Europe and Eurasia Brace for Impact

Key Findings

• The migration crisis and wrenching economic problems are threatening both the survival of the European Union and the stability of Eurasia’s entrenched dictatorships.
• Weighted for population, the average Democracy Score of the 29 formerly Communist countries surveyed by Nations in Transit has declined every year since 2004—12 years in a row, including 2015.
• In Central Europe and the Balkans, illiberal leaders and strongmen challenged fundamental principles of democracy.
• In the Eurasian half of the Nations in Transit report region, the collapse of oil prices created an economic crisis exacerbated by a lack of transparency and accountability.
• The largest score decline was Macedonia’s, where scores dropped in six of the seven different categories that Nations in Transit measures. The second-largest decline was in Tajikistan.

Europe and Eurasia Brace for Impact

Europe and Eurasia ended 2015 mired in institutional and economic crises that threatened both the survival of the European Union and the stability of Eurasia’s entrenched dictatorships.

While illiberal nationalism rose in Europe, with Central European leaders closing borders and denouncing refugees as a threat to the nation, financial pressures brought about by falling oil prices and worker remittances undermined the economies of Russia and most former Soviet states. The risk is that these separate developments could converge, with the collapse of Eurasian states adding to Europe’s growing list of troubles.

Since 1995, Nations in Transit has tracked the progress and regression of democracy in Central and Eastern Europe, the Balkans, and Eurasia. Data from the last decade present a grim portrait of decline. Weighted for population, the average Democracy Score in the region has declined for 12 years in a row. A stark return to consolidated authoritarianism in Russia, which accounts for 35 percent of the region’s population, has been the top driver of the decline. But the problem goes well beyond Russia. The region has had more declines than improvements every year since 2007. Not a single subregion—Central and Eastern Europe, the Balkans, or Eurasia—has improved overall since 2011. These trends have now coalesced into fundamental threats to the regional order that bode ill for 2016 and beyond.

Europe in Question

European institutions have faced a growing crisis of confidence since 2008, triggered first by the ongoing struggle to wind down the eurozone crisis. But the increased flow of refugees and migrants from the Middle East and North Africa in 2015 presented the European Union and its leading governments with an emergency that could not be contained with half-measures or delay, and the disjointed response they offered was plainly inadequate.

Europe’s disunity left the field open for populists. Leading politicians in Central and Eastern Europe—backed by some counterparts in Western Europe—embraced xenophobia and nationalism, positioning themselves as protectors of their countries’ Christian identity against an “invasion” of Muslims. The challenge to Europe that for years has been embodied by the brazen illiberalism of Hungary’s Viktor Orbán is no longer concentrated in a single country; it is becoming the preferred approach among the states that joined the EU after 2000. What used to be fringe talk of the possible collapse of the union is now a matter of serious diplomatic discussion.

Driven by Hungary’s rapid backsliding, Nations in Transit’s average Democracy Score for Central and Eastern Europe has now declined 12 percent from its peak in 2006. Moreover, the Law and Justice party’s moves to rapidly take control of state institutions and weaken checks and balances in Poland damaged that country’s score in 2015 and portend further declines in 2016.

In the Balkans, the leaders of Serbia, Macedonia, and Montenegro have turned the EU’s disarray to their advantage, trusting that its longing for stability will outweigh clear evidence of individual politicians and parties capturing the state to promote their own interests.

Despite allegations of vote rigging, corruption, and fraud that prompted Macedonia’s largest protests in years, former prime minister Nikola Gruevski has stalled implementation of an EU-brokered reform deal and appears likely to return to power through early elections now scheduled for June. In Serbia, Prime Minister Aleksandar Vučić successfully opened accession negotiations with the EU even as he accused the bloc’s representative of funding investigative journalists to undermine him. Montenegro opened six new chapters in its accession negotiations and received a formal invitation to join NATO, but it is mired in corruption under Prime Minister Milo Ðukanović, who has run the country in and out of office since 1991.

