Follow Britain?

grant_charles_01_állóPoland’s and Hungary’s euro-skeptics and nationalists are rather similar to Putyin than to the British conservatives. Charles Grant, one of Britain’s geopolitical and economic think tank, director of the Center for European Reform, and former editor of The Economist, admits in the interview that Cameron, Orbán and Kaczynski have something in common. However, Grant does not believe that a strong cooperation could be built by them. While the British conservatives are completely free-market oriented, would give more freedom to the banking sector and reduce the role of the government, Hungarian and Polish nationalists are rather protectionists and support the establishment of a centralized system. He explains that Russia and China are increasingly restraining civil rights and are strengthening their anti-Western sentiments.

Zentai Péter: Is Britain going to leave the European Union?

Charles Grant: I have been saying for the last two years that the chances of Britain leaving the EU are relatively high. Based on our research, the probability of the withdrawal before 2020 is about 50 percent. Mr. Cameron has promised a referendum in 2017, if he is still prime minister then. Given the state of the public opinion, the Labor will feel that they have to make the same promise, too. Thus, independent of who will win the next election, there is likely to be a referendum in the next parliament.Unless the Eurozone starts to revive in the following years, unemployment comes down and the financial system stabilizes in most of the member states, the British people will vote for leaving the European Union.How the EU and the Eurozone are doing play a crucial role in: 1) whether the referendum will be officially declared or not, 2) how people will vote, if it is declared. The Portugal and the Italian government might collapse anytime and social tensions in the Southern European countries do not seem to ease…

Does Britain’s way of thinking impact the Hungarian or Polish nationalism? If the United Kingdom leaves the EU, will Hungarians, Polish and some others follow the British ‘model’?

Undoubtedly, there is something common between Fidesz, Law and Justice – lead by Kaczynski – and the Conservative Party. They all share a common dislike of the EU and an emphasis on national sovereignty. However, one big difference between them is that while the British Conservative Party is very free-market orientated and would constrain the government mainly in the financial sector; the Hungarian and Polish nationalists are more protectionists and prefer centralization.

Nevertheless, do you think that the after the exit of the UK, other countries would do the same thing? Euro-skeptic nationalists might gain strength and cooperate with each other…

It is not very likely to happen as euro-skepticism in itself is not enough for an international collaboration. Nationalists care about their own nation state, so they find it hard to work together. Sooner or later, there would be conflicts of interest, as they couldn’t be able to enforce their demands without harming others’ interest. Most likely, there will be a growth in the extremist votes in the European Parliament after the elections next year. But I don’t count Fidesz or Law and Justice as extremes.

According to many experts and politicians, the economic and financial problems of the union can be only solved by the formation a European political federation. Is there any chance that this will happen?

This is a “cloud cuckoo land”, a fantasy. The chances for such a European federation are exactly zero. Nations are not willing to give up their sovereignty anywhere around the world. Some of my best friends are federalists – very noble, well-meaning, and nice people – who believe that the world would be a better place, if we had a world federation like the European federation. It is simply not realizable. We have to accept that the majority of the people reject any thoughts about federative visions.

Then the European Union will collapse in the long term… If we are not willing to give up sovereignty, the fundamental issues of the Union will not be settled.

I only question the potential of a political federation. The integration of the European financial system is under way. The primary goal is the establishment of a banking union and a bank resolution regime that does require some sharing of risk between rich and poor countries. The process is going slowly but this is what the market believes in. This belief was confirmed when Germany saved Greece last summer and the ECB intervened with unlimited amount of money where it was needed.
All these developments won’t lead to such a political union, where the European Commission would become the government to EU and in the end, the European Council would run the member states.

Maybe a more intense integration with North America, the expansion of the transatlantic cooperation would boost the economy the EU, even if it is much more beneficial for the United States and larger companies than it is for the smaller European ones.

Everybody who has studied elementary economics knows that free trade benefits all participants. It is not a zero-sum game; both of the parties gain.

However, the nationalist sentiments have strengthened in the Eastern European countries because the common belief is that only the wealthy foreign multinational companies have benefited, when the markets were opened in the early 1990s.

Those who really think that are economic illiterates. Actually, Eastern European countries have benefited more than Western countries in the past twenty years. Poorer countries gain more because they can grow extremely rapidly and can catch up quite quickly. It is impossible for richer countries to grow that fast.
A strong cooperation between Europe and North America is possible and Europe will have enormous benefits from it. This is, however, only an economic, mainly trading integration. As long as Europeans are divided on foreign policy, they cannot work with North America or with other dominant political powers such as Russia and China. On issues, where the EU is united (the trading possibilities) both participant will benefit. I hope the Transatlantic Trade Investment Partnership will be an example of US-EU collaboration.

What about Russia and China? Will they suppose that the European-American collaboration is against them?

Next week, I am going to Russia to meet Mr. Putyin. I spend a lot of my time there and I know that leaders are very paranoid towards the West, particularly the United States. Although I am very much in favor of the EU-Russia cooperation, it is quite difficult for the EU to have a close cooperation with Russia. Russia is changing: they are starting to look at Western countries as enemies. Russian leaders are now emphasizing that their values are different from Western values, that they are more nationalist, less liberal. They believe that the Western Europe and United States has weakened by too much homosexuality, too much multiculturalism, and too much irreligion. They represent themselves as the true descendants of Judeo-Christian civilization and have started to build up a dictatorship. So Russia is making the cooperation harder because it is not democratic anymore. A lot of Russian leaders really believe that the US is trying to undermine and destroy their regime. Moreover, they think they are self-efficient and doing fine because of their natural resources, especially oil. But outside natural resources, we are not seeing big European investments.

In our region, nationalists argue similarly to Putyin and the Russian leaders against the West. The worse things are going in the EU, the more people tend to be attracted by such thoughts.

Yes, I know that some of the Eastern European political leaders share some of Putyin’s world view. But let’s not forget: Hungary and Slovakia and all these countries are essentially democracies and parts of the European Union. Although – you know better than I do – there are imperfections, there is at least some degree of press freedom and when you have an election, you can change the government. You cannot be sure about the election’s result before people vote. Russia is not a democracy; it is an autocracy is controlled by a leadership. Thus, it is hard for any European democratic leader to get too close to Russia and establish a long-term strategic relationship with it.
As for China, I would be also very much in favor of the EU cooperation with it. However, there are two difficulties. Firstly, just as with the United States, I find it hard to build a constructive partnership, if we are divided within Europe. Northern Europe cares about human rights that China violates. Southern and Eastern Europe do not really care. Separate meetings are held for the Central European countries and the main Western Europeans countries. But in fact, we all want China to open up its markets like the way we do. The other difficulty is China itself or its political system. The situation is getting worse as the new leadership in China seems to be less committed to any liberalization or political modernization as previous leadership.