Mapping Eastern Europe
BSSB.BE World Economic Forum 30.08.2018
Europe Baltic Germany
* Central and Eastern Europe is often portrayed as a mix of political uncertainty and fragmentation.
What do patterns shaping the region’s past and learning from latest developments tell us about prospects for a shared future?
Given the partial success of the Lisbon Strategy, it has become of paramount importance to perform a thorough critical analysis of the nature of the objectives set by the newly-concocted Europe 2020 Agenda. Hence, amid the difficult times the European Union is facing, the fulfilment of this complex strategy is largely reliant on the active involvement of each member state.
By assessing the overall objectives of the aforementioned agenda, it becomes obvious that the role of Central and East-European states will be essential to their success, all the more because priorities pertaining to growth and cooperation tackle subjects this part of the continent is particularly interested in.
The relative experience of such nations in the area of “soft power” policies needs to be furthered, in order for them to attain more convergence and lead to an effective contribution to the social, economic and environmental dimensions of the Europe 2020 Agenda.
RISKS AND CHALLENGES A rapid integration and consolidation of the eurozone poses numerous risks for the CEE countries. Out of the Visegrad Group (V4) only Slovakia is currently a member of the eurozone.
Despite this fundamental difference of status, the V4 nevertheless remain reliable partners, sharing many characteristics including history, geography and economic make-up. Inevitably, once the eurozone becomes more integrated – and if no other V4 country joins the eurozone – there will be a growth in disparities within this small group, with Slovakia reaping the fruits of a -more completed EMU and extra re-distributional channels.
Further, if the eurozone moves forward in certain integration areas and starts to vote as one block in EU institutions, non-euro members might quickly feel marginalised. This scenario might also lay the foundations for the further destabilisation of the EU.
Interactive maps and data visualizations bring to life the historical trends and emerging geographic patterns behind the world’s pressing challenges.
The growth of disparities has to be carefully considered. With proposals for its own budget, a minister and parliament, the eurozone will be a self-sufficient and independent club within the EU. This will provide serious challenges for CEE countries outside the eurozone. Re-distributive mechanisms will change in terms of amounts and direction. A possible separate budget for the eurozone will result in a new ‘members only’ re-distributive channel.
This, in turn, might lead to a further concentration of capital in the eurozone and the growth of significant social and economic disparities between CEE euro and non-euro members. Moreover, the future set-up of the eurozone will more strongly reflect the positions of continental Western Europe than those of CEE countries, with less developed and structurally different economies. When it comes to social policy, taxation, energy market liberalisation and similar issues, Germany and France have much more in common than the more ‘liberal’ UK and CEE countries. The eurozone undoubtedly remains a work in progress in which structural economic, financial and political reforms are still incomplete.
This presents risks for CEE countries inside and outside the eurozone. In the case of the former, Slovakia, Estonia, Latvia, Lithuania and Slovenia cannot yet guarantee the stability of their economies and finances when the next economic crisis comes. In the meantime, some non-eurozone members like Poland and Hungary are hesitant to commit to joining the eurozone, afraid that another euro crisis will damage them if they release their national economic and financial autonomy to the supranational level.
During the last financial crisis, some CEE countries were able to use their independence from the eurozone to preserve their economies and financial markets. This was done through utilizing exchange rate fluctuations, controlling their own interest rates and, in the case of Poland, taking advantage of a larger internal market. However, a careful comparison of GDP trends among CEE countries before, during and after the 2008 economic crisis reveals a notable lack of differences between members and non-members of the eurozone (Figure 1).
Active participation in the single market has, put simply, bound non-eurozone countries to fluctuations of the Euro. The difference between being part of the eurozone or not lies in the stabilisation and protection mechanisms available to members and the question stands if such mechanisms can be also created and sustained at a national level.
- Pavlo Klimkin, Minister of Foreign Affairs of Ukraine
- Timothy Snyder, Richard C. Levin Professor of History, Yale University, USA
- Antónia Mészáros, Executive Director, Hungary, United Nations Children’s Fund (UNICEF), Budapest; Young Global Leader
- The publication is not an editorial. It reflects solely the point of view and argumentation of the author. The publication is presented in the presentation. Start in the previous issue. The original is available at: World Economic Forum