After substantial progress from 2004 to 2010, the Balkans subregion has now declined six years in a row, and its average Democracy Score is the same as it was in 2004. With the exception of Albania, the scores of all the subregion’s EU candidates and potential candidates are declining, not improving—a disturbing indicator of their level of commitment to EU standards.

Eurasia on the Brink

In the Eurasian half of the Nations in Transit region, the collapse in global commodity prices, especially oil, drove Russia into recession and triggered similarly desperate currency crises and budget shortfalls in the petrostates of Azerbaijan, Turkmenistan, and Kazakhstan. The decline rippled through the non-energy economies of the Eurasian periphery that are dependent on Russia through subsidies and migrant labor: Belarus, Kyrgyzstan, Tajikistan, and Uzbekistan.

Eurasia’s economic crisis is exacerbated by the fact that vital state institutions have been hollowed out over decades. The lack of transparency, accountability, and checks and balances has left the dictators of the region saddled with bloated, indebted, and deeply corrupt state enterprises built on high commodity prices. Petty corruption and official predation weigh down weak private sectors. As we write in early 2016, banks are being shuttered and International Monetary Fund (IMF) delegations are touring the region on emergency evaluation missions. If oil prices stay low throughout 2016, Eurasia’s much-vaunted authoritarian stability could come to a dramatic end.

The majority of Eurasian leaders have responded with measures intended to ensure that nothing threatens their rule. Vladimir Putin’s naked embrace of autocracy since his return to the presidency in 2012 deepened in 2015 with an ever-harsher crackdown on civil society and political organizing. Application of the “foreign agents” law drove civic organizations abroad or underground, and the list of political prisoners continued to grow. Russian “innovations” in authoritarianism like restrictions on NGO activities continued to spread within Eurasia, in some cases from imitation, and in some cases from active Russian efforts. With the economic situation becoming more desperate and the chance of success in Ukraine more distant, Putin opened a new front in his challenge to the West by launching military operations in Syria to back President Bashar al-Assad.

Tajikistan pursued one of the fiercest consolidations of power the region has seen in the last decade, banning the main opposition party and imprisoning its leadership. One opposition leader, Umarali Kuvvatov, was assassinated in Istanbul. Kazakhstan’s President Nursultan Nazarbayev held early elections to reaffirm his mandate while signing a new law to increase control over civil society. Azerbaijan continued a crackdown that began in the summer of 2014, marked in 2015 by the sentencing of the country’s most prominent investigative journalist, Khadija Ismayilova, to seven and a half years in prison.

Showing his typical Machiavellian flexibility, Belarus’s President Aleksandr Lukashenka took the opposite tack by freeing political prisoners and allowing mild criticism ahead of a presidential election in October, in an effort to court the EU and replace the patronage that Russia can no longer provide. The cosmetic “thaw” worked: the EU has lifted sanctions, and the IMF is in talks to prop up the economy.

Muddling Through

Even in a dark year, there are small reasons for hope. Civil society–driven efforts to uproot a corrupt system in Ukraine showed intermittent progress in 2015, with the government enjoying relative stability and laying the groundwork for institutional reforms in the judiciary, the prosecutor’s office, and anticorruption bodies. So far the EU and democratic donor governments have remained firm in making assistance conditional on reforms, and it is vital that this approach continue, lest entrenched elites turn such aid into yet another embezzlement scheme. Ukraine is and should be the top priority for reform efforts in the region, and aid must not become a blank check for its leaders. The same is true for Moldova, where the EU and its allies still have a chance to build on popular outrage over the 2014 theft of $1 billion from the country’s banks and force the state to finally tackle corruption.

