Former Soviet Satellites and the European Union

Former Soviet Satellites and the European Union

Recent decades have been decades of great change for the nations and peoples of Europe. The West has witnessed the gradual demise of interstate rivalries, the former system of wholly independent states being replaced by an increasingly close union of partner nations. Meanwhile, in the East, these same years saw nearly the whole of Europe from the Baltic to the Black Sea fall under the domination of the Soviet Union. However, with the collapse of communism in the early 1990s, these former Soviet satellites were transformed, almost overnight, into a collection of fledgling democracies. And though the nations of Eastern Europe, at least ostensibly, now share the same political values as their neighbors to the West, their transformation has not been without its problems. Years of Communist rule, has left these countries economically backward and underdeveloped. Yet each of these former Communist nations is faced with a similar dilemma - in order to succeed in today's global economy, each must somehow bring its nation up to the developmental level of its Western European and American peers. This process is not easy, and often involves much more than simply making decisions on the economy. Whether the country is Hungary, Belarus, or Ukraine, there are important political, social, cultural, and historical fact is to be considered. For although each of these three countries is a new democracy, none is a new nation. Each has a long history of special internal concerns, foreign relations goals, and socio-political aims. It is for these reasons that the decision on whether to join the European Union is a difficult one. A country is shaped by its experiences, and these three nations are no exception.

This is not to say that Hungary, Belarus, and Ukraine do not have, in a sense, a common history. Not only were each of these three states former Soviet satellites, but each one of these nations formed for a long time a component part of an alien empire. Hungary was one-half - the inferior half - of the Austro-Hungarian Empire, while Belarus and the Ukraine were long under Russian rule, first that of the tsars, and then that of the Soviets. In each case these experiences produced certain internal situations, and at the same time created a certain relationship with both Western Europe and the former Soviet Union - now the Russian Federation. In some instances, historical events bind these countries to the West, and in others to the East. While in still other cases, these same historical circumstances drive seemingly irremovable wedges between former partners. Hungary's long association with Austria links it socially and culturally with a wider world of German-speaking Central Europe, and Western Europe in general. In pre-Communist days, Budapest, the Hungarian capital, was often known as the Paris of the East. Its national life was, on the whole, adapted to the general European cultural model. On the other hand, Belarus, or as it was once known, Byelorussia, and the Ukraine were for centuries, the outlying provinces of the Russian and Soviet empires, their native cultures submerged beneath a tide of Russification. Thus, both Belarus and Ukraine have very real reasons to wish to distance themselves from the Russian Federation, and to align themselves more closely with the West.

As Hungary's association with the West was always greater than either Belarus' or Ukraine's, its movement toward the European Union was considerably easier. Diplomatic relations were opened between Hungary and the European West in August 1988. This was followed by the Europe Agreement which was signed on December 16, 1991. This gave Hungary the status of an associated state within the European Union. As a result, there began a steady flow of Western funds into the Hungarian economy. Hungary was one of the first beneficiaries of the European Union's new PHARE program, a program specifically designed to render financial assistance to countries seeking admission into the European Union. Since 1990, Hungary has received more than €1 billion under this program. Importantly, these funds do not have to be repaid, and have contributed successfully to the reinvigoration of Hungary's infrastructure: economic development and restructuring, environmental investments, research and development, public administration, human resources development, and various other tasks deems necessary to prepare estate for membership in the European Union. Furthermore, Hungary also benefits from two additional programs, the Instrument for Structural Policies for Pre-Accession, and the Special Accession Program for Agriculture and Rural Development. Under these programs, Hungary expects to receive nearly €140 million each year over the course of the next few years. This cooperation with the West has been an extremely positive experience for Hungary,

As a result of consistent economic strategies followed in the recent years, the Hungarian economy has been stabilized and conditions for a sustainable economic development have been created. Macroeconomic indicators in 1998-1999 are promising. The annual growth of GDP has been over 4%, unemployment is now below 8%, both figures are better than EU average. Competitiveness of domestic production grew by 20%, budget deficit remained under acceptable limits, inflation dropped under 10%, cumulated FDI inflow exceeded 22 Billion USD (one-third of the total foreign capital invested in East Central Europe).

