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Customs Union: The world’s largest trading block turns 50

MD Staff

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The Customs Union is unique in the world. It is a foundation of the European Union and essential for the proper functioning of the Single Market.The Customs Union is a single trading area where all goods circulate freely, whether they’re made in the EU or imported from beyond its borders. This means that there are no customs duties at the borders between EU countries. Duty on goods from outside the EU is generally paid when they first enter the EU. From then on, there’s nothing more to pay and no more checks. National customs services in all EU countries work together as one to manage the day-to-day operations of the Customs Union. Member countries share one single system for handling the import, export and transit of goods.

The Customs Union comprises the 28 Member States of the EU, Monaco and British territories. Over 114,000 customs officers work around the clock at airports, border crossings, ports, inland customs offices or customs laboratories. The EU’s customs administrations need to work closely to facilitate trade and protect the health and safety of all EU citizens.

How does the EU’s Custom Union help to protect and keep us safe?

The aim of the Customs Union is to protect society at large while making sure that legitimate trade can flow easily. The Customs Union defends against international trafficking and smuggling, protects consumers against illegal and dangerous goods, and preserves the environment and European cultural heritage as well as the financial interests of the EU and the Member States. In the EU, there are 90 state-of-the-art customs laboratories to carry out this job. Some labs specialise in certain types of analysis – for example, toy safety. When human senses are not enough to detect certain types of illegal goods, customs officers partner up with sniffer dogs which specialise in detecting illegal drugs, suspicious food, explosives or even large amounts of cash. 

HOW THE CUSTOMS UNION PROTECTS  

 DRUGS AND CIGARETTES  
  • In 2016, EU customs seized almost 4.6 billion illegal cigarette and 298.9 tonnes of drugs in the EU.
  • In Spain, for instance, law enforcement dismantled an organisation producing contraband tobacco products. In three of these operations, 15 persons were detained and more than 275 tonnes of tobacco products, valued at more than €20 million, were seized. Two types of machines were confiscated: for the manufacturing of the tobacco products and for drying the tobacco. Additionally, numerous sacks containing chemical substances used to fabricate the final product were also seized.
  • In Poland, a tobacco sniffer-dog discovered 10.5 million cigarettes inside a sea-container at the container terminal of the Gdynia sea-port.
  • On the west coast of France, 19 tonnes of cannabis resin were seized in a sailing ship. Three tonnes of cocaine were found in a maritime container. In addition, 120 000 doses of diazepam were seized.
  • In Spain, a customs boat supported by a customs helicopter intercepted a sailing ship loaded with almost nine tonnes of hashish.
  • In Belgium, customs seized 2 275 kilos of drugs which were smuggled through passenger traffic (by air) and 476kg by express consignments.
 
WEAPONS  
  • Some 6,256 firearms were seized in the EU in 2016, along with more than 1 million pieces of ammunition and 1 520 pieces of explosives.
  • Customs officials in Belgium were able to stop 126 pieces of weapons/ ammunition/ explosives from entering the EU. These weapons were being smuggled into the EU through air traffic or post.
  • In Spain, 737 assault rifles and 72 grenade launchers, including chargers and instruction books were seized.
 
FAKE AND DANGEROUS GOODS  
  • EU customs intercepted products suspected of violating intellectual property rights on more than 63 000 occasions. In 2016, more than 41 million articles were detained with an estimated value of nearly €672 million.
  • Estonian customs seized almost 34,000 pieces of fake “Diesel” jeans in Muuga Port.
  • Greek customs seized more than 1.3 million batteries, 537,000 packs of cigarettes and 24,300 wallets.
  • There were almost 14 000 cases of goods presenting a risk for consumers in terms of health (sanitary, phyto-sanitary and veterinary technical standards). More than 37 million items were identified as unsafe or uncompliant in terms of product safety.
 
GOODS VIOLATING ENVIRONMENTAL RULES  
  • 3,500 infringements of regulations for endangered species (CITES) were detected. In 96 cases, exports were detected which did not respect the rules on exports of cultural goods.
  • Estonian customs seized almost 66,000 tubes of face cream which contained caviar.
  • In France, 110,000 cosmetic products with caviar and protected plants were seized, as well as 46 square meters of alligator skin and 20 tonnes of wood from the exotic “Dalbergia retusa” species.
  • In the United Kingdom, 300 map turtles (Graptemys spp), 5 live giant salamanders, 6 kg of caviar, 300 leather items made from python skin, 760 kg of traditional medicines containing protected plant species and 18 kg of ivory tusks were seized.
UNDECLARED CASH
  • Travelers entering or leaving the EU are obliged to declare amounts of cash valued at €10,000 or more (or its equivalent in other currencies or bearer negotiable instruments) to customs authorities. In 2016, there were 571 significant cases, where seizures of undeclared cash amounted to more than €50,000.
  • Each year, more than 100,000 cash declarations are submitted to customs, amounting to more than €62 billion. Each year, more than 10,000 cases of undeclared cash or incorrectly completed cash declarations are recorded
  • As part of the EU’s Action Plan against Terrorism financing, recently-agreed new rules will extend the rules to cover cash sent in postal parcels or freight shipments, to prepaid cards and to precious commodities.

