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Central Europe, Here And Now

Exoticism has always been the enemy of countries trying to swim toward the mainstream. Central Europe – meaning the Visegrád countries of the Czech Republic, Hungary, Poland and Slovakia – are losing their exotic labels. Events and familiarity are blowing away the whiff of ‘Ruritania’ – the fictional creation of the British 19th century novelist Anthony Hope – and not before time.

As the 25th anniversary of the fall of the Berlin Wall approaches, it is worth noting the huge strides toward normality made by the countries that once suffered behind it. They are members of the European Union (EU) and North Atlantic Treaty Organization (NATO). Slovakia and Slovenia (along with their Baltic cousins Estonia and Latvia) are members of

the Euro-zone. They are among the continent’s least-indebted and fastest growing members. They are stable politically and socially. Whereas before the financial crisis, the continent’s big task was integrating its new, poor “eastern” neighbors, attention has now shifted to salvaging the economies of its troubled old southern ones.

That is cause for congratulation. It is hard now to remember the skeptical, patronizing tone that many European policymakers took toward the east only 20 years ago. The stereotypes of the “east Europeans” at international meetings used to be a bearded man laden with grievances, and a pretty girl sitting quietly with a laptop. Not anymore. Politicians such as Estonia’s President Toomas Hendrik Ilves, or Poland’s Foreign Minister Radosław Sikorski are figures on an international scale. Mr. Ilves is the go-to European politician on digital and internet issues; Mr Sikorski is in the thick of decision-making about Ukraine. Bulgaria’s former Foreign Minister Nikolai Mladenov played a quiet but important (and ultimately abortive) role on Syria. Other examples abound.

Behind the personalities lie hard economic facts. The Visegrád countries are no longer charity cases. They buy stuff and make stuff. They matter more to Germany now than Russia does – a fact which is not lost on policymakers in Berlin, or the business lobby there. The Central European countries are policymakers, not policy takers: if you want to get things done, you have to talk to them.

This quiet revolution deserves celebration. But will it last? Outsiders have good reason to be worried. What would Poland look like under a Law and Justice government? Last time, it was comically erratic, with the Kaczyński twins (Lech as president and Jarosław as prime minister) picking fights with Germany and sabotaging EU decision-making with bizarre demands. And what about Hungary, where the conservative government of Viktor Orbán has jarred sensibilities with new media laws and a winner-takes-all approach to public appointments and institutions, coupled with a Russia-friendly energy policy?

The Czech Republic has a weak government even by its own dismal standards, whereas Slovakia has a strong one with a secretive bent and little appetite for reform. Emigration is bleeding many of the countries of the region dry, particularly Latvia and Lithuania. If the post-Communist success story is so great, why are people voting against it with their feet?

In assessing answers to these questions, it is important to distinguish between short-term wobbles and long-term structural problems. And the standard of comparison must be clear. Democracies do have a habit of throwing up exotic politicians. The question is whether public institutions are strong enough to contain and channel their energies.

So far on this front, the post-Communist story has been a good one. Politicians have often been deplorable, but the countries have carried on, partly because of their own institutions, and partly because the EU and European human rights legislation (under the auspices of the Council of Europe) provide such a strong external framework. That is not going to change any time soon. Some countries are more troubling than others – particularly on issues such as judicial reform, but it is hard to argue than any country is in a worse state than it was five years ago.

The geographical comparison is important too. Reckless, corrupt or incompetent government is not a peculiarity of the “ex-Communist” (a phrase well past its use-by date) world. For all its faults, the Orbán government in Hungary has not led the country into a Greek or Cypriot-style disaster.

Leaving aside the short-term problems and natural political and economic wobbles, the real question for the “region” is about structural problems. Foremost among these is prosperity. These countries

were starved of capital and outside contact during the Communist era. They still need to catch up. Is that happening, or will they fall into what some economists call a “middle-income trap,” eking out a living as subcontractors for the advanced economies of Europe, but with the fruits of their labors mainly going to others?

This is certainly a danger. The low-hanging fruit has already been picked. Competing for western investment by offering cheap land and labor provides diminishing returns. The region has yet to show it can fully integrate into the knowledge economy of the future. It is therefore important to preserve and extend the education system, in both quality and quantity. The region needs better connectivity in energy, data and transport (it is a scandal that some trains are still slower now than they were a century ago). There is plenty of room to include Austria in the region as a partner, and to use it as a financial, educational and research hub.

The second big structural problem is demographic. The great danger for the region is that it gets old before it gets rich. This is already a pronounced problem in Bulgaria and Georgia, but the crisis is hastening toward other countries too. The answer is a complex one. Countries need to make better use of the children they have, especially from the Roma minority (education again). The labor force of 2050 will comprise the children being born right now, and many of them face dismal life prospects. But Hungary has already shown that rapid progress on Roma inclusion and education is possible, by simple means such as tying child welfare payments to school attendance. Other countries would do well to follow suit.

The region could also do a better job in cherishing its adult workforce. Millions of Poles, Lithuanians, Latvians, Slovaks, Romanians and others have gone to seek their chances in Western Europe, often doing jobs more menial and boring than their education would suggest. Higher wages are only one reason. Another is the quality of public services – including health, education and transport – and the certainty that comes from fair, honest tax and criminal-justice

systems. Too many of these migrants feel disillusioned and pessimistic, sometimes bitterly so, with their native lands. Winning back their affection and respect is a big task which cannot happen soon enough.

The third challenge is geopolitical. Russia is resurgent: a revisionist power which regards the post-1991 settlement as profoundly unfair. It will use money, energy, diplomacy, espionage and other means to secure its interests in a region that it regards as its own front-yard. The countries of the former Soviet empire are far more aware of this than their counterparts in the rest of the West. They are still uncomfortably vulnerable. Ukraine is just the start of the Kremlin’s push-back. Who will be next? It would be nice to think that the defenses are manned and the watchtowers vigilant. I am not so sure.

In short, the achievements of the past 25 years are colossal. The countries of the region have established themselves as solid democracies and market economies, rooted in the Euro-Atlantic structures. They have avoided economic collapse, the financial crisis and (ex-Yugoslavia apart) ethnic or national strife. But the job is only half done. Being “good enough” is not good enough. Deep and painful changes await. The region must meet them, and its friends must be ready to help.

 By Edward Lucas

Note: Edward Lucas is a Senior Fellow and Contributing Editor at the Center for European Policy Analysis (CEPA) and an International Editor for The Economist.

– This article first appeared in the April 11, 2014 issue of the CED (Central Europe Digest).
Reprinted with permission from the Center for European Policy Analysis, 1229 19th Street NW, Suite 450, Washington, DC 20036

www.cepa.org