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Schriftenreihe des Europa Institutes Budapest, Band 27:45–49.


The External Economy of the European Union, South-Eastern Europe and Hungary


0.9% of the world’s population lives either in today’s Balkans or in the countries of South-Eastern Europe. This 0.9% of the population may claim 0.5% of the world’s exports, 0.4% of the world’s GDP, in addition to the 0.4% of foreign direct investments, which has significantly influenced its development over the last half century. We are, however, dealing with a rather narrow economic potential that cannot really be attractive to international participants involved in global activities. The Balkans is an underdeveloped area of minor significance where the per capita GDP is 25% of the average of the EU-25 members. Croatia alone has achieved 40% and in the case of Serbia, Montenegro, Albania and Macedonia this figure is below 20%. Moreover, this ratio dropped during the past century. It is a hardly known fact even within the region that the per capita GDP in the period prior to the First World War reached close to 60% of the then developed Europe. Ninety years on and it has dropped to just 25%, – certainly a substantial decline. In 1937 this group of countries accounted for almost 2% of global exports; this figure currently stands at 0.5%. Therefore it is hardly surprising that this area has not been able to raise a greater economic attraction.


The Security Factor

Since the 1878 Congress of Berlin, international interest in the Balkans has been largely confined to matters of security. As a consequence of being a flashpoint of conflict, a potential powder keg or being cast in the role of a ’black hole’, methods have been developed to manage conflict, but in effect international attention has only been directed towards the issues of European security and stability, which the Balkans have triggered, since the collapse of the Yugoslav state and the ensuing military conflict between NATO and Yugoslavia. Attention waned, however, before a long-term settlement to the conflict could be achieved, instead being diverted to the Middle East, towards the conflict zones of Israel, Palestine, Afghanistan, Iraq and Iran. Recently we have come to realise that the unsettled status of Kosovo, the situation of the Serbia-Montenegro confederation with its three prime ministers, as well as issues resulting from Montenegro’s pursuit of independence may still cause considerable concerns for Europe. This may have given rise to the EU decision that enlargement over the next ten to fifteen years would be directed towards South-Eastern Europe rather than towards Eastern Europe by moulding and developing economic organisation, spatial economic integration, reconstruction programmes, and a market economy and democratic system of institutions. Recognition has been growing within the United States that should the Middle East become a significant focal point for international attention in the coming decades, the Balkan region will have a strategic demonstrational role to play and therefore will demand greater attention than it has to date.


Hungary and the Balkans

Among the Member States of the European Union, Hungary, ordinarily remarkably sensitive to foreign relations and deeply embedded within the European system of relations, has been most affected by the outcome of the processes unfolding in the Balkan region. The reason for this can be found primarily within a geographical context. Of all the EU countries Hungary has the longest border with three of the Balkan countries, namely, Romania, Serbia and Croatia, which produce two thirds of the Balkans’ GDP and constitute approximately three-quarters of the Balkans’ entire population. As such, Hungary neighbours the Balkans to a greater geographical extent than any other member country. In global economy the importance of geographical neighbourhood rises, since we are no longer dealing with countries isolated from one another, separated by national economic borders and governed by inward looking tendencies, but much rather neighbours who are enterprising enough to co-operate and to dismantle borders. A good neighbourhood policy is a more essential requirement for development than ever.

In terms of its geographical location, Hungary finds itself at the centre of north–south flows. European infrastructural networks, energy pipelines and information highways crossing the country have an effect generating development. The intensity of the development generated by transit depends on the country’s enlightened economic policy. Geographical neighbourhood is a significant driving force even in an age when technical development can make geographical distance vanish, but not the cultural one. Neighbouring countries, in fact, are familiar with each another. This mutual knowledge is reinforced by close historical relations, a factor which bears unparalleled impact within the EU. Between the 12th and 15th centuries the presence of Hungary in the Northern Balkans was extremely strong. After the 15th century a significant migration from Balkan territories arrived in the Carpathian basin, thereby strongly enhancing Hungary’s social and cultural diversity. The shared structure of experience lasting for almost half a century of socialism also constitutes part of these historical relations and has similarly contributed to mutual awareness and knowledge, and to adequate empathy for other countries within the region. This is a very important driving force behind building relations among the countries, even if certain countries within the region define the nature of these relations in different ways. It should be remembered that even today almost two million Hungarians live within the national territories of the countries of the Northern Balkans. Hungary, as such, has a twofold responsibility towards the Balkan region. Public life in Hungary has always paid great attention to the fate of Hungarians living in this region and is always concerned whenever any conflict or crisis may adversely influence their situation. Hungary can further more by no means remain indifferent should any escalation of the conflicts encourage the one hundred thousand Serbs resident in Kosovo to set off again and show up in Vojvodina. This could even mean a stability problem in Central Europe. Hungarians living in the state territories of the Northern Balkans have a stimulating role to play in the European integration and modernisation of the area, which could in turn have a beneficial effect on the entire region as well as on Hungary’s well-being in general. Since, relatively speaking, a larger task falls to Hungary in terms of coping with the Balkan situation within the European security policy, it is no exaggeration to highlight that those elements which characterised Hungarian foreign policy during the Anjou-era will once again appear in Hungarian foreign policy. At that time the focal point of building intra-European relations was not Western, Northern or Eastern Europe but much rather the region of the Mediterranean and the Balkans.


