Stanislav Máselník

Putin’s Eurasian Union: A danger or strategic opportunity?

Putin and EurasiaWhen Vladimir Putin recently published an article in the Russian daily Izvestia that officially announced his plans for the establishment of an Eurasian Union in the geographical space of former USSR countries, he caused quite an uproar in the Western media.1 The headlines such as those in the Telegraph run that Putin’s wish is nothing short of re-forming ‘a pseudo-Soviet Union’ reassuring readers that the plan is about ‘reclaiming the Russian Empire’,2 even though in the same article Putin explicitly rejected any comparison with the USSR. Newspaper commentaries are naturally inclined to exaggeration and the use of catchy words to raise readership figures, but they still reflect general fears of the West towards the resurgent Russian foreign policy of the last decade. The essential policy question for the EU and US is whether these concerns about a Eurasian union are justified and reflect a real threat of some ‘incoming Russian empire’. Or perhaps, if considered from a different angle, the Putin’s and Russian administration’s plans might just as well present the NATO allies with a real strategic opportunity.

A short notice to readers about my argument’s presuppositions is first due, however. In the grand realm of foreign policy, one can speak about natural allies and interests only with a grain of salt. If the cultural and value-based factors remain excluded, economics, energy, nor even geography can offer clear-cut answers on choosing a country’s allies and by extension, also its enemies. To say that Russian foreign policy now poses a threat or strategic opportunity then implies taking a particular normative stand, which is in turn arguable based on the principles adopted. In this short piece, my purpose is singular: to contrast the arguments of those on the side of the EU and US who claim that the Russian initiatives in the Eurasian basin should be opposed with those less numerous voices to which I also humbly join, who argue that Putin’s ‘Eurasian Union’ is a sound initiative of regional integration that can serve the EU’s and US’s interests in stabilising the whole region thus creating a strong ally to balance out other rising superpowers such as China.

Flags of the three present members of the Customs Union
Belarus, Kazakhstan and Russia already form a Customs' Union, Eurasian Union will be its successor

The critics of the Russian foreign policy generally argue that Russia under Putin and Medvedev is simply rebuilding its former empire, sometimes using its leverage in energy resources, sometimes outright military aggression as in case of Georgia. In their interpretation, such efforts must be vigorously opposed, as the result will be nothing but Russia’s domination of its ‘Near Abroad’ that will prevent countries such as Ukraine and Georgia in making a free choice to join the international community of liberal democratic states. These arguments are often joined by those in the EU who believe that the Union’s foreign policy should be based on stabilising its neighbourhood through spreading of its norms, functioning as a sort of ‘a neo-medieval empire’ (Jan Zielonka) or ‘neoliberal empire’ (Warwick Armstrong and James Anderson). Naturally, approaching Russia, a country that has consciously adopted a development strategy of ‘modernisation without Westernisation’, with this approach is inherently ineffectual, as the EU as Russia’s equal ally does not have any leverage that it could impose on its eastern partner. The result is that Europe’s prominent politicians such as German FM Guido Westerwelle and his Polish counterpart Radek Sikorski, who recently addressed a joint letter to the EU’s chief of foreign affairs Catherine Ashton, where they urged her to reorient her policy towards realpolitik of securing energy supplies and modernising Russian economy.3

If the Russian leadership’s military solutions to the Georgian and 2nd Chechnyan conflicts can regarded as controversial, Putin’s latest initiative shows that the Russian political elite clearly realises that their country’s influence on its neighbourhood can be achieved only if it brings benefits to both sides and is not based on force. Far from being a Russian empire, the Customs Union, which is to be a first step towards a full Eurasian Union, was joined by Kazakhstan and Belarus of their own sovereign decision and they will retain a proportionate control over the decision-making of the whole union. Indeed, Kyrgyzstan and Tajikistan already have submitted their own bid for the membership. Similarly, where Russia once had relied on its hard currency reserves to gain from its neighbours political concessions through cheap provision of loans and direct subsidies of fuel, the new policy aims at elevating the economic prospects of the entire region with Russia serving as a natural gravity well.4 While Russia will over time benefit by reinforcing its status as the region’s financial and business centre, the other countries of the Union will be more competitive in agriculture and heavy industry such as steelmaking, gain investments for their backward, Soviet-style economies (this especially applies to Belarus), just as benefit from the competitive advantage of their cheaper labour force.

For the EU and US, the Russian effort to lead a regional integration brings a possibility of an alternative form of the international ordering. Without making any positive or negative judgements, the present international order can be broadly labelled as the global military hegemony of the US with the support of its NATO allies. This hegemony has been supported by the combined economic might of the US, EU and Japan, but as the economies of indebted Western countries will be experiencing their relative decline, their military control will inevitably wane too. The obvious alternative is that this hegemony will be replaced by another – that of the Asian or Chinese century. As this is naturally an infeasible outcome for the European and American interests, maximum effort should be made to seek out other options, the most significant of which is a return to the principle of balance of power remodelled for the purposes of the ‘grand scale’ of the globalised world. While the original international order of nation-states presupposed the relative equality of countries in the still rather localised world of the 19th century, sovereignty in the postmodern world becomes intangible but for the largest of polities that possess a broad control over the world’s natural and economic resources. Thus, political equality in the 21st century can be achieved only on the level of ‘grand spaces’, by political groupings that are sufficiently large and powerful to maintain an effective control over their territory that would balance out that of other similar entities.

A Eurasian Union, modelled on the EU is a clear step into the direction of such a multipolar world. As its plans develop from the current Customs Union to a full economic union, it is based on fully voluntary grounds and is expected to bring benefits of peace and economic growth to all its members – not just the Russian giant. In the rapidly changing world of the 21st century, a Eurasian Union could well become a strong ally of the EU and US and help them to ensure that their relative strength will remain preserved, even against the odds of the rising Chinese dragon.

Show 4 footnotes

  1. Vladimir Putin, ‘Новый Интеграционный Проект Для Евразии: Будущее, Которое Рождается Сегодня / Buduscheie, Kotoroie Rozhdaeietsa Segodnia / Novyi Integratsiovannyi Proiekt Dlia Evrazii’, Известия, 3 October 2011 <http://izvestia.ru/news/502761> (accessed 4 October 2011).
  2. Andrew Osborn, ‘Vladimir Putin’s Plan to Create a Eurasian Union Is About Reclaiming the Russian Empire’, The Telegraph, 5 October 2011 <http://www.telegraph.co.uk/news/worldnews/europe/russia/8807720/Vladimir-Putins-plan-to-create-a-Eurasian-Union-is-about-reclaiming-the-Russian-Empire.html> (accessed 11 November 2011).
  3. Andrew Rettman, ‘Putin’s Return Poses Questions for EU Strategy’, EUobserver, 14 November 2011 <http://euobserver.com/24/114266> (accessed 15 November 2011).
  4. Andrew E. Kramer, ‘Russia, Belarus and Kazakhstan Form Customs Union’, The New York Times, 5 July 2010, section Business Day / Global Business <http://www.nytimes.com/2010/07/06/business/global/06customs.html> (accessed 1 July 2011).

EU referenda: The right answer to Europe’s ills

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Debating Europe: Do we need Referenda on EU Membership?
Debating Europe, discussion: Do we need Referenda on EU Membership?

The following is the answer I provided at Debating Europe’s latest discussion on the question of EU membership referenda. As a convinced supporter of direct/participative democracy, I couldn’t but approve of their need. But they are not only required at the national level, for countries such as Britain to decide on their membership, but also and as equally strongly on the level of the EU, where they can serve as the only means that can strengthen the people’s identification with the European project. Especially in the times when the eurone crisis puts the whole integration project under yet unprecedented stress.

