Three Seas Talks – Mihai Sebe, PhD, European Institute of Romania

Stefan: My name is Stefan Tompson. I’m the host and the interviewer of the series of interviews around the Three Seas. We are interviewing people from all members states of the region. Mihai, let’s start with you giving us an introduction on who you are, and your work. Tell us a little bit about yourself and what you currently working on.

Mihai: Thank you very much for your kind introduction. I am Mihai Sebe. I have a PhD in political science from the University of Bucharest and currently I am working on EU affairs. My most recent topic is the impact of digital technology on politics and the way the technology changes the way we do business and politics. I came across the Three Seas Initiative in the last couple of years. And I decided to focus more on it. This Initiative is, in my personal opinion, one of the best initiatives that came up in the region after we joined the EU. It is an initiative than can bring a new life to the member states and can also help us build together a better future.

Stefan: Absolutely. So the key aims of the Three Seas Initiative can be boiled down to literally “3 C”. One of that Cs, that links in with your work, is connectivity – the process of bringing in digitization, linking us on the North-South axis, and essentially redressing this historical injustices that have occurred and made our region an East-West transit zone. Sorry, you were going to say something?

Mihai: The Three Seas is, in the end, a flexible, political tool for the region, created in order to better connect us in the energy, transportation and digital sectors. And to help us to achieve our full potential.

Stefan: Digital revolution is one of the really exciting things in our region, in Central-Eastern Europe (CEE). When I travel to the West one of stark things I see is the extraordinary advances we made in tech [comparing to the West]. You have seen some massive IPOs in Romania. That’s very exciting because it means that there is a whole new generation of young, millennial, highly digital, mostly men (but there are some women) involved in tech in CEE. These start-ups, maturing start-ups and recent IPOs, especially in Romania, really fill me in hope for the future regarding the digitization process. What I want to ask you about, at the more expert level, as my interest in the region is mostly on the communication, popular knowledge level, is the cooperation process between Romania and Poland. If you could also expand beyond that two countries and take a look at the region. What the cooperation process, in your field, looks like?

Mihai: Take for example the question of the digitalization… Our countries had the fortune, if I may say so, of inheriting a strong technical education, especially from the communist period, when the efforts were made to develop and promote earth sciences, technology, engineering and so on. We have a young generation of people that is benefitting from this education and its focus on mathematics and IT. And the fact that we in the CEE have some better IT infrastructure is due to having it built from the scratch. We did not have the luxury of the pre-existing infrastructure, so we developed it step by step. For instance, in Romania one of the advantages we have is a very fast internet speed.

Stefan: One of the fastest in the world, I hear.

Mihai:  This is due to the fact that companies building the infrastructure could use the latest technologies and did not have to rely on the existing infrastructure. So we have the advantage of strong technical legacy. At the same time the lack of preexisting infrastructure meant that we could build everything using new technologies.

As for Romania and Poland, the Three Seas Initiative is a natural continuation of our traditional cooperation. In the region, there is a historical background [to any] cooperation [format]. In the interwar period we had this idea of Intermarium, an area that was seen as a point of convergence of different cultures and an area where countries could develop their prosperity together. From Romania’s perspective the Three Seas can be seen as based around a single, sustainable relationship between Romania and Poland. In fact, it’s a continuation of the alliance project the two countries had in the interwar period. In a way, it’s one of the oldest political relationships, one of the most fruitful political relationships in the region. The Three Seas was build on this very positive historical background.  The initiative developed further the existing political cooperation and expanded it to include economic, connectivity and digitization issues.

Stefan: Bouncing back to some of the points that you made… You raised many interesting points that are going to be the leading points of our discussion going forward. One of them is this legacy of technical skills. You pointed out to advantages of communist education, this science centered education, which now is resulting in deep tech-talent pool in the region. Is it possible that the second advantage you mentioned, having essentially newer infrastructure in the digital sphere, is this just the late-comers to the game advantage? Is this edge just a temporary matter, just because our digital infrastructure was built later with newer available tech than in the West? Is this an edge that we can easily or rapidly use?

