Why Serbia Should Not Join the EU
The need for the accession to the EU is not disputed by anyone in Serbia. It is identified with the blessings of Western life standards, a market economy and modern democracy. The ones that don’t agree with that are booed as pro-Milosevic types, unready for the challenges of the modern world. “Europe” and “European Integration’s” are today’s mantra for the solution of all of Serbia’s problems, and even the members of the old regime do not dare to question it, partly because they see Europe, as one of our actors said: as everything America isn’t!”
Whatever the case may be, in this, as in anything else, our society moved from one to the other equally uncritical extremity: the antiglobalist hysteria and the resistance to the New World Order of yesterday to the blind hurling into integration’s at any cost. The characteristic of both viewpoints is their emotional and irrational basis, without paying any attention to the real economic and political interests of Serbia. The thesis of this text is that the current euphoria for joining the EU is a very damaging phenomenon, and that the said accession will cause great economic and political damage to Serbia, and stunt her growth. The first signs of sobering from the EU-hysteria are already evident in East Europe (particularly in those countries that joined the EU in May), where people quickly realized that integration does not necessarily mean rapid economic growth and attainment of a high standard of living, but rather the wave of bureaucratic regulation, centralized decision-making that inhibits competition and initiative and imposes artificial standards in various areas, all of which weakens the comparative advantages of new members.
The European Union originally developed on the idea of globalization as a removal of artificial administrative and political barriers to free competition and cooperation. Her essence, particularly during the 80-ties and 90-ties, was free trade among member states and the uninhibited market of goods, services and labor. The founders of the EU saw her mission in the same way the Founding Fathers saw the US – the integration of huge spaces via free markets and without bureaucratic centralization, which promotes productivity and efficiency by expanding the economy, which in turn enhances the choices of any individual. The best illustration of this essentially libertarian character of the American Union, was the implicit right of any state to secede, which was brutally destroyed in the Lincoln’s’ War of Aggression, in which the US was really transformed into a unitary state. A similar unitarist revolution is happening in the EU of today, only it is happening peacefully, gradually, and without any blood being shed, and it is far more comprehensive than the American one. The first phase of that unitarisation process is progressing trough coordination and “harmonization” of policies and legislation in accordance with common forms and standards, and the peak should be achieved in the forming of an centralized European Super-State, with it’s Constitution and its’ President, the long dream of all socialists and regulators. Already, a growing part of the prerogatives of national governments are being taken over by centralized non-elected institutions, such as the European Commission, and this process is, in a way, crowned by the European Constitution. A lot of pomp and circumstance is invoked because of this document, and some of the Brussels armchair-socialists see themselves as the European Founding Fathers, obviously unaware of the how ridiculous they look in the comparison.
In that sense, what is today referred to as the European “Unity” has taken on a meaning that is totally different than what its’ founding fathers had in mind, and to what Europe owes its’ strong economic growth – it no longer means a free market and the possibility for individuals to cooperate regardless of national boundaries, but the imposition of artificial regulation and socialist uravnilovka for all countries (one shoe for all sizes).
The magic word by which this process of bureaucratic centralization and banning of competition is promoted is “harmonization.” It is demanded in many areas; from production standards, labor laws and environmental “protection,” to trade regimes. The rationalization of this process is the story that by “harmonization” the development of all regions will be brought in line and that the harmonious functioning of the Union as an economic, political and social entity, will be assured. The real background, however, is the wish to prevent, via artificial administrative restrictions, the more free market countries to use their comparative advantages and attract the capital of the countries with more expensive and inefficient social systems. For instance, the so-called “Social Charter” demands that new members incorporate the labor law standards of old welfare states, like Germany and the Scandinavian Countries, in order to avoid the reallocation of capital towards the East and cheaper labor (the so-called “Social Dumping”), intended to assure that those Western countries might retain their expensive and inefficient systems of “social protection” of workers. So, new countries are blackmailed to artificially raise the cost of their work force, so as to protect the Western “social” benefits. The specter of “Social Dumping” is supposed to justify actions that push the bureaucratic Brusselisation and to show that Prodi, Solana, Paten, and the other proponents of socialism are not fighting freedom, competition and the welfare of the East’s’ poor, but with a Biblical Abomination called “Social Dumping.”
