10 October 2015

The West must stop bullying Hungary and Central Europe

By Andrea Hossó

­What a dramatic year 2015 is turning out to be. There is the Ukraine crisis, the migrant crisis, the latest stage of the Eurozone crisis and the row over the possibility of Brexit.

In the whirl of this mighty geopolitical turbulence it is a surprise to find normally low-profile Central Europe suddenly in the centre of the international media spotlight. Even more remarkably, Central Europe gets praise one moment and harsh condemnation the next.

At the height of the Greek debt crisis the public was treated to a slew of articles lauding robust Central Europe as a worthy example to be followed by wayward Greece as it struggled to accept harsh bail-out conditions. Shortly after that, as Hungary and her neighbours attempted to manage the unstoppable rush of hundreds of thousands of migrants, the exalted exemplary countries suddenly became the shame of civilized Europe, an ungrateful, uncooperative, heartless, xenophobic lot.

It would be fascinating to explore in depth the Jekyll and Hyde view of Central Europe, except that both representations are false.

Central Europe is not a role model for Greece; if anything, it should serve as a warning for any country facing structural economic problems. Greece was given an ultimatum: apply more austerity to your downtrodden economy and hand over a huge chunk of your productive assets to foreign investors in exchange for short-term liquidity and the illusion of security in the Eurozone. While it may serve the momentary interests of EU and Greek leaders, this Faustian bargain will deprive Greece of even the chance of building a sustainable domestic economy leading to prosperity for the whole country.

Central Europe did something similar in the early 1990s, when it was just emerging from half a century of Soviet colonization. Relinquishing even the thought of an alternative, without any serious attempt to restructure their economies as best suited to their situation and long-term developmentgoals, the then new Central European governments buckled under political pressure and accepted Western wisdom as delivered by international organizations and consultants jumping on the infamous “gravy train”.

This meant shock therapy, the immediate opening of markets, and most importantly fire-selling assets to foreigners without the setting of any conditions, effectively leaving economic policy-making to foreign investors. These countries now find themselves to have become low-value links in the global supply chain of multinational companies. The impressive growth, held up to Greece as an appetizing carrot, reflects mostly foreign-owned companies realizing enormous profits thanks to extremely cheap labour and generous subsidies, largely allocated from much-touted EU transfers.

Do we remember the intense debates around the economic viability of an independent Scotland? It is worth recalling the little publicized but highly pertinent study of Glasgow University explaining that Mr Salmond’s assurances of Scotland’s economic strength were exaggerated as most of that country’s productive assets, even whole sectors (oil, banks, single malt, salmon farming, etc.) are in foreign hands, therefore their profits belong to foreigners as well. The same applies even more to Central Europe, and there most of all to Hungary. This economic structure creates serious macroeconomic imbalances and denies Central Europe the possibility to reach higher levels of economic well-being. Greece should indeed learn from the Central European example, but the way sailors learn to avoid shipwrecks by steering clear of treacherous rocks.

Even more misplaced is the vehement international denunciation of Central Europe on account of its attempt to manage the migrant crisis. These countries are criticized for opposing quotas, for not showing European solidarity and for not wanting to take their “fair share” of solving this “European” problem. They are reproached for their ungratefulness for the goodness and generosity the West allegedly bestowed on them.

Hungary has again been distinguished by special treatment. In an outpouring of shrill criticism reverberating all over the world, the country is being called everything and anything from xenophobic to fascist. The frenzy bears an uncanny resemblance to the wave of international hysteria in early 2012 when media organs and public figures were outdoing one another vilifying Hungary and openly advocating “regime change”, of course, in the name of defending “democracy”.

Hungary is now being vilified for trying to apply EU rules by registering migrants as best she can. There are endless reports about police teargas, none about migrants provoking it by throwing stones at the Hungarian police. And of course, there is considerably less coverage of French police using teargas against migrants in Calais. In Hungary, no migrant hostels have been attacked or set on fire, as happens frequently in Germany. European values? Surely a fair and objective media should be part of the story?

