, EU’s Internal Security Strategy projects a future security model centered around judicial and enforcement cooperation, intelligence sharing, border management, integration and solidarity. With countries like Romania and Bulgaria still not part of the border-free Schengen Area, the EU seems to be serious in its intentions to fully integrate members only based on their satisfaction of internal security expectations. Furthermore, the restrictions on the two countries with regard to the free movement of workers are also proof that the EU chose first to create the proper path for a secure final enlargement, and only after 7 years to put together its last piece. Keeping all these in mind, the Internal Security Strategy and the restrictions to new member states, we can notice how the security agenda is being incorporated into the enlargement process to create a safe and prosper Union.

The opposing view is that there is also such a thing as too much enlargement, especially when accompanied or preceded by NATO expansion. As mentioned earlier, the two appear to be going hand in hand. Even if this were not the case, meaning that a military expansion would not occur, the idea that economic power – and its product, an economic sphere of influence-replaces hard power still allows to understand the defensiveness of political actors that could be affected by an enlarged EU. To be more specific I will refer here first to an increase in the military interest of NATO in the Caucasus and the Black Sea Region. Second, I will consider the economic aspects of attracting Ukraine to the EU and issues related to energy diversification that could alter EU-Russia relations.

As stated in the Report on EU’s Security Strategy, under the ENP the EU expresses its strong interests in Ukraine, the Republic of Moldova, the Black Sea, and Georgia, as well as famously in Turkey. Furthermore, NATO’ s enlargement policy considers Georgia and Ukraine as future members. Turkey is already part of the organization. This year, Moldova is expected to play an interesting part in NATO’s 10 year celebration of Eastern European expansion. Considering the Cold War history, these movements might appear as NATO-US encirclement to the Russian Federation. There has already been present a strong tension between the US and Russia caused by the placement of the Missile Defense System in Europe, which could go beyond a turning point after the recent events in Ukraine. In this atmosphere sewed with mistrust, any EU enlargement attempt would definitely be perceived as security threat to the Russian Federation, which would ruin security aspirations.

Lastly, Europe is energy dependent and this dependency is increasing steadily. This is a major factor in EU-Russia relations which obviously requires a diversification of sources of supply and transit routes. The alternative to Russian energy could be Azerbaijan’s. The current winning project is the Trans- Adriatic pipeline which replaces the famous Nabucco project. Greater involvement of the EU in the South Caucasus could be seen as an intention to replace Russia as number 1 energy supplier, which could also bring more Russian tough policies on its southern neighbors, thus destabilizing that region. In the case of Ukraine, a free trade agreement is seen by Russia as dangerous to its own market because of a pre-existing free trade regime between the former members of the Soviet Union. Current events in Ukraine show us how the cost for an association agreement with the EU is the grave deterioration of EU-US-Russia relations, which reminds of the Cold War.

To conclude, I would say that achieving international or regional security is the product of good intentions, ideals and prudent calculations. Enlargement of the EU to Central and Eastern Europe is an example of such good intentions and strategic thinking. Stability and order have been brought and maintained so far on the Old Continent. However, European policy-makers and leaders must also keep in mind that other powers in the international system have interests of their own and that history is is still present in the collective memory of nations. Because of this, boundaries to expansion -both geographical and cultural ones – must be put in place. Even if EU’s imperialism is a benign one, as Zielonka puts it in Europe as Empire, the risk to instability and conflict is too great when trying to project too much power, soft one included.

References:

• Cooper R., The new liberal imperialism, Observer Worldview Extra, 7 April 2002;

• Internal Security Strategy for the EU, Council of the European Union, 2010;

• Report on the implementation of the European Security Strategy, 2008;

• Rees W., The US-EU Security Relationship, 2011, Palgrave Macmillan;

• Zielonka I, Europe as Empire. The Nature of the Enlarged European Union, 2006,

Oxford University Press.

• Bbc.com, website: http://www.bbc.com/news/world-europe-25108022

• EU Commission, Memo, End of restrictions on free movement of workers from

Bulgaria and Romania, 2014;

• euractiv.com, website: http://www.euractiv.com/energy/eu-favoured-nabuccoproject-

hist-news-528919;

• NATO, website: http://www.nato.int/cps/en/natolive/topics_49212.htm;

• novinite.com, website: http://www.novinite.com/articles/159230/Capitals+of+US,

+EU,+Moldova+to+Host+NATO%E2%80%99s+Enlargement+Anniversary;

• reuters.com, website: http://www.reuters.com/article/2014/03/21/us-ukrainecrisis-

eu-agreement-idUSBREA2K0JY20140321;

• voiceofrussia.com, website: http://voiceofrussia.com/2014_03_20/US-using-missiledefense-

system-in-Europe-to-make-Russia-change-its-Ukraine-policies-0975

 

Passionate student of IR and European politics with an interest in developing a high-level expertise in International Security and geopolitics.

