The geopolitics of future tourism development in an expanding EU

EU growth, expansionist or organic?

The motivations for EU expansion and the methods used to achieve it are contentious and centre on whether this growth has been organic, i.e., a response to acceding countries wish to join, or whether this has been a goal of the EU itself to grow its power and influence. The EU has been expanding since its inception in 1951, but more particularly so in the last two decades, and is set to continue to do so in the coming years. In 2004, the largest ever expansion of the EU occurred as ten countries acceded to full membership: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Seven of these were part of the former Eastern Bloc (of which, three were from the former Soviet Union and four were members of the Visegrad group), one was part of the former Yugoslavia (together sometimes referred to as the “A8” countries) and the remaining two were Mediterranean islands and former British colonies (Cyprus and Malta). In 2007, Romania and Bulgaria followed. In 2013, Croatia officially acceded after a process of 12 years. Currently, there are six more countries at various stages in the accession process: Albania, Macedonia, Iceland, Montenegro, Serbia and Turkey. Were the populations of acceding countries demanding membership of the EU? If so, what exactly is the definition of what the EU offers that is so desirable? Can we regard the EU as a consolidated democratic system?

Consolidated democracy or democratic deficits in relation to the EU

At this point, it is useful to consider in more detail what the democratic system of the EU is and whether it qualifies as being referred to as a consolidated democratic system. What the EU offers and is built to deliver is enhanced cooperation between member states leading to better trade and economic prosperity for all. The whole system is predicated on the existence of order, security and a system of resolving disputes peacefully and democratically. The EU system of governance has an impressive record on preserving the peace within its borders and stimulating economic growth (there have been no wars between EU members since the formation of the EU in 1951). However, there is a lively debate over the nature of democracy in the EU, which is illuminating to explore. Two aspects are important here: first, what is a consolidated democratic system, and second, does the EU qualify to be described as such. If it does, is there evidence of gains in political stability and economic growth in acceding countries?

For the purposes of addressing the nature of democracy, and the debate around the definition of the term “democratic consolidation”, both Schedler (1998) and Huntington (1991) provide excellent discussions of the subject. Similarly Dahl (1989), Lipset (1994), Lijphart (1984) and Tocqueville (1838) all make major contributions towards a grasp of the requirements for and content of consolidated democracy. It is illuminating to consider several metaphors that describe democratisation as a process. Tocqueville talked of democracy being “an impure river” and introduced the notion that democracies are more than capable of inducing what he termed “soft despotism”. This is an illusion of democratic control concealing “a network of small and complicated rules” rendering the electorate (citizens) powerless.

In contrast to Tocqueville, Schedler (1998) prefers the metaphor of progression or regression to describe the process of democratisation. He also refers to reverse waves, meaning that consolidating democracy is aimed at preventing reverse waves – a return to authoritarianism or dictatorship, or resurgence of communism, for example. Consolidated democracy is therefore seen as having permanency, being enduring, possessing resilience and being irreversible, whilst democracy lacking consolidation is seen as fragile, unstable and vulnerable. In the final analysis, Schedler (1998) contends that emphasis should be focussed on the longevity of a democracy, its sustainability and the expectation that it will last into the foreseeable future.

Polyarchies

A detailed and practical approach to the subject of democratic consolidation was taken by Robert Dahl (1989). He pinpointed what a so-called consolidated democracy consists of. Five criteria are to be met in the quest for democratic consolidation: effective participation, equal opportunity to form preferences, voting equality, control of the agenda and inconclusiveness. He calls politically advanced countries “polyarchies”. Polyarchies have elected officials, free and fair elections, inclusive suffrage, rights to run for office, freedom of expression, alternative information and associational autonomy. Critically, polyarchies provide real mandated policy alternatives, to be voted on by citizens.