How does the EU’s Custom Union help to facilitate trade?

The EU is one of the largest trading blocks in the world. In 2015, the EU accounted for almost 15% of world trade in goods, worth €3.5 trillion. Managing this volume of international trade requires handling millions of customs declarations per year in a fast and efficient manner. The Union Customs Code removed the need for hundreds of different customs forms and now allows the use of electronic transport manifests for customs purposes and the moving of goods under temporary storage without lodging a transit declaration. It also introduced centralised clearance, and is more straight-forward for businesses, providing uniform and harmonised rules on guarantees. Finally, it also reduces the administrative burden on compliant and trustworthy economic operators (AEOs) by allowing a number of simplifications of customs procedures, and of the use of guarantees, and by allowing self-assessment of customs debts under certain conditions.

What has the Commission proposed to support customs operations as part of the new EU budget?

As part of the plans for the next EU budget, the Commission has now proposed a continued financial commitment of €950 million for the EU’s customs programme, representing just 0.07% of the entire budget. The programme supports the essential cooperation between customs authorities across the EU and protects the financial and economic interests of the European Union and its Member States. It has helped to build a modern and innovative Customs Union that ensures the safety and security of all EU citizens, while at the same time facilitating growing global trade. It allows the joint development and operation of major, pan-European IT systems and establishes networks, bringing together national officials from across Europe.

The new proposed Customs Programme [LINK] will build on this success, helping customs administrations to deal with increasing trade flows and emerging trends and technologies, such as e-commerce and blockchain. It will also support customs authorities through enhanced cooperation on the ground and more training. The programme will help to provide better risk management to protect the EU’s financial interests and to respond to security threats and cross-border crime. A new Customs equipment instrument worth €1.3 billion is also being created to allow the purchase, maintenance and replacement of innovative customs equipment by Member States.

CUSTOMS UNION – TIMELINE AND KEY STEPS 

1 July 1968 

 

All customs duties and restrictions lifted between the six member countries of the European Economic Community (EEC). A common customs tariff replaces national customs duties on products from the rest of the world. Trade between the countries multiplies and investment and economic growth increases.
1987  One Single Administrative Document replaces hundreds of national customs declaration forms. At the same time, the common transit system is created.
1992  EU adopts the Community Customs Code, creating a common rulebook for customs legislation. This milestone leads to much simpler guidance for traders and customs alike.
1993 

 

Free movement of goods become a reality: no more customs formalities at internal borders of the EU and no more long queues for lorries filled with goods to be checked at border crossings. For the first time, uniform customs legislation becomes directly applicable in all Member States of the EU.
1994  Launch of the integrated tariff of the European Union in digital format (TARIC) with daily transmissions to the EU Member States. It replaced the first TARIC database with weekly transmissions since 1987.
1996 EU-Turkey Customs Union enters into force.
2003  A new computerised transit system becomes operational. It is the first European customs system that uses electronic declaration and processing.
2004  10 new countries join the EU and the EU Customs Union, marking the largest expansion of the EU Customs Union in its history.
2005

 

 

EU launches the Customs Risk Management system that connects more than 800 customs offices and provides a digital platform to exchange information about risks and irregularities. New security legislation is introduced providing for advance cargo information, risk-based controls and measures aimed at end-to-end supply chain security, including through use of technology.
2008 

 

 

EU introduces the Authorised Economic Operator (AEO) status: an internationally-recognised quality mark indicating that a company’s role in the international supply chain is secure, and that customs controls and procedures are efficient and compliant. It is voluntary and enables simplified customs procedures and in some cases the right to ‘fast-track’ shipments through some customs and safety and security procedures.
2011  Customs becomes a major actor for increased security in the EU. Common risk criteria for security and safety start to apply to all goods crossing the EU borders, ensuring equal protection of all EU citizens and member states.
2016 

 

 

The Union Customs Code takes effect, further modernising and streamlining customs procedures throughout the EU. It also introduces a number of IT systems to support harmonised customs rules and to reduce the administrative burden for trade. Full implementation of IT systems is foreseen in steps, with the majority of systems being available by 31 December 2020, with further upgrades during the period up to 2025.
2018 The EU Customs Union celebrates 50 years of operation.

