The Belgian Curtain: Europe after Communism Part 8

These lurking uncertainties are reciprocated in the west. The mostly Slav candidates are stereotyped and disparaged by resurgent rightwing, anti-immigration parties, by neo-nationalists, trade protectionists and vested interests. Countries like Spain, France, Ireland, Greece and Portugal stand to receive less regional aid and agricultural subsidies from the common EU till as the money flows east.

Core const.i.tuencies in the west - such as farmers and low-skilled industrial workers - resent the enlargement project. Anti-Slav prejudices run rampant in Italy, Austria and Germany. The incompatibilities are deepest. For instance, according to research recently published by the Pew Center, the new members are staunchly pro-American, though less so than ten years ago. In stark contrast, the veteran core of the EU is anti-American.

Many of the denizens of the candidate countries regard the EU as merely an extended Germany. It is the focus of numerous conspiracy theories, especially in the Balkan. The losers of the second world war - j.a.pan and Germany - are out to conquer the world, this time subst.i.tuting money for bullets.

Germany, insist the Serbs and the Macedonians - instigated the breakdown of the Yugoslav Federation to establish a subservient Croatia. Wasn't Slobodan Milosevic, the Serb dictator, ousted in favor of the German-educated Zoran Djindjic? - they exclaim triumphantly.

Germany is rea.s.serting itself. United, it is the largest country in Europe and one of the richest. Its forces are keeping the fragile peace in Balkan hot spots, like Macedonia. It will contribute to the EU's long-heralded rapid reaction force. It owns the bulk of the, frequently overdue, sovereign debts of Russia, Ukraine and other east European countries.

One tenth of Germany's trade is with the candidate countries, a turnover comparable to its exchange with the United States. German goods const.i.tute two fifths of all EU trade with the new members.

Germans are the largest foreign direct investors throughout the region - from Hungary to Croatia. German banks compete with German-owned Austrian banks over control of the region's fledgling financial sector.

The study of German as a second or third language has surged.

Last year alone, German corporations plunged $3.6 billion into the economies of the acceding countries. German multinationals like Volkswagen and Siemens employ almost 400,000 people in central Europe - for one tenth to one eighth their cost in the fatherland.

Quoted by the World Socialist, the German Chamber of Industry and Commerce (IHK) estimates that the production costs in mechanical engineering and plant construction are 20 percent lower in Poland than in Germany, while quality is more or less the same.

Germany runs the EU rather single-handedly, though with concessions to a megalomaniacally delusional France. In September, the German and French leaders, meeting t?te- -t?te in a hotel, dictated to other members the fate, for the next 11 years, of half the EU's budget - the portion wasted on the Common Agricultural Policy (CAP).

Germany's hegemonic role is likely to be enhanced by enlargement. Many of the new members - e.g., the Czech Republic - depend on it economically. Others - like Hungary - share with it a common history.

German is spoken in the majority of the candidates. They trade with Germany and German businessmen and multinational are heavily invested in their economies. A "German Bloc" within the EU is conceivable - unless Poland defects to the increasingly marginalized French or to the British.

Germany's federalist instincts - its express plan to create a "United States of Europe", central government and all - are, therefore, understandable, though spurned by the candidate countries. Germany is likely to press for even further enlargement to the east. The EU's commissioner for enlargement is a German, Gunter Verheugen.

The dilapidated expanses of the former Soviet satellites are Germany's natural economic hinterland - on the way to the way more lucrative Asian markets. Hence Germany's reluctance to admit Turkey, a ma.s.sive, pro-American, potential compet.i.tor for Asian favors. Integrating Russia would be next on Germany's re-emerging Ostpolitik.

This firmly places Germany on an economic and military collision course with the United States. As Stratfor, the strategic forecasting consultancy, put it recently: "In Was.h.i.+ngton's opinion, America's obsessions should be NATO's obsessions." Germany, the regional superpower, has other, more pressing priorities: "maintaining stability in its region, making sure that Russian evolution is benign and avoiding costly conflicts in which it has only marginal interest."

Moreover, there is an entirely different - and much less benign - interpretation of EU enlargement. It is based on the incontrovertible evidence that the German ends in Europe have remained the same - only the means have changed. The German "September Plan" to impose an economic union on the vanquished nations of Europe following a military victory, called, in 1914, for "(the establishment of) an economic organization ... through mutual customs agreements ... including France, Belgium, Holland, Denmark, Austria, Poland, and perhaps Italy, Sweden, and Norway".

