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The Impact of the European Debt Crisis on the Partnership with Central Asia

The Impact of the European Debt Crisis on the Partnership with Central Asia

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This policy brief explains how Central Asia may suffer as a result of the European financial crisis.
This policy brief explains how Central Asia may suffer as a result of the European financial crisis.

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Categories:Types, Research
Published by: German Marshall Fund of the United States on May 30, 2012
Copyright:Attribution Non-commercial

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Foreign Policy and Civil Society Program
May 2012
1744 R Street NWWashington, DC 200091 202 745 3950F 1 202 265 1662E ino@gmus.org
Summary:
Central Asia maybe a collateral victim of the
European nancial crisis. The
internal European politicalcrisis, further spurred by the
nancial crisis, has impaired
Europe’s rise to power on the
Central Asian scene. Austerity
policies will drastically reducethe funding strategies of theindividual European member
states. However, the impact of 
the European crisis is making itself most clearly felt in Central
Asia on the political level. The
crisis has reinforced local elites’skepticism toward the Europeanmodel, reducing Europe’slegitimacy to promote rule of lawand good governance, therefore
decreasing its soft power.
 The Impact of the European Debt Crisison the Partnership with Central Asia
by Sébastien Peyrouse
Te 2008 global economic andnancial downturn, ollowed by theEuropean debt crisis and the risk o an internal political crisis, have animpact on European oreign policy both directly and indirectly. Tis isespecially true in the Mediterraneanregion, Eastern Europe (Ukraine,Belarus, Moldova), and the SouthCaucasus. European governmentsare acing growing skepticism romtheir citizens, who are not inclinedto commit public unds to coun-tries deemed too ar removed romtheir daily lives. In this environment,the Mediterranean and the EasternPartnerships risk becoming weakeras Europe loses legitimacy in terms o its global role in world aairs. Te EUmembership prospects o the Balkancountries and the associative agree-ments discussed with Ukraine andurkey may slow or lose some o theirmeaning. Central Asia may also be acollateral victim o the European crisesat the crucial time when Europe andthe United States must put orwardnew security mechanisms or regionalstability in preparation or the 2014drawdown in Aghanistan.Central Asia sees Europe as a complexactor. Central Asian governments,accustomed to the centralization andpersonalization o power, are baed by the administrative layers o the Euro-pean Union and its multiple aces —the Commission, the Council, and theParliament — as well as by its uniquesituation with its inuence challengedby its very members. Historically, theCentral Asian societies, inuencedby decades o Soviet domination,have seen Europe more through thenational cultures o its member statesthan through the European politicalconstruct. Te Soviet regime alwaystried to avoid building solid relationswith European institutions, avoringdirect relations with member states.Although the EU has gained visibility in the region thanks to the “Strategy or a New Partnership with CentralAsia” launched in 2007 and an increasein political contacts at the highestlevels, Europe’s representation in theregion remains through its memberstates. Germany, France, Netherlands,Italy, and Great Britain all dominatein both cultural and economic terms.Some countries that one would notexpect to be on the honors list or their visibility have also cemented theirpresence in the region. Finland, orexample, has done so thanks in partto its 2009 “Wider Europe Initiative.”Other Central European countriessuch as Poland, the Czech Republic,and Romania, have ollowed suit by 
 
Foreign Policy and Civil Society Program
2
The crisis also exacerbates
the lack of solidarity betweenEU member states and thedissociation of their foreign
policies.
transorming their once-common belonging to the socialistworld into new economic assets.Te internal European political crisis, urther spurred by the nancial crisis, has impaired Europes rise to power onthe Central Asian scene — a stage ull o external actors. EUdevelopment unding dedicated to Central Asia — about€750 million between 2007 and 2013, based on mid-termscycles rom 3 to 7 years — has not been directly hit by thecrisis in the current cycle. However, since the current reviewo the strategy is neither proposing major developmentsnor making the region a priority or the EU, this undingwill probably not be increased or the next cycle, or couldeven be reduced. In any case, the amount in question —about €20 million per country per year — is so small that ithas only a very minor impact on Central Asian countries.Much more problematic are the unding strategies o theindividual European member states; austerity policies willdrastically reduce these.rade and investment between Europe and Central Asia ismostly driven by private actors, and, besides those dealingin energy-related sectors, they have also been weakened.While major oil and gas companies (Eni, Wintershall,BASF), rms linked to strategic resources like uranium(Areva), and major international groups in the deenseindustrial sector (EADS, Talès) will pursue becomingestablished in the region, the presence o mid-size Europeancompanies specializing in areas o innovation such as greenenergies, high-tech, or biotechnologies, or in the develop-ment sector is liable to wane. European aid or the modern-ization o Central Asian economies, which are overly specialized in raw material exports and in the entrenchedrent-seeking culture o the ruling elites, risks being heavily aected.However, the impact o the European crisis is making itsel most clearly elt in Central Asia on the political level. Tecrisis has reinorced local elites’ skepticism toward the Euro-pean model, reducing Europes legitimacy to promote ruleo law and good governance, thereore decreasing its sopower. Europe also appears to be an ambiguous and contra-dictory actor or the Central Asian elites, who eel that the value-oriented narrative is conditional, since priority isgiven to energy (in particular as concerns urkmenistanand its possible association with the “Southern Corridor”)and security (German and British agreements with Uzbeki-stan and Kazakhstan or resupply eorts and reverse transitrom Aghanistan). Unless the EU has condence in itsel,the legitimacy to promote its own conception o develop-ment and human security will be limited in a region markedby authoritarian regimes and ailing governance, and inwhich Russia and China do not promote any politicalreorm policies.Te crisis also exacerbates the lack o solidarity between EUmember states and the dissociation o their oreign poli-cies. Member states will continue to avor their own way in Central Asia and be less dependent on EU structures.Germany, the leading European actor in terms o visibility,economic presence, and security involvement in CentralAsia, might or instance see its policies in the region divergerom those o France, Italy, or Great Britain, as was already the case in discussions concerning whether to adopt a value-oriented or an energy- and security-oriented strategy.Te image Europe conveys to the Central Asian societies isthereore partly one o conusion, o a lack o well-hierar-chized priorities, and o an entity in which the contradic-tion between institutions and between member states isbecoming increasingly apparent. As a growing share o theyoung Central Asian elites look toward China, other partso Asia (South Korea, Malaysia, Singapore), and the UnitedArab Emirates, the undermining o Europe — as well aso the United States — in promoting its model o develop-ment presents a challenge to the legitimacy o the West inthe region. European actors will have to explain how theirmodel can be more competitive than others, but nonethe-less more sustainable in the long term, or else they mightlose the support o a growing contingent o younger Central

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