For more, I invite you to read both the Debating Europe’s introductory post and my answer below, which is a response to this video, where British Conservative MP Bill Cash and former Irish Taoiseach (prime minister) John Bruton debate out the same issue.

My answer (‘Do we need Referenda on EU Membership?’):

As a convinced supporter of federal Europe and an equally strong critic of the EU in its present form, I have no doubts that in the long term, the integration project can work only if it is built on popular, democratic grounds.

Unfortunately, the EU has been a technocratic project from the start. Based on the neo-functionalist spillover theory that a political integration will somehow naturally follow the economic one, European people and their wishes were put on a second line. Instead of serving as a cure to numerous political problems suffered by European nation-states, such as alienation of the political elite from citizens, artificial technocraticisation or ‘expertisation’ of decision-making, or sectoral interests of corporations and financiers having privileged access to parliamentary representatives, the EU seemingly only deepened these ills and put them into a far greater, transnational distance. Instead of tackling issues that receive added benefit on a continental scale, EU institutions produce endless minute regulations of internal market of the kind of quality standards for cucumbers (they are allowed a bend of 10mm for every 10cm of length!), or now legendary proper measurements of the European banana. This makes of the principle of subsidiarity, officially enshrined in the EU treaties since 1992, an empty shell that can be potentially used to justify any intervention under the argument that the Union is better placed to intervene in those affairs than a member state or local authority.

Lacking a clear reference to the European civilisational identity, which, notwithstanding eurosceptic critics, is more deeply rooted in the European continent than relatively new national identities, the long-term tenacity of people’s belief in European integration against these saddening facts of its actual realisation is rather a proof of the symbolic strength of our civilisation’s identity than a sign of its rejection. People of Ancient Athens, Aristotle, or modern civic republicans such as Hannah Arendt well knew that the best way to ensure citizens’ identification with their polity is allowing them to actively participate in its political affairs. Advocates of representative democracy are always very quick to come up with claims that people are not knowledgeable enough to rule for themselves and that they need experts who will ‘kindly’ take that burden off their shoulders. As if political rule was not as much or even primarily a question of telos (purpose or aim) as that of expertise! The very idea of life in a democratic polity is that political questions are not a matter of experts to decide (contrary to their implementation). No number of experts will be able to make a purely technical decision on issues such as, for instance, the creation of a common federal political entity (or exiting from it, for that matter), engagement in foreign military interventions, or deciding to bail-out the banking system by privatisations and slashing the public expenditures. It requires a stupendous amount of arrogance to claim that providing answers to these questions is a matter of following some correct, rational and technical procedure rather than and first of all a question of values.

Our values are common and accessible to the whole society as they come from the plentiful soil of literature, religion, myths, culture or tradition. It follows that if political decisions are always made through values, based on who we are, it is the society as a whole that is best placed to discern where these values politically lead it to. As any social entity, parliamentary assemblies are prone to think first of their own sectarian interests rather than those of society. If people give that power away to their representatives, instead of delegating it on the condition that these representatives will continue to respect their political will even after the election, there is no longer any democracy and instead a term-limited reign of government or parliament. In this way, referanda are a powerful instrument of participative democracy that are well placed to ensure that MPs and MEPs remain representative of citizens’ interests.

Yes then – referenda are not only the right answer for individual nations to decide on their EU membership, but also the only right and possible answer for making key political decisions in the EU as a whole.

The Neoliberal Union: EU and its model of economic integration

The following analysis can be also downloaded as a pdf file by clicking on this link. Given the article’s extent (about 18 pages), it should make the content more readable.

EUTo accuse the European Union (EU) of supporting of unfettered rule of market forces in the form of neoliberal policies is increasingly common under the fiscal and economic crisis that engulfs Greece and the eurozone. But the connection made between the Europe’s transnational union and this strand of economic thought is far from being new. The French voters rejected the draft Constitutional Treaty in the national referendum in the spring of 2005, because they perceived its silence on social policy as a threat to the French social model.1 According to the French left-leaning monthly Le Monde diplomatique, the recent Lisbon Treaty only refurbished the same neoliberal principles that were already once rejected by the French people, but now without giving them the possibility of rejecting them again.2 A thorough discussion of the principles behind the current form of European integration is therefore crucial for understanding the future prospects of the European project, especially since commentators from both the political left and right agree that further integration would be possible only when it would be backed by the support of the European public.3 Furthermore, if the presence of neoliberal policies in the European foundational treaties is confirmed, this might also engender debates on the fundamental principles of constitution-making: would it be legitimate if any future European constitution or constitutional treaty also clearly specified the principles (neoliberal or other) according to which its policies must be developed?4

In order to further this debate, this essay discusses the institutional structure and policies of the EU and, agreeing with some other commentators that discussed the same topic, it argues that the EU promotes a specific model of capitalism that can be best understood as ‘embedded neoliberalism’.5 In doing so, the approach of this work is following. First, it develops a model of neoliberal economics. Second, it continues by giving a brief historical overview of how this model competed for influence with other alternative models of capitalism at the EU level and states the reasons for its victory in the 1990s. And thirdly, it discusses the institutionalization of neoliberalism and overviews the major EU policies that can be associated with it.

The Political and Economic Principles of Neoliberalism

As even many authors that are critical of neoliberal policies acknowledge, the term ‘neoliberalism’ is eminently vague.6 It is often used pejoratively to describe the global spread of market economy and consumerist lifestyle at the expense of the traditional welfare state, thus avoiding rigorous analysis of the phenomenon.7 Thorsen and Lie, who manage to provide a very thorough overview of the concept, observed that the main problem when approaching the available literature is that ‘there does not seem to be anyone who has written about neoliberalism from a sympathetic or even neutral point of view.’8 Notwithstanding such problems inherent to the debate, for the purposes of this essay it suffices if neoliberalism is defined in terms of the core policies that are associated with it. Apart from Thorsen and Lie’s critical study, it is David Harvey’s A Brief History of Neoliberalism that provides a dispassionate introduction to the topic. He defines neoliberalism as being

in the first instance a theory of political economic practices that proposes that human  well-being can best be advanced by liberating individual entrepreneurial freedoms and skills  within an institutional framework characterized by strong private property rights, free markets and free trade.9

Consequently, the role of the state is minimised to that of the preserver of the institutional framework appropriate to the free market economy. However, this does not entail that the state loses any of its political authority. Quite the contrary, as could be seen during the Reagan and Thatcher administrations in the US and UK respectively, ‘a more authoritative state must now concentrate on providing the conditions under which individual entrepreneurship, self-government, freedom and responsibility can be possible.’10 In other words, although its nominal sphere of influence is to be reduced, the state has to first roll back the ‘nanny’ welfare state and thus secure the legal framework for the inhibited running of markets. In this way, it also ensures the inviolability of the private property, or guarantees the defence and policing of the country. Furthermore, the state is put in charge of the privatisation of state-owned companies and of public utilities that aims at extending the domain of the market economy by creating new markets. The tight fiscal and monetary discipline, the liberalisation of trade and capital markets and the ‘flexibilisation’ of labour market are thus natural steps to be taken by the state when following the neoliberal principles.  On the international scale, neoliberalism is associated with the promotion of reducing trade barriers and enhancing capital mobility and ‘together with the application of new information-based technologies, [it] facilitate[s] the emergence of less constrained multinational corporations able to negotiate the very favourable terms of investment with national governments’.11 Obviously, neoliberalism could be also studied from the perspective of its underlying political philosophy, where the most important conclusion is that in putting the political emphasis on the individual, the differences between liberalism and neoliberalism are only slight.12

