THE RUSSIA PROJECT: COTTRELL TRANSCRIPT
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NEW SCHOOL UNIVERSITY
Graduate Program in International Affairs

On February 24, 2004, the project on New Post-Transition Russian Identity, sponsored by the Carnegie Corporation of New York and organized jointly by the New School University, The World Policy Institute, and the Harriman Institute at Columbia University, presented a panel entitled "NATO, Russia, and the European Union: Where are the Limits to Europe?" The discussion concerned the question: How will European Union expansion into Central and Eastern Europe affect relations between Europe, the US and Russia?

Robert Cottrell is the Central Europe correspondent of The Economist. Cottrell has served previously as the European Union correspondent of The Economist and as Moscow bureau chief of the Financial Times and is a regular contributor to the New York Review of Books. His writing diaries for the FT won him the online journalist of the year award from the London Press Club in 2002.

Project Director Nina Khrushcheva, senior fellow of the World Policy Institute, moderated the discussion.

(For the minutes from the November 18, 2003 panel of the New Post-Transition Russian Identity project, entitled The United States, Russia and Central Asia: New Cooperation or the Old Divide, please see the following link: http://www.harriman.columbia.edu/us-russia-c-asia.pdf )

Robert Cottrell: I write now about Central Europe. Prior to that I was writing mainly about Russia for a number of years, and so I¥m particularly interested in the interaction between Central Europe and Russia. That¥s a theme to which I¥m going to return several times in the few minutes ahead. I¥m going to talk mainly today about the enlargement of the EU and NATO into central Europe in April and May. It¥s going to be an ambitious and long-term project which is going to transform Central Europe and is going to clarify in some ways relations between Europe and Russia. We¥re going to see more of the pieces that were shaken loose by the collapse of the Soviet Union 13 years ago and the collapse of communism in Europe slotted into new homes. If you try and think back 13 years and look at it from the perspective of Central Europe, in which I will include here the Baltic countries as well as Poland, Hungary, the Czech republic, Slovakia, Slovenia, this was their dream. It was joining the west, rejoining the west, being secure, and now, 13 years later, that dream is coming true, and one of the things I think we need to ask ourselves is why it doesn¥t seem nearly so thrilling now that it¥s happening.

There are several reasons for that, one of which is that the European Union in particular has lost a lot of its self-confidence. It had a very rocky decade in the 1990¥s, at the same time that America was having in many ways a magnificent decade. The US had a long economic boom, the intoxicating feeling of creating a new economy, the fantastic maturation of military power capable of projecting force around the world at a very limited cost in American lives. From the Gulf war at the beginning the decade to the Kosovo war at the end of the decade.

In Europe, it was a very different story. It was an economy which dragged along, started to grow and then didn¥t follow throughûfell behind America. There were the wars in the Balkans which were horrible in themselves but also a horrible humiliation for the European governments that could neither foresee, nor understand, nor stop them. So there was a divergence across the Atlantic in terms of mood, in terms of optimism, in terms of confidence, and I think that that divergence lies at the root of the strained relations that we¥ve come to see across the Atlantic in the past decade. Western Europe envies American power and wealth, it resents American power and wealth and it fears American power and wealth. Other countries, not just Europe are going to fear and resent a power as great as that which America now possesses, however wisely or benignly that power is used. So Europe responds defensively by claiming or pretending that it is better than America in some ways that are not so easily captured in statistics, that the European social model is better that criminal justice is more humane, that European foreign policy is more consensual or law-abiding. Some of these things may be true, but the point is that once upon a time Europe and America used to define their relations largely by the issues on which they agreed. Now, they define their relations increasingly by the issues on which they disagree. And the effect of that is a tension which is not going to change very soon. I doubt that it is going to change within my lifetime.

Consider what that means for the European institutions, NATO and the European Union, both of which are enlarging now into Central Europe. To NATO, the trust among the countries in it and above all the trust between Europe and America, is supposed to be the very essence of what NATO is all about. The countries of NATO promise to pool their soldiers, their officers, and their weaponry with one another. They promise to go to war on one another¥s behalf, and that takes a lot of trust. If trust is no longer there, it¥s very difficult to say what NATO is really for any more, and I think that that is a point which we¥ve certainly reached and which we¥ve probably passed by now. NATO keeps going mainly because the symbolism of dismantling it would be too frightening for most of the countries involved. It may be useful for occasional odd jobs such as peace-keeping at the next Olympics or in Macedonia, but you don¥t need a whole military alliance of 2 dozen nations to do that. Whether there is even any question to which NATO is the correct and necessary and most efficient answer, I doubt. NATO may still have some use in reassuring the countries of central Europe, especially the Balkan countries, which are frightened of Russia. It may have some use, but it¥s marginal and commonly misplaced.