Strict Eco-standards are being imposed with the goal of preventing new members to profit from their comparative advantage derived from their lower ecological standards and, on that account, to attract additional investments from old member states. Tariff and trade “harmonization” are imposed with the purpose of preventing new members to draw benefits from their freer trade laws than those in the West (Estonia, for instance, that abolished all tariffs, now has to re-impose them, in order to “harmonize” with the EU!). The real purpose of the campaign that is perpetrated by the regulators from Brussels, that calls for “tax harmonization” (though it is not yet formalized), also has the purpose of preventing the bankruptcy of Western bureaucrats’ socialist programs that could happen if capital fled to the East, as a product of low taxation there. One of the ringleaders of centralization and socialism in the EU, Romano Prodi, has quite openly recently explained the purpose of pushing for fiscal harmonization: “If Estonia decides to abolish all taxes, all capital will flee there.” So, force should be used to prevent new members to use lower taxes to attract capital from the West and create fiscal competition to the older members.
So, the essence of harmonization, which is the basic component of joining the EU, is the prevention of internal competition amongst member states, the propping-up of the bankrupt welfare-state in the West and its’ forced imposition on the East, with the wholesale deterioration of economic growth, productivity, and competitiveness. The benefits of this process are confined to intellectuals that believe in socialism, regulation and planning, and the vast majority of EU citizens’ wind up with the damages. The real substance of this process is well described by Professor Joseph Simma, from the University of Prague, by saying that “harmonization” simply consists of translating 60 000 pages of EU regulation to native languages of the new members, and their obedient acceptance. The disillusionment of people in many countries is now evident, people that even now understand the validity of the warnings of Euro-realists, led by Vaclav Klaus, that the joining of a European Super-State is not necessarily a blessing. They will be even more aware when the bills for “integration” and “harmonization” start coming, in the form of economic stagnation and the loss of current comparative advantages.
As far as Serbia is concerned, the situation is not fundamentally different from other nations in transition. Her most important advantage is a relatively educated and inexpensive labor force, lower technological and “ecological” standards. That means that any “harmonization” in these areas (particularly the adoption of the “Social Charter”) would have very damaging and discouraging effects on business activity. There would probably be no damage in the monetary sphere, because of the fact that the adoption of the Euro would eliminate currency transaction costs and eliminate the still-present inflationary risks. Also, the tariff harmonization would not, in the medium term, be damaging because of the fact that the present tariff levels in Serbia are much higher than the ones in Europe, and since populist forces are getting stronger in Serbia, and they propagate even higher tariffs and other protectionist measures, this kind of harmonization would actually be beneficial, in the mid term, because it would force domestic populists to open up to foreign trade more than they would like. Still, protectionist trends that are getting stronger in the EU itself advise caution, and to the idea that it may be better to stay out, and use the possibilities of the broader world market, which would be significantly closed for us, in case we enter the EU. And you never know where the unitary European politics will lead; experience shows that when you give politicians too much power, and abolish their competition, they usually respond by attacking the people’s freedoms, and imposing interventions and limitations to free cooperation.
In many areas the damage from uncontrolled EU accession can be heavy in the long term, if the political situation improves, i.e., if Serbia gets a government that is willing to significantly cut on taxes, regulation and public spending, and in so doing, stimulates private investments, and the accession arrangement ties it’s hands. In case we accept an unconditional “harmonization,” the possibility for dramatic liberalization will a priori be excluded, since the parameters for labor, environmental, trade, and even fiscal competitiveness will dramatically deteriorate, according to the conditions from Brussels. If we realize that the enormously high, almost socialist public expenditure, and enormous regulation, the things that are endemic to the economies of most EU countries, and if we know that the harmonization “standards” are dictated mostly according to their needs and interests (unfortunately, we are talking about the most powerful countries – France, Germany, Italy.), it becomes clear that that is not conductive to Serbian prosperity, to say the least.