Foundation of the EU and Neofunctionalism

The European Union began as a project of economic, not of political integration. Jean Monnet, a key architect of the ECSC, explicitly based his views of the future of European integration on neofunctionalism.13 The neofunctional theory of regional integration was first developed by the American political scientist Ernst Haas, who argued that establishing economic interdependence between several countries will give the process its own internal dynamics, thus leading to the political integration through a series of ‘functional spillovers’.14 The 1985 White Paper of the European Commission on the creation of a single market in this way claimed that ‘just as the Customs Union had to precede Economic Integration, so Economic Integration has to precede European Unity,’ thus confirming that the neofunctionalist approach to the integration persisted as the dominant model throughout the Union’s whole history. The neofunctionalist approach can be criticised for giving excessive predominance to economy at the expense of politics or culture, as indeed many authors have done,15 but it is not directly connected to neoliberal policies. Similarly, the idea of economic integration has no necessary connection to (neo)liberalism as it is entirely possible to conceive an integrated economic system that would have upheld more social democratic values, protected its members against the negative effects of economic globalisation, and/or integrated only certain sectors of economy while supporting the local producers against large transnational corporations.16 While the idea of a common market is therefore not (neo)liberal per se, this work argues that the actual economic integration of the EU has been made according to fundamentally liberal principles, which consequently provided it with the institutional basis for the political shift to ‘embedded neoliberalism’ by the early 1990s. In order to analyse whether the EU contained neoliberal policies since its foundation, it is now necessary to turn to concrete policies that were behind such abstract phrases as ‘economic integration’.

The Development of the Economic Integration: Neoliberalism, Neo-Mercantilism, and Social Democracy

The European Coal and Steel Community was created as the first supranational institution in 1951 to encourage the expansion of iron and steel production and of heavy industry and, more generally, with the aim of preventing any future wars between France and Germany. As Christoph Hermann notes, it was ‘inspired by the notion of coordination and cooperation rather than market-mediated competition.’17 It was only the establishment of the European Economic Community (EEC) in 1957 that took the first steps to a free trade zone by creating a customs union with a common external tariff. Thus, in Article 3 of the Treaty of Rome, one can read that member states subscribe to a gradual development of a ‘common market free from distortions to competition’ – an idea with clearly liberal roots. At this point, thus distinguishing it from later neoliberal policies, the common market meant only free circulation of goods – free movement of labour, capital, and services were only institutionalised with the signing of the Single European Act (SEA) in 1986. The single European market of SEA was considered the last-resort response to the economic crisis Europe underwent in the early 1980s, when individual national therapies failed. Its aim was to create a ‘healthy’ pan-European competitive environment, with flexible capital and labour markets that would make it easier for the firms to carry structural readjustments that were until then hampered by the welfare regimes of individual member states.18 As Stephen Gill remarked, SEA marked a key shift in the European community’s policies towards a form of neoliberalism, for at that point ‘scientists, journalists and politicians succeeded in presenting the Single Market as the breaking-up  of  incrusted  and  rigid  structures  of  European  labour  and  social regulations.’19 Hermann observes that a key part of SEA was the principle of mutual recognition for those goods and services for which the EU did not regulate.20 This principle had an inherently liberalizing tendency, since as no overarching regulation, supervisory procedures or common standards on goods were established, it has allowed the use of the lowest standards to be found among the contemporary 27 member states. This leads Hermann to conclude that the common market ‘has thus become a neoliberal market characterized by weak regulations or even deregulation.’21 This also amounted to a de facto liberalisation of the external trade policies, as the principle of mutual recognition has also applied to them.22 Furthermore, as Fritz Scharpf observes,

it required the liberalization of hitherto protected, highly regulated and often state-owned service-public industries and infrastructure functions, including financial services, air, road and rail transport, telecommunications and energy; and it extended the reach of European competition law to all national polices that could be regarded as distortions of free competition.23

As described by Bastiaan van Apeldoorn, the establishment of the single market coincided with the creation of an elite forum of Europe’s emergent transnational capitalist class – the European Round Table of Industrialists (ERT). Founded in 1983, this lobby currently unites 50 CEOs of ‘of major multinational companies of European parentage covering a wide range of industry and technology’.24 Apeldoorn’s analysis tries to show that the ideological development of ERT can be considered a microcosmos of the EU as a whole. In the early 1980s, ERT was dominated by European industrial capital, which had the major interest in protecting the European market from the global competition. Apeldoorn calls the model of capitalism to which they subscribed ‘neo-mercantilism,’ characterizing it as promoting defensive regionalisation as against globalisation.25 At the same time, neo-mercantilism was largely compatible with the social-democratic strand of capitalism to which at least nominally subscribed Jacques Delors and his three Commissions (1985-94).26 Delors’ support for the ‘European champions’ was a direct correlate of the neo-mercantilist arguments of ERT, but European industry was also willing to concede a further point to social democracy by supporting a certain level of social partnership with European labour.27 The social democratic model also supported the ‘European social model’ of mixed economy that would complement ‘negative’ market integration, would strengthen supranational institutions, or ensure high levels of social protection for workers.28 Nevertheless, the neo-mercantilist project, gradually faded into background when ERT, since the late 1980s fully controlled by globalised sections of European capital, shifted its support to ‘embedded neoliberalism’. The lobbying of ERT in support of neoliberal policies consequently played a vital part in undermining the social-democratic plans of Delors.29 Furthermore, Andy Storey concludes that the support for neoliberal policies within European companies is likely to become even more entrenched as their sales outside Europe grow when compared to European markets.30 Thus, he notes, between 1987 and 2000, the top nineteen companies of the European parentage increased their non-European sales from 34% of turnover to 46.2%, while within the EU their sales almost did not increase at all.31 Apeldoorn thus describes the embedded neoliberalism as a hegemonic project of ‘a class-conscious transnational business elite’.32 The difference between the embedded and ‘pure’ liberalism is in this way marginal: the difference lies in the former’s effort to co-opt other social forces such as trade unions by incorporating into the neoliberal discourse certain aspects of social policy. The social policy at the EU level thus acquires the ‘market enabling’ at the expense of traditional social policy instruments such as social protection or income redistribution. When compared to national welfare state models, the remit of the market remains unrestricted and the social policy itself acquires the character of facilitating the workers’ participation in the labour market (e.g. for instance through training or requalification). On the other hand, all efforts that would have provided for a substantive EU social policy and that would have balanced out the fiscal constraints imposed on the member states by the treaties, EMU and SGP so far failed.33 A clear example of market-enabling social policy is present in the Europe 2020 strategy recently put forward by the Commission. Although it claims that it sets out a vision of ‘Europe’s social market economy,’ it stresses that the European economy must be restarted by privileging an economy ‘based on knowledge and innovation’, ‘fostering high-employment’, and ‘modernis[ing] labour markets and empower[ing] people by developing their of [sic] skills throughout the lifecycle with a view to increase labour participation’.34 When it comes to the social dialogue and partnership that the European founding treaties refer to (Arts. 152 & 153 of the Treaty on the Functioning of the European Union), the most of the commentators argue that trade unions have at best a mixed record when engaging with the EU politics.35 In this way, Andy Storey then adds that that ‘engagement there has been has tended towards the containment of the unions within corporatist structures rather than seriously challenging neoliberal policies.’36

In criticising this lack of a full-fledged social policy at the EU level, it must be noted that the authors such as Scharpf argued that an option of having a traditional welfare state at the EU level is in practice foreclosed by the diversity of European welfare state models and that only an intergovernmental co-operation based on the strengthened Open Method of Co-operation is in practice feasible.37 In this model of strengthened co-operation of Scharpf, or Iain Begg and Jos Berghman, a common approach to social policy would be adopted and be enforceable at the EU level, while its implementation would still remain national, with sufficiently extensive provision for national differences.38 If such option is open, it should be concluded that there is clearly no other reason than the member states’ and the EU’s commitment to neoliberalism that would explain the lack of political will in implementing such European model of social policy provision.

