The Easter Enlargement of the European Union - a successful story?

Structure

1. Introduction - The Integrative Task of the EU

2. The Economic Perspective: A Win-Win-Situation
2.1 Perception of the Enlargement
2.2 The Convergence Process of the New Member States
2.3 The Four Fundamental Freedoms of the European Union
2.3.1 The Free Movement of Goods
2.3.2 The Free Movement of Services
2.3.3 The Free Movement of Person
2.3.4 The Free Movement of Capital

3. The Political Perspective: A necessary but tough Step?
3.1 The Historical and Ideological Point of View
3.2 The Impact on Domestic Policies
3.3 The Impact on Foreign Affairs

4. Conclusion

5. Bibliography
5.1 Monographs and articles from journals and collections
5.2 Online Publications

1. Introduction - The Integrative Task of the EU

Over the last 60 years the European Union has changed from an economic cooperation of only six states to a political, social and economic Union of 27 members aiming at the whole European continent. In Article 49 of the treaty on the European Union it is said that any European state can apply to become member of the Union if this particular state respects the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law.^[1] Due to this integrative task the Union has been constantly growing during the years.

In the year 2004 the European Union was faced with the biggest Enlargement in its history. Eight central- and eastern European countries (NMS-8) and the two southern European islands Cyprus and Malta became member states. Coming along with this Enlargement there were substantial changes for the old and the new member states. In the following I’m going to examine the challenges, expectations and real outcomes of the Enlargement. Therefore I will touch on the subject first from an economic point of view and secondly from the political perspective. With the Enlargement being a very wide issue I want to mainly focus on Germany and treat the NMS-8 as a whole. In the end I will try sum up my results and give an evaluation of the Enlargement in 2004.

2. The Economic Perspective: A Win-Win-Situation

2.1 Perception of the Enlargement

Concerning the economic point of view the perception of the Enlargement was varying among different groups of society. Most scientists predicted a positive effect of the Enlargement for the economic welfare of whole Europe, but this knowledge could not be transferred to society in large. Due to this there were many economic concerns about the Enlargement especially in direct neighbouring countries like Germany. The costs of the Enlargement for the old members seemed to be too high to be paid back by the positive impacts of the Enlargement. In the following I will weaken most of these concerns and prove the thesis that the Enlargement is an economic win-win-situation. Therefore I will first examine how the EU supported and supports the transformation process of the NMS-8 to more democratic and market-economical states. In the second place I will go through the four fundamental freedoms of European Economic Law and show that their introduction for the NMS-8 has a positive impact on both sides.

2.2 The Convergence Process of the New Member States

With the fall of the Iron Curtain in the end of the 1980s and the beginning of the 1990s a time of change began for the former communistic states in Central- and Eastern Europe. The latest history of the NMS-8 was coined by a transformation process to market-economical democracies, which was impelled and supported by the EU from its early beginnings. On its summit in Copenhagen in 1993 the EU set up three accession criteria for new member states including a political one, and an economic one as well as the so-called acquis-criteria^[2]. Therefore the former communistic states were encouraged to become democracies with stable institutions and functioning market economies. Furthermore the acquis-criteria wanted them to be able to “[...] take on the obligations of membership, including adherence to the aims of political, economic and monetary Union^[3].”

But the Union not only set up the criteria it also supported the new member states in fulfilling them. There have been several programmes of the EU providing financial support. It started with the “PHARE-programme” in 1989 which is a programme to support the reorganization of fiscal and governmental authorities in the transforming countries. Later the “PHARE- programme” was extended by the “SAPARD-programme” aimed at the agricultural and rural development, and the “ISPA-Fond” to support the infrastructural and environmental adjustment. The European Union decided to pay this financial supports also after 2004 because the adjustment process is not finished. Between the year 2000 and 2006 the EU spent yearly € 3.11 billion on these programmes.^[4]

That this transformation policy of the new members and the EU really worked is proven by several figures. The average economic growth in the new member states between 1996 and 2003 for example was 3.6% compared to 2.1% in the EU-15.^[5] The interdependency between the new and the old members becomes also obvious in the figures of foreign trade. The exports of Germany into the NMS nearly tripled from 1993 to 2003 and in 2003 10.8 percent of all German imports came from the NMS compared to only 4.5 percent in 1993.^[6]

On the other hand there are also some problems for the new members coming along with this process of transformation. First and foremost has to be mentioned that most of these states are or at least have been facing a difficult financial situation, as the development of the last 20 years has been very expensive. Enormous national debts, increasing figures of new indebtness and instable currencies are the problems the fiscal- and monetary policy of the NMS is faced with. Furthermore the unemployment figures rose significantly after the fail of socialism, i.e. in Poland about 18% in 2003^[7]. In some countries like the Czech Republic the transformation process caused serious economic crisis in the mid 90s.

