CEE COUNTRIES IN EUROPE: TOWARDS CENTRE OR PERIPHERY COUNTRY REPORTS ON CROATIA, LATVIA AND SLOVAKIA Chief Editor: Chen Xin CEE INSTITUTE: CEE COUNTRIES IN EUROPE: TOWARDS CENTRE OR PERIPHERY COUNTRY REPORTS ON CROATIA, LATVIA AND SLOVAKIA REPORTS ON CROATIA, CENTRE OR PERIPHERY COUNTRY IN EUROPE: TOWARDS CEE INSTITUTE: COUNTRIES - CHINA Prepared by University North, Varazdin, Croatia Latvian Institute of International Affairs, Latvia University of Economics in Bratislava, Slovakia Published by: China-CEE Institute Nonprofit Ltd. Telephone: +36-1-5858-690 E-mail: [email protected] Webpage: www.china-cee.eu Address: 1052, Budapest, Petőfi Sándor utca 11. Chief Editor: Dr. Chen Xin ISBN: 978-615-6124-06-7 Cover design: PONT co.lab Copyright: China-CEE Institute Nonprofit Ltd. The reproduction of the study or parts of the study are prohibited. The findings of the study may only be cited if the source is acknowledged. CEE Countries in Europe: Towards Centre or Periphery Country Reports on Croatia, Latvia and Slovakia Chief Editor: Dr. Chen Xin CHINA-CEE INSTITUTE Budapest, October 2020 Preface China-CEE Institute announced a “Call for Proposal” research program in December 2018. Of the proposals received, one research proposal is “CEE countries in Europe: toward Center or Periphery”. What we are presenting here is the result of this research project, conducted by a Consortia led by the scholars from University of Economics in Bratislava (Slovakia), Latvian Institute of International Affairs (Latvia), and University North (Varazdin, Croatia). This project has developed its discussions on the future integration of the EU, with a special focus on visions presented in “White Paper on the Future of Europe: Reflections and Scenarios for the EU27 by 2025” published by the European Commission in 2017. In a multi-speed Union, EU members states either joining the “core” or the “periphery”, depending on their level of integration in different areas. This project selected three countries as case studies, namely, Latvia, Slovakia and Croatia, and implemented further analysis on the position and tendency of these three CEE countries towards EU’s center or periphery. The three countries are representing different sub-regions in the EU (Baltic, Visegrad and Balkan) with different historical legacy (depart from USSR, Czechoslovakia and Yugoslavia), different accession time into EU (2004 and 2012) and different integration levels (Schengen, Eurozone). The project will provide a further understanding on CEE countries after complex comparisons. The China-CEE Institute, registered as a non-profit limited company in Budapest, was established by the Chinese Academy of Social Sciences (CASS) in April 2017. The Institute aims to build ties and strengthen partnerships with academic institutions and think tanks in Hungary, Central and Eastern European countries, as well as other parts of Europe. The China-CEE i Institute encourages scholars and researchers to carry out joint researches and field studies, organizes seminars and lecture series, holds training programs for students and junior researchers and publishes publications, etc. I hope this book will help enrich the research literature on CEE countries. Prof. Dr. CHEN Xin Executive President and Managing Director, China-CEE Institute Deputy Director General, Institute of European Studies, CASS ii Content Preface …………………………………………………………………...............i Introduction ...................................................................................................... 5 Country Report on Croatia Chapter 1. Economics ..................................................................................... 11 1.1. Indicators ………………………………………………………………11 1.2. Euro as a currency in Croatia or not? …………………………………20 1.3. Coordination of macroeconomic policy in future shocks …………….20 1.4. Conclusion …………………………………………………………….23 Chapter 2. Politics; Foreign Policy .................................................................. 25 2.1. Euroscepticism in Croatia ……………………………………………..25 2.2. Representation of extremist political parties in parliaments and governments …………………………………………………………………28 2.3. Defense Union or Common Foreign and Security Policy …………….34 2.4. Migration, asylum laws, Schengen area ………………………………42 2.5. Strengthening and weakening of European institutions ……………….48 2.5.1. Croatian decision makers and the Three Seas Initiative in the context of EU Common Foreign and Security Policy ................................................................ 54 2.6. Public opinion, Eurobarometer ………………………………………..57 Chapter 3. Conlusions ..................................................................................... 61 References ………………………………………………………………...