Central and Eastern Europe at the heart of the EU

The evolving Russian — Chinese relationship will impact Central Eastern European countries and thus affect the unity and stability of the EU

/ By Katja Geršak, Executive Director, Centre for European Perspective and Editor-in-Chief of Bled Strategic Times

Geopolitics is upon us again. The global power is shifting from West to East and the coming decade will be marked by an intense geopolitical rivalry between the US and China. Other resurgent regional powers are also increasingly assert­ing their political and economic interests. A multipolar world will be much more inse­cure and unstable.

In our globally interconnected world, projecting power also involves projection of global might in high tech development as well as projection of culture and values. Chi­na has become representative of the fact that huge economic leaps and social progress are possible without a system of liberal democ­racy. Rule of law is no longer the only game in town and it cannot be taken for granted. Furthermore the Chinese government is using Artificial intelligence and big data as a way of increasingly controling its citizens specially when dealing with minorities. There are a number of authoritarian states which consider such a system of control a boon. Therefore the world will increasingly be divided between democracies struggling to maintain a rule of law based political sys­tems and authoritarian states using the latest technology to control and when need be re­press their citizens.

The Global unipolar moment of the West provided a relatively secure geopolitical en­vironment in which the EU, aided by an ir­replaceable alliance with the US, flourished. The global migration of power to the East will have profound consequences for Europe in the coming decade. Beyond the US-China dichotomy, the Russian-Chinese relationship will greatly influence security and geopoli­tics in Europe. After all Europe, China and Russia are positioned on the Eurasian conti­nent and geography still very much matters.

While the EU remains a mighty force with the second largest economy globally, it has also failed to achieve greater unity and political integration. Therefore it is entering this era of multipolarity with a number of challenges stemming from within. Political differences, economic divergence and social inequalities between EU member states will make the Central and Eastern member states particularly vulnerable to meddling by out­side powers.

Russian-Chinese relations have had their fair share of ups and downs. In the past de­cade they have strenghtened and a partner­ship between them was further solidified in 2014 after the Russian invation of Crimea. But this friendship is not bound to last.

Russia, the largest but mostly flat conti­nental power, defines its security in terms of territorial might. In that sense it has been through a particularly rough thirty years, with territorial losses in Easter Europe and Central Asia. It has witnessed first a rise of NATO on the east and now a rise of China on its western border. Yet Russia still per­ceives Eastern Europe as well as Central Asian states as vital to its security and po­litical interests. China has its eye on both of these regions. It is becoming a significant player in Central Asia, a region bountiful in natural resources which the Chinese market craves, but which Russia still views as ‘its backyard.’ By investing heavily in infrastruc­ture (roads and pipelines) China is drawing the region closer. The interests of Russia and China in Central Asia already diverge, the gap will only grow bigger.

China entered Central and Eastern Eu­rope through the 16+1 Initaitive. While the stated objectives are purely economic, it would be hard to overlook the geographical fact that the majority of countries included in the Initiative belonged to the former Sovi­et Union or what in the Cold War was known as the Eastern Block. Russia still views this region as strategically important. Again, the interests of Russia and China will soon di­verge here too.

The Chinese have also acquired the port of Pirrei in Greece as one of the entry points to Europe. Greece now entered the 16+1 Initiative, promply making it the 17+1 Ini­tiative. This too should give pause to Russia.

Russia will also have to contend with China in the East where they share a ter­ritorial border. The Chinese population is heavily concentrated in the eastern part of China and there is a steady flow of Chinese migrants settling in far-east Russia in search of a better life. The Russian population is concentrated in the western, European part of the contitnent and the regions bordering China remain sparcely populated. The fluid­ity of that border is an item on the agenda of Russian-Chinese relations, which is, sooner or later, going to become more prominent. Russia is increasingly going to perceive Chi­na as a growing challenge to its interests in the East and West.

The evolution of Chinese — Russian re­lationship is not one of two equal powers destined for rivalrly but is increasingly being skewed in favour of China.

Russian economy remains dependent on revenues from natural resources (natural gas, coal, oil hydropower) which its leader­ship has used to quadruple its military bud­get. President Putin has not implemented reforms that would make Russia more at­tractive not only for investment but namely as a role-model for the former Soviet Union countries of Central Asia. Russia is also fac­ing a population decline, current trends in­dicate that population will shrink from 141 million to 111 million in 2050. The percent­age of muslim population is growing and will, in parts of the country, reach up to 20% in the coming decade. Russia will threfore have to invest more into maintaining social cohesion of its society and be faced with minority is­sues, which may include not just muslim but Chi­nese minorities too.

