A tight institutional schedule

A tight institutional schedule

On the 12th and 13th December last, the European Council of Copenhagen closed the negotiations with ten countries :Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovak Republic, Hungary, Slovenia, Cyprus and Malta. The actual accession on the 1st May 2004 of the 10 countries chosen by the European Council of Copenhagen, will depend on whether the 2003 schedule is adhered to. The schedule appears very tight.

• In Brussels, the final draft of the Accession Treaty will have to be ready in order that it may be signed in Athens on the 16th April 2003 by the 15 current members of the Union and the 10 countries chosen at Copenhagen. The Treaty, which could comprise between 5 and 6,000 pages, will first have to obtain the assent of the European Parliament.

• The ratification procedures in the candidate states might start even before the Treaty is signed. Slovenia will probably be the first country to hold its referendum, on the 9th February, followed by Malta and Hungary (12th April). The probable date for Lithuania is the 11th May, with the 16th and 17th May for the Slovak Republic, and either the 15th or the 16th June for the Czech Republic, the 14th September for Slovenia and the 20th September for Latvia. Poland is planning to choose the 8th June, while the dates for the other candidates are not yet definite. As for Cyprus, a referendum will be held only if agreement is reached before the 28th February on the final status of the reunified island, in accordance with the United Nations plan, and the people would be consulted both on the agreement itself and on membership. These referenda are somewhat variable in purpose, some having only an informative value, while others are regarded as valid only if 50% of the population takes part in the vote.

• The popularity of EU membership varies from country to country. According to the latest national surveys, more recent than the table opposite but which must be interpreted with caution, the yes votes total between 65 and 70% of the opinions expressed in Hungary, Slovenia and the Slovak Republic and between 55 and 65% of those in Poland, the Czech Republic and Lithuania. On the other hand, in Estonia and Latvia, the yes votes account for less than 50% of the total whilst still being higher than the noes, a considerable part of the population having abstained. Unpleasant surprises, however improbable, cannot be totally ruled out.

During the period preceding accession, the candidate states must, with determination, continue the implementation into national law of the acquis communautaire and fill the many gaps in its application. The Commission will prepare a new report on this question before the 1st October 2003. This report will be the subject of a particularly close examination by the current Member States.

• The ratification procedures in the 15 countries of the Union should follow the parliamentary route and thus involve less uncertainty.

If all these deadlines are met, the year 2004 will see the candidates’ final accession on the 1st May, and their simultaneous assimilation into the various Community bodies: the Council of Ministers, the Commission and the European Parliament.

Enlargement within sight

The fourth enlargement of the EU, scheduled for ten countries for the 1st May 2004, and probably 3 years later for Bulgaria and Romania, is often described as being on an unprecedented scale. At the same time, some observers refer at great length to its negative aspects for the current EU members. These two approaches should be put into perspective.

• In terms of mass, enlargement towards the East is comparable with the previous enlargements, but it will increase the disparities among EU members.

• The ten countries concern ed will account for 15% of the population of the enlarged EU and 19% of its area. Judging by these two criteria, this will not be the largest addition to the EU: the first three entrants in 1973 (United Kingdom, Ireland, Denmark) accounted for a quarter of the population of the new EU of 9, whereas in terms of area, the waves of previous accessions were all greater, in relation to the size of the EU at the time. If one considers GDP, this is actually the smallest.
• On the other hand, this enlargement will bring about a more marked increase in the disparities existing within the Union: on average, wealth per capita in these countries is less than half the European average; and only three countries exceed this threshold (Slovenia, the Czech Republic and Hungary). For the purpose of comparison, the GDP per capita (in PPP) of Greece (1981), Spain and Portugal (1986) together accounted for 60% of the EU average in 1986. However, the dynamism of these emerging economies, as well as the Irish and Spanish examples, make for optimism regarding their ability to converge in the medium-term.

Although today’s candidate countries are not so very different from those of yesterday, it is now the requirements for entry to the EU which have changed: the new Member States are now joining not just a customs union but a single market and in the long run a monetary union, which means much more ‘acquis communautaire’ to implement.

• Fears of negative economic repercussions in the West resulting from the assimilation of the CEECs are sometimes exaggerated.

