Look East Again, Europe

The EU’s historic decision to admit eight former communist countries as members must not be create a new division between Eurasia’s haves and have nots. Instead, the Union needs to turn its attention further east — to its new neighbors and the other countries of the former Soviet Union.

The EU spent 9 billion euros between 1999 and 2002 to prepare Central European and Baltic candidate countries for membership — 10 times the amount it spent on Central Asia’s impoverished non-candidate countries. The EU will spend over 30 billion euros integrating its new members into the Union. It is in the EU’s economic and security interests to extend that generosity further eastward to assist the development of stable market-economies in Central Asia, the Caucasus, and other CIS countries.

Poverty and under-development undermine security and democracy. They fuel cross-border organized crime, trafficking in human beings and illicit migration, as well as the drugs trade, religious extremism, and terrorism. Afghanistan is a stark warning of what happens when the world turns its back on an impoverished country in a volatile region. Expanding Europe’s common economic space to all territories of the former Soviet bloc will contribute to security and prosperity across the region.

In many respects, the former Soviet republics are less well-placed than their former communist neighbors to the West to cope with the transition to a market economy. For some, indeed, the challenges look almost insurmountable.

In Georgia, Moldova, Tajikistan, and Ukraine, for example, per capita GDP is now less than half of the dire levels achieved under communism. Economic discrepancies are growing. Foreign direct investment in 1991-2001 averaged $1,400 per capita in the eight former communist EU candidate countries. It was only $198 per capita in the CIS.

Recent studies by the European Bank for Reconstruction and Development (EBRD), the World Bank and the CASE Foundation show that geographical distance from centers of development, mountainous terrain, lack of “market memory”— recent historical experience of an entrepreneurial tradition — and failures of economic policy are the main causes of the lack of recovery after the collapse of the Soviet-era economy.

Let me add another: Western assistance to EU non- candidate countries is neither comprehensive nor systematic. It is scattered, sporadic, and uncoordinated, leaving many areas uncovered. It is too modest.

All of this is in sharp contrast with the treatment given the EU candidates. They were assisted by thousands of experts in adopting the EU’s legendary, 80,000-page “acquis communautaire.” legislative package. For the first time in EU history, they received pre-accession funding to help overcome costly hurdles.

If such massive assistance was necessary to restore the market economy to Western Europe’s closest neighbors, who spent “only” 45 years under Communism, how much greater is the challenge of building modern economies from scratch in remote lands like Kyrgyzstan or Tajikistan?

These countries never experienced modern market arrangements. For 70 years, their contacts with the West were stifled by the Soviet system. No matter how hard they try — and Kyrgyzstan has certainly tried — they are doomed to fail without coordinated, well-designed and adequate assistance.

Some good news is on the way. The EU is doubling its TACIS program in Central Asia. President Bush wants Congress to fund $5 billion of assistance over three years to the world’s poorest countries. Foreign ministers of the 55-nation Organization for Security and Cooperation in Europe (OSCE) decided last month in Porto to develop a new strategy for economic and environmental cooperation in the Euro-Atlantic area so as to address security threats resulting from the growing inequalities between countries of this region.

But this will not suffice. From my perspective at the OSCE, it is clear that far more needs to be done:

* The EU’s technical capacity, which has been preoccupied by enlargement, could be redirected towards assistance for the non-candidate countries of Euro-Asia. Building the institutions of a market economy should be the main focus, not alignment with expensive EU standards in food production or the environment;

* The EU should gradually phase out its Common Agricultural Policy, which primarily benefits owners of large farms, and instead develop new instruments of financial assistance for its own poor regions and its new neighbors;

* Current EU members and successful candidate countries could make available large-scale training programs in market-relevant disciplines for the young generation in CIS countries;

* Taking as a model the Stability Pact in the Balkans, the EU could offer concrete incentives, such as economic assistance and the prospect of closer integration, to stimulate parties to end unresolved regional conflicts in the Caucasus, Transdniestria and Central Asia;

* The main actors providing international assistance — including the World Bank, International Monetary Fund, EBRD, the EU itself, and the United Nations Development Program — should ensure a minimum level of coordination to avoid duplication and waste. The OSCE, with field offices in all the countries concerned, could play a useful role here.

By preventing a new division of the Euro-Asian region into successes and failures, the EU will make a substantial investment in its own long-term security.

By Marcin SWIECICKI, a former Polish government minister and Mayor of Warsaw, the OSCE’s Coordinator of Economic and Environmental Activities © : Project Syndicate, January 2003