EUOBSERVER / COMMENT – The 2004 enlargement of the European Union has mounted new challenges for both the old and new member-states.
So far, public discussions in the EU have focused on such issues as the welfare gap that the new member-states are trying to bridge in catching up with old Europe, the EU constitution, the Lisbon Strategy and the services directive.
Yet the terror acts in Madrid and London, as well as the reaction that these events provoked across the EU, show that security issues are just as important as referendums on the EU constitution.
For quite a long time, the security of the new borders was not an issue in debates on EU enlargement.
The new member states were a kind of buffer zone between old Europe and, to put it mildly, troublesome neighbours. So after the bombings in London security and the war on terrorism have been put on top of the European political agenda.
Corruption and EU border security
How important is the problem of the new borders in relation to the threat of terrorism and other security issues in the EU?
The 2004 Transparency International “Corruption Perception Index” shows that out of 145 countries Estonia ranks 31, Latvia 57, Lithuania 44, Poland 67, the Czech Republic 51, Slovakia 57, and Hungary 42.
These ratings might look good in the world context but they are certainly not too impressive in comparison with the old EU member-states.
More than that, the new member states border countries where corruption is even more pervasive. These are Russia in the 90th place, Belarus in the 74th position and Ukraine in the 122nd.
Historically, the EU has had little experience in administering direct borders with Russia, Belarus or Ukraine.
Until the 2004 enlargement, the EU border with Russia was 1,340 km long. Today the EU has a 2,720 km border with Russia, Belarus and Ukraine. Given that Bulgaria and Romania will join the EU before long and that these countries have Moldova and the Balkan states as their neighbours, the EU will face even bigger challenges in terms of exposure to corruption.
Why is the problem of corruption so important when we talk about security?
Research shows that customs and border control top the list of institutions that are plagued by corruption. Of course, this implies a direct threat for the security of the EU and its member-states.
This problem has not come out of the blue. It was sparked off by the protectionist policies and high taxes that the new member states pursued until they signed the free trade agreements and joined the World Trade Organization. And now this problem has turned into a headache for the whole of the EU.
Will the funding that the EU is now allocating for border security, coupled with NATO requirements, help to tackle the problem of border security? Not very likely, to my mind.
Tradition is always stronger than any kind of order innovations, while corruption on the border is systematic and so deeply entrenched that additional cash injections alone will not help to root it out.
Furthermore, as new associated membership agreements and free trade agreements with the EU neighbours come along, putting locks on the EU borders is no way out.
Excise taxes and terrorism financing
There is the other side of the coin – economic considerations – which the European Commission has not yet taken note of.
During the EU membership negotiations, the acceding countries pledged to raise their excise taxes to meet the minimum rates that are applied in the EU.
Transitional periods were granted so that these nations could capitalize on their robust economic growth and rising incomes and adjust to the EU minimum over time.
However, no one hinted that these minimum rates had been set back in 1989 or 1990 according to the economic potential of the then member states whose economic potential strongly exceeded the purchasing power of the new member states.
Absurdly, with the accession of the new nations close at hand, the European Commission raised once again the minimum excise rates in 1999.
According to Lithuania’s membership obligations, for example, the excise tax on cigarettes will have increased by 437 percent from 2002 until 2010. Given that the average purchasing power of Lithuanians is eight times lower than the EU average, such an oversight on the part of the European Commission has put a bomb under the new EU borders.
Consumers and businesses of the new member states will bear all cost of the misbalanced and greedy Brussels and their own government excise policy.
The stolidity to this problem professed by the ministers of finance and economy of the EU member states and the commission itself leaves no hope for Europe’s future economic growth, the implementation of the Lisbon Strategy and for those member states that are aiming at joining the euro in the short run.
Opinion polls conducted in Lithuania show that people have no scruples with regard to the buying and consumption of smuggled goods because what consumers care about is the price.
More than a half of those polled said they did not use smuggled goods only because they did not know where to buy them. Corruption on the border, coupled with this kind of public attitudes, create ideal conditions for the spread of smuggling.
Security experts admit that large-scale smuggling, for example cigarette and alcohol smuggling, is an excellent source of financing for large criminal groups, including terrorists. Smuggling plus corruption also provide transportation and distribution networks for cigarettes, people, guns and explosives, including for future terror attacks across the EU.
Paradoxically, it is ordinary consumers who are at the bottom of this pyramid of evil.
Alarmed by high taxes and being too hard-up to buy their way out from local authorities or the EU, they are forced to make compromises with their consciences and pay smuggling networks instead.
Obviously, high excise taxes and governments’ ever-growing thirst for money, underpinned by the illusion that taxes can help stamp out the vices caused by the consumption of excisable goods, excite not simply fear and mistrust of government among consumers.
They pose a direct threat for the borders and citizens’ security. If a reasonable level of security is to be achieved, the existing excise taxation in the EU should be replaced.