Mihai: To be honest, I am in a rather pessimistic mood nowadays. Every progress that we made in the region needs to be sustained. We need to have reliability and inclusive policies in the digital and economic sectors in the region in order to continue developing our advantages. The fact that we have shared history and we face the same geopolitical challenges should encourage us to develop faster and ensure that a long-term planning is in place. In tech, especially, every new advantage is only a temporary one. We need to continually invest in education, infrastructure and technologies. We cannot rely just on this temporary success, as I see it, but we need to invest further. I am afraid that each of our countries in its own way is just a small actor in the global economy and market. We don’t have national resources to make a lasting impression in the global arena. But together, Romania, Poland and the other countries of the CEE, can pull together resources and become a more competitive actor. But that needs predictability. We need long-term investment plans and we need to stop seeing the education as only the drainer of our resources. We need to see education as a way to ensure prosperity for us and our children. We must not perceive money dedicated to education as money wasted, but we should see them as an investment into our common future.

Stefan: I very strongly agree with that, especially the emphasis on education. But I also think that one of the things, I am very curious if you agree with me, that is important is that we have this very unique talent poll in the moment when the digital sphere has exploded and has become incredibly lucrative. So one of the other things that appears to be truly missing is essentially the funds needed to grow the potential of the region. We don’t have enough of available venture capital funds to promote these start-ups here and to give them that leg up to compete against these giants emerging out of Silicon Valley or tech city in London or other big tech ecosystems. I will be very curious to see if you agree with this, I think that one of the models that could be pursued in the region, region-wise, is the Israeli model from the 90s. It is a fascinating example of state funds being provided with money for the start-up system and those funds growing those initial big players sufficiently for the private market to then get involved itself and provide money to continue that work. So initial government money was essentially the catalyst for the creation of the start-up ecosystem. In Romania just had the UiPath exit, huge exit, I mean of the biggest in the region in the history of our region. So impressive to see that happen. As I observed that happening in Romania, these guys who got their exit, got their unicorn, they are going to start their own venture capital funds and they are going to pour the money from their IPO right back into Romanian start-ups and Romanian talent to get that grow and to start that catalyst. To me one of the priorities, apart from education, continuing to raise and educate a new generation that is capable of taking that lead and outperforming its Western contemporaries, is to have funds available for that. I don’t know if that is something that you see the need for as well.

Mihai: To be successful in the future we need both top-down and bottom-up approaches and for that we need strong public-private partnership. What the government can do is to ensure legal and economic stability in the region. We need to have clear economic legislation that is not shifting every six months. We also need to have a very positive fiscal climate for the IT sector and investors. You mentioned that we do not have enough financial resources for our IT players. This is true. And for that we need to go beyond our borders a little and see who can help us. Beside the nation-wide support we need to develop cooperation in the region with the relevant actors. Moreover, we need to attract more funds from third countries. For instance, American financial resources might be important for the region. Often, when we speak about Three Seas, the importance of the transatlantic relationships is very relevant. South Korea could also be an important investor in the region.

The Israeli model that you mentioned before is a model that can be used in the region after some adjustments. When we speak about the Three Seas we need to also have in mind that there are the regional competition between the participating states. This competition is not a negative one; it is a positive form of competition that encourages each country to strengthen its position. And this positive competition can therefore be enhanced by the cooperation – by trying not to sabotage each other, on the contrary trying to help each other out. The fact that we live in the region that is easily accessible, after all the distance between Bucharest and Warsaw is not that big, means that disruptive competition affects us all. We need to realize that we need to build our own ecosystem and that one country’s prosperity does not need to be build on other country’s misery. Our region has this potential of positive cooperation and positive competition and this, alongside the stability that governments can provide, will provide us with necessary tools for future advancement.

We need to find a better way to use all the funds available at the EU level and for that cooperation is also the key. We must not lose any financial resources available to us.

Stefan: Going back to the broader issue – the economic cooperation across the region… What do you think are some ways that would allow us to move this cooperation forward? You’ve discussed that not competing would be a very important point, despite the fact that we have separate national interests, that we are all pursuing our national interests. But you say that they are not necessarily mutually exclusive, that we can cooperate while continuing to work on our national interests. You also mentioned the EU funds aspects, and the South Korean and US investments. I think thank SK is such an interesting example, such a wonderful example of economic growth and of building prosperity and advancing society in about 2-3 generations. Out of abject poverty and into one of the most technologically advanced societies in the world. What are some concrete examples of how we can intensify and deepen our economic cooperation between Romania and Poland? And then within the Three Seas region as well?

