Rebuilding Eastern Europe: Economics and Politics: [Opening Remarks]Author(s): Gerard CollinsSource: Irish Studies in International Affairs, Vol. 3, No. 3 (1991), pp. 1-5Published by: Royal Irish AcademyStable URL: http://www.jstor.org/stable/30001778 .

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Rebuilding Eastern Europe: Economics and Politics

Opening Remarks*

Gerard Collins

Minister for Foreign Affairs

If you had any misgivings, Mr Chairman, when you were planning this, your 13th annual conference, that the number 13 might not be auspicious, let me quickly dispel them. I congratulate you and the members of the National Com- mittee for the Study of International Affairs on an excellent choice of subject: it is clearly one that is very much in the forefront of our minds at the present time, whether we approach the subject from the standpoint of practical decision-making or from the more theoretical one of academic research and analysis. Your con- ference is timely, and I am confident that your discussions will be of very con- siderable value not only to the participants but also, in time, to a much wider audience.

You will not be surprised when I say that I count myself amongst those who have an especial interest in the subject of your discussions today. I am speaking to you as one who has been, over the last two momentous years, in the engine room, as it were, of international developments affecting the future of Europe. Involved both in trying to anticipate new developments and in reacting to events on a day to day basis, it has been at times difficult to appreciate the full impli- cations and the far-reaching nature of the changes in Central and Eastern Europe that we have been witnessing. I do not think that it is any understatement to say that our traditional attitudes to Central and Eastern Europe, including basic con- cepts and even vocabulary, are now badly in need of revision, and this is an area in which we look to the academic world for some guidance.

These and other developments have totally changed the tenor of East-West relations. It is, in fact, no longer possible to try to approach relations in Europe from the old perspective. The countries of Central and Eastern Europe are no longer, as in the past, compelled to conduct their international relations largely in accordance with the wishes of the Soviet Union. They, and it, accept the same principles of international law as do the longer-established European democ-

*Opening address to the Thirteenth Annual Conference of the Irish National Committee for the Study of International Affairs, 7 December 1990.

Irish Studies in International Affairs, Vol. 3, No. 3 (1991)

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racies, and they conduct their relations on this basis while, of course, seeking to further their own legitimate interests.

As a result of these developments, all the states of Europe-with the exception of Albania-for the first time this century share common general premises on how their societies should be structured and how their international relations should be conducted. This consensus has been emerging over the last year or so and was formally adopted, at the highest political level, in the Charter of Paris for a New Europe, signed in Paris on 21 November 1990. In the Charter, the member states of the Conference on Security and Cooperation in Europe (CSCE) accepted democracy as their only system of government; they accepted that the protection and promotion of human rights are the first responsibility of govern- ment, that economic liberty, social justice and environmental responsibility are indispensable for prosperity, and that the free will of the individual forms the necessary basis for successful economic and social development.

After last year's upheavals, most of the countries of Central and Eastern Europe have set about consolidating their democracies on the basis of free elections, institutional and legal reforms and the protection of human rights. Poland, Hungary and Czechoslovakia lead the field in this regard, as has been recognised by Hungary's admission to the Council of Europe, and the prepar- ations being made for the admission of the other two states. In the remaining countries, including the Soviet Union, important progress has been made, but much still remains to be done.

Implicit in the title of today's conference, 'Rebuilding Eastern Europe', is the notion of construction, and construction suggests plans and designs. There has been much discussion of 'the new European architecture', reflecting a number of differing perceptions of possible new structures and arrangements for cooper- ation. However, what is becoming increasingly evident is the extent to which the future evolution of relations with the countries of Central and Eastern Europe is likely to be dictated by pressure of events on the ground. A pragmatic and flexible approach is required, enabling a rapid and effective response to be made to new circumstances as they arise.

It is hard to believe that little more than twelve months ago the Berlin Wall was still in place, and Europe was still divided on an East-West basis. Few could then have imagined that, in November 1990, West Berlin's emergency food reserves, held as a precaution against possible action by the Soviet Union, would be donated to the Soviet Union in the form of emergency food aid. The pace of developments is itself a cause for caution. We are all working under severe constraints--constraints both of time and resources. It is a paradox that the very act of opening up the countries of Central and Eastern Europe to the forces of political pluralism and the market economy has had the effect of accelerating the collapse of the centrally-planned economies, with all the major political, social and economic consequences that this has entailed, without, on the other hand, providing any immediate remedies to the mounting problems facing the emerging democracies of the region.

It is clear that, in the short term at least, market forces cannot on their own provide instant remedies to the problems of mass unemployment, food shortages and ethnic tensions, to name but a few. There is a real danger that the early euphoria may be giving way to new feelings of frustration and discontent. The ending of the era of confrontation in Europe has now led to one of the greatest

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challenges for the democracies of Western Europe since the start of the Cold War more than forty years ago. This is a challenge which involves us all, regardless of involvement in military alliances. For the twelve member states of the European Community it represents a particular challenge. Our political and economic integration is already greater than that of any other grouping in Europe and ensures that others look to us to provide leadership. The emerging democracies of Central and Eastern Europe make no secret of their desire to strengthen their links to us as a means of consolidating their political reforms and assisting them in undertaking essential economic restructuring. Our response to the developments in Central and Eastern Europe has therefore been, and must continue to be, a concerted one, so that the Community and its member states can exercise their collective weight in a manner that will ensure a stable and secure framework for the development of cooperation in Europe on a much broader basis than has been possible hitherto.

