WARSAW / WASHINGTON – For hundreds of years, Poland suffered from an overbearing Germany that trampled on the rights of the Polish nation, occupied the country, and, at times, worked to extinguish the Polish nation-state entirely. No wonder that there is a residue of skepticism and caution in Poland when it comes to relations with its big neighbor to the west. A healthy distance and dose of hedging have long been the default position of the country’s foreign policy. Poland’s accession to the European Union has changed all that. Nearly eight years on, Poland is rephrasing its German question, and in a baffling way: how close is too close?

Last week, Poland consented to a European agreement that it did not like in the interest of keeping the continent together. European leaders had agreed on a fiscal compact, a treaty aimed at strengthening the fiscal discipline in the EU countries that choose to sign it, and set governing rules for the eurozone. Prime Minister Donald Tusk faced an uncomfortable choice. On one hand, Poland has declared itself a staunchly pro-European country. In his now-famous Berlin speech last year, Polish Foreign Minister Radek Sikorski spoke of the need for a strong, united, and even federal union. On the other hand, the eurozone was potentially moving ahead without Poland. The plan shaping up ahead of the summit called for meetings of the 17 eurozone countries, excluding Poland from what is seen in Warsaw as a vital decision-making body of a changing EU. Consequently, Tusk threatened Poland might not sign the treaty if this mechanism was not changed.

In Warsaw, eurozone summits are not simply seen as a crisis management mechanism for the euro, but as a nucleus of a smaller club in which most of the key decisions for the EU are made, some in areas beyond the single currency. France is the most active proponent of eurozone-only solutions, and a zero-sum game between France and Poland has developed around the question of a two-speed Europe. Warsaw fears that France wants to undo the EU’s eastern enlargement. Seen from Warsaw, inclusion is a core national interest; Poland did not join the European Union only to find itself sidelined.

The other eurozone members faced a dilemma of their own. No democratic theory stipulates that nonmembers ought to have voting rights in membership organizations. Since voting rights for nonmembers are out of the question, the group considered the PNV principle — “participate, not vote.” But even speaking rights would give nonmembers the opportunity to influence, and maybe even undermine, goals that member states deem essential to sustaining their common currency. Nonmembers should not benefit from the currency union while not contributing to it, and nonmembers should have an incentive to join. But strict exclusion of nonmembers is in nobody’s interest. Some nonmembers are really “not-yet-members.” They are, like Poland, candidate countries working to qualify and waiting for the right moment to join. They have a right to know what’s going on in the club they are aspiring to join. The more the eurozone coordinates to save its currency, the more it will make decisions that affect all 27 EU members. They might pertain to competitiveness, social systems, and taxes.

Keeping Poland in the cold is least of all in Germany’s interest. Poland is the most pro-European country outside the eurozone. Why alienate it? Last weekend, Germany got a taste of what that might mean when Sikorski warned that Germany should not even try to aspire to be a benevolent hegemon. Poland is Germany’s crucial ally for a more federal Europe and a power to help balance the less ambitious Brits and the more confederate French. Poland is essential in order to lead Central and Eastern Europe towards the eurozone and prevent Europe from splitting in two. It has rarely had a more central role in Europe and has never been a more pivotal partner of Germany.

In true European fashion, this led to a compromise, albeit an ugly one. The agreement allows non-eurozone countries to take part in the eurozone summits at least once a year, and whenever issues of competitiveness or the architecture of the eurozone are discussed. Additionally, Herman Van Rompoy, president of the European Council, assured that any summit of the euro 17 will be preceded by a meeting of all EU 27 member states.

An unhappy Tusk contends the agreement still establishes a decision-making format in which Poland does not have a vote, and frequently will not even be present at the deliberations. Nonetheless, Poland decided to join the other 24 signatories (the U.K. and the Czech Republic were the holdouts), marking yet another time that Poland chose “more Europe” when presented with a choice. The Europe Poland is choosing is less and less to its liking, but it is easier to influence the club from the inside than from the outside.

