"EU enlargement
to include East and Central Europe will
cost money. The current and future EU
budgetary spending plans are inadequate to cover the costs of enlargement."
To discuss question about costs of EU enlargement,
we must distinguish between so-called direct costs, which
are easily traced in budgets and indirect ones, created
by such huge external shock as enlargement. The overall
macroeconomic consequences of enlargement is not only about
its monetary price for current members plus trade and growth
potential, but also about redistribution of income, changes
in real GDP, exchange and interest rates, prices and current
account. In this project I will try to identify costs and benefits of EU enlargement, who must pay
for it and how effective is EU budgetary politics.
1.
Benefits of EU enlargement.
This
topic seems quite obvious and not related to this project,
yet to discuss costs, we must compare them with benefits
and make rough estimation what seems preferable or attractive
for which current and prospective members of EU and who
is going to be the main contributor into common budget.
We must also take into consideration the fact, that interests
and cost-benefit calculations behind the EU enlargement
may differ in the east, as well as the west of the continent.
First of all, the geographical position of each country
influences its interests. Secondly, the most important defining
questions like security, economy and culture rate differently
in each single country. Thirdly, the interests concerned
will change with time. However, despite these changes and
differences, each European country will benefit from enlargement
in the global sense.
1.1
Global benefits
EU
enlargement must be viewed in context of the worldwide globalization process,
which brings both challenges and opportunities; states are no longer
in a position to solve these difficult problems alone. Europe must assert itself against
keener global competition and take advantage of the opening
up of the markets and the integration of newly-industrialized
countries into the world economy.
In political terms, EU enlargement will “extend the
zone of stability in Europe, thus contributing to security
and peace throughout the continent” [1] , the enlarged EU
will carry greater weight in world affairs and will be a
stronger partner in international trade negotiations; economically
it’s the extension of the single market from 370 million
to 480 million and stimulation of economic growth and new
opportunities for business throughout Europe.
EU will secure democracy in Central and Eastern Europe. Through enlargement,
“more countries will participate in a Union that promotes the principles
of democracy, good governance, the rule of law and respect
for human and minority rights.” [7] This will of course
make Europe more stable and European
borders more secure.
Enlargement will make continent safer for its citizens:
the threats today -crime, terrorism, drugs, and pollution
can be stopped only through joint action across the
continent, and prospective members, including Turkey, may
be viewed as some kind of gate keepers to the EU.
There is no comparable common market with such great
purchasing power anywhere else (even in North
America), and the applicant countries all have enormous growth potential.
We may predict considerable increase in potential purchasing
power of integrating countries, which in turn will lead
to growth of prosperity in the region. A larger internal
market also provides increased
competition, thereby,
it works in favor of the consumers.
In economics such effect deals with the theory of
monopolistic competition: creation economies of scale, product
variety, etc.
Eastern enlargement will also help the European Union
and Europe as a whole to enhance its
global competitiveness, especially with USA and
Japan, through
transnational specialization and modern intra-industrial
division of labor. For
the foreseeable future the present “EU with its 15 members
does not seem able to increase the speed of its own economic
development” [5] and presence of
dynamic regions on its neighborhood will create “qualitative
conditions for growth in Europe.”[5]
The benefits of economic integration with Central
and Eastern Europe are distributed
very unevenly among existing EU members: some would benefit
more, some would less, and the dominant
interest of all of them is in intra-EU trade.
1.2.
Benefits for some EU members
Recent studies [4] show that the EU-15 are projected
to gain about 10Bn Euro in
real income from the enlargement, and this gain is
likely to be distributed
as follows: Germany,
France and
the UK would together get 70% of the total. The CEE countries’ gain is 3Bn
EUR (1.5% of their GDP), but taking into consideration also
the investment multiplier, CEE states would gain 30 billion
EUR, somewhat over 15% of their base year GDP [4].
Table
1. Distribution of trading profits derived from eastward
enlargement by EU members
|
Share of total EU-15
real income gain, %
|
Germany
|
33,8
|
France
|
19,3
|
United
Kingdom
|
14,1
|
Italy
|
8,5
|
Spain
|
7
|
Netherlands
|
4,6
|
Sweden
|
3,9
|
Belgium/Luxembourg
|
2,6
|
Austria
|
2,6
|
Denmark
|
1,9
|
Finland
|
1,4
|
Ireland
|
0,3
|
Greece
|
0,3
|
Portugal
|
0,4
|
Table
1 shows distribution of trading profits received by western
companies from trade with countries of central and eastern
Europe. [5] Germany
is clearly the most important beneficiary of economic integration
with the East. Its trade with Central and Eastern
Europe comes to 9% of its total external trade and around 34% of total EU trade with this region
(although its economy accounts for only around 25% of the
EU economy in terms of GDP). “Already, Eastern European
markets together are more important for Germany than the
US and other markets” [2] The “core” countries for trade
with Eastern Europe, i.e. Germany, France, United Kingdom
and Italy have the best chances for economic growth and
can carry out significant structural changes on the East.