In Georgia, despite the politicization of high-profile cases, the judiciary has improved at the day-to-day level, offering a positive sign that even in a polarized system, structural reform may still have momentum. Parliamentary elections in 2016 will be a major test of the durability of this trend. Kyrgyzstan held on-schedule elections in October that improved modestly on its previous round in 2010. Although there is disturbing evidence of consolidation of power around President Almazbek Atambayev, the electoral process was open enough that his party could not secure a majority in the parliament. Kosovo, the worst performer in the Balkans for years, made some progress on institution building in 2015, although a serious crisis between the opposition and government brought the parliament to a standstill late in the year, threatening to cripple the government’s work in 2016.

Rising to the Challenge

In Europe and Eurasia, not to mention the United States, the politicians who stand out today are the ones with the particularist platforms and the easy answers— build a wall, crush the terrorists, protect the fatherland. It is not enough to say that these populists are doomed to fail, that their disregard for checks and balances or their dismissal of basic economics will eventually be their undoing. The damage they do can live on long past their time on the political stage.

Europe must choose between creating accountable mechanisms with enough power to address fundamentally supranational issues, or watching as individual member states take apart the union piece by piece. On migration, the EU’s March 2016 deal with Turkey neither solves the problem nor complies with international law. By granting accession progress to Turkey’s deeply authoritarian government in exchange for a crackdown on refugees, the EU has undermined its moral authority and left itself vulnerable to blackmail. At least on this front, the Hungary model—of unilateral border controls, dismissal of international law, and stigmatization of outsiders—appears to be winning.

Paradoxically, despite the EU’s failures on migration, there are signs that it is gaining assertiveness on good government elsewhere. For candidate countries, accession criteria have grown more stringent. For members, the relative success of the union’s Cooperation and Verification Mechanism in encouraging Romania to curb corruption, and the early invocation of the EU’s new rule-of-law mechanism regarding Poland, show that there is hope for more accountability within the bloc.

After an initial hesitation, the United States has done an admirable job of supporting far-reaching reforms in Ukraine, which is still the single most important policy for sustaining democratization in the region. The decision to deploy more troops in Eastern Europe and the Baltics is another positive sign that Washington is responding appropriately to Moscow’s threats.

The United States is less well prepared for the more subtle challenge of preventing backsliding inside the EU and in the Balkans. The concept of a Europe “whole and free” is still valid, but it must be updated to recognize the internal threats to Europe’s unity and liberty, namely the return of nationalism and the dismantling of checks and balances to allow state capture. A forward-looking U.S. policy will support Europe not only against external aggression, but also against the dangers posed by grand corruption and illiberalism at home.

Turning To Xenophobia In Central Europe

In 1991, Central European leaders distinguished themselves with their commitment to cooperation and democratic practices after tearing down an oppressive system. In 2015, they stood out by constructing walls and obstructing supranational problem solving. Twenty-five years after the founding of the Visegrád Group, the Czech Republic, Hungary, Poland, and Slovakia have become the building blocks of a Europe that is more nationalistic and more inward looking than at any other time in the past two decades.

Small pockets of illiberalism have long been developing in the region, as shown by the past decade of score declines in Nations in Transit, but the new challenge of the refugee crisis exposed the true fragility of European integration. As the crisis escalated, Central European politicians led the way in embracing xenophobic rhetoric to marshal public support for their positions, and tore down the barriers of “unnecessary political correctness” even as they erected real fences.

The European Union’s demand that member countries share the burden by accepting a proportional quota of refugees—from 803 for Slovakia to about 7,000 for Poland—was met with significant resistance in Central Europe, including lawsuits filed by Slovakia and Hungary at the European Court of Justice. Political leaders also exploited the crisis to strengthen their populist appeal, disregarding fundamental humanitarian principles and the ideals of democratic pluralism for short-term partisan gain. Hungary’s ruling Fidesz party and Slovakia’s Smer experienced an upsurge in opinion surveys, and the crisis dominated political discourse in both countries.

