When the Eastern Partnership (EP) was first unveiled in May 2008, Poland (along with co-partner Sweden) was lauded for taking the lead on enhanced relations with the EU's eastern periphery. Its aim was to improve political, economic and security relations between the six "strategically important" post-Soviet states and the European Union.
Moreover, Poland's successful transition into a stable free market democracy, helped to serve as a model. Less than two years into its inception, has the Eastern Partnership lost its luster? Recent events suggest its future looks increasingly blurry.
Rising tensions between Poland and Belarus, over recent arrests and growing harassment of Belarus's Polish minority, highlight the challenges of engaging with Europe's last remaining dictatorship.
Specifically, it forces Poland to walk a complex political tightrope, on the one hand, standing firm in support of civil, minority and "human" rights, while on the other minimizing the risk that a tougher policy stance will further isolate Belarus or push it towards exclusive Russian influence.
Meanwhile, Ukraine's election of Viktor Yanukovich - the would-be spoiler of 2004's Orange Revolution - suggests that many were not only fed up with the political and economic deficits that have long plagued their country, but were increasingly skeptical of the EU's long-term vision for and commitment to Ukraine's economic development and international security cooperation.
The longevity and legitimacy of the Eastern Partnership, relies on Europe speaking and acting with a unified voice. The lack of a coordinated EU foreign policy towards Georgia and response to the August 2008 war with Russia, is a prime example of potential consequences.
While the EP may have been the brainchild of two mid-size EU powers, it requires the muscle of larger member states like Germany and others to ensure its success. This is critical, especially as individual EU members have increasingly shaped bilateral relations with Russia and other post-Soviet states along individual geopolitical and energy security needs. The EU needs to stop sending mixed messages.
Otherwise competing political and economic fault lines will no doubt rip the Eastern Partnership apart.
The EU's current efforts (led by France and Germany) to rescue Greece from its colossal debt crisis will surely result in greater EU-wide scrutiny, but it could also spark a new wave of tighter economic and financial supervision. Greece's public sector, long accused of fraudulent accounting practices, corruption and tax evasion, offers sobering lessons for countries across Central Europe grappling with their own structural limitations, deficits and eurozone accession strategies.
The Greek conundrum highlights the economic limitations of establishing a monetary union without a complimentary fiscal union. Having sixteen separate fiscal policies, particularly during economic downturns, not only results in growing economic discrepancies (and animosity) between fiscally disciplined and fiscally loose member states, but enables individual members to avoid accountability to a central fiscal authority. Ultimately, this threatens the strength and stability of the euro, as we have seen in this week's sell-off.
The eurozone's debt crisis has enabled EU leaders to call for greater fiscal integration, coordination and most importantly stricter implementation of structural reforms throughout the eurozone and within those countries vying to join it. This poses challenges for countries like Poland and others throughout Central Europe which could see greater engagement from Brussels over future budget and economic policies, as creating an increasingly finer line between meeting Maastricht criteria and economic recovery.
Poland in particular will see its debt management strategy tested. It has a legally restricted debt-to-GDP ratio of 55 percent, which if surpassed would force the government to restrict borrowing and make additional cuts to public spending.
This poses challenges for several reasons. First, Poles, along with Central Europeans in four other countries, are preparing for national elections in 2010. Despite being the only EU country to avoid a severe recession, Poland's recovery is still shaky and an additional round of austerity measures will not sit well with voters.
Second, though the euro convergence plan is still aimed for 2012, it will be increasingly difficult for Poland to cut its budget deficit from almost seven percent to under three percent in less than two years.
Finally, much of Poland's debt strategy rests on the success of upcoming privatization deals and high economic growth. With the eurozone influx, the American recovery uncertain, and global trade yet to rebound, achieving this goal will be challenging. The lessons from Greece are twofold: first, rushed euro convergence, while creating short-term stability, ultimately creates larger structural economic deficiencies. Second, getting into the eurozone is just half the battle, thriving in it is another story.
Prime Minister Donald Tusk's government swept into office in late 2007 on a pro-business platform focused on promoting privatization, competitiveness, entrepreneurialism and transparency within the Polish economy.
As Poland settles into another cold winter, increased competition within Poland's energy sector is becoming vital to its future economic development (and security) as well as that of its neighbors.
Like any wise investor, Poland too should look to mitigate risk by diversifying its portfolio of energy investors and suppliers. Poland's decision to grant exploration rights of potential shale-gas resources to two major US oil companies is a step in the right direction.
A few days ago PGNiG, Poland's state-run gas distribution monopoly, finalized a gas delivery contract lasting until 2037 with Russia's Gazprom. While improved pricing and delivery mechanisms with the Moscow-based energy giant are positive developments for bilateral relations - especially after last winter's supply disruptions across the EU, including many Central European member states - expanding supplies of Russian gas to nearly 75 percent makes Poland even more dependent on a specific source and supplier.
Even if successful, shale-gas drilling may not be able to ease supply burdens or boost domestic reserves in the short-term, however, it can provide Poland with long-term opportunities to become more energy independent, attract diverse foreign partners and investors and perhaps even develop a viable energy-export sector.
Additionally, by pushing for greater demand side liberalization, especially natural gas, the government would allow for more competition and ease barriers to entry within Poland's domestic market.
Finally, development of a diverse and viable energy sector could provide Poland, as well as its Central European neighbors with the necessary momentum to engage in greater EU convergence efforts in energy security. Alternatively, Poland and other vulnerable markets across Europe risk pursuing policies that undermine EU integration, and worse yet, gamble with its energy future.