Do then the EU institutions (EU Parliament, Commission, Council of Ministers and Courts of Human Rights) qualify? There is a strong divergence of opinion on this question. Criticism of the EU’s democratic system is led by Simon Hix (1998). He asserts the EU system lacks democratic accountability and legitimacy as compared to national governments. Only 50 per cent of EU citizens think their country’s membership is a good thing (Hix, 1998). Moravcsik (2002), on the other hand, emphasizes the notion of “salience” in refuting claims to democratic deficit. Salient issues are those that voters can be relied upon to focus on enough to generate stable preferences. Others are issues best left in the hands of institutions who retain the delegated power to take decisions on behalf of the voters. Moravcsik contends that the vast majority of policy areas dominated by EU institutions are of little concern or interest to voters, so the fact that they might miss direct democratic control is unimportant, even positive. Trade in the EU or the regulation of markets (traditionally areas in which EU policy dominates) should not be confused with issues such as taxes, welfare, defence, healthcare, pensions, education and immigration, all of which are highly salient to voters and where decisions are taken at (directly elected) national Government level.

To sum this up, whilst the existence of democratic deficits in the EU structure alone (the fact that EU elections are rarely about EU issues, the fact that key political functions like the EU Commission President, and ECB President are both appointed by the Council of Ministers) precludes the system qualifying in Dahl’s terms as a “polyarchy”, the combination of national and EU democratic representation that an acceding country would enjoy enhances the argument that membership of the EU will strengthen democratic institutions and serve as guarantee for greater individual citizens rights, human rights and political representation. These are all aspects which generally lead to the preservation of order and security by enabling the resolution of disputes within and between EU members by discussion and voting instead of the use of force. This in turn provides the environment where inward investment in infrastructure and growth of tourism can flourish. The next section explores the changes to governance political stability and economic health, which have taken place in Croatia and Greece during and after their accession.

EU structural funding

The motive behind EU membership remains not only political stability (democratic consolidation in all its aspects) but also access to the EU’s development funding and the open market. The Economist recently reported that 60 per cent of Croatia’s exports go to the EU and that 11 billion Euros worth of structural funds are earmarked for Croatia in the next decade. EU Membership, however should not be seen as a panacea for economic and tourism growth (or for diminishing of traditional hierarchies), but it has offered Croatia vital opportunities. Despite those opportunities, Croatia’s economy has been in recession for five years now and has an unemployment rate of 20 per cent. Against this trend, tourism has blossomed and grown, taking advantage of enhanced political stability and infrastructure improvements. A mixture of Euro scepticism, pro-European feeling and ignorance still characterises voter opinion on the EU in Croatia. While its EU status divides opinion, when given the opportunity, in January 2012, 66 per cent of Croatians voted in favour of EU membership (Traynor, 2012). That membership does not guarantee prosperity but does offer Croatia the opportunity to compete in an expanded market on a level-playing field. To survive and prosper, countries like Croatia must seize the opportunity and be competitive. Their challenge must be to use the political stability created by membership as a spring board to economic prosperity.

Tourism development in Croatia (2000-2014)

As mentioned, the period of accession for Croatia has been one of impressive growth for its tourism industry. One complicating factor is the economic recession that explains the 2009 dip. However, it is clear though from Eurostat (2015) figures that tourism has been growing faster in Croatia than the EU as a whole. It is also clear that a large majority of foreign guest nights to Croatia come from within the EU itself. Again according to Eurostat figures in 2012, only 11 per cent of foreign guest nights were from outside the EU. In 2011, Croatia experienced tourism growth of 6.1 per cent in foreign guest nights as compared to the EU average of 3.6 per cent (Eurostat, 2015). Obviously, growth at these rates would not be sustainable without investment in tourism infrastructure (new motorway construction, airport facilities and a range of accommodation from camping sites to luxury hotels), and here Croatia has benefited not only from funds that were an integral part of its accession agreement with the EU but also from access to other fundings from EU financial institutions. In 2014, for example, a 25 Million Euro loan was confirmed by the EIB (European Investment Bank) in order to renovate and expand hotel accommodation on the coast of Croatia near Dubrovnik (EIB, 2015). Croatia’s tourism infrastructure was in desperate need of renewal after the economic and security disasters caused by the breakup of the former Yugoslavia, which took place from 1991 till 1995. Membership of the EU has facilitated the necessary levels of investment for that renewal to take place (Figures 2 and 3).