Let¥s take a detour here and consider the evolution of sentiment in Europe towards Russia because that also has a big bearing on the Central European and the Western European countries. Russia seemed to be at least open to the western liberal democratic model in the very early 90¥s. It seemed to be at least curious about experimenting, but it¥s going off now in a very different direction toward a more authoritarian system, even if some of the rituals of democracy are still being staged. The levels of fear and distrust and dislike of Russia have remained high in Central Europe and the Baltics even if those feelings have been kept under wraps in recent years.

As those countries prepare to draw in the European Union, and as the Baltic countries in particular prepare to draw into NATO, the tensions are rising. The Baltics in particular are becoming more outspoken. Fear and distrust of Russia is becoming more overt, and Russia is reciprocating. The relations between Russia and Europe are probably now at the most argumentative that they have been in the post-Soviet period, and they¥re going to get worse. They¥re going to get worse because the European Union and NATO are taking in a number of countries which feel this weight of anger, resentment, and fear towards Russia. At the risk of generalizing, they feel that Russia cannot be trusted in the future until it has in some way confronted or purged, through a confession or through an apology, it¥s actions as the dominant regional power of the Soviet Union. We could argue whether a confession or an apology from Russia would be enough to remove that distrust, but it¥s very clear that no apology of any sort is going to be forthcoming.

The Russian view from recent Russian history varies in my observation between four responses. First of all, that the Soviet Union was not such a bad thing or that it was a bad thing, but that the countries of Central Europe were the willing subjects and partners of it. Third, that it was a bad thing, but the Russians themselves were the victims of it too. Or fourth, that whatever the Soviet Union was, it was in the past and we should draw a line under it. However you view those responses, I don¥t see the basis in them for an apology or reconciliation, especially since under Vladimir Putin, the proposition that the Soviet Union in some ways was a good thing seems to be in the ascendant. The number of voices in the European Union that are skeptical or hostile towards Russia are going to increase, and at the same time Russia is going to feel cut off, isolated, insulted by the new European Union orders, the new European Union visa regimes across Central Europe, cutting off countries that Russians could previously visit without a visa or with a visa that they bought at the airport. Those visa regimes aren¥t going to go away any time soon either. Russia is now the largest source of illegal immigration into Europe, so if anything, the European Union will make the visa regime and travel rules tighter, not looser in the near future.

Russia is going to feel shut out of Europe. It is going to see European enlargement as some sort of post-modern empire under construction. It already thinks it sees America constructing a classical empire by occupying other countries militarily, by taking control of their political processes. It¥s going to respond with some empire-building of its own. It won¥t say the word empire, just as the American government never says the word ¨empire¥, just as the European Union never says the word ¨empire¥, but Russia is going to be more insistent about its influence over--its possession of--Ukraine, Belarus, Moldova, and parts of Central Asia. This is a point to which we will return, because the European Union also talks about closer relations with Ukraine, Moldova, and Belarus, because these are going to be the new neighbors of the enlarged European Union, and if the European Union doesn¥t manage to draw Ukraine, Moldova, and Belarus closer to it, then it¥s going to need some very good ideas about how to keep Russia happy at the same time. I can¥t imagine what those ideas could possibly be. So I envisage Ukraine, Belarus, and Moldova as some sort of front line for Russian European relations in the years ahead.

It¥s clear that the countries of Central Europe including the Baltics are finding the western structure which they are joining, the European Union and to some extent NATO, less welcoming than they had expected. They find themselves being posited as a problem for the older richer members of these alliances who don¥t really want to be disturbed with the decision-making mechanisms or demands from the new members. But I want to go on to argue something which is a little less obvious, which is that these structures are much more fragile in than they were expected to be or than they were meant to be. Now, I touched a bit on the lack of purpose for NATO. I don¥t think that means that NATO is going to disappear because it would be so symbolically damaging to dismantle it, but I do think it¥s going to lose more significance. It¥s going to become even more redundant. It¥s going to become something like the Council of Europe is now or the Western European Union--things which are barely understood by the people within them and which are scarcely heard of by the people outside of them. Since the NATO-Russian partnership council was created, which gives Russia a very intimate involvement in the decision-making of NATO, NATO has become something much more like a giant confidence-building measure for relations with Russia, but not even a very successful one of them because it isn¥t contributing to a great increase in confidence. So it will have some symbolic importance. It may do some peacekeeping, but it¥s no longer the defensive pact it used to be. To the extent that the Baltic countries and, for example, Poland, still view Russia as a long-term threat, which they certainly do, then they¥re going to see their best protection lying more in bilateral relations with the United States, much more so than in multilateral relations mediated awkwardly through a NATO in which Russia has many of the privileges of membership.