Despite a building relationship with Germany, Warsaw’s support of Berlin’s leadership in Europe is anything but unconditional: “Provided you [Germany] will include us in decision-making, Poland will support you,” Sikorski emphasized in his Berlin speech. Poland knows that it cannot always count on the unwavering support from its western neighbor, especially if Germany had to choose between Poland and France. Tusk’s goal now is to broaden Poland’s alliances within the eurozone, starting with Spain and Italy. Germany will have to earn Poland’s support.

Michal Baranowski  is the Senior Program Officer for Foreign Policy and Civil Society in the German Marshall Fund’s Warsaw office. Thomas Kleine-Brockhoff is a Senior Fellow and Senior Director for Strategy at GMF’s Washington, DC office.

WASHINGTON– Strange as it may seem to some, there are those who wish to join the European Union, in spite of all its current flaws.

Croatian voters gave a resounding yes to becoming the 28^th member state of the European Union in a referendum held last Sunday. The country is slated to join as a full member on July 1, 2013, after the parliaments of all 27 current member states ratify the treaty of accession to the EU that Croatia signed in December 2011. The European model of interstate cooperation, the successful European peace project, the single market, and the principle of solidarity and mutual support: all these continue to exert the power of attraction to outsiders wanting to join.

The European Union, founded in 1957, is currently fighting one of its deepest crises: It is struggling to salvage the joint currency of 17 of its 27 member states. Chancellor Angela Merkel of Germany and other EU leaders have equated saving the euro with saving the Union itself.  There is a growing renationalization of politics in European countries, and fear of “others” is on the rise. Despite all this, a European country, Croatia, has decided through a democratic procedure that it wishes to join this European Union.

Croatian leaders have hailed this victory as “a great day for Croatia,” “a new day and a new chapter,” “a decision of such importance that we have made ourselves for the first time,” and “finding a haven guaranteeing security and peace.” But they also underlined that the dilemmas and concerns of those who voted against entry or abstained from voting have to be given due consideration.

The low turnout and the third of voters voting against entry were disappointing for many in Croatia, but also to a degree understandable. The crisis of the European Union, the fear that sovereignty is being taken away — after what has been perceived as a hard-fought war for national independence — the worry that now Croatia might also have to help bail out countries such as Greece, and the deep concern that a country that represents 0.8% of the population of the EU and 1.6% of EU parliamentarians will have no effective say in the affairs of the EU — all this created a relevant Eurosceptic movement and led more than half of the eligible voters to abstain.

In an electorate composed of 4.5 million voters, the turnout was 43.5%. This was, to date, the lowest turnout in an EU accession referendum. Of those who voted, 66.27% were for entry, 33.12% against.

Until now, 15 countries of the EU have asked their citizens to approve accession in referenda. The lowest turnout in a referendum for EU entry before Croatia was in Hungary in 2003, when 45.62% turned out, but 83% voted for joining the Union. Relatively low turnouts were registered in 2003 in the Czech Republic and Poland (55% and 58%) but with 77% majorities for entry. The highest turnout was in Malta with 90%, but “only” 53% voted for entry. Swedish voters in 1995 voted with the lowest majority for entry (52.8%). The biggest majority for entry was in Slovakia with 92.5%, with a 52% turnout. Denmark in 1973 and Finland in 1995 returned less than two-third majorities for entry. Meanwhile, Norway rejected entry twice, in 1973 and 1995, with majorities of 53.3% and 52.2%.

Why did Croatian voters decide to enter the EU? And, why did they do it with somewhat less conviction than their predecessors?

The common wisdom of the Croatian and other Western Balkan publics, where there are majorities for accession, is that it is better, as small and economically weak countries, to join a still very prosperous Union of 500 million people and 27 member states, than to stay outside of it. A Europe that has seen 67 years of post-war peace makes for an inviting haven for the successor states of the former Yugoslavia, who went through a harrowing conflict in the 1990s. For them, entry into the EU is still, above all, a guarantee of security, stability, and peace. In this stricken corner of Europe, the EU’s soft power is very real.

