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Czech Republic and the EU: The Marriage of Convenience, Not of Love

English Pages, 9. 11. 2004

When I was last time here, in San Francisco, six years ago, my country was still in the first decade of its post-communist era. We were still deeply involved in our, so-called transformation process. It is, therefore, not surprising that the title of the speech I delivered here then was “The Political Economy of Transition: The Czech Lesson”. I discussed the basic structure of this unique historical manouvre – of the move from communism to a free society. I tried to describe the crucial pillars of the whole process – liberalization and deregulation of the administered economy, privatization of a fully state-owned economy, restrictive macroeconomic policy (after decades of repressed inflation), building of the democracy and market-friendly institutional infrastructure, as well as our attempts to organize this manouvre in a way which would minimize the inevitable transformation costs, connected with such a deep and radical systemic change. I also stressed that the transition was done in a real world, not in a laboratory controlled by an omnipotent philosopher-king, by an enlighted president or prime minister.

I tried to explain that “I do not believe in the possibility of a smooth and stable transition path in politically and socially difficult, but highly democratic, pluralistic and open societies (and economies) of Central and Eastern Europe. We are not in a brave new world of perfect markets and of prefect government”. I do not see any need now to put it differently, even if there are permanent dreams about organizing the transition as a controlled experiment in applied economics.

The transition is over. The Czech Republic has become – structurally – a standard, normal European country and as a result of this it has typical European problems. They cannot be solved by means of another revolution, because we are already in the middle of the process of a spontaneous evolution. This evolutionary era is less radical, less dramatic, less headlines-creating, but – paradoxically – more controversial and even more ideological. This era is also connected with the ongoing European integration process and with our entry into the EU on the 1th May 2004. Let me say a few words about it.

Our entry into the EU has been planned and prepared for a long time. Already in November 1989, hundreds of thousands of us – almost subconsciously and thus completely spontaneously – came with a slogan „Back to Europe“, with a slogan that – in its simplicity – became one of the most important symbols of that historic occasion and of our further development. By saying that we wanted to indicate that we intend:

- to overcome the isolation of our country that lasted almost half a century;

- to overcome our unnatural and one-sided orientation towards the East;

- to end our disrespect for the basic values of the political, economic and social systems functioning successfully West of us,

- to end our non-involvement in the activities of those European institutions that had been founded during our absence from the democratic developments of the free part of the European continent between February 1948 and November 1989 and that shaped the face of today´s Europe.

I can assure you that this powerful slogan did not suggest any kind of antiamericanism, as it could be interpreted now. We just wanted to be a normal, free, functioning, prosperous country. “Back to Europe” is, of course, a different slogan than “Avanti into the European Union”. Whereas the first slogan can promise benefits, the second one has both costs and benefits. The first journey was straightforward, the second one is more complicated.

On the other hand, the problems are natural. As it is usual in the lives of individuals as well as of the whole society, we have gained something by becoming an EU member but at the same time there is something we have lost. One never gets anything for free, as the well-known saying goes there are no free lunches. It is our obligation to do everything to make sure the proportion of gains and losses is favourable, which certainly is not and will not be automatic. We must learn how to remain ourselves, not only as individuals, but as a Czech nation which is more than the sum of individuals and of individual interests. These wider interests do exist and they should not be labelled as nationalism. We are obliged to our predecessors to preserve Czech statehood. The Americans understand patriotism well, much more than contemporary Europeans who consider it as something politically incorrect.

Looking at the European integration process from the broader, not only Czech perspective, the year 2004 will be remembered for two important events in Europe: for – until now – the biggest EU enlargement and for the birth of EU constitution, which represents a radical step on the way to an – at least nominally – unified Europe and to the gradual disappearance of national states on the European continent.

When we speak about enlargement, there is no doubt that the new members, Central and East European countries, gained an important political recognition, that their membership in the EU means an end of the post-communist transformation, as well as an end of the Cold War division of Europe. This is very important. These effects are, however, more symbolic than real.

The real problem is different. The new member countries – economically less developed countries – need catching-up. They need real convergence. The question is whether the nominal convergence, the acceptance of EU legislation, standards, rules, policies, will accelerate the expected real convergence or will block it? The historical evidence is in this respect – at least – mixed. The results depend very much on the existence or non-existence of huge financial transfers because – without them – the nominal convergence creates costs that are higher than the benefits. This problem should be taken seriously because, otherwise, we will be confronted with a huge disappointment of citizens in the new member countries. The case of East Germany is well known; the case of Mezzogiorno, in Southern Italy as well.

Enlargement means a bigger EU and, as a result of it, the transaction costs of EU functioning will go up. On the one hand, the governing in a bigger and more diversified entity will be more complicated. I refer to the costs of collecting, using and evaluating the necessary information, the costs of making decisions in a multidimensional, very complicated structure, the costs of implementing and controlling decisions, etc. When we increase the number of countries, keep the scope of policies constant, the governing will be either more costly or less efficient and/or less democratic. To escape such an unpleasant arithmetic is not possible. At the same time, there will be non-zero costs for individual EU countries connected with their obligatory application of uniform EU decisions and standards.

All of this is amplified by the appearance of the EU constitution, which is a radical document with huge implications for efficiency, democracy and national sovereignty. It aims at eliminating legal autonomy of individual European countries, it introduces EU legal personality and, in terms of international law, it transforms the EU into a state.

It can be bring about some increase in the operational efficiency of governing, but at the price of

– the strengthening of the democratic deficit;

– the shift in decision-making procedures – less of a democratic type, more of a hierarchical type;

– more majority voting than unanimity;

– the further depersonification of the EU and growth of anonymity in decision-making;

– the growing loss of national sovereignty;

– the increasing power of the EU “core”, etc.

These unpleasant phenomena cannot be changed by hypothetically good intentions of EU politicians and bureaucrats. It is a systemic issue.

We should not rely on god-like characteristics of EU politicians and bureaucrats. We should take a different route. We should not europeanize issues but fight for the preservation of basic civil, political and economic liberties, as well as for a minimal state. We need institutional framework which makes it possible. We need unregulated markets, we need states to guarantee and safeguard the rule of law. We should know that the alternative is a non-state, post-democracy and administered society.

We need New Europe, Europe without Europeanism. We need Europe of economic freedom, Europe of small and non-expanding government, Europe without state paternalism, Europe without pseudomoralizing political correctness, Europe without intellectual snobbism and elitism, Europe without supranational, all-continental ambitions. If somebody across the ocean labels this kind of Europe by the expression “New Europe”, it would only be good. However, I must emphasize that we are very far from it.

Václav Klaus, Speech for The Commonwealth Club of California and World Affairs Council of Northern California, San Francisco, November 8, 2004.