What happens in the East when the West gives up?

The eastern and western halves of Europe have had high expectations of each other. The East looked to the West as a source of political and economic standards. The West looked to the East for appreciation and obedience. Those sentiments were the basis for NATO and EU expansion: the creation of a single market and collective security from the Atlantic to Galicia, and from the Baltic to the Black Sea. Those were huge achievements. But they were built on flawed foundations.  Both the East and the West are disillusioned now. The big question is whether the edifices built in happier times will survive.

Part of the expectations stemmed from misappre-hension. The Western picture of the East was suffused with sentimentality. After decades in which ‘Eastern’ had been synonymous with ‘Soviet’ (and therefore a threat), opinion switched. ‘East Europeans’ —  in itself a questionable term —were seen as heroic, downtrodden and grateful, scruffy on the outside but noble on the inside. The captivating stories of an electrician who became president in one country, and his playwright-philosopher counterpart in another, far outweighed the gritty reality. That rosy picture was mirrored by a dark one, also misleading: a kind of orientalist view of the ‘East’ as savage, prone to irrational ethnic hatreds and bizarre historical grudges.

Those stereotypes have unwound over the past 25 years. The romantic era is over, and so is the mass murder of the ex-Yugoslav wars. The smoke hanging over Europe now is more likely to come from torched cars in the banlieues of big French (or British) cities than from anywhere in Eastern Europe.  Some East European countries have emerged as stars — Estonia in cyber-excellence, Poland as a diplomatic heavyweight. Others still lag, with corruption, weak courts, poor public services and still-shoddy infrastructure. But the idea of a single Eastern Europe is gone. The most successful ‘Easterners’are now ahead of the worst-performing West-erners, in public services, in quality of life, and even, narrowly (Slovenia vs Greece) in GDP per person.

Eastern thinking about the West has changed too. The Washington consensus (liberalise, privatise, stabilise) still has ardent advocates in the ex-communist economies, but they note that its authors in America and Western Europe no longer practise what they preach. Western economists used to mock Viktor Gerashchenko, the governor of the Russian central bank in the early 1990s, because he believed you could stimulate the economy by turning on the printing presses. But by the standards of the Bank of England, the Fed, and the ECB, Mr Gerashchenko was a model of orthodoxy. Borrowing and printing money, bailing out banks and other bankrupt industries is now seen as a pragmatic response to extraordinary conditions. But the conditions in the ex-communist world in the early 1990s were extraordinary too, and nobody let governments break the rules then.

Now the apostles of rectitude are on the eastern side of the old Iron Curtain. On his visits to London, Jürgen Ligi, Estonia’s sabre-toothed finance minister, can be seen berating British officials for their lax public finances and costly, barnacled tax system. We hear the same message from his Polish counterpart, Jacek Rostowski. Both men run economies which grow fast and borrow modestly: in Western Europe it is the other way round. In three of the ‘Eastern’ countries — Estonia, Slovakia and Slovenia — hard-pressed, hard-up citizens are forking out (either with tax euros, or through depreciated savings) for the bailouts of much richer countries such as Cyprus, Greece, Ireland, Portugal and Spain. (On the ‘Eastern’ side, Hungary and Romania remain problems and Slovenia is a looming one. But Latvia is the poster-child for successful recovery after a bailout).

Nor does Western standard-setting count for much when it comes to politics. Political corruption in Italy under Silvio Berlusconi was of Putinesque proportions. The tide of dirty money in politics sloshes all over Europe. Mass membership of political parties is plummeting everywhere. The model of competitive electoral politics that the West preached during the Cold War looks threadbare, and nothing much is ready to take its place. Western countries mostly spend pitiful amounts on defence. So too do most of the new member states (Poland and Estonia are the honourable exceptions).

The real remaining divide is in the rule of law. The legal and criminal-justice systems still work far better in ‘old’ Europe than in most of the ‘new’ member-states. Slovakia’s judges, Bulgaria’s gangsters and Czech politicians are signal examples of the problem.

Overall, however, the change is in balance of moral power. ‘Easterners’ now make decisions on their merits, rather than because of pressure from the West. Has Slovakia’s Robert Fico changed to a more open, less heavy-handed style of government because of Western disapproval? Probably not. More likely he thinks it works better (he may have looked across the border to Hungary too).

It is the same story further north. The Kaczyński era in Polish politics, marked by venomous distrust of Germany, ended not because of strictures from the EU, but because Polish voters tired of all the excitement. They preferred the slightly sleazy and complacent, but predictable and competent, rule of Civic Platform instead. Latvian voters could have chosen politicians who offered default and devaluation, rather than the IMF and austerity. But they did not.

The good news here is that some of the most team-minded (communautaire) countries in Europe are the new member states. They appreciate the way in which the European Commission has attacked Gazprom’s business model. They like the structural funds. They like the safety of the common security and defence policy (even in its current embryonic form). They trust the European institutions to give them a fair crack of the whip. They see that when they plan hard and play hard, they get good results (Poland spent years negotiating its share of the EU budget, and was well-rewarded for it).

The bad news is in the West (meaning the old member-states and new ones that never suffered Communist rule). It is Cyprus that now puts the euro zone under its biggest strain. It is Italy which is the biggest source of political uncertainty. It is France that now seeks to break the rules of the internal market by subsidising its bankrupt industries. It is Spain and Portugal where the banking systems look most perilous. In none of these countries do the voters seem ready for the shocks and squeezes that the future must inevitably bring.

One big danger is that the West infects the East. Suppose a Polish government started behaving like the French? Or suppose patience snaps in Latvia and it becomes another Cyprus? Suppose corruption in the Czech Republic reaches Greek proportions, or that Hungary pursues the Berlusconi model?

The Easterners should aspire to more than avoiding such disasters, or being a quiet, smug role model. They should aspire to lead. They have a huge amount to gain from extending the single market, especially in services and in the digital economy. The UK would be a powerful ally if it can be woken from its euro-sceptic reverie. The deregulation agenda is still barely touched. NATO allies are divided over how much attention to devote to territorial defence (while France is sending over 1,000 forces to this year’s ‘Steadfast Jazz’ exercises in Poland and the Baltic states, Germany only a few dozen). These are questions that should matter greatly to all the new member-states. But, with some honourable exceptions, their diplomats in Brussels remain curiously quiet.

The EU and NATO are no longer ‘Western’ institutions. They belong to the East European states as much as they do to any other country. The shifting balance of moral power gives the new members greater chances than ever before to make their case and shape the collective future. They just have to want it.

By Edward Lucas, published by Central European Policy Institute