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Russia–EU Relations in 2020: Opportunities, Limitations and Possible Trends

Dr. Andrey KORTUNOV

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Any attempt to predict the development of Russia–EU relations in the upcoming years must certainly acknowledge the fact that relations between the two sides have remained remarkably stable since 2014, and the momentum of current dynamics (or, instead, the momentum of no dynamics) will most likely continue. 2019 marked European Parliament elections, the “overhaul” of the European Commission and other EU governing bodies, as well as the formation of a new balance of political power on the continent. It may be safe to assume that 2020 will be a quieter and altogether less nerve-wracking year for the European Union, although certain states (for example, Poland or Italy) may very well have some surprises in store. Additionally, a shift towards tackling the most critical issues associated with Brexit is a distinct possibility.

Most experts believe that the political system in Russia has a sufficiently large “safety margin” to pass through 2020 without being exposed to any significant destabilization risks, and the accumulated financial “safety cushion” will allow the country’s leadership to guarantee socioeconomic stability despite possible fluctuations in the global economy or world energy prices, or any changes to the international sanctions regime against Moscow. A real political challenge to the authorities may appear later, probably no earlier than the parliamentary elections of September 2021. Accordingly, it is unlikely that any new domestic factors will pop up before the end of 2020 that may trigger a significant shift in the EU’s approach to Moscow or Russia’s approach to Brussels.

Uncertainty Factors

Nevertheless, the features and orientation of internal processes in the European Union and Russia will undoubtedly influence their bilateral relations. In our opinion, the main uncertainty factor for the European Union rests in the level of political unity and the ability or inability of the new European Commission to successfully withstand centrifugal trends in the EU, as well as pressure exerted by populists in individual EU member states. Clearly, the new offensive launched by populists and deepening internal contradictions within the European Union will tempt Moscow to use the organization’s disunity to achieve “separate” agreements with its traditional European partners. At the same time, many in Europe will inevitably lay principal responsibility for confusion and vacillation in the European Union at Moscow’s doorstep. A strong and cohesive European Commission will restrict the possibility of the Kremlin pursuing “selective involvement” with convenient European partners.

On the other hand, it is highly unlikely that a weak and disjointed European Union will dare to launch a serious internal discussion of the prospects of its Moscow strategy beyond the five “Mogherini principles” that were formulated four years ago, given its concerns about further undermining the already fragile foreign political unity of its member states. It is common knowledge that the ongoing sanctions regime against Russia is less of an instrument of exerting influence on Moscow than it is one of the few remaining symbols of “European unity.” A weak European Union will be forced to prioritize maintaining the existing status quo and minimizing potential change-associated risks.

For Russia, the main uncertainty factor, it would seem, is still the level of socio-political tension in the country, and how authorities respond to it. If tensions continue to grow during 2020 (which can be expressed, for instance, in an increase in the number and size of rallies, picketing, demonstrations and other manifestations of street political activities) and the authorities tighten the screws in response (dispersing rallies by force, carrying out pre-emptive arrests and searches, holding trials and imposing harsh sentences), the European Union will be forced to somehow respond. This will inevitably create additional obstacles to the dialogue between Brussels and Moscow, energizing the forces that have no desire whatsoever to pursue discourse with Russia.

If the overall level of tension turns out to be relatively low and the response of the authorities relatively mild, then a prerequisite for the Russia–Europe dialogue will be more favourable. In addition to everything else, a low level of tension will serve as an additional argument for those forces in the European Union that consider Russia’s socioeconomic and political systems to be sufficiently flexible and adaptive, to remain stable for the foreseeable future. If this is the case, then it makes no sense for the European Union to repeatedly postpone dialogue with Moscow in the hope that inevitable radical political changes will take place.

The following external factors affecting relations between Russia and the European Union in 2020 will likely be most significant:

1. The outcome of the 2020 United States presidential election. Victory for the Democrats would mean that erstwhile transatlantic solidarity will be at least partly restored, and the United States and the European Union will be able to coordinate their policies towards Russia better.

Moscow will once again face a “consolidated West,” which will inevitably restrict Russia’s room for political manoeuvre. On the other hand, should Donald Trump emerge victorious, this will likely further deepen contradictions between the United States and the European Union, which will allow Moscow to solidify its current tactical advantages in its relations with the “disjointed West.”

2.The state of U.S.–China relations. Further exacerbation of the trade, economic, political and military confrontation between the United States and China, as well as the movement of the international system towards rigid bipolarity, will create additional restrictions for interaction between Russia and Europe, for instance, in implementing multilateral “Eurasian” projects. Russia will be oriented towards an increasingly close alliance with China, while Europe will be forced to follow in the wake of the policies of the United States. Conversely, if the confrontation between Washington and Beijing softens, this will allow Moscow and Brussels to avoid many of the restrictions that a rigid bipolar configuration entails.

