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Reflections on Europe as seen from Beaver Creek

English Pages, 25. 6. 1998

1.

It is a very refreshing experience to be here at the AEI World Forum (and at this beautiful place) after several weeks or months of dramatic campaigning in the Czech parliamentary elections. In the last four weeks I gave more than 100 public speeches or presentations, and the results are not that bad. The Czech Republic is the only post-communist country where the leftist parties have not yet won the elections – even if the attacks from the left were very aggressive, especially this time.

I will try to use my three days here for seeing our current post-election turmoil at a distance and to get from you a new ammunition for my arguments in debates with those who want to suppress our new, young, still immature freedom, democracy, and free market economy.

2.

It is difficult to speak after Lady Thatcher. It was Margaret Thatcher who changed the world, who co-initiated the fall of communism, who was a real leader, who was able – and is able now – to express her ideas in a clear, straightforward and simple (which means understandable) way as we have just had a chance to see and hear.

In the communist era she was and still is for many Czechs and other East-Europeans – the symbol of freedom, of courage, of belief in free markets and in the system of individual responsibility. I have the feeling, however, that she doesn´t have so many admirers in Western world (and especially in Europe) which brings me closer to the topic of my today´s talk.

3.

Chris deMuth asked me to talk here about Europe, about its continuous, never-ending struggle for freedom, about its struggle against all forms of creeping socialism which we see again and again around us.

At first, I was not sure whether I know Europe sufficiently, then I was informed that Lady Thatcher would talk about Asia and decided to accept this task.

It is always difficult to generalize, to talk about continents, but I remember my very special experience some 30 years ago in the dark communist era, one year after the Soviet invasion into Czechoslovakia, at the moment when Western Europe was for us very far away (not geographically). I spent one semester at the Cornell University and – to my great surprise – I was, subconsciously, using the phrase “we in Europe”.

I will, therefore, try to make some general or “generalised” remarks as I see Europe and its main challenges now.

4.

The apparent and, of course, fictitious challenges, repeated in the speeches of European politicians many times a day, include the following ones:

- to deepen the European Union (especially to introduce single currency);

- to widen the European Union (to expand it to the East);

- to bring down unemployment and to accelerate economic growth;

- to become a world power, which means to be strong and united, to be protected from American influence, culture, lifestyle and products on the one hand and from Asian cheap products, Asian religions and values on the other.

I am afraid that such targets or ambitions are false and misleading. I am deeply convinced that Europe needs something else, that it needs a velvet revolution which will change some deeply rooted structural characteristics of European society and economy. Europe needs to complete the Thatcherite revolution as regards liberalization, deregulation, privatization and not to replace it with other, fashionable, more “up-to-date” projects and ideologies. There are no brave new world projects, there are only old remedies.

5.

I do not interprete the so-called deepening of EU as a movement in the direction: more liberalism (in the European sense), less government intervention, more individual freedom, less syndicalism and corporativism, more free markets, less regulation, more traditional values and individual responsibility, less communitarism. Deepening – in my understanding – means more statism, more rules (created by someone and imposed upon someone), expansion of regulatory and administrative legislation, growing distance of decision making (in crucial matters) from individual citizens, etc.

It can be easily demonstrated by problems connected with the introduction of single currency. It is quite clear that

- European monetary union is not a technical issue of monetary policy;

- EMU has inevitable and costly consequences;

- monetary union requires fiscal union (or fiscal federalism) to operate efficiently;

- fiscal policy lies at the core of national sovereignty;

- fiscal union needs political union (which someone may love, someone not, but it must be offered with an explicit and all-embracing price tag).

In addition to it, I have a very special and very recent Czechoslovak experience, connected with the split of Czechoslovakia which was – technically speaking – the collapse of a monetary union. Without political and fiscal union, it could not continue to exist, even if we wanted to preserve it.

Everyone is talking about widening, but one thing is rhetoric and another is the real feeling of many Europeans. It is often suggested that the newcomers are not prepared, but it should be added that the same problem is on the EU side. It is evident that the enlarged union, expanded to include countries with lower GDP per head, will cost more, not less. This fact should be accepted (or not) – but we should not hear statements about a potential future reduction of payments of individual countries to the EU budget after enlargement.

As the only participant from a post-communist country here, I would like to say a few words about Central and Eastern Europe. It is sufficient to make three simple points:

a) a change in institutional arrangements (from communism to markets) has its non-zero costs. There is not only no free lunch but no free reform either. In spite of it I am repeatedly confronted with the lack of understanding of the reasons of lost output and income in the first stage of transition – our critics talk about stagnation, about weak GDP growth, not about the end of a totalitarian system;

b) we liberalized (and had to liberalize) markets without waiting for a perfect market structure. We introduced a minimalist market regulation because we knew that it is impossible to constructively generate markets. They must evolve spontaneously and for that reason I do not agree with (sometimes “high-brow”) Western criticism of non-perfect markets in countries of Eastern Europe;

c) there is enormous vulnerability of an economy undergoing transition. It should be accepted, not superficially attacked.

To bring down unemployment and to accelerate growth in Europe cannot be done by more government intervention, by more protection, by strengthening of syndicalism, by shortening working hours, by industrial or export promoting policies but I see such approach as dominant in EU documents.

I am frustrated by the undisguised undertone of anti-Americanism which is often present in EU deliberations. I prefer free Europe to strong, protected and monolithic Europe. As a liberal (again in European sense) I do not think in terms of continents and their relative powers. I am not afraid of American values, life-styles and approaches to human activities even if I will never drink coke or eat hamburgers. As someone who spent most of his life in a closed society I prefer openess to closeness, freedom to somebody´s definition of justice or equality, markets to continental bureaucracies. And this is the main problem of Europe at the end of 20th century.

Václav Klaus, Notes for AEI World Forum in Beaver Creek, June 25, 1998.