The undertaking is on an immense scale. This is true even if consideration of assistance to the Soviet Union is kept separate, as it has been up to now. Poland, Hungary, Czechoslovakia, Romania and Bulgaria have between them a combined population of close to 100 million.

The challenge cannot be viewed as static or isolated. It is interlinked with other questions. The most obvious of these of late has been the Gulf crisis and the doubling of the price of oil in six months just when Eastern Europe was coming to terms with paying for its energy imports in hard currency. The complete transformation of these economies, from centrally planned and largely state- owned to decentralised and privately owned, has been called for. But the con- comitants by way of a banking system, a financial sector and a stock-market are lacking. Price reform has to be introduced, trade has to be liberalised and con- vertibility of currency established. Above all, investment is needed to replace old, inefficient and often environment-damaging plant. But the countries concerned, with the exception of Romania because of the policies followed there, start on these tasks with high external indebtedness hanging over them. The Economic Commission for Europe reports that in the first nine months of this year their industrial output overall has fallen by 18 per cent and inflation is in double-digit annual rates. Unemployment, a hitherto unfamiliar phenomenon, is rising and there is great need for training and retraining, particularly in management and techniques appropriate to a market economy.

Secretary of State George Marshall's words at Harvard in June 1947: 'It is logical that the US should do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace', could just as well be applied to the European Community in the current situation. In a sense indeed the unfinished work of the Marshall Plan is now being addressed since Poland, Hungary and others were excluded from its benefits as the Iron Curtain descended across the continent.

The Community's response has been directed to both the political and the economic areas. As enunciated at the European Council in Dublin in April, the development of closer relations will be 'on the understanding that the basic conditions with regard to democratic principles and transition towards a market economy are fulfilled'. We have moved rapidly to develop our ties with the emerging democracies through the establishment of formal diplomatic relations and through the conclusion of trade and cooperation-so-called 'first gener-

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ation'-agreements. We have also moved to institute regular political dialogue with them.

Beyond this, the countries of Central and Eastern Europe and the Community look to create a more formal, structured framework for the development of their relations. Some of the emerging democracies have of course signalled their own aspiration to membership in the medium or longer term. The Special European Council in Dublin in April considered EC relations with Central and Eastern Europe in some depth and decided that association agreements should be con- cluded as soon as possible between the Community and the states of the area. Internal preparation is now well advanced for the beginning by the Commission of negotiations on such agreements with Poland, Hungary and Czechoslovakia. The agreements are envisaged as providing for political dialogue; phased progress towards free movement of goods, services and capital with more modest goals in relation to movement of persons; rapprochement of the partner country's legis- lation with that of the Community; and extensive economic, cultural and financial cooperation. An Association Council will meet at ministerial level. This network of association agreements, when completed, will clearly be a significant feature of a new European architecture that would include also the Community's links to EFTA in the shape of the European Economic Area now being negotiated and the EC's long-standing ties with the Mediterranean countries.

The European Community is playing a pivotal role in the vast international effort now under way to fill the economic needs of the Central and Eastern European countries. The European Commission is coordinating the 'Group of 24' programme of western economic assistance in support of political and economic reform in Central and Eastern Europe. Originally limited to Poland and Hungary, at that time in the vanguard of reform, it has since been extended to Czechoslovakia, Bulgaria and Yugoslavia. Aid to Romania, other than humani- tarian aid, remains suspended, as a signal of concern at the pace of reform there. Effective coordination is vital when resources on such a considerable scale are being pledged. On the basis of information on the requirements of the emerging democracies, the G24 countries have agreed priorities and have exchanged infor- mation on their national aid programmes. Coordination between actions of the G24 governments and of the multilateral economic and financing agencies is ensured through the participation in the G24 of the representatives of these agencies. Apart from the obvious short-term need for certain humanitarian aid, as has been delivered to Romania and to Poland, the agreed priority areas for G24 measures are the promotion of investment and the climate needed to encourage it; the development of agriculture and related industries; the tackling of the lament- able environmental legacy of the past 40 years; the provision of the training that is needed in a market economy context; and the energy sector as a whole.

The most recent tally of G24 commitments of aid comes to a grand total of approximately 12 billion ECU. Additional to that sum is the $10 billion capital being subscribed to the European Bank for Reconstruction and Development based in London under Jacques Attali's direction. The EC and its member states are contributing by far the greatest share of this huge international effort. The EC programme of assistance is fully integrated into the G24 framework and draws on various existing possibilities as well as innovating where appropriate.

I have gone in some detail into the question of the role that Ireland, together

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with the member states of the European Community, is playing in the rebuilding of Eastern Europe because of its importance to the whole issue. However, I have also tried to caution against undue raising of expectations or any assumption that the road ahead will be anything but a difficult one. I hope that what I have said may be useful in setting the scene for your discussions today; and I trust that these discussions will prove rewarding for all those who participate and that their proceedings will make a valuable contribution to our understanding of the issues involved and how to meet them. I wish you well in your deliberations.

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