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Ten Years After Europe's 'Big Bang': How Enlargement Has Transformed the EU

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Ten Years After Europe's 'Big Bang': How Enlargement Has Transformed the EU Transcript: Q&A Ten Years After Europe's 'Big Bang': How Enlargement Has Transformed the EU Jacek Rostowski Deputy Prime Minister of Poland (2013); Finance Minister (2007-13) Anne Applebaum Director, Transitions Forum, Legatum Institute Dimitar Bechev Senior Visiting Fellow, European Institute, LSE Chair: Quentin Peel Mercator Senior Fellow, Europe Programme, Chatham House 24 November 2014 The views expressed in this document are the sole responsibility of the speaker(s) and participants do not necessarily reflect the view of Chatham House, its staff, associates or Council. Chatham House is independent and owes no allegiance to any government or to any political body. It does not take institutional positions on policy issues. This document is issued on the understanding that if any extract is used, the author(s)/ speaker(s) and Chatham House should be credited, preferably with the date of the publication or details of the event. Where this document refers to or reports statements made by speakers at an event every effort has been made to provide a fair representation of their views and opinions. The published text of speeches and presentations may differ from delivery. 10 St James’s Square, London SW1Y 4LE T +44 (0)20 7957 5700 F +44 (0)20 7957 5710 www.chathamhouse.org Patron: Her Majesty The Queen Chairman: Stuart Popham QC Director: Dr Robin Niblett Charity Registration Number: 208223 2 Ten Years After Europe's 'Big Bang': Q&A Question 1 A comment to Anne, very briefly. I think you were a bit too tough on Britain. We were the first country to open up, to say that the transition mechanism doesn't apply and we welcome all the proverbial Polish plumbers. Anne Applebaum That's true. Question 1 Indeed, the argument [indiscernible] we thought it was only going to be 50,000 of them and it turned out that it was more like 1 million. So one could argue that the case of Britain, far from being depressing, is a case of a country that was very optimistic about enlargement and was disappointed, which is a slightly different narrative. But a question to all the panellists, if I may. How much has the European Union itself changed as a result of this enlargement? If you look at Federica Mogherini's election, if you look at the initial reaction to the events in Ukraine, one could argue that we are still on an automatic pilot of a union still dominated by western countries, rather than a true continent, free and united. Question 2 Would the panel agree that part of the transformation of the EU is greater east European influence in EU institutions and policies now? There are certain obvious – among the personalities, obviously there is the appointment of Donald Tusk and good portfolios for east Europeans. But in terms of policy also, in an area that I follow – energy and climate policy – eastern Europe has at last, also thanks to the Ukraine crisis, made western Europe aware of the energy security problem. Even on an area which deeply troubles economically eastern Europe, climate policy (because of its expense), there seems to be a modification. Poland got a rather good deal in the latest 2030 climate target bargain. Anyway, influence of eastern Europe on the EU. Question 3 I feel that although I've always been very much in favour of the European Union and keen to see it prosper, that many of the unemployed in Britain, France, Spain and other countries would feel that our discussion so far has been far too much in the air, rather abstract. What we're sort of pushing into the sidelines is the fact that the European Union is incapable of producing economic growth, jobs and so on. It's crying out for – well, in the late 1940s it was Marshall aid that allowed Europe to recover. Mitterrand tried Keynesianism in the early 1980s but that was squashed by Thatcher and Kohl. Currently no one has the nerve to come up with Keynesian reinvestment, job-creating policies. So what does the panel really 3 Ten Years After Europe's 'Big Bang': Q&A think they can do about, or propose, that would actually get the economies going and take these grievances away that are feeding right-wing parties that are threatening the democracy you've been lauding? Quentin Peel Okay, thank you very much. So three quite sceptical questions for you, to pop this bubble of good cheer that you were trying to bring to us. Jacek, you go first. Jacek Rostowski On the first two: well, maybe when it was six, but the EU has not for a long time been – what was the phrase you used? A union of free and equal partners. No. The EU has for a long time been – at European Council, it's the ministers of the large countries and a few influential medium-size countries who actually have influence. It so happens, and this is in no way an attempt or a suggestion that somehow – well, it's certainly not a criticism of our regional neighbours, but it just so happens that there's only one, by European standards, large country among the new members states, and that's Poland. Therefore, enlargement has in fact meant that the seven people who used to have something to say or used to talk in the ECOFIN, an eighth person got added, or added themselves. That's the way it has effectively worked. Maybe one of the things that's most striking has been the weakness of the Czech Republic and Hungary in this context, political weakness, for all sorts of also internal political reasons. But the fact is Portugal doesn't have much to say, Czech Republic doesn't have much to say, Romania doesn't have much to say. Part of it is not just how big you are, it's also the quality of your civil service, of your advice; it's somehow easier in a bigger country to get those things done. At least, that was my experience during six years. So it wasn't really an expansion from 15 to 28, it was an expansion from seven to eight, as far as I'm concerned. On the third question, I couldn't agree more. Keynes is right once every 80 years and this happens to be the second time in 80 years. We have a major problem. We've constitutionalized anti-Keynesianism in the ECB. We've also constitutionalized it in the treaties. We've constitutionalized it sometimes in our national constitutions, as in Poland. We have deeply legislated ourselves into this situation, and we have to find a way out of it. We've got to cheat. We're using, for instance – I say 'cheating', not really cheating according to all the rules. We have used a national development bank in Poland to encourage investment projects and to give guarantees to small and medium-sized enterprises. It's worked rather well. The Polish government is now proposing a similar – proposed, a couple months ago – a similar idea for the EIB to enable about €700 billion of investment over a couple of years. That's fairly moderate, given what Europe needs. Interest rates in Europe are under 1 per cent. There is no way that one couldn't ensure or absorb, as one used to say, well over a trillion euros of investment that in the current economic crisis would be useful investment, would get growth growing. But unfortunately, unless the EIB can do this – I mean, it's obvious that two years ago when the euro zone was on the verge of collapse, the ECB had a patent obligation to buy Italian, Spanish, Portuguese government bonds. It didn't do that and it couldn't do that, 4 Ten Years After Europe's 'Big Bang': Q&A at least according to the lawyers. Well, a central bank president who doesn't control his legal department is not really a central bank president. This is the first thing that a central bank president should do, and Mario Draghi has failed to do that. We could talk about this for a long time but we've put ourselves – this is really the fundamental issue and there isn't an easy way out. The idea was that political union would solve that; we don't seem to be nearer to it. Quentin Peel We can come back, but isn't what has happened through enlargement, Anne, is that it's not that the central and east European countries have got a lot more influence, it's that they've shifted the balance of power so that Germany has got a lot more influence. Germany, sitting in the middle, the only country that was really easy with the process. Anne Applebaum I'm not sure I would give all the credit to the central and east European countries for putting Germany in that position. I think we can maybe give France some credit. We can give the British a lot of credit. I can answer that by answering Jonathan's question. Yes, I absolutely take your point: the movement toward creating something like a joint EU foreign policy, that looked like it was happening over the last few years, I would say has now comprehensively disappeared. The events of both the selection of commissioners and the way that was done and the way that the crisis with Ukraine has been handled, have indicated that there's really only one country in Europe that has a foreign policy, and that's Germany – and Germany is now, in effect, speaking for everybody else.
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