Mihai: From the Romanian perspective the Three Seas has always been associated with two priority projects. First is the road mobility project, Via Carpathia. And second is the Rail-2-Sea project meant to enhance the rail traffic between the North and South. In Romanian opinion, having this two mobility projects fully operational will immensely help the region and will help us work together better. We also need to solve the question of Romanian accession to the Schengen area. The fact that Romania is still not a part of the Schengen zone affects all cooperation within the Three Seas. It means waiting at the customs which impact the transportation of goods. These are the barriers that need to be removed in order to advance the cooperation. And if we succeed and have this mobility between North and South, then road and railway transportation will have positive effect on the digital infrastructure. If you have physical infrastructure alongside this infrastructure you can build a lot of economic opportunities for the region. But if we are not able to move fast from North to South, then less tangible aspect like digital ones, will be affected. So if we need to have the “infrastructure of the future” we need to first have the “infrastructure of the past”. We are in the very strange region where everything needs to be build simultaneously.

Stefan: That’s actually quite nice way of putting it. A nice way of actually defining what Central and Eastern Europe is. But what you said does the trick. It’s all the countries that need the infrastructure of their past to be finally build because it does not exist. Clever way of phrasing it.

Something that you started mentioning earlier, that the Three Seas is not a new project, but a sort of relaunch of an old vision, the Intermarium. Certainly in Poland there is a lot of reticence to call it that way or to define it that way. I think partially because Pilsudski’s vision never materialized, never happened, never worked so eventually we got wiped out from the map by the Third Reich and the Soviet Union. The second reason why there is some reticence to the Intermarium is this fear that region could perceive Poland as trying to have some sort of imperial ambition, taking the lead in the region. Obviously in terms of just population Poland is the biggest player in that space between the German powerhouse and today’s Russia. That is the state of the game, right? In terms of pure economic numbers, the transformation in Poland has been a success – 3.4% average growth between 1992 and 2019. So an incredible 27 years of uninterrupted economic growth. Numbers do speak for themselves, but nonetheless in Poland when the Three Seas project is mentioned there is this reluctance to mention Intermarium. You did not seem to have that reluctance. How do you feel about the Intermarium idea? Is that something that bothers you?

Mihai: I don’t have this reticence because my PhD and my studies focused mostly on the interwar period. So for me, as a researcher, I have this luxury to say this is a continuation of century old relationship between Romania and Poland. I don’t use Intermarium to refer to some model of regional leadership, but to underline that in our region a lot of projects are not necessarily new projects. The fact that we have this rich historical background only makes historical references more relevant when we talk about building common future and to see how present is affected by the past. We must not ignore it. Indeed there are differences between the 3SI and the Intermarium project. For example Romania also had the desires in the past to build projects such as Danuban Confederation, for the countries located along the Danube river to have free economic trade. At the end of the First World War the Central-Eastern Europe was very divided due to the fact that big empires ceased to exist. In the first years after the WWI the imposition of the custom barriers and new legislation affected the development of the region. So I don’t think it is necessary bad to make the reference to the past. I think we can learn from the past mistakes. And the Three Seas, in my opinion, is going to compensate for all the regional nationalism from the interwar period. Our countries are too small to develop by themselves, so they need to work together. The North and South of our region are essentially just different branches of the same economic regional tree. Only working together can ensure prosperity. If we decide to focus on our individual profit, we risk losing not only our individual economic prosperity but negatively affecting the prosperity of neighboring countries. That is why I use Intermarium, as a way of remining us [of what can happen if we don’t work together] within the Initiative.

You mentioned the very interesting idea of leadership competition and also the need to overcome the challenge of diverging economic interests. And the need to identify the necessary resources. I believe that our countries have this potential of working out through their differences. Especially now, when we are in a very complicated geopolitical context. We realize that we are just too small to stand alone in front of future challenges and we need to work together. One problem that is important to me and is not widely discussed, is the question of the region’s demographics.

We are living in the times where a lot of our population is downsizing. We have very strong migration, brain drain to the West and other more developed countries. This also affects our capacity to build and create common infrastructure. We don’t have the necessary labor force and the advantage that I mentioned before, the young pool of STEM-trained people is slowly diminishing due to this demographic factor. Maybe the question of demographic and the future of the population could also be an area that can be addressed through regional cooperation. Because we are not only competing from the economic point of view, but we are also competing from the human resources point of view. Even if we invest a lot in the education we risk loosing our graduates to third countries that can offer them better wages and better living conditions. This also needs to be considered. This demographic challenge should be in the background of any future cooperation.