Now the European Union is above all a complicated animal, but I will venture to say that it is either going through a mid-life crisis now, or it is approaching the end of its useful life. And the question is ¨which?¥ Jacques Delors, who ran the European Union through its finest years in the mid-80¥s, early 90¥s, recently put the likelihood if the EU falling apart within this decade at about 50%. For once in my life, I agree with him. The enlargement of the European Union into Central Europe and the Baltics is a magnificent gesture. It¥s right. It¥s decent. It¥s the most valuable thing that the Union has done since it cemented the post-war reconciliation between France and Germany 45 years ago. But this process of expansion, of enlargement into Central Europe has exhausted the Union¥s reserves of energy, of generosity, of altruism, and of optimism. The Union may well grind to a halt. If it grinds to a halt, it may fall apart. The phenomenon of imperial overreach--that all empires are almost predestined to expand themselves beyond the limits of which they can sustain themselves--is very well-documented, and the European Union is at least tempting that fate.

Even with the best will in the world, enlargement is going to put huge strains on the European Union¥s mechanisms for deliberation and decision-making. The European Union is still mainly a body which likes to work by consensus, even when it argues it likes to end the argument with a general agreement or a compromise, and it does that because it has to reconcile the supranational nature of its institutions, the ability to bring countries together with the national sovereignty of its members, which cannot be overridden. It tries to find issues on which they can agree, or on which they do not very much mind disagreeing. That can be done fairly easily with six or nine similar contiguous countries. It¥s proved difficult to do with twelve or fifteen, and it¥s probably going to be impossible with twenty-five. And that¥s talking about a European Union with the best will in the world among its members, and we¥re not going to have the best will in the world. There are lots of tensions within existing European Union members over economic policy, foreign policy, social policy, defense policy, and there are going to be bigger divisions and tensions between the Western Europeans and the Central Europeans. You¥re going to have the visceral pro-Americanism of the Balts and Poles versus the visceral anti-Americanism of the French and the Belgians, and increasingly a few others. You¥re going to have basically liberal countries economically, like the Balts and the Slovaks, confronting the high-tax, high-welfare views which have been the consensus of European Union thinking until now. You¥re going to have arguments between rich and poor countries over who puts money into the European Union coffers and who takes it out. You¥re going to have a huge wealth gap between the rich countries of Western Europe and the poor countries of Central Europe. Incomes in Central Europe are a quarter or a third of those in Western Europe. That gap is going to take decades to close. I don¥t think it¥s possible to have standards for the environment, for food hygiene, for health and safety, working hours at work that suit both very rich and very poor countries. Policies like that cost a lot of money to impose. The countries of Central Europe cannot afford them, and they want to keep their labor cheap. They want to keep their costs of production down. They want to undercut the countries of Western Europe and take investment from them, and relations like that are not a recipe for good neighborliness.

That¥s why the European Union, as it approaches enlargement into Central Europe, after a decade of encouraging the countries there to look forward to drawing in, is suddenly turning on them. Telling them to shut up when they voice pro-American views, cutting back on the budget allocations for them, closing the Western European markets against cheap labor from Central Europe. France and Germany are even talking openly about forming a new inner circle within the European Unionûa new union within the European Union to which the newcomers would be, in effect, excluded.

At this point, allow me to boil down those general themes into a few specific points which I hope will then help us move forward to discussion. The first is that this enlargement of the European Union is going to be very problematic mechanically, and it¥s going to be very problematic politically. It¥s going to take the European Union ten years, perhaps, to digest these new countries. It¥s going to take these new countries ten years to absorb all of the rules and regulations of the European Union, if the European Union lasts that long and if that sort of reconciliation is ever achieved. There¥s a further enlargement penciled in beyond this for 2007, when the European Union is supposed to be taking in Romania and Bulgaria. I doubt very much that this will occur. A lot of promises have been made to those countries, great promises, but I think that the problems of overcoming the next enlargement and making it work are going to be so great that they¥re going to throw all future plans off balance. Then there¥s Turkey, which has been promised a decision at the end of this year about whether it can enter negotiations to join the European Union. I doubt very much that European leaders want to take the responsibility of angering and alienating Turkey and perhaps even destabilizing it by denying it negotiations at this stage, so they will open negotiations, but nor do they want turkey inside the European Union. I think that they will open negotiations never intending to finish them. The question will become one of how long it will takes before those negotiations collapse because of loss of faith on the Turkish side and how bad the recriminations of that collapse will be.