Enlargement of the EU, one of its greatest successes, continues despite “fatigue” — and despite long waiting times. (Croatia handed in its formal application for EU membership in 2003.) The next members in line, apart from Iceland, which is on a fast track, will probably do so at the earliest toward the end of this decade. Montenegro is a formal candidate for EU accession, with a date set for talks; Macedonia is a candidate; Serbia is awaiting candidacy in March. Bosnia and Herzegovina (BiH) has signed a Stabilization and Association Agreement. Kosovo’s case is the most complicated, since it remains unrecognized as a state by Serbia, BiH, and five EU member states, and has as yet no formal relationship with the EU. And then, of course, there is Turkey.

The “Yes” of Croatia’s citizens is a historical watershed: for the country itself, for a formerly war-torn region, and for the EU. It is another step towards the completion of an integrated Europe, free, democratic, and at peace.

Ivan Vejvoda is the German Marshal Fund’s Vice President for Programs

BRATISLAVA—“Freedom House got it wrong!” We can expect to hear this message from an angry official in Budapest after the release on Thursday of the Freedom in the World Report 2012. Hungary has the unfortunate distinction of being the only Western democracy in which governance and civic liberties declined over the last year. Just earlier this week, Hungary’s Prime Minister Viktor Orban was grilled in the European Parliament for his government’s recent policies, including some seemingly draconian legislative steps that have brought an unexpected number of protesters to the squares and streets of Budapest. Compared to other democratically-elected leaders in post-communist countries who departed from their countries’ democratic trajectories, Orban is younger, more talented, better educated, and has a superior understanding of Western politics. But following the constitutional and political reforms of the last year — which have given him wide-ranging and centralized authority over many areas of governance and society — Orban’s furious critics at home took to calling him “Viktator.”

Like many such leaders before him, Orban has used a tried and true formula to justify or defend his actions: a political mandate, appeals to nationalism, and a sense of crisis. Orban and his followers in the Fidesz party — which won a two-thirds or constitutional majority in the 2010 elections — like reminding their critics of their popular mandate. They argue that they are simply carrying out the wishes of the people, in line with Hungary’s democracy. Secondly, Orban’s followers make appeals to the greatness and historical exclusivity of a suffering nation, defending their actions as being in the spirit of the country’s founding fathers while redressing past mistakes. Finally, they imply that the country is embroiled in a serious economic and moral crisis and that Orban is the only person capable of saving it.

Following multiple demarches by Brussels and Washington, popular domestic criticism led by prominent Hungarian intellectuals and activists, and worrisome economic trends being highlighted by credit-ratings agencies, one might expect Orban to modify his course. But it does not appear that the politically skillful Orban is about to reset his policies any time soon. In fact, rather paradoxically, the ongoing economic and political crises in the European Union and the United States have allowed Orban to advance his own assertive political rhetoric. He can also, for the time being, capitalize upon the weaknesses of a fragmented domestic political opposition, a controlled media, a scared business community, and a civil society, academia, and church that have been silenced. He is also capable of deftly tackling criticism from European technocrats by pretending to fix things around the margins.

At the same time, Orban should be aware that his country, hit hard by the economic recession, cannot survive long in isolation. Nor can he continue bluffing the United States and European Union forever. His neighbors, many of whom have sizable ethnic Hungarian minorities, will not let him freely continue making grand and bizarre gestures and statements featuring obsolete Great Hungary tones. Most of all, Orban should be aware of his own people’s power and keep in mind the fates of other seemingly omnipotent leaders in his immediate neighborhood and beyond.

Over the last two decades, countries in post-communist Europe produced various forms of government, ranging from Western-style liberal democracies to authoritarian rule. After the collapse of the Berlin Wall, it was generally assumed that those countries that graduated from the pre-accession process and entered the European Union would become immune to authoritarian practices. Hungary single-handedly overturns this assumption. Orban’s willingness to ignore criticism of his country’s departure from shared European values amid the gradual destruction of checks and balances has created headaches in many EU capitals. In that sense, Hungary’s future is deeply intertwined with that of the European Union and what it stands for: cohesion, good governance, and respect for state sovereignty. 

Pavol Demes is Senior Fellow with the German Marshall Fund of the United States in Bratislava. 

