At the upcoming EU summit, tough questions loom

By
Pieter Cleppe
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Later this week, EU leaders are gathering in Brussels, when a number of important decisions will need to be made on the accession of Ukraine and Moldova and on the EU budget, including whether to release extra financial support to Ukraine. One EU official remarked to Bloomberg correspondent Maria Tadeo that he could not remember a summit where so much, so consequential, depended almost entirely on one leader, referring to Hungarian PM Victor Orban. Tadeo added: “If statements from foreign ministers (“deplorable, anti-European”) anything to go by, this week’s EUCO is a train crash.»

That was yesterday. Today, Politico reveals that “Uncle Orban” is about to get what he wants, as EU commissioners are expected to grant Hungary €10 billion in EU funds, which have been frozen over corruption and rule-of-law concerns.  Reportedly, senior French and German diplomats have pressured the Commission to release the funds.

Orban has been blocking the EU’s extra financial support for Ukraine. Some reports claim that Orban will now in turn agree to releasing it, while one diplomat thinks it may still end in “No Deal” at the EU Summit on Thursday and Friday. The latest rumour is that Orban would be opening the door to lifting his veto in exchange for cash. An alternative option diplomats are contemplating is to offer a one year loan plan to Ukraine, outside of the EU budget.

In any case, for Ukraine, this cash is crucial, as it “enables authorities to maintain all functions of the state,” according to the IMF.

The EU budget: driving cronyism

A senior diplomat defends the concession to Orban, saying: “if the Commission does not release the funds, Hungary could sue and would likely win.” This version is however contested by some Commission officials and a number of MEPs.

In a 2021 article on Brussels Report, I looked into Hungarian cronyism. Unfortunately, Hungary’s cronyism is not unique in the EU. Similar problems of cronyism and executive control of the judiciary can be witnessed in Poland, Romania, Bulgaria and all across the former Warsaw pact states, perhaps with the exception of the Baltic states.

A common characteristic is that a lot of it has been fueled by EU funds. According to the NY Times, in Hungary, Orban’s close circles have profited from EU cash, as “he uses European subsidies as a patronage system that enriches his friends and family, protects his political interests and punishes his rivals.” In Balkan Insight, Tim Gosling delves deeper into “how EU cash props up populists” in the Czech Republic, Hungary and Slovakia, where “the cash helped nefarious networks penetrate to the top of the Czech, Hungarian and Slovakian political systems”.

Also the economic returns from all those EU transfers are questionable. Between 2014 and 2018, Hungary – but also Bulgaria – absorbed more in net EU transfers than their economy grew by. Where did all that money go? Whether these intra-EU transfers have contributed to poorer regions catching up is very much in doubt, when looking at the available research. In 2016, a Centre for Economic Policy Research (CEPR) study even concluded that “EU structural funds [are] negatively correlated with regional growth” and “[do] not seem to contribute effectively to foster income convergence across regions.”

To be clear, that is not only true for the “new” member states that acceded to the EU from 2004 on. Organised crime siphoning off EU funds in places like Italy has also widely documented.

MEPs in denial

Of course, neither the cronyism that is undermining democracy, the lack of evidence that EU funds actually helped EU member states, or the now evident failure to single out member states deemed to abuse EU funds, is a reason for mainstream EU politicians to change course. Only this week, Jan Olbyrcht (EPP) and Magarida Marques (S&D), MEPs on the European Parliament budget committee and rapporteurs for the Multi-Annual Financial Framework (MFF), wrote an article in EU Observer, calling “proposals for cuts» to EU spending “patently nonsensical», referring to specific proposals to “cuts to funding for programmes like the Horizon Europe research and innovation programme or the Erasmus+ student exchange programme.”

Conveniently, the MEPs thereby omit that the brunt of EU spending –  which amounts to a whopping 1000 billion euro over seven years – goes to regional spending or “agricultural” spending. The latter includes a 100 billion euro support for farmers to reduce CO2, deemed as having had “little impact on agricultural emissions” by the European Court of Auditors.

Even a very modest suggestion by the likes of Sweden to look at pots of unused cash sloshing around in the EU’s coffers to finance 50 billion euro extra support for Ukraine are dismissed by the MEPs, who claim that “the ‘hidden pots of cash’ is money programmed to support real people, businesses and organisations around the EU.”

Clearly, the MEPs are refusing to look at what’s really happening with the precious resources in the EU budget kindly provided by already hard-pressed taxpayers, and they are unfortunately representative for the mood in the European Parliament, which consistently demands even more money when the European Commission is requesting extra cash from EU member states. This rather bizarre attitude for an institution supposed to scrutinise the EU spending machine does not change the fact that it has the power to veto revising the EU budget, which is necessary to provide the extra cash to Ukraine.

