HWC Europe (1991-2008)

Integration in Western Europe and the rise of the European Union

The Treaty of Maastricht (1992)

-officially combined the various “communities” into the EU and expanded to include justice, defence, and foreign policy

-it set up open borders and a single-currency system, €, to be instituted ten years later

-prices, goods, services are the same in every member state

Countries in the EU:

-Germany, Spain

-France, Portugal

-Belgium, Denmark

-Netherlands, Greece

-Luxembourg, Italy

-Ireland, U.K.

1995 Expansion

-E.U. expanded 15 countries with addition of Sweden, Finland, and Austria (they applied for membership)

-all had avoided political/economic alliances during Cold War

-went from neutral—>to taking a side

Finland 1995:

-share longest border with Russia (830 mi), everyone has to be battle trained

-fastest mobilization in the world; SU never invaded Finland

Sweden 1995:

-always history of neutrality; country based on security, peace, and cooperation

Austria 1995:

-has to choose a side; buffer country between NATO and Warsaw

-prospers from tourism

Treaty of Nice - 2001

-set up federal-style governmental system for EU; majority wins (able to veto)

-included executive, bicameral legislature, and court system

Treaty of Nice - 2001 (agreeing to a treaty)

-member states gave up measure of sovereignty on matter of trade, many economic regulations, human rights, etc.

-EU decisions take precedence over national ones (superior)

Treaty of Nice - 2001 (elections)

-elected every 5 years based on population size

-small countries higher % of population than bigger countries

January 1, 2002

-The Euro (€) replaced individual nations’ currencies in 12 member states (GB, Denmark, Sweden abstained)

-A European Central Bank manages the currency, but individual states can largely borrow money and manages their economic affairs on their own

January 1, 2002 (borders)

-EU opened all internal borders to goods and people

-anyone could travel freely from one member state to another

The “Center Consensus”

-right is gone, left is weak after fall of SU

-everyone access to benefits like safety nets, well-fare programs, etc.

-high population size helps this

The “Center Consensus” (stuff to give up)

-leaves almost every country in the EU with two strong, moderate political parties - center right and center left (not extremes though)

-politics becomes tame, with generally broad consensus on how to run things and broad willingness to let EU grow in power and influence

Germany

-reunited in 1990 with cost of $2.5T over 30 yrs spend trying to bring East to modern standards

-West had to modernize East G if they wanted United Nation to function (the $2.5T)

-still lags behind West Germany by every measure

-East G suffers from Communistic control

-centralized economies not allowed economy to flourish

-issue: East G never really gets over that gap

Czech Republic and Slovakia

-experienced an amicable disease and both emerged as fully liberal countries

-U.S. spend around $20B over years to help

-Czech gov’t falls b/c no Russian support so widespread protest

Velvet Revolution

-Peaceful, but people demand independence

-SU realized they can’t control Czech b/c lack of economic ability after all expenditures, so Czech population and Slovakia people disagreement

-who runs gov’t? which ethnic groups superiority?

-can’t decide so split happens 1993 - Czech Republic and Slovakia

Liberalized countries

-Estonia, Hungary

-Latvia, Romania

-Lithuania, Bulgaria

-Poland

-gov’t spent $20B to help them democratize over the years

Moldova

-independence in 1991 and road to liberal democracy

-issues: poverty, corruption, and immigration

-lose # of ppl and workers so economy draining

-many turn to Russia for political stability

-EU is also ppl which is why brain drain

Belarus

really tied with communism so hard to get independence

-receive economic stability b/c R promised B that they can maintain control of oil and pipeline networks if they have friendship

Ukraine, Moldova, Belarus

-struggled with liberalization b/c governance and corruption issues and LOTS of pressure from Russia

Ukraine

-independence in 1991, issue is annexation of Crimea by Russia

-ppl living in East and Central portion in U that speaks Ukrainian; South speaks Russian

-pro-Russian President in U joins Russia federation: EEU and citizens protest - then he was forced to leave the country

-U geographical advantageous resources that Russia wants

Ukraine nuclear weapons

-decide to not give R nuclear weapons in U b/c defense mechanism in case Russia wants to expand

-we tell U to return weapons and we defend them in return

Yugoslavia

-melted down into ethnic and religious violence as a series of conflicts throughout 1990s left over 130k dead

-NATO intervened more than once and Russia was not amused

-removed from Warsaw b/c shot down NATO planes and Russia was nervous

“Former Yugoslavia”

-made up of: Slovenia, Croatia, Serbia, Montenegro, Bosnia & Herzegovina, North Macedonia, Kosovo

NATO Expansion

-1999(CR, Po, Hu)

-2004(Es, La, Li, Ro, Bu, Slovakia, Slovenia)

-2009(Croatia & Albania)

-2017(Montenegro)

-2020(North Macedonia)

-Russia was NOT amused

-NATO open door policy: allows EE countries to join as long as they follow principles of treaty and contribute to security

EU Expansion

-2004: Malta, Es, La, Li, Po, CR, Slovakia and Slovenia

-2007: Hungary, Romania and Bulgaria

-2013: Croatia

-marked final step in fast liberalization of much of Eastern Europe but also led to some issues