BUCHAREST—The landslide victory of former speaker of the Parliament Yevgeny Shevchuk in the December 25 Transnistrian presidential elections came as a surprise to observers in Moldova, Russia, and the West. Shevchuk, who won 74 percent of the vote in the run-off, overcame the challenges of the Moscow-backed candidate Anatoly Kaminski and the incumbent of 20 years, Igor Smirnov, who lost in the first round. Transnistria’s new leader is widely seen as representative of a younger generation, having proposed constitutional reform in 2009 to limit presidential powers. Shevchuk had focused his campaign on fighting corruption and nepotism, which resonated well in a region where people are struggling to overcome economic hardship and where the leadership was often accused of embezzling funds meant for humanitarian purposes. His first order of business after being sworn in as president was to dismiss over 80 state officials, including the heads of government and law enforcement agencies, appointed by Smirnov.

The coming to power of a reform-minded leader represents a long-awaited change in Transnistria, and marks a period of newfound optimism, not just for this disputed region, but also for neighboring Moldova. Although the Moldovan government did not recognize the legality of these elections, its officials are now hopeful of a more constructive dialogue. Moscow also welcomed the shift of power, having lately seen Smirnov as an obstacle to finding a solution to the protracted but frozen Transnistrian conflict. Although Shevchuk was not the Kremlin’s number one pick, he was nevertheless reassured that Transnistria can continue to rely on Russia’s friendly assistance and cooperation.

Shevchuk is also believed to be on good terms with officials in Kiev and is seen as a more progressive figure in Brussels. He was one of the few Transnistrian officials whose five-year travel ban to member states of the European Union was lifted at the beginning of 2008. He is also described by former EU Special Representative to Moldova Kalman Mizsei as a modernizer, and someone who should be welcomed by the European Union.

The election of Shevchuk sets the stage for a new dynamic in the region. Although he shares his predecessor’s stance on Transnistrian sovereignty, there are already clear signals that relations between Transnistria and Moldova will gradually improve. In his inaugural speech, Shevchuk promised to establish good neighborly relations with Moldova and Ukraine and to ensure the free movement of people across the frontier. He also noted that Transnistria needed to modernize and better integrate with regional economies, which would be impossible without better relations with Moldova. It now remains to be seen whether Shevchuk will follow up his rhetoric with concrete actions.

Change will not come quickly, and it is highly unlikely that Transnistria will reunite with Moldova in the near future. But with another round of talks scheduled for February, and with a more reform-minded leadership in Transnistria, Moldova might finally have a serious interlocutor in its efforts at finding a solution to this long-standing conflict.

Dinu Toderascu is Program Officer with the German Marshall Fund of the United States in Bucharest.

MINSK– On 19 December 2010, Belarus’ president Alexander Lukashenko claimed victory in a re-election (his fourth) marred by irregularities and falsifications. The mass protests that ensued were brutally repressed. All nine opposition candidates and 700 protesters were arrested; the opposition leaders Andrei Sannikov and Nikolai Statkevich remain in prison, as well as 13 other political prisoners. Since then, the situation in the country has become ever more desperate; Belarus is a state hovering on a precipice. The numbers speak more strongly than any words.

189 percent is the rate at which the Belarusian rouble devalued this year.

113.6 percent is the current figure for base inflation. Food prices have risen by 127.4 percent, those of services by 72.4 percent.

45 percent is the current refinancing rate, the highest in the world (a year ago, it stood at 10.5 percent).

70 percent of GDP is the estimated size of Belarus’ external debt by the end of 2011.

$177 is the difference between wages in December 2010 and October 2011 (average incomes dropped from $530 to $353 per month).

11 price increases have driven up the cost of gasoline in 2011, provoking several mass protests.

100 percent is the ownership by Gazprom of Belarusian pipeline operator Beltransgaz. Having just purchased the remaining 50 percent for $2.5 billion, Russia now for the first time owns a pipeline outside its territory. Gazprom has promised a threefold wage growth to its new employees.

$7.3 billion is the total of Russian subsidies to Belarus, as per Moscow’s calculations, in 2011. For example, the price of gas will drop from $ 270 per one thousand cubic meters to $ 165.50 for Belarusians (Ukrainians will pay $ 416). Besides reductions in gas prices and the purchase of Beltransgaz, Sberbank has provided a $1 billion loan to potash giant Belaruskali, and the Eurasian Economic Community made available a $440 stabilisation loan.

