The Eastern Partnership in crisis

THIS ARTICLE FIRST APPEARED IN THE EU OBSERVER

The EU has recently approved the Eastern Partnership initiative, just at the moment when the global economic crisis is changing the rules of the game in the Eastern neighbourhood, and elsewhere. Both Russia and the EU will have fewer resources - money and political attention - to be too preoccupied with the neighbours. The Eastern Partnership is not in crisis, but will have to be implemented in times of crisis. So what is the likely impact of the crisis on the Eastern Partnership?

The Eastern Partnership is an attempt to resuscitate the European neighbourhood policy and focus EU's political attention on the East. But now the economic crisis is stealing the show. Concentrated on itself, with the growing danger of protectionism inside the EU, and growing negative attitudes to "foreign" workers, many aspects of the European integration process, let alone the EU neighbourhood policy will come under strain.

Free trade and visa facilitation with the neighbours might be the first to suffer. Visa-free talks will be delayed, and the temptation to accelerate the building of "fortress Europe" even higher. Many EU member states and neighbours are increasingly protectionist. A near-collapsing Ukraine has recently raised import tarriffs by an average of 13%, which puts under huge strain EU-Ukraine talks on a Deep Free Trade Area. When EU member states themselves are entering dire straits, it will also be increasingly  difficult to commit more EU funding for the neighbours. The Eastern Partnership was marketed inside the EU as being "budget-neutral", implying that it would not require additional money. Many bilateral assistance programs of (especially new) EU member states directed at the Eastern neighbours will be cut. Many of the Eastern Partnership's champions among the new EU member states are hardest hit by the crisis. They are likely to become more introvert and might lose bargaining power inside the EU.

But the EU neighbourhood policy and the Eastern Partnership are not likely to collapse. The perspective of deep free trade between the EU and its neighbours was a mid-term one. For most EU's neighbours, it was not likely to materialise in the next 3-4 years anyway (negotiations last for years, and the EU has only started them with Ukraine). Such talks might be delayed by the crisis, but would not killed.

The economic crisis might also change the neighbourhood in ways that can actually strengthen EU's influence. For the last years, EU assistance to its neighbours was considered "candies" as Moldova's president Voronin recently put it. And more often than not EU's neighbours did not need the support of institutions such as the International Monetary Fund. They had huge economic growth (often into 10%), huge inflows of remittances and a cash-rich Russia was providing them with investments and assistance when necessary. Not anymore. Growth might turn into recession, while Russia is learning again how to count money.

As the neighbours are heading for rough times, EU funding suddenly becomes more important in the neighbourhood than it was in times of economic growth. EU funding to the neighbourhood (under ENPI) remains stable, and even marginally increases with the Eastern Partnership. Suddenly, EU's voting rights in the IMF also become significant. The EU supported IMF bailouts for Ukraine and Belarus. Thus the EU can channel its influence through other channels as well. Bad times will increase the scope for EU conditionality in the neighbourhood, and give the EU an opportunity to actually accelerate its neighbourhood project. In other words, in times of crisis the EU might be able to buy more influence for the same money.