Radu Magdin: The trend in Europe goes eastward

Vladimir Mitev, Mediapool, 9 September 2024

Radu Magdin is CEO of Smartlink Communications and a (geo)political risk analyst and consultant. In this interview he spoke about the current weakness of the liberal centre in Germany and France, the shift of power in the EU towards the East, the potential for cooperation in Southeastern Europe, and how Bulgarian-Romanian and regional relations could change. Finally, he gave his predictions for the outcome of the Romanian presidential and parliamentary elections due to take place at the end of 2024.

Mr Magdin, we are speaking just a few days after the elections in Saxony and Thuringia, where the tendency of the collapse of the centre in German politics continued, and we also saw how the European elections also demonstrated this in France and Germany. So if this collapse of the centre, or strategic weakness of the centre in the European Union is true, what are the conclusions to be drawn, and how should Bulgaria and Romania respond as societies, as EU allies?

One of the sound bites for the first countries to join the EU was that they did not initially live happily ever after, but lived what the French would call les 30 glorieuses, the 30 glorious. In fact, after the start of the European project, the initiating countries found that there was up to three decades of almost headache-free continued growth, right? We are on the same path as Romania and Bulgaria, and we have to understand that we have to reinvent ourselves periodically in terms of, let’s say, economic strategy, but not only.

I start with the economic argument because, at the end of the day, this dissatisfaction with the mainstream, not just the centre, but the mainstream – right, left, centre – is also a dissatisfaction with living conditions. Unfortunately, from this point of view, Western Europe and Eastern Europe are decoupled in terms of the historical cycle. Whereas in Western Europe you sometimes hear talk of decline, it’s clearly not the case in Eastern Europe, because we feel that since we joined the EU we have a sense of rising, not only in terms of economic standards, but also in terms of GDP, but also in a broader sense, we have a sense that we have prospered. There may be some frustration among some of our people that as certain categories they have not prospered in parallel with the numbers of the country, so that we have not always seen the translation of national economic growth into our pockets and welfare. Nevertheless, Eastern Europe feels good and is still growing, along with the broader global trend of the global axis moving more to the east, and when I say east I don’t necessarily mean Russia, I mean the Asian century and the growth dynamics of Asia.

From this point of view, especially in Western Europe, in some of the regions, let’s say, or in some of the social categories, there has been at least a decade of frustration, if not longer. When did the damage really start in Western Europe? The damage really started in Western Europe after the economic crisis of 2008, and the truth is that we went from this perspective of a population that had stabilised and thought they were going to live well in the 90s and early 2000s, to suddenly a lot of people who had been prosperous before and had some mini economic recession cycles, maybe in the 80s or early 90s, they were faced with a cascade of crises from which they never really recovered. I mean the eurozone crisis and the global financial crisis, then quite frankly we were all affected by Covid and the economic turmoil that followed, then Ukraine, Russia’s war on Ukraine with the energy crisis, rising inflation and so on. So it’s an imbalance between the West and the East.

The West is living worse than it thought it would live, and perhaps worse than in the past. So it’s normal that in some reports it’s part of the messages linked to nostalgia or part of the messages linked to unfulfilled expectations for the future. I wouldn’t be so pessimistic in the case of Germany, I think we could be more pessimistic in the case of France.

I think the dangers that France faces are that although the French state and some of the French politicians are trying to do what we call containment of the populist wave, I fear more for France than for Germany. What I mean is that the structure of Germany, the federal structure of Germany makes that, yes, we have seen Saxony and Thuringia go to the AfD, but at the same time you will still see the CDU very strong in North Rhine-Westphalia. You will still see the SPD quite strong in some of their districts where they still have a star.

The Greens are still there. On the mainstream side and the AfD coalition in Germany, only the FDP is not necessarily feeling good, the liberals, because they have their doubts for future elections if they can make it in parliament. So I wouldn’t be too worried about Germany, because Germany is kind of divided, in a way like the EU, but geographically in reverse.

Western Germany still delivers a lot in terms of economic prosperity, whereas Eastern Europe has accumulated economic frustration and welfare frustration with the West. It’s the opposite of what we see in Eastern Europe, where Eastern Europe is still superior to Western Europe in terms of growth, and it’s very dynamic… So overall I’m not a fan of doom and gloom.

I think we’re still okay, but it also creates a leadership opportunity for us in Eastern Europe and opportunities for bilateral ventures, like the Baltics working together, maybe Romania and Bulgaria, whether bilaterally or trilaterally with Greece. In terms of our formats in the region, we can step forward, be more proactive in terms of European thought leadership and be more proactive in terms of strategic initiatives because, surprise! While Berlin and Paris are busy with their own things, there may be an opportunity for constructive ideas that can be adopted by the wider club, coming from Sofia, Bucharest or both capitals.

