The outcome of this enlargement process will dramatically transform the role of the EU

"The outcome of this enlargement process will dramatically transform the role of the EU. Everyone knows that longer-term security and geopolitical standing of the EU depend on how it integrates Ukraine. If it integrates well, the EU will be stronger. EU will be more competitive"

Interview with Laszlo Bruszt

 

 

László Bruszt, Director of the CEU Democracy Institute, is a distinguished scholar specializing in regime change, economic transformation, and transnational governance. Actively engaged in Hungary's democratic transition, he played a key role as National Secretary of the newly formed independent trade unions during the 1989 Roundtable Negotiations. He joined CEU in 1992, later serving as Acting Rector and President in 1996/97, and held a professorship at the European University Institute in Florence from 2004 to 2016. His academic career spans leading institutions in Europe and the United States, including teaching positions at Notre Dame, the New School for Social Research, and Cornell University, alongside research fellowships at Wissenschaftskolleg in Berlin, the Budapest Collegium, and Stanford's Center for Advanced Study in Behavioral Sciences. His work offers deep insights into the political and institutional dimensions of economic integration, with a particular focus on Europe's Eastern and Southern peripheries.

Professor Bruszt's research explores the evolving dynamics of regional governance and transnational integration. He examined the impact of EU regional development programs on local institutional structures and developmental agencies. He investigated how integration regimes such as the EU and NAFTA shape institutional development in emerging market democracies. Through support from the Global Governance Programme, the Robert Schuman Centre for Advanced Studies, and the Inter-American Development Bank, he leads a research initiative on Transnational Integration Regimes (TIRs), analyzing their role in driving domestic institutional change in developing economies. His expertise continues to shape global debates on governance, market regulation, and economic adaptation in an increasingly interconnected world.

 

O. Kandyuk: To start with a general question: How has the war in Ukraine changed the EU's approach to enlargement? Can we speak of a new stage in the Union's enlargement policy?

 

L. Bruszt: One change happened for sure: Before the war started, the EU member states were very little ready to consider any kind of enlargement. So, the Western Balkans enlargement was dragging on, and the most important question was how to stabilize the region without taking it, and the Eastern neighborhood policy was going nowhere. The war raised the question of enlargement in a very different framework, in the framework of geopolitics and European security, and that helped a lot.

Now Europe is solidaristic with itself. It sees the potential longer-term geopolitical implications of this war, both for the Eastern frontiers, but also for Western Balkans. And then a longer-term perspective of the general relationship between a very aggressive Russian regime and the European Union.

So, these things were a wake-up call for Europe, and that allowed for the very rapid reaction of the EU leaders. This war basically yielded a turn, a change in the general strategy of the EU.

 

O. Kandyuk: In light of this, can the war in Ukraine become a catalyst for more like deeper reforms within the European Union? And what kind of reform it should be from your perspective?

 

L. Bruszt: Yes, that's a very important question, because the thinking about enlargement always focuses on the accession countries that have to change, have to adjust. And of course, this is a one-sided approach. The EU also needs to adjust, change if it wants to integrate new member states.

One of the reasons why there has been no enlargement since 2004 or 2007 is that the EU is not ready to make the necessary changes. And one of the reasons why now there is a growing hesitance within the EU member states about the new wave of enlargement is exactly because the EU actors, that is member states, are not sure what kind of changes they need.

The most important question is whether the enlargement and the taking of new member states have lots of distributive effects. It basically redistributes opportunities and wealth across, the member states, different sectors, different categories of firms, and so on. And some of them gain a lot immensely, others lose a lot.

Some member states will get enormous opportunities because of this enlargement, because their firms are competitive enough, and they can gain a lot. Others will lose. Now, that is, of course, a big implied redistributive question.

And without having a mechanism to manage these redistributive questions, the EU will not be ready for enlargement. Or if it takes new member states without managing the same types of distributive issues within them, then you can expect the growth of populism, nationalism, economic-nationalism, and so on. So, the EU, if it wants to successfully manage this new round, it has to change.

The question is not about the readiness of Ukraine alone or the readiness of the accession countries, it's about the readiness of the EU, and the EU has to change. The most important thing is to depart from this idea that the extension of the free market is for free. It's not.