Europe spent the first half of the 19th century (following the 1815 Congress of Vienna) containing a post-Napoleonic France. The Concert of Europe was specifically designed to reflect the interests of the Big Powers, establish the limits to their expansion in Europe, and create a continental "balance of deterrence". For a few decades it proved to be a success.

The rise of a unified, industrially mighty and narcissistic Germany led to two ineffably ruinous world wars. In an effort to prevent a repeat of Hitler, the Big Powers of the West, led by the USA, the United Kingdom and France, attempted to contain Germany from both east and west. The western plank consisted of an "ever closer" European Union and a divided Germany.

The collapse of the eastern flank of anti-German containment - the USSR - led to the re-emergence of a united Germany. As the traumatic memories of the two world conflagrations receded, Germany resorted to applying its political weight - now commensurate with its economic and demographic might - to securing EU hegemony. Germany is also a natural and historical leader of central Europe - the future lebensraum of both the EU and NATO and the target of their expansionary predilections, euphemistically termed "enlargement".

Thus, virtually overnight, Germany came to dominate the Western component of anti-German containment - even as the Eastern component has chaotically disintegrated.

The EU - notably France - is reacting by trying to a.s.sume the role formerly played by the USSR. EU integration is an attempt to a.s.similate former Soviet satellites and dilute Germany's power by re-jigging rules of voting and representation. If successful, this strategy will prevent Germany from bidding yet again for a position of dominance in Europe by establis.h.i.+ng a "German Union" separate from the EU.

If this gambit fails, however, Germany will emerge triumphant, at the head of the world's second largest common market and most prominent trading bloc. Its second-among-equal neighbors will be reduced to mere markets for its products and recruitment stages for its factories.

In this exegesis, EU enlargement has already degenerated into the same tiresome and antiquated mercantilist game among 19th century continental Big Powers. Even Britain has. .h.i.therto maintained its Victorian position of "splendid isolation". There is nothing wrong with that. The Concert of Europe ushered in a century of globalization, economic growth and peace. Yet, alas, this time around, it has thus far been quite a cacophony.

Europe's Agricultural Revolution

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

One of the undeniable benefits of the forthcoming enlargement of the European Union (EU) accrues to its veteran members rather than to the acceding countries. The EU is forced to revamp its costly agricultural policies and attendant bloated bureaucracy. This, undoubtedly, will lead, albeit glacially, to the demise of Europe's farming sector as we know it.

Contrary to public misperceptions, Europe is far more open to trade than the United States. According to the United Nations (UN), the International Monetary Fund (IMF) and the Organization of Economic Cooperation and Development (OECD), its exports amount to 14 percent of gross domestic product (GDP) compared to America's 11.5 percent. It is also the world's second largest importer. In constant dollar terms, it is the world's largest trader.

A recent Trade Policy Review released by the World Trade Organization (WTO) mentions two notable exceptions: farm products and textiles.

Europe's average tariff on agricultural produce is four times those levied on non-agricultural goods. Yet, a number of trends conspire to break the eerie stranglehold of 3 percent of Europe's population - its farmers - on its budget and political process.

The introduction of the euro rendered prices transparent across borders and revealed to the European consumer how expensive his food is. Scares like the mishandled mad cow disease dented consumer confidence in both politicians and bureaucrats. But, most crucially, the integration of the countries of east and central Europe with their ma.s.sive agricultural sectors makes the EU's Common Agricultural Policy (CAP) untenable.

The CAP guzzles close to half of the EU's $98 billion budget. Recent, controversial reforms, introduced by the European Commission, call for a gradual reduction and diversion of CAP outlays from directly subsidizing production to WTO-compatible investments in agricultural employment, regional development, environment and training and research. Unnoticed, support to farmers by both the EU and member governments has already declined from $120 billion in 1999 to $110 billion in 2000. This decrease has since continued unabated.

Still, the EU is unable to provide the candidate countries with the same level of farm subsidies it doles out to the current 15 members.

Close to one quarter of Poland's population is directly or indirectly involved in agriculture - ten times the European average. The agreement struck between Germany and France in September and adopted in a summit Brussels in October freezes CAP spending in its 2006 level until 2013.

This may further postpone the identical treatment much coveted by the applicants. Theoretically, subsidies for the farm sectors of the new members will increase and subsidies flowing to veteran members will decrease until they are equalized at around 80 percent of present levels throughout the EU by the end of the next budget period in 2013.

