The Centre for Research into Post-Communist Economies


Nice and Enlargement

On Wednesday February 7 Lord Tomlinson will call attention to the Nice Treaty and the Case for Enlargement

The Treaty of Nice, despite its ostensible aim, does not forward enlargement at all. It concentrates deliberately on institutional problems and numerical balance between member states, both present and future. To anyone who has actually looked at the problems of enlargement the important questions have to do with agriculture, environment and mobility of labour. What it does do is use the question of enlargement to produce a more integrationist agenda and lay down further plans for the creation of a single state. Surely nobody can still maintain that enlargement will mean greater distribution of power from the centre towards the member states. Quite clearly, that is not how the EU and its officials see the process.

The assumption made and articulated at Nice is that the candidate countries need to work even harder to achieve the sort of standards required by the EU. There is no reference to the need for reform within the Union itself. In the past there have been half-hearted references to the need for CAP reform and British politicians still speak about it. Occasionally Commissioner Fischler refers to the absolute necessity to change the CAP system. However, since the d�b�cle of Agenda 2000 the calls have been even more muted. Clearly, nothing very much will happen about this.

The CAP is in dire need of reform at the very least. In fact, one can argue quite sensibly that it ought to be abolished completely. Whatever purpose it may have had in the mid-fifties has long ago evaporated. It is also in need of reform as a preparation for eastward enlargement. The applicant countries are largely agricultural and largely inefficient (though some of the food they produce is of high quality). Polish farmers (this is a misnomer � they are really peasants) are very worried that while all sorts of impossible reforms are demanded from them they will not receive what they are hoping for, which is CAP subsidies. A few weeks ago they were reassured on the latter by Verheugen, Commissioner for Enlargement: CAP payments for East European farmers will be phased in, he told them. At the same time he called on them to think in terms of investment into agricultural and environmental improvements. The problem is that they do not have the sort of money that is needed for improvement. They want subsidy � they cannot get subsidy as the EU cannot afford it and, in any case, it is very questionable whether that is the desirable way forward for Poland or any other East European country.

The other subject that was severely left alone at Nice was labour mobility. Germany and Austria are calling for a seven year moratorium on labour mobility as they are worried about being swamped by reasonably qualified Polish and Czech workers who will be prepared to accept lower payment and no social security. The outgoing Polish Ambassador to the EU, Jan Truzczynski, has dismissed these fears and has accused the Commission of exaggerating the problem. (A recent Commission analysis put forward the theory that if the first wave of enlargement took place in 20002 � an unlikely scenario � and there was labour mobility from day one, there would be an immediate net migration of 335,000 people, 220,000 of whom would go to Germany.) The EU countries are calling for restrictions on blue-collar migration. Ambassador Truzczynski has referred to this as immoral and said Poland had no desire to compromise on the subject in order to speed up enlargement. At the same time, of course, he and his government would like to see substantial progress under the Swedish presidency.

Restricting labour mobility is going to be a particularly thorny question as the likelihood is that full implementation of the acquis communautaire, particularly the various, often unnecessary, environmental regulations will cause severe economic upheavals in the countries concerned. Economic upheavals will probably result in unemployment at a time when they are just about getting over the problems caused by the collapse of the Communist system. How is the EU proposing to deal with the ensuing difficulties?

It is difficult to decide what the institutional changes agreed on at Nice will mean in real terms, as many of the details have not been finalized. Numbers to be required in weighted voting, QMV etc do not at the moment add up and we have to wait to see what the final text will say. There is some feeling in Eastern Europe that they are not being given their due in numbers of MEPs and votes in the Council of Ministers. This may become an issue as according to the rules the institutional chapter of the acquis, which was one of the first to be closed with most first-wave applicants, will now have to be reopened as the conditions have changed since the last round of negotiations.

First calculations indicate that the European Parliament will cost an extra 145 million euros a year to run after the first wave of enlargement. (That is, of course, on present prices.)

Enhanced co-operation and the proposals for the EU�s future development are likely to consign the new entrants (assuming they will actually enter) to an outer circle from which they will not be able to move further in. The applicant countries have maintained that all they are interested in is participation in the economic arrangements of the EU. The developments at Nice make it overwhelmingly clear that they will be expected to become part of an integrated state. Furthermore, as things stand, they will always be a poorer, less developed, less advantageous part as they will be locked into the position at which they join.

As the political agenda becomes inescapable, opinion in Eastern Europe changes. As even their politicians say, it is not all that long since they have regained their freedom and independence. They have no desire to give it again. Nor do they have any desire to ask their people whether they want to give it all away again. Recent opinion polls show that support for EU membership is ebbing fast partly because of the way these countries are being treated by the EU and partly because the true agenda is becoming clearer. Support in Poland hovers around the 50 per cent mark, sinking to 30 per cent among farmers. A recent opinion poll in Estonia showed 45 per cent opposing membership and saying they intend to vote no in a referendum. According to �ripaev, the Estonian business daily, Estonia�s economy is at present too liberal for the EU. Similar complaints have been heard in other countries, especially in the Baltic states, where the agriculture in particular has been liberalized in the wake of the Soviet collapse. The EU negotiators are attempting to reimpose what the former Communist states see as a collective economy.

All these questions will come up sharply when a number of the applicant countries will hold referendums � assuming that we get that far. For instance, Article 1 of the Estonian Constitutions states: �Estonia is an independent and sovereign democratic republic in which the people hold the highest power.� A number of the other countries have similar articles in their constitutions.

Applicant countries are forced to put up political and economic barriers against their neighbours who will not come in at the same time or at all. This may suit the EU�s protectionist tendencies. It is hardly the right answer for an area that is sorely in need of trade and economic development.

All this leads to the inescapable question: is membership of the EU the right solution to the problems of the former Communist countries. Would it not have been better to set up free trade agreements (something the EU has refused to do as it has continued to discriminate against goods from Eastern Europe, while dumping heavily subsidized products on their market)? Having strung them along so far it may not be possible to revert to some kind of a sane arrangement at this stage, but there is no harm in trying. That may produce sensible developments within the EU as well.

Helen Szamuely