Exports in the same period grew more rapidly than imports and exceeded world trade average growth. By the end of the 1990s, the share of the EU in Hungary's external trade relations reached 75% which can be regarded as a decisive level of real integration. This progress has been positively evaluated by both the annual Country Reports of the EU and reputed international research institutions which re-qualified Hungary from "emerging" to a "converging" economy.

Of course, such financial and planning assistance would be as much use to Belarus and Ukraine as it is to Hungary. However, while Hungary's eventual integration into the European Union has been generally smooth, the situation has not been quite the same for Belarus and Ukraine. Belarus, in particular, has had to fight hard against what can only be described as Western European prejudice against its Eastern brethren. As a requirement for admission into the Union, all nations must adhere to the enormous amount of regulations - some 80,000 pages of them - already promulgated by the European partnership.

In all cases, this means that nations applying for membership must, in an exceedingly brief period of time, approved legislation already accepted by member nations. Often this necessitates considerable changes in both domestic and foreign policy. As shown by the President of the Commission on European Enlargement's comments in regard to these potential new members, this means a proven record of being in line with general Western European attitudes.

Since then these countries have come a long way. The path they have taken may truly be described as revolutionary. A huge area of our continent has moved peacefully from dictatorship to stable, participatory democracy.

Their achievements are extraordinary. In the space of a decade we have seen:

The holding of dozens of free and fair national, regional and local elections;

The adoption of thousands of laws and regulations to give shape to the new democracies and incorporate the acquis communautaire into national law;

The training of tens of thousands of civil servants and magistrates to interpret and apply the new legislation;

The participation of hundreds of thousands of elected officials, specialists and members of professional organizations in EU-financed training and cooperation projects in order to learn about our policies.

For countries so long under the yolk of totalitarian Communist regimes, it is certainly an achievement to hold free elections, and to forge an entirely new civil service composed of well educated and highly trained personnel capable of running a modern post-industrial democracy. But as can be seen, these can be very difficult goals to meet, and acceptance into the Union is as much a measure of Western European attitudes, as it is of the actual progress made by those nations that aspire to membership. A country like Hungary, with reasonably strong Western associations can expect that its past "mistakes" will be overlooked, and that current European Union member nations will look kindly on its efforts to conform to the Western norm.

However, a nation such as Belarus is in an entirely different situation. Never a genuine member of the Western "club," Belarus finds itself in a much more difficult position. Its efforts toward democratic reform are closely scrutinized, and subjected to considerable criticism. The following account of Belarusian elections in 1997 is a case in point:

The human rights monitoring work done by the Belarus Helsinki Committee has shown increasing arbitrariness in the actions of civil servants and increasing violations of citizens' civil and political rights and liberties as guaranteed by the Constitution of the Republic of Belarus.

A decisive phase in the escalation of these violations was the so-called Referendum, carried out on President A.G. Lukashenka's initiative, during the period 9-24 November, 1996.The Constitutional Court and the Supreme Soviet (Parliament) ruled that the referendum results could not be binding. Nonetheless, the President issued decrees annulling the rulings of these bodies and defining his own mechanism for holding national referenda and implementing their results.

The voting process began ahead of time, and before the texts of the two draft Constitutions had been published on 12 November in all Government newspapers, while the draft submitted by the Parliament was published on 21 November in one newspaper only).

Electoral Commissions were created at the beginning of the voting by the local executive bodies. After the voting had started, the President unlawfully fired the Central Electoral Commission Chairman, V.I. Gonchar. The ballots were printed by the Presidential Administration and were distributed to local Electoral Commissions, bypassing the Central Electoral Commission and the Oblast Electoral Commissions.