But all in all the transformation process brought a new welfare to the former communistic states. With the strong support of the EU and the enormous effort of the new members itself the westward orientation and the approach to the EU must be evaluated as a success for the new member states. Even today the NMS-8 are benefiting from the EU structural- and adjustment - policy as well as the neighbourhood programmes.^[8]

2.3 The Four Fundamental Freedoms of the European Union

One main characteristic of the EU and its economic policy is the introduction of “[...] an internal market characterised by the abolition, as between Member States, of obstacles to the free movement of goods, persons, services and capital;^[9] These four fundamental freedoms are always seen as the basis for the main chances of the Enlargement but also as the ground for the fears and threats. In the following I’m going to examine the influence of the Enlargement on the four freedoms and show that their impact is in general positive.

2.3.1 The Free Movement of Goods

This fundamental freedom means the reduction and in most cases abolition of tariff and non-tariff barriers of trade within the EU. The free movement of goods between the new members and the EU-15 was already introduced in a constant process since the early 1990s. The NMS were part of the generalised system of preferences (GSP) of the EU and coming along with the pre-accession strategy the idea of a full free-trade zone between the EU- 15 and the Central- and Eastern European applicants was more and more realized.^[10]

As I already mentioned above the foreign trade of Germany with the new members increased rapidly between 1993 and 2003. These dynamics also continued after the Enlargement, when the German exports increased from € 56 billion in 2003 to € 83 billion in 2006 and the imports from € 55.3 billion to € 70 billion.^[11] The reason for this dynamic development is that the ongoing liberalization of trade and the reduction in costs of transactions opens up new markets for both sides. During the 90s Germany profited from the new members’ need for industrial goods to built up or at least modernize their economies. It is likely that these countries will grow more rapidly than the previous EU members in the future too. Consequently this convergence process will also increase future trade relations with the new member states.

[...]

^[1] Treaty on the European Union. Official Journal of the European Union. 2008, URL: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:115:0013:00]45:EN:PDF [10 November 2009].

^[2] Copenhagen Criteria. European Comission. URL: http://europa.eu/scadplus/glossary/accession_criteria_copenhague_en.htm Europa Glossary. [8 November 2009].

^[3] Ibid.

^[4] Beichelt, Timm. Die Europaische Union nach der Osterweiterung. Wiesbaden: VS Verlag. 2004.

^[5] Ifo-Institut. „Wirtschaftswachstum 1996-2003“. 2004. URL: http://www.tdLbayern.de/tarifpolitik/Volkswirt%20%20Info/IF0Inst%20_%20Lage%20in%2 0D.pdf [13 Januar 2007]

^[6] Statistisches Bundesamt. „Deutscher AuBenhandel nach Landergruppen und ausgewahlten Landern“. 2004 URL: http://www.destatis.de/presse/deutsch/pm2004/p1810181.htm [12 November 2009]

^[7] Beichelt, Timm. Die Europaische Union nach der Osterweiterung.

^[8] EurActive. “The new EU cohesion policy (2007-2013)”. 2004. URL: http://www.euractiv.com/en/regional-policy/new-eu-cohesion-policy-2007-2013-archived/article-131988 [11 November 2009]

^[9] The treaty establishing the European Community. Official Journal of the EU. 2008, URL: http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=0J:C:2006:321E:0001:0331:EN:pdf [12 November 2009]

^[10] Beichelt, Timm. Die Europaische Union nach der Osterweiterung.

^[11] Institut fur Arbeitsmarkt- und Berufsforschung. Auswirkungen der EU-Erweiterung auf Wachstum und Beschaftigung in Deutschland und ausgewahlten EU-Mitgliedsstaaten. Nurnberg. 2007.