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Economy

Manufactured goods and industry: a symbol of German decline

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German industrial power and quality levels became a national symbol in the latter part of the 20th century, and to some extent the lifeboat of post-war reconstruction. Even throughout the industrial rise of Asia at the end of the century, the German island remained sanctuarize from the competitive attacks of Eastern developing countries. But several German industries have been increasingly struggling in the past decade and gasping for air. Is Germany at the end of its prosperity cycle, for having rested on its laurels?

Germany, along with its wartime Japanese ally, impressed the world with its rise from its ashes in the latter half of the 20th century. Starting with the Marshall plan quickly followed by self-standing growth, Germany speedily re-built its industrial capacity, and its reputation for top-notch quality. As soon as in the 1960s, German brands invaded the global market with their sturdy reputation preceding them: if the product said “Made in Germany” then the customer could feel sure there was nothing better on the market. At the end of the century, a large share of the top global engineering segment was German: BMW, Bosch, Rheinmetall, Merck, the list is endless. Economic historian Werner Abelshauer describes [1] how the label “made in Germany” became a symbol of quality: “The label “Made in Germany” ultimately developed into a sign of quality, though it took a while.” But the era during which Germany levitated above the rest of the industrial world is coming to an end. While Germany remained unharmed by Asian competition for longer than its neighbors, it is now fighting on a level field with all other manufacturers in the field, and worse: it’s not doing all that well. Economic reporter Chris Papadopoullos placed [2] the start of the decline during the year 2015: “Total production, which includes construction, manufacturing and mining, dipped 1.2 per cent in August compared with July, German statistical office Destatis said. The production of capital goods fell 2.1 per cent while consumer goods dipped 0.4 per cent. Construction and energy output also posted declines “.

Of course, the Volkswagen scandal caused a major dent in the image of industrial Germany. Consulting group ALVA published an extensive study of the post-scandal consequences on the image of Volkswagen and German quality altogether, and wrote [3]: “After the emissions scandal revelations, we can see a very different picture, with all Advocacy drivers having moved into negative territory to a greater or lesser extent. This is indicative of a reverse halo effect in which a negative emotional response to a company due to an erosion of trust spills over and clouds rational judgement of all of its traits.” Until then, German car manufacturers had been above suspicion, thanks to their reputation for industrial quality and business performance: when one is the best, there is no need to cheat. Through the fraudulent emissions revelations, Volkswagen, one of Germany’s flagships, showed that “Made in Germany” wasn’t all it was cracked up to be, and that they had flown too high on borrowed wings. The scandal shed doubt over other German flagships in its wake, as reported [4] by automotive journalist James Mills: “German media allege that US authorities have discovered that Daimler, parent of Mercedes, developed software for its diesel-powered vehicles that would shut down vital emissions equipment after driving just a short distance. Daimler is reported to have come up with programs that would shut down certain functions of the selective catalytic reduction filter after just 16g/km of NOx is admitted.” And the damage extended beyond the automobile world, into the whole industry.

Of course, if the problem were limited to the automobile world, Germany could survive on the others. But the slipping in industrial standards, the resulting loss of performance, and finally the need to resort to unsavory business practices to survive, seems to have contaminated all fields of the German industrial apparatus. German shipbuilder TKMS recently illustrated the downfall: after decades of occupying high grounds on the submarine market, the engineering firm is facing such a severe string of problems that it is facing being sold off entirely and scrapped from the national heritage. After losing a major submarine contract in Australia, it delivered a few corvettes to the German Navy, which simply refused them on the dock, due to quality standards being overstepped. Wall Street Journal William Wilkes reported [5]: “Germany’s naval brass in 2005 dreamed up a warship that could ferry marines into combat anywhere in the world, go up against enemy ships and stay away from home ports for two years with a crew half the size of its predecessor’s. First delivered for sea trials in 2016 after a series of delays, the 7,000-ton Baden-Württemberg F125 frigate was determined last month to have an unexpected design flaw: It doesn’t really work.” Germany’s submarine fleet, also built by the same shipbuilder, is currently completely out of order [6]. In desperate need for new contracts, it resorted to bribing officials, resulting in a political and economic quagmire in Israel. In an attempt to secure a submarine purchasing contract in Tel-Aviv, TKMS allegedly transferred over 10 million dollars through shell companies to a top government Israeli official. News Site Haaretz [7] reports: “At least ten high-powered individuals have been identified as involved in the scandal, including very close associates of Prime Minister Benjamin Netanyahu. A multimillion dollar submarine deal with German shipbuilder ThyssenKrupp is the focus of a police investigation, which is probing possible wrongdoing involving Netanyahu’s personal lawyer and German shipbuilder ThyssenKrupp’s local representative.” For weathered investors, this time in which German manufacturers need to resort to cheating to make up for their slipping industrial standards is something completely new, and in some ways an earthquake. As a result, investments are scarce for start-ups [8], as well as for established businesses [9].

