A COALITION WITHIN A COALITION: THE BALTICS IN THE EUROPEAN UNION

This article gives an overview of small power problem focusing on the behaviour of small power states within coalitions and their proneness to free riding. To pursue an independent agenda and increase their significance within large associations, the authors argue, small powers tend to create ‘coalitions within coalitions’, essentially acting as free riders and transferring costs and political responsibility for decisionmaking to larger players. Such an asymmetric strategy makes it possible for small powers to advance their interests within alliances and save resources. The authors test this hypothesis on the behaviour of the Baltics in the European Union. It is demonstrated that Lithuania, Latvia, and Estonia have created a stable small coalition within the EU and actively form ad hoc alliances with the leading states to push union-level decisions, as it was the case with settling the migrant issue. In other areas, these states tend to benefit from free-riding behaviour.


Introduction
The opportunity to combine resources for solving common problems encourages states to create coalitions whose role is constantly increasing across the world.Small states have the added incentive to form or join coalitions, and their behaviour within alliances differs from that of large players.In particular, this is manifested in their increased propensity to and opportunities for the free-riding.
If a coalition consists of many member states that differ significantly and Baltic region.2017.Vol. 9, № 1. P. 4-17.have disparate interests, smaller coalitions can be formed within the parent alliance.They can be either temporary, aimed at solving a concrete problem, or permanent -formalised as institutions, for instance, comprising neighbouring countries.In the latter case, small states may join a larger player to increase the chances that a decision beneficial to them be made.
The central thesis of this article is as follows: entering an alliance yields small states double profit -generated by taking advantage of free-riding opportunities (which make it possible to economise on resources without affecting the result, i. e. the common decision) and by forming coalitions within alliances (which makes the desirable decision more probable).This thesis will be tested in the context of the Baltics' behaviour within the European Union.

Small states: openness, vulnerability, and free-riding
The increasing academic interest in small states as a special research object can be explained by large-scale political process -the decolonisation of the 1970s, the disintegration of the 'Socialist camp' in the 1990s, and the EU enlargement to the small states of Central and Eastern Europe [1][2][3][4].Iver B. Neumann and Sieglinde Gstöhl argue that, in the context of international relations, small state studies can contribute to research on the nature of such states' capabilities, institutions, and relations [5].Another interesting issue is the strategies that are used by small states to mitigate their structural limitations.In other words, the question is what policies these countries can pursue to overcome the 'consequences' of their small size and limited resources.The number of such strategies and policies is significant.Small states may pursue a policy of overcoming (mutual) dependence, i. e. 'closing the system' and implementing the autarky and isolationism strategies.They may strive to avoid increasing dependency on the outer world through a selective foreign policy (thus economising on resources) or securing a distinct specialisation in the global division of labour and expanding the network of trade partnerships.A completely different strategy is integration and active participation in coalitions, including political ones.Small states' strategies do not focus exclusively on foreign policy.They also include domestic policy options, such as consociationalism, federalism, or corporatism.
Small states differ substantially from large ones.As Katzenstein emphasises, these differences are not limited to their geographical areas and scale of activities.A more important factor is their feeling of political and economic vulnerability [6, р. 10-11].Therefore, small states will opt for greater liberalisation, flexibility, and capacity to learn and adapt as compared to larger states [6, р. 12].According to Katzenstein, the capacity to learn and adapt to the rapidly changing world is crucial to understanding the high development rates and lasting prosperity of small European states [6, р. 18].At the same time, the (forced) economic openness and vulnerability to external challenges ensuing from the small states' limited resources increase the probability and scope of losses.Therefore, small states will be more inclined to form or join coalitions.Participating in an alliance will let small states share the burden of losses with the other members and/or respond to external challenges more effectively as a group.In other words, as part of a coalition, small states increase their chances of formulating and implementing a successful policy in the changing external conditions and insist on decisions that they could not secure if they acted on their own.Dan Reiter believes that the alliances of small states with great powers are explained by individual experiences of small countries.Reiter insists that the effects of the past and individual experiences are of greater importance for small states than for large ones, when it comes to creating a coalition [7, р. 120].Alberto Alesina and Enrico Spolaore pursue a different line of argumentation.They prove that the small area of a state is not only beneficial to its citizens but also it is 'natural' in a global world.Their central thesis is that the liberalisation of international trade and economic integration make the key benefit of a vast territory -a large domestic market -inconsequential [8].Alberto Alesina and Romain Wacziarg write, 'Under free trade, even a small country will have a large market: the world' [9, р. 15].The connection between the economic (market size) and political boundaries disappears and the 'optimal' size of a country is reduced.Regional, cultural, and linguistic groups can benefit from political independence and the opportunity not to share a common agenda, policies, and institutions with other groups with disparate preferences, in order to secure access to a larger domestic market [10].