With regards to the Balkans, the worst is over there. There was a past decade in which we were prone to look at the region through the prism of its most war-torn country, whether that was Croatia, Bosnia, Kosovo, or Macedonia. There was always a tendency to imagine the finding to be more generalized than it was. It¥s finished. You can go there for pleasure. Tirana is a safe city after dark. The problems are economic ones now. They need to be sorted out, and to get them sorted out, you need some nation-building. I think it¥s time to recognize that ethnically federated states are working much less well than unitary states, so it¥s time to give independence to Kosovo, to consolidate independence of Montenegro, and to make Bosnia into microstates if that gets them past years of corrupt and dysfunctional government. But that¥s it. I doubt the Balkan states are even going to get an entry date for the European Union, so they¥re going to have to make it by themselves.

Belarus and Ukraine, will be drawn closer into the Russian orbit--probably Moldova too--though its close ties with Romania may make it easily digestible. It¥s not the end of the game for Belarus and Ukraine. If they preserve their sovereignty, their independence in action, and if their neighbors like Poland and Slovakia in central Europe start getting visibly much richer, and if a fall in oil price knocks the stuffing out of the Russian economy, then they¥re going to be tempted away from the Russian model towards the Western European model, but it¥s a competition of models and propaganda. It¥s a bit like the Cold War in miniature. It¥s going to take years. Short term, the point is that Russia wants these countries much more than Europe or America does, and it has a much more securely in its grasp.

NATO will continue to exist, but bilateral relations between America and the European countries will matter much more than NATO does, and those diplomatic realities will be translated fairly visibly into facts on the ground as America reduces sharply its troop numbers in Germany and moves them into Central and Eastern Europe--into the countries which are, basically, its friends. That¥s the Europe I foresee. It¥s going to be a very difficult decade. It¥s going to be at least as difficult as the 1990¥s were, but none of these problems are insoluble. All of them require some sort of economic recovery on the part of the Western European counties, particularly Germany, which will give Western Europe back it confidence, its altruism and its generosity.

Question: What exactly would it mean for the European Union to ¨fall apart?¥

RC: I would say that the European Union at the moment has three functions which are of undisputed value, one of which is the Schengen system, or the open borders, which allows people to move freely across almost all of the countries in the European Union. The second is the common currency, which at the moment is certainly of great convenience and should lead over time to a greater economic consolidation and transparency among the European Union countries. The third is the single market, which in effect makes possible trade of any commodity or service with a few exceptions, equally across all borders of all EU countries. There is a fourth area of foreign security policy and defense policy, which is underdeveloped. So taking those areas one by one, I would say that foreign and security and defense policy is already failing or has failed as a policy for the Union as a whole. To the extent that it is moving ahead at all, it is moving ahead through experimental work among small groups of countries who do not expect to generalize the result to the whole European Union. I would regard that policy as one which is actively contributing towards the fragmentation of the union.

With Schengen, I worry deeply about news already announced. Thirteen of the fifteen existing European Union countries have decided to close their borders to workers from eight of the ten accession countries. This means a big step backwards towards a mechanism of border controls or at least 2, very probably 5, very possibly seven years, and possibly longer than that. I fear that Schengen is such a wonderful but such a fragile thing because it requires such acts of renunciation among the participating governments, that once we have started to eat away at it with these restrictions on the free movement of labor, given the current climate of increasing paranoia over security, that this may be the beginning of the end for Schengen, or certainly a step back from it.

And then, finally, the single currency. We already have a loss of confidence in the modalities by which the single currency is managed. We have arguments amongst the countries which are running it. We have a reluctance even to contemplate admitting in the near term countries of Central Europe and sharing the management of the single currency with them. I think that the single currency itself is a too vital a thing now that it exists for it to be allowed to fail, but I could easily imagine the single currency standing apart from the European Union and having its own chain of command, its own political structure which did not rely upon the political and organizational structure of the European union and which allowed other countries to join or leave the single currency regardless of whether they joined or left the European Union.

In respect to the single market, that is probably the most valuable and indispensable and irreplaceable function which the European Union currently discharges. I hope it survives, but I worry that a severe blow may be dealt to it soon after enlargement if France, in particular, and other western countries start refusing the import of food from Central Europe on health grounds and the Central Europeans reciprocate. You can easily imagine it spreading into other areas, and the single market going down bit by bit like a house of cards. I hope not. The corrective action there would be to move the single market away from being a political creature as it is at the moment towards one that is much more rigorously run by the rule of law, by the European Board of Justice. But that, basically, is how I would break it down. Foreign and defense policy: no, it¥s not going to work for the whole Union. Single currency: already the western Europeans want to keep it to themselves. Schengen: it¥s already under threat and already being damaged. Single market: could start being unraveled at the edges very soon after that. That¥s what I mean by collapse or fragmentation, and I think that if you have arguments, disagreements, and gridlocks in all of those four areas, then the chances of getting anything else accomplished or having an amiable or an optimistic debate in any other actual or potential area of human life is pretty limited. I think the response to that would be the creation or recreation of a new core group of Western European countries which were willing to reopen these same issues among themselves, but that would be, in effect, the end of the European Union. Enlargement would have killed it.