This creates additional demand for goods from other EU countries,
particularly from less developed Mediterranean region and
countries of the Mediterranean and Central and
Eastern Europe will deepen their
trade relations.
So all EU countries are going to benefit, either
directly or indirectly, from this expansion of trade; of
course benefits for all does not mean the same benefits
for each participant.
2.Costs
of enlargement.
A major objective of the EU is economic and social
cohesion, as well as economic, monetary and political union.
Cohesion refers to the attempts to reduce disparities between
the levels of economic development of member states and
harmonizing their policies and practices in industry, agriculture,
regional development.
This process will involve an increase in EU budget
expenditures and in receipts. “It is too early to assess
the overall impact of enlargement on the EU budget.”[1]
The greatest impact of enlargement is likely to occur
in the common agricultural
policy and in the structural funds,
the two largest components of EU spending. Work on both
is continuing on the basis of Agenda 2000 priorities.
2.1.
Opportunity costs of non-enlargement.
Current economical and political situation shows
highly asymmetrical East-West interdependence: on the one
hand, the CEE countries cannot credibly threaten to close
their markets to the West and thus deprive the EU of the
benefits of trade integration;
on the other hand, it is not convincing to argue
that, without the prospect of EU membership, the CEE countries
would become politically and economically unstable, threatening
Western European security and welfare with illegal migration
and organized crime. It is in the self-interest of the CEE
governments to develop stable political and economic systems.
Going even further, some authors [3]
argue: “why shouldn’t the EU be able to defend itself
efficiently against the spill-over of Eastern European instability?
Countries that do not achieve internal stability
on their own and export instability beyond their borders
are excluded from the benefits of association and have no
prospect of becoming EU members whatsoever.”
More importantly, the EU members are
able to receive maximum benefits of
trade integration without granting the CEE countries
full membership. Under the current association regime, economic
integration has progressed toward a free-trade area. Western
corporations benefit from advantageous terms of trade, and
the EU has realized each year a trade surplus with its Eastern
neighbors. Direct investments in the region are growing.
What is more, association allows the EU to protect the sectors
in which it is “particularly vulnerable to competition and
to prevent migration more effectively than it would be possible
after enlargement.” [3] For
example, Hungary, regarded as one of the most dynamic countries of Eastern Europe, offers now very
favorable conditions for foreign investors in acquiring
property, establishing business, taxation. It is must, however
that after enlargement, the country will be forced to change
own status of the “tax heaven” in order to be less “competitive”
on enlarged European market .
Trade with the EU for CEE countries is much more
important than trade with the CEEC’s for the EU in proportion
1:20 [12]. Due to the fact that
the size and economic power of new member states is quite
small compared to EU-15,
the derived impact of their own development on the present
Union is also likely to be small.
However, considering opportunity costs of not pursuing
an eastern enlargement, it is worth raising also political
issues. Most obviously these are defense
costs and affected attitudes of foreign investors.
Today, the EU has a “historic opportunity and it would be
tragic if monetary considerations which are relatively small
should delay or even reverse this process” [13].
2.2.
The monetary costs of enlargement
It is obvious that all CEE countries would become
structural net recipients. For the foreseeable future, EU
transfers to these countries will outweigh by far their
contributions to the EU budget. Because the new members
from Central and Eastern Europe must be treated in the same
way as are the present member states, the monetary cost
of enlargement is
estimated be equal to payments according to the Common Agricultural
Policy and the Union’s structural and regional policies,
which together comprise around 80% of the Community budget. Therefore the correct answer to the question
about the cost of enlargement is: “Enlargement will cost
whatever member countries agree to pay because all member
countries have to agree on the budget.”[3]
Agriculture is always a major issue in the enlargement
of the EU because of the political strength of the agricultural
lobby and the dominant role of the CAP in EU budget expenditure.
Common Agricultural Policy would be seriously affected because the
CEE countries, whereas producing only 3% of the EU GNP,
possess 44% of the EU productive land and attain 30% of
the EU agricultural production. Some experts
[7] expects that agricultural production will rather
increase than decrease as a result of economic recovery,
and that participation in the CAP would give the CEE countries
an additional incentive for agricultural production because
EU prices in many areas of agriculture are well above world
market prices. The reasoning for this is a very protectionist
agricultural policy: as production rose and surpluses developed,
high internal EC prices were maintained by a system of intervention
purchases and “by variable levies on imports” [8]
The main problem in CAP is direct payments to CEEC
farmers [7]. They were also called 'compensatory payments',
because they were introduced to 'compensate' EU farmers
for the price cuts implemented in connection with the last
round of reform of the CAP. These reforms were unavoidable
in the past decade, because CAP depressed and destabilized
world prices and made market situation unacceptable to other
agricultural exporters, “most importantly the United States”
[8]
Present EU countries argue that there is no justification
to pay farmers in the Central and Eastern Europe compensation
because these farmers will see their prices increase, not
fall, after accession. For example, agriculture plays an important role in economics
of Poland, the biggest among the candidate countries, and
agricultural policy is very sensitive issue for this country.