It's not, anywhere. All around the world, actually, what you see is the re-emergence of economic nationalism and, basically, different forms of neo-mercantilism. And they basically signal that the era when you could say that the big solution to all the problems of development of countries is free trade and extension of economic freedoms is over. The economic conditionality of the EU is basically about extending the Single Market and implementing those rules that allow for the free movement of goods and factors of productions. It is assumed that the extension of these freedoms will generate lots of wonderful things. And yes, it will generate lots of wonderful things for many and it will take away opportunities from others.

And now, there is no free trade or free market without costs and management of these costs on gains. So, my brief answer to your question is that the EU has to change.

Whether it will be able to change in the short term depends on lots of geopolitical things. The bigger the pressure, geopolitical and security, the more likely is that the EU will change. Under pressure, the EU can learn, this is the lesson of the last decade.

 

O. Kandyuk: Speaking about geopolitics, how do you assess the EU's role in global politics? Can the EU become an independent geopolitical player in the context of competition between the US and China?

 

L. Bruszt: It can be. At the moment, different groups of countries, plus China and the US are the key players. However, the EU has a role to play in several issues, but not in its present form.

In its present form, it's weak as an agent. And actually, the outcome of this enlargement process will dramatically transform the role of the EU. If it succeeds in integrating Ukraine and also some of the new accession countries, it can become again a strong player.

Not immediately, but it becomes a strong player. If it fails, it will be a problem both continentally and globally.

 

O. Kandyuk: Speaking about the internal problems, how do you assess the EU's role in protecting democracy and the rule of law within its borders? How effective are mechanisms such as Article 7 of the EU Treaty?

 

L. Bruszt: Well, there is a very good work by Dan Kelemen on the authoritarian equilibrium in the EU. There are strong political interests within the old member states, first of all in Germany, but also in several other member states, to keep this equilibrium. This has changed somewhat with the radicalization of Orban and the withholding of several transfers to Hungary, but the overall effects are limited, to put it mildly.

So there are several other regional arrangements that have such countries. But in general, I think that the evolution of the rule of law and democracy in general is primarily still shaped by domestic factors. And until the external actors cannot focus on helping the coming about of these domestic conditions, all the other measures fail. That's not about the sanctioning or giving money. Things like that are important but more as an expression of solidarity.

They don't change the domestic balance of powers. And actually, they deteriorate them. Changing the balance of powers involves creating powerful enough coalitions that have stakes in and have the capacity to maintain rule of law and democracy.

Now, that is very much linked to the enlargement strategy of the EU, because the enlargement strategy didn't really care about exactly these issues. In the present, the stability of the rule of law and the stability of democracy is seen to depend on conditionality. Yes, you create external incentives, positive and negative sanctions, and that will create democracy. The expectation is that it can create institutional stability, not just democracy and the rule of law, but the stability of democracy and the rule of law. And that's a very naive idea. The stability of democracy and the rule of law comes from the existence of social and political forces within the country that have the stakes and capacity to maintain the rule of law and democracy. That needs a large, very wide distribution of societal and political power.

For example, now the EU in Ukraine started to ask for de-oligarchization, which is a step in the right direction. That's already talking about one of the key domestic conditions of the rule of law.If there is a too strong concentration of economic and political power, then it's very hard to imagine a stable rule of law or stability of democracy. However, the other condition is a strong enough coalition of winners from the socioeconomic system. If you have that, then it means that they will fight to maintain democracy and the rule of law, or even to strengthen that.

And that's the problem with the enlargement strategy that basically separates democracy and rule of law on the one hand, and economic conditionality on the other hand. It basically thinks that the two are independent of each other.

It is that wrong. That's the Copenhagen criteria. It was already wrong in 1992. And even today, this is the guiding principle of the enlargement. So Ukraine or the other countries are not able to start negotiating the economic chapters until they are done with the political chapters, the rule of law and democracy. This is very naive, and not just naive, it is very dangerous.

Because really what happens is that the implementation of the economic chapters will shape what part of the regions will become competitive, flourish in the EU, and which of them will get marginalized, which groups of firms will disappear completely, or become very strong, because they will access a 500 million large market, and so on. So I can go on with examples, but this will redistribute again, opportunities within Ukraine. And of course, it will create losers, and will create winners, and will create political tensions.

And this, once Ukraine hopefully soon becomes a member of the EU, this will come back. The political opposition will politicize the issues that the EU depoliticizes now. It basically will come up with economic nationalism, with the parties that will defend “the real Ukrainian interests” from the EU.