Tens of thousands of Belarusians have migrated to Russia and Ukraine for work; the worst-case scenario expects 1 million people to leave.

20.5 percent is the share of Belarusian citizens that would cast their vote for Lukashenko today. The official number given for the 2010 election was 79.6 percent; independent polls at the time showed the real number was 51.1 percent.

It has been a long year for the Belarusians.

Maryna Rakhlei is a journalist with the independent Belarusian news agency Belapan.

BERLIN – In politics, this has been a year of extreme weather. The Arab Spring dismantled decades-old autocracies through peaceful protest. The heat of summer scorched some even more brutal and determined rulers, from Libya’s Muammar Gaddafi (whose regime went up in fire) to Syria’s Bashar al-Assad (the flames are still licking at the foundations of his power). Late autumn, finally, dealt a surprise blow to the Russian government, with the largest protests since the ascent of Putinocracy. Yet in Alexander Lukashenko’s Belarus, winter reigns all year round.

Only a year ago, things looked a lot more promising in Europe’s last dictatorship, which is sandwiched between the northeastern borders of the EU and Russia. In the campaign preceding the presidential elections, nine opposition candidates challenged Lukashenko, met voters in packed halls, and even debated in the state media. Relationships with the West warmed, an invitation was extended to Belarus to join the EU’s Eastern Partnership, Western leaders flew to Minsk and promised aid in exchange for democratic reforms. For a while, it seemed as if the Belarusian regime might open up after 16 years of iron-fisted rule.

But this democratic experiment was brutally aborted on December 19 of last year. When it emerged that the polls had been grossly manipulated to secure Lukashenko a fourth term in office, tens of thousands of Belarusians took to the streets in peaceful protest. There, they were met with the full force of the police state. Some 700 protesters were beaten and arrested that night, including all of the democratic candidates. Ever since “Bloody Sunday,” as democrats soon called it, things have gone from bad to worse in Belarus.

A witch hunt was unleashed against opposition leaders, human rights activists, and independent journalists. Those that were not thrown into jail went underground or into exile. Show trials were held against some 40 dissidents, with 15 of them remaining behind bars to this day. Those who were released reported physical and psychological torture. Laws that were already strict were tightened to squeeze civil society and the independent media. Citizens are now forbidden even to gather silently. Critics inside the country are intimidated by the KGB; those that left the country live in fear for their relatives and face Interpol arrest warrants for themselves.

Nonetheless, Lukashenko’s regime is weaker than ever, despite the brutality of the crackdown. Last year’s elections gave Belarusians a lasting taste for political openness. The subsequent state terror has politicized even ordinarily docile Belarusians, and protest has become frequent. Official propaganda is so shrill now that many citizens are turning to independent, mostly Internet-based media, whose audience has tripled. Belarus’ economy has effectively collapsed, with the national currency devalued by 189 percent and annual inflation at 104 percent. As a result, independent polls report that only a fifth of the Belarusians still support Lukashenko.

In short, the Belarusian winter first hit the most courageous of Belarusians, then engulfed the entire population, and now Lukashenko himself is feeling the gnawing cold. So will Belarus succumb to permafrost—or is there a possibility of a thaw?

Lukashenko himself is clearly intent on staying at the helm by any means. He has begun to reinforce the pervasive security structures that are now the only remaining pillar of his power. To sustain them, he has launched a desperate search for funds, whether by taking out loans at a staggering scale or by selling the country’s family silver, including gas pipeline operator Beltransgaz. This has proved a boon for Moscow—for the Putin regime, Minsk’s troubles are an opportunity to recapture Russia’s supremacy in the post-Soviet space, to grab strategic assets in Belarus, and to subdue the notoriously unruly Lukashenko.

Europe, for its part, appears helpless and resigned. Neither the EU’s pre-election strategy of political outreach nor its subsequent isolation of Minsk since seem to have yielded any results. For Belarus’ citizens, Europe’s declarations of support must ring increasingly hollow. And European lethargy may waste the last chance in a long time to end Lukashenko’s rule, ensure an independent Belarus, and launch much-needed democratic and market reforms.