Political forces in the other two Visegrád countries, Poland and the Czech Republic, were less unanimous in obstructing collective action by the EU, but they provided their fair share of hostile rhetoric. Czech president Miloš Zeman and Polish ruling party leader Jarosław Kaczyński found support for their vilification of migrants not just among extremist groups, but in a significant percentage of the population. Still, pushback from civil society and individual citizens against the turn to illiberal discourse did serve as a sliver of hope for the region.

The democratic malaise illustrated by these leaders is not limited to Central Europe. The EU as a whole is facing questions about its identity, both as a unified actor on crucial policy matters and as a project built on liberal values. Many Western European politicians have also turned to hateful rhetoric, and many more advocate nationalist solutions. But the fact that the Visegrád Group, 25 years after its founding, has transformed from an exemplar of unity and democracy into a leading proponent of selfishness and bigotry should serve as an urgent warning about where Europe is headed.

 Eurasia’s Economic Crisis

A combination of U.S. and European sanctions on Russia, Russian countersanctions, and a collapse in world oil prices have driven Eurasia’s economies to the brink. In 2015, the region’s oil-exporting states increasingly faced hard decisions about currencies and budgets. Other Eurasian economies that rely on Russian subsidies or remittances from migrant laborers in Russia were caught in the downward spiral.

Ukraine's Pivotal Year

The 2013–14 “Euromaidan Revolution” began when the president at the time, Viktor Yanukovych, rejected an association agreement with the European Union. All of the subsequent reforms under the new administration have been predicated on steering the country toward Europe. Although EU membership is not on the table at this point, it is worthwhile to examine how Ukraine compares with countries that are already in the official accession process.

While Ukraine falls far short of the performance of EU members covered by Nations in Transit, it actually outperforms the average of official current and potential candidates in NIT on three out of seven indicators—civil society, electoral process, and independent media. Ukraine scores worse on local democratic governance, corruption, judicial framework and independence, and national democratic governance, with the last of those indicators affected by government instability and the fact that Crimea and the Donbass remain under occupation.

Ukraine’s most urgent tasks for 2016 are addressing corruption and adopting related reforms of the judiciary and general prosecutor’s office. The resignation in early 2016 of Economy and Trade Minister Aivaras Abromavičius, who stepped down to protest continued malfeasance and self-enrichment among senior officials, could provide a spark for more rapid progress. But the president’s office and the prime minister will have to demonstrate the political will to reject old practices if the country is to retain U.S. and European support.

Blueprints for reform of the prosecutor’s office, which includes reducing the number of prosecutors by 40 percent, have been signed into law but still need to be implemented. Judicial reform has been delayed by the need for complex constitutional changes to undergird it. These amendments were submitted to the Constitutional Court at the end of 2015 for approval. In addition to their importance for fighting corruption, such reforms are essential for the observance of human rights in the judicial and penal systems, and the proper prosecution of those responsible for violence during the revolution.

The reforms required are substantial and far-reaching. But given time and support, Ukraine certainly has the potential to equal or surpass the democratic performance of official EU candidate countries in the near future. Consistent international conditionality for economic and other aid—as seen in the International Monetary Fund’s refusal in early 2016 to provide the next tranche of financial assistance until the government proves that it is serious about uprooting corruption—is the only way to ensure that progress continues.

The EU’s Dilemma In The Balkans

Twenty years after the Dayton Peace Accords and 16 years after the NATO intervention in Kosovo, the European Union’s policies in the Western Balkans have the appearance of success. There is no war. Serbia and Montenegro have begun the EU accession process, Albania and Macedonia are official candidates, and Bosnia and Kosovo are potential candidates. But reform in the region has slowed and now retreated, with the region’s average Democracy Score back to where it was in 2004.

The EU’s core dilemma is how to strike a balance between ensuring short-term stability in the Balkans and pressing for convergence with European norms. Dayton brought an end to the war in Bosnia, but put in place an excruciatingly complex political system that has crippled the Bosnian state and led to the hardening of ethnic divisions. The country operates as a set of ethnic fiefdoms, and one of its entities, the Republika Srpska, squarely rejects the legitimacy of national institutions. The EU’s enlargement strategy has put off dealing with these issues in favor of an approach focused on socioeconomic reforms, but it is questionable whether progress on these is possible without untangling the system of political patronage that Dayton encourages.

