The biggest question facing all of Europe at the moment is whether Britain’s protracted exit from the European Union, which remained uncertain until late January, will be an isolated “one-off” phenomenon, or whether it will represent a turning point that will see the EU adjust its power and ambitions in significant ways — or even start to come apart completely. EU critics like Nigel Farage hope for the latter outcome, but the opposite is equally possible. Now that the restraining voice of Britain is gone, the larger European nations that dominate the EU — France, Germany, and their western European satellites — might move to increase the EU’s ambitions. This poses dilemmas for the smaller nations on the EU’s extended periphery, like Bulgaria.
Free trade and greater economic integration, the original central purpose of the European Economic Community (EEC) that evolved into the EU, remains a sound purpose today. With trade frictions increasing in recent years even within the formerly free trade stalwart United States, the old logic of the mutual gains from trade liberalization is losing its authoritative status. In today’s volatile climate of revived nationalism and neomercantilism, it would not be surprising to see the EU jump on the bandwagon and repudiate some of its original guiding purpose. No doubt a retreat from market liberalization would be called “managed trade,” and to be sure a lot of residual protectionism in Europe (think especially of French farmers) is already called “managed trade.”
The EU’s economic integration and liberalized internal migration regime offers substantial benefits to Bulgaria and the other small and relatively poorer nations of eastern Europe. In some respects Bulgaria enjoys the best of both worlds, being able to tap the fruits of EU economic and social integration while preserving its own currency. (Joining the Euro currency regime did Greece no favors in the long run.) A retreat from economic liberalization would impose its heaviest costs on the smaller nations of Europe. Despite what ought to be the sobering lessons from Brexit about the perils of overreach by the EU, it is the nature of ambitious, well-meaning but lightly accountable bureaucracies to tend toward imperiousness. Hence the immediate post-Brexit period is fraught with hazards. The temptation just now, in the wake of the Brexit humiliation, is for the EU to dig in its heels and perhaps even “teach a lesson” to any nations that resist its reach. Already we have seen French President Emanuel Macron and German Chancellor Angela Merkel make snarling and menacing comments toward critics of “the European project.”
The EU tried to make it difficult for Britain to execute its exit, threatening harsh economic punishment on a country that has the second largest economy in the EU and, more importantly, a country with a trade deficit with the European continent, meaning such threats ran against the economic interests of Europe and hence rang somewhat hollow. Such would not be the case with any smaller or weaker nations that seek adjustments to the EU regime.
It has always been the nature of international economic liberalization efforts that they become more difficult as they get closer to core economic interests of individual nations, and as individual nations go through periodic financial crises (like Greece and Italy) that test their commitment to the broader liberalizing regime. Further economic liberalization had already slowed down before Brexit, but as EU economic liberalization grew more difficult over the last 20 years the emphasis shifted toward new extensions of political unification, through instruments such as the Lisbon Treaty and the aggrandizement of the European Parliament and the executive EU Commission in Brussels.
Like economic harmonization, the political extension of the EU project is a mixed bag. It’s central purpose—to prevent the return of calamitous conflict and violence to Europe that occurred as recently as 25 years ago in the former Yugoslavia—is eminently sound, but as with other kinds of regulatory overreach the various supranational political structures (the various European courts for example) steadily erode national sovereignty by imperceptible degrees.
One area to watch in particular is the EU’s efforts to gain some momentum on climate change policy. The effort has been flagging in the last few years as nations (especially Germany) reach the limits of higher cost alternative energy sources. As we see in the United States, there is growing opposition to the development of new oil and natural gas supplies and infrastructure such as pipelines. Eastern European countries, already caught up in Russian intrigue over controlling the natural gas market for national advantage, should be especially wary of EU initiatives in energy.
It is to be wished that cooler heads prevail at the EU, and that they follow the advice Winston Churchill tried to give Stalin about Eastern Europe at the Yalta conference in 1945: “The Eagle should permit the small birds to sing, and care not wherefore they sang.” Today the nations of Eastern Europe face glowering eagles on both sides: the “benign” EU to the West, and malignant Russia to the East. The question for Bulgaria and other Eastern European nations whose situation Bulgaria shares is a strategy for engaging the EU to enhance its mutual benefits while preserving sufficient independence and latitude to build the nation’s future without shackles from Brussels.
By Steven F. Hayward