I’d like to follow up on the question you raised, because if we look at geopolitics, it’s already been discussed that France and Germany have a bit more turbulence in their politics, but Politico and other media keep writing that the centre of gravity or power in Europe is shifting to the east, with Poland very much on the rise, and also Ukraine and Moldova coming even closer to Europe, and a lot of infrastructure projects being implemented, for example in the Three Seas Initiative region. So could you comment a little bit more on that, both potential and concrete things that could be done so that this region that you mentioned, which can offer an alternative for its own dynamism and its own contribution to the European Union, really does so?

If you just look at the combined population of Poland, Ukraine – and I’m including the Ukrainian diaspora here, which has the potential to return to Ukraine after the war – and combine that with Moldova, Romania and Bulgaria, you realise that you have about 110 million people on your table, which is more than the population of Germany. So just these four countries, if they come together and do more projects in the future, you have a collective market that is pretty good. If you just put together the EU members, Poland, Bulgaria and Romania, it’s about 70 million people.

So it’s still important, it’s still a country beyond the population of France, so from that perspective I’m optimistic that regional cooperation projects and ideas will be mutually reinforcing in a way, if we’re synchronised and it doesn’t become a matter of ego. So I think if it’s designed from the beginning, of course somebody has to do the design, whether it’s Sofia, Bucharest or Warsaw, but if it’s handled well on a personal level, from a statecraft perspective, I think we can be mutually supportive and we can take the lead together on Eastern European issues. I mean, at least between Romania and Poland, we are clearly also encouraged by our American allies to do more.

If you look at Ukraine, that’s certainly where Britain comes in. The UK is trying to look at different security and other formats. I would say that Poland is well positioned at the moment in terms of its relations with the Baltics, but it’s got a problem with the Visegrad format because of the current status of its relations with Hungary and Slovakia, whereas the functional member from a Polish perspective in Visegrad is Czechia.

The good news is that I think both Romania and Bulgaria are two very constructive countries in Europe and it’s always good to be constructive and it’s always important that your partners feel that you are an open interlocutor. And I think that is an added value for Romania and Bulgaria in the future. I wouldn’t necessarily count on too much beyond the geopolitics, the economics of Moldova and Ukraine.

And I say that as an optimist. Even as an optimist, I’m aware of the challenges that lie ahead for Moldova and Ukraine. Ironically for Moldova, although it’s perhaps less important geostrategically for Europe than Ukraine, because it’s smaller in size and scale, and there’s a lot of talk about how much EU money we have to offer Moldova, ironically Moldova, if it stays on its EU track and makes progress on the negotiating chapters, will join the EU, perhaps even before some of the Western Balkans if they stall, or certainly before Ukraine, because Ukraine has both an advantage and a disadvantage in its size. It has the geopolitical and geoeconomic advantage of its size, but at the same time it is an easy field for Ukraine’s opponents in the EU club, because as Romania and Bulgaria found out when they joined the EU, we don’t only have friends in the EU arena. I think they will be confronted with conditions that we have been confronted with, in terms of privatisation or in terms of other additional criteria that have to be met in order to make sure that the gates of Brussels are open, whether it’s CVMs, cooperation verification mechanism or any other kind of mechanism. At the moment, I would say that Europe has a lot on its plate. Security is clearly an issue.

I think if we were to put one word where Eastern Europe and Brussels are aligned, and this is also linked to the broader Brussels agenda, specifically this week, it’s competitiveness, and I’m also talking about the Draghi report. Because Eastern Europe is naturally competitive, we have to learn more in terms of innovation, but we have been more competitive, that is why we have managed to grow. And I would venture to say that competitiveness is also a massive hot potato for Brussels, for geopolitical purposes and for the great power competition agenda, because if Eastern Europe has to become more innovative and move further up the productivity scale, then it has to reinvent its economic model, then Western Europe also has to reinvent its economic model, because what worked before will no longer work.

So all this is on the common agenda. Yes, the trend is eastwards, but you see, this is also where we have to seize the opportunities, because geographically speaking, if you look at the analysis of different empires in the past and so on, the opportunities tend to go to the centre of the empire. And if you look at the EU as a wider economic empire, I don’t say this in an imperialistic Russian propaganda sense, but simply in terms of, let’s say, the mechanics of the club, Brussels and Germany are well positioned to be at the centre, where the opportunities move to.

So yes, the trend is eastwards, but it depends on Romania and Bulgaria how we create opportunities for ourselves in the future, because otherwise the big engine will remain around Germany and around Brussels.