With regards to the neighboring countries of Belarus, Ukraine, Moldova--they¥re moving towards closer ties with Russia. Europe doesn¥t really want them. Particularly for Belarus and Ukraine, the historic and political ties, economic ties, and business ties with Russia are far too strong. I think the Russian reaction to losing influence in those countries would be fearful and fearsome. In the end I think it¥s going to be no contest. Europe may in the future to be able to present a better alternative to those countries in Eastern Europe, but I don¥t think the Russian model of economy and society is so great that if you¥re Belarus and you throw your lot in with Russia, you¥re going to think that you¥ve made the right decision forever. It seems to me that the Russian economy is buoyed up to such an extent by high oil prices for the time being that it¥s losing freedoms and attributes of democracy. If one can keep alive an image of a better west and project that image into Ukraine and Belarus, then if they still have freedom of action, perhaps at sometime in the future they will shift their orientation. I think that¥s the way it has to be. The idea that one can somehow replicate what happened in Georgia in November to Belarus and/or Ukraine, which in a lot of people¥s minds right now, is attractive but rather dangerous thinking.

As for the Balkans, I suspect that they¥re going to surprise us by doing tolerably well. The idea that they¥re somehow going to be catastrophically damaged by not being integrated into the European Union is wrong. There are countries with wages of a hundred, two hundred, three hundred, four hundred dollars a month. A lot of what the EU demands would be an incredibly unrealistic burden on economies like that. It¥s better that they should function as very low cost, very low wage adjuncts to the European union. Peaceable, reliable, attractive to foreign investment, and linked into the European Union by some sort of free trade or concessionary trade arrangements. So long as the free market lasts, I think that it is easy to imagine such a scenario. There¥s enough regret and guilt and horror at what went on there a decade ago for the Europeans to make an allowance for some free trade and any peacekeeping over the next few years, though it¥s going to stop well short of European Union membership.

Q: What if enlargement goes better than expected? Would Croatia¥s prospects for EU accession be better?

RC: That¥s right. If I¥m overly pessimistic and if Bulgaria and Romania do get in under the wire in 2007 it would seem to me to be a misjudgment to deny Croatia that opportunity.

Q: Moving to the question of the former Yugoslavia, I would like to agree with you, but I don¥t. I spent last summer in Central Europe and I had the opportunity to meet lots of people from bits of pieces the former Yugoslavia. They would say "I¥m from Yugoslavia," and all of them would say that Yugoslavia should be one. So, it might be something that people are going back to the idea of Yugoslavia. Not Croatia. Not Serbia. The problem is not solved. If you see the latest election results, the Serbs are going back to the old parties. Kostunica is back as prime minister of Serbia. When he was asked about the possibility of Kosovo becoming a part of Albania or an independent state, he would say, "Never. Kosovo is Serbia, and it¥s the holiest part of Serbia." So instead of thinking that the former Yugoslavia is on its way out, I think that the former Yugoslavia might be on its way in. Not next year, not in the next few years, but slowly but surely.

RC: I hope not. I think that certainly as far as Slovenia is concerned, that it¥s over. They¥re very happy doing what they¥re doing. Croatia: the prospect of some sort of closer European ties would help a great deal in Croatia¥s orientation. Serbia: I would say that particularly if there¥s some sort of backward movement to be feared there, this is an exceptionally urgent time to break up the elements of the country. Give Kosovo independence. Constitute Montenegro¥s independence formally. Force Serbia to confront its own problems. I don¥t know whether the Europeans have the boldness to adopt that sort of policy. They¥ve fought it off so far. Their general view has been, "Let¥s try and put everything off in the hope that things will improve generally, and then we¥ll confront the entire situation in a few years time." I think it would be a very good time for America particularly to bear down more heavily on the Europeans and persuade them that this is a good time to make Serbia face its own problems, and to convince them that Kosovo is never going to be a stable part of Serbia, that it¥s not the end of the world to have two countries where you used to have one, so long as they¥re both functioning as two countries better than they were as one.

Q: If the European economies in the western European countries begin to improve, would the prospects for other countries hoping to enter the EU improve?

RC: I fear that it¥s not going to change in the next year or two, if we just look at the continuing economic problems in Germany and consider what a large portion of the European economy that represents. Therefore, I think that the defensive mood that the Germans are now in is going to color, overshadow the hopes of enlargement and the construction of the European Union budget for the next 5 years, which in turn is going to do a lot to shape European Union policy-making. I fear that the bad news is pretty much locked in for the next 5 years or so. If one then were to imagine that Germany has reached a point where it has no choice but to haul itself back up, and that this does lead to some sort of economic recovery, then yes, you could imagine things looking a lot better towards the end of the decade. But I think that one would have to posit some sort of recovery in the economy and in the political realm. I heard a striking figure in January that Germany is now below the average level of prosperity for the European Union. That¥s striking.