• First, the economic assimilation of these countries into the EU is a long process which has already been partially completed. With the progressive removal of trade barriers over the past 10 years and the importance of FDI flows (more than 120 billion $US, one quarter of the applicant countries’ GDP) they are already widely integrated into the European division of labor. Two thirds of the CEECs’ trade takes place with the EU and most of the reorientation of its business from East to West is over, with cross-industry trade accounting for an increasing share. French trade with Central and Eastern Europe has multiplied nearly five-fold since the beginning of the transition process, and these countries account for 10% of French exports outside the EU. In future, trade will continue to progress, but not so quickly.
• Secondly, although the amplitude of economic cycles may be strongly marked, potential demand remains high in the medium-term, judging by the household equipment rates in these countries. The opportunities to acquire market shares are even greater for French companies, since France’s market share in these countries is only 6%, significantly less than her trading weight within the EU (10%).

Most of the surveys on the economic impact of enlargement predict that the overall effect will be beneficial because of the widening of the single market and the scale economies which will ensue for businesses. From the economic point of view, the ten applicant countries will continue to bring a growth surplus to the EU: although their GDP (in current euro) is only 5% of that of the enlarged EU, their share of growth is much larger, 11% in 2000 and 15% in 2001.

The coal industry, assessment and prospects

Where does the coal industry, a major energy sector and emblem of the socialist period, stand today?

• Since 1990, consumption, production and employment have been constantly diminishing.

• Whereas coal production (excluding lignite) in the CEEC reached a level of 343 million tons (MT) in 1990, it amounted to only 245 MT in 2000, that is to say a reduction of 40% over 10 years. But the region is also characterized by widely differing situations: two major producers, Poland and the Czech Republic, account for 68% of the total in 2000 ; at the opposite end of the scale come Slovakia, Slovenia and the Baltic States, producing token quantities or even none whatsoever.
• As regards consumption, in the producing countries coal only retains a strategic role in the generation of electricity. Slovakia, Slovenia and the three Baltic States have already turned to other sources of power. In intermediate position come Romania, Bulgaria and Hungary, countries in which coal’s place in the energy balance remains important, but where alternative energy sources, often nuclear (providing respectively 11, 45 and 41% of the electricity generated), have been used for over twenty years.
• Although reorganization and a reduction in employment levels (more than 450,000 people in the whole region having been made redundant between 1990 and 2000) have enabled productivity to rise, the coal industry is still not profitable. In Poland for example, the coal industry’s debt stands at 5.4 billion euros. The low energy content of the coal extracted from the region’s mines, often coupled with its high sulphur content, which creates a great deal of pollution in use, scarcely improve the industry’s prospects.

• The future of coal in the CEEC seems mainly to consist of restrictions.

• Environmental protection is becoming increasingly important and the coal industry will have to abide by the new regulations, in accordance with European standards and the undertakings given in the Kyoto protocol agreements. The reduction in CO² emissions will necessarily involve a reduction in the use of coal. This requirement is however not a priority, as the sharp decline in heavy industrial activity since 1990 has already greatly reduced the level of carbon dioxide emissions : in 2001, their level was 30% below that set by the Kyoto protocol, ratified in 2002.
• Social pressures appear much stronger today. The attempt by the Czech Republic to guarantee a certain level of production in the mines, in the context of the privatization of the national electricity operator CEZ, illustrates its concern for the social situation in Northern Moravia : any strategic investor would be under an obligation to buy a minimum annual amount of coal. In Poland, the recent announcement of a plan to close unprofitable mines, which would involve the loss of 35,000 more jobs, caused strong reaction on the part of the miners’ unions.

• Taking into account the social aspects and local energy structures, the proposed changes will not be too drastic.

• Among the large producing countries, Poland is envisaging only a slight reduction (10%) in its production by the year 2010, owing to the importance of its reserves (10% of the world total) and of the social cost of changing to an alternative source of energy. In Romania, coal will for the years to come remain an important primary source in the energy balance, even though both the authorities and the people remain favourable to the development of nuclear power.
• The transition which is most often mentioned, that towards natural gas, almost exclusively from Russia, will depend to a great extent on how the prices of the various types of energy fluctuate.

For background information to this analysis (Revue Elargissement No. 37 – 20 January 2003), the relevant tables, or more analyses, see the

enlargement website of DREE.