Central Europe Activ

“Every kingdom divided against itself is brought to desolation; and every city or house divided against itself shall not stand” – Matthew 12:25

The former East bloc new member states have had a great number of grievances since they joined the Union in 2004 and 2006, but none of this has accounted for the different effect of the economic crisis to the EU. I fully agree with those opinions which say that the EU has its deepest ever crisis in the current global economic meltdown. The division between Western and Eastern member states is indeed a real danger to both the eurozone and the Union itself. The division became manifest when the Polish prime minister, Donald Tusk has organized a mini-summit before today’s full EU summit with the Czech Republic, Slovakia, Hungary, Estonia, Lithuania, Latvia, Romania and Bulgaria.

As expected, the Hungarian prime minister has called on the EU for the establishment of a fund worth €160-190 billion to provide liquidity and debt rescheduling for Eastern European states, which are currently experiencing their worst economic recession since the Second World War and the renegotiatoin of the entry criteria to the eurozone on today’s informal EU summit. German chancellor Angela Merkel rejected the idea by saying that the former communist countries – the newest EU member states – were not all in the same situation, echoing the position outline by many in the Czech and Polish political elite. Two relatively less hurt Eastern states, the new eurozone member Slovakia and Estonia opted to stay with the Western bloc in hope for more favorable treatment – at least on the bond market. What the EU got instead of a new East-West deal is that Ms Merkel stayed with the traditional French alliance and France was promised to get a bailout for its automotive industry.

Some tried to play down the rift between Western and Eastern member stated and the Polish-initated Eastern Summit. Some Czech and Polish officials insisted that the meeting was a regular part of the preparation for EU summits, and did not signal a growing panic over the economic crisis.’The whole EU summit is a crisis meeting. You can’t have one crisis meeting inside another one,’ a Czech diplomat who asked to remain anonymous told dpa. According to this view, the meeting is a ‘regular’ meeting of the Visegrad Group. However, Romania, Bulgaria and the Baltic States are not members of the otherwise rather defunct group.

The Economist editorial rightly claims that

if a country such as Hungary or one of the Baltic three went under, west Europeans would be among the first to suffer (see article). Banks from Austria, Italy and Sweden, which have invested and lent heavily in eastern Europe, would see catastrophic losses if the value of their assets shrivelled. […] Indeed, collapse in the east would quickly raise questions about the future of the EU itself. It would destabilise the euro—for some euro members, such as Ireland and Greece, are not in much better shape than eastern Europe. […] The political consequences of letting eastern Europe go could be graver still. One of Europe’s greatest feats in the past 20 years was peacefully to reunify the continent after the end of the Soviet empire. Russia is itself in serious economic trouble, but its leaders remain keen to exploit any chance to reassert their influence in the region. Moreover, if the people of eastern Europe felt they had been cut adrift by western Europe, they could fall for populists or nationalists of a kind who have come to power far too often in Europe’s history.

The economist partly shares my earlier argument that the EU has less to loose from letting in some of the new member states unconditionally than with leaving them out. The bailout plan is indeed supported and urged by the World Bank as well. It would be very ironic if a Washington-based global institution would have to send assistance to a part of the EU, supposedly the richest economic bloc of the world. As a noticed a few times before in 2008, the Western EU member states are often irked by the fact about Central Europe’s fondness for the US, while the new member states see less and less value of the EU if they have to run to Washington for shelter in any economic or political crisis.

The EU is not a flexible institution, and it is still held back by the lack of the Lisbon Treaty which would give some governance make-up to this rigidity. (It is not blind chance that the Hungarian parliament has raitifed the Lisbon Treaty first, on the first possible day after it was signed). However, a global crisis needs fundamentally different solutions. There had been some good signs: many realized that it is Europe’s interest to expand the eurozone and recognize the different structure of an established and a transition economy, or the new member states with their high growth potential and higher risk can be both the source of higher EU growth or contraction.

A great president of the American Union once referred to the motto above: “A house divided against itself cannot stand.” Why cannot Europe learn from history? Although it will be good to drive a Peugeot car or pay with euros in Reykjavík, such political changes will not save the EU from a long-term paralysis or disintegration. Today’s summit was a sing of lack of leadership and vision for the future of Europe. When the crisis will be over, the participants of today’s summit will be the leaders of the past, and the EU will look fundamentally different from today. The rift between the East and the West has become manifest.

Update: Here is my reformulated post which appeared also on komment.hu, one of the most read Hungarian-language opinion sites.

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  1. In the end, the behaviour of the EU seems strikingly similar to what happened in the early Yugoslavia crisis where a unified, long-term strategy evaded the Eu countries. While the actual bloodshed will be less and the U.S. wont be around to save Europe from itself, the pain from the political and mental paralysis within the EU will be substantial. Just this time, instead of just Croats and Serbs and Bosnians flooding the cities of Austria and Germany we will be able to include far more Hungarians, Romanians, etc. This, itself, may then force another policy reaction in certain Western capitals that could spell the end to the EU as we currently know it.

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