Is There Any Reason to Celebrate Our 10 Years in the EU?
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Public lecture delivered by Vaclav Klaus on 5th May 2014.
Many thanks for the invitation. I almost don’t remember when I spoke here, in Budapest, last time in a private capacity, not being on a formal state visit.
It may be partly a personal problem because I entered politics in the moment of the Czechoslovak-Hungarian dispute about GabÄíkovo-Nagyamaros Danube dam project and I dared interpreting it as one of the conflicts between green ideology and rational thinking which was not very popular in Hungary at that time. In addition to it, there has always been a sort of competition between the Czech and the Hungarian concept of post-communist transformation – and together with it – a missing mutual understanding of our specific approaches.
It may also be non-personal because the Czechs were always – for understandable reasons – on the side of Slovaks in all kinds of Slovak-Hungarian disputes and because the Czechs looked with evident doubts and reservations on the Hungarian attempts to revive the almost century old debate about the Trianon treaty. We have always seen it differently. And there has also been a natural rivalry between the Czech Republic and Hungary about their role and position in Central European politics.
On the other hand, we have had similar views on Europe and on the European integration process. When I was here on my farewell state visit in December 2012, my talks with Hungarian political leaders showed me quite convincingly that our views on the EU are very close.
I don’t know how Hungary celebrated the 10th anniversary of its EU membership a few days ago and I hope to get some information about it during this visit of mine here but in the Czech Republic there were no celebrations. With the exception of the current political elite which vehemently tries to differentiate itself from the previous political leadership, from the former president and the former right-of-centre government, the support of the EU is at the lowest level ever. We didn’t find a motivation for any kind of celebrations. Serious analysis is missing and propagandistic statements are meaningless. We don’t expect, however, that even a serious, unbiased, politically neutral cost-benefit analysis would give us a favourable outcome for the impact of our membership in the EU. Such an analysis is technically and methodologically very complicated because of its multidimensional character. The EU membership was also not a controlled experiment. We didn’t live in a vacuum, all other things were not kept equal, the “ceteris paribus” condition was not fulfilled, etc.
At the same time it is quite evident that
- we have not entered a healthy, prosperous, fast growing economic area and that
- we have not entered a truly democratic entity.
We also observe (and can easily document) that we have been getting – almost every day – new and new proofs of the loss of our sovereignty. In the first 10 years of our EU membership, we had to accept 3600 European directives and were forced to pass almost 500 new pieces of EU legislation. With growing despair, we witness the gradual reversal of our liberal reforms (which were done immediately after the fall of communism at the beginning of the 1990s) into a new form of government interventionism. In spite of our relatively successful fights with all versions of “third ways” twenty years ago – because we wanted to follow the first way, capitalism – we feel now that the EU membership brings us back from capitalism to a modern form of European socialism, to a new administratively organized society.
People like me have been afraid of all kinds of slippery roads which lead to socialism. It reminds me of my speech at the highly contested international conference about reforms in communist countries in February 1989 in Györ and the surprise in the audience when I quoted Hayek and asked for a truly Hayekian solution. I had the feeling then that the dreams about socialism were very strong there, even among the well-respected reformers.
Our past, sufficiently long experience with communism inevitably sharpens our eyes when observing today’s EU. I have repeatedly criticized European politicians, European intellectuals and European business people for not taking the evident problems connected with the current European integration process seriously enough. It is very frustrating for me that nothing significant has changed even when the failure of this project became so evident in the last couple of years.
I am afraid we continue marching in the same blind alley as before
- regardless the deteriorating economic data,
- regardless the waning respect and position of Europe in the rest of the world,
- regardless the deepening of the democratic deficit we are confronted with,
- and regardless the undeniable increase of frustration of people who live in Europe and are objects of this immodest progressivist and constructivist experiment.
The substance of my polemics with current European arrangements is based on the criticism both of the negative effects of the ambitions to economically centralize and unify the European continent and of the underestimation of negative consequences of the undemocratic suppression of nation-states in favour of pan-European governance.
After four decades of communism when we were not free and sovereign, we wanted – similarly to Hungary – to be a normal European country in a “normal” continent of free, sovereign and naturally friendly countries. Our current situation is undoubtedly much better, we live in a nominally free country now but in spite of that we feel new, not negligible constraints on our freedom.
We have been losing our sovereignty again now – this time to Brussels – and the dictate of political correctness and the powerful role played by new modern isms, such as multiculturalism, human-rightism, environmentalism, homo-sexualism, aggressive feminism and genderism, all of them based on old, perhaps differently packed collectivist and freedom suppressing concepts, have been undermining and negatively affecting our feeling of being free.
There is an important economic dimension to it. More than 80% of our exports goes to the EU which is by no means a flourishing economic area. This is a region which undergoes an already rather long economic stagnation and acute sovereign debt crisis. Even if we keep the Czech crown – in a similar way as you keep the Hungarian forint – we cannot disconnect ourselves from the developments in the rest of Europe.
The economic stagnation Europe is facing is not a historic inevitability. It is a man-made problem. It is an outcome of a deliberately chosen and for years and decades gradually developed European economic and social system on the one hand and of the more and more centralistic and undemocratic European Union political institutional arrangements on the other. They both and especially they together form an unsurmountable obstacle to any further positive development. What we go through is not an accident or a misfortune. It is a self-inflicted problem. It is a self-inflicted injury. Hundreds of small, at first sight innocent details have metamorphosed into a serious systemic problem.
It is evident that the European overregulated economy, additionally constrained by a heavy load of social and environmental requirements, operating in a paternalistic welfare state atmosphere, cannot grow. This burden is too heavy. If Europe wants to start growing again, if Europe wants to solve its many daunting social problems, it has to undertake a far-reaching transformation of its economic and social system. This is my proposal No. 1.