Economic and Monetary Union and Stability and Growth Pact

A crucial further step in the process of ‘neoliberalisation’ of the EU has been the Economic and Monetary Union of the EU (EMU) that was completed in three stages between 1990 and 1999, with the Euro as the common currency being adopted in 2002.39 For purely pragmatic political reasons (it was perceived as a crucial step in the long-term development of the economic integration), the EMU was backed in the late 1980s even by the ‘Europeanist’ part of ERT.40 The EMU is administered by the independent European Central Bank (ECB) that is endowed with an explicit anti-inflationary mandate, maintaining high interest rates to this end. Commenting on the latter, Scharpf thus observes that the monetary union has not only deprived the member states of the capacity to control exchange rates according to local economic exigencies, but also of the the ability to control interest rates.41 This entails that the interest rates set by the ECB to correspond to average conditions in the Eurozone ‘will be too high for economies with below-average rates of economic growth and inflation and too low for countries above the average. Hence they will further impede the recovery of sluggish economies and add to inflationary pressures in countries with high growth rates’.42 Indeed, the disparities between different regions are a problem in any larger state, but then they are solved by national redistribution policies, which are, as was stated above, unavailable to the EU.

The Stability and Growth Pact (SGP), which was as a part of EMU adopted in 1997, adds further neoliberal constraints on the fiscal policy of the member states. Its purpose is to monitor the fiscal discipline of the EU member states and potentially sanction the offending members. Although its efficiency was recently doubted,43 for the purposes of this essay it suffices to say that the criteria it officially sets are clearly neoliberal. Thus, according to the SGP, the annual budget deficit of the member states should not be higher than 3% of their national GDP and their national debt should be lower than 60% of their GDP. These rules were softened in 2005 (budgetary objectives are now reviewed every fourth year and countries with a low public debt and a potential for high growth are allowed a budgetary deficit of 1% of GDP in the medium term), but their fundamental neoliberal nature remains unchanged.44 By the SGP and other above stated measures related to the EMU, the European law thus effectively bans the use of those national macroeconomic (Keynesian) instruments that could positively influence national growth.

European Treaties

The presence of neoliberal policies is the most fully developed in the European founding treaties themselves. They will be discussed by referring to the last, post-Lisbon consolidated version of Treaty on European Union (TEU) and Treaty on the Functioning of the European Union (TFEU).45 The Art. 26 of TFEU, which outlines the principles of the internal market, thus states that it ‘shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties’. The Art. 119.1 of TFEU expands this by confirming that the adoption of an economic policy will be ‘conducted in accordance with the principle of an open market economy with free competition’. The third point of the same article further adds that the guiding principles of economic and monetary policy will be ‘stable prices, sound public finances and monetary conditions and a sustainable balance of payments’. The only exceptions to the free running of the markets that are mentioned in the treaties are in the Arts. 27 and 144. The first of these states that the Commission can decide on temporary derogation from the principles of free market for the ‘economies showing differences in development’, however, such provisions ‘must be of a temporary nature and must cause the least possible disturbance to the functioning of the internal market’. The Art. 144 contains a similar clause that allows the governments to take precautionary protective measures in case of a sudden crisis in the balance of payments. The Art. 21.2e of TEU also mentions that in its foreign policy, the EU shall ‘encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade’. This clear adherence to the neoliberal project is further expanded in the Art. 206 of TFEU, which states that the Union will contribute ‘to the harmonious development of world trade, the progressive abolition of restrictions on international trade and on foreign direct investment, and the lowering of customs and other barriers’. Finally, if the member states adopt measures that distort competition and the principles of free market as laid down in the treaties, the Arts. 258, 259 and 348 of TFEU allow the Commission or any member state to bring that matter before the European Court of Justice. The Art. 260 of TFEU then stipulates that the Court’s decisions are binding and the member states that fail to comply are liable to fine specified by the Commission.

Notwithstanding the presence of these neoliberal provisions in the EU treaties, some authors such as Laurent Pech argued that the leading critics of neoliberalism ‘are mysteriously selective in their reading’.46 Pech therefore points out that TEU and TFEU also contain what he considers an ‘extensive set of social objectives’.47 Is it possible to confront such charge? Indeed, Pech is right when he notes that the present treaties explicitly mention a number of social commitments. One should thus recall the Art. 3.3 of TEU that states that the Union shall establish ‘a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment’ (it should be noted that some authors would certainly see argue a contradiction between ‘highly competitive’ and ‘full employment and social progress’). Similarly, the Art. 153 of TFEU recounts an extensive list of the objectives that ‘the Union shall support and complement’ to the activities of the member states. They range from the commitment to the improvement of working conditions (a) and working environment (b), to the combating of social exclusion (j).

Nevertheless, in the light of the actual institutionalisation of the EU treaties as recounted higher above, one should question the seriousness of these commitments. Surely, if that commitment carried more than rhetorical weight, the EU would not subsume social policy under that general neoliberal framework, which was analysed over the course of this essay. The goal of combating social exclusion, or building a truly social market economy is certainly not compatible with the weak institutionalisation of the social dialogue with the employees, absence of substantive social policy, weakly regulated common market that favours ‘high competitiveness’, or the policies of fiscal austerity promoted by the EMU and SGP. It is rather the case, as Apeldoorn pointed out, that such subscription to social policy goals is characteristic for the political project of embedded neoliberalism with its effort to co-opt the other social strata to what still remains essentially a neoliberal project. In the end, however, such support for social values does not go beyond mere rhetorical commitment.

Conclusion

As Douglass North suggested already in 1991, the structure of the EU, including both its constitutive treaties and its actual policies, is ‘not politically innocent, but rather facilitates or hinders the adoption of specific political programs’.48 In this essay it was argued that the model of capitalism promoted by the EU can be best described as embedded neoliberalism. To this end, a general model of neoliberalism was developed and consequently applied when analysing the development of the EU’s economic integration from Jean Monnet to the last amendment of the constituting treaties by the Treaty of Lisbon. Firstly, the claim that the neofunctionalist project of economic and political integration was inherently (neo)liberal was dismissed. Secondly, it was shown that in the 1980s the project of embedded neoliberalism, supported by the European Round Table of Industrialists, won over other two competing models of capitalism: neo-mercantilism and social democracy. The subsequent development in the EU, as best perceived in the establishment of Economic and Monetary Union and fiscal constraints imposed by the Stability and Growth Pact, then proceeded along the lines of embedded liberalism, with a limited commitment to social policy, which acquired market-enabling character. Finally, the neoliberal character of the European economic integration was confirmed by analysing the essential principles of the Treaty on European Union and Treaty on the Functioning of the European Union.

