The impact of EU's enlargement at supranational and national level - A cost/benefit analysis

TABLE OF CONTENTS

INTRODUCTION

FIRST PART
THE BENEFITS OF AN ENLARGED EUROPEAN UNION
1. The moral imperative to create a unified Europe
2. The enhanced safety measures
3. The significant economic stimulus
4. The improved global weight of the European Union

SECOND PART
THE COSTS AND RISKS OF THE ENLARGEMENT PROCESS
1. The economic costs
2. The constitutional overload
3. Specific national or regional problems

CONCLUSION

REFERENCES

INTRODUCTION

The appointment of Mikhail Gorbachev as Secretary General of the Soviet Union in march 1985 has been the final attempt to prepare the morbid communist system for future challenges. But faced with overwhelming structural deficits Gorbachev's issues of Perestroika, Uskorinye and Glasnost, reforms, acceleration and transparency, paved the way for the end of the Union and its communist superstructure. Thus the dramatic overthrowing years from 1989 to1991 with the pacifistic end of bipolarisation implies a major political opportunity of historical range. Remembering that peacekeeping is still the most important pillar of the hole communifying process, the enlargement of the European Union, the integration of former communist countries is more than a simple opportunity to embed some 100 millions consumers into the liberal European trade area. It is a political imperative in order to realize the historical possibility of a peacefully united Europe under democratic conditions.

Although the present European Union already carried out four successive waves of enlargement which have led to nine accessions since 1973, the scheduled Central-Eastern and Mediterranean enlargement in 2004 will have in a doubtless way the most important impact about the futures' quality of the Union - in quantitative (widening) as well as in qualitative (deepening) measures.

This enlargement will constitute a highly complex multidimensional event, combining great benefits for the Union as entity as for its early new member states with massive costs and proper risks which should not be underestimated.

This essay attempts to outline in the following the major aspects along the cost-risk-benefit axe at the supranational as well as on the national level. Specific national problems, especially the case of Cyprus and the Baltic States, as well as the role of the NATO will be taken further into account in order to sketch a brief general survey of changing perspectives and policy options.

FIRST PART The Benefits of an enlarged European Union

Hans van den Broek , responsible commissioner for Central and Eastern Europe and strong personal supporter of the enlargement process brought it to the point:

<< An enlarged EU will bring increased security, stability and prosperity to Europe^[1] >>

In fact, there are four important aspects in favour of the enlargement which will be argued in the following:

1. the moral imperative to unify Europe,
2. the enhanced safety measures
3. the significant economic stimulus and
4. the improved global weight of the European Union

1. The moral imperative to unify Europe

The present EU-Treaty makes clear that every European country which is sharing the values of the EU-Charter of Fundamental Rights is eligible for membership.

The last mediterranean enlargement which brought Greece, Spain and Portugal into the European Community already demonstrated the basic motive to strengthen the consolidation of democracy and stability in countries having abolished totalitarian dictatorships. These positive examples were contributing to push the European Union after the fall of the iron curtain in a more and more attractive position. There have never been before so many countries wishing to join the Union than today. Especially former communist satellite or member states of the SSSR perceived the chance to participate in the European integration process. The vast transformations since the political upheavals a decade ago has brought these countries to the threshold of membership. The present EU is now in the position of duty to respond positively to these developments and to contribute to the improvement of a stable social, political and economic order for (nearly) the hole European continent.

2. The enhanced safety measures

The creation of this stable social, political and economic order across Europe can also be considered as a force for international peace and stability. A liberal supra- and transnational economic system integrated in an ample constitutional framework leads to the wide opening of political regimes and democratisation.

The former vice-president of the European Commission underlines especially the economical links fostering interdependence, which in turn promotes political stability.