The above holds especially true for the European Union, where unprecedented economic integration has ensured political cohesion.However, this comes with a caveat.A sine qua non is the high competitive ability of small states, which allows them to take advantage of economic integration.However, if a small state is less competitive than other small and large countries, with which it interacts in the free market, the cost of participating in the market increases, and the groups that felt secure during the era of protectionism turn into 'new losers'.For instance, groups of 'new losers' mounted resistance to the reforms that followed the decisions of the Baltic national elites to accede to the European Union.
Researchers agree that small states strive to create or join a coalition and their behaviour differs from that of large players.A manifestation of such differences is the increased propensity for small states to show free-riding behaviour.
Mancur Olson, in his authoritative work The rise and decline of nations, proves conclusively that the propensity for free-riding is universal [11].Countries enter alliances to combine resources for solving common problems.Mancur Olson and Richard Zeckhauser stress that an alliance provides certain and irrevocable goods for all its members [12].However, the cost of these collective goods, primarily, security is not shared equally between all alliance members -large members incur greater expenses than smaller ones, for instance, when it comes to defence.The smaller the alliance member, the smaller expenses it incurs, which finally leads to free-riding.The free-riding of small countries is explained, in particular, by the fact that that failure of a small state to fulfil its obligations will not affect the alliance's defence capabilities, whereas such behaviour from a large state -and specifically a hegemon -will have much more noticeable consequences.In the literature, the problem of free-riding has been studied extensively in the context of NATO.Complaints about the free-riding of European countries at the expense of the US are almost as old as the organisation itself [13].
Researchers are not unanimous about the free-riding of small states in the European Union.For instance, Malcolm Chalmers argues that the EU displays a small-state bias in the context of the common defence policy, which results in the free-riding of such states [14].A different perspective is adopted by Han Dorussen, Emil J. Kirchner, and James Sperling.They prove convincingly that the risk of free-riding in the European Union is asymmetric and it varies depending on the sphere and/or policy.In the sphere where the risk of free-riding is high, the large EU member states are faced with a choice.They can make the group of large member states, which will later determine the EU policies in these areas, incur the expenses.Another option is to institutionalise cooperation in such a way that the small countries' freeriding be kept to the minimum.The latter is possible in the case of burden sharing between small and large member states.For instance, small states are responsible for upholding order and protecting the population in the framework of the EU's foreign operations, whereas large states are 'in charge' of military actions and enforcement.The free-riding of the small EU states is possible.However, it does not pose a major problem for common security [15].Moreover, free-riding is simply impractical for the small states situated at the EU's border.It is more logical for them to influence the EU policy towards their neighbours [16, р. 67].
The Ukraine crisis has left fewer incentives for the free-riding of the small EU states, especially those located on Russia's border.Before 2014, the Eastern EU states did not have to invest in their own security policies and they relied on NATO and EU guarantees.Out of the three Baltic States, only Estonia made a substantial investment in defence, whereas the governments of Latvia and Lithuania did not deem external threats serious enough to take any substantial steps in that area [17].The crisis changed the situation dramatically.Earlier, it did not only permit but also encouraged freeriding, which was sustained by NATO and EU membership.'Neglecting security' increases the political, economic, and military costs incurred by the small EU states [17, р. 7].Moreover, the crisis has brought to the fore the balance-or-bandwagon dilemma, which becomes extremely acute for small states during confrontations between great powers [17, р. 2].

