Fifty years ago, an important decision was made in Vienna: the Vienna Institute for International Economic Studies (WIIW) was founded. As president of the Institute, I took the opportunity at the traditional spring summit to highlight the trajectory of Europe over these past 50 years. Europe has been divided, and no end to this division was foreseen 50 years ago. However, behind the decision to establish such an institute was the idea -- or rather the hope -- of a slow convergence between Europe’s east and west. Needless to say, things turned out differently. We have witnessed a mixture of gradual developments and disruptive changes as well as a combination of integration and disintegration -- sometimes at the same time.
A process of economic integration and democratization
The last 50 years have been years of dramatic change, but in the beginning, developments were smoother and slower. The western half of Europe formed itself into an economic and then gradually into a political union. With political changes in the Iberian Peninsula and Greece, the western economic union also gained a southern flank. And the introduction of the euro has -- after some years of critical challenges -- had a strong integrating effect.
Over this period, time initially seemed to stand still in the eastern and southeastern regions of Europe. Necessarily, there were developments, but when they became too revolutionary, they were crushed. The potential for political initiatives by the public or even within the various Communist parties was very limited, and it was Moscow that stood behind these limits. One should not forget the feeling that many had and still have that, even when it was under Communist leadership, Moscow/Russia is an imperial power trying at minimum to control the countries within its neighborhood -- if outright incorporation into Russia is not possible.
Yugoslavia was not under the control of Moscow, but the country’s leadership sought to maintain the fragile balance between its different ethnic and religious groups. Nevertheless, the authoritarian approach to achieve this goal was not successful, as we saw at the end of the 1990s.
A Great Leap Forward
The dramatic changes in 1989/1990 came as a surprise for most observers. Economic inefficiency and stress, together with civil society efforts, formed an explosive mixture in the countries of the Eastern Bloc. This development led to a severe decoupling from Russia -- politically and economically. This decoupling was partly supported by the West but was especially promoted by those countries that suffered most by being occupied or controlled by Moscow.
How did the West react to the new Russia deprived of its empire? The EU offered a „modernization partnership,“ and NATO offered information exchange and discussions inside a NATO-Russia Council. These offers were not strong enough to connect the West more closely to Russia, and there was insufficient willingness to do so. Russia was seen as the primary responsible party for all the evils of the Soviet Union, and many did not trust Russia’s willingness to transform itself into a democratic and peaceful country.
Russia at a crossroads
At the same time, Russia’s political and economic elite were split. Some wanted closer ties with the West to transform Russia into a „modern“ country. They were supported by Western experts who argued for a quick transition into a neoliberal economy and society.
But there were also those who seized companies and sought to enrich themselves not by modernizing the economy but by exploiting existing resources. This is especially true for mineral resources, predominantly oil and gas. This group increasingly integrated itself into Russia’s political class, from Yeltsin to Putin.
Some in the West thought that a corrupt system in Russia would be a guarantee against the recovery of Communist forces, and they were not unhappy about the expansion of corruption. Most of us saw Putin as a stabilizing factor and an obstacle against a resurgence of the Communists under the leadership of Zyuganov. We underestimated the presently-apparent trajectory of Putin into a dictator who would bring back war to Europe.
Within domestic Russian competition, oligarchs had the better card. They could offer the new and small political class quick financial benefits. And the political leaders -- and soon the only remaining political leader -- guaranteed their economic privileges if they respected their -- or more accurately his -- political prerogative. They jointly organized an effective capture of the state, which naturally included control of the media through money and political censorship. This backward-looking and partly revanchist orientation of Russian politics received additional ideological and religious support.
Some steps back inside the EU
The close and corrupt connection between economic and political agents can also be observed beyond Russia. In several former Communist countries -- including some in the EU -- similar connections grew and have also given rise -- perhaps in a more moderate way -- to state capture. Such policies also characterize some successor countries of Yugoslavia.
This development is in strong contradiction to the basic principles and values of the EU. So how could it happen within EU countries? On the one hand, some parties right of the center had only a rapid and thorough liberalization in mind. Even if this course was successful economically, many people were left disappointed. They felt left out and neglected by liberal political forces. Some right-wing parties provided an answer in the form of populism combined with the restriction of civil liberties, and they received support by voters.
On the other hand, many parties on the left failed in their transformation from Communist to social-democratic parties. They were ambivalent in their attitude to the needed changes for a liberal democracy, and some even permitted a corrupt relationship between politics and the business sector. By adding some social and often populist policies into this mix, they were also successful in elections.
Once these right- or left-of-center populist parties establish themselves, it becomes difficult to vote them out and send them into the opposition. However, it is not impossible, as this is a defining characteristic of democracies, and democracies are the best basis for balanced economic development and sound social well-being -- at least in the long run.
Many call for a stronger reaction by the EU to these developments, but in a democratic and law-based union, one cannot simply punish a government that violates its values. Difficult and lengthy legal procedures must be respected. While these challenges will impact the EU for many years to come, for now it is the EU that must set the limits to authoritarian rule and prevent transformations into outright dictatorships.