<< In my view, it is not by chance that the unprecedented period of world peace since the last world war has coincided with the unprecedented growth in economic interdependence^[2] >> Although the economic contribution for international stability is significant, the institutional security structure still plays a key role for peacekeeping. On the one hand the increasing cooperation in the fields of justice and transnational police prosecution will effectively help fighting crime. On the other hand the enlargement of the NATO which will soon cover most of the EU -candidate countries, will further improve (in cooperation with the OSCE) the security architecture in the hole Euro-Atlantic Area. Over and above that, this enlargement will highly contribute to the Transatlantic partnership between the United States and the European Union^[3].

3. The significant economic stimulus

The enlarged European Union will represent with its 480 Million consumers the most powerful economic force in the world. While the internal market, expanded by additional 100 million people with rising incomes will stimulate the economic growth in Europe, Brussels' economic support of the recently opened up market economies in Central and Eastern Europe will significantly reduce the prosperity gap (as a result of the cold war ) between Eastern and Western Europe. The economic development of Ireland, Greece and Portugal demonstrates the national stimulus of financial aid in combination with business prospects. The scheduled liberalisation of markets in goods and services between East and West, North and South will certainly be expressed in rising GDPs especially in CEEC-countries which will be a result as it will contribute to a vaster range of transnational trading opportunities across over the continent, a benefit for all.

The integration process will further establish social and environmental standards for the hole Union. Thus, the prohibition of dumping will strengthen the fair competition as well as the environmental protection, there will be a significant reduce of the soaring costs of environmental pollution.

4. The improved global weight of the European Union

The worldwide rising regional integration process' in every continent (from the Mercosur in South America over the African Union to the ASEAN and APEC states in the pacific region ) can be considered as an answer as well as a contra-movement of nation-states to the general globalisation process undermining national sovereignty.

The fact that the nation-state has lost most of its former political power about economics is incontrovertible. Even the strongest nation-states lost their position to decide independently about rates of interests, exchanges or other financial measures.

The deepest existing integration process, the Europe van Union (in contrast to the NAFTA representing an example of negative integration) is in comparison with each of its single member states in a much stronger position.

Especially small candidate countries (like Lithuania or Slovenia) would suffer without alliance of a vast power deficit. But the fact being part of the largest trading bloc in the world will strengthen the individual position of the nation-state as well as the hole Unions' position. Sir Leon Brittan, former vice-president of the European Commission describes the situation as follows: << Globalisation is a very real phenomenon which poses substantial challenges to the way we run our affairs both politically and economically. The EU has proved itself as a uniquely effective response to these modern challenges and has enabled nation-states to extend a much greater degree of effective sovereignty over the new international order than they would have been able to do on their own^[4] >>

SECOND PART The Costs and Risks of the Enlargement Process

In spite of the large benefits who would arise from a successful enlargement procedure, there are still many risks and huge costs, especially for the losers of this communifying integration process that have to be taken into account in order to organize the enlargement with its benefits successfully.

The 1. economic costs - a scheduled increase of 74 per cent of the EU-budget to cover the expenditures due to enlargement - will be accompanied by a 2. constitutional overload and 3. specific regional or national problems.

These aspects will be argued in the following.

1. The economic costs

The principal core aspect against a rapid economic integration of the former communist CEEC-Countries is the enormous current prosperity gap between the EU-15 and the candidate countries. In fact, the combined GDP of all CEEC-Countries represents just 4 per cent of that of the Union - roughly equivalent to the Netherlands' GDP. The average national income is still 70 per cent (!) under the EU-15 average. This massive cleft will have an immense impact on the financial distribution system on EU-level. Present EU-members, which are actually receiving a remarkable surplus of financial support (for example Portugal, Greece and Ireland) will obtain significantly less from Brussels, others are even forced to reinterpret their role as past receivers to future providers.

Present eurosceptics in the EU-15 won't have - at least in a middle-term perspective - much difficulties to bother the Union. The degree of solidarity will have to be very considerable in view of the coming budgetary expenditures for structure funds or agricultural bills.

Especially this lattern communified a g r i c u l t u r e p o l i c y , being considered as the highest challenge, will put the transnational solidarity to the test. It is import to remember that the agricultural sector amounts still 50% of the total EU-budget, although the primary sector covers less than 2% of the GDP and rather 5% of the labour employers^[5].