* I have written this paper in 2010 as a part of completing my MA European Studies at King’s College London. This version has a slightly reworked introduction that sets it in the context of the eurozone’s fiscal crisis.

Bibliography

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Begg, Iain, and Jos Berghman (2002), ‘Introduction: EU social (exclusion) policy revisited?’, Journal of European Social Policy, Vol. 12, No. 3, pp. 179-194.

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Bieler, Andreas (2007), ‘Co-option or resistance? Trade unions and neoliberal restructuring in Europe’, Capital & Class, Vol. 31, No. 3, pp. 111-124.

Blackburn, R. (2005), ‘Capital and social Europe’, New Left Review, No. 34, pp. 87-112.

Bonefeld, W. (2002), ‘European integration: The market, the political and class’, Capital & Class, No. 77, pp. 57-86.

Bourdieu, Pierre (1998), Contre-feux: Propos pour servir à la resistance contre l’invasion néo-libérale (Paris: Editions Liber).

Cassen, Bernard (2007), ‘Résurrection de la « Constitution » européenne’, Le Monde diplomatique, December, p. 8.

Chomsky, Noam (1999), Profit over People – Neoliberalism and Global Order (New York: Seven Stories).

Eichengreen, Barry (2007), The European Economy Since 1945: Coordinated Capitalism and Beyond (Princeton and Oxford: Princeton University Press).

European Central Bank, ECB: Economic and Monetary Union, http://www.ecb.int/ecb/history/emu/html/index.en.html (Accessed 23 April 2010).

European Commission (2010), ‘Europe 2020: A strategy for smart, sustainable and inclusive growth’, available at http://ec.europa.eu/eu2020/pdf/COMPLET%20EN%20BARROSO%20%20%20007%20-%20Europe%202020%20-%20EN%20version.pdf.

European Council (2008), ‘Consolidated Versions of the Treaty on European Union and the Treaty on the Functioning of the European Union’, Official Journal of the European Union, Vol. 51, pp. 1-388.

European Round Table of Industrialists, Members A-Z, http://www.ert.be/members_a_to_z.aspx (Accessed 22 April 2002).

Gill, Stephen (2003), ‘A Neo-Gramscian Approach’ in Alan Carfuny and Magnus Ryner, eds., Neoliberal Hegemony and Transformation in Europe (Lanham: Rowman & Littlefield).

Gillingham, John (2003), European Integration 1950-2003 (Cambridge: Cambridge University Press).

Grieve Smith, J. (2005), ‘Expansion is the only way to cut Europe’s dole queues’, Guardian, 14 December.

Haas, Ernst B. (1958), The Uniting of Europe: Political, Social, and Economic Forces, 1950-1957 (Stanford: Stanford University Press).

Hainsworth, Paul (2006), ‘France Says No: The 29 May 2005 Referendum on the European Constitution’, Parliamentary Affairs, Vol. 59, pp. 98-117.

Hanson, Brian T. (1998), ‘What Happened to Fortress Europe? External Trade Policy Liberalisation in the European Union’, International Organisation, Vol. 52, No. 1, pp. 55-85.

Harvey, David (2005), A Brief History of Neoliberalism (Oxford: Oxford University Press).

Hermann, Christoph (2007), ‘Neoliberalism in the European Union’, Studies in Political Economy, Vol. 79, pp. 61-90.

Kendall, Gavin (2003), ‘From liberalism to neoliberalism’, Conference paper presented at the Social Change in the 21st Century Conference (Queensland University of Technology: Centre for Social Change Research).

Kesner-Škreb, Marina (2008), ‘Stability and Growth Pact’, Financial Theory and Practice, Vol. 32, pp. 83-85.

Kol, Jacob, and L. Alan Winters (2003), ‘Recovering from Cancún: The EU responsibility’, Intereconomics, pp. 339-345.

Mitrany, David (1994), ‘A Working Peace System’, in Brent F. Nelsen and Alexander Stubb, eds., The European Union: Readings on the Theory and Practice of European Integration (London: Lynne Rienner, 1994), pp. 77-97.

Mitzman, A. (2005), ‘Beyond the EU Constitution: Agenda for a sustainable Europe’, Counter Punch, 26 May.

Pech, Laurent (2007), ‘The European Project: Neither Neo-Liberal, Nor Socialist – A Reply to Andy Storey’, The Irish Review, Vol. 36, pp. 95-110.

Pollack, Mark A. (1998), ‘Beyond Left and Right? Neoliberalism and Regulated Capitalism in the Treaty of Amsterdam’, Working Paper Series in European Studies, Vol. 2, No. 2, pp. 1-43.

Saad-Filho, Alfredo, and Johnston, Deborah (2005), ‘Introduction’, in Alfred Saad-Filho and Deborah Johnston, eds., Neoliberalism: A Critical Reader (London: Pluto).

Scharpf, Fritz W. (2002), ‘The European Social Model’, Journal of Common Market Studies, Vol. 40, pp. 645-670.

Schmitt, Carl (2008), Constitutional Theory (Durham: Duke University Press).

Storey, Andy (2008), ‘The ambiguity of resistance: Opposition to neoliberalism in Europe’, Capital & Class, Vol. 32, No. 3, pp. 55-85.

Strafford, John (2009), Our Fight for Democracy: The United Kingdom and the European Union (London: The Bruges Group). Available at http://www.brugesgroup.com/OurFightForDemocracyPaper.pdf.

Talani, Leila Simona (2008), ‘A dead Stability and Growth Pact and a strong Euro: there must be a mistake!’, in Leila Simona Talani and Bernard Casey, eds., Between Growth and Stability: The Demise and Reform of the Stability and Growth Pact (Glos: Edward Elgar), pp. 85-108.

Taylor, G., and Mathers, A. (2002), ‘The politics of European integration: A European labour movement in the making?’, Capital & Class, No. 78, pp. 39-60.

Thorsen, Dag Einar and Lie, Amund (2002), What is Neoliberalism? (Oslo: Department of Political Science, University of Oslo). Available at http://folk.uio.no/daget/What%20is%20Neo-Liberalism%20FINAL.pdf.

Touraine, Alain (2001), Beyond Neoliberalism (Cambridge: Polity).

Tsoukalis, Loukas (2008), ‘Can or should we have a more political Europe?’, Policy Network, available at http://www.policy-network.net/index.aspx?id=1188 (Accessed 21 April 2010).