Q: Part of this is the strain of absorbing the former East Germany.

RC: They have brought the average down significantly, and I fear that they have also contributed a lot of inflexibilities to the labor market and to the political attitude towards recovery. Take German reunification as being a European enlargement in miniature. It was absolutely the right thing to do. On a long-term perspective it was an essential thing to do. But nonetheless, on the short and medium term, it¥s bad. I think the costs have greatly exceeded even the most pessimistic expectations of the day.

Q: Addressing the previous comments about the Balkans, if we allow self-determination in the Balkans, then who has the right to self-determination and who doesn¥t? What about Basques in Spain? What about the Corsicans and France? There are numerous examples of the Turkish side. Where do you draw the line?

RC: I doubt that anyone could use a formula or a set of rules which would generate an answer for any situation. My impression is that, at the moment, Spain is not a failed state frustrated by problems it has in accommodating the Basque country, nor is France overwhelmingly paralyzed by the problems of accommodating the Corsicans. On the other hand, you can make a case that the interaction between Kosovo and Serbia is paralyzing benign evolution in both of those places. Generally speaking I would take it on a case by case basis. My feeling is that it¥s an experiment worth taking.

Q: I wonder to what degree these countries¥ internal affairs will affect enlargement. At least in Germany, France, and Italy, the pension systems are extensive. How will these structures be affected by enlargement?

RC: There is no question that the economic models and the economic levels being imported into the European Union now from Central and Eastern Europe pose a direct challenge and a direct threat to the high tax, high cost, high public spending model of Western Europe. Also, the big problems of the Western European countries have not so much to do with wage levels as with unemployment and workforce participation. There¥s no basic question that someone can live reasonably well on 1600 or 2000 dollars a month. It¥s not great but it¥s not that bad. On the other hand, if you haven¥t got a job and can¥t get a job because of the dead weight of regulation which is in place there in order to protect the high level of welfare, then that¥s a much more serious problem, and that¥s the threat which Central Europe poses: the wide availability of cheap labor which is willing to do any job. At the moment, they¥re trying to shut people out, which is merely going to postpone things. I hope that it¥s going to deal a catastrophic blow to the current economic models of a lot of western European countries and force them to massively cut taxes and welfare spending to something more like you enjoy in the US, which is growing very quickly and employs lot of people. It¥s a very good example.

Allow me to add that I think that what has happened in Central Europe brings tears to your eyes. It¥s fantastic to see the progress that¥s been achieved there over the past ten or twelve years. To me, it¥s been a particular contrast because I spent several years before living in Central Europe in Russia, where the changes have been by no means so obvious or so great, nor have they been so uniformly benign. To come to another part of the world and to see people working hard and getting awarded for it, not only economically, but also in the quality of life and in the quality of political life, is great. The European Union has played very a great part in that it¥s offered rules which have worked, it¥s offered motivations which have worked, and it¥s offered institutions which have worked. There are countries there which have per capita incomes of 3 or 4 thousand dollars, 5 thousand dollars, which are behaving politically and socially like countries with per capita incomes of 10 or 12 or 15 thousand dollars in terms of quality of life, sophistication, education, and democracy. Some of that is because they¥re able to draw on political and human capital accumulated before communism, but a lot of it is because they¥ve had, in a sense, a free ride on the institution and the wisdom of the European Union. It¥s as if the accession process has been worth the equivalent of three or four thousand dollars per head to everybody in those countries in terms of their political life, their social life, their intellectual life. That¥s great. And so that¥s why we still have to regard enlargement as a validation of the European Union so far, something that has only been possible because of the European Union, and worth doing even if it brings the European Union to its knees. It¥s a sort of noble Japanese suicide. They did the right thing.

Q: Strong nationalist drives exist within a lot of these countries. Should the European Union fall apart or decide that enlargement is too much, how does Ukraine deal with the fact that they really don¥t like the Russians, and that they¥ve experienced a long hard history with Russian domination? Where does US involvement fall? Are we going to have stronger ties in these areas?

RC: I hope that ties between the countries of Central Europe, particularly the Baltics and America, remain strong. The situation in the Baltics is yet to be decided. There are large Russian speaking minorities in Latvia and in Estonia, where 35-40% of the population have not taken national citizenship. There will be education reforms moving forward in those countries in three years, reforms which are liable to produce very strong and possibly violent social tensions. Russia in the long term believes itself to be the natural power in the region including those countries. I would feel a lot more relaxed about Latvia and Estonia on a twenty, thirty, fifty year view--once these education and language reforms are complete. It will certainly require a lot of diplomacy, a lot of reassurance from the European Union and also from America to steady the hand of these governments and to persuade Russia not to exploit the situation excessively while these last changes are working their way through.