-NATO doesn’t have army but member states contribute to armed defence

-all members have to agree for a change to happen

Russia’s Thoughts on Expansion:

-probably not amused

Labor Issues

-GDP per capita in the post-2004 members is almost $20K less than original fifteen

-free flow of goods meant tariff-free outsourcing to East

-free flow of ppl meant lots of wage/jobs/welfare pressures in the West b/c ppl moved East

Governance Issues

-some Western European countries (France) felt like their power in EU was declining b/c of the new countries

-Eastern Europeans see world differently from Western counterparts

-they tend to be more conservative on social and religious issues than the West

-countries on road to democracy backslid a little bit

Foreign Policy Issues

-Eastern Europeans enthusiastic about joining U.S. on some of its military adventures

-brought into questions EU ideas on defense

Economic growth

-increased by EU’s size - everyone benefited from being part of unified trade block of over 500M people

-countries using the Euro enjoyed the strength of a single currency

The Euro

(which emerged as a really strong and respected currency allowed countries to) :

-borrow a bunch of money at low interest rates to fund gov’t spending

-pull tons of money into their banks, which financed a business and construction boom across the continent

-promise of adopting the Euro kept Eastern European countries working towards greater liberalism

-they had to run their economies well in order to be invited to adopt it

Democracy

-generally free and fair elections were held throughout the 1990s

Boris Yeltsin

emerged as Pres. of Russia after fall of SU

-embraced liberalism

-prone to acts of violence against his opponents, often too ill or drunk to govern and gave into temptations of corruption, using his power to enrich himself and his family

-criticism of Yeltsin (saw him as an embarrassment)

The Communist Party

-refuses to go away, winning legislative elections and using its power to undermine economic reforms

-attempted coups against Yeltsin, leading to fighting in Moscow and near civil war in 1993

“Shock Therapy”

-when Yeltsin came to power, he announced an immediate end to state ownership of the economy, gov’t subsidies, and guaranteed employment

-Russia was not in its place to do this (always behind)

-decision was meant to stimulate the economy and make a firm end of Soviet policies

“Shock Therapy” privatization issues

-rapid privatization caused problems like:

-only Bolivia and Poland get that money

Unemployment

-privatization = profits

-other companies were privatized and forced to compete, or the first thing they did was lay off 25-50% of staff

-businesses inefficient so they couldn’t compete, so they shut down

-unemployment skyrocketed - what had been guaranteed is now lifetime jobs disappearing

Hyper-Inflation

-subsidized prices = most stuff could be purchased for well-under its market price

-Yeltsin dumped the subsidies, so runaway inflation (got worse when gov’t printed money to pay its spiraling debts)

-at the same time, state pension payments were not increased to keep up, leading to elderly suffering

-led to questions like democracy would have been better

Oligarchs

-where they try to solve their problems

-typically top members of Communist Party

-gov’t did not make process of privatization open or fair

-handful of well-connected individuals buy up former state assets at rock-bottom prices

-”oligarchs” got wealthy at the same time most Russians were seeing their living standards drop

Natural Resource Prices

-oil and other resources prices hit historic lows in 1990s (for many reasons)

-60-70% of Russian exports are resources

-many funds were simply not there

Corruption

-gov’t employees and soldiers rarely got paid in 1990s

-bribe-taking and/or a thriving black market in weapons and other contraband which made its way around the world

-U.S. stepped in to secure Russia’s nuclear arsenal

-force politicians to pass laws

Debts

-Russian gov’t borrows money and relied on Western aid

-1997: a debt crisis in East Asia spread to Russia so money dried up

-no one willing to lend anymore so country bankrupt in 1998

Vodka

-declining economy and chaotic political system contributed made problems

-alcohol and drug abuse, collapse of health care system, violence

-life expectancy dropped by 7-8 yrs in 1990s and approx. 7M “extra” ppl left Russian pop.

-democratic system was not what they had hoped

NATO and EU Expansion

-Russians angered when U.S. and Europeans expanded their sphere of influence at Russia’s expense

-both extended membership right up to its doorstep

-R gov’t too dependent on American aid

Former Yugoslavia (Balkans)

-1993, Yugoslavia melted down into factions divided by ethnic and religious lines

-Serbs started killing ppl

-NATO bombed them and occupied large lands of the Former Yugoslavia

-Russia tries to intervene diplomatically on behalf of Serbs, but was ignored = humiliation

Chechnya

-tries to declare independence alongside everyone else when SU fell

-Muslim province in Caucasus Mts.

-war broke out in 1994

-Russia lost was (14K Russian soldiers died) - forced to give the province wide autonomy

Final Conclusion

-Russia worse off by 1998 than it had been when SU fellin 1991

-mid 1990s polling showed 70% R pop. “had regrets” about SU collapse and 30% calling for re-establishment

-many blamed West for humiliating R and expansion of NATO

-many blamed Yeltsin, who forced to resign in December 31, 1999

-replaced by Prime Minister - Putin