Europe’s Losers Have Become Its Winners Again

One of the nicer stories doing the rounds in Brussels these days is about how Europe’s COVID-19 recovery funds are spent. We’re talking here about the roughly $869 billion in grants and loans the European Union’s 27 national leaders earmarked in 2020 for projects to kick-start their economies after the pandemic. By now, all member states have proposed dozens of different projects, with some of them already implemented. In Brussels, around 80 officials are working around the clock to process and evaluate these applications, and check project details against a list of criteria such as green transition, digital innovation, economic and social resilience, and so on.

Which projects pass this scrutiny with the greatest ease? Interestingly, they’re the ones proposed by countries such as Greece, Ireland, and Portugal. During the euro crisis, over 10 years ago, these countries got used to receiving money in exchange for reform plans. To them, creditors coming back for more details all the time is nothing special. Intrusiveness is something they have learned to anticipate. That is why even the first drafts of their project proposals, officials say, often contain the required details: In Athens, Dublin, and Lisbon, they know what Brussels wants and they don’t take any of it personally.

This matter-of-fact attitude is bolstered by the fact that, with the euro crisis behind them, Southern European countries generally now feel more confident in their dealings with Brussels: Economic reforms have largely worked, the economies are picking up, tourism is booming, foreign investors have returned. According to the latest economic forecasts of the European Commission, Cyprus, Greece, and Portugal will be among the fastest-growing EU economies in 2023. Moreover, last winter’s energy crunch was less severe in the south of Europe because it relies on Russian oil and gas less than other regions in Europe. As a sign of Southern Europe’s growing confidence, Portugal initiated the creation of an EU group of Atlantic countries, which met in the coastal city of Porto at the end of May.

This glimpse into Europe’s backstage shows how quickly the positions of countries and the relationships between them can change. Rifts and conflicts that appear during one crisis are often replaced by different ones during the next. It’s a reminder to be careful with clichés about any EU member state—after all, yesterday’s losers can be tomorrow’s winners. In Europe, reality can catch up with you fast.

In the case of the COVID-19 recovery funds, it cuts both ways. Project proposals from some Northern European countries tend to be too short and not detailed enough, officials say. When pressed for additional data or guarantees that promised reforms will indeed be carried out, northerners are sometimes a little irritated: Why on earth is Brussels meddling so much? As creditor countries during the euro crisis, they were the ones making those demands—to such an extent that some called it a “creditors’ dictatorship.” They were the ones changing dots and commas in Greek or Portuguese reform plans, deciding which laws needed to be changed, and how and sometimes even when. Now, they find it difficult to be in the role of the recipient. Some of their projects get off to a more difficult start as a result.

The emancipation of Central and Eastern Europe is another example of how quickly the fortunes of EU countries can change, transforming the balance of power within the EU.

Poland is a good example. Before Russia’s invasion of Ukraine in February 2022, Poland was marginalized in the EU because of its rule of law violations. In several areas, including foreign policy, Poland was less consulted than before and boxed below its weight. Ministers from other EU member states hardly ever visited the country, waiting for better times. Then, after the Russian invasion, Poland became a frontline state practically overnight. Humanitarian aid, weapons deliveries, foreign dignitaries, refugees—almost everything and everyone on the way to or from Ukraine passes through Poland. Polish warnings on Russia’s belligerence that western Europeans often found exaggerated were now proven right.

As a result, today, Polish views are more closely listened to. Some even say that Poland is already becoming too dominant in Brussels’ debates. The country now tries to use this new clout to box itself out of the rule of law corner as well; it has made some concessions, but according to the European Commission they do not go far enough. The moves themselves are interesting because they show, once again, that things never stay the same for long in Europe.

In many respects, the Russia-Ukraine conflict has prompted the emancipation of not just Poland, but the Central European and Baltic region too. It is not just that these regions’ assessment on security and defense issues obviously carries more weight in the EU than before because of their proximity to the war. On strategic themes such as EU enlargement, their views have also become more influential. It was their idea, initially, to offer Ukraine candidate status for EU membership. The recent blockade of Ukrainian grain by Poland and other Central European countries, moreover, shows their determination that Ukraine’s integration should not take place at their detriment.

Last but not least, the fact that Central European and Baltic countries have taken in millions of Ukrainian refugees is changing Europe’s difficult asylum and migration debate. In Brussels, the regions were previously regarded as a partner unwilling to do anything except build fences and fortify Europe’s external borders. Today, they grapple with the same integrational dilemmas familiar to Western European societies. With more EU member states sharing similar experiences, there is more mutual understanding and willingness to help each other—with one exception: Hungary, which is completely isolated and can hardly use a veto on this dossier.

Nordic countries are moving a little more to Europe’s center, too. Russian aggression has made Denmark and Sweden realize what Finland—Russia’s direct neighbor—acknowledged already long ago: The EU is not just a market but provides political shelter and security, too. Russia’s war in Ukraine prompted Denmark to join EU defense initiatives. The war also reinforced Danish and Swedish debates about the merits of joining the European banking union. Even both countries’ resistance to the abolition of the veto in the EU foreign affairs and security domain seems to be melting away.

Although the Nordic countries still advocate open, liberal markets, they have started supporting more “protectionist” EU policies, too—measures shielding European companies from takeovers by foreign, state-owned companies or cyberattacks, for instance. Nor have the Nordic countries blocked the European Commission’s push for a European industrial policy, which would make Europe a little less dependent of the rest of the world in some respects. What is more, despite their stingy reputation, the Nordic countries are willing to pay for these policies too.

So, Europe is in constant transformation. With new challenges, old feuds are settled and new ones emerge. During the euro crisis, there was a deep divide between the north and the south. Later, during the refugee crisis, the main disagreement was between the east and the west. Now, with the war in Ukraine, with every country affected in a different way again, alliances and rifts change once more.

Almost every challenge that comes Europe’s way produces first a fracture and then a scar. Over the years, the scar tissue has become thick and multi-layered. Feuds are rarely forgotten and sometimes flare up again. Still, the tissue has proven to be stronger than some tend to think.

Correction, May 25, 2023: Portugal’s capital was misidentified due to an editing error.