The challenge of the pandemic
The biggest challenges for the EU will come from the outside. Covid-19 has already demanded more joint actions than at any time before. Certainly, the reaction to the pandemic was slow, but in comparison to former economic packages, the recovery program for the post-Covid period was quite encouraging.
Nevertheless, we would have hoped that some of the proposals by our WIIW staff, such as the European Silk Road, would have received a more positive response from the EU. In general, the reliance of EU institutions on economic and social expertise is too weak. Needless to say, it is politicians who must decide, but the mutual exchange of ideas and proposals could be much more elaborate and productive.
War returns to Europe -- a new boost for enlargement?
An even greater challenge has now called for drastic new measures. The war in Ukraine has changed the geopolitical situation dramatically. All of a sudden, military expenditures in support of Ukraine must be spent from the EU budget. But even more exceptional decisions must be taken: Ukraine, Moldova, and Georgia want a clear answer to their request to join the EU.
At the same time, one cannot forget that the countries of the Western Balkans are already waiting for the fulfillment of the EU’s promises to them. North Macedonia and Albania are waiting for the opening of accession talks, and Kosovo still waits for the promised visa liberalization. In the past years, these promises have been broken due to resistance by some EU member countries. The treatment of these countries is particularly unfair in regard to financial support.
According to a recent study by the WIIW and the Bertelsmann foundation, the Western Balkan countries receive much less financial support in proportion to their GDP than the former accession countries form eastern Europe. But it would be unfair to blame the EU alone for the stalemate in the enlargement process. Certainly, the leaders of several countries of the Western Balkans are more interested in their nations’ “heroic” pasts than in the future. This is one of the reasons why the future-oriented youth is leaving the region en masse.
What we need now is a new approach to a bigger European community and a more sophisticated accession process -- for the Western Balkans, but also for Ukraine and others. This staged or step-by-step process should give countries incentives to decide and implement necessary reforms in order to ascend to a new stage of integration before they can finally join the EU with full obligations and full rights. This could be combined with a comprehensive European Political Union -- as expressed by Enrico Letta and Emmanuel Macron -- which would give a connection and working relationship with the EU to all countries that currently aspire to join the bloc.
The connection process for all countries willing to join the EU must continue. If the EU wants to gain strength vis-à-vis autocratic and anti-EU influences in its neighborhood, it must act quickly -- not by accepting without reservations and careful scrutiny new members, but by organizing a well-planned enlargement process.
At the same time, we must lead a combined fight against Russian aggression and in support of Ukraine’s sovereignty, but we must make it clear that the EU is a project that aspires to transcend nationalism. If the EU wants to be effective, we need this move away from nationalism towards common positions, primarily according to the community method. In addition to appreciation for the EU’s recent unity, we need a strengthening of the community method in combination with majority voting and a weakening of the veto rights.
A new alignment with the UK
In this respect, I must also return to the alone country that has left the EU: the United Kingdom (as long as it remains united.) The current government is using the war in Ukraine to get more engaged in and on the European continent. The UK presents itself as a strong military and security power, and it would be beneficial if this would lead to a new alliance with the EU.
Sometimes I hear British voices that support the “new Europe” of Poland, the Baltics, and the Scandinavian countries that are about to join NATO. In addition, from the Ukrainian side, one hears many voices that draw such a difference: the good side of the staunch supporters of Ukraine compared to the old-fashioned countries -- especially Germany and France – that still believe one can find a compromise with Putin by handing over some parts of Ukrainian territory.
We should make it clear that only a united EU can meet the big challenges of ending the war and organizing the rebuilding of Ukraine. And we still need a united EU to deal firmly with Russia after the war -- and hopefully soon after Putin. However, Russia remains a European country, even if some want to deny and neglect this fact of geography.
A new look at connectivity
In the past, many in the West -- not only in Germany and Austria -- hoped for a change in the authoritarian system in Russia and China through strengthening economic ties. It was not the most important aim of trade, but rather a desired consequence. The WIIW organized seminars for and with the OSCE about connectivity as a means to overcome tensions and prevent conflict and war. The IIP has also remained active in finding ways to connect countries and people who have been led against each other by their leaders, and both institutes will continue to do so in the future.
However, this interconnectivity did not and does not achieve the desired outcome, especially if the incomes generated by international trade are not used to modernize economies and societies. In China at least, money earned through international trade was and is used to modernize the economy and improve some basic living conditions, but, at the same time, political structures have become even more streamlined. There are also some voices that express an aggressive foreign policy.
In Russia, not even modernizing the economy was high on the political agenda. Russia’s strong oligarchic class got richer and richer and spent its money on yachts and real estate in the West. The failure to prepare for the future -- for example by modernizing the economy and democratizing the public sphere -- led to a backward-looking policy to the times of a “Great Russia.” And this led to the aggression against Ukraine.
Strong decoupling from Russia
Over the past few decades, the integration of eastern European countries led to a decoupling from Russia, demonstrated by research and statistics by the WIIW. This has only been partly compensated by Western investment in Russia. Officially, these investments were welcomed, but there were many bureaucratic obstacles to overcome.