3. The situation in the Middle East. Unexpected and significant negative dynamic in the Middle East (escalation in Syria or Lebanon, an acute crisis in Egypt or Saudi Arabia, a conflict between Iran and Saudi Arabia or between Iran and Israel, or a new large-scale outflow of refugees from the region) may prove to be essential incentives for deepening Russia–Europe cooperation, especially if the situation worsens against the background of the United States continuing to roll back its commitments in the region. The preservation of the current status quo also means that Russia and the European Union will be able to maintain their current (low) level of interaction in the region. However, certain escalation scenarios (for instance, Damascus launching a large-scale offence on Idlib, with one of the parties to the conflict using chemical weapons) will create an additional problem for Russia–EU relations. Any aggravation of the problem of migration from the Middle East to the European Union will be construed as part of Moscow’s hostile strategy towards Europe.

4. The global economic situation. The global economy may enter another stage of the cyclical crisis in 2020, or even fall victim to a systemic global financial crisis similar to that of 2008–2009. The future systemic crisis will likely be more dramatic than the previous one, since the principal actors in the global economy are less inclined today to cooperate than they were ten years ago. The new crisis will undermine the economic foundations of Russia–EU relations and give rise to more pronounced protectionist and nationalist sentiment in both the European Union and Russia. In a crisis, the opportunities for positive interaction between Moscow and Brussels will be limited. Conversely, economic acceleration in the European Union and Russia will increase the interest of both parties in expanding cooperation.

Probable Risks

The current trends in Russia–EU relations carry a number of risks that should be mentioned when predicting possible scenarios for the further deterioration of these relations:

The general deterioration of European security due to the expiration of the INF Treaty; the degradation of confidence-building measures; and the start of an arms race, including hi-tech weapons (understanding that the military-political situation in Europe cannot change drastically in 2020, and military spending in European countries is not expected to rise sharply);

The continued competition for influence in the post-Soviet space, including Eastern Europe, the South Caucasus and Central Asia (the collapse of the political coalition in Moldova in the autumn of 2019 is a negative sign); and the further divergence of stances on the Donbass settlement will have a particularly negative effect on relations;

The intensification of sub-regional competition between Russia and the European Union (this competition appears to be particularly dangerous in the Western Balkans, given the possibility of an acute political crisis in one or more of the countries in the region);

The intensification of the information war in Europe (in particular, the European Union may approve a “blacklist” of Russian media outlets, while Russia may significantly expand its own list of “undesirable” European organizations); we cannot rule out the possibility that investigations may be launched in some EU states in connection with accusations of Russia interfering in their elections and supporting separatists and political extremists.

The harsh confrontation between Russia and some EU member countries in pan-European organizations (PACE, OSCE); 2020 will be a challenging year in the history of these organizations, which will be put under immense political pressure;

The further politicization of energy cooperation between Russia and the European Union (for instance, the emergence of new issues in completing work on Nord Stream 2; and the blatant refusal of some EU states to prolong gas contracts with Russia);

The clash between Russian and European interests in some regions of the world, including Africa and Latin America; and competition between Russia and Europe for preferential relations with Turkey might posit a particular issue.

Unfortunately, “black swans” may very well throw a spanner in the works – the unfortunate incident in Salisbury in March 2018 and the events in the Kerch Strait in November of the same year are prime examples. Such events may again lead to a deterioration of relations between Moscow and Brussels, regardless of who is to blame. A distinctive feature of Russia–EU relations today is that significant progress should be visible along the entire line of interaction between the parties, while a single negative event in any of these areas is enough to provoke a new crisis. This makes the process of restoring even limited cooperation extraordinarily fragile and unstable. And this a situation will continue throughout 2020.

Potential Opportunities

At the same time, we can identify several most promising areas of Russia–EU cooperation where, under favourable circumstances, certain practical results may be achieved as early as 2020:

Progress in settling the conflict in the east of Ukraine. The recent domestic political scandal in the United States in connection with Ukraine further obstructs Washington’s constructive involvement in resolving the crisis. The Ukrainian crisis is objectively less critical for the United States than for Europe, and certainly for Russia.

On the other hand, the new leadership in Kyiv is more focused than its predecessors on achieving a peaceful settlement to the situation in the Donbass. By all accounts, Moscow is ready to (or could) demonstrate more flexibility than before in its approach to Ukraine’s implementation of the Minsk agreements. If progress is achieved at the upcoming Normandy Four summit in terms of implementing the Steinmeier formula, then opportunities will appear as early as the first few months of 2020 to involve the European Union in the peace process, including post-conflict reconstruction programmes in the Donbass.