I would also be very happy if this vision for the transformation of the EU and the region came to pass, but I’m also aware of very strong national egotisms in the periphery of the EU. And you probably know that in our region, the wider region, even with Poland and the Visegrad Group, each country seems to look to another, bigger brother for support, like Poland to the US, Hungary perhaps to Russia, and Romania perhaps to Western Europe. Bulgaria has a special relationship with Turkey, which is often underestimated. So I’d like to ask you, okay, let’s believe that Romania and Bulgaria have the potential to do something together. Who is the agent of change in this relationship?

Because my own impression is that there is a big problem of trust. Basically, there aren’t many Bulgarians who are open and sincere and engaged in their attitude and curiosity towards Romanians and vice versa. And it takes time, even if you have them.

These people who can be bridges are very few, I think. So who is the agent of change?

I think at the moment Romania is very busy with its electoral agenda, which unfortunately has kept Bulgaria busy in recent years. But apart from that, if we have clarity in Bulgaria, let’s see if we have that clarity after the elections this autumn. And certainly we will have clarity in Romania, starting in the first quarter, with a new government, a new president.

For sure things will be reshaped. And I think Bucharest will be very interested in coordinating with foreign partners, particularly the Americans as the main security partner and Germany as the main economic partner, to make sure that we create a broader regional, let’s say, growth potential. Because a lot of the Romanian government’s energy this year has been in preparing for the election year.

And that’s normal in all the countries around us, it’s normal in all the great democracies. So we haven’t had much time for statecraft or regional leadership. What helps Romania is its size and the fact that we have 19 million people, plus 4 million in the diaspora.

At the same time, Romania is in a very interesting decade in which we are moving from being a follower to, I wouldn’t necessarily say a reluctant leader, as we sometimes use the term for Germany, but I would dare say that from time to time we are starting to take the initiative because we have seen the opportunity. My hope, and I think it’s a realistic hope with regard to the new president and the new government of Romania, is that we will have to start a very ambitious agenda next year. Because we are forced to do so by two deficits.

A trade deficit, which we have and it’s consolidating, and a budget deficit. So we’re forced by the economics of Romania’s development. If we want to keep our population happy and if we want to keep enough resources for a turbulent region, because we still don’t have a clear end to the war between Russia and Ukraine, we have other challenges in the region.

So we’re going to be forced to quickly revise a regional agenda in coordination with Sofia, perhaps also with Athens, talking about bilateral or trilateral. And we will certainly have an ambitious Brussels agenda, a constructive Brussels agenda. And it’s not just a question of being forced to be constructive because you have a deficit.

I think both Romania and Bulgaria have the advantage that we are historically mapped as two very pro-European and constructive countries. And that is what Brussels needs. And this is also where we ourselves need a high degree of constructiveness from Brussels.

I wouldn’t necessarily say laissez-faire, laissez-passer as far as our two countries are concerned, but flexibility from Brussels on our own agenda. So it’s like a prize for a good child. What exactly the initiatives would be, how fast, that also depends, at least for Bucharest, on the personality of the Romanian president, of the next Romanian prime minister.

But I think no matter who comes to power and no matter what the exact government format of the new coalition is, I think again we’re forced by economic realities to make faster decisions. So I trust that 2025 will be a very ambitious year in Romania. How it will be in Bulgaria, I think it depends a lot on the new structure of the government, after the elections, on the different power poles and so on.

But certainly there is an open door between the two countries. Also because we have this strategy, again, history makes us natural allies on an issue. We were natural allies for NATO accession, we were natural allies for EU accession, for CVM-related purposes, and now we’re natural allies for the completion of Schengen.

So I think that Schengen is also another file where we are bound together to push in the next weeks, months and next year at the latest to also finalise the terrestrial component of Schengen.

Speaking of the terrestrial component of Schengen, you know that Austria had some reservations about the membership of Bulgaria and Romania. In the end, an agreement was reached, but it also included the strengthening of land border controls between Bulgaria and Romania. On the other hand, there is this proposal, supported by the influential Romanian politician Dacian Cioloș, to abolish border controls, land border controls, between Greece, Bulgaria and Romania.

So is it true to say that these are two conflicting visions for our region?

First of all, I think that our politicians need to get together from time to time to better understand when we are all synchronised on strategies or tactics. Because, for example, in the last episode on Schengen, the last time I had the victory, even in Romania there was a separation of the tribes. And I supported the tribe that was more daring, rather than protecting the status quo.

What do I mean by that? One of the tribes in Romanian politics said we should maintain dialogue with the Austrians, they are the second largest investor in Romania, we should be nice to them and try to be nice boys, nice guys, nice girls with them and they will appreciate us being so nice. I think that was the main hug with the Dutch, but also with the Austrians in the past in Bulgaria.