The necessary measures to take for Europe have long been on the table and demanded by Belarusian democrats. Political isolation must be accompanied by effective economic sanctions, targeting those exports for which the EU is Belarus’ key market, such as oil products and fertilizers. An embargo will deprive Lukashenko of the funds for his machinery of terror and depress the price investors might be willing to pay for industrial assets. If coupled with a moratorium on loans from financial institutions, such as the IMF or private banks, this would dry up the Western revenue stream that has long sustained the regime. This would force Lukashenko to the negotiating table. There, the EU’s first demand must be the release and rehabilitation of all political prisoners, followed by talks between the regime and the democratic movement on political, economic, and social reform.

Belarusian civil society deserves all Europe’s attention and support. The restrictive visa regime must give way to open EU borders for ordinary Belarusians, and opportunities to visit, study, and work have to be boosted. Human rights groups, civic initiatives and independent media need increased, continuous, and accessible assistance. The political opposition needs encouragement, expertise, and funding to develop its strategy for change, and the democratic movement has to be treated as Belarus’ recognized representative in all European and international forums.

Europe has taken first and encouraging steps toward such a shift in policy, including a visa ban and asset freeze against 210 key representatives of the Belarusian regime. It must now move from piecemeal to comprehensive, from half-hearted to decisive. It is the only chance to prevent the looming permafrost in Belarus and give its brave citizens a hope of spring.

Joerg Forbrig directs the Fund for Belarus Democracy at the German Marshall Fund of the United States.

KIEV– After reaching an agreement on Russia’s accession to the World Trade Organization on Thursday, European Union leaders are set to meet Ukrainian President Viktor Yanukovich in Kiev today. Although the EU-Ukraine summit should endorse an ambitious new political association and free trade agreement that has been five years in the making, the agreement’s fate is still uncertain on the eve of the meeting. The association agreement would mark a significant shift in Ukraine’s political and economic orientation towards the West. It commits the country to upholding democratic freedoms and the rule of law as well as EU standards in areas such as fair competition and transparent public purchasing. Corruption and red tape meant that Ukraine attracted just 30 foreign investment projects last year, which created only 1,000 jobs. Investment flows improved in 2011, as negotiations with the EU neared completion and related reforms started to take effect. So why is this win-win agreement still in doubt?

A number of EU member states object to concluding the negotiations while Yulia Tymoshenko, Ukraine’s former prime minister and defeated presidential candidate, is languishing in jail on charges related to the ten-year gas supply deal she concluded with Russian Prime Minister Vladimir Putin in January 2009. She now faces additional charges of tax evasion and theft of government property. However, Tymoshenko has told European diplomats that she would not want her imprisonment to stand in the way of a deal from which both sides will benefit.

At the same time, Yanukovych is demanding that a clause be inserted into the new agreement that would give Ukraine the prospect of joining the European Union. This is a pretext for delay. Yanukovych knows full well that the EU, grappling with the euro crisis and still coming to terms with Bulgaria and Romania, cannot presently give Ukraine a membership perspective. At last week’s European Council in Brussels, member states were not even ready to give an unqualified go ahead to Serbia or Montenegro, whose political and economic reforms are far more advanced. Furthermore, in October, Putin invited Ukraine to join his proposed Eurasian Customs Union, with the incentive of a further discount on Russian gas prices;Putin’s proposed union would be incompatible with the EU agreement.

It looks as though the president and his backers prefer to temporize, keeping both Russia and the EU in play, with as few concessions as possible to either. Ukrainian oligarchs are afraid that their freedom of action would be limited by both the Russian and EU agreements. While the Russian proposal would open up Ukraine to competition from far more powerful Russian oligarchs, backed by the Kremlin, the EU agreement would put an end to opaque tendering procedures and the manipulation of tax and customs rules, which today discourage foreign competitors. Ukrainian participation in the putative Eurasian Union is necessary for the body’s credibility, and this gives Kiev some leverage with Moscow.

