NATO summit – the costs of being the USA’s eastern flank

By Dennis Barton and Paul Taylor

The NATO summit in Vilnius, 11-12 July, is set to further consolidate US dominance over Europe. The US is attempting to increase the subordination of European countries to further its goal of achieving global primacy. 

Today, that means Europe paying more for the US proxy war against Russia in Ukraine and backing its plans to use an enlarged NATO to apply perpetual military pressure and isolation on Russia. It also means stepping up cold war actions against China in coordination with the US.

According to the NATO general secretary, Jens Stoltenburg, NATO members should agree to increase their military spending to at least 2 per cent of their GDP. The Central and Eastern European (CEE) countries are on the front line of this strategy, which will result in perpetual insecurity and economic damage in the region. It also leads to further political instability in CEE, with the right in many countries gaining support.

A long-term strategic priority for the US has been to prevent Europe from uniting as an independent rival to the USA. This strategy has many elements, including, The Marshall Plan; opposition to a neutral, united Germany, Ostpolitik and Osthandel; the creation and expansion of NATO; and the blowing up of the Nordstream 2 pipeline. Following the end of the Cold War, the USA has opposed any proposals to integrate Russia into a European-wide security and economic structure. Since the collapse of the Soviet Union, the US has been expanding NATO and, thereby, its power over Europe. The rise of China has added a new dimension to this agenda, with the USA determined to prevent Eurasian unity and the extension of the Chinese Belt and Road initiative into Europe. 

The eastern flank of the US 

At the heart of this strategy is the US endeavour to break the CEE countries from the rest of Europe and completely subordinate them to its agenda. This view was clearly expressed by Donald Rumsfeld in the run-up to the Iraq war when he made the distinction between so-called ‘new’ and ‘old’ Europe. The CEE countries – ‘new’ Europe – supported and actively participated in the US assault on Iraq, whilst countries such as Germany and France opposed it. The US now aims to use the CEE countries as a wedge in Europe to weaken any opposition to its military hegemony over the continent. 

The US continues to ratchet up matters of security to drown out Europe’s concerns about the economic effects of its policy; for example, the devastating consequences for European industry and employment of Biden’s Inflation Reduction Act [IRA].  

For the US agenda to be consolidated, it is essential that those governing the CEE countries are aligned with US policy. The Czech President, Petr Pavel, performs this task particularly well. He is operating as an out-rider for the US, calling for the expansion of NATO into Ukraine, a security clampdown on Russians living in Europe, the weakening of economic links with China and a ramping up of support for an independent Taiwan.

Economic Burdens 

The military conflict in Ukraine, the imposition of sanctions on Russia and the shift of economic resources to military spending is causing massive economic damage in Europe. As in the rest of the world, the European working class also suffers from a fall in living standards caused by the surge in US-inspired inflation. This is being acutely felt in CEE.

The CEE countries are located on the periphery of the European and world market and are, therefore, more open to external economic shocks. Since 1989, these countries have become dependent upon German and EU capital, and the decline in the strength of the German economy adds to the vulnerability of the CEE economies. For the CEE nations to develop independently, they need to be able to trade with the East and West. However, the conflict in Ukraine has severed many ties with their eastern neighbours – as Ukraine has been devastated by the war and Russia estranged through Western sanctions, which reduces access to resources, particularly energy. The CEE countries have suffered rises in inflation well above the EU average, leading to large falls in living standards.

Inflation Rate CEE Countries and the EU (source: World Bank)

As the largest CEE country bordering Ukraine, Belarus, and the Russian enclave of Kaliningrad, Poland’s economy has been badly hit by the war in Ukraine. At the start of the war, the lifting of EU trade barriers for Ukrainian agricultural products led to a slump in the prices of some Polish agricultural products and resulted in a wave of protests by farmers. In response, the Polish government unilaterally blocked the import of goods in April, with the EU introducing a subsequent ban on Ukrainian grains to neighbouring EU countries. 

Poland has also hiked its military spending, planning to spend around 115 bn euros on modernising its armed forces by 2035, which is the equivalent of 20 per cent of its current GDP, and to build a standing army of around 300 thousand soldiers. Around three-quarters of the Polish state’s military purchases are due to be from abroad (primarily in South Korea and the USA), meaning that any positive effects on the Polish economy will be limited.  

