Are Visegrad Declaration economic goals fully achieved?Economy 26 October 2015
Originally formed in 1991 by three states – Hungary, Poland and Czechoslovakia (now with successor states Czech Republic and Slovakia), the Visegrad Group aimed to fully provide restitution of independence, democracy and freedom to the region of Central Europe. With around 64 million inhabitants in total, V4 states form the 4th most populated entity within the pan-European space.
Eleven years of the EU membership has brought free movement of persons, goods, services and capital between those states in accordance with the idea of the Union. Observed as one entity, the Visegrad Group is geographically positioned at the crossroads between the Western Europe and Russia and Ukraine. This contributes not only to the development of infrastructures, such as railways and highway corridors, but also a higher degree of multilateral connections between the V4 states.
In 1991, the three States signed a Declaration initiated by the Czech President Václav Havel and joined later by the new-born state of Slovakia. The Declaration (today known as “Visegrad Declaration”), proclaimed the cooperation between Central European states as the highest value after the fall of the Berlin wall. That cooperation could be achieved only by setting several concrete goals that needed to be fulfilled.
Along convergent goals, such as elimination of all existing social, economic aspects of the totalitarian system and the construction of a modern State of Law in which human rights are respected, the Declaration proclaims two more economic goals. These are the creation of a modern free market economy and the full involvement in the European political and economic system, as well as the system of security and legislation.
Creating free market economy/ies
Despite the geopolitical events which have been occurring during the last decade of the 20th century, V4 states have successfully managed to achieve economies based on the free markets and the freedom of capital movement. During its entire existence, V4 has been striving to fulfill those goals by holding numerous quadrilateral and multilateral meetings.
The Visegrad Group meetings are also held in cooperation with neighbouring states such as Slovenia, Croatia, Serbia, Austria and Baltic states. Those States are usually represented by their Prime Ministers and/or Presidents of the State. Depending on topic, it can be possible that V4 States are represented by their Ministers of economy and all other relevant fields. In the latest meeting of Ministers of economy, held on 12 October, they have adopted a Memorandum of Understanding in order to foster start-ups and ecosystem friendly entrepreneurship.
When it comes to the implementation of this projected goal, it is worth mentioning the fact that all four states have fully harmonized their legislative systems (especially in the economic field) when entering the EU, therefore, they keep track of supranational economic policy led by the European Central Bank and other relevant EU bodies.
The so-called “acquis communautaire” of the European Union, as well as national laws, adopted by the V4 Group, provides strong guarantees that free market economy system is going to function undisturbed in the future. However, special attention should be devoted to the fact that the EU membership still cannot automatically assume that those states have fully completed the process of economic transition.
A full involvement in the European political and economic system
In 2004, all V4 States have joined the EU and officially finished their politico-economic transition to the modern market economies from state controlled ones during the communist era. However, economic transition has not been going as smoothly as it should have been. When taking into account this goal, it is important to have a broader picture of its fundamental meaning. For the purpose of this article, only the economic dimension will be analyzed. The process of full economic integration of V4 States, within the Union has not been completed as long as three of four States have not accepted Euro as currency, yet.
Slovakia, the only Eurozone member within the V4 Group, abandoned its pre-euro currency (Koruna) and adopted Euro as its official currency, when entering the Eurozone in 2009. On the other hand, Czech Republic still has the Czech Crown (CZK) as its official currency, while Hungary uses Forints (HUF) and Poland its Zloty (PLZ). There are no clear statements coming from Hungarian, Polish or Czech officials that those three States will adopt Euro as their official currency in the near future. Even the EU will not try to force them to enter the Eurozone which would mean de facto the acceptance of the Euro.
This issue became more complicated, when the British Prime Minister, David Cameron, announced that London would demand Brussels to adopt an “explicit statement” that the Euro will not be the official currency of the EU, making clear that Europe will be a “multi-currency” union.
A full involvement in the European Monetary Union (EMU) is not a one way process. On the contrary, it includes not only simple political willingness of a single state to join it, but also the fulfillment of the defined criteria and several other conditions. These conditions are known as the ‘convergence criteria’ (or ‘Maastricht criteria’).These criteria include low and stable inflation, exchange rate stability and sound public finances. Excluding the UK and Denmark, which opted-out from the monetary agreement, and Sweden, all other Member States, that have not adopted Euro, obtained the EU membership status in the near past (2004, 2007 and 2013).
Beside the Eurozone issue, there are some open economic issues where V4 States failed to integrate with the rest of the Union such as the taxation policy, opposing to the exportation quota system(s) and the relations between the Union and the third states in economic field.
“Internal” possibilities – what can V4 states jointly do?
According to the World Bank database, V4 total GDP amounts to 989 billion US dollars. The Visegrad Group therefore would rank as the 6th highest GDP state within the EU observed as one single entity. Its economy is being predominantly led by Poland, which contributes with more than 50% of total V4 GDP (some 548 billion US dollars). V4 States are limited by the EU regulations coming from the Commission in economic and financial area.They cannot decide on their own about several crucial things which are being decided in the headquarters of the ECB in Frankfurt or in Brussels. For instance, V4 States cannot impose economic sanctions towards third party subjects, because that decision is made by the Executive Board of the ECB. However, the Commission encourages the “subregional” partnerships in implementing transnational projects; therefore, V4 States are fully implementing more than 100 joint projects financed by the Commission.
Joint conclusions made by V4 leaders or ministers, at their respective meetings, can ensure that “V4 voice” will be heard stronger in Brussels.
Is V4 Group an outdated project?
With an initial idea to foster politico-economic transition in the region of Central Europe, the Visegrad Group has become a multidimensional project which deeply regulates many areas of modern life of its citizens.No initiative for breaking the ties between V4 states has been launched yet. Several times officials of the Visegrad Group emphasized their “willingness to continue with further efforts in making the Region better place for life”.
If V4 Group is perceived as a mid-term process with only one main goal – to transform communism into democracies, more likely its activities would have no reason to continue. More than 10 years as EU Member States is a sufficient reason for such claim. Nevertheless, bearing in mind all the positive achievements of modern regional connections in multilateral era, there are no reasons why the Visegrad Group should not continue to exist. Increased number of multilateral meetings with neighbouring states, and several foreign and economic policy initiatives promoted by this organization puts this regional umbrella organization as a new regional player in contemporary European affairs.