Given the Russian ac­rimonious relations with the West, it is becoming more and more dependent on the Chinese market. Russia is increasingly diverting oil to China, purchasing advanced weapons systems from China and increasing the share of yuan in its foreign currency reserves (in an effort to avoid the dollar). In addition Russia has re­cently signed a deal with Huawei to develop its 5G equipment. Russian President Vlad­imir Putin once said that the country with the most developed AI will rule the world. In a Machiavellian twist of faith, the Russian President will now be getting AI (at least the hardware) from China.

As the balance of relations tilts towards greater Chinese influence, there may also be an opportunity for a strategic reset of Russian relations with the West. Such shifts are cer­tainly not unprecedented. One of the factors which will crucially impact Russian-Europe­an relations is the political path that Russia chooses in the long-run. Whether it will pick a path of greater control over its population though developing AI technology or turn in a more liberal — a more European — direction.

How will this rivalry impact on Europe? In what shape is the EU entering this new multipolar era?

The EU remains a place to which millions of people around the world aspire to migrate in hopes of creating a better life. EU’s attrac­tiveness shows that values do matter and de­mocracy is a brand. The EU has contributed to economic growth and social development in all of its member states. With a vibrant economy, it remains an attractive destination for investment.

However it is not all sunshine and roses. Lately we seem to be spending much more time discussing EU’s problems. With Brex­it, the EU is losing an important economic and political power. While the process itself has sparked a boost in unity and popularity among EU’s continental citizens, it will still leave the EU weaker. The Franco-German motor is losing steam — it is less coherent and seems to lack strategic depth. There is a need to deepen EU integration. The lesson of 2008 financial crisis has (or should have) taught us that we need further fiscal integration (and consequently also political) integration to ensure Eurozone’s endurance during cycles of economic downturn and in turn provide greater political stability in the future (as economic hardship results in resurgent na­tionalisms within Europe). However, in real­ity many populist politicians within the EU are calling for greater sovereignty, for ‘less EU’ and are in favour of ‘taking back control.’ One of the key reasons is the rise in inequal­ity within the majority of EU member states over the past decade, which has helped in re­surgence of latent nationalisms.

Europe is lagging behind US and China, the top two tech innovators. None of the technology giants come from Europe and with the cur­rent levels of investment into R&D, nobody is expecting the EU to be a potential leader of digital economy of the future. The EU will not project glob­al power as a unified entity in financial, military or political terms in the coming decades. Despite of it having the market and people potential for doing so.

The absence of EU as a unitary political and military force, the unpredictability of US partnership, a revisionist Russia and a grow­ing China leave Central Eastern European (CEE) countries particularly vulnerable. CEE is still battling with its past in terms of economic and socio-political development. ‘Eastern European citizens still earn about 40% less than the average European. Despite significantly higher growth rates, income levels in Eastern European countries remain significantly below that of EU-15 countries.’1 The gap is not likely to close anytime soon. Democracy and rule of law in CEE remains vulnerable to upswings of populism and na­tionalism. The rule of law is not yet deep­ly entrenched in countries of CEE, which means that backsliding is a real possibility.

Russia, which has a vested interest in CEE, continues to upgrade its military and partic­ularly its hybrid capabilities and is actively pursuing a policy that aims to weaken the unity and coherence of the EU and NATO. China, on the other hand, is using its vast fi­nancial means to raise its political influence in the region. It is hard to overlook that the 17+1 initiative includes countries, which are also of strategic interest to Russia. CEE countries will increasingly be caught up in the complex relationship between Russia and China. Therefore it is imperative that the EU designs its policy towards China with greater unity and clarity, starting with screening and coordination related to Chinese investment in the EU and greater transparency related to funding of academic, think tank and other organizations.

CEE is of key importance to EU’s wider stability. A prosperous region that is pro­gressively closing the gap with the most de­veloped EU countries, thus further rooting its interests, social and economic well-being within the EU, will be less susceptible to the courting (and meddling) of outside players. CEE region should be more connected. Ini­tiatives, such as the Three Seas Inititative, should be welcome as they strive to further elevate the development of the region. US engagement in the region should not be viewed as an unwanted intrusion but should be taken in the context of further strength­ening the Transatlantic partnership. After all, it is a partnership of democratic countries, which seek to promote a rules-based inter­national world order.

Deeper integration is crucial to our com­mon European future. The only path leading to a secure and prosperous Europe is ‘more EU.’

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