Expanding interaction in the “shared neighbourhood.” Neither Russia nor the European Union are interested in further escalation in the area. The example of several post-Soviet states, for instance, Armenia, shows that the balance of influence between Russia and the European Union does not necessarily have to be a zero-sum game.

Deepening interaction on Iran-related issues. The positions of Russia and the European Union on topics such as the Iranian nuclear and missile programmes and Iran’s role in Syria and the Middle East are not identical, although they are close. Given the current escalation in relations between Iran and the United States, as well as between Iran and Israel (this trend will most likely continue in 2020), Russia and the European Union can and should coordinate their actions more closely concerning Iran.

Launching full-fledged dialogue between the European Union and the Eurasian Economic Union. In 2020, this dialogue can be moved from the current technical to political level. It could include coordinating multilateral cooperation in Central Asia, implementing the European “connection” concept and possibly even discussing progress in implementing China’s “Belt and Road” project.

Developing a new “energy/environmental plan” for Europe. There is reason to hope that politically difficult problems related to Nord Stream 2 and the future of gas transit via Ukraine will be partially resolved in 2020. If this does happen, then it may be possible to try to “depoliticize” the European energy agenda. This could include, for instance, climate change, prospects for energy cooperation between the European Union and the Eurasian Economic Union, issues of standards, energy security and energy efficiency, training personnel and the exchange of experience.

Making Europe’s Russian sanctions regime more flexible. We should not expect the European Union to lift the sanctions against Russia in 2020, even if progress in settling the Ukrainian crisis is achieved. However, the European Commission might set itself the more modest task of modifying the mechanisms of applying the sanctions. History shows us that sanctions, especially bilateral sanctions, do not work if the sides do not have the option to respond to even small behavioural shifts promptly. In mid-2016, Frank-Walter Steinmeier proposed modifying the EU’s sanctions mechanism, and this idea has maintained its relevance for the last three and a half years.

Preserving pan-European areas. Despite the growing divide in Europe along the East-West axis, common European areas of science, education and culture can still be maintained. If progress is achieved in other areas in 2020, then the connecting role of humanitarian areas should be strengthened further. For instance, the parties could spearhead a joint plan to liberalize the visa regime or introduce visa waivers for students, scientists, scholars, artists and cultural figures.

Developing a new “road map” for the development of the OSCE. 2020 will mark the 10th anniversary of the Astana declaration, the 30th anniversary of the Charter of Paris and the 35th anniversary of the Helsinki Final Act. Structured dialogue on military and political issues was launched in 2016, and it turned out to be one of the most productive formats of East-West communication in Europe. The OSCE still needs political support from both the European Union and Russia.

Of course, we should not assume that activating some or even most of the abovementioned areas of cooperation in 2020 will result in a “reset” of Moscow–Brussels relations. The current “strategic disconnection” between Russia and Europe is not caused by their differences on specific issues (even issues as serious as Ukraine and Syria), but rather by their profoundly opposing views on the fundamental problems of global politics, its contents, driving forces, priorities and the desired model of the future world order.

Until these differences are overcome, relations between Moscow and Brussels will remain primarily focused on rivalry. Consequently, the next common task for Russia and the European Union is to cut the costs and reduce the risks that are inextricably related to such rivalry. However, achieving even modest progress in this area in 2020 and creating an atmosphere of positive dynamics would be a significant outcome of the year that concludes a challenging decade in global politics for both the European Union and Russia.

From our partner RIAC

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The Prisoner of Geography: Orbán’s perception of geographical pragmatism

Péter Kacziba, Ph.D.,

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Between the beginning of September and the end of November 2019, the Hungarian government has received an exceptionally high number of foreign officials. Among others, Viktor Orbán’s cabinet has hosted Aleksandar Vučić Serbian, Andrej Babiš Czech, Peter Pellegrini Slovak, and Antti Rinne Finnish prime ministers as well as received Vladimir Putin, Recep Tayyip Erdoğan and Charles Michel, the new elected President of the European Council. Besides the highest level, the five foreign ministers of Turkic Council have also been hosted, while after six years of demonstrative absence, the German Foreign Minister Heiko Maas has also paid a visit to Budapest. 

Even though the visits of Mr. Maas and Charles Michel received less enthusiastic media coverage, the Hungarian government regarded all meetings with special attention. Besides tide security and traffic restrictions, the high regard has also included the introduction of a new political rhetoric which maintained the most important frameworks of Hungarian foreign policy but added a new interpretation based on geographical pragmatism. The new discourse characterized the joint press conferences given respectively by Viktor Orbán and the Russian and Turkish counterparts where the Hungarian PM presented his foreign policy as an approach driven by the unchangeable conditions of geographical realities. As Mr. Orbán described it to Vladimir Putin, “the basis of our political cooperation is a very simple geographical fact, that no country can change its house number”. According to Mr. Orbán, the geographical conditions of Hungary tie Budapest to the Berlin–Moscow–Ankara triangle which geopolitical environment determines the potentials of Hungarian foreign policy. 

