Introduction
The development of the European economic integration project has confirmed the importance of collective action to face the challenges of globalisation. These challenges include recurring economic shocks and crises (financial crises, fluctuating energy prices, trade disputes, in addition to economic challenges resulting from wars and natural disasters). The last few decades have witnessed major disruptions (expected or not) such as the end of the Cold War, the dissolution of the Soviet Union and Yugoslavia, the global financial crisis, the Russo-Georgia war, the annexation of Crimea, and the COVID-19 pandemic. All these disruptions have led to significant surges in uncertainties (Kolev and Randall, 2024, p. 1, see also Meyer et al., 2022).
More recently, the 2022 Russian full-scale invasion of Ukraine has brought further economic unpredictability (Yotzov et al., 2022). The ongoing instability in the Middle East, fuelled by the Israel-Hamas war, has further worsened uncertainties and disrupted the flow of major food and energy supplies for Europe and the world. These economic shocks and uncertainties might lead to recession, inflation, increased poverty and unemployment, in addition to social discord and political instability (see Ahrend, Moeser and Monacelli, 2011). With the 2022 Russian invasion, the EU and its neighbours witnessed high levels of economic uncertainty due to dependence on the Russian energy sector, which increased pressure on both households and businesses. This has pushed EU decision makers to consider the situation as significantly worrying and requiring intensive and coordinated action (Kolev and Randall, 2024, see also Schnabel, 2022; Adrian, 2022). Kristalina Georgieva (Managing Director of the International Monetary Fund) stated that the ‘challenges the EU faces going forward […] shout out for a concerted response. In a time of geopolitical and economic uncertainties, policy choices will matter deeply’ (Georgieva, 2024).
Disruptions to the economy often challenge established power structures and necessitate adaptive responses from various actors (at both individual and collective levels) within the economic landscape. Kahneman and Tversky’s (1979) discussion on prospect theory highlights that ‘the decision weight associated with an event will depend primarily on the perceived likelihood of that event, which could be subject to major biases. In addition, decision weights may be affected by other considerations, such as ambiguity or vagueness’ (289). In general, economic shocks often push for responses from institutional actors such as international and regional organisations, governments, central banks, and regulatory agencies. Scholars have analysed the effectiveness of policy measures to lessen the impacts of economic shocks and bring back economic and financial stability, such as monetary and fiscal stimulus, regulatory development, and international/regional cooperation in mitigating the impacts of economic shocks (see Ahrend, Moeser and Monacelli, 2011).
Among the responses to uncertainties and shocks, the concept of protean power has emerged as a framework to understand how individuals, organisations, and states navigate and exert influence in dynamic and uncertain environments. Rather than using ready-made definitions, our analysis of the conceptual framework to which protean power and the related notion of control power belong starts with acknowledging the distinction between risk and uncertainty in decision-making. Classifying events and situations as representing risks versus uncertainties is not easy.
Trying to understand ‘economic uncertainty is difficult because it is not directly observable. In response, economists have developed a large literature that attempts to measure uncertainty and assess how heightened uncertainty affects the economy – both in theory and in practice’ (Moore, 2017, p. 550). Knight (1921) provides a definition of uncertainty and distinguishes it from the concept of risk. According to Knight, risk is a quantifiable concept, whereas uncertainty is incalculable (Knight, 1921, pp.19-20). Under uncertainty, economic actors are unable to precisely predict probabilities and take pre-emptive measures to limit their effect. In contrast, a situation of risk (even if it also has some ambiguities according to Knight, 1921, p. 20) allows for assigning probabilities to outcomes (Alhabeeb, 2021). Sometimes, measurable uncertainty and risks are used interchangeably (see Knight, 1921, p. 20). Despite these distinctions, the terms risk and uncertainty are frequently used interchangeably (for a review of the literature, see Kolev and Randall, 2024).
In retrospect, we can make relatively safe assumptions about political life as risky or uncertain, but we cannot be sure that policy makers at the time have experienced the environment as risky or uncertain in the same way as we describe it years later. We follow on from Katzenstein and Seybert (2018) who considered risks to be connected to the realm of predictable and foreseeable occurrences whereas uncertainties are experienced because of the potentiality of unpredictable and unexpected change.