Not less important is the fact that the excessive and unnatural centralization, bureaucratization, harmonization, standardization and unification of the European continent has created a deep, more and more visible democratic defect, not just a democratic deficit as it is euphemistically called. The end result of this is that we can´t speak of democracy in Europe any more. We entered a post-democratic or semi-democratic era which was, of course, always a dream of socialists of all colours. This may become in the long-run an even bigger problem than the current economic stagnation. Changing it – which means changing the concept of the European integration, getting rid of its post-Maastricht development – is the task No. 2.
Four months ago, on January 1, 2014, the EU architects and exponents planned to celebrate the first 15 years of the common currency, but as far as I know it went almost unnoticed. Euro evidently did not help practically anyone. On the contrary, it brought new problems. It weakened the self-discipline of individual countries. It produced an exchange rate which is too soft for the countries of the European North and too hard for the European South.
European monetary union is nothing else than an extreme version of a fixed exchange rate system. As an economist, I have to argue that all historically known fixed exchange rate regimes needed exchange rates realignments sooner or later. Eliminating this powerful – and for centuries functioning – adjustment mechanism was a naive attempt to stop history, something which all the constructivists, central planners, manipulators and dictators always wanted to achieve. Unsuccessfully.
The economies of Eurozone countries have diverged, not converged since the introduction of the euro. The erroneous belief that the very heterogeneous European economy could be – in a relatively short period of time – made homogenous by means of monetary unification belongs to the category of wishful thinking. Europe can be made more homogenous only by evolution, not by revolution, not by means of a political project.
When discussing the current European problems, I find it wrong to concentrate on the well-known weaknesses of individual EU countries. These countries did not bring about the current problems. These countries are the victims of the system of one currency.The system itself is a problem. These countries were forced to function in a world of – for them – unsuitable and inappropriate economic parameters. It proved to be untenable. Letting such countries leave the Eurozone – in an organized way – would be the beginning of their long journey to a healthy economic future. This is my proposal and our task No. 3.
Some critics say that it was a mistake to establish a monetary union whose members enjoy – according to them incorrectly – fiscal sovereignty. They are, therefore, in favour of a genuine, full-fledged fiscal union and don’t want to hear that the people of Europe want to retain fiscal sovereignty of their nations. If I understand it correctly, this is also the stance of the people of Hungary. Establishing a fiscal union in Europe should not be our task. On the contrary. Our task is to guarantee fiscal sovereignty.
The issue of freedom in Europe gets a new relevance in connection with the recent developments in Ukraine. We are confronted with a blunt misinterpretation of events. Some people in Europe (and America) try to use Ukraine to restart a clash between the West and Russia. Ukraine, with its long existing fragility both in political and economic fields, has been denigrated to the role of an instrument in it.
To force Ukraine into making a decision now whether the country belongs to the West or to the East is a certain and guaranteed way how to destroy it. I formulated it at the end of February quite resolutely: “Giving Ukraine a choice between the East and the West means destroying it… It leads the country into an insolvable conflict that cannot have but a tragic ending.” This is exactly what we see developing in front of our eyes. The mainstream media and politicians use the many times proved to be effective Orwellian newspeak – they try to tell us that they do intervene in Ukraine in an attempt to save (or introduce) freedom and democracy there whereas the only way to save or introduce freedom and democracy would be to let Ukraine solve its own problems without foreign intervention. Both from the West and from the East.
I expect that someone will remind me now of the Russian behaviour in Crimea and compare Soviet intervention into Czechoslovakia in August 1968 with what happened in Crimea several weeks ago. It would not be fair. The recent violent political destabilisation of Ukraine was not a genuine domestic political uprising but an imported revolution. Its organisers had other plans and ambitions than to introduce freedom and democracy there. The Orwellian shift of causes and consequences is here again. At the beginning of March we formulated it in the following way: “the sequence of causes and consequences is evident – it went from the events in the Kiev Maidan to the Russian troops in Crimea. Partial events shouldn’t be taken out of context”.
The victims of this all is Ukraine and the people who live there. They didn’t need it and they did not deserve it even though the responsibility of Ukrainian politicians for not succeeding in solving the long-lasting Ukrainian problems for more than two decades after the end of communism is enormous (and inexcusable).
Other victims of today’s events are the European democrats. The atmosphere of confrontation, danger and fear will be quickly misused to further accelerate European unification and to create a centralized European superstate with a rather limited right to hold an independent opinion.
Today’s artificially created atmosphere is bringing us closer to the “Brave New World”, so brilliantly described 80 years ago by Aldous Huxley. The Czechs, who got rid of the communist version of the Brave New World 25 years ago, know something about it. We are afraid that we are coming close to it again. The EU is to some respect responsible for it.
We are often asked what to do, what kind of concrete measures to implement. This question implies that such measures exist which is not true. The change must start differently. It must start by acknowledging that the whole system has failed and that the system must be changed. We need a fundamental transformation of our thinking and of our behaviour, which would require serious, free and open political debates all over Europe, not blocked by political correctness, or by old taboos and misconceptions. They must be generated by the people, not by the vested interests of EU politicians. The forthcoming European elections may become one of the chances to do it but I am afraid that the feeling of systemic failure is not yet sufficiently deep and wide-spread. It is also successfully blocked by the EU propaganda.
 The Václav Klaus Institute's Public Statement on the Situation in the Ukraine, February 25, 2014, http://www.klaus.cz/clanky/3528.
 The Václav Klaus Institute Public Statement on the Situation in the Ukraine No. 2: Let’s Not Trivialize the Situation by One-Sided Interpretations, March 5, 2014, http://www.klaus.cz/clanky/3534.
Václav Klaus, The Speech to the Danube Institute, Budapest, May 5, 2014.
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