New members are a chink in EU's armour
With impending elections, slowing growth and rise in assertive nationalists opposing further integration of the bloc, the year looks gloomy for 'emerging Europe'.
The so-called "emerging Europe" faces sharp challenges this year as overall EU politics, a packed election calendar, Brexit, migration battles, US-China trade frictions and slowing global growth pressure the sometime, fragile economies in central, eastern and southeastern regions.
A report by the non-profit Wiener Institut für Internationale Wirtschaftsvergleiche (WIIW) based in Vienna warns that 2019 will be crucial due to both European and national elections.
Elections to national parliaments will be held in Moldova in February, Estonia in March, Ukraine in October and Poland in November. Presidential elections are set for March in Slovakia and Ukraine, Macedonia in April, Lithuania in May, Romania in November and Croatia in December.
The WIIW says the vote in Poland could be a watershed as another victory for the country's Law and Justice Party would likely result in more confrontation with the EU. The Ukraine presidential election is up in the air with polls indicating high disapproval ratings for the main contenders.
Romania will be under the spotlight as it holds the EU's rotating presidency in the first half of 2019, with some concerned that a poor performance could reflect badly on Romania and the region as a whole. Though it will hold the presidency, Romania does not use the euro currency nor is it a signatory to Europe's Schengen open borders treaty.
With economic growth slowing across Europe, less-developed, newer EU members face yet another series of hurdles after they long languished in the Cold War and endured various conflicts after it ended. Hoping EU membership would help lift them from hardship, they now see an EU that is in conflict with itself as more assertive nationalists rise to oppose further integration of the bloc.
In 2004, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia joined the EU along with Cyprus and Malta. Bulgaria and Romania joined in 2007 while Croatia became the EU's newest member on July 1, 2013.
They have yet to come up to nearly the level of western European members. Poland, one of the large, more developed newer EU members, had a per capita GDP of $13,863 in 2017 compared to Germany's $48,298, according to statistics from the Organisation for Economic Co-operation and Development. In Romania, the figure was $10,853 while Albania, which is scheduled to begin EU accession negotiations in June, had just $4,543.
Some in the EU have called for a "two-speed Europe", a euphemism that acknowledges all members are not equal.
EU enlargement ground to a halt in recent years partly because voters in some member countries oppose the idea of Western Balkan countries joining, fearing the free movement of workers and migrants once they are in. The bloc is considering "membership minus" to some applicants, meaning they won't join in certain policies such as free movement.
With countries in the east and south perhaps seeing less incentive to join the EU, several are still reliant on other countries such as Russia, Turkey, or even China, which started a "16+1" plan for infrastructure, trade and finance. Among the initiative's 16 eastern and southern European countries, 11 are current members of the EU and five are not - Albania, Bosnia-Herzegovina, Macedonia, Montenegro and Serbia.
China has already developed regular cargo shipping by rail through central Asia to Lodz, Poland, and last year the first overland freight trucks made their way from ports in China to Eastern Europe. But few actual projects have been built under the "16+1" scheme, all of them in the five non-EU countries. Infrastructure loans in the Balkans have been linked to Chinese contractors and suppliers, providing little stimulus to local economies.
As a result, many in the region continue to look west in their hope to scale the development ladder. But with the EU facing a range of issues, the climb is becoming steeper. After Brexit, the EU budget is likely to shrink, creating risk of reduced programme funding that has been equal to be 2 to 5 per cent of GDP annually for countries in the emerging Europe region.
In the real economy, another hurdle is slowing growth in Germany, a major trade and investment partner for almost all countries in the region.
A pending internal EU battle is potential sanctions on Poland and Hungary that could lead to loss of EU voting rights after the European Commission initiated Article 7 proceedings for policies it says violate the rule of law. The government of Hungary's Viktor Orban is accused of silencing the media, targeting NGOs and removing independent judges, while Poland is under scrutiny for passing constitutional reforms that the EU says undermine independence of the judiciary.
For their part, Poland and Hungary bristle at what they see as EU interference in their national affairs and say member states have ceded too much sovereignty to the centralised administration.
At a time of increasing friction across the globe, 2019 does not appear to offer the best environment for further integration of nations, especially of countries that have age-old grievances with one another. But the motivations for continuing on with goodwill are massive: It's time to band together to face what has the makings of a turbulent year head.
Jon Van Housen and Mariella Radaelli are editors at www.luminosityitalia.com
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