In our study, we therefore try to contextualise the events and occurrences in the Western Balkans and the eastern neighbourhood that have spurred the EU into action over the course of the last 30 years, keeping in mind ‘the fluidity of real-life situations that often oscillate between risk and uncertainty’ (Katzenstein and Seybert, 2018, p.85) and providing an expert reading of predominant perceptions of risks and uncertainties at the time of the events.
Likewise, when we distinguish between the effects of control power, linked to the domain of risk, and the effects of protean power, generated in the context of radical uncertainty (Katzenstein and Seybert, 2018), we are aware of the interplay between the two types of power and their interdependent and even reinforcing qualities. Protean power often leans on control power capabilities, and control power resources are often necessary for generating protean effects. Our analysis is in this sense both guided by the main conceptual framework offered by Katzenstein and Seybert and sensitive to the complexity of the empirical contexts that we deal with.
Protean power can take various forms depending on the strategies and capacities that policy makers implement to deal with shocks, uncertainties and risks and reduce their negative impact. Actors with protean power cultivate resilient networks of relationships spanning multiple sectors, industries, and geographical regions. These networks serve as sources of information, support, and collaboration, enabling adaptive responses to economic disruptions. Research by Granovetter (1985) studying ‘the problem of embeddedness’ highlights the importance of the strength or weakness of diverse network connections in accessing new opportunities and resources during periods of uncertainty. Protean power involves an inclination for creativity and entrepreneurship. This allows actors to build on their technological and economic development in addition to capitalising on emerging markets. Studies by Schumpeter (1950) and subsequent scholars underscore the role of creative destruction in driving economic renewal and resilience. This requires creativity and innovation at the decision-making level to be able to adjust to uncertainties and utilise potential opportunities that can arise from them.
When zooming in on the EU, we observe that the EU has emerged as a significant economic power internationally, in which it has used its single market and common currency to strengthen its position. The EU’s role in the WTO, G20, IMF, the World Bank, etc. and its efforts in promoting liberal economy have been documented in the literature (see for example Jacoby and Meunier, 2011; Bradford, 2005, 2015, 2020; Beeson and Stone, 2013, Woolcock, 2016). However, this economic strength at the global level has been challenged internally and externally. Internal issues such as economic inequalities among EU Member States, differences in fiscal/economic policies and labour performances, uneven impacts of the euro crisis, in addition to external/global challenges such as the global financial crisis (2008/2009), COVID-19 pandemic, wars in the neighbouring regions, climate change (to name but few) have put more pressures on the EU economic model and necessitated creative ways to handle all of these crises.
Against this background, this paper delves into the origins and evolution of the EU’s enlargement and neighbourhood policies in the socio-economic area. It first examines the internal and external economic security risks and radical uncertainties that the EU has faced in the Western Balkans six (WB6) and the Eastern neighbourhood trio (EN3) in the last three decades. It then investigates the traditional power tools (control power) that the EU has employed and the innovations and improvisations (protean power) that it has undertaken in response to economic challenges. While economic risks and uncertainties raise challenges that would require proactive measures from international and local institutions and agencies to promote resilience, stability, and inclusive growth, this paper studies how the EU adapts to changing circumstances and mitigates risks through its attempts to turn challenges into possibilities by exercising protean power.
Following this introduction, the next sections delve into the intricacies of socio-economic risks and uncertainties. The paper reviews the internal and external risks observed in the WB and EN3 regions. Internal risks outline the structural vulnerabilities in the candidate countries, stemming from the break-up of the Soviet Union and Yugoslavia, while external risks include economic security perils: coercive economic tactics employed by Russia, China, Turkey and others, encompassing trade embargoes, customs arrangements, energy security dynamics, strategic investments, the weaponisation of migration, and passportisation strategies.
Consequently, the paper discusses the economic shocks and uncertainties observed during the 2008-2009 financial crisis, the COVID-19 pandemic, and the aftermath of the 2022 Russian invasion of Ukraine. Our analysis then extends to evaluating the EU’s response and the tools employed at both traditional (control power) and innovative (protean power) levels. This encompasses aspects such as breaking free from energy dependency and utilising new or existing tools for fostering trade and investments. These aspects can be seen as part of a multifaceted approach to address the complex challenges posed by the region’s economic landscape and to prepare the candidate countries for integration into the EU.