Although the geographical explanation is not a new feature in the rhetoric of Hungarian foreign policy, the importance of Germany, and generally the West, was deliberately ignored in recent years. Since the visit of Angela Merkel in August 2019, this trend has begun to change. While the Russian and Turkish friendly approach remained to be a crucial part of the Hungarian foreign policy, Mr. Orbán seems to rebalance the relations and attempts to normalize partnerships with the West, and particularly with Germany. If the rebalancing continues, Hungary could turn back to the original frameworks of the Global Opening foreign policy that attempted to find a delicate balance between the West and the rest. 

The shifting balance of Global Opening

Since coming to power in 2010, Viktor Orbán and his FIDESZ party have made significant changes in the Hungarian foreign policy. The Atlantist or Westernizer approach was supplemented by the doctrine of Global Opening which diversified Hungary’s previously EU-, US- and NATO-based foreign policy and aimed to reduce unilateral dependence on the West. The original framework of this new foreign policy direction first redirected Hungary’s attention towards the global East (2010) and then the global South (2015). The often-criticized approach, according to the official explanation, was meant to respond to the new global trends and intended to channel the Hungarian economy into the seemingly skyrocketing developing markets. The new strategy made efforts to establish cooperation with globally (Russia, China) and regionally (Turkey) significant countries and also resulted in a more active and sometimes more confrontational foreign policy towards neighbouring countries.

Though the original, economy-oriented idea of Global Opening did not aim to divert the country from its traditional Euro-Atlantic direction, domestic illiberal measures, friendly relations with Russia and the anti-EU rhetoric automatically generated antagonistic feelings among Hungary’s Western allies. The growing Western criticism and the FIDESZ’s harsh responses to it further deepened the disputes, and, by 2016-2018, pushed the increasingly isolated Hungarian government towards Moscow and Ankara. While Vladimir Putin and Recep Tayyip Erdoğan became frequent guests in Budapest, the Sargentini report condemned the Hungarian government over the violation of basic European values and the European People’s Party suspended FIDESZ’s membership. Relations reached the lowest point during the campaign of the 2019 European Parliamentary election when many from the EU centre labelled the FIDESZ as a far-right and even a fascist party, and when the Hungarian government accelerated its anti-EU, Stop Brussels campaign.

Damage control and rebalancing

The European Parliamentary elections in May and the Hungarian local elections in October 2019 turned out to be crucial milestones as the FIDESZ suffered serious, though not fatal, setbacks. On the European level, the assumed breakthrough of the populist parties remained to be an illusion, while on the local level, the Hungarian opposition parties gained majorities in ten major cities, including Budapest. On one hand, these developments pushed FIDESZ towards a more cooperative attitude and altered both domestic and external strategies. On the other hand, certain members of the EU and NATO have also begun to change their tone and seemed to realize the potential danger of Hungary’s isolation. As part of the correction process, Donald Trump briefly hosted Viktor Orbán at the White House in May and Angela Merkel travelled to Hungary in August. The chancellor’s visit soon was followed by the reciprocated visits of Hungarian and German foreign ministers and high-level consultations with EU officials. By the summer of 2019, the domestic communication of the Hungarian government has also begun to change and started to cease the anti-EU campaigns.

While the above-mentioned visits and meetings are signalling a new willingness to engage in a dialogue, Hungary and its Western allies are still divided by significant differences. In this sense, Budapest seems to publicly acknowledge the improvement of bilateral, state-to-state relations but shows reluctance to admit Hungary’s dependence on the EU. At the same time, the vast framework of EU itself hinders the rapprochement process. Although Angela Merkel’s realpolitik recognized the need for normalization, others from the various commissions and parliament fractions still consider the FIDESZ as a traitor or a Trojan horse. These controversial responses significantly influence the Hungarian domestic and foreign policy rhetoric which rejects harsh criticism with even harsher reactions. Even though the already difficult situation is further complicated by political and ideological differences on issues such as migration and asylum-seeking, Ursula von der Leyen seems to be ready to move on and begin with a fresh start. The incoming president of the European Commission showed her determination by nominating the FIDESZ delegated Olivér Várhelyi to the post of Enlargement and Neighbourhood Policy Commissioner, a position which was highly appreciated by the Hungarian government and was eventually approved by the European Parliament.