“If we apply the present CAP in Poland, agricultural income
would go up by 47%. Thus the application of an unreformed
CAP would benefit CEEC farmers substantially but
only at substantial cost to the rest of the economy” [10]
The prospective members retort that it would create
a serious distortion of competition if their farmers, who
are already poor and less efficient, had to compete with
EU-15 farmers without being “on a level playing field in
terms of financial support received from the EU.” [7]
Predicting the budgetary cost of applying the CAP
to CEE is difficult, because this depends on production
levels, on world price levels and Euro-$US exchange rates.
For the entire group of advanced candidates in CEE,
joining EU in 2004, these direct payments are estimated
to be in enormous range between 6
and 10 billion Euro p.a. [1,3,7]
Are these large or small numbers? The right answer
is both: even 6 billion Euro is very large, indeed representing
one-half, of the value-added of agriculture in the CEEC,
which is around 12 billion Euro. “Yet 6 billion Euro is
peanuts (less than one-tenth of one percent) when compared
to the EU GDP of around 8,000 billion Euro, and only a bag
of peanuts (around 6%) if compared to the EU budget of close
to 100 billion Euro” [7]
The fact that direct payments would be so important
for farmers of CEE countries (i.e. mostly Polish)
implies that they will fight very hard to get them. But
for the EU budget this might constitute the a real problem
with the only decision: to reduce direct payments for everybody
over time (called degressivity by experts). Given that direct
payments to EU-15 farmers amount to about 25 billion Euro,
one needs a reduction about
20% of the basis on which direct payments are calculated.
This would be sufficient to keep spending on direct payments
to farmers constant while treating the CEE countries and
the EU-15 equally. “This is just another consequence of
the difference in economic size: only a small cut by the
EU-15 is needed to make room for transfers to the new members,
which would be very substantial for the CEE countries.”
[3] But it is also true, that such reduction will inevitably
lead to income reductions for the EU farmers as well as
to either lower transfers to “the comparatively disadvantaged
EU regions or to fewer regions eligible for financial support.”
[7] So, it is highly
unlikely that candidates countries would be eligible for
the same level of financing in CAP, even under generally
accepted principle of “equal treatment” for all member states.
Due to their low levels of wealth and income, the
CEE countries would benefit
from the Structural Funds. The Berlin Council decided
that the candidate countries could at most absorb payments
from the Structural Funds amounting to 4% of their GDP.
The Structural Funds, the Cohesion Fund were instituted
to reduce disparities within the EU to achieve a “minimum
level of convergence between member states”[9]. This financial
assistance can be seen as compensation for poorer member
states to agree to the completion of the single market as
well as the development of EMU. A political function of
these funds is to promote solidarity, “demonstrating that
EU membership provides
benefits all round as well as imposing costs” [9].
There are three Structural
Funds: the European Regional Development Fund (ERDF), which
supports infrastructure and employment creation in the poorer
regions, the European Social Fund (ESF) which supports training
and development programs, and the Guidance Section of the
European Agricultural Guidance and Guarantee Fund (EAGGF),
which supports economic diversification and employment creation
projects in rural areas. In addition, the Financial Instrument
for Fisheries Guidance (FIFG) which provides functions in
fishing industry similar to those in agriculture by EAGGF,
is formally regarded as part of Structural Funds. The Cohesion
Fund supports transport infrastructure and environmental
projects in the poorest countries of the Union (Greece,
Portugal, Ireland and Spain).
The nature and distribution of structural aid is
also a politically sensitive issue. For new CEE countries,
as the poorest areas of the EU, payments have come to be
viewed as the means to encourage their national government’s
support for potentially damaging EU actions, for example,
when the removal of tariff barriers will increase the competitive
pressure on industries of these new member states.
It seems to be little dispute about the Structural
Funds and the ceiling of 4%, that has been more or less
accepted by the candidates. [7] However, today it’s became
clear that such ceiling is inadequate for financing structural
policies in the CEE countries.
If one deducts his own contributions to the EU budget
from this figure, the net transfers to the new member states
under current rules would thus be only about 3% of their
GDP. [7] As their combined GDP is less than 300 billion
Euro, this implies that net Structural Funds’ transfers
to the new members will be below 10 billion Euro p.a.