Show 48 footnotes

  1. Hainsworth (2006), p. 104.
  2. Cassen (2007), p. 8.
  3. E.g. for the position from the right see Strafford (2009); and from the left Tsoukalis (2008).
  4. Indeed, the majority of constitutional theorists argue that a constitution should outline only the most general principles of the political unity with which the whole polity can identify. Cf. Schmitt (2008), pp. 59-74. This would leave the determination of concrete political norms, which have always more transient nature than the constitution, to the actual, democratically elected parliamentary majority.
  5. Cf. Apeldoorn (2002); Bonefeld (2002); Storey (2008). But consider Pech (2007), who disagrees with Storey and argues that the EU project also contains a substantial social dimension.
  6. Saad-Filho and Johnston (2005), pp. 1, 3.
  7. Cf. Bourdieu (1998); Chomsky (1999); Touraine (2001); or Saad-Filho and Johnston (2005).
  8. Thorsen and Lie (2000), p. 2.
  9. Harvey (2005), p. 2.
  10. Kendall (2003), p. 6.
  11. Hermann (2007), p. 62.
  12. Kendall (2003), p. 6.
  13. Mitrany (1994).
  14. Haas (1958); Gillingham (2003), p. 28.
  15. Cf. Benoist (2008).
  16. Blackburn (2005); Grieve Smith (2005); Mitzman (2005); or Storey (2008), pp. 76-77.
  17. Hermann (2007), p. 69.
  18. Eichengreen (2007).
  19. Quoted in Hermann (2007), p. 70. The original source is Gill (2003), p. 63.
  20. Hermann (2007), p. 71.
  21. Ibid.
  22. Hanson (1998).
  23. Scharpf (2002), pp. 647-648.
  24. European Round Table of Industrialists website.
  25. Apeldoorn (2002), pp. 78-82.
  26. Ibid., pp. 171-173.
  27. Ibid., pp. 78-82.
  28. Ibid.
  29. Apeldoorn (2002), pp. 158-89; Kol and Winters (2003).
  30. Storey (2008), p. 70.
  31. Ibid., p. 71.
  32. Apeldoorn (2002), p. 185.
  33. Scharpf (2002), pp. 645-670.
  34. European Commission (2010).
  35. Cf. Bieler (2007); Taylor and Mathers (2002), pp. 39.-60.
  36. Storey (2008), p. 71.
  37. Scharpf (2002), pp. 645-670.
  38. Begg and Bergman (2002).
  39. European Central Bank website.
  40. Apeldoorn (2002), pp. 162-170.
  41. Scharpf (2002), p. 648.
  42. Ibid.
  43. Talani (2008).
  44. Kesner-Škreb (2008), pp 84-85).
  45. European Council (2008).
  46. Pech (2007), p. 5.
  47. Pech (2007), p. 6.
  48. Quoted in Pollack (1998), p. 5.

Europe scores a victory: Polish elections and European integration

The official poll results speak clear: with 39.2 % of the votes and 207 seats in the 460 seat Sejm (lower house of the Polish Parliament), liberal conservative Civic Platform (PO) of incumbent PM Donald Tusk is a clear winner of last Sunday’s (9 October) general elections. Second with 29.9 % came the national conservative Law and Justice party (PiS) of former PM Jaroslav Kaczynski. Since pro-European credentials of Mr Tusk are well known, this is a timely moment to consider the significance of this result for Europe as a whole. Will the government’s re-election bring any changes to its positive policies to the Union and its integration? And why the euroscepticism of PiS and its European counterparts has to fail in the long duration?

Old-New Coalition and its pro-Europeanism

PM Donald TuskCivic Platform is likely to form a coalition government with its current partner, centrist Polish People’s Party (PSL), which came out fourth in the polls (8.9 %), placing itself behind Palikot’s Movement (10 %). This would give the coalition a slight majority of 235 votes in Sejm and allow smooth continuation of their present policies including those of the Polish Presidency of . Mr Tusk may face quite stringent coalition demands from PSL’s leader and Minister of the Economy Waldemar Pawlak, whose party represents agrarian interests of the country. Polish media suggest that there will be probably only minor disputes over domestic policy issues and coalition talks will mostly involve haggling about the division of ministerial positions. Europe will be off agenda as PM Tusk and Mr Pawlak share the same supportive attitude towards European integration and on several occasions stated that they stand for ‘a strong Europe [that is] economically and socially integrated’. In a speech to the European Economic and Social Committee’s plenary in July, Mr Pawlak thus argued that Europe can only profit from further integration and economy of scale and gave further backing to a tighter integration of industrial policy. This well complements Mr Tusk’s own reputation as an advocate of the community method in EU affairs, who does tend to miss an opportunity to denounce ‘a new wave of euroscepticism’ in the Union.

The Kaczynski brothers and problems with euroscepticism

With some hindsight, the domination of the Polish political scene by pro-European Civic Platform  is a fascinating turn of events from the time when Poland was still led by the eurosceptic Kaczynski brothers. (The late Lech Kaczynski was the President of Poland from 2005 until his death in 2010, while his identical twin Jaroslaw Kaczynski served as PM from July 2006 to November 2007.) Many commentators, several of Polish origin, argued back then that the Kaczynskis only reflect the country’s ‘deep-seated nationalism’ and ‘suspicions of old enemies like Germany and Russia’. The Law and Justice party, which is still presided by Jaroslaw Kaczynski, perhaps supports Polish membership in the EU, but only on the grounds that it serves Poland’s national interests. It hardly needs to be repeated that if every country approached the Union expecting that it will fulfil its national demands, there would be little reason for trying to build a Union of common interests in the first place.

In this regard it is even less surprising that PiS has always been staunchly Atlanticist, sharing this stance with other European nationalist and republican parties (e.g. Front National, Geert Wilder’s Party for Freedom, Czech Civic Democrats, the British Conservatives). The United States and Transatlantic partnership are in these parties’ line of thought regarded as some sort of ‘saving grace’ that will assure European defence without having to resort to the ‘inconvenience’ of sharing sovereignty with Europe. Surely, even if the US were not troubled by the need to implement its own defence budget cuts, just like any other nation state they are primarily interested in their own defence and strategic interests, and the concern over their allies’ security including Poland’s is only of the second-order importance. Similarly, if the eurosceptic Atlanticists prefer to secure defence in a military alliance rather than under the auspices of a European federation, it is unclear why to prefer NATO to a defence pact with their culturally and geopolitically closer European neighbours. Be it under the EU’s Common Security and Defence Policy, OSCE or by supporting some other kind of European defence cooperation. It becomes clear that nationalists like the Kaczynskis pursue only an idealised, national spectre of sovereignty, rather than its true content, which lies in the fact that a given polity possesses a tangible and not just legal control over the full range of its domestic affairs: in finance, culture just as in defence.

In a world where US military expenditure in 2010 was $698 billion and China’s $114 billion, even countries with a long warfare tradition such as Poland cannot gather enough of funding to counter the newest, high-tech security challenges. (For comparison, Poland’s military expenditure in 2010 were $10.8 billion, whereas collectively, the EU-27 spent $270.6 billion in 2009, which is only about 39 % of the US’s expenditure.) It is often striking that the same political parties who idolise national sovereignty favour increasingly greater liberalisation of transborder movements of commerce and finance – in other words, they stand for economic globalisation, which in turn functions as the principal bearer of global consumerist ‘culture’. Since financial markets with its rating agencies and speculators do not respect any legally defined national boundaries, the rhetoric of national sovereignty serves only to disguise the real division of powers, which has waned from the control of national politicians long time ago. If the restoration of impenetrable national borders remains an unfeasible dream of politicians like Mr Kaczynski, it is possible to imagine that globalisation might be made to take a different form that would be more favourable to the specificities of various national cultures and that would curb down the power of global capital so as to give back to the people political control over their economies and societies. The EU can be an agent of such reassertion of popular sovereignty, but arguably, so far it has been rather the foremost European  ambassador of neoliberalism and global financial interests.

Sparkling new debate in Central and Eastern Europe?

PM Tusk and his old-new government coalition perhaps do not offer such alternative to the EU’s current ‘globalist’ form. Yet, they rightly perceive that in the long term, European integration is the only possible remedy for social and economic problems that Europe currently undergoes. Civic Platform’s second success might well sparkle debates on the issues of integration and national sovereignty in other Central and Eastern European countries. It is to be hoped that these discussions will be lead in a creative form, giving space to different models the integrated Europe might take. Most importantly, they cannot forget to highlight that for those who oppose the destruction of national identities that proceeds under the steady march of globalisation, a European union is a part of the solution, and not necessarily a problem.