A coalition within the EU: The choice of small states
Without detailed knowledge on the functioning of the European Union, the number of its member states and the scope of its foreign and domestic policy give reason to suppose that intra-EU alliances are possible.Indeed, we know that the disparate external geographical priorities of EU member states lead to a situation where a single state that is especially interested in developing relations with concrete partners acts as the driving force behind the EU initiatives.To reach this goal, such a member state creates a coalition with other countries.This was the case with Finland's promotion of the Northern Dimension and a coalition bringing together the Nordic countries and Germany.Another example was the Polish initiative, which was dubbed the Eastern Partnership.In that case, Poland teamed up with Sweden.Many researchers agree that the largest pre-2004 intra-EU coalitions were confined to either the north or the south, which led to a deep rift between the North and South as to the vision of integration development in Europe [18][19][20][21][22].
Creating alliances makes it possible to combine the resources of several players and multiply their profits through holding multilateral negotiations to develop a common position.The incentive to create such alliances is a common interest.However, a player (or players) may view their interests differently as time pass.This will transform the coalition, change its composition, or result in its collapse.Spyros Blavoukos and George Pagoulatos illustrate this thesis with the case of the Southern -or Mediterranean -bloc, which comprises Spain, Greece, and Portugal [23].These states acceded to the EU almost simultaneously, shortly after the collapse of the previous political system, when the new, democratic one was being built.The EU membership was meant to serve as an external factor legitimising the new system.The initial intention of the three countries was to create a stable intra-EU coalition.However, over time, their interests diverged and the coalition cohesion became a thing of the past.Later events reminded of a pendulum swinging from divergence and competition to agreement and coalition.Baldur Thorhallsson questions the existence of stable intra-EU coalitions.He cites decisions on the EU Common Agricultural Policy -agriculture being a primary specialisation of all the small EU states -and the distribution of structural fund support as prove of the absence of stable intra-EU coalitions with the exception of the Benelux countries and the German-French duo [24].However, without challenging Thorhallsson's conclusions, one must emphasise that he builds his hypothesis on the analysis of only two EU policies.Moreover, in the last 15 years, the number of EU member states has almost doubled from fifteen to twenty-eight.
As Manja Klemenčič argues, the coalition behaviour has become an integral part of the decision-making process in the EU [25].Alliances are useless when the voting procedure demands that each member state has one vote in the Council and has the right to block a decision, i. e. each member state is a veto player.However, only 30 % of the Council decisions are made following this procedure [26, р. 95].In most cases, the Council decisions are reached based on the qualified majority principle, where prior agreements and coalitions play an important role.Aggregating votes within a coalition makes it possible for member states to block a decision or make certain that the desired decision is made [27; 28].Such alliances are short-term partnership agreements concluded to solve a concrete problem (ad hoc coalitions).They are characterised by a low degree of institutionalisation.However, there are stronger intra-EU coalitions that are highly institutionalised and characterised by a well-engineered structure, frequent interactions, and developed internal coordination [29].Such alliances are often based on the geographical proximity of member states.Examples are the Benelux, the Visegrad Group, and the Nordic-Baltic coalition.Note that those coalitions comprise small EU states almost exclusively.
Unlike the large EU member states, which have an articulate position on all items on the EU agenda, the small states -due to the paucity of resources -focus their interests on a single set of problems.Their small size makes it possible to defend their priority interests and to be flexible in all other areas.Small countries are an important pillar of the Commission.They serve as the driving force of European integration, while the large states often oppose the Commission's initiatives [6, р. 25].Moreover, the 'power' of the small EU states comes from their ability to form and maintain coalitions [29, р. 1] and reach compromises between its members.In creating and maintaining coalitions, the small states advance their interests, making a transition from passive free-riding to the pro-active defence of their interests in the European Union.
Ilze Ruse draws interesting conclusions from her research on the institutionalised Nordic-Baltic intra-EU coalition.This alliance has gone through several stages.The coalition emerged as a partnership of the Nordic states.After the three Baltic States had acceded to the EU in 2004, the centre of regional cooperation drifted from the North of Europe to the Baltic Sea, which was quite natural in view of the post-'big enlargement' geopolitical situation in Europe.It was the beginning of a close partnership between the six states -Sweden, Finland, Denmark, Estonia, Latvia, and Lithuaniaunder the informal leadership of Sweden.This cooperation format became known as NB6.Unlike the Benelux, NB6 is based on the 'tradition to consult the partners' rather than a formal agreement [29, р. 7].The most impressive success of the Nordic-Baltic coalition was the adoption of the Baltic Sea Strategy as an EU initiative and a new model of a macroregional strategy aimed to coordinate the EU policies in the region.The Strategy brings together eight member states -Sweden, Finland, Denmark, Estonia, Latvia, Lithuania, Poland, and Germany (the NB6+2 format) -and three non-EU partners -Russia, Norway, and Iceland [29, р. 11].The positive decision of the Council on the Strategy, which had been lobbied by the NB6+2 coalition, proved the efficiency of the alliance and the ability of small states to convert their interests and preference into the actual EU agenda [29, р. 12].