That's the most important lesson of the previous wave of enlargement. That was six years after Hungary's accession to the EU, Orbán came to power and said that he would defend Hungary from the EU. The single largest demonstration in Hungarian history was in 2012. There were huge banners on the streets of Budapest saying that “we will not be the colony of the EU”. Eight years before, Hungarians would have died on the streets of Budapest to become members of the EU.

 

O. Kandyuk: Well, in this context, how can we avoid this in new enlargement? Should we extract it from the Copenhagen Criteria or should we put economic integration first? Or what is the recipe?

 

L. Bruszt: Well, the recipe, in a way, is very simple. We know that there are 100,000 pages of regulations, of transportation, regulation of banking, regulation of state aid, of phytosanitary rules and so on. Yes, this is 100,000 pages of regulations.

Their implementation in Ukraine will have costs and gains. These I call externalities of rule compliance. So the question is how and when you start regulating or managing these externalities.

There are two types of externalities. There are positive ones, that is, they give opportunities for some sectors or some regions or some categories of workers. But they might not have the capacity to capitalize on them.

State policy, industrial policy, and institution building can help to increase gains and capitalize on these gains. So the Ukrainian state can develop these kinds of capacities, strengthen state capacities, strengthen local or regional state capacities, and strengthen the capacity of development banks, associations, municipalities, business associations, and chambers. I can go on, but this is about capacity building.

They, the empowered public and private actors, can detect where there are opportunities and how to use them. In many cases, the problem is not that regions or groups of firms don't have resources. The problem is that they don't know that they have resources, and have limited knowledge and capacity how to capitalize on them.

But then, of course, the other problem is the problem of negative externalities. Lots of the firms will have to be closed down. Lots of the economic actors will lose their livelihoods.

There is no place for them in the single market. Here the question is how to manage that, how to reorient them, find new places, and how to give them new skills or new opportunities.

The good news is that once this war is over, the reconstruction will start. And the reconstruction can be integrated with the management of these positive and negative externalities. The stronger is the integration between the two, the more will be the gain of Ukraine from that.

And seeing the outcomes of such a management of externalities as producing gains to many is very important. Participation in that process is a business that can generate profits. It's a business, meaning you can get involved in the management of externalities the European level investment banks and the EBRD, the EIB, the German or Polish development banks, etc.

That is, you can create longer-term gains that provide profit. So this is a profitable enterprise in investing in development. So I don't think that this is first of all about or primarily about redistribution of member states’contributions via Brussels.

Redistribution has a role to play, first of all, in reconstruction. But there are lots of parts that are not necessarily about redistribution. So anyway, what I'm saying is that the key is to start managing these externalities, these positive and negative consequences of rule-taking.

In many of the new member states in Hungary, Poland, Romania, Bulgaria, the management of externalities started sometimes in some sectors or some regions only 10, 15 years after they became members. But by the time that started, the management started by the governments who were on the Eurosceptic part or who were on the populist side. They came to power by using the claim that the EU, and previous domestic governments did not care about the “national interests”. So, that's in a nutshell.

That's just the lesson from the previous wave of enlargement – the sooner you start – the better. We have lots of case studies from Romania, Poland, Hungary, Slovakia, Spain, and from several sectors. And one has to learn from that.

Now, the transfer of knowledge to Ukraine or to these countries is going at the level of compliance, how you can comply faster or more efficiently. That is important question. I don't think that it's not important, but that's not really the longer-term question. How do you integrate the management of the consequences of compliance with compliance? That's the trick. That's the recipe also for the stability of democracy and the rule of law: to create broad based constituency for democratic institutions by involving diverse groups of actors and making compliance with EU rule profitable to many.

 

O. Kandyuk: You talk about strategies of "deep" and "shallow" integration in the context and example of Poland and Ukraine. What do you think is the reason that integration in Ukraine is shallow?

 

L. Bruszt: Not just Ukraine was shallow, but the whole Eastern Neighborhood and in a way that's everywhere outside the EU. So, again, the "big bang" integration of the Central and Eastern European countries 20 years ago was what we call “deep” also for a geopolitical reason.

There was no other way to integrate them than a deep way. First of all, it was very clear by the early 1990’s, that the members of EU cannot leave out the Central European countries outside of EU for geopolitical reasons, security reasons, and political reasons.

