Europe Divided: Poland’s legal reforms are a harbinger of deepening crisis for the European Union

In June, the President of the European Commission Jean-Claude Juncker rejected a proposal from Germany to link EU funding for member states to the respect of democratic principles and human rights. The main targets of the proposed bill were Poland and Hungary, whose domestic politics have both been the subject of recent criticism from Western European states. While EU institutions and the Hungarian government have bickered for two years, it is the more recent standoff with Poland that has brought regional tensions – and the threat of conditionality – back to the fore. Yet making EU funding conditional on human rights principles would merely widen this political rift between Eastern and Western European member-states.

Domestic and foreign policy differences between Western and Eastern member states have been on the rise. In foreign policy, a key area of contention is attitudes towards Russia. On the one hand, in the upcoming German elections, both sides of the political spectrum argue for the need to engage in dialogue with Moscow. The SPD, the German centre-left party, goes furthest, arguing for de-escalation in order to improve European security. On the other hand, Riflemen’s Associations in Poland, supported by the government, are training new recruits for underground resistance should Russia attempt to occupy Poland. In the Baltic states, similar concerns have fed the revival of the Forest Brothers.

The gap between Eastern and Western Europe is also felt in domestic policy. Eastern Europe is increasingly turning towards social conservatism, which appears incompatible with how Western member states perceive the rule of law and individual rights. The recent Polish legal reforms, which would increase political control over the judiciary, have provoked threats from Brussels to trigger the Article 7 procedure against Poland, stripping the country of its voting rights within the EU. Such a development is highly unlikely in practice because Hungary would certainly veto such a move, but the threat underlines the severity of Brussels’ concerns about Eastern Europe’s conservative turn.

The present crisis has deep roots in the aftermath of the Cold War, when joining the EU was the best option on the table post-Communist Eastern Europe. The EU could, it was hoped, provide newly independent countries protection from Russia, which most elites in the region feared and continue to do. Eastern European political elites also hoped that EU membership, in particular development funds, would boost economic growth. Political elites in Eastern Europe transformed their governing institutions in order to comply to EU accession rules. These rules included regular democratic elections, guarantees for minority rights, and a free market economy. Over the less than two decades between the fall of Communism and the EU accession of Eastern European members, institutional change was achieved. Yet it was based mostly on pragmatic calculation by political elites, rather than on a shift in norms.

One of the main reasons why a rift exists today between Eastern and Western member states, then, is that Eastern Europe’s transition to fit the Western institutional framework was superficial. Because the adoption of institutional reform was based mainly on pragmatism, it remained vulnerable to changes in the political elite’s perceived interests. In Poland and Hungary, as the economic and political dividends that can be reaped from EU membership come into question, elites are moving to retreat from the superficial changes of the past two decades.

One areas of contention which subtly shifted elite’s calculations in both states is Brussels’ demand to spread the burden of refugees across the EU. Opposition to accepting refugees stems for a variety of reasons: from concerns with terrorism and job loss to a perceived cultural and religious threat. Moreover, the EU’s current identity crisis and uncertain political future has pushed Poland and the Baltic states to look increasingly towards the United States as their main supporter against Russia. In this context, motivation for Eastern European political elites to support Western-style institutions, which already have little normative support in the region, is decreasing.

Cuts in the existing funding budget are unlikely, and any attempted sanctions on Eastern European states for refusing to meet refugee quotas or for domestic policies like the Polish legal reforms would likely fail to gain unanimity. The real danger lies in the forthcoming negotiations for the EU’s 2021-2027 budget. In these talks, Brexit will play a key role.

First, Britain’s departure from the EU will create a massive contribution gap of about 10 billion euros. Some of this will be initially compensated for by Britain’s divorce bill. In the longer-term, however, compensating for this budget gap by simply raising contributions will be politically unfeasible: compared to 2014-2015, Germany, for example, would have to raise its contributions by more than 14%, approximately by 3.8 billion euros per year, according to a Jacques Delors Institute forecast. Although contributions may certainly be raised to some extent, the EU budget will have to be cut.

Brexit also raises the probability that there is no budget agreement by 2021 because the Brexit negotiations will preoccupy EU institutions. In June 2017, EU Budget Commissioner Günther Oettinger called for a delay in EU budget negotiations until a Brexit deal has been outlined. 2019, when Britain is set to leave the EU, will be a challenging political year in Brussels, with parliamentary elections in May, and changes of EU Commissioners in the autumn. Any deal outlined before 2019 is likely to be placed on hold for most of that year, and to subsequently require considerable revision to accommodate the views of new government figures. A ‘no deal’ situation is thus likely.

EU funding to Eastern Europe may pay the price for these budget difficulties for two reasons. First, it is currently not the main investment priority for net contributors, who wield a considerable influence over funding allocations. The 2018 budget proposals are already addressing ‘new’ areas in defence spending, in particular border security, and support funds in light of the refugee crisis, to encourage compliance with the Dublin accords. These areas of spending are likely to remain a priority for net contributors. Contributor countries, especially Germany and France, face a considerable flow of migrants as well as domestic security challenges related to terrorism. Furthermore, European elites question the reliability of the Trump Administration in the US as a security partner, and therefore will push for the development of the EU’s common security framework as a funding priority.

Second, net contributors are mostly Western European states that are critical of recent Eastern European countries’ ‘illiberal’ reforms and their refusal to share the burden of refugees. Cutting funding for these states will provide leverage against the region’s political elite. Mr. Oettinger hinted in May that conditionality, such as compliance to the rule of law, may be imposed on development funds. Austria’s chancellor Christian Kern pointed out in March that countries which are not addressing migration issues should not receive the funding from the EU that they do today. EU net contributors may see an advantage in cutting Eastern European funding in order to retaliate against recent political developments in the region which are considered by many in the Western member states to contradict fundamental European principles.

In most cases, 25 years have not been sufficient for Western social and political values to permeate Eastern European political culture. The economic and political incentives to comply to Western-style institutions and government are now eroding as well. The reemergence of conservative and interventionist governments in Eastern Europe is highly likely to accelerate with EU funding cuts, deepening the rift between Eastern and Western member-states. In the context of the current existential crisis within the EU, such a development will only accelerate the disintegrative tendencies at work within the Union.

Originally published with In The Long Run, University of Cambridge: http://inthelongrun.org/articles/article/europe-divided-polands-legal-reforms-are-a-harbinger-of-deepening-crisis-fo

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Brexit and the conceptual crisis of modern capitalism

Conference: Cambridge & Brexit: Mapping an Uncertain Future, Cambridge, 24 February 2017

Author: Nora Kalinskij

Abstract: This section of the The Cambridge Brexit Report discusses two political economic challenges that Britain faces today. First, it diagnoses a conceptual crisis of the contemporary economic system. Second, it addresses the strategic choice that Britain faces in the aftermath of Brexit between two economic models: a trading and industrial power or a financial power. The full report can be found at: https://issuu.com/cambridgebrexitreport/docs/00_the_cambridge_brexit_report_6352c4231b66f1
Brexit and the conceptual crisis of modern capitalism (PDF Download Available). Available from: https://www.researchgate.net/publication/316789149_Brexit_and_the_conceptual_crisis_of_modern_capitalism