The Economy of the Balkans

In the period prior to World War II, when Hungary’s interstate relations with its Balkan neighbours could not be described as cordial, 12–15% of Hungary’s exports were directed towards these countries. Following almost four decades of COMECON this proportion had dropped to just 6% by 1989. Relations had shrunk. Since 1989, exports to the Balkan countries have increased at a rate above the average and now exceed 8%. As far as its product structure is concerned it is quite advanced, reflecting an industrial division of labour. In terms of the quality of relations it is a new element that more than half of the Hungarian direct capital exports, nearly four and a half thousand million dollars, have been invested in the neighbouring countries of the Balkans. Romanian investors are already present in Hungary. Major Hungarian companies have also discovered the countries of South-Eastern Europe – MOL, Richter, OTP, MATÁV, Trigránit are all present in the market.

Due to the security problems major international enterprises do not appreciate the Balkans on such a level even as other relatively less developed countries. Today, small enterprises have an important role to play in transforming the market economy of the Balkans given that large companies are still avoiding the region. In the case of Hungary, however, the improvement in co-operation between small Hungarian and South-East European enterprises plays an important role within the group of transition countries. Should one wish to create new foreign contacts for small Hungarian enterprises, given their limited geographical manoeuvring capabilities, one should not search for that particular connection in Holland but in the immediate neighbourhood.

A further factor is worth mentioning. Hungary adapts modern technologies from the West. Time after time over-optimistic opinions can be heard about Hungary taking a gigantic leap and breaking into the forefront of international technology, but given the constantly diminishing research and development budget the possibility of this actually happening within the foreseeable future remains limited. Nevertheless, Hungary may enjoy another potential role in so far as it is able to transfer technologies, services, experience and skills to the countries of South-Eastern Europe at a level more in keeping with the needs of the Balkan countries than, for example, technologies derived from Holland or the United States. From this respect an extremely useful and prosperous long-term co-operation could take shape.

The geo-strategic significance of both the South-East European region and Hungary has been reassessed. It is known that once the Turks had appeared in the Balkans, South-Eastern Europe and Hungary experienced a decline in their standard of development compared to mainstream development in Europe. The main European intellectual streams such as Gothic art, the Renaissance, Reformation and Enlightenment exerted a weaker effect on the Eastern and South-Eastern part of Hungary and beyond that also on the territories of South-Eastern Europe, resulting in a comprehensive lagging behind. As a consequence of the unfavourable geo-strategic situation the vanguard of European development was shifted to the West, to the shores of the Atlantic Ocean. This geo-strategic situation is now changing due the European Union’s decision to enlarge in a south-eastern direction and to start its long march towards Asia Minor and the Middle East. Currently Hungary constitutes the Union’s ’vanguard’ on this road and could as such obtain benefits and transfer roles comparable to the role Austria enjoyed during the 1970s and 1980s in the golden age of trading between East and West. Currently Hungary possesses a geo-strategic dowry that could and must be exploited. In other words, history has presented Hungary and South-Eastern Europe with a rendez-vous, since the economic growth of the European region is likely to accelerate in this direction. In order to ensure its success it is advisable to have a certain amount of preliminary knowledge at one’s disposal in order to lay the theoretical and scientific foundations of this historic meeting. This can provide a further incentive for Hungarian public life, for political thinking and government activity in formulating the country’s long-term destiny within a framework of comprehensive development concepts so that Hungary might exploit this favourable historical constellation.