But they already had something that made them very cautious about this idea that the free market is for free because that was the lesson of the very rapid integration between the eastern and western parts of Germany that resulted in a complete collapse of the Eastern German economy.

The expectation was that the West German market would go over and West German firms, the strongest in Europe, will basically integrate and the East German economy and there would be another German economic miracle. The miracle came, but not a positive one, but a huge negative one, because after the monetary integration that was done overnight, within one and a half years, there was an 80% de-industrialization in the East. And West Germany had to pay around 800-900 billion German marks a year, just to manage the costs of that.

So, when the European Union created the Copenhagen criteria, how to include these countries, these economists, the German economists in the first place, were pushing the strongest way, but the other member states also bought this idea that we have to be very cautious because the extension of the continental free market might be very expensive. If we do that the German way, we have to be cautious. So that's the origin of what we call “deep” integration.

Deep integration means not only that these countries have to take over all the rules "flawlessly", but that there were very strong policies to assist them, not just to meet these criteria, but being capable of living by the rules, which is not to collapse, as East Germany did. So they did very cautious planning.

Actually, one of the Copenhagen criteria was the capacity to withstand competitive pressure. What does it mean? That means that we would like these guys in the Single Market alive. Don't bring here 10 dead economies. That's the deep thing. For example, market extension happens planned, in a planned way.

The accession countries were are asked to prepare dozens and dozens of plans by sector, policy field and territorial unit. What happens if you implement these groups of rules? How many of the slaughterhouses have to be slaughtered if you implement the phytosanitary rules of EU? How many of the large firms have to disappear completely? What happens with the industry or region X that will lose 60% of its employment? Things like that. Have plans, plan it.

That's deep, at least much deeper than the so called Deep Associations Agreements that did not care about the economic, social externalities. Ukraine, or the neighborhood countries, the EU did what it always did before: extend the markets for free. The deep association agreements didn't consider, didn't ask for any planning, didn't ask any kind of major assistant programs or offers and that's because the political and economic interdependence was much lower. And that's not that they, the EU insiders, are excessively selfish. They are just, as the economists would call them, “rational”.

The politicians who have to sell the enlargement are voted or not voted for by the electorate in their home countries and they have to be able to say that they defended national interest, not the EU's interest, national interest much better than competitors would have or would defend and that's the cheaper you can make, for example, stabilization of neighborhoods or capitalize on its markets, the better. That is the problem of the EU: there is no policy maker in Brussels who would be accountable to the European public, who could be sent to opposition if other candidates would promise better representation of the common interests of the Europeans.

 

O. Kandyuk: I read your article "The Trap of Confederalism" and I got the impression that you are not a supporter of differentiated integration (which is rather rare among experts): How then to reconcile the urgency of Ukraine's accession (and not only Ukraine's) to the EU with the need for long-term institutional transformation?

 

L. Bruszt: I'm neither a supporter nor an opponent. You can have staged, differentiated integration that can happen in many different areas but not in the economy, not in a single market. The single market, whether you are playing by the rules or not, is based on the principle of non-discrimination, that is wherever you come from, whatever is your product, whatever is your origin, exactly the same rules apply to you, exactly the same obligations and rights you have independently, whether you come from Belgium or Bulgaria. Many other policies like Schengen can be differentiated or staged.

The problem with staged integration is that you can stage it in many different ways. The most important thing is a very strong, credible commitment that the process ends with membership. That is, if and if and if, there can be 15 ifs. But if the country meets these criteria, then it automatically gets a membership. And then you can stage.

For example, for Ukraine, it's very important to get in fast, meaning if it complies with the criteria. But the management of these externalities that I was talking about is longer. It takes more time. Getting restructuring and getting things done and developing the new industries and closing down the old ones and retraining and so on and so for. That's time-consuming. Now, if you don't want to wait, these two, implementation of the rules and management of the externalities of these rules can happen in a non-simultaneous way. Ukraine gets in very fast, and closes down the chapters, but has a very strong commitment from the member states that once it meets the criteria, it will be a member and that the policies or the programs that are there to manage the externalities of meeting the requirements of membership will be executed.

And then they can happen even after, later. But they have to be, in a credible way, in place. So I'm not against stage enlargement if it has a strong and credible commitment about the membership.

 

O. Kandyuk: In your work, you often talk about the need to "rethink Europe". How do you see the future of the EU in 20-30 years? What scenarios seem most likely to you?