Germany’s downfall in the industrial world isn’t taken lightly by political forces, and the economic problem is turning into a political one, with worker unions stepping up their criticism of management, and politicians scrambling to stop the nosedive. Angela Merkel has been urgently addressing the problem, but so far too little or no avail. “Angela Merkel champions Industry 4.0, urging investment in new technology. German business isn’t heeding the call”, says Politico [10]. Unlike Angela Merkel, many in the country haven’t figured out that Germany had slipped from one industrial model to another: initially known for the superb quality of its products, it was caught up quickly by its direct competitors: United Kingdom, France, Japan and the United States in particular. The core of German’s added value today lies mainly in the machine-tools and high-tech subsystems of German equipment-makers. But as a whole, Germany no longer has the capacity to integrate large and complex systems such as aircrafts, frigates or new-generation submarines.

[1] https://www.dw.com/en/125-years-of-made-in-germany/a-16188583
[2] http://www.cityam.com/226018/german-industrial-production-sees-steep-decline
[3] http://www.alva-group.com/en/reputation-damage-vw-emissions-scandal/
[4] https://www.driving.co.uk/news/emissions-scandal-vw-mercedes-cheat-diesel-tests/
[5] https://www.wsj.com/articles/german-engineering-yields-new-warship-that-isnt-fit-for-sea-1515753000
[6] https://www.defensenews.com/naval/2017/10/20/all-of-germanys-submarines-are-currently-down/
[7] https://www.haaretz.com/israel-news/LIVE-the-israeli-submarine-scandal-what-we-know-1.5626626
[8] https://global.handelsblatt.com/companies/german-startups-drying-up-without-risk-ready-investors-863686
[9]https://www.reuters.com/article/germany-investment/big-investors-cautious-on-german-public-private-partnership-plan-idUSL5N0XK45Q20150423
[10]https://www.politico.eu/article/why-europes-largest-economy-resists-new-industrial-revolution-factories-of-the-future-special-report/

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Hungary And Poland To Lose Up To 25% Allocation Of EU Funds

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Hungary and Poland are set to be hit with new cuts in cohesion support after EU commission proposed new radical changes. This came to light after a series of propositions were published recently by the EU executive. Eastern European countries will be hard hit by the propositions, but more impact will be felt in Hungary and Poland.

The changes come in light of the immigration policies that certain countries have chosen to adopt. The two most affected countries will lose nearly 25% in cuts due to their problematic policies. The repercussions of the cuts could be felt very soon especially if the Eastern European countries decide to take on Western Europe.

Even though the commission has maintained that the new changes are not meant to be punishment for inconsistency and criticism, there is a general feeling that the countries will not take the changes well. The commission also argued that there is no need to compare the allocations between EU member states as each country has their own share of prosperity.

The proposed changes will also affect more countries in Eastern Europe including Lithuania, Czech Republic, Slovakia, and Malta. Germany will also get a reduction in the allocation to the tune of 20%. There are some countries however that will get a raise in their allocation including Greece, Romania, Bulgaria, and Italy.

The EU commission, through its commissioner for regional development, Corina Cretu, says that the recent changes have no political bearing behind them.

How the commission arrived at the figures

In previous years, the commission had an established formula for calculating the allocation of funds. This year though, it seems like there was a break from tradition since the calculation method was visibly adjusted. The GDP would be used to determine prosperity in the region during the past, for instance. This criterion seems to have been adjusted in addition to the inclusion of other factors like climate, education levels, employment levels, and of course the attitude of the countries towards immigrants.

It is yet not clear how these changes will affect the forex market in Europe. What is clear though is that the aftermaths of major decisions in recent years have often caused some disturbances in the stocks and forex markets. At times like these, stock and forex traders need to be on the lookout for any major breaking news. Admiralmarkets.pl suggests using the current forex and stock platforms to get market feeds in real-time.