There was no account of the number of ballots in circulation. In contravention of the Law, the referendum was financed by funds outside the State Budget. Propaganda for voting in favor of the President's proposals was conducted at the polling stations and even while voting was in progress. There are testimonies to the fact that voting results were falsified. In particular the figures published by the Central Electoral Commission describing the massive voter turnout between 1800 and 2200 hours has been contested by many persons who were there at the time. The fact that 65.85% of all those who participated should have voted against a single budget, known to the public as the only source of financing for all branches of government; and that 66.92% are claimed to have voted against direct elections to local councils, does not inspire trust.

Clearly, the above memorandum is far more than a simple analysis of an election. It is an indictment of an entire system. Not only is there considerable concern on the part of the European Union for the manner in which these elections were conducted, but distaste is also expressed for the fact that such large majority of the electorate voted against the measures on the ballot. In the eyes of the Western European observers, this is but a sign that the Belarusian president's budgeting programs were entirely unacceptable to the Belarusian people. Rather than put this down to simple public dissatisfaction with a government's proposals, the EU's inspectors chose to view this as an example of the Belarusian government's inability to govern. Massive voter rejection of the budget was taken as a symptom of a much wider disease. Certainly, it is not entirely implausible that a budget might suffer the same fate in Western country. Frequently budgets - especially school budgets - are rejected by an overwhelming majority on the local level. How often have American school districts have recourse to draconian austerity budgets because the public refusal to endorse increased spending? In Europe too, the public balks at tax increases, even when such increases are necessary to fund such popular mandates as national health and welfare programs. In many European parliamentary states, governments have fallen on the basis of a single vote, a measure on which the ruling party staked to its beliefs and its future. Yet, no one would think of attributing the failure of these administrations to a much greater, system-wide failing. This is, however, precisely the conclusion that is being drawn in this case. While Belarusian elections may not yet be quite up to European standards, it must be remembered that the development of a true democracy takes time, and what may be considered proper in one country is not necessarily acceptable behavior in another.

Nevertheless, a memorandum such as that previously referred to is illustrative of deep-seated Western European suspicion of its eastern neighbors, especially those small nations perceived as having been integral parts of the former Soviet Union. And the operative word here is, "small nation." For, in marked contrast to Belarus, the much larger Republic of Ukraine has not suffered from such debilitating evaluations. The nations of Western Europe have been more than willing to work with Ukraine on a whole host of issues. Ukrainians and Western Europeans have worked together to bring the Ukrainian educational system up to European standards, to make Ukrainian legislation compatible with EU Laws, and to remedy safety and security deficiencies at Ukraine's many nuclear power plants. Of much greater concern, is Ukraine's economic performance over the past decade. In common with the various other former Soviet republics, Ukraine's industry and commerce have suffered a marked decline as a result of the Soviet Union's collapse. Increasingly, the formerly productive Ukrainian has become a primary producer, exporting primarily raw materials rather than the finished products of its own factories. And while 20% of Ukraine exports are to the European Union, Western European exports to Ukraine are virtually negligible averaging less than 1% of the Union's gross exports. The continuing perilous situation is well demonstrated by the following charts:

Real GDP ($ billion) source: Ukraine Ministry of Economy and European Integration)

Real GDP data in terms of annual rates of growth (%)

2002* source: European Commission)

Estimate for 2002

As can be seen, Ukraine's economic performance over the past five years has been less than sterling. While there has been something of an improvement in the annual growth rate over the past five years, the real GDP has continued a steady decline. It is not Ukraine's progress, or lack thereof, in the cultural, political, or social arenas that is of concern to the states of Western Europe, but rather its lack of sustained economic progress. Clearly, the European Union does not wish for Ukraine to become a financial sinkhole into which it empties millions in billions of Euros while reaping nothing in return.