I embrace the second tribe, which I would say was mainly centred around Prime Minister Ciolacu and the Social Democrats, namely that we should not necessarily be more aggressive, but certainly more assertive towards the Austrians. And I think we should start to send out some signals of power, just like Romania and Bulgaria, because they’ve been in the EU for 17 years now. Because you don’t have to be Mr or Mrs Perfect to be able to play power games in the EU. There are other countries which from time to time, even in the context of national weakness bloc processes in the EU, send out the idea to their colleagues in the EU that we should also consider the interests of the countries, right? So I’m in favour of a pro-European Romania and a pro-European Bulgaria, but I think that the two governments and the leadership of the two countries should be aware of the fact that the EU is not just a happy club. It’s also a power club. And in this power club it’s important to send out signals of power from time to time.

So in case of the new changes in Vienna, we believe that we will be able to engage in a nice way with the new government, with the FPÖ, which will certainly be a senior partner in the government, if not even the chancellor. That’s great, if we can negotiate something. In case we can’t negotiate anything, I am in favour of a Romanian position, and I hope that the new president of Romania will take it on board, because it certainly hasn’t been taken on board by the current president or the new prime minister, in which our Austrian friends understand that they are making good money in Romania as the second largest investor, and that they themselves should be interested in the future of Romania and Bulgaria, and that they should be constructive with regard to our Schengen ambitions.

Yes, we can talk about technicalities, we can talk about additional measures, but not in a forceful way towards Romania and Bulgaria, and not in a pushy and blackmailing way towards our two countries, but in a sense that, yes, these two countries really need to move forward. I’m not sure that Mr Cioloș, who I respect as a broader European and national player, will have the political traction for his proposal. I’m not sure the leadership of the two countries can get behind such an idea.

It’s an interesting idea from my point of view, and it’s also in a way a power play, right, if you go ahead, but I think the instinct in Bucharest, no matter who is in office, will not be to go ahead with such a bilateral or trilateral issue. It will be mainly to make sure that we go beyond any Austrian veto and we secure the victory per se, right? So again, we should be more forceful, be nice, continue to be nice, but be forceful in case the others push us to the limit.

I have two more questions. The first, again, on Bulgaria and Romania. For me, one problem in the periphery is trust.

They are peripheral because there isn’t enough trust, and they don’t have enough trust because they are peripheral. How could this be changed, not only at the level of states, but also with other actors or subjects?

I think we should do more, let’s say, bilaterally. I mean bilateral, not, as you mentioned, administrative, political. But we should do more bilateral in terms of our intellectuals, in terms of our perhaps developing regional projects together, you know, in the Black Sea, in the Western Balkans, in the Eastern Partnership, right, because we are complementary.

And apart from that, I think we should talk more between our employers’ organisations and our business community, because that way we have an ecosystem approach to the bilateral relationship and we don’t depend on the whims or the faction or the big guys, you know, who are running the show at the moment in terms of politics or administration. We are creating an environment in which we can push for a more important bilateral agenda. And in terms of escaping the periphery, this is one of my pet projects.

And I have a project called Global Romania, an idea where I anchor the idea of Romanian ambition. And I think we should anchor more and more, not only regional, but pan-European and global ambitions for Romania and Bulgaria. Of course, this should be matched by resources, but even so, how do you get respect by being present in thought leadership?

From this point of view, I think that Bulgaria has a great advantage in having one of the most intelligent European intellectuals, Mr Krastev. He’s not always very positive about the region, right, because sometimes he talks about democratic decline, right, which is a reality in some of the countries. Me, I’m more of a positive guy because I come more from the business side.

But, I mean, he has a great deal of thought leadership. And I think with this kind of people, right, from business, from politics, from the wider intelligentsia, you know, we can not only be more respected, but we can also create, let’s say, the intellectual ecosystem that allows us to promote regional, bilateral and pan-European progress.

Okay, and finally, Romania has presidential and parliamentary elections in November and December 2024. What do you expect from the results, the winners, and not only in terms of people, but what will win? Which tendency or political vector will prevail?

Periodically in Romania we try to exaggerate the drama to make sure we mobilise the voters. But to be honest, Romania is in no danger of changing any vector.

Most of the Romanian political class, with the exception perhaps of AUR and SOS, namely the non-mainstream, ultra-conservative-extremist parties, you know, with that exception, the vast majority of the political class, and here we count almost 75-80%, so three-quarters, four-fifths of the Romanian political class, remain committed to the country’s European and Euro-Atlantic aspirations. I wish we weren’t so provincial. I mean, we would talk more, not necessarily about being constructive, but more about being ambitious at the Euro-Atlantic and European level.

In terms of expectations, I expect either Mr Ciolacu or Mr Ciucă to be the next president of the country, because I think at the end of the day it will be party discipline over and above personality that will decide who goes through to the second round, and I expect the continuation of the current coalition, simply because I think the current coalition will get close to 50%, and it’s very difficult to find other combinations that will get 50% of the electorate and thus secure a majority.

Photo: Radu Magdin (source: The Bridge of Friendship)

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