But, in reality, the entire CAP stands to be renegotiated in 2005-6. No one can guarantee the outcome of this process, especially when coupled with the Doha round of trade liberalization. The offers made now to the candidate countries are not only mean but also meaningless.

A recent tweak by Denmark, the current president of the EU, to peg support for farmers in the accession countries at two fifths the going rate, won a cautious welcome by the applicants. Some of this novel subventionary largesse will be deducted from a fund for rural development in the new members. Additionally, national governments will be allowed to top up inadequate EU dollops with governmental budget funds.

Even this parsimonious offer - still disputed by the majority of contemporary EU members - will cost the Union an extra $500 million a year. It also fails to tackle equally weighty wrangles about production quotas, EU protectionist "safeguard" measures, import tariffs imposed by the applicant countries against heavily subsidized European farm products, reduced value added taxes on agricultural produce and referential periods and yields - the bases for calculating EU transfers.

It also ignores the distinct - and th.o.r.n.y - possibility that the new members will end up as net contributors to the budget. Quoted by Radio Free Europe/Radio Liberty, Sandor Richter, a senior researcher with the Vienna Inst.i.tute for International Economic Studies, concluded that the first intake of applicants will end up underwriting at least $410 million of the EU's budget in the first year of members.h.i.+p alone. With the GDP per capita of most candidates at one fifth the EU's, this would be a perverse, socially unsettling and politically explosive outcome.

Aware of this, the European Commission denies any intention to actually accept cash from the candidates. Their net contributions would remain theoretical, it pledges implausibly. Yet, as long as a country such as Poland is incapable of absorbing - disseminating and utilizing - more than 28 percent of the aid it is currently ent.i.tled to - veteran EU members rightly question its administrative ability to tackle much larger provisions - c. $20 billion in the first three years after accession.

The prolonged and irascible debate has taken its toll. In some candidate countries, pro-EU sentiment is on the wane. Leszek Miller, Poland's prime minister, told the PAP news agency that Poland should contribute to the EU less than it receives in agricultural subsidies.

And what if not? "n.o.body would be overly concerned if Poland did not enter the EU together with the first group of new members."

Hungary echoes this argument. Almost two thirds of respondents in surveys conducted by the EU in Estonia, Latvia, Slovenia and Lithuania are undecided about EU members.h.i.+p or opposed to it altogether.

The situation in the Czech Republic is not much improved. Only Hungary stalwartly supports the EU's eastern tilt.

Opinion polls periodically conducted by GfK Hungaria, a market research group owned by GfK Germany, paint a more mixed picture. On the one hand, even in countries with a devout following of EU accession, such as Romania, support for integration has declined this year. Support in Hungary and Poland, on the other hand, picked up.

Yet, the EU can't seem to get its act together. According to the Danish paper, Berlingske Tidende, Danish prime minister, Anders Fogh Rasmussen, rules out a "take it or leave it" ultimatum to the candidates. There will be "real negotiations", he insisted. Not so, says Anders Fogh Rasmussen, the Danish president of the EU until Dec 31: "The room for maneuver in negotiations will be very limited ... We have a certain framework, and we stick to it."

Yet, disenchantment should not be exaggerated. Naturally, flood-affected farmers throughout the region - from the Czech Republic to Poland - are vigorously protesting their unequal treatment and the compromises their governments are arm-twisted into making. Still, according to a survey released last December by the European Commission, 60 percent of the denizens of the accession countries support it.

As the endgame nears, the parties to the negotiations are posturing, though. EU enlargement commissioner, Gunter Verheugen, argued a fortnight ago against equalizing support for Poland's 6 million farmers with the subsidies given to the EU's 8 million smallholders. In a typical feat of incongruity he said it will prevent them from modernizing and alienate other professions.

Franz Fischler, the Austrian EU's agriculture commissioner, hinted that miserly production quotas for cereals, meat and dairy products, offered by the EU to the seething applicants, can be augmented. The EU presently provides the candidate countries with funding, within the Special Accession Programme for Agriculture and Rural Development (SAPARD) to support farm investments, to boost processing and marketing of farm and fishery products and to bankroll infrastructure improvements. Hungarian farmers, for instance, are ent.i.tled to up to $38 million of SAPARD money annually.

In a thinly veiled threat, Fischler included this in a speech he made in a recent official visit to Estonia:

"The EU enlargement countries should be pleased with the 25 per cent agriculture subsidies, as the member states have not agreed even on that yet, therefore this should be the first goal and only after that can further subsidies be discussed ... It would not be very wise to tell the EU member states that accession countries are not pleased, that would not be positive for the whole process."