The Baltics in the European Union
Having reached the final decision on national sovereignty and the secession from the USSR, the Baltics were faced with a difficult choice about the trajectory of the countries' further development as independent actors in international relations.The small size and the geopolitical position of the Baltic states offered three viable options -a) to maintain neutrality and non-alignment with either Western or Eastern institutional alliances; b) to join the Western bloc; c) to take part in different forms of inter-and supranational partnerships with Russia and other post-Soviet states.
Andres Kasekamp stresses that the first -so-called Finnish -model was the most evident alternative for the former Baltic republics [30, р. 18].During the Cold War, this strategy made it possible for relatively small Finland to foster relations with the West and develop economic and cultural ties with its largest neighbour -the Soviet Union, -which was home to a large Finnish diaspora and kin Finno-Ugric ethnic groups.However, the Baltic States had the tragic experience of 1939-1940, when their formal neutrality in the conflict between the Soviet and German systems was shattered, when Germany secured control over Memel and incorporation into the USSR, took place.After World War II, Lithuania, Latvia, and Estonia lost their national sovereignty, as the three countries were incorporated into the Soviet Union.The 'effect of the past' made complete neutrality impossible for the Baltic States.This created additional incentives for choosing an integration strategy as a foreign policy paradigm and necessitated joining a coalition either in the West or in the East.
One of the options for the future integration of Lithuania, Latvia, and Estonia in a larger alliance was the further development and intensification of relations with Russia.This option seemed viable in the light of the active democratic transformations in the former metropolitan state and the denunciation of the authoritative Soviet system by the leaderships of all the four countries.Moreover, the Baltics and Russia had close economic ties and there was strong economic interdependence between the former Soviet republics, which was inherited from the Soviet planned economy.However, such a partnership could result in what Andris Ozoliņš called unilateral dependence [31] -a situation, where the economies and politics of Lithuania, Latvia, and Estonia would have become completely dependent on Russia.The negative experience of such dependence on Russia, which had been accumulated during the Soviet period, fuelled both distrust and concerns about the Baltics' security and sovereignty in the framework of potential cooperation with the Eastern neighbour [32, р. 4].
Thus, the most effective strategy for preserving independence was acceding to as many international organisations and institutional associations as possible, the strongest being the European Union.In this case, a potential unilateral dependence would have been replaced by pluralistic dependence on a number of actors, none of which acted as a hegemon.This would have minimised risks for the Baltics' sovereignty [31].The doubts about the chosen path were almost dispelled by the mid-1990s when Sweden and earlier 'neutral' Finland acceded to the EU.From that moment, the integration of Lithuania, Latvia, and Estonia into the Western world and their accession to the European Union were just a matter of time.
The supranational 'Baltic identity' emerged at the time.In the beginning, the differences in the level of economic development and market transformation achievements made the Baltics compete in the 'race for membership' [30, р. 20].Since the economies of these countries developed at different rates, there could be no certainty that they would accede to the EU promptly and at the same time.Moreover, no one wanted to wait for those lagging behind and each state fought for the membership on its own.Estonia -with its close historical ties with Finland -strived to join the Nordic countries.Lithuania was observing the significant progress of Central European countries towards NATO membership and it was ready to enter their ranks.
At the same time, the Baltics' common past and the similarities in the new institutional design of their political systems [30, р. 23] prevailed over situational differences -all the three states concluded accession negotiations in 2002.The Baltics held referendums to secure the support of citizens and, on May 1, 2004, they became full members of the European Union.The interactions between the Baltics in preparing for EU membership and their joint integration into the European institutions provided a platform for the emergence of the Baltic identity -a stable and partly institutionalised coalition.