The EU recognizes Kosovo as a potential candidate for membership, but it continues to avoid a final determination about the country’s statehood. While the “Brussels dialogue” between Kosovo and Serbia has made some progress, the results are increasingly unpopular inside Kosovo, especially given the negative example of Bosnia after Dayton. The issue is now distracting attention from much-needed reforms, particularly those related to fighting corruption. The stalling of EU visa liberalization for Kosovo, even as countries like Ukraine with equally deep governance problems move ahead, has further soured citizens on the dialogue.

In Macedonia, Montenegro, and Serbia, political strongmen have been pressing the EU to overlook their bad behavior by arguing that there is no better choice.

The EU expended huge amounts of political capital to bring the Macedonian government to the table with the opposition and to broker early elections. After conceding to an agreement in the summer of 2015, the ruling party stalled investigations and reforms that were needed to make the early elections free and fair. EU leverage is weakened by the ongoing name dispute with Greece, which prevents the opening of accession talks.

In relations with Serbia, maintaining the “Brussels dialogue” with Kosovo trumped other considerations throughout 2015. Right-wing prime minister Aleksandar Vučić was able to argue that only he can keep more radical nationalists in check, so the EU was loath to challenge him when he denounced its support for independent media. Cooperation on managing refugee flows has given Vučić additional negotiating power with the EU.

Montenegrin prime minister Milo Ðukanović, who has effectively ruled since 1991, brought the country into NATO and continues to open new chapters for accession to the EU, even as the government makes no progress on genuine independence for anticorruption bodies or transparency in public procurement. Opposition forces with a mixture of right-wing and good-government agendas tried to challenge Ðukanović through protests in the second half of the year, but they were unsuccessful.

Durable peace in the Balkans is no small achievement. But peace without progress has led to a festering and potentially dangerous stagnation. Crippling unemployment rates, especially for youth, still push tens of thousands of migrants each month to seek work in the EU. A sustainable solution will require the bloc to prioritize media independence, rule of law, and good governance within these countries over any short-term geopolitical objective.

Migration From And Through The Balkans

The movement of Middle Eastern and African refugees into Europe was the continent's biggest news story in 2015. It is easy to forget, however, that at the beginning of the year it was outward migration from the Balkans, especially from Kosovo, that made the headlines. In the first three months of 2015 alone, more than 50,000 Kosovars sought asylum in the European Union.

As the number of Balkans applicants tapered off during the spring, the number of Middle Eastern refugees rose. By May, asylum applications from Syrians alone equaled those from all of the Western Balkans. In total, more than 75,000 people filed for asylum that month, with one-third of them coming from Syria, Iraq, and Afghanistan. These numbers more than doubled by the summer, when Germany announced that it would not deport Syrian refugees arriving on its territory.

In early September, the European Commission proposed adding all Balkan countries and Turkey to its list of “safe countries of origin,” meaning asylum applicants from those states could be returned automatically. In the next few months, the flow from the Balkans shrunk to a trickle.

By year’s end, Hungarian prime minister Viktor Orbán’s strategy of imposing strict national border controls, though initially derided, had become the norm across the EU, as the union failed to develop a shared policy for managing the movement and settlement of refugees. In December, Austria and Slovenia announced the strengthening of border controls and started building their own fences. While the flow slowed somewhat during the winter months, the EU is set to face the full consequences of its fitful actions this spring.

Passing the responsibility for managing refugees and protecting EU borders on to the Western Balkans is neither fair nor without its own dangers. The massive outflow of migrants from Balkan countries in the first half of 2015 should stand as a warning about the economic and political fragility of this region, which is increasingly trapped between Greece and the rest of the EU.