EU’s Illusory “Ring of Prosperity”

 Great Britain’s forthcoming exit for the European Union promises to unleash a series of the most serious aftershocks in the Old World after the end of World War II, according to the Russian newspaper “Komersant.” Serbian analysts share euro-skeptical views in this regard. One of the most basic illusions of Serbia’s public life over the last few decades – the European Union – has now begun to falter. The policies of Serbian regimes after Milosevic, whatever superficial differences there may have been among them, were all based on that mirage. It now stands discredited and its partisans are at a loss how to disguise that damning fact, affirms Stephen Karganovic.

Branko Radun is also quite outspoken: “Great Britain’s departure from the EU alters the relationship of forces because London is the only truly independent geopolitical force in Europe. A Europe without Great Britain will be dominated by Berlin. But that having been said, the Germans lack the ability to transform what remains of EU into a significant player.”

As for Serbia, it would be unable to join the EU even if Great Britain were to remain in it. Serbia declares its commitment to European integration only because it knows that otherwise Brussels would begin to destabilize it, which for Serbia would be devastating. A similar situation can be observed in some other countries, notably in Moldavia.

Taking the Republic of Moldavia as our case in point, it is a country of three and a half million adrift on the EU periphery. Its political elite and governing apparatus are thoroughly corrupt. The oligarchs have sacked the banks and additionally acquired the habit of throwing their competitors behind bars, all being suitably disguised as an anti-corruption campaign, as pointed out in Spiegel Online. With outright theft running into billions and millions distributed in bribes, the oligarchs have virtually annexed the government and are waging a no holds barred war for power. It all sounds like hyperbole but that precisely is the scenario unfolding in Moldavia.

Former Moldavian prime minister (2009 – 2013) Vlad Filat was handed a nine-year sentence at the end of June for his involvement in a billion Euro affair. Filat was considered one of the wealthiest and most influential men in the country. The court in Kishinev found him guilty of embezzling 900 million Euros with the complicity of three banks. That is an astronomical figure for the poorest country in Europe. It amounts to a sixth of Moldavia’s GNP in 2014.  

The case turned into the biggest corruption scandal in Moldavia’s history. Three banks were found to have been involved in it: Banca de Economii, Banca Socială and Unibank. Investigators found evidence that suggested that part of the loot was laundered through Latvia. If so, that would not have been the first time that Latvia’s banking system (be it noted, the country is an EU member and in the Eurozone) became the object of scrutiny for being a conduit for funds of disreputable origin.

Pointedly, many Moldavian mass media have noted that Filat’s arrest and prosecution amount to no more than a settling of accounts among the local oligarchs, under the pretense of an anti-corruption campaign.  The former prime minister was prosecuted based solely on the accusations of one witness, Ilan Shor, a notorious Israeli-Moldavian entrepreneur known for making odious deals. A native of Israel, he eventually moved with his family to Kishinev.    

According to Romanian political analyst Dan Duganchi, “the situation in Moldavia had never before been as dramatic… In addition to the profound economic crisis, to which the billion Euro affair had contributed, there is also a crisis of confidence of as yet unimaginable dimensions.” Former reform politician Ion Sturza, who in 1999 briefly served as prime minister, described the steadily deteriorating conditions in the following terms: “The luxurious way of life of the political leadership is based on corruption, theft, and deception. The financing of all political parties derives from corruption-based sources, including links with organized crime. All ministers, parliamentary deputies, and government officials are in the service of their political godfathers.”

Iulian Tsifu, an adviser to Romania’s ex-president Traian Basesku, comments that “Romania is playing the role which it always played, which is to act as Moldavia’s advocate within the EU.”  A pathetic role, it must be observed.

Moldavia as a case study of “Eastern Partnership”

Moldavia is perceived as unviable by both its citizens and representatives of the various European countries. Yet as little as a year ago Moldavia was touted as a shining example for the other members of the “Eastern Partnership,” says Katharina Patzelt, EU program manager in Brussels. Of all the countries participating in the program, Moldavia’s citizens were uniquely granted full freedom of movement throughout Europe. The European Union heaped praise on the reforms implemented by the coalition government and signed an association agreement with Kishinev. The country was planning to join the EU by 2020.