Although Yanukovich wants to keep Tymoshenko in jail until after the parliamentary elections scheduled for October 2012 — meaning that the EU agreement is unlikely to be signed before then — he also hopes to gain some electoral advantage by wrapping himself in the European flag. If the agreement is not concluded, he can claim this was because the EU refused his membership demands.

In Kiev today, EU leaders should call the Ukrainian president’s bluff. It is not in the EU’s interest for Ukraine to remain a kind of no man’s land, in which the rule of law is up for grabs. The Ukrainian people, too, need “more Europe,” if they are to shake off the political cynicism that has taken hold since the collapse of the Orange Revolution. A better business climate is required to generate jobs in what remains one of Europe’s poorest countries. The conclusion of the negotiations today would start a process that still requires initialing, signature, ratification, implementation, and enforcement. At each stage, the EU can nudge Ukraine toward further reforms as a condition for moving ahead. For now the association agreement should be endorsed without unrealistic preconditions and the EU should continue pressing for

Tymoshenko’s release from prison, pending the conclusion of the various legal procedures underway.

Michael Leigh is senior advisor with the German Marshall Fund of the United States in Brussels.

Image by Alissa Ambrose.

BRATISLAVA, Slovakia – The entry of the four Central European countries — Poland, Hungary, Czech Republic and Slovakia (known also as the Visegrad 4 group, or V-4) — into the European Union on May 1,  2004, was the triumphant end to a long journey.  It was a time for celebration among the quartet of post-communist countries and in the democratic West, which helped these nations achieve their successful democratic reforms.  Populations and elites in V-4 countries believed that the membership in the prosperous union would help them to built sustainable growth, tackle corruption, contain populism, and deal with residual problems from their  past.

But the current turmoil in the EU has hit these four Europhilic nations hard, both in economic and political terms. Few expected that the European Union’s problems would generate so much domestic socio-economic and political turbulence, generating incipient doubt in the common European project. In my home country of Slovakia, the crisis even brought down the government over deep discord on how to tackle the European financial stability mechanism.

Last week’s European summit devoted to the rescue of the eurozone showed more differences among V-4 countries in their approaches toward the proposed reconfiguration of Europe.  Slovakia, so far the only V-4 country to have adopted the euro, has opted to throw its lot with the group of the 17 states of eurozone, along with regional power Poland.  Slovakia and Poland have called for more German leadership in the EU.  On the other hand, the Czech Republic has declared that it will “study carefully” the current situation and likely will not join the “EU 17-plus.” Further still from the EU core, Hungary, under the powerful leadership of Viktor Orban, is fast-shifting to a position similar to the United Kingdom’s, becoming in effect a sort of “continental island” committed to the development of its own European software with roots in  Hungarian history.

The decisions made at the recent EU summit will reverberate for years to come.  Ever-deeper political divisions, a loss of confidence in the institutions, and growing apprehension have become a hallmark of today.  The collateral damage of the process on the V-4 likely will be less regional cooperation among the V-4 group, and potentially even the end of the regional project.  The crisis shaking the foundations of the European Union could prove stronger than geographic proximity, shared history, and, until recently, very similar attitudes toward the common European home.

Pavol Demes, based in Bratislava, Slovakia, is a Senior Transatlantic Fellow with the German Marshall Fund.

BRUSSELS – At five in the morning on Friday, a senior EU official commented that the summit outcome could be the first step toward Britain’s leaving the EU. After Prime Minister David Cameron’s veto of a new treaty embracing all 27 member states, aiming to achieve what German Chancellor Angela Merkel calls a “stability union,” the U.K. found itself totally isolated. The willingness of the other 26 member states to embrace the proposed stability union, subject to parliamentary consultations in Sweden, the Czech Republic, and Poland, left the U.K. without any supporters around the Council table. Britain has lost good will and influence in the European Union and may also do so in the world beyond. From a transatlantic perspective, the United States’ “special relationship” with the U.K. today depends more on Britain’s influence within the European Union than upon supposed cultural affinities. This, too, is likely to suffer if the U.K. persists in relegating itself to the sidelines.