Political and economic 'dwarves' in the EU, the Baltics have been forced to look for opportunities to participate in intra-EU coalitions, teaming up with the leading countries.This way they have been accruing their political capital as reliable partners for the 'driving forces' of the European Union.Such an approach made it possible for the Baltics to advance their regional interests, including those in foreign policy.The Baltics actively supported the further enlargement of the EU and associations with other post-Soviet states, which opened up new opportunities for the three countries to develop their economic potential and to gain greater political weight in relations with their neighbours.When entering coalitions, Lithuania, Latvia, and Estonia supported the majority led by Germany and opposed some other old member states, thus demonstrating their loyalty.Since their accession to the European Union, the Baltics have used their veto power -i.e. have left a coalition -only once, when they blocked the negotiations on the new EU-Russia Partnership and Cooperation Agreement in 2008 [30, р. 30; 33, р. 139].
The integration of the Baltic States in the EU institutions shows that a successful strategy for protecting the interests of small countries within large supranational associations is a combination of two factors: 1) creating and maintaining a stable and coherent coalition with the neighbours (fellow small states) -an example is the Baltic identity, which translates into coordinated decisions of all the three states in the face of external challenges.Common -especially geographical -interests create a stable platform for such an alliance; 2) proactive participation in such a coalition and potential ad hoc alliances with the participation of the leading states in preparing decisions and prior to voting.This allows small states to prove themselves as reliable partners of large countries and to make sure that their proposals are included on the agenda of the winners.
Such a survival strategy is being tested during crises when reaching an agreement is complicated, benefits from participating in a coalition are not evident, and risks are high.For the Baltics, such a test was the development and adoption of the 2015 decision on relocating refugees.In the course of the discussions, Lithuania, Latvia, and Estonia changed their position.Finally, the three countries joined the ad hoc coalition of the majority and voted for the quota system, thus reaffirming their commitment to the 'double coalition' strategy.
The problem of refugees: The Baltics' coalition response The Baltics have pursued a strict immigration policy since independence.Partly, such a policy was a result of concerns about the significant number of resident Russians and natives of other former Soviet republics, who were very sensitive about the collapse of the Soviet Union as well as the formation of independent states in the Baltic.The fact that the governments of Lithuania, Latvia, and Estonia legally claimed continuity from their pre-1940 status, i. e. the status they had had before incorporation into the USSR, made it possible for the three countries to be very selective in granting citizenship.Latvia and Estonia -home to large non-Latvian and non-Estonian minorities -passed exclusive nationality laws, according to which citizenship could not be acquired automatically by all people residing on their territories [34, р. 333].This created the 'non-citizen' phenomenon -Soviet migrants and their descendants, who had come to the Baltic republics after 1940 and who were not issued Latvian and Estonian passports.Lithuania, whose national minorities were much smaller, opted for an inclusive nationality law and granted citizenship to the whole population of the country [34].
These basic approaches to citizenship largely affected the future development of migration law in the three countries.The Baltics' policies towards migrants and refugees were becoming increasingly restrictive.Moreover, the three countries did not coordinate their actions in the field [34, р. 333-336].The situation started to change as the three countries acceded to the European Union and made a transition from uncoordinated national migration policies to greater coordination and unification within the common EU institutions [35, р. 75, 82].However, statistics show that, despite all the effort, the Baltics remained almost closed to refugees.In 2014, Lithuania granted refugee status to 75 asylum-seekers, Latvia to 25, and Estonia to 20 [36].
During the first six months of 2015, the number of officially registered refugees in Europe reached over half a million people [37] -almost as many as throughout 2014.The EU countries started to develop joint programmes for resolving the crisis, with active participation from Germany and France.A quota system was proposed as a method for just distribution of refugees around the EU member states.In the framework of the quota system, each state has to accept a number of asylum-seekers that is proportional to its population, GDP level, unemployment rate, and the number of asylum applications submitted in previous years [38].