The integration of the highly agriculture orientated CEEC-countries - an average of 22,5 percent of the population is working in the agricultural sector, gaining 7 percent of the CEECs' GDP - will constitute a huge defy. Especially the powerful western agricultural lobby is pushing forward to save his part of the budget. Although a modification of the financial agreement is highly needed, there is up to now no common view how to achieve it. But it is obvious to note that structural transformations are needed, in the primary sector as well as in industry and service providers faced with increasing competitive pressures, these latter will in particular affect low qualified labour.

2. The constitutional overload

The impact of the enlargement on institutional aspects of the Union is a crucial point that has not been completely solved yet. There is no question, that the enlargement has to be organized on a solid base, thus the need for institutional reform is more evident than ever. The present institutional organisation is not in the position to deal with 25 or maybe more member states on a democratic, transparent and efficient base.

Although there have been many debates in the last decade how to organize a very largely extended European Union, but the recent results of the European Agenda left many questions open. Although the problem of the institutional overload is not new.

The commission emphasized already in 1994 - short time after the first applications of candidate countries - the need for institutional reforms to ensure the efficiency of an enlarged Union. The European Parliament also pointed to the need of institutional reforms. But the most powerful instance, the Intergovernmental Conference, was broken up. The member states had very different views on the need for reform, on the one hand Germany who was calling for a major overhaul of the European engine, on the other hand the British government considering the IGC merely as a platform to exchange national interests.

Due to the evidence of the problem, many attempts to secure institutional reforms have been started, but they have never succeeded.

The European Council established for example in 1995 a direct linkage between the enlargement and the Intergovernmental conference, on which a greater recourse to majority voting and simplified legislative procedures should have been agreed.

Although the European Council, the Commission and the Parliament were calling to tackle the institutional question before enlargement, but the following treaties failed in several crucial points. How can greater involvement in, and acceptance of, the Union's activities by its citizens be achieved ? How to improve the preparation and implementation of decisions in an enlarged Union which will surely involve more complex and diverse considerations ?

Perhaps the most sensitive and contentious institutional issues is the range of decisions to be taken by qualified majority vote. All the fundamental constitutional decisions must be still taken by the Intergovernmental Conference which has to decide unanimously. This procedure also includes the possibility of small member states like Malta with its population of 50.000 to block a major decision of the hole Union by veto, concerning nearly half a billion people.

Due to the fact that the European Union will certainly turn into a more heterogeneous political system, its enlargement will completely block its acting capacity, if there will be no fundamental reform of the current decision-making procedure.

Those reforms will need a strong political willingness in order to achieve a functional system, member states do have to become accustomed that they may not be always on the winning side of every vote but that, on balance, their interests are served by an effective system which is not constantly confronted by vetoes.

Another difficult issue include the nature and composition of the six-monthly rotating Presidency (Troika system), the manner in which the council transact business.

Which instance will secure the continuity of European Politics ? The new quality of heterogeneous plurality comprise a delicate problem, the Union will be faced with.

Just to emphasize the organisational aspects: every table round with 25 member states will take more than two hours, if every member is speaking for just five minutes.

The twenty-two (!) official languages in the EU will further constitute a vast challenge. The costs of interpretation and translation as well as the possibility of misunderstandings will be particularly high, if the member states insist on the maintain of their national language as official working language. The establishment of English and French as single working language would improve on the one hand the effectiveness of the procedures, but the privilege of France and Great Britain would be obvious on the other hand.

The future role and composition of the European Commission is another contentious point. There is doubtless a wide consensus on the need to reduce the number of Commissioners - but that is the end of the consensus, meaning the end of the pounded personal participation of each member state.

The prospected role of the European Parliament is another controversial debate.

There is still the need to simplify its highly complicated procedures and to strengthen his position vis-à-vis the other institutions - the Maastricht treaty was a right pace, but still not far enough in order to promote a further democratisation of EUs' institutional framework.