Geographic pragmatism

The Hungarian prime minister has a reputation of adopting theoretical interpretations for the legitimization of his practical policies. In recent years, he quoted Hungarian authors (e.g. Sándor Karácsony) when explaining his governance techniques or recalled Fareed Zakaria’s concept when outlining frameworks of illiberal democracy. Like the previous examples, the new foreign policy rhetoric also seems to resemble authors of international politics, mainly from the fields of geopolitics. Coincidence or not, especially Tim Marshall’s Prisoners of Geography (2016) has interesting similarities with the recent rhetoric Mr. Orbán has used. As in Marshall’s book, emphasizing the importance of physical realities, indicating the determining effects of geography or stressing the geopolitical laws of power all became part of the recent interpretations and defined Mr. Orbán’s speeches at bilateral press conferences. The new rhetoric justified the Hungarian developments through geographic pragmatism and by the recognition of geopolitical realities that position Hungary in the overlapping area of German, Russian and Turkish sphere of influences. As the prime minister put it, “…the reality is that to the left of us there’s the land of the German iron chancellors, to the right the Slavic military peoples, and down south the vast population masses of Islam. Hungary lives its life within this triangle, and within this geographical region it has been the task of governments down the centuries to create balance, to create peace and security, and for us to build relations in all three directions, so that the three capital cities and the three powers which are so much larger than us have an interest in the success of Hungary.”

While Orbán’s new interpretation seems to realize how the normalization of German-Hungarian relations could support this vision of success, it maintained the original ideas of Global Opening and aims to keep solid relations with Russia and Turkey. Though the prime minister marked the line by including Berlin to the triangle of regional powers, he also stated that not dreams or philosophies will determine “who in the world we like the most” rather the geographical realities. According to Mr. Orbán, besides Germany, Russia and Turkey are also parts of the greater geographical environment of Hungary, consequently, the country’s foreign policy should acknowledge their decisive role and must maintain pragmatic relations with them. In terms of security, the pragmatic relations mean closer ties and cooperation with NATO members such as Germany and Turkey, while it also comprises a policy of conflict prevention which helps to avoid bilateral disputes between Hungary and Russia. According to Mr. Orbán, the decisive role of regional powers also includes dominant economic performance that has to be respected and exploited by Hungary. On one hand, as a small Central European state with limited material resources, Hungary needs the energy supplies, the financial and industrial investments, or the high-technology and military equipment that these regional centres could offer. On the other hand, Hungary may offer various benefits in return. The country’s strategic location with valuable memberships positions, the relatively cheap but skilled labour, or the increasing purchasing power are just a few examples to prove the possible benefits of foreign investors. The recently announced military modernization of the Hungarian Armed Forces is another major example: beyond Germany, Turkey and Russia, Trump’s transactional diplomacy also seeks to get a piece from the large military tenders.

The limits of balancing

Besides benefits, geographic pragmatism and balancing foreign policy have their limits too. It is highly questionable, for instance, what members of the Berlin–Moscow–Ankara triangle think about each other and, maybe more importantly, how they see the Hungarian peacock dance in the middle of the triangle. In this sense, Mr. Orbán’s recent foreign policy statements were directed not only towards the domestic audience but to the regional partners as well. Though the statements presented Hungary as a country that maintains strategic partnerships with both the West and the East, in reality, conflicting interests significantly constrain the options of balancing. Germany, for example, is highly concerned about the growing Russian influence in Hungary and considers it as a security breach and a politicoeconomic mistake. According to this view, the relocation of previously Moscow-based International Investment Bank, the construction of Paks 2 nuclear power plant or the recently signed long-term gas contract with GAZPROM could be labelled as perfect examples of such mistakes. Besides Russia, Budapest has also troubles to explain friendly relations with Turkey who is condemned by the EU for launching the contradictory Operation of Peace Spring. In this case too, Hungary pursued a contrasting strategy: it conditionally supported Turkey’s actions and even vetoed the EU’s draft resolution that was jointly prepared to condemn Ankara. Although the veto was re-evaluated later, it showed how difficult is to play in two teams at the same time. 

The Hungarian behaviour during the days of Operation Peace Spring also demonstrates those ideological differences that further constrain Mr. Orbán’s geographic pragmatism. While the Hungarian government has no ethical dilemmas to oppose the implementation of illiberal models, the country’s Western allies feel moral obligations to condemn domestic developments in Russia, Turkey or Hungary. These Western allies consider Hungarian domestic developments as being incompatible with the basic principles of European values and regard Hungary’s close ties with Russia and Turkey as a partnership that could undermine the unity of EU or NATO. The Hungarian government, however, has different interpretations. In the case of Russia, it considers Moscow as part of the wider European geopolitical environment, as a Great Power who influence the Central European matters either Hungary likes it or not. As the indispensable Russian influence may be exploited by balancing foreign policy, the regional impacts of Turkey can be also utilized. In this regard, the Hungarian government views Ankara as a key actor in migration and urges the EU to open closer cooperation with Turkey to prevent new influxes of asylum-seekers. 

