How much has EU membership really helped countries like Latvia?

Membership of the European Union, it is widely accepted, transformed the economic fortunes of the countries of East and Central Europe, helped consolidate their independence and brought them into the European mainstream. If you visit almost any of those nations that joined in 2004 and compare them with how they looked, felt and functioned as communism collapsed across Europe, the transformation is astounding. To take the three Baltic states, their capitals are now jewels of restoration. Most of all, though, these small countries, incorporated against their will into the Soviet Union, now feel free.

But the transformation has not been without difficulties, as October’s parliamentary elections in Latvia showed. Popular dissatisfaction with banking scandals, corruption and unemployment convinced voters to forsake the governing coalition, boosting support for Harmony, a party that favours better relations with Russia. It is a measure of discontent that a pro-Russian party could potentially enter government in Latvia, barely 30 years after the Baltic states began to break free of the Soviet Union.

In the capital, Riga, the effects of the sluggish economy are apparent. The gap between rich and poor, between the new economy and the old, is glaring. Renovation and rebuilding appears, if not stalled, then stuttering. While there are smart new shopping centres and eateries, there are also derelict sites, and some new buildings are starting to look prematurely old. Although a few new-style businesses are proudly Latvian, the bulk are foreign franchises.

How much any of this has to do with the fact that Latvia has lost nearly 20 per cent of its population to emigration since 2000, including many young and educated people, is debatable. But the mood seems less upbeat than it was. Similar, though less dramatic, trends can be observed across the region.

Yet there is one place where this is not happening—and it is in Russia itself. Just before visiting Riga, I had been back to the central Russian city where I had spent a year as a British exchange student in the 1970s. Voronezh, like many Russian cities beyond Moscow, took a while to recover from Soviet penury, and its biggest material changes took place in the late 1990s and early 2000s. But the change I observed on this visit was both a visible step up in general prosperity and a new sense of civic pride and morale.

Which invited a question: how far can the transformation of the East and Central European countries be attributed to their EU membership, and has this benefited their economies as much as they—and we “old Europeans”—like to believe?

In the 1990s, the population of Voronezh (Russia’s 14th largest city) was almost identical to that of Riga, at just below one million, although the standard of living in Riga was much higher. Since 2010, its living standards have risen, while Riga’s have stagnated.

It also entered the top 10 in Russia’s “liveability” table for the first time last year (inconceivably for any westerner who spent time there in the Soviet years).

Another conspicuous contrast is the number of banks and businesses that are home-grown. This is a perverse effect of the western sanctions following Russia’s annexation of Crimea, which spurred huge growth in domestic agricultural production, benefiting cities like Voronezh that are in Russia’s black earth farming zone.

One factor in the changed fortunes of Riga could be the lagging effects of the 2008-9 financial crisis, which hit over-exposed Latvia hard. Although the then-government managed to return the country to growth within three years, the drastic measures taken to keep Latvia on course to join the euro led to a 25 per cent fall in GDP.

For countries like Latvia, EU membership was not only about economic prosperity. There were significant intangibles, such as the return to what they saw as their rightful place in a free Europe; their security vis-à-vis Russia; the restoration of nationhood—all of which have been triumphantly attained. But the argument that EU membership has been an unmitigated boon for these countries, and specifically for their economic development, deserves another look, now that Russia’s second-tier cities—such as Voronezh—are quietly rising through the ranks.