This is the probable direction things will take: a mighty coalition of European bureaucrats and Serbian politicians (it is, actually, already formed) will occur. The former will offer bribes to the latter, in the form of subsidies from the European budget and lucrative positions in bureaucratic bodies in Brussels, and in return will ask them to sign the “Social Charter” and accept harmonization in many areas. Serbian politicians will sell the interests of the very people they are sworn to represent, to bureaucrats from Brussels, and will in return get candies’ they can give to their voters, buy their loyalty, and convince them of their’ “economic patriotism.” European bureaucrats are generous benefactors of the Serbian people that take from themselves to help Serbia, and the domestic politicians are crafty guys that succeed in obtaining huge amounts of “aid” for their country. The bills for that “aid” in terms of weakening the competitive position of our economy, due to increased costs of regulation, will anyway be tomorrow paid by someone else. The deadweight costs of these social transfers (the usual theft and corruption) need not be counted. In short, the consequences of joining the EU will be higher business costs, more regulation, more rent-seeking, the lowering of potential growth rates, and wholesale and enduring economic stagnation, similar to that in which Portugal, Greece and Spain are wallowing (compared to the state before they joined the EU), regardless of all the subsidies, and “aid” from Brussels. Domestic and foreign politicians, union leaders will reap the benefits, and socialist NGO-s that promote “European values” and non-market funds. The costs – 99% of Serbian citizens.
Having in mind both the past experiences of the EU, and even more so, the experiences of the USA, the only recipe for progress is free competition in all fields, and the maximal possible disharmonization of economic and political systems, and not the artificial, bureaucratic leveling under the guise of European unity. Serbia, a poor and excommunicated country, that was not “blessed” by environmentalists’ and eurocrats’ impose her their “high standards” in labor, ecological and fiscal legislature, must insist on the right to live according to its’ “disharmoneous” paupers standards. Messieurs’ Eurocrats have the chance to promote their costly socialist ideas on the expense of their taxpayers, and should let us wallow in the puddle of our “law of the jungle” capitalism. If their Bismarkian, socialist super-state in which they are forcing us (and we are forcing ourselves) is so superior to unrestrained capitalism, why are they then so afraid of competition from one “jungle-capitalistic” Estonia? Or maybe, tomorrow, Serbia?
Hence, it is the best option for Serbia to refuse to join the EU, and to dedicate itself to strengthening economic freedom and the rule of law. Serbia should immediately join NATO as a sign of its place in the civilized Western world, but should keep its national independence and politics free of any ready-made schemes, whether it is isolationist or Euro-fanatic. The fact that Serbia is in Europe does not mean that bureaucrats from Brussels should govern Serbian economy or the lives of Serbian citizens, but that there should be freedom of investment and trade between Serbia and European countries. If the still relatively poor Russia could accept mutual liberalization and a free trade zone, without insisting on harmonization and political conditions, the question arises why the relatively rich countries of the EU can’t. The only answer is that those countries believe in socialism more than the Russian government, which, especially under Vladimir Putin, shows a lot more pro-market thinking.
The best option for Serbia in this moment is remaining outside the EU, with the maximum possible economic integration with the EU countries, and membership in NATO (similar to the status that enjoys Turkey). The second best option is to join the EU, but refuse further harmonization and fight in alliance with other free market countries within the EU (UK, Ireland, The Chech Republic, Estonia, and Lithuania…) for more economic freedom. That option is not impossible, especially if acting from a broad coalition of countries that can counterbalance the Franco-German coalition that pushes for more socialism and harmonization and attacks various forms of “social dumping”, in order to impose new standards on the whole EU in order to prevent losing further investment from their stagnant economies.