A unique example or the victim of circumstances?

The key question at this point is whether balancing Hungarian foreign policy will produce positive results or fail to find the middle ground between the conflicting interests of regional powers. Hungary seems to be an exceptional example, yet other countries in the region face similar dilemmas. Their responses usually follow two not too distinct path: either trying to serve the needs of all regional powers or limiting the interests of one by using the influence of another. The choice between these two options is further complicated by the wider geopolitical transformations. From the Central European perspective, especially the Ukrainian and Syrian conflicts are problematic as these globally defining struggles have increased disagreements among regional powers and boosted their external activities. With such developments, Central European states have found themselves in a difficult position of contradictory expectations. On one side of the region, there is Moscow and Ankara, both have begun to look for weak links and been practising hardly refusable policies to influence smaller members of the EU. On the other side, there is the EU and Washington, both expect a much clearer stand on democratic values, Western principles and generally a much stronger commitment to maintaining the alliance unity.

In these kinds of circumstances, it is quite difficult to find a win-win situation. As Tim Marshall’s Prisoners of Geography put it, “Geography has always been a prison of sorts – one that defines what a nation is or can be, and one from which our world leaders have often struggled to break free.” Nevertheless, Central European states have always found their limited yet flexible ways to navigate between regional powers and their contradictory interests. It seems Hungary has also developed a path which we may call by various names – geographic pragmatism, Global Opening or balancing foreign policy – at the end all mean a survival strategy between the West, the East and the South. One should wonder, however, is it the survival strategy of Hungary or just those who lead it?

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Europe

Is North Macedonia good enough for NATO but not good for the EU? How to salvage the relations

Iveta Cherneva

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image: NATO

At the NATO Summit today, NATO Secretary General Stoltenberg was asked a question by a North Macedonian journalist in the context of North Macedonia’s debut this week as NATO’s newest member. Is North Macedonia good enough for NATO but not good enough for the EU?, is the questions that was lurking over the Summit. For an answer to this, we should look towards French President Emmanuel Macron.

Commentators and politicians alike, have loudly pointed to the Macron veto of Albania and North Macedonia as a mistake.

Getting no for an answer need not mean falling off the European map for them, however.

As EU’s political dialogue with Georgia seem to suggest, there are many layers of cooperation that fall just short of accession talks and prove to provide value for both sides. For Georgia, this is in the form of EU’s Eastern Partnership.

“Something similar to EU cooperation with Georgia could be a model for engagement with the Western Balkans”, told me journalist Georgi Gotev.

Western Balkan nations, due to their geographical belonging, and not only, have the right to feel different from and more European than Georgia and the rest of the East Partnership countries.

Nevertheless, the relationship the EU has built with Georgia shouldn’t be underestimated as a potential blueprint for bringing closer EU’s backyard called the Western Balkans which has the right to be offended.

The influence of Russia and China is prominent in both Georgia and the Western Balkans region which is one more reason not to allow the Western Balkans to drift away.

Georgia has trade agreements with both China and the EU. Similarly, China’s security influence is felt on the Western Balkans in Serbia where Chinese policemen are now patrolling in the country.

Georgia’s precarious security relationship with Russia sometimes takes the shape of full-blown war. For that and other reasons, a real dialogue for EU membership with Georgia is not really possible, despite Georgian enthusiasm. Displaying the EU flag is a common practice in Georgia.

Again with Western Balkan countries, one can see the EU flag being waved too, as a sign of political enthusiasm. And similar to Georgia, but to a much lesser extent, Russian political influence in some Western Balkan countries presents one reason for skepticism in opening accession talks.

All that does not mean that there are no mechanisms for the EU to engage the Western Balkans and to somehow salvage the shaken relationship.

For Tamar Chugoshvili, first vice-chair of the Georgian Parliament, EU’s Eastern Partnership has delivered. “Its results have been the Association Agreement, the Free Trade Agreement, and the visa-free movement”, she said. This is an engagement blueprint that could work for some Western Balkan countries.

Although an EU partnership involving labor movement at this point might be a stretch for Georgia and the Western Balkans alike, democracy and human rights dialogue needs to continue being a component of EU’s engagement. Apart from trade and tourism, the EU has still a lot to offer in terms of soft power and norm diffusion.

Finally, an important difference is that Georgia was never led on to believe it was coming close to accession talks for EU membership; that’s why expectations were always different. For Albania, but especially for North Macedonia which changed its official name as a prerequisite, disappointment and frustration are more than natural reactions.

So, a Georgian blueprint with an enhanced trade partnership might work for EU’s engagement provided Western Balkan countries overcome their resentment and swallow that bitter taste that Emmanuel Macron left in their mouth. For that to happen though, the EU would need to pour a whole lot of new water their way.

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