Finally, it should be noted that an article within the Lisbon Treaty specifies that the EU “shall complement the action of the Member States in the tourism sector, in particular by promoting the competitiveness of Union undertakings in that sector” (Eurostat, 2015). This underlines the fact that tourism growth is one of the fundamental joint aims agreed to between the EU and acceding nations.

Greece: democracy vs Greek hierarchies

The example of Greece is insightful as it offers a view of a country which acceded to the EU long before Baltic or Balkan countries did. In addition to this, it offers a view of a country that also has struggled (and struggles still) to liberate itself economically and in terms of political representation from hierarchies and from oligarchs who seek to control media and markets. Greece like Croatia is heavily dependent on tourism but also has more general economic difficulties in terms of recession and high unemployment. Like Croatia, Greece has been afflicted with recession during the last five years and latterly a sovereign debt crisis (which continues to this day). As part of the Eurozone (unlike Croatia) and with far more urgent financial difficulties, Greece has been struggling to meet demands to reform its economy in return for loans from the Troika (IMF, European Commission and ECB). Pavlos Eleftheriades (Associate Professor of Law at the Oxford University) describes what he calls “the ruination of Greece” as the work of oligarchs[1] (Eleftheriadis, 2014). Even though Greece managed last year to run a current account surplus, it was only achieved by cuts to salaries and crippling taxes on the middle class. The reforms necessary to make Greece more open and more competitive as an economy have still not been achieved yet, despite the agreements made with the Troika. These reforms have not been possible, argues Eleftheriades, due to a hand full of wealthy families whose hold over politics and the media prevent any reform that will harm their interests. The levels of poverty caused by the need to cut budgets in Greece have also lead to a polarisation in terms of politics. The far-right Golden Dawn party has grown rapidly, as has the left-wing party Syriza (now a governing party) who were committed to re-negotiation of Greece’s bailout terms. Eleftheriadis doubts the ability of the EU to use the funds it supplies to Greece as a lever sufficiently to reform Greece and to break the power of its elites. However, a majority of the Greek population and of other countries who are in a similar position to Greece (Cyprus is similar in this respect), see the EU as a force larger than national politics and as a way of breaking the status quo. Membership of the EU is seen by these populations as a route towards better representation of their interests in the body politic, access to investment capital and economic prosperity. Despite the vilification of Germany in Greece for being a proponent of austerity, the Greeks and the governing party Syriza still wish to remain within the EU and notably within the Eurozone. This echoes the situation in Croatia where the majority of the population still opt for EU membership despite obvious economic problems.

Tourism development in Greece (2008-2014)

The story of Greece as a tourist destination predates its EU membership in 1981. However, it must be remembered that as in the case of Croatia (and all acceding member states) Greece has been recipient of “structural funds” from the EU, grants to regional areas with the aim to improve the general economic conditions. With the exception of the dip caused by the 2008 financial crisis, Greece has experienced comparable growth in tourism to that of Croatia (not as high) but is still confronted by wider economic problems which impact its ability to secure growth for the future. Greece has no specific geopolitical threat to deal with apart from its tense relationship with Turkey, which has led to it being embroiled in certain territorial disputes regarding Islands between the Greek and Turkish mainlands. It is, however, in a position to profit from the geopolitical storms occurring in the Middle East, that is, if its tourism marketing strategies allow it to. Its memberships of the EU and of the NATO are important stabilising factors, guaranteeing the order that tourists demand as a pre-requisite. The main challenge for Greece to protect its still-expanding tourism industry is to tackle its wider political malaise. This will involve reforming the key markets in the economy still controlled by “elites”. The recent crisis regarding a new tranche of bailout funding from the Troika has this time hit Greece’s tourism industry. Beyond the raging debate concerning the effects of austerity as an economic strategy, the role of Germany as a power in bailout situations and the undeniable suffering that the recession in Greece has caused its population, the terms of the latest bailout remain similar to original accession agreements in that they centre on issues of convergence. Convergence in economic terms is the pre-requisite for joining both the wider EU and the Eurozone in particular. In Greece’s case, certain basic provisions and reforms to achieve this level of convergence were never met. Continuing negotiations between the Troika and the Government of Greece amount to an insistence on the part of Greece’s creditors to force this long overdue convergence. However, should convergence be reached and a reformed stability restored to Greece’s economy, prospects for its tourism sector will again improve considerably (Figure 4).