Stefan: Absolutely. I am actually very glad that you brought that up. You actually brought two elements that were at the back of my mind, one being the geopolitical situation. Really in many ways, despite this tragedy of our neighbor Ukraine, this is absolutely a wake-up call in terms of this temporary safety that we had since this kind of pause in history since the fall of the Berlin Wall and the end of the Soviet Union. Peace really is temporary and order is such a fragile thing. So despite the great tragedy of Ukraine, wishing our Ukrainian friends all the best in their struggle against Russian aggression and imperialism, for us I think this really is a wake up call. This is a very strong signal that time is very precious and we must do our very best essentially to make sure that our region is strong enough to economically withstand, to be able to finance its defense, but also to be able to withstand various economic pressures. Many of the projects of the Three Seas have now become really so timely, including the Polish project of Baltic pipe.

The other thing that you brought up here, that hasn’t really been dealt with sufficiently, is the demography. It is a problem throughout the region, every single country in the Three Seas has it. Especially Bulgaria where I think almost ¼ of the adult population has left since 2007, when they joined the EU. Which is staggering. ¼ of the population taking and leaving, ¼ of the working potential… That economic cost just in terms of potential GDP loss, cannot be understated. I am very glad you brought that up.

My next question is: what can we do? If we provide the citizens of the Three Seas with the adequate economic conditions – the ability to live in a dignified way, to live in relative safety, relative prosperity – they would not be drawn to the West and migration. That seems like a first obvious step and it is of course happening, because it is a natural process. But I was wondering if you have any other suggestions. What we can do as Romania, Poland and as the Three Seas region to counter the demographic decline, be it via migration or and falling birth rates?

Mihai: We need to think more about the nature of policies. We need better, human-centered policies. That means a safe and friendly space in the region with guaranteed access to quality education and medical services, alongside all the perks of the modern society. We need that to keep citizens in the region and persuade those who left to come back.

We need to have user-friendly policies, if I may say so. In case of parents, we need easy access to kindergarten or to school. We need to invest more and to subsidize. Maybe add some tax incentives based on how many children you have.

We also need to invest more in quality medical services in order to better treat our citizens. Prevention is also important. Demographic policies could also subsidize reproductive health treatments. In the end all these policies are about creating a better living conditions. Not only salaries are important, but also the entire ecosystem where one lives. This makes environmental policies also important. We need to have cleaner air, cleaner water and preserve better our forests to ensure this child-friendly environment.

No single policy can do it all, we need a set of policies, an integrated vision. Often some policies might result in some undesirable effects, so we need to put them on the map and see how they all fit together in order to help the demographics.

Also, we need to have patience. Current demographic situation did not happen overnight. It took us years to arrive here, so the solution will also require at least as many years to reverse this decline.

Also, in addition to policies for retention of workers we need to create policies that will attract skilled workers from other parts of the world. This competition goes both ways, so why shouldn’t we try to create incentives that attract skilled workers to the region? We need to have patience, consistency and an integrated vision of policies.

Stefan: You said one thing that really caught my attention. That you are pessimistic. I would not want to leave our viewers with that sense of pessimism. On a personal note, and I think that data will reflect it, I think that despite geopolitical difficulties our region is on the upwards trajectory. It might be that I am still a relatively young man so that makes me naturally optimistic. It is very hard to find pessimistic young man. But I do think that data gives us a lot of reasons for hope. So I would like to ask you about some of the things that you are optimistic about. In our region, in the Three Seas project, Poland, Romania or just Romania. I’d like to get some sort of optimistic note form you, Mihai.

Mihai: Well, I’m optimistic, because in my opinion the Three Seas initiative was created to maintain the status for the region. Why do I say that? After the EU enlargement of 2004 and 2007, the CEE states seemed to be at the apex of international presence and influence. And the Three Seas Initiative wants to bring this back, preserve the existing international order that is based on multilateralism, human rights and the presence of international law. This order is more than favorable for our post-communist states that had difficult past, marked by injustices, international dictate and disregards for sovereignty.

The simple fact that the Three Seas exist as a regional format is for me a signal of hope. That fact that we are having this dialog, the fact that across the region experts and ordinary citizens are focusing on what our common future should be is a motive of hope. In the end, the Three Seas Initiative has the potential to become the powerhouse in the EU because of its structure. 3SI has a bright future ahead as long as its helps create are own political and economic identity. I am optimistic also in the end because I know that future is yet to be written and that we have all the ingredients needed for success. I said that I was pessimistic before, because when you are pessimistic and the outcome is positive, you can never be disappointed.

Stefan: That is a nice way of putting it. Mihai, thank you so much on this optimistic note on which I wholeheartedly agree with. Thank you again.

Mihai: It was a pleasure. Thank you.