Commentary: The EU: Too Tough on Prospective Members?

By John Rossant

Valéry Giscard d'Estaing, the patrician former President of France, knows a thing or two about politesse. In his address to the inaugural meeting of Europe's constitutional convention on Feb. 26, he uttered the words "ladies and gentlemen" not only in the European Union's 11 official languages but also in Polish. It was a graceful nod to the convention members hailing from Poland and the 11 other Eastern European countries, including Estonia and Hungary, that hope to become full EU members in 2004.

Giscard's gesture no doubt went down well in Warsaw, Tallinn, and Budapest. But the sad reality is that apprehension about EU expansion is mounting on both sides of the former Iron Curtain. Leaders in Europe--east and west--badly need to rekindle enthusiasm for this monumental project, which will increase the EU's land mass by one-third, boost its population by 100 million, and add $400 billion to its economic output. But EU enlargement is not just about a bigger, better common market. It's about the historic reunification of Europe after centuries of often bloody estrangement. If expansion stalls, Eastern Europe's transformation into a peaceful and democratic free-market economy could stall as well.

Building support for such a huge undertaking might well be easier if not for the European Commission's stinginess. In late January, the EC unveiled proposals on financing the enlargement process--including a 10-year transition period before any new EU members would be eligible for the same level of agricultural supports doled out to French, Spanish, and other EU farmers. The former East bloc countries could also face a seven-year ban on the free movement of labor inside the EU. Sure, in these tough economic times, the 15 existing members can't afford to spend billions subsidizing Eastern European farmers or absorbing thousands of new workers. Still, the measures would effectively create a hierarchy of first- and second-class European nations.

Not surprisingly, applicant countries have been quick to complain. "Our farmers must have the same conditions as others," insists Hungarian Foreign Minister Janos Martonyi. Officials in Poland have assailed the proposals as a grave setback for a country where 27% of the population still lives on the farm, compared with an average of just 3% in the EU. "We badly need those transfers," says one prominent government adviser in Warsaw. "It's difficult enough as it is to convince Poles that joining the EU will boost our economy, raise living standards, and buttress democracy." Forcing farmers in the west to share some of their overly generous subsidies with their brethen in the east may be one way around the impasse.

Although hardly anybody thinks the controversy will derail enlargement altogether, delays are now likely. That could leave the 12 candidate countries in a dangerous political and economic limbo. Hard-line nationalist groupings suspicious of Brussels are gaining support. Euroskeptics already control almost one-quarter of the seats in Poland's Sejm, and charge that the center-left government of Leszek Miller is making too many concessions to Brussels. In Hungary, Viktor Orban's center-right coalition is cozying up to the anti-Semitic MIEPE party in advance of national elections on Apr. 7. "The whole progress toward becoming a mature and democratic society would be slowed down" if Hungary is not admitted into the EU club on schedule, says Peter Felcsuti, managing director of Budapest-based Raiffeisen Bank.

Sadly, a falloff in enthusiasm for enlargement is also visible in the EU itself. In Germany, where a stubborn recession has pushed up unemployment to 10.4%, the center-right candidate for Chancellor, Edmund Stoiber, warns that jobs could be lost to cheaper immigrant labor from the east. In Austria, 15% of voters signed a petition circulated by Jörg Haider of the far-right People's Party demanding that Vienna veto the EU accession of the Czech Republic as long as a nuclear power plant near the Austrian border stays open.

There are no easy ways to speed up the process. The EC and applicant countries must still hash out a host of thorny issues, such as regional aid, tax breaks, and rules on land ownership, by the end of the year in order to make the 2004 deadline. It may not be a vote-winner, but European politicians need to start convincing increasingly doubtful voters that the advantages of enlargement are worth the cost. That kind of orchestrated effort worked wonders for another experiment that had lacked popular support: the launch of the euro. Unfortunately, it takes more than just one French ex-President to constitute a cheerleading squad.

Rossant covers European politics and economics from Paris.

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