How to deal with neighbours

Ten countries in Central and Southern Europe join the European Union on Saturday, adding 75 million people to the world's largest market of (now) 450 million.

What began as a limited customs union of just six countries has expanded to a very substantive economic union of 25 countries, including many that were on opposite sides of what once looked like an unbridgeable ideological and security divide.

Eight of the 10 countries that join the EU on Saturday were part of the Soviet bloc till 1989. Today, the Poles, Czechs and Hungarians who rushed across borders guarded with barbed wire can now travel and work freely throughout Europe without visas or work permits; indeed, their countries (now functioning democracies) will add zing to EU's economy. It is an amazing transformation in just 15 years.

This is a good time to look at the West European and American approaches to neighbours. Because, other than the North American Free Trade Agreement (Nafta) with Canada and Mexico, and a free trade agreement with Chile, the US has done precious little for its hemispheric neighbours.

There has been talk of a Free Trade Area of the Americas, a more limited Central American Free Trade Agreement, and so on, but no real progress.

Instead, growing US agricultural subsidies have come in the way of Latin American exports; US security interventions in the region have usually been hostile (Panama, Nicaragua, Grenada); there have been political tensions (as with Venezuela now); and when the largest Latin American countries have slipped into economic crisis (Brazil, Argentina, Mexico), the US response has been mixed -- helpful on occasion, but on others, oriented to little more than protecting the American banks.

The EU experiment in expanding its reach and lifting millions of people to European standards of living, has meant pouring massive sums of money into its poorer members, like Portugal and Ireland, while Germany did the same for the region that was the former East Germany.

Side by side, the EU has encouraged in its new members political reform, the creation of market-supporting institutions and the adoption of structural economic reforms, all aimed at getting whole countries ready for the demands of EU membership.

While plenty of questions stare the EU in its face (there is doubt, for instance, about the adoption of its new draft constitution, and even greater doubt about the efficacy if its governing and decision-making structures), the US has simply not engaged with its neighbours in any comparable way.

To be sure, most of the blame for Latin America's failures rests on its domestic leaders and internal failures; and it must be said in defence of the US that it has encouraged the adoption of both democracy and free markets as ideologies.

Nevertheless, there can be little doubt that the US loses out in comparison with Europe in any 'good neighbour' ranking. The American concern has been with stopping illegal immigration and ending the supply of narcotics from Central America, and both are understandable.

But both would be achieved more effectively if the US could invest real effort in getting its neighbours to improve their political and administrative systems and economies, and rope them into a pan-American common market where wealth can be shared. Indeed, the lack of real interest in its own neighbourhood is at odds with the far more active concern that the US demonstrates when it comes to much more distant places like Iraq.

Americans are scornful about European ineffectiveness when it comes to security problems in its own backyard (Bosnia and Kosovo, for instance), so that American troops have to move in under the Nato flag, but Europe can rightly point to its sustained economic and political engagement, which delivers better long-term results.

India too should ask itself some tough questions about how good a neighbour she has been. There is no regional shortage of internal crises (Nepal, Sri Lanka), political problems (Mynamar) and poverty (Bangladesh, Nepal, Myanmar). And when it comes to neighbours beyond South Asian boundaries, India has only lately woken up to their existence and importance (Thailand, for instance).

The regional economic integration that should have been possible has therefore not happened, and not just because of the Indo-Pak standoff. So, like the US, India too should learn a lesson or two from Europe on how to be inclusive when dealing with weaker, smaller and poorer neighbours.

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