3. Specific national or regional problems

Enlargement leads by definition to the incorporation of former domestic affairs of the nation state by the European Union. Due to the heterogenity of the candidate countries, most of those problems are proper to the specific state.

Therefore two brief examples: the (more or less voluntary) giving up of sovereignty may be a problem for every incoming member state. This aspect is nevertheless much more important in the Baltic states, who just have gained their independency from the former Soviet Union ten years ago. It is not improbable that Nationalistic anti-european movements - using the " less-of-sovereignty-context" - may occur especially in the former USSR- region.

Another completely different problem may concern the membership of Cyprus, in particular in the context of the Turkish application for EU- membership. The present Cyprus government controls actually less than 60% of the territory, the north of the country is still controlled by a Turkish government. Thus, the desirable creation of a unified Cyprus government can only be achieved in negotiations with Turkey - a great chance to promote Turkeys' own ambitions, the EU- membership.

Latter turns into a more and more delicate problem, which involves the up-to-date hottest issue: the Islam and the question where Europe ends.

CONCLUSION

The sketched costs and risks of the Central, Eastern and Mediterranean Enlargement should demonstrate clearly the required efforts which have still to be undertaken. The headwind, in particular at the very beginning of the integration process will be remarkable, such as well as the number of current or future trouble spots. The question of Europes' cultural, political and military identity has to be solved, what will be the role of Russia, Turkey and Cyprus ? What about the Common Foreign and Security Policy, how to redefine NATOs' role for Europe ?

How to prevent in this context conflicts with the United States ? What about the money , the reorganisation of the financial agreement ?

Who will have to pay for what ? What about particular difficult economic sectors, especially the agriculture policy as the hottest issue ?

The institutional framework, responsible for the decision-making process, must also be put into question in order to prevent its overload flowing into a wide paralysis - and furthermore - into a contra-productive EU-wide disintegration.

Due at least to the evidence that every enlargement is automatically leading to a more complex heterogeneous structure among the Union, the enormous challenge of the integration process demand more than the simple consensus of the need for reforms. The scheduled widening has to go hand in hand with a profound deepening of the Union. Therefore Europe need a blend of political willingness and creativity, idealism and solidarity, realism and statesmanship to promote a stronger Union - the benefits of a successful enlargement are clear, according to the good old sociological thesis that the hole system always have a higher value than the sum of its parts.

REFERENCES

Avery, Graham; Cameron,Fraser; The Enlargement of the European Union Sheffild Academic Press 1999

Brittan, Sir Leon; Globalisation versus Sovereignty ? The European Response Cambridge University Press 1997

Funck, Bernhard, Pizzati, Lodovico (Ed.); Labor, Employment, and Social Policies in the EU Enlargement Process; The World Bank, Washington 2002

Kellermann, Alfred; de Zwaan, Jaap (Ed.); EU - Enlargement, The Constitutional Impact at EU and National Level, Asser Press, Den Haag 2001

Maresceau, Marc (Ed.); Enlarging the European Union; Relations between the EU and Central and Eastern Europe; Longman Edition, London 1997

Tsoukalis, Loukas; The European Community and its Mediterranean Enlargement George Allen Ltd, London 1981

Weidenfeld, Werner; Huterer, Manfred; Eastern Europe: Challenges, Problems, Strategies; Bertelsmann Foundation, Gütersloh 1993

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^[1] Ref. Foreword of Hans van den Broek in Avery, Graham; Cameron,Fraser; The Enlargement of the European Union

^[2] Ref. Brittan, Sir Leon; Globalisation versus Sovereignty ? The European Response, page 7

^[3] The costs and the repercussions on the EUs' scheduled CFSP (Common Foreign and Security Police ) can not be discussed in that short essays' framework.

^[4] Ref. Brittan, Sir Leon; Globalisation versus Sovereignty ? The European Response, page 25

^[5] Numbers from the EU Commission 1998 in Maresceau, Marc (Ed.); Enlarging the European Union; Relations between the EU and Central and Eastern Europe