The current feeling from the Eastern European countries is that the commission is finding ways of diverting money from the region to other regions that have faced challenges in recent years. The southern part of Europe has for instance been in the red for a couple of years now. The crisis in Greece and Spain is yet to completely settle.  The sentiments of Eastern Europe do not seem to bother the commission, however. The commission argues that these countries have seen major growth in recent years and that they would even handle stiffer cuts. This, the commission argues, would especially be true if issues like GDP per capita were to be considered.

EU officials have spent much of the time explaining how their recent propositions are in no way related to the crisis in the south. Instead, the commission has used every opportunity to highlight the changes in GDP as the key reasons for the allocation cuts. It is indeed easy to find reason in this rationale when you analyze the economies of Eastern European countries.

Poland has for instance seen a lot of positive growth in the past few years. In 2017, the economy grew by 4.6%. This growth came in the backdrop of a similarly strong growth the previous year where the GDP growth was recorded as having been 3%. The forecasts for this year do not look bad either. The GDP is expected to grow by at least 4.3% as per what the commission has established on its forecasts. The growth pattern in Hungary was also comparable, being 3.3% in 2016, 3.45% in 2017 and with a projected growth of 4% year.

Looking south, the economy of Italy recorded growths of 0.9% and 1.5% in 2016 and 2017 respectively. The forecast does not look any different also as a projected growth of 1.5% is expected. In order to argue their case, the commission argued the case of Portugal, which is still struggling but which got some cuts due to its strong performance recently.

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Hungary Economy: Population, GDP, Inflation, Business, Trade

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The Hungarian economy is ranked as the 55th freest according to 2018 statistics. This economy has undergone a lot of transformation and it has particularly improved in the areas of the judiciary, labor freedom and investment. There are some realms however that have not seen great improvements especially in the areas of business freedom, government integrity, and property rights. In overall, Hungary is below average in most metrics in Europe compared to other peers in the region. The country is also just above the world average on the global scale.

Looking at its recent past, this country has seen a bit of relapse into some laws that were previously abandoned. The country has definitely seen much freer and liberal laws in recent years just before the government began to intervene in the areas of policy. Much of the changes over the years have been instituted to support economic growth and to balance out the budget while steering clear of areas that might cause conflict with the European Union. There are many targets that the government has including reducing public debt. It plans to achieve all of them by taking an active role and instituting sectoral laws.

The history of Hungary is long and colorful. It was once part of the communist realm until 1990 when it became completely independent. The country is currently a member of NATO having been in the organization since 1999. When the EU was formed, Hungary was not among the founding members and only joined the organization in 2004. There have been numerous economic reforms in the last decade and today, the economy is supported by strong local demand as well as exports. In recent years, things have been looking very optimistic for the country. The construction industry has boomed and there is a hands-on approach by the government on economic matters. The unemployment rate in the country is low.

Despite these improvements, there are still some challenges that face the government. It is for instance not as open as it ought to be and the judiciary is weak and subject to government interference. The policies surrounding land tenure are pretty straightforward and the government keeps updated records. Because of its somewhat domineering government and a weak judiciary, there are always concerns about corruption. The business sector is thus highly affected by the apparent indifference in the government towards corruption. A lot more needs to be done by the government to deal with prominent figures who have been a menace to business.

Moving on to the financial sector, there is a generally fair support by the government to the financial markets. The tax for corporates is maintained at 19% and tax for individuals is at 15%. The stock market is pretty vibrant with the Budapest SE index enjoying some good figures in recent years. Forex traders can do many things in this country even though the market is not as developed especially compared to the West. Forex trading is supported a lot and there are dedicated providers that allow Hungarians to access tens of thousands of markets.

As a country that is still developing many sectors, Hungary has a government that has a direct oversight over some sectors. You will thus often find direct government support for some industries. There are some sectors where there is not enough manpower. The labor regulations are somewhat basic which makes mobility a little difficult. Most of the product prices are market-determined but some goods’ prices are regulated by the government. Some of the areas in which the government has a hand on the prices include the markets of pharmaceuticals, tobacco, digital money, some machinery and electronic appliances and telecommunication products.

The health of the economy is definitely good considering that the trading industry is pretty vibrant. Hungary relies a lot on both exporting and importing goods. The total value of goods that either leave or enter the country comprises of up to 175% of the GDP. There are no strict tariff regulations and there is a general preservation of a 1.6% tariff rate. While there is much more government presence in many areas of the economy, the impact is not too big to disrupt economic activities. The financial sector is still in its formative years and it will take sometime before the banks get the necessary regulatory policy that supports growth.

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