What should happen instead is to simply cut EU funding for all EU member states, to avoid discussions about double standards and given that it is unrealistic to expect sovereign governments judging each other in a serious way, something that has just been proven by Germany and France pushing for concessions to Orban.

Difficult questions on Ukraine

All of this is still separate from the question on whether the EU should transfer extra finances to Ukraine. Yes, the country has secured some progress when it comes to corruption, according to some, and yes, the European Commission did gave the green light to opening of talks last month, but some reforms are still pending, as for example the requirement to raise the legal cap on the number of staff in Ukraine’s National Anti-Corruption Bureau, and providing the country’s National Agency on Corruption Prevention more powers to verify the assets of public officials.

Then more bureaucracy to fight corruption has historically not been an effective strategy. What did work instead, was what Georgia did in the 2000s, under President Mikheil Saakashvili, who managed to drastically reduce corruption by deregulating the economy and dismantling the system that facilitates extortion. Saakashvili was later appointed by former Ukrainian President Poroshenko as governor of the Odessa region, but he resigned, complaining that Ukraine’s government was still too corrupt. Today, he serves a questionable jail sentence in his native Georgia, which last year failed to obtain EU candidate status after it slipped back into its old ways, yet another topic EU leaders are about to consider this week.

For Ukraine, it does not help that last week, Kyiv Mayor Vitali Klitschko told Der Spiegel that Ukraine is moving towards authoritarianism, thereby engaging in criticism of President Volodymyr Zelensky. He stated:

“At some point we will no longer be any different from Russia, where everything depends on the whim of one man”.

Thereby, he also complained that despite being the mayor of Ukraine’s capital, he did not yet talk to Zelensky since the start of the Russian invasion. Both men have been at odds, but it all adds to the ongoing deep questions of how the West, which should obviously side with Ukraine, should position itself and what precisely it should do and not do.

Already in February, Dutch expert Rob de Wijk, professor of international relations and security at Leiden University and founder of The Hague Centre for Strategic Studies (HCSS), warned:

“Ukraine’s victory is no longer a foregone conclusion. […] The worse things get for Ukraine, the more likely it is that NATO countries will become ever more deeply involved in the war. The risk of a direct confrontation with NATO is also increasing. The heavy weapons NATO countries then need, limit the possibilities of delivering them to Ukraine now.”

Clearly, arms deliveries have helped Ukraine a lot more than sanctions. With ever more statistics emerging that the EU has been continuing to buy coal, gas and oil from Russia, profound questions need to be asked.

Part of that great debate on Ukraine is also whether EU leaders should already decide now to open accession talks with Ukraine. Deciding to hold off a while longer, in combination with increased actual delivery of defensive arms, could for example be an alternative that avoids sending out the signal that the West would be abandoning Ukraine.

“Restrictive measures” in Moldova

Less attention is giving to another decision EU leaders need to take, which is whether to start accession talks with Moldova. Also this has a geostrategic dimension, as there have been continuing rumours of Russia considering to attack the country, which Russia is partially occupying already anyway.

Also here, profound questions on the state of Moldova’s democracy should be raised.

Yes, the country was granted EU candidate status in June 2022, but things like media freedom remain deeply troubling. According to “Reporters Without Borders” “major media, such as TV6, NTV Moldova and Prime TV, are in the hands of political leaders”, further pointing out that the licenses of six TV channels deemed pro-Russian have been suspended since December 2022.

Protests against this, for example the “Stop Media Ban“ campaign, have so far failed to change anything, and at the end of October, the media ban was even expanded. According to one of the campaigners, Alexei Lungu, “in reality, our channels were banned because we speak out when our government is in the wrong. We do not sit silent when the opposition is taking steps to improve the life in the community. As the code of journalist profession requires, we always present all sides to the story, yet sometimes our elected leaders refuse to talk to press they deem as “opposition» (…) A poll among the Moldovan population, “Socio-Political Barometer”, showed that 68% of those interviewed believe the decision of the Commission for Exceptional Situations to suspend the licenses for the six television stations is an abuse on the part of the current power.”

Local elections took place in Moldova at the beginning of November. In a sign that not all is well with local democracy, according to the OSCE, these were “peaceful and efficient, but marred by sweeping restrictive measures amid national security concerns”. A brand new development, from today, is that opposition parties managed to get an appeals court to annul a decision that banned hundreds of candidates from an alleged pro-Russia political party from participating.

Conclusion

When it comes to accession for all of these countries, at least the Western-European public is not convinced. According to a new poll, commissioned by the European Council on Foreign Relations (ECFR) in Austria, Germany, France and Denmark, there is no clear majority support for any of the current candidate countries, even if there is a slight relative majority to the accession of Ukraine, Moldova and Montenegro.

To be clear, the question to poll respondents was whether they thought these countries “should be able to join” the EU, which clearly implies that certain conditions need to be fulfilled. Most certainly, the devil is in the detail here.

 

 

 

 

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