Althusius: A Thinker of European Federalism

Johannes Althusius
Johannes Althusius

As the ‘F-word’ is increasingly discussed in the intellectual and political circles as a viable solution to the Eurozone crisis, it is useful to remind ourselves that there is more to federalism than the well-known model of the United States. In fact, there is an older strand of federal thought that is peculiar to Europe. And this unknown thinker whom I would like to present on the following lines can be rightly called its father. Readers will shortly discover that Althusius’s federalism is easily distinguishable from its American counterpart by its extension of the federal principles onto the society as a whole. The federation is not simply a kind of a nation-state that distributes political prerogatives between the institutions at the state and federal levels. Althusius’s European federalism goes much further below. It is already families, firms, towns and other socio-economic entities that are perceived as rightful holders of political and other rights, and who need to have a say in the decision-making of higher strata of society that contains them. This, indeed, might be precisely what is needed in building a functioning polity in such a complex social reality as we have in Europe.

Let us first briefly start with the life of Johannes Althusius (1557-1638) himself. Besides being a jurist and prolific Calvinist political thinker, Althusius was engaged in active politics of the city of Emden. As a syndic of that city, he had become the main instigator of the arrest of the city’s provincial lord, count of Eastern Frisia, by Emden’s city councillors that transpired on 7 December 1618. Althusius vigorously defended the councillors’ decision as a ‘legitimate act of self-defence and resistance’ against the provincial lord’s infringements on the city’s rights, considering it an ultimate resolve ‘warranted under every natural and secular law’.[1] As will become apparent with the discussion of his work, the right of resistance to tyranny of a government that does not respect the rule of law is a key part of his federal thought.[2] His most famous work Politica Methodice Digesta (Politics Methodically Digested, first published in 1603), which will be taken here as the main source of Althusius’s federal thought, in a similar vein justifies the right of the Dutch provinces to secede from the crown lands of the Spanish ruler.

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Last European Kaiser

Otto von Habsburg and his spouse, Princess Regina of Saxe-Meiningen
Otto von Habsburg and his spouse, Princess Regina of Saxe-Meiningen

Otto von Habsburg, the son of the last Austro-Hungarian Emperor Karl I, died in his estate in the Bavarian town of Pöcking on 4th July. Undeniably, whom Europe lost is a man noble not only by lineage, but foremost by deeds and spirit. Politically active from the 1930s, he became one of the early proponents of European integration in the tradition of Coudenhove-Kalergi’s Paneuropean Union, which he first came to chair as Vice President (1957-73) and as President later on (1973-2004).

Being raised by his mother, Empress Zita, on the way to becoming a Catholic monarch and having later obtained education in political and social sciences at the Catholic University of Leuven, it was Christian faith that proved to have lasting influence on his public engagement. It was not surprising then that he felt politically closest to the Bavarian CSU. While its legendary leader Franz Jozef Strauss became his mentor, he started serving under its colours as a Member of the European Parliament for 20 years (1979-1999).

For the duration of his long life, and much beyond the floor of the European Parliament, Otto von Habsburg followed in the best footsteps of his family’s tradition in upholding the ‘imperial’ idea of Europe, a form of the political unity that is based not on membership ties to one nation or another, but on the allegiance to a principle. He was convinced that for Europe this central principle was Catholicism – it both inspired his vigorous political activism and fuelled his personal qualities, which included, among great resolve and bright intelligence (he fluently spoke 7 languages), also a deep sense of moral duty towards “the Habsburg family’s” peoples of central Europe. Notwithstanding the fact that he had to spend years in exile and obtained Austrian citizenship only after making a declaration that he would abstain from politics and renounce all personal claims to the Austrian throne, he ever remained a keen Austrian patriot.

His most notable act in the effort to reconcile European peoples separated by the world domination attempts of two superpowers was the organisation of the Pan-European Picnic in August 1989 on the Austro-Hungarian border: a symbolic event perhaps, but a one that gave many a hopeful signal that a better future might have been coming. In about 3 hours, 600 East Germans got the chance to cross the border to Austria, which was followed on 11 September by a complete opening of the border for the citizens of all Eastern European countries; the first time that a Warsaw pact member country ever did so. One can therefore only wonder what Otto von Habsburg thought of the events of the last few weeks, when France and Italy decided to put ‘temporary and targeted’ restrictions on the free movement in the Schengen zone, while Denmark restarted border spot checks on people travelling from Germany and Sweden just today, supposedly in order to ‘keep out criminals from Eastern Europe and illegal economic migrants’.

A European union he favoured was the one based on Christianity as Europe’s “soul”, although he and Paneuropean movement always accepted what they called the shaping role of other two monotheist religions. One could expect nothing else from a heir to the Austro-Hungarian monarchy coming from the Europe’s most renown Catholic dynasty. One can hardly doubt the earnestness of his belief, although, with some critical spirit, we should note that the origin of Europe, in the sense of its historical and cultural background, is not Christian but rather ‘pagan’:[ref]I put ‘pagan’ in inverted commas because the derogatory term paganus (“country dweller”) represents a Christian view on the ancient Mediterranean polytheist religions, not the one, quite obviously, held by their adherents.[/ref] fundamentally connected with Ancient Greece and Rome, which gradually adopted the creed of once-a-minor, monotheist sect and meld it with ‘paganism’ in such a way, that Catholic Christianity retained its notable elements; not least the worship of saints, these ancient heroes in a new mould. Similarly, it cannot be hoped that Catholicism will play much of a political role in uniting the world’s most atheist continent that is becoming even more so with every year. Any appeals for a return to the principles of the Church will have little effect in a culture of post-modernity, which already pursues a different god – that of the ever-present more, appearing as the trinity of greater profit – greater technological advancement – greater spread of (neo)liberal democracy worldwide, notwithstanding occassional disagreements of cultures-so-to-be-endowed. But this trinity that Heidegger called Gestell, a ‘frame’ through which we people of our time perceive the world, has escaped the notice of many other people than he – perhaps, of all of us. It nevertheless made the Otto’s wish that, one day, the EU’s future constitutional treaty might refer to the one God as a high authority, illusory. At the same time, one can well agree with Otto von Habsburg’s sighs that politicians do not speak much about religion anymore. Since spirituality and the holy belongs to the public space of any culture – no matter whether it is in the form of pondering about our ‘absent gods’, or about the issues related to religious plurality.

To end our brief homage to Otto von Habsburg’s life, which was that of a convinced European, who not only believed but also acted so that the continent’s peoples might once find reconciliation in their common European home, there are probably few more fitting words than those of Robert, chevalier d’Estouteville: “There where is honour and there where is faithfulness, there and there alone rests my homeland.” Without hesitation, we might take this creed as if it were the last European emperor’s own.

Towards a Eurasian federation?

Russia, Belarus and Kazakhstan finalise their customs union

As of 1 July, Russia, Belarus and Kazakhstan are operating under a full customs union. The Customs Union of Belarus, Kazakhstan and Russia, as is the official name of the entity, started functioning on 1 January 2010 with the introduction of a single customs tariff with the aim of boosting trade and investment in the region by opening it up to greater competition. This was followed on 1 July 2010 by a common ‘Customs Code’ that removed customs checks on the majority of goods traded between the three states. In the present, third phase, the whole process was finalised by removing custom border checkpoints that still controlled the goods flowing into the union from third countries. Passport controls and immigration authorities will remain in place, but the countries are establishing a working group to simplify passport and visa procedures. An overview of all the customs integration phases can be seen on the table from RIA Novosti below.