The present geopolitical situation is characterized by a severe decoupling from Russia. Many experts argue -- including in a recent event organized by the WIIW -- that Russia will face enormous setbacks primarily due to the fact that many Western companies will withdraw from Russia and, as a result, important products and technologies will be unavailable for the Russian economy. We do not yet know what this kind of decoupling means for Russia’s economy, society, and politics.
How will this influence Russia’s international behavior and actions? Will it obstruct international institutions and prevent important progress? It may have a sharply negative impact on global conflicts and/or policies. How should we organize the energy transformation necessary to combat climate change without Russia? Can we be satisfied to live in a world „without Russia,“ as our guest at the WIIW formulated it?
And China?
Many experts think -- and I agree -- that, on a global level, Russia will lose and China will win. If so, even more questions will rise over how the West -- and especially the EU -- should deal with a rising China. How should we deal with a China that is allying itself with Russia but sees Russia as a junior partner and makes Russia dependent on it?
The West also needs China as a partner for an efficient climate policy. It seems somewhat arrogant to claim that the West could easily beat Russia and China, economically and politically, at the same time. Regardless, Asia will become the world’s dominant region, and we must prepare for -- hopefully peaceful -- competition. We do not yet know how China sees this competition: as largely aggressive, combined with military threats, or primarily economic, with cooperation in climate policies?
Emerging powers
At the same time, one cannot forget the countries that do not align with the West, Russia, or China on an ideological basis. The countries representing at least half of the world’s population -- including India -- are not ready to connect on a permanent basis with one of the major powers. They must be convinced by concrete actions and direct benefits. The experience these countries had with the West during the Covid pandemic was not encouraging, and support among these countries for their energy transformation is very limited -- as shown in Glasgow.
The West -- and especially the EU -- will have to do more to support these emerging countries if they are to be convinced to support the EU’s positions globally. In particular, the renewed increase in global poverty -- due in large part to rising energy and food prices – cannot be accepted. This will require more economic and financial support by the West at a time when the demand for more military spending and social support for low- and middle-income communities at home is also rising.
One can also observe how suddenly refugees and immigrants are not perceived as a problem but rather as an opportunity in the EU. Discriminatory attitudes in many EU countries do not enhance the bloc’s perception by African leaders who are criticized for not acting enough against the emigration or transit of emigrants and refugees.
A new supply chain strategy
We have seen over the past years and months that globalization delivers many positive results and was undoubtedly responsible for reducing global poverty. However, we also saw the dependence and sensitivity of such a globalized world. In particular, the strong dependence on energy by modern Western economies is an extraordinary challenge.
In the short run, the EU must look for a new supply of oil and gas. At the same time, it must look for sufficient resources for its own energy transition in the short term. The EU must not commit the same mistake it made with hydrocarbons; instead, it must promote an efficient strategy of diversification and invest in a circular economy to reduce import dependency on materials it could gain from recycling. This is especially important for the bloc’s energy transformation.
It must be clear that de-globalization is not on the agenda, but rather diversification and greater resilience within the framework of a globalized world. In view of the critical challenge of combatting climate change, this is the only reasonable strategy.
Challenges for the EU
If we consider the enormous challenges that the EU must face, it is surprising that, until now, so much unity could be preserved. When some criticize that more courageous steps -- such as ending gas supplies from Russia -- were not taken, we must not forget that in democracies, public support must be maintained.
Rising prices for food and energy, the energy transformation in the framework of a comprehensive climate policy, and new efforts for EU enlargement will also lead to discussions within member countries about the EU’s priorities. And let us not forget that in some EU countries, the number of EU-skeptical voters is still high -- or, as evident in the case of the French presidential elections, even increasing. We must avoid an overextension -- not so much geographically, but regarding competencies. The challenges for the still-young EU are enormous.
Hopefully the day will come when a restart for cooperation and interconnectivity can be envisaged. Because of the war in Ukraine, the policy of decoupling is unavoidable. However, we must remember that “Europe without Russia” is not the best Europe that we can imagine. But any alternative must be on the basis of a changed attitude by Russia towards its neighbors and the rest of the world. Additionally, this war shows that conflicts in Europe have enormous repercussions worldwide -- especially for the poorer parts of the world.
On the other hand, all recent and current crises -- the pandemic, wars, climate change, and more -- show the need to strengthen the EU and its institutions, including the Commission and the European Parliament. Only a strong EU can prove that the continent can provide an alternative to a backward-looking Russia and an ideologically-fixed China. This is not a position of a naive utopian; it springs from a realistic evaluation about we must do to help our citizens live in peace and an environment that guarantees adequate living conditions.
Dr. Hannes Swoboda, President of the International Institute for Peace (IIP), started his career in urban politics in Vienna and was elected member of the European Parliament in 1996. He was Vice President of the Social Democrat Group until 2012 und then President until 2014. He was particularly engaged in foreign, enlargement, and neighborhood policies. Swoboda is also President of the Vienna Institute for International Economics, the Centre of Architecture, the University for Applied Science - Campus Vienna, and the Sir Peter Ustinov Institute.