Further progress is...needed in a number of areas, including the protection of intellectual property rights, and elimination of discriminatory conditions in the automobiles industry sector. The EU also expects Ukraine to lift other export restrictions, such as those applied to metal scrap. The EU and Ukraine aim to adopt common rules of procedure for dispute settlement within the PCA in 2003, which will be particularly relevant to bilateral trade disputes. The Commission is currently assessing the Ukrainian request to be given 'market economy' status under the EU anti-dumping rules, and consultations have taken place about the prospects for Ukrainian exports of cereals to the EU in 2003. A new bilateral steel agreement is under consideration in 2003.

As these statements show, in many ways the nations of Western Europe still look upon Ukraine as, in effect, a third world economy. Not only is its productivity and fiscal stability far below Western standards, but even the legal apparatus surrounding its mercantile community is not up to European standards. Infringement of intellectual property rights and - by Western European standards - shady business practices are still a major issue. However, it is Ukraine's size, and potential market, that attract Union interest.

But as already mentioned, Ukraine does only about 20% of its business with the European Union making the establishment of closer ties with the West desirable but not an immediate necessity. Ukraine's main trading partner is, in fact, still the Russian Federation. As Ukrainian president Leonid Kuchma stated in a 2001 article in Pravda,

Russia has been and remains Ukraine's trade partner, President of Ukraine Leonid Kuchma has said this Friday at a joint press-conference with Vladimir Putin.

Kuchma believes that "it is the economy that must form the basis of the relations between Ukraine and Russia." He also thinks that in the current situation politicians need to perform the role of a mechanism for the implementation of large-scale projects signed between Ukraine and Russia.

The conference held on the same day by Ukrainian Premier Kuchma, and Russian President Putin affirms this Ukrainian-Russian dynamic:

Putin stated during the conference that both Russia and Ukraine were responsible for the energetic security of Europe. "That is why Russia will render all necessary assistance as far as the power-generating units are concerned. Russia wants to see Ukraine rich and prosperous...We need an economically strong partner," - Vladimir Putin said.

Ukrainian President Leonid Kuchma called upon the Russian investors to enter the Ukrainian market more actively. Putin offered them to participate in the privatization of the Ukrainian state companies and set up the joint financial and industrial group. Kuchma claimed, he saw the big future for the joint usage of the Ukrainian energy carrier transportation systems, in particular [the] Odessa-Brody oil pipeline.

The envisioning of Russia and Ukraine as guarantors of Europe's energy security by Presidents Kuchma and Putin readily indicates that the two states each other as in some sense opposed to the European Union. This is not to say that the two countries are antagonistic to Western Europe, in state's statement that in many ways both Ukraine and Russia are independent of the Western European economic and political system. Russia has not attempted to join European Union, thus any deals between it and a state not yet excepted for membership in that Union are clearly agreements outside the purview of the European league. In certain ways, Ukraine appears to actually be hedging its bets by allying itself with both Russia on the one hand, and the European Union on the other. Ukraine's turning toward Russia in its time of need is symbolic of both its traditional association with Russia, and its full recognition of the fact that it cannot rely and Western Europe alone.

However, it is also quite obvious that the mere presence of Russia on each of their borders drives Belarus and Ukraine toward closer ties with the West. Having experienced centuries of Russian domination, the two countries are all-too-familiar with the dangers of becoming too closely bound up with the Russian Federation. Former Soviet satellites are under almost constant pressure from the new Russian Federation. Russia has long considered these regions to be its natural frontiers, territories it must dominate, if not directly control, it is to survive against the onslaught of the West. Former Soviet republics like Belarus, Ukraine, and even Hungary seek out alliances with the West, not necessarily because they are especially pro-Western (though as previously mentioned Hungary is primarily Western in orientation), but because they fear reincorporation into the Russian juggernaut. The Warsaw Times puts it quite succinctly, as it refers to an agreement signed by Belarusian President Alexander Lukashenko authorizing unification with the Russian Federation,