The accusations against Central Europe are both false and hypocritical.

The present surge of mass migration is predominantly a result of Western power politics. Central Europe was until relatively recently colonised and now it is not a major political player in the EU. Now, for the sake of European solidarity, the region is called upon to share the heavy consequences of international political games it played no part in.

Yet, it is hard to discover these values and solidarity in the “old” EU countries. Why does Germany declare open door to all Syrians one day and close her borders the following? Why are Austria and Denmark closing borders and railway lines? Why does the EU refuse to help Greece, which stopped defending her borders? Why does Chancellor Merkel thank Hungary for trying to register the migrants instead of just letting them cross the country straight to Austria, then regrets to add that the Dublin Convention is still in place, thus migrants not accepted in their chosen destination country will be sent back to where they were registered? Why can’t the EU quickly override the Dublin Convention, which is clearly inadequate for the present crisis, and come up with a common strategy building on truly shared interests?

For decades, Western Europe has been encouraging immigration based on economic and political arguments. A bigger pool of labour helps keep wages low boosting competitiveness as it is defined by mainstream economics. Politically, a diverse mix of peoples instead of homogeneous populations helps loosen the texture of the nation state deemed outdated and contrary to the goal of a globalised world and a faceless EU managed by one supranational and unaccountable bureaucracy. Despite the immense efforts of the political class and mainstream media to make this process seem as irreversible as the Euro, a lot of citizens have failed to subscribe to it and, in an exasperated moment in 2010, even Chancellor Merkel was driven to say that “multiculturalism has utterly failed.”

We now find that the Western European political class has sown the wind but does not want to reap the whirlwind. Western governments are trying to manage affairs to their advantage desperately seeking to avert an outbreak of public wrath, with an eye towards the next elections. While talking up the merits of mass immigration – olitical, demographic, cultural and most importantly, economic – they are reluctant to open fully their own borders. It seems to be better PR to shift the blame to Central Europe, especially those countries in the frontline. It would be even better to force them to register and hold huge masses of migrants, who actually do not want to stay there. Then destination countries could freely cherry pick educated immigrants to fill their job vacancies leaving the rest to Central Europe, which is considered too homogeneous anyway.

The global fury is caused by Central Europe, usually docile and easy to manage, now showing some backbone. It seems to be inacceptable for these countries to choose their own migrant policy as they see fit. They are forced to take immigrant quotas against their will. They are expected to pay back supposed Western largesse – structural funds, admittance into the EU – by continuing to accept policies thought up by their betters. In reality, there is no debt to pay back. Central European countries were accorded EU accession for geo-political and economic reasons that had little to do with solidarity. Western European countries gained a “cordon sanitaire” and a highly profitable economic playground in Central Europe.

It is time to realize that these countries, much poorer then Western Europe, simply do not have the financial conditions to cope with an influx of this magnitude, and do not wish to be forced to become multicultural societies. Western leaders and media should accept that this has nothing to do with values and humanity and stop addressing these countries from the moral highground. Western policy has proven to be disastrously misguided sometimes; let’s just remember the premature introduction of the Euro, or the shameful part the EU played in the 1995 Srebrenica massacre. Having more money confers neither infallibility nor the prerogative to dictate to countries whether they should stay largely homogenous or become artificially multi-ethnic.

Behind the whole attitude towards Central Europe and Hungary lies a much more worrying, much deeper problem. The EU is incapable of shaping a common strategy because it does not share a common identity and common interests. This is serious, indeed, because a genuine European alliance based on shared interests is our common European interest.

This goal can be achieved only if Western European leaders are willing to admit that Europeans want nation states working together based on shared interests rather than coercion. They must realize that the EU consists not only of North and South, but of Central Europe as well, which should be treated as an equal partner. Central Europeans do not wish foreign powers, Eastern or Western, to tell them how they should live their lives. In our genuine common European interest, the West should stop bullying Central Europe.

Andrea Hossó is an economist and investment specialist. She has held different positions in asset management in the City of London