L. Bruszt: I think that the most important thing would be as fast as possible to create an administration that integrates, runs, and governs the integration of meeting the EU criteria and managing its social, economic, and political consequences. And that can be a joint EU-Ukrainian institution that jointly runs the things, gives so to say, ownership of managing and integrating these two processes, the meeting of the EU conditionality and the management of the social and economic externalities, hopefully in the framework of the post-war reconstruction. I think that's the first and most important thing because that provides gains both to Ukraine and to the EU. The closest to these ideas is the institutional solution suggested by Timofyii Mylovanov and Gerard Roland about the creation of UREIA, the Ukraine Reconstruction and European Integration Agency.

In the end, the mission of this institution is to make sure that Ukraine meets the EU conditionality and is ready for membership, but ready in a way that guarantees stability and democracy. And very importantly, the more you manage these things together, the harder it will be for populists and Euro-skeptics after membership. And that gives stability and can create a strong coalition of winners around EU membership and EU institutions. And it at the same time guarantees stability and security on the eastern frontiers of the EU. Because Russia will misuse any kind of social or political instability as she did since the creation of Ukraine.

The second could be, perhaps that in European defense, Ukraine might play a very important role. So the new Department General for Defense might actually initiate a consultative body that can grow into a governing body that creates and suggests a proposal about European security and defense. And since now we know where the problem is coming from, it would not be a bad idea to have that with Ukraine.

And the third is industrial policy, in European industrial policy and competitiveness.

There is a big talk about competitiveness and using industrial policy and there are new methods going there. But the biggest problem is if the EU wants to stay not just competitive, but secure, that it has to take Ukraine. But it cannot take Ukraine without making sure that the member states when Ukraine meets all the criteria, the member states will vote for it. The danger is now that Ukraine can very rapidly fulfill all the criteria perhaps, but by that time 10 member states will vote against it.

Speaking about the future of the EU I can only talk about the economic part because the EU is very complex machinery and actually extends from the economy to many other areas and security, for example, defense, environment, and other things.

But in the economy, the single market idea and the economic integration idea were very strongly linked originally to the idea of peace and security in Europe. And the idea was that a growing interdependence would make war a very irrational strategy, that economic interdependence will tame nationalism and finally tame Europe.

This wonderful idea goes back to Montesquieu from the 18th century that people who trade don't have time to kill each other. And then that kind of trade relations and extending market was basically until the 1980s, still happening in the Bretton Woods system, meaning that very limited expansion of the market and keeping capitalism and market economy under the control of democratic politics. That was very important. That was this embedded liberalist idea.

And then in the Single Market Act and later movement towards the Monetary Union, departed from this old settlement in which democratic politics at the level of nation states and member states controlled economic processes. And that was linked to the belief of the Delors Commission that after a while, there would be democratization and political integration also at the European level, allowing the EU-wide management of the distributive consequences of a continental market. That did not happen, but marketization happened.

And so the EU went from this embedded liberalism to a new and unstable settlement in which now member states are embedded in a supranational market and rating agencies or  supranational institutions unaccountable to the European citizens can change, for example, budgets or constrain economic decisions by democratic institutions in the member states. This was called by Ms. Merkel at one point, market conform democracies. And this is not sustainable.

It's visible. It's everywhere, even now in Germany, in Austria, France, and other countries, extreme right and economic nationalists are coming up. So this is the sort of Gramscian period when the old doesn't work anymore. But God only knows what will be the new one.

Unfortunately, I have to say, at this stage, still, the EU is still in the old paradigm. The old paradigm is that solving the problems, and solving the distributive consequences of extending the market to lesser developed economies is the private business of these countries. That created the Orbans and Kaczynskis.

Right now the EU has limited capacity to manage the social and economic externalities of enlargement and the integration of Ukraine which is dramatically de-industrialized, and it's in enormous debt, because most of the money transfer is not a grant, but credit. So if the EU doesn't change, if it does not develop mechanisms that could allow for  managing simultaneously the requirement of playing and living by the rules of the Single Market, then the outcomes can be much worse than in Hungary or in Poland, politically and much worse than in Bulgaria economically.

But everyone knows that the longer-term security and geopolitical standing of the EU depends on how it integrates Ukraine. If it integrates well, the EU will be stronger and more competitive. If not, the EU will decline in its importance and will be exposed to Russian threats.