Israel: the development of smart[2] tourism strategy despite geopolitical storms

Israel provides an example of a country with a comparable democratic system to those of the Western democratic nations but is situated outside Europe in a zone of conflict. Since the birth of Israel as a state in 1948, it has dealt with an existential threat which has tended to dominate its governmental priorities. The frequency with which Israel has been involved in conflict or has had to deal with violent uprisings with attendant media coverage has harmed its reputation as a safe destination to visit. Despite this fact, however, and in no small part due to the rich tourism product it can offer, but also its smart promotional strategies, tourism has shown itself to be remarkably resilient in recovering in periods when peace was restored after conflict had taken place.

The graph in Figure 5 illustrates how the Israeli tourism industry suffered but then recovered from geopolitical storms and regular conflicts since its creation as a state.

On a strategic level, faced with the prospect from the outset that conflict was not only likely but almost inevitable, stakeholders learned by bitter experience to expect conflict scenarios with the attendant drops in tourism demand. The smart strategies that Israel employed to minimise the dips and recover from them included the following: first and foremost, the industry used dips in tourism arrivals as times to renew the infrastructure of tourism, i.e., hotel accommodation and road and rail networks; second, it has become adept in using clever marketing to attract new markets from the east of Europe, Russia and the USA to supplement the more traditional tourist visitors from Europe. In 2013 (3.4 million incoming tourists) and 2014 (3.3 million tourists), Israel has underlined its ability to re-build its tourism arrivals.

Smart tourism strategies for the future

What does all this mean for EU tourism for the future? The example of Israel demonstrates the value of realising that geopolitical storms will deplete tourism, but that there may also be opportunities caused in a region (like the Middle East) where other countries also experience compromised security. Therefore, scenarios (with tourism flows in mind) which anticipate changes based on in-depth geopolitical analysis would enhance prospects for re-building tourism when order is restored. The Israelis are a leading example of this, in that they have needed to develop tourism plans (also wider economic and security plans) based on the likelihood that security is compromised. Because of their geopolitical predicament, they have realised that they have to be smarter in their plans to survive. Therefore, in tourism dips (related to wars or conflicts), they have invested in infrastructure and found new markets. The adaptability and flexibility built into plans and the speed of their execution are hallmarks of smarter tourism strategies.

As far as the EU goes, the evidence presented clearly proves that structural investment combined with the levels of security and societal cohesion that EU democratic structures encourage delivers benefits for tourism development. The expansion of the EU and its governmental model will continue in future but with caveats. It is not given that the EU and in particular the Eurozone can achieve the levels of convergence necessary to deliver those benefits. In this scenario, the model of the EU is undermined and the possibility of regression exists. Instead of converging to access the opportunities the EU offers, there is a chance of divergence. Member states who are not satisfied with economic performance within the EU or Eurozone will seek to reclaim their own national sovereignty. In turn, this process holds the possibility not only of undermining the EU but also of destabilising it.

In a world where order is increasingly threatened and in a Europe where a clash of governmental systems is driving a regional military conflict on its eastern border, a much greater emphasis on geopolitics is required in smart tourism planning for the future. In that future, the EU will continue to strive for levels of convergence that make the EU democratic/economic model work and deliver for its member states. Whether this succeeds for the wider EU and the Eurozone remains to be seen. The extent to which this battle is won or lost by the EU though will certainly have a major impact on future levels of order, trade and tourism growth for its member states.