EU’s “Eastern Partnership” program was initiated by the Union as a mechanism for deepening ties with six countries in the post-Soviet space: Ukraine, Moldavia, Azerbaijan, Armenia, Georgia, and Belarus. The underlying purpose of “Eastern Partnership” is to drive a stake through those countries’ relations with Russia, thus obstructing their inclusion in the Eurasian integration processes. But with all that, the EU is not seriously considering admitting those countries into its ranks in the near term.

In the words of the Polish foreign minister Vitold Vashchikovsky the “Eastern Partnership” program has produced nothing but illusions. The project has failed and as a result the Polish government “rejects that concept as inoperative,” Radio Poland quotes the foreign minister. However, a situation where in the foreseeable future the six Eastern European countries have but a faint chance of joining the EU is one that suits Berlin perfectly, comments the BBC. The contradictions and flaws of “Eastern Partnership” appear most starkly in the case of Belarus. On the one hand, the European Commission is working hard to include Minsk in a number of its projects and, on the other, it is actively interfering in that country’s internal affairs on the side of the opposition.

According to EU’s own data, since the “Eastern Partnership” program was launched in 2009 about 3,9 billion Euros have been spent on it. In 2014 alone 730 million Euros were invested. However, instead of the promised “prosperity ring,” including market economy and democracy, the European Union is now surrounded by a “ring of fire” consisting not only of post-Soviet, but North African and Near Eastern countries as well.  

The Vishegrad Group under cross-fire

The countries of the other EU project, the so-called Vishegrad Group, composed of Poland, the Czech Republic, Slovakia, and Hungary, are now effectively exposed to cross-fire. Membership in the European Union makes it obligatory for them to follow the anti-Russian policy course, while national interest urges cooperation with Russia. In terms of Hungary’s foreign trade, for instance, Russia is in the second place, after Germany, but it is still ahead of China, which is steadily improving its position in the European market.

Russia is an even more important partner in Poland’s foreign trade. It is ranked fifth among Poland’s export partners and second (after Germany) in terms of imports. Russian goods are in the third place within Slovakia’s imports, behind Germany and the Czech Republic, but ahead of Austria, Hungary, and Poland. No less remarkable is the foreign trade picture of the Czech Republic. For reasons which are understandable, Germany occupies the top slot. But closely behind it follow Slovakia, China, Holland, Russia, and Austria. It is for good reasons that the Czech Republic is evidencing concern about the financial and economic situation in Russia and Europe as a whole. Czech entrepreneurs are particularly worried about the prospects of their credits and investments in Russia. The “sanctions war” has already taken its toll to the tune of over 130 million dollars in damage to the Czech economy.

“One way or another, we are bound to lose everything,” Czech Board of Trade analyst Franciszek Masopust comments. “And that means that Czech exporters will be the main losers. It would be useful to know what we have gained by participating in the sanctions against Russia? Nothing, of course. It is long overdue for us to abandon the foolish and harmful sanctions scheme. But for that to happen, obviously, what is necessary is political will in Brussels which, alas, is not yet in sight.”

For what possible reason, then, does the EU need such economically feeble partners as Moldavia? Is association with the EU a political or an economic affair? Masopust’s answer to that question is that it is “undoubtedly political. I happened to be around a highly placed official in Brussels and I put to him that very question. The answer was unequivocal: it was an approach that was purely political.”

Other Russian trade partners are also suffering considerable losses under the impact of the “sanctions war.” The total losses to EU member countries are estimated by Western analysts to be at least two billion dollars annually. Russia’s share of EU’s food exports is ten percent, which makes it the second most important market for the Europeans, exceeded only by the US at 13 percent. Therefore, sanctions imposed due to pressure from the other side of the Atlantic impact very negatively on European producers, decelerate economic growth, and result in loss of jobs.

Europeans are gradually coming to a very negative perception of EU’s anti-Russian policies. As reported by the London “Sunday Times”, chancellor Merkel is under increasing pressure by German manufacturers and businessmen who are demanding that the sanctions be called off. They understand that without both a strong Europe and a strong Russia the global market crisis cannot be overcome. Many Central and Eastern European governments are getting ready to call on the EU leadership to review its present radical policies toward Russia. But there is still that huge proverbial gap between words and deeds that remains to be bridged.