This proposal ran into objections from some EU member states, primarily, the Visegrad Group, whose members were not going to abide by the deci-sion1 on accommodating a further 120 thousand refugees [39, р. 51-52].In 2015, the Baltics reached a decision of accommodating refugees on their territories (325 in Lithuania, 250 in Latvia, and 200 in Estonia) [36].Thus, the Baltic States reaffirmed their commitment to the common principles of the European Union and showed solidarity with the EU countries, which had been most affected by the refugee crisis.However, the three countries opposed [40] the quota system and the decision to accommodate a further 120 thousand people, which would have turned their good will into an obligation and increased their refugee burden.Not long before the voting on the issue, stable Baltic coalition could not agree on a common agendawhether to support the coalition led by Germany or join the Visegrad Group and block the decision.The Lithuanian, Latvian, and Estonian leaderships were faced with yet another dilemma of the European Union [41, р. 113-114] -finding a balance between fulfilling the obligations to the EU and winning the support of the population.There was little cohesion in the Baltics.Rallies against migrants took place across the three countries.The right parties and nationalists and, sometimes, members of the governments raised their voices against the quota system [42].One of the few politicians who demanded greater solidarity and supported Angela Merkel's open door policy was Estonia's President Toomas Ilves [38].
The final decision on distributing a further 120 thousand refugees was to be adopted by the European Council after the approval from the Conference of Minister of Justice on September 22-23, 2015.The decision was adopted by a qualified majority with much effort.Finland abstained, whereas Hungary, the Czech Republic, Slovakia, and Romania voted against the decision [39, р. 53].The Baltics showed solidarity and voted for the new quota system, within which Latvia, Estonia, and Lithuania had to accommodate 526, 738, and 780 refugees respectively.
Despite the many years' experience of a restrictive migration policy, sharp disagreements between the parliamentary parties, and the risk of losing the support from the population, the Baltic leaderships reaffirmed their commitment to the 'double coalition' strategy and joined the ad hoc alliance, which was led by the neighbouring major partners.This decision contributed to their image of a reliable partner.However, there were two more arguments in its favour.
Firstly, as Viljar Veebel and Raul Markus emphasise, the number of refugees coming to the Baltics and their proportion in the countries' population was far from critical, whereas the threats associated with the refugee problem were overblown [43, р. 258].Secondly, the decision on the quota did not mean that it would be fulfilled.The 2015 quota system leaves room for freeriding.On the one hand, refugees do not want to be accommodated in the countries, where, as they think, the conditions will be poor and the standards of living low [44].On the other hand, even those refugees, who come to such countries as the Baltics, consider them as a relay post on the way to the countries that they deem more prosperous -Germany or Sweden [45].
Thus, the decision that seemed rather disadvantageous for the Baltics proved in practice to demonstrate the viability of the small states' coalition strategy for survival within large supranational associations.At the same time, the free-riding potential of the decisions made by such associations leaves room for mitigating possible negative consequences.In situations similar to the 2015 crisis, the size and geographical position of the small countries become their key advantage.

Conclusions
Researchers show that small countries actively join alliances created by major actors in international relations.However, to forward their own agenda and increase their weight in such associations, they are inclined to create 'coalitions within coalitions' with countries with similar interests (and geographical positions).Such coalitions may differ in the degree of institutionalisation and stability.Within coalitions, small states often act as free riders, delegating financial and political responsibility to larger players.Such a strategy makes it possible for small states to advance their interests within large alliances and economise on resources at the same time.
From all the options that the Baltics had after regaining independence, integration with the EU became their key foreign policy priority in the 1990s.Having acceded the continent's leading political and economic association and having joined the European institutions, Lithuania, Latvia, and Estonia created a small coalition, which allowed them to response to external and internal challenges collectively.Moreover, these countries actively join ad hoc coalitions created with the participation of the leading states to reach EU-level decisions.
It is remarkable that even if the expected decisions do not yield immediate benefits and are associated with potential risks -as was the case with the deployment of refugee quota system in 2015 -the Baltics continue to act within the 'double coalition' paradigm.They supported the position of the intra-EU coalition, which insisted on a joint solution to the crisis through the quota-based distribution of refugees.Although such a decision, which sparked off an intense debate in the Baltic States, contradicted their restrictive migration policy, the three countries strengthened their position in the EU, on the one hand, and (paradoxically) they got opportunities for freeriding and minimising the actual costs of showing European solidarity, on the other.