Cameron’s goal of obtaining a protocol to the proposed new treaty that would have protected the City of London failed to attract any support. His comment to the press, after the summit, that Britain remains in the single market will be cold comfort to the City. Many observers have pointed out that the survival of the euro depends less on legal obligations to keep down deficits and debt than on the new union taking on real powers for fiscal policy. It is apparent that competence for regulating banks and capital markets will necessarily move toward the eurozone if Merkel’s stability union is to be effective. Under these circumstances, the U.K. will progressively find itself excluded from decision-making on key issues affecting the City of London and the single market.

The early hours of the morning are not necessarily the best time for laying the foundations of a future fiscal union. On reflection, the British government and other member states would do well to consider how to build bridges between the 27 of the EU and the 17 of the eurozone. Ill-tempered comments after a sleepless night should not obscure enduring interests that link the U.K. to other member states, not least Germany and France. The U.K. and Germany, as major trading economies, share an interest in maintaining the open international economic system. They will need to work together in the aftermath of the failed Doha Development Round and in safeguarding the single market. From a wider perspective, France and the United Kingdom remain the only member states with the willingness and capacity to project EU power beyond its borders.

In the short term, Mr. Cameron has preferred to listen to euroskeptical voices in the Conservative Party than to moderate Conservatives, his Liberal Democratic coalition partners, or colleagues in the EU. The present situation looks bleak for the United Kingdom. Yet the U.K.’s vital interest in the single market and the survival of the eurozone will oblige the British government to start building bridges without delay.

Michael Leigh is a Senior Advisor in the German Marshall Fund’s Brussels office.

Croatia

On December 4, Croatians went to the polls to choose the government that will lead them into the European Union in 2013.

Tired of numerous political corruption scandals, the most high profile of which was the arrest of a former prime minister, Ivo Sanader (from the conservative HDZ party), and despite the recent anti-corruption drive of the new prime minister, Jadranka Kosor (also HDZ), voters chose a center-left coalition government – The Kukuriku coalition – comprised of the Social Democrats, the Pensioners Party, the Croatian Peoples Party, and a Regional party, the Istrian Democratic Assembly. It was a surprise result even to the winners. In his victory speech, Zoran Milanovic, the Kukuriku candidate for prime minister, declared that the future politics of the Croatian government will be justice and fair payment, with modern values but with respect for tradition.

The new Croatian government will be comprised of people who have clearly thought about what problems need urgent attention in the country. They have held meetings and gatherings since 2009, carefully planning their future steps toward victory. However, their aim included not only winning the elections. This coalition is aware that it will be called on to make tough decisions on budget cuts to handle the country’s economic downturn. This coalition is aware that now is the opportunity to finally reconcile all the national groups within the country. And this coalition is aware of the necessity of regional cross-Balkan cooperation and of the importance of good neighborly relations where dialogue and compromise are the key words. Or, as Milanovic said, embracing it all, “We will do everything for Croatia to become a good place to live in.” Though he had every reason for triumph, his speech was serious and expressed concerns about the difficulties awaiting Croatia and its new government.

The new dawn for Croatia brought a lot of sunshine, but it will be hard to keep it from becoming cloudy given the economic and political realities. Continued support from the European Union and the United States will help chase those clouds away.

Slovenian Elections

In Slovenia, it was a real surprise where Ljubljana mayor Zoran Jankovic claimed victory in their recent elections. The center-left government of Borut Pahor lost its confidence vote in September this year due to the austerity package meant to fix the financial crisis. Pahor is the latest in a series of eurozone leaders who were toppled by the sovereign debt crisis.

Jankovic faces a series of negotiation talks as now everything depends on the willingness of the other parties to form a stable government capable of addressing the crisis. The problem here is that his potential collaborators are quite different in their political nature since one is the Democratic Party of Pensioners, which is strongly against the idea of budget cuts to the public sector, and the other is Civic List and its leader Gregor Virant, a moderate liberal whose party is supportive of drastic measures such as rapid privatization — something with which Jankovic himself is not comfortable. He would prefer a corporate approach in state management of currently public-run companies, but such a government could prove impotent to repairing the damage; there would be a scramble for concessions, which would lead to further financial and political complications, potentially ending in another round of special and early elections.

Gordana Delic is the Director of the German Marshall Fund’s Balkan Trust for Democracy in Belgrade.