A Czech Moment

PRAGUE – As I listened to what some Europeans were saying as my country prepared to take over the presidency of the European Union, I heard dim echoes of Neville Chamberlain’s infamous description of Czechoslovakia as “a faraway country of which we know little.” I suppose that Donald Rumsfeld’s misguided bid a few years ago to incite a divide between “new and old” Europe contributed to the re-emergence of that disdainful attitude. The reality is that there is no such thing as “old and new” Europe, and there never was. The break with communism and reunification of Europe is now almost two decades old. We Czechs are 100% European, and were even when the Iron Curtain cut us off from democratic Europe. Indeed, our pro-EU sentiments may be all the stronger because our membership in the Union, like our freedom, is so comparatively new. So no one in Europe needs to fear that the Czech Republic has some nostalgic or idiosyncratic agenda that it wants to impose on the Union. On the contrary, events have imposed an agenda on Europe that we cannot escape and for which solidarity – true union – will be needed. The primary, and most pressing, of the problems we face is the financial and economic crisis that is enveloping the EU. Unfortunately, conditions across the Union will likely worsen before they begin to improve. The type of social unrest recently witnessed in Greece may spread, because the downturn is likely to take a disproportionate toll on Europe’s young people, who are seeking jobs at a time when hard-pressed European businesses will be able to offer them very few. It will fall to the Union, once again, to help transform despair into hope. We Czechs know something about this, as the wrenching economic transition that we underwent in the 1990’s taught us much about how the right policies can break the grip of hopelessness. To contain today’s financial and economic crisis, Europe will also need to continue the cooperation that it has shown up to this point. The very existence of our Union, and particularly of the euro, has already helped to prevent the competitive devaluations and beggar-thy-neighbor policies that ravaged Europe during the 1930’s – the last time the continent faced so brutal an economic downturn. But we cannot be complacent that the forces of national egoism will remain in check. For now, EU governments’ coordinated fiscal stimulus has deprived populists of their usual charge that the EU is indifferent to the fate of individuals. Even more policy coordination will be needed both to confront the crisis and to re-establish EU norms once the storm clouds begin to dissipate. Although it is right that the Stability and Growth Pact has become more flexible in these extraordinary times, its rules did secure a successful first decade for the euro. These rules must eventually be restored intact if Europe is to return to the path of sustainable growth, and a consensus will need to be forged now to make that happen. The second key challenge that we will face during our European presidency is that of Russia. A new Partnership and Cooperation Agreement (PCA) between the EU and the Russian Federation must be negotiated. Those negotiations should have begun seriously last year, but the war in Georgia intervened to put them on hold.Now those talks have resumed, but the background to the negotiations has changed dramatically. Russia’s economy is now in far worse shape than that of EU members. The collapse of world oil and gas prices has wounded Russia’s budget, and lack of investment in the country’s energy sector over the years is now causing the declining production that economists have long predicted. Until now, Russia has cared less about a new PCA than the EU, because two-thirds of Russia’s exports to the Union comprise natural resources, which bring in cash even without the strong rules that a PCA provides. Given the stark changes in economic conditions, however, it is now in Russia’s national interest to reassure international markets that it is a reliable place to do business, for which a new PCA would serve as an ideal signal. Moreover, without a new PCA, individual European countries may feel it necessary to seek even more bilateral agreements with Russia. Indeed, many EU members have been in a race with each other to see who will be Russia’s closest friend in the Union. But the bilateral deals that have emerged from this race sometimes come at the expense of other Union members, and may unbalance relations within the Union as a whole. Only a rules-based EU framework can provide a firm foundation for both bilateral and Union-wide relations with Russia. Europe’s main strength in foreign policy is not its commitment to a rules-based multilateralism, important as that undoubtedly is, but its unity. When the Georgia crisis erupted, Europe united around a single position on Russia’s withdrawal. It is the Czech Republic’s task, and that of the Swedish EU presidency that will follow our own, to maintain this unity as the PCA negotiations move forward. During the 1990’s, the US and Europe erred in treating Russia with benign neglect. It would be a mistake for Russia to respond in kind today by seeking to prolong the PCA negotiations in the hope that a possibly more amenable EU president may one day offer softer terms. We, like all EU presidencies, will be representing the wider Union interests when we negotiate. Karel Schwarzenberg is Foreign Minister of the Czech Republic. Copyright: Project Syndicate, 2009.www.project-syndicate.org

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A Czech Moment