In the case of Ukraine, I would question the proposition that the Ukrainians are all that shocked by the idea of a life fairly closely integrated with Russia. There is possibly even a large majority of Ukrainians who are competent Russian speakers as opposed to only Russian speakers, and in the case of Belarus you can really push it a bit further and question the degree to which a sense of nationhood can possibly have taken much of a grip there in the time that it¥s had much effective independence. At this particular stage, I think that there are attractions to going in with a Russian economic area which may even be stronger than going in the with European economic area, and there¥s a lot of comfort in terms of language and culture history. They aren¥t going to suit everybody there, and they may make some people in Belarus and Ukraine quite angry. Nonetheless, I think there are large majorities in both countries that would be fairly comfortable with it.

With regards to America¥s view of all this, it depends to some extent on what view you thought America was going to take of Russia. I found it quite disturbing when relations between Bush and Putin were at their warmest a couple of years ago, and Bush was talking about Putin¥s soul. I imagined that you would have an America over here and a Russia over there which saw a sort of exclusive and integrated Europe taking shape, resistant to free trade, with blocks on either side which were closing its borders to Russia and which was going to be a coherent political actor in ways that might challenge both America and Russia and which had a somewhat different view of the world, a view which had more to do with consensus and international law. America and Russia, on the other hand, are in some ways quite similar in their insistence on sovereignty and their recourse to force in international affairs. My nightmare at that point was some sort of tacit American-Russian partnership in beating up on Europe. Mainly because Russia has clarified its intention not to become the sort of country with which America would ever be happy, that scenario kind of evaporates. There are now increasing or returning tensions between Russia and America. I see time winding back towards a Western Europe that is turning in on itself and would rather have freedom of action from America and a fairly amiable relationship with Russia at a distance. I see a Central Europe which is afraid and mistrustful of Russia and sees both America and Europe as its allies in that, but America as its ally of last resort. When you overlay that on the institutions you have at the moment, the European Union and NATO, then you see a fracture down the middle of Europe again, between Central Europe and Western Europe. It is not as deep or as bad or as exclusive a fracture as it was ten or thirteen years ago, but one which is still thereûone which is still real.

Q: To shift focus again to the Balkans, they are the one shining example of successful transition among the former Soviet Union countries. They have really taken the initiative and expressed themselves. To the extent that there weren¥t many actors who were willing to back the Balts over the years, it was really a mixed record in Western Europe, how do you see Western Europe responding bilaterally to Baltic animosity towards Russia?

RC: Being stationed in Riga, Latvia, I have a bias towards seeing Russia through Baltic eyes. I agree with you that the Baltics are in many ways models of recovery and reconstruction, politically as well as economically, from communism. We should pay them credit for having chosen a route which defied the good advice that they were getting from the west, which was to initially create a nice society from the proposition that you had large Russian speaking communities, and then arriving at some sort of federated model, which gave primacy to the separable interests of both communities. Instead they said "No, we¥re going to have our country back, and then we¥re going to make it a decent place for everyone to live." By and large, I think that they have proved that that can be done. They¥ve not quite gotten there yet, but their success has been very impressive. My belief is that the Baltic governments, particularly of Latvia and Estonia, retain all of the fear and distrust and dislike that they had of Russia ten or thirteen years ago. It¥s going to take generations to change that, and they have been suppressing those views for the last ten years because they quite understand that nobody wants to bring a troublemaker into Western Europe. They understand the European point of view, so a game is being played out which ought to involve some sort of civilized reconciliation with Russia and a broader community over time. If the Baltic countries were saying, "No, this will never work. The Russians are not like us. You let them in and they¥ll ruin everything." Then they would be seen as troublemakers, and they would suffer also. We¥re coming to the end of the time when the Baltics risk being shut out for saying things like that. They¥re going to get into the councils, and then they¥re going to say more things like that out loud.

I think that they conducted themselves very intelligently during this process, recognizing that their self-interest lay in affecting a greater moderation than they in fact possess. In terms of the future, it¥s obviously going to lead to tensions and disagreements over Russia policy within the European Union. The Balts will be sitting on the edge of Russia wondering when it¥s going to invade them next and pressuring the European Union to pressure Russia in areas not just of economic relations, which come naturally to the European Union, but in areas of political relations and in areas of human rights. The Balts will say, " We must have a better say for Russia." The Western Europeans will say, "It¥s more trouble than it¥s worth. It¥s another country. Let them get on with it. Concentrate on trade and investment. That¥s going to be just one more factorûnot a decisive one, but a big oneûin creating this alienation between the old Europe and the new Europe. It will correlate fairly closely with visceral pro and visceral anti-Americanism.

