Background:

For the foreseeable future, the world will cross turbulent times, marked by economic uncertainty and security threats. The post-war equilibrium has been broken, and a broader rearrangement has to emerge, that will, ideally, build a stronger Europe with strong transatlantic links. It is not only the trans-Atlantic space that is transforming, but indeed the entire world is in need, and search, of a new realignment. For Europe to maintain and even grow its strength, based on commonly shared values and principles, a conversation about its new architecture needs to start now. A conversation that this time around, will include countries of Central and Eastern Europe as serious players and full stakeholders.

The decisive factor in the new balance of power is the the not-so-democratic world, or the revisionist one. Many developments will depend, as they already do, on the BRIC countries and other emerging economies. The US and Europe are still in the position to win the economic argument, especially if they realign with Japan and South Korea. The task becomes, consequently, to co-design the new world order, convening with other key players of the world, and attempt to win some of those who do not adhere to the trans-Atlantic narrative. That is the definition of victory.

Historically, there were always very tense relationships with Russia. We have come to understand that Russia will never give up on Ukraine, which it regards as a near existential issue. Ukraine is bound to have the strongest army in Europe; even with smart negotiations, nothing will be good enough for Russia, short of its stated goals. A very long time of historical tensions is to be anticipated, no matter how the conflict ends. Victory is fluid, and it depends on Europe and the US to give Ukraine and Moldova a place that they be willing to defend. It is not about who is going to win the war, but about the balance of power. There are two contradictory tendencies in rebalancing the relation of power:  national reassuring, embraced by the US and the EU, and the-winner-takes-it-all, that Indo Pacific embarked on.

A new role for Central and Eastern Europe:

A new architecture of Europe is to be designed. As Chancellor Scholtz has said in Prague: “The centre of gravity in Europe is moving eastward”, and the countries of Central and Eastern Europe have now an important role to play in co-designing the future of Europe.

Security:

Central European countries are playing an important role in supporting Ukraine in the current war, and in increasing European defence on its Eastern border. They will retain the role of security providers for the entire continent even, or maybe especially, after the war. They are taking this role seriously, renewing their military arsenal, hosting EU and US troops, and discussing an enhanced security along Eastern flank. The downsize, however, is that European defence industry cannot keep up with the demand, a conflict of this intensity has not been foreseen, and neither Europe nor the US are geared up for a long war.

There is a need for an in between a peace-time and wartime economy, and for policies to secure- proof economies. The energy crisis has been a wakeup call, and Europe realized that dependency on Russia was not only an economic, but also a security vulnerability.

The war in Ukraine has resulted in a shared perception of the threat Russia represents, but underneath the surface there are different nuances of this conclusion that are bound to surface. European cohesion has been key in supporting Ukraine and confronting Russia, and it is important to maintain it at the same level, if not higher, once the war – or its military active phase – ends. Central Europe is probably the most cohesive in its attitude towards Russia, and their attitudes and opinions have to be better integrated in EU’s foreign policies.  Relatedly, for Europe foreign policy will never be just about Russia and Ukraine, the Union has strategic interests globally. The divergence of interests, and competition for resources and attention, increases between regions, and CEE needs to learn to look at other threats as well. For Central Europe to become integral part of EU foreign policy making, it needs to build expertise in, and be vocal about these other regions.

The most significant action EU can take for its security is to enlarge. Should CEE want to play a role in this, it needs to address its own deficit in the rule of law and democracy.

Economy:

Looking at the future of Europe, security is not the central issue, but climate, digital transformation, and economic resilience are. These are issues where Central European countries are taking an increasingly important role.

One issue Central Europe is struggling with is demography. The countries are fighting brain drain and depopulation, and it will take at least a generation to address these, especially as these countries are generally opposed to immigration.

In the past 12 months, the EURO zone had the highest economic growth since 1974, overcoming China’s. The inflation has been absorbed by the market, and EU reached almost 0 energy dependency on Russia. Unemployment rate is at an all-time low. These make for a very strange economic context, with performance above expectations and predictions.

The relationship between EU and China has improved gradually after the COVID crisis. China cannot afford to give up the West and Europe, it makes up too much of its GDP to ignore. At the same time, there is an economic disconnect between the US and EU, deepened by the recent IRA.

CEE is more energy transient than the West because of the imperative to decouple from Russia, and limited access to other sources. Long-life learning and digital skills are among the lowest ranking in CEE, they have been slower in adapting their education systems to the new reality. In addition, economic development without confidence in the institutions erodes the attractiveness of a country even though it is an European member. Without structuring the rule of law in CEE, there will be an economic impact.

Bringing Ukraine closer to the EU is complicated in practice. Ukraine, with the energy and societal cohesion it gained in the war, has the potential to become a powerful disruptor, as it has the possibility to be reconstructed to the newest and highest standards. The country is currently considering re-building its cities, so there is an opportunity to leap about three or four phases, and to overcome the status quo in some parts of Europe.

Ukraine will also become more digital, as it had already started to digitalize ahead of the war. The postwar Ukrainian society will be a very modern one. For example, they are considering placing their public budget in blockchain, to avoid corruption. CEE can trigger economic development in Europe, but the reality of the digital transformation of their economies needs to be reflected in education, otherwise there will be opportunities missed. Overall, the need to educate the workforce is a challenge that CEE needs to recognize and address. For CEE to play the role it can play within the European architecture, the region needs to address the question of good governance, and countries need to take these issues seriously. In conversations about co-designing future of Europe, it is clear that the tools available at the European level right now are blunt, what is needed is fundamental changes at the treaty level. This could be more calibrated, more sophisticated. What happens at European level will impact what happens in countries of the CEE, and the other way around.