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The 'big bang' one year down the road

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Published 02 May 2005, updated 28 May 2012

The European Commission's official assessment of the state of play one year after enlargement is upbeat, but the divisive issues are piling up, and a sense of enlargement fatigue seems to have set in.

There has been a general malaise within the EU from having to face up to the competition of a globalised economy, most recently exemplified by the controversy surrounding cheap imports of Chinese textiles. Along similar lines to the debate on the services directive, the enlarged EU has been debating the appropriate level of business taxation. With a markedly lower average than EU-15, some of the new member states have been accused of 'tax dumping'. Populistic ideas of cutting access to EU structural funds to countries with the lowest tax levels have been aired by leading French politicians such as Nicolas Sarkozy, adding weight to a sense of 'us  and them' within the EU. 

The difficult talks on the next EU budget covering 2007-2013, which is set to be concluded by June 2005, pits the hitherto biggest cohesion and structural fund recipients such as Spain, Portugal and Greece against new member states with greater needs. In the past, EU budget talks that have got bogged down have traditionally been solved by Germany pulling out its wallet and paying more into the pot. However, this cannot be expected to emerge as the  way out  this time around. Germany is not only more self-confident, but also economically weaker.     

Fears of a large-scale influx of cheap labour from the new member states to EU-15 has been avoided, in part due to the restrictions put in place by a majority of EU-15 states to avoid just that. Only Ireland, UK and Sweden have not put up restrictions. However, the absence of one of 'the four freedoms' of Europe has left the new member states with the feeling of being less than fully-fledged members. This perception is all the stronger given that the new member states are not yet members of Schengen nor of the Euro. 

In spite of few specific examples, the fear of industries from the EU-15 moving their business to the new member states in search of cheaper wages and lower production costs has also added to negative public sentiment towards the EU-10 in parts of the EU-15.    

Positions: 

"Twelve months on, slowly but surely, even the biggest doubters have to accept that far from a threat, enlargement represents for both sides an opportunity," said Luxembourg (current holder of the rotation EU presidency) Prime Minister Jean-Claude Juncker.

French President Jacques Chirac: "The reality of Europe is this: a process of getting people and economies together for the benefit of all." He added: "Experience shows that, in these areas, those who believe in an invasion of low-cost products are quickly contradicted by the advantages linked to a tide of growing exports." 

Calling it a happy event, the European Commission's President José Manuel Barroso  sent a confident message underlining that fears had been largely unfounded: 

"It is a forceful reminder that openness towards others - and not isolationism - is what drives the EU and yields results. With 25 members - 27 in around two years time - the EU is strengthening its position on the international stage.

The arrival of ten new member states bridged that artificial divide between eastern and western Europe. But the enlarged Europe has not closed in on itself. It is open to all countries which belong in Europe, subscribe to our values and meet the Union’s accession conditions. We are still getting to know each other, getting to grips with the new realities of our community. And that will take time. We must be patient and give ourselves the time to learn about and get to know each other."

The Polish Regional Policy Commissioner Danuta Hübner observed: "Some people feared that the new member states would be unable to absorb the substantial  structural assistance offered by the EU, but so far these fears have proved unfounded. EU funds are helping to realise the enormous growth potential that exists in these economies, and they are contributing to visible improvements in governance and administrative capacity."

Enlargement Commissioner Olli Rehn said in a press interview with Süddeutsche Zeitung that there was a certain 'enlargement fatigue' after the in-take of ten new member states. Indirectly admitting some of the failings of past negotiations, he said that, in the future case of Turkey, Brussels "will rely less on promises and act more on the basis of hard facts". He added that "further enlargements must be gradual  and carefully managed to ensure that European citizens support them and that the Union maintains its capacity to act". Rehn regretted that the "objective successes" of enlargement will be obscured in a time of weak growth in the EU-15: "People fear for  their jobs and feel insecure."  

"The problems we are facing in Europe have nothing to do with enlargement, they have to do with a lack of willingness to carry out reforms in the old member states," said former Czech Commissioner Pavel Telicka to United Press International.

Former leader of the Polish Solidarnosc labour movement, Lech Walesa, who was instrumental in bringing about the fall of Communism in the USSR, accused the EU-15 of not treating the new members in an equal manner: "I only see egoism, especially in France", said Walesa to Associated Press. "When we talk about Europe, where is the equality? They have money for their own farmers, but not for our farmers." 

Next steps: 
  • Romania and Bulgaria will join the EU in 2007.
  • Croatia is set to start membership talks as soon as the Zagreb government finds and turns over the suspected war criminal Ante Gotovina to the International War Crimes Tribunal in The Hague. 
  • Turkey is expected to start membership talks in October 2005.  
Background: 

On 1 May the EU celebrated the first anniversary of its enlargement from 15 to 25 member states. It came against the backdrop of the gloomy prospect of a negative result in the French referendum on 29 May, in which fears of outside competition are playing a major role in the 'no' camps campaign against the EU Constitution. 

There is particular anger directed against the proposal for a services directive, which is seen as leading the way to 'social dumping'. Service providers from the new member states are the subject of these fears.

The recent conclusions of enlargement negotiations with Romania and Bulgaria, the stalled start of negotiations with Croatia and the expected start of negotiations with Turkey later this year have led even Enlargement Commissioner Olli Rehn to speak of "enlargement fatigue".

The new EU member states have experienced higher average growth than the fifteen existing members that they joined. GDP rose by 5% in EU-10 in 2004, up from 3.7% in 2003. The forecasts point to a 4% rise in 2005, more than twice that of the EU-15.  

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