An overview of the essential facts about the Customs Union of Belarus, Kazakhstan, and Russia
Briefing on the new Customs Union of Belarus, Kazakhstan, and Russia. © RIA Novosti, 2010

The Customs Union and Europeans

What can Europeans expect from these unification efforts of the Eurasian troika? For those who hope that one day international affairs will be better off when centred around multiple regional poles, which would be politically, socially and economically integrated on the basis of their shared identity, the Russia-lead regional efforts are clearly a much welcomed step. Indeed, it is one of the main tenets of the European Strategist to endorse such very efforts. And notwithstanding recent disputes between Belarus and Russia, it seems that the creation of the customs union will move the region a few steps closer to a hypothetical ‘Eurasian federation’ of the Commonwealth of Independent States, as is a long-time dream of Kazakh president Nursultan Nazarbayev and several other visionaries.

From this it proceeds that the Europeans should bear in mind at least three points when following new developments in the region. First, the integration efforts are not yet complete. The parties stress that the customs union will allow them to proceed with the next stage of the integration in creating a common economic space (by 1 January 2012) with the free movement of goods, services and labour. This would create a major economic zone of about €1,473 billion of nominal GDP,1 or roughly about 12 % of the EU-27’s GDP of €12,683 billion.2 The initiative further proposes to unify the countries’ taxes (quite many Russian commentators applaud this step, because they fear that the customs union without common tax rates might lead to companies leaving the country to their neighbours, mainly to Kazakhstan),3 and establish common and trade monetary policies. Indeed, swiftness with which the Russians and its partners move is even more commendable when one considers that any effort to harmonise diverse tax regimes in the EU’s member states would be a political impossibility: even the Commission’s initiative to create a so-called Common Consolidated Corporate Tax Base (“CCCTB”) is being met with a considerable opposition, although it is being prepared in various working groups for last 7 years.

Second, the move is also another clear signal that in the follow-up to the 2008 financial crisis, Moscow is changing its economic policies in the former Soviet space. New York Times observed already a year ago that whereas formerly, Russia relied on its hard currency reserves to gain from its neighbours political favours by providing them with loans and direct subsidies of fuel, the new policy aims at elevating the economic prospects of the entire region with Russia as a natural gravity well.4 In the short term, Russian farmers and steel workers might lose in the competition with Belarus and Kazakhstan, but over time, it is assumed that Russian banks will benefit from gaining access to Belarus’ backward, Soviet-style economy, which is currently on the way towards privatising its major services and industries. Moscow will thus reinforce its role as the region’s financial and business centre and even more increase the allure of its domestic market for other neighbouring countries. Indeed, Kyrgyzstan and Tajikistan are already bidding for the membership.

Putin’s and Medvedev’s greater openness to their country’s economic integration has also a strong European dimension, as they would hope to extend the free trade partnership also to the EU and other EFTA countries. Here, however, they will not get any further without the co-operation of EU’s political leaders, which is lacking. The EU’s politicians are now on one hand much more concerned with the financial problems of the eurozone and, on the other, lack strategy and political will for leading a strong, common EU-Russian foreign policy.

A special status of Ukraine

Third, Ukraine continues to be a ‘blackjack’ of the geopolitical game between Russia, NATO and the EU, whose allegiance remains for the time being unclear. After the election of Viktor Yanukovych, who succeeded the Atlanticist Viktor Yushschenko, it was widely perceived as a Moscow’s triumph. Subsequent events, when he agreed to prolong the lease for Russia of the naval base in Sevastopol and declared that Ukraine will not bid for the NATO membership, seemed to have confirmed the fears of all uncritical Euro-Atlanticists. When the Russian daily newspaper Kommersant revealed a document describing the present Ukrainian government’s plan to develop close relations with NATO, if not seek the outright membership, it came as a shock both to the Atlanticists and Kremlin. Yanukovych is therefore a pragmatist who is above of all ‘pro-himself’.

So far, Yanukovych claimed that he seeks ‘association’ and free trade with the EU, but with the Russian strategic and cultural interests in Ukraine, Moscow will be putting increasing pressure on Kiev to join its customs union instead. In particular, Alexey Miller, CEO of Gazprom, implied that by the end of 2011, the price of natural gas for Ukraine might grow to an astronomical figure of $500 per thousand cubic meters. Is cutting off the subsidies a legitimate instrument of foreign policy? No doubt, although its ethicality is dubious at best. More seriously, one can doubt whether the ‘hard man’ attitude will serve Moscow’s interests in the long term, because such threats will rather repulse the Ukrainians from the Russian customs union then convince them of its benefits. Indeed, it is outright incompatible with the Russian latest effort to integrate its neighbourhood economically, as discussed above.

The EU cannot, however, engage in wishful fancies of Ukraine’s joining the EU under conditions that would be unacceptable to Kremlin, an event that would both endanger the EU-Russian strategic economic ties and cause instability in the region. Similarly, supporting further expansion of NATO is out of question beforehand: even if one leaves aside the fact that it would have much more detrimental effect on the EU-Russian relations that the Union membership bid (which is a fact independent of the perceived legitimacy or illegitimacy of the Alliance’s continuing expansion), NATO is a side arm of Washington foreign policy and therefore unacceptable for anyone who is serious about striving for a sovereign Europe. Besides, as the recent poll suggest, no more than a third of the Ukrainians support the NATO membership.5 If the foundation and standard on which international relations should be built is therefore political self-determination and multipolarity, rather than hegemony or any efforts at ‘civilising missions’, the EU and Russia will have to get down to one table and reach such agreement on Ukraine that will start from what the Ukrainians want themselves. At the same time, the deal will have to be acceptable to all the three sides. To imagine what it might look like is premature, but it is possible that the Russian ethnic minority in Ukraine would seek to build strong ties with the Russian, while the ethnic Ukrainians would look towards the EU. Preferably, this should be complemented by restarting the efforts at Euro-Russian strategic partnership and thus proceed along the way that would offer economic, social and strategic benefits to everyone in Europe without the destructive zero-sum logic of ‘either Kremlin or Brussels’.

Having said that, it is clear that the new Customs Union of Belarus, Kazakhstan and Russia will play a key role in the region in the next few years. For the time being, the Europeans will do well to remember these three tenets in mind: it will continue on, signals a change in Russia’s neighbourhood policy, and Ukraine will be the main unknown in the geopolitical game. Will the EU and European political elite prepare a common and adequate foreign policy that would respect these stakes? That is to be doubted. But no matter, that is no reason for analysts not to keep trying for their voice to be heard and hope that after the euro zone problems get solved, European political representatives will gradually turn outwards to their partners and use the economic initiatives such as the Customs Union for their shared benefit.

Show 5 footnotes

  1. IMF World Economic Outlook Database, April 2011. Exchange rate used for the calculations: 1 EUR = 1.4464 USD (ECB data for April 2011).
  2. Eurostat forecast from July 2011 for 2011.
  3. E. g. Коммерсанть FM, ‘Таможенный Союз Стер Границы’, Коммерсанть, 7 January 2011 <http://kommersant.ru/doc/1670431?isSearch=True> (accessed 1 July 2011).
  4. Andrew E. Kramer, ‘Russia, Belarus and Kazakhstan Form Customs Union’, The New York Times, 5 July 2010, section Business Day / Global Business <http://www.nytimes.com/2010/07/06/business/global/06customs.html> (accessed 1 July 2011).
  5. Kramer.