BGK report: Rebuilding and bringing Ukraine to the EU to become a historic opportunity for Central Europe
14 lutego 2023
The experience of transition, along with regional initiatives (NATO, EU, the Visegrad Group, the Three Seas Initiative) helped the Central European countries to better cope with recent global and regional challenges: COVID-19, refugee crisis and the war in Ukraine.
Central European transition experience can play a significant role in fast recovery of Ukraine and in bringing the country back to the European community.
Central European countries can benefit economically by securing stability on its eastern and south-eastern flank, and the ongoing developments and geopolitical shifts in Europe will mark the end of the processes that began in 1989.
Polish development bank (BGK) presented the report ‘Varieties of Transition and Development Paths in Central and Eastern Europe. Message for Post-War Ukraine’. According to it, the Russian invasion of Ukraine and other recent multiple global crises can be perceived not only as a threat, but also as an opportunity for the whole Central and Eastern Europe. The Central European countries can play a significant role in bringing Ukraine back to Europe by sharing its transitional experience, and building a broad political coalition for further EU enlargement, including Ukraine, Moldova, and the Western Balkan countries.
‘The former socialist countries in Central Europe have been more successful in catching up with the West than for instance Ukraine and the Western Balkans. The successful transformation of Central Europe resulted from the geopolitical window of opportunity after 1989. However, not all post-communist countries were able to follow the path that led to full integration with the Western structures’, claims Mateusz Walewski, chief cconomist, BGK. ‘For instance in Ukraine and Moldova it was the proximity to Russian Federation that shaped the countries’ geopolitical choices and local political and economic dynamics. Paradoxically, the ongoing war in Ukraine has forced all European countries to take action vis-a-vis the Russian threat’, notes Mateusz Walewski.
Advocating for further EU and NATO enlargement in Eastern and Southeastern Europe and assistance for the reforms in these regions may bring more stability and prosperity to the neighboring countries. The successful NATO expansion in Central Europe radically changed European power relations and redefined the geopolitical settings by strengthening NATO's global position. Subsequently, thanks to the flow of EU funds, Central European countries managed to reduce the essential development gap in infrastructure and get more integrated with the advanced European transportation networks. Other investments contributed to the progress in digitalisation, agricultural modernization, environmental protection, and a knowledge-based economy. Along with strengthening ties with Western integration structures, the CEE countries were developing their regional cooperation platforms. Two main initiatives, i.e. the Visegrad Group (V4) and the Three Seas Initiative (3SI), represent the region’s aspirations and provide the framework for regional-identity building processes.
The past EU integration improved the situation in Central Europe but there is still much to be done, note the authors of the report. Despite the significant investments in infrastructure after 2004, the average annual expenditures on infrastructure per capita in the Central European countries are still lower than in Western Europe. The development gap is also reflected in the existing income differences. None of the CEE countries has managed to reach the EU average annual salary. According to Eurostat data, in 2021 the highest average annual full-time adjusted gross salary per employee among new EU member states was in Lithuania (21 741 €), and it was about twice as low as in Germany (44 404 €). Even in the most advanced countries of the region (Czech Republic, Slovenia, Poland, Hungary, and Slovakia), the model of economic growth has been based on production efficiency and labor-cost competitiveness. The report’s authors see the way to overcome those challenges in further EU enlargement.
‘Central Europe has already learned how to turn difficulties into opportunities. Recent complex crises such as COVID-19 pandemic, the flow of refugees or the Russian invasion of Ukraine tested the Central European countries' resilience systems. The experience of transition, along with all regional initiatives aimed to build up more robust connectivity, helped them to better cope with those challenges’, says Bogdan Zawadewicz, foreign affairs expert, BGK. ‘The potential future integration would have a tremendous positive impact on Central and Eastern Europe in economic terms. This would give the companies in the region an access to new markets. Thus, it could help them to accumulate more capital and move the whole regional economies closer to the European core. The ongoing developments and geopolitical shifts in Europe will mark the end of the processes that began in 1989’, concludes Bogdan Zawadewicz.
The entire region can benefit from economic integration. Ukraine and other neighboring countries can rely on transition experience of the EU member states. The Central European countries can benefit economically by securing stability on its eastern and south-eastern flank. It is a historic opportunity to build lasting prosperity in Europe and develop capabilities to cope with all global challenges.
The opening report marks the creation of a new analytical team within BGK's structure. New unit aims to cover international affairs, especially such topics as the political and socio-economic developments in EU eastern neighborhood and the connectivity and cooperation between the Three Seas Initiative countries.
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BGK wspiera zrównoważony rozwój społeczno-gospodarczy Polski. Jego działania wpływają na powstawanie miejsc pracy, budowę mieszkań, rozwój infrastruktury i poprawę jakości powietrza. Bank dba o przyszłe pokolenia - buduje kapitał społeczny, rozwija przedsiębiorczość i zapewnia odpowiedzialne finansowanie.
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