…64 LIST OF ABBREVIATIONS ......................................................................... 68 Country Report on Latvia Chapter 1. Economics ..................................................................................... 72 1.1. The Euro and Latvia’s fiscal policy …………………………………….72 1.1.1. Monetary policy: a slow yet steady Eurozone accession ............................. 72 1.1.2. National fiscal policy: towards battling inequality ...................................... 74 1.1.3. Latvia and the EU Common Fiscal Policy .................................................. 77 1 1.2. Macroeconomic indicators focusing on unemployment and education ..82 1.2.1. Employment and labour shortage ............................................................... 83 1.2.2. Education and lifetime learning ................................................................. 85 1.3. Social policy, harmonization of social systems, minimum wage, population……………………………………………………………………87 1.3.1. Mitigating the risks of a declining population ............................................ 87 1.3.2. Latvia’s approach to the European Pillar of Social Rights .......................... 90 Chapter 2. Politics and Foreign Policy ............................................................ 93 2.1. Euroscepticism in Latvia ………………………………………………. 93 2.1.1. Catch-all-ism and populism in Latvia’s politics .......................................... 94 2.1.2. Euroscepticism – marginal agenda, mainstream critique ............................. 95 2.2. Representation of extremist political parties in parliaments and governments ………………………………………………………………. ..96 2.2.1. The specifics of the Latvian division between right and left........................ 96 2.2.2. “Oligarchs” in the Latvian parliament and government .............................. 98 2.2.3. Parliamentary elections of October 6, 2018: the old, the new and the anti- establishment .................................................................................................... 100 2.3. Latvia and the Common Security and Defence Policy of the European Union ………………………………………………………………………102 2.3.1 CSDP in the Latvian defense policy .......................................................... 103 2.3.2. Public debate on CSDP and the idea of a European army ......................... 104 2.3.2. Latvia’s engagement in CSDP activities .................................................. 106 2.4. Migration, asylum laws, Schengen area ………………………………108 2.4.1. Insight into history .................................................................................. 108 2.4.2. Policies and current debate ...................................................................... 109 2.5. Strengthening and weakening of European institutions ………………112 2.5.1. Core vs. periphery debate: integration vs. national competences ............... 112 2.5.2. EU institutional framework and Latvia’s principle of subsidiarity............. 114 2.6. Public opinion of Latvian population on the European Union ………..116 2.6.1. Support to the EU and its institutions ....................................................... 116 2.6.2. Benefits, priorities and concerns at the European level ............................. 117 2.6.3. European Parliament elections ................................................................. 118 2 Conclusion ....................................................................................................120 References …………………………………………………………………122 Country Report on Slovakia 1 Economic Section ..................................................................................132 1.1 Economic integration…………………………………………………134 1.2 Monetary and fiscal policy issues ……………………………………135 1.3 Slovak economy developments ……………………………………... 137 1.4 Convergence of the Slovak economy – addressing the country-specific recommendations …………………………………………………………..141 1.5 Demographic development in the EU ………………………………..145 1.6 Social Policy …………………………………………………………148 1.7 Education …………………………………………………………….150 1.8 Job Vacancies ……………………………………………………….. 151 1.9 Unemployment ……………………………………………………….153 1.10 Research and Innovation ……………………………………………..155 1.11 Europe 2020 ………………………………………………………….156 2 Politics and Foreign Policy .....................................................................158 2.1 Euroscepticism in Slovakia …………………………………………..158 2.1.1 Slovakia tended to trust more the European Union in the past ........... 160 2.1.2 The rising of Euroscepticism in the EU............................................. 161 2.1.3 Passive attitude in Slovakia towards the EU ...................................... 162 2.1.4 Slovakia’s future in the EU .............................................................. 163 2.1.5 The Visegrad Group (V4) and the United States of Europe ..............