Q: How do you see the economies in the Baltics faring over the next couple of years, and what do you see NATO membership meaning to these countries?

RC: Estonia¥s growing by 5 or 6% a year, which is not quite fast enough. It should be 7 or 8, but that¥s still 2 or 3 points faster than Hungary or Poland. That¥s the way to go. As far as NATO is concerned, it is a way of cloaking their relations with the United States. To that extent, it¥s very important to behave well. It¥s important to be good members of NATO and to use NATO in increasing the stock of good will on the American side. In the end, if something does go wrong, no one really expects the Belgians to come and help, but the Americans. So to that extent NATO is an instrument, rather than an end in itself.

Q: You¥ve mentioned the Baltics, and you say Latvia and Estonia, but you haven¥t mentioned Lithuania. You were talking about not letting in troublemakers. The economic miracle of Lithuania was the exports of aluminum, a commodity it doesn¥t produce, and the president is about to be impeached, so I just wonder why you haven¥t said a word about Lithuania.

RC: In the case of aluminum, I would say "Isn¥t free trade a great thing?" The main reason I single out Latvia and Estonia is the nationalities question. They both have had large Russian-speaking minorities installed there since Soviet times, and Lithuania doesn¥t, so it¥s not susceptible to the same sort of manipulations from Russia. Consequently, the defensiveness of Russia is not so great. The basis of an easier relationship is there. Again, you can speculate or debate whether Russia has exploited that easier relationship in order to get much more deeply inside the Lithuanian political establishment than they would ever have been able to get in Estonia or Latvia and to surround the president, which is what has taken place. I just feel very sorry for the Lithuanians. They have done as much as anybody else to make it possible for these countries to get into NATO. Now, NATO enlargement is going to be undertaken as a meeting of foreign ministers in Brussels in April so as to engineer a ceremony on a level which need not involve a Lithuanian presence. It¥s humiliating and it¥s sad. I think it¥s containable because, fortunately, America is taking a fairly strong line, basically telling Lithuania that if they want to be taken seriously in NATO and in world affairs that they have to get rid of their president. If it were left to domestic politics in Lithuania I think that Paksas would probably survive. 20% of the people would vote for him again tomorrow, 40-45% of the people think that he shouldn¥t resign, he¥s got one of the most popular political parties in the country, and general elections are coming up at the end of this year. Even if the politicians do force him out, they will do so at enormous cost to the confidence between those in government and to the cohesion of society. I think they will do it because they will have to do it for international reasons. It will be over by April, but it¥s a horrible and terrible thing.

Q: How will it affect the domestic outcome?

RC: It will probably result in a more populist government being elected at the end of this year because there will be a backlash of sympathy in favor of Paksas that will transfer to his political party. The sense of Paksas being treated unfairly and the government having gone wrong has caused a rise in support for the populist party of the left and labor party. You now have a scenario whereby you could imagine a coalition government bringing together Paksas¥ populist party of the right, and a labor populist party of the left, the former government, which wouldn¥t be totally reasonable , but which would be one of the least experienced and least liked governments in Europe for the next 5 years.

Q: I¥d like to go back again to the question of the fragmentation of the European Union. Would it, in every sense, be a bad thing? What elements of it would be the most tragic to lose, and which elements could we live without?

RC: My ideal European Union would be one which stopped more or less with what¥s working now. Schengen is wonderful. I think the European Union was worth doing just for that. You can cross among 13, 14, soon 25 countries without showing you passport. The single market is superb. A wonderful thing. The single currency is probably a wonderful thing. It certainly makes travel a lot easier. The extent to which I¥m pessimistic about fragmentation of the European Union is because I fear that the fragmentation of the European Union would pull apart those things. If we could imagine a termination--a stopping of the European Union that nonetheless left these things in place across the enlarged area of the new European Union, I would be very happy with that. If we did have a fragmentation, what would be so bad about that? Perhaps nothing, if everybody then went off and did sensible, useful things within their different bits of it. But why would it fragment? It would fragment because the rich, fat, lazy countries of Western Europe didn¥t want to be inconvenienced by the low-cost, high-growth, energetic countries of central Europe. If we have a fragmentation of the European Union which essentially lets France, Germany get on with pursuing their extremely attractive but hideously expensive and unsustainable economic and social models for a few more years and which cuts off the Central European countries from the trade and investment, which would help it to get richer faster, then both sides of the divide would lose. So that¥s why I think it would be a bad thing.

This transcript was prepared by Wendy Eberhardt, project on the New Post-Transition Russian Identity research associate.

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