GMF - The German Marshall Fund of the United States - Strengthening Transatlantic Cooperation

The European Union was presented with another serious challenge to its ability to contain hardline nationalism this week with the inclusion in the government of new member state Slovakia of a key party with rabidly xenophobic views and a nostalgic attitude to that country's pro-Nazi wartime government.

The far-right Slovak National party was invited into government by Slovakia's leading leftist party, SMER-DS, which came first in recent elections but needed coalition partners to form a government. The fact that far-rightists have been brought into power by Social Democrats is but one of several alarming precedents that have been set by these events, which come on the heels of the formation of a new government in Poland that includes the nationalist and homophobic League of Polish Families.

The Slovak National party, apart from its sympathies with the second world war clerico-fascist government of Father Jozef Tiso, which paid the Nazis to deport about 70,000 Jews to death camps, is unremittingly hostile to Slovakia's sizeable Roma and Hungarian minorities.

Among many inflammatory remarks, Jan Slota, its leader, once said that the best solution for the Roma was a "small courtyard and a long whip" and, in a drunken outburst in 1999, called on Slovaks to "get in their tanks and flatten Budapest" to defend Slovakia from the alleged encroachments of neighbouring Hungary. Mr Slota has also described Tiso as one of the greatest sons of the Slovak nation and has held gatherings to salute his memory.

Set in the context of recent events in Poland and the rise of Jorg Haider's Freedom Party in Austria in 2000, the concern now is that we are seeing the start of a trend in which each success for an extremist party in one country emboldens and helps legitimise extremist parties in others.

During the election campaign in Slovakia, leading figures in the Slovak National party successfully countered charges that their presence would be unacceptable abroad by pointing out that Brussels had been forced into a humiliating climb-down in its brief attempt to isolate Austria in 2000 and had done nothing significant in Poland.

So far, these groups have been junior partners to more mainstream parties who say they can prevent extremist rhetoric from translating into government policy. But if this trend continues, it may only be a matter of time before such a party becomes the leading force in government. If that happens, modern European history will have entered a new period.

All of this presents a mighty challenge to the EU's claims to "soft-power" influence and to be a club whose membership is defined by adherence to a set of core values. There is a very specific problem arising from all this with the credibility of EU anti-racism campaigns. Chauvinists, after all, are hardly going to take seriously the message that racism is unacceptable when they switch on their television sets and see the extremists they voted into power being wined, dined and otherwise legitimised by political leaders across Europe.

That problem is compounded in the new member states which, as of January 2007, will become eligible for almost Euros 170bn (Dollars 216bn) in structural fund aid. This promises to be a political bonanza for coalitions across the region who will inevitably claim the credit for the increased living standards and improved infrastructure such funds are intended to promote. Smaller parties in government will bask in the reflected glory as much as bigger ones.

In the case of Slovakia, Brussels will thus find itself in the monstrous predicament of providing a de-facto subsidy for the future political popularity of the Slovak National party which, to make matters even worse, has been given the key ministry responsible for distributing EU funds.

Outlining the nature of the problem is admittedly easier than suggesting a solution. These governments are being formed following free and fair elections and many in Brussels got their fingers burnt over the Haider affair. But if the EU is unable to find a way to put its house in order, and to do that sooner rather than later, it will only be storing up bigger problems for the future.

Membership of the union is not compulsory and subsidies from European taxpayers are not a God-given right. If the EU is serious about this problem, perhaps extremists and the people who form governments with them should be made aware of precisely what that last sentence means.

The writer is a senior transatlanticfellow of the German Marshall Fund of the United States.