Energy sanctions have particularly hit the Hungarian economy on Russia as it is heavily dependent on Russian energy imports. This contributed to Hungary’s soaring inflation, rising interest rates and a fall in domestic demand. A similar situation is observable in Czechia and Slovakia, which rely heavily on imported Russian energy. Despite the sanctions, Hungary receives around 80-85% of its gas from Russia, mainly through the Turkstream pipeline that bypasses Ukraine. Poland continues to transit gas from Russia to Czechia and is the largest importer of Russian gas inside the EU. 

In Czechia, the right-wing government and President are simultaneously cutting economic and social spending whilst hiking military expenditure. The coalition government’s austerity proposals include reducing support for small and medium-sized enterprises, cutting social spending, and cutting public sector jobs and pay. The government is also proposing to reform the pension system, which includes raising the pension age and tightening the rules for early retirement. 

Trade with China

Pressure from the US for the CEE countries to cut ties with China is meeting resistance. Whilst Czechia has taken a hostile stance towards China, the Slovakian government has deepened its ties with Beijing, with the Speaker of the Slovak National Council meeting with China’s Vice President in China this April, pledging to deepen economic cooperation within the framework of the Belt and Road Initiative. Also, with the closure of transport lines through Ukraine and Kaliningrad, Poland has become the main entry point for Chinese goods entering the EU, via Belarus. 

Hungary, the most resistant to the pro-US agenda in CEE, has deepened its economic cooperation with China, which invested a record 12 billion dollars in Hungary in 2022. At the recent World Economic Forum conference in China, the Hungarian foreign minister said that “both decoupling and de-risking [from China] would be a suicide committed by the European economy.”

The political consequences 

CEE politics is dominated by the right due to the collapse of social democracy throughout the region after it embraced the neo-liberal agenda. The war in Ukraine has entrenched the dominance of pro-US, nationalist and neo-liberal political forces in the region, with anyone trying to push back against the US agenda demonised as being ‘pro-Putin’. The left has generally echoed the pro-NATO expansionist policy and the shift of resources towards the military. Therefore, although the damaging economic effects of the war have fuelled frictions within CEE countries, this has tended to result in a growth in support for the far-right rather than in a revival of the left.   

As the most strategically important country in CEE, Poland’s elections this autumn will take on particular significance. The elections are being fought between the right-wing Law and Justice Party (PiS) and the pro-EU neo-liberal Civic Coalition (KO), led by the former President of the European Council, Donald Tusk. These will be the most tightly contested parliamentary elections for some time, and the opinion polls point to neither of these parties/coalitions winning an outright majority. With the left marginalised, the far-right Confederation Party is growing in the polls and could enter a future coalition government. This party combines extreme neo-liberalism with right-wing conservatism, nationalism and xenophobia. It is the only party in the Polish parliament to question the government’s strategy in Ukraine but has done so in a reactionary manner, including attempting to harness social dissatisfaction by scapegoating Ukrainian refugees.  

Slovakia’s fall in living standards triggered widespread protests against the government, resulting in the governing coalition government losing its majority in December last year. The country is now governed by a technocratic cabinet led by the central bank’s deputy governor, Ľudovít Ódor, with elections due at the end of September. Currently, the left-wing ‘populist’ party SMER-SD is leading in the polls. Led by former PM Robert Fico, SMER-SD opposes the Slovakian policy of sending military equipment and support to Ukraine and is against the sanctions on Russia. 

The militarist and austerity policies of the Czech authorities have instigated a wave of social protests over the past year. In May this year, the main trade union confederation, ČMKOS, immediately announced a strike alert in response to the government’s austerity proposals. 

Uncertain Future

The war in Ukraine has further exposed the damaging consequences of Europe’s subordination to the USA and, with that, a decline in its global economic and political position. This is widening divisions within the continent, with the USA attempting to entrench the CEE countries as its most loyal allies. However, this US strategy has worsened the economic conditions in CEE, which is deepening the political crisis in some countries. It also exposes divisions between the CEE countries, which challenge the view that CEE is a pro-US monolith, devoid of its particular interests and concerns that are intrinsically connected to Europe’s economic prosperity and future security.