It means that the new countries get 126 Euro per
capita, amount which will be increased to 137 Euro per capita in 2006 (this will
represent nearly 2,5% of total GDP of the new countries).
The amount proposed is considerably lower than the average
of 231 Euro structural expenditure per capita (Structural
Funds and Cohesion Fund) in 2006 for the four present EU
cohesion countries (Greece, Ireland, Portugal and Spain).
Transport improvements are seen as an essential part
of economic development in CEE countries. It has been estimated
[9] that the likely investment costs for establishing the
Union’s trans-European transport network is for CEEC between 50 and 90 billion Euro over 15 years.
This estimate includes merely upgrading roads and railways
to Western European standards, without including any new
links.
Last year EU have spent around 1.2 billion Euro on
transport and environment projects in the CEEC, launching
94 projects in Bulgaria, the Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.
Most of the projects focus on the modernization of urban
and municipal water supply, waste water systems, and road,
motorway and railways' rehabilitation and construction.
These projects are undertaken together with beneficiary
states and international financing institutions, which provided
financing of 1,1 billion Euro. Making some extrapolation
of required 50 billions in the next 15 years with the most
probable spending 1,2 billion p/a, it is difficult to say
that such amount of financing would really be raised.
2.3
Strategies of cost reduction
Given the monetary price, which current member states
would have to spent on the enlargement project, it is necessary
to discuss how they can try to reduce
costs and whether it’s politically or economically
feasible.
First, the EU could limit its Eastern enlargement
to the six CEE countries with which it currently conducts
accession negotiations. For example, Bulgaria received clear
message from the EU that it would never became a member
of the Union, unless level
of economical growth and effectiveness of government policy
are improved significantly. However, this group is still
much below EU economic standards and comprises some of the
most potent agricultural producers (therefore recipients
of financial aid) of the region.
Second, the EU can introduce a partial membership,
which excludes participation in the CAP and the structural
policies. However, this is only a theoretical option, which
would not only be difficult to legitimate politically but
which also meet serious practical
obstacles: current market situation in candidate countries,
attitudes toward enlargement, equal treatment for all member
states, etc.
Finally, the EU could postpone enlargement significantly.
Probably, the costs of CEE membership will diminish while
candidate countries modernize their industries and increase
rates of economic growth. Nevertheless, the CEE countries
would still remain a EU periphery and net recipients of
the community budget. Moreover, this strategy only affects
the structural policies positively (provided that CEE growth
rates continue to exceed EU growth rates). In the case of
the CAP, an increase in CEE agricultural productivity would
mean an increase in expenses instead: EU would have to compensate
and support poor eastern farmers in order to retain the same
levels of production
and prices in agriculture.
3.
Who will pay for enlargement?
So, it is clear how much the eastward enlargement
would cost, the remaining is to look at the structure of
EU budget and to find out who would pay. This issue, however
appears not only from financial point of view, but also
from political and even social ones.
All EU politicians claim to be in favor of enlargement,
but they also say in unison that somebody else should pay
for it. The current net beneficiaries (see Fig. 1) argue
that they cannot be asked to accept less because it would
be unfair to finance enlargement by cutting transfers to
the poor. The current net contributors argue that their
populations will simply not accept any increase in the present
levels of their transfers to the EU budget.
It is widely accepted that enlargement “constitutes
a positive sum game: all participants will gain in the end.”
[7] But the distribution of the budgetary costs constitutes
a strictly zero sum game: if one country pays less, other
countries have to pay more. This game is now being played out and creates basically the biggest problem
in implementing the enlargement project: unfair (at least,
for net contributors) or unequal distribution of enlargement
costs among all member states.
However, lets look from the other point of view.
Research by an experts at the Vienna Institute for International
Economic Studies [3] came to the surprising conclusion that
the eastern candidate countries may become net payers into
the EU budget. The potential new member countries receive
pre-accession aid today. They get financial transfers from
Brussels but do not have to pay into the EU budget. After
membership, the situation changes. There will be potentially
much higher exchanges available from the EU budget, but
they will also have to pay their contributions. Using figures
published in part by the European Commission,
researchers [3] calculated that the group of new
members - expected to number up to 10 countries - may end
up owing 400m Euro to the EU budget for the first year of
membership, 2004, alone. And that, they say, is an optimistic
estimate. The key factor in these calculations is the ability
of the newcomers to “meaningfully absorb and utilize the
routine financial transfers which Brussels is prepared to
make to them as members, particularly under the headings
of regional funding and agriculture.“ [3]
It’s not surprising that the European Commission
strongly denies that it will be receiving net income from
the new member states, “whose standards of living are mostly
well below that of the average of the current EU” [1]; moreover
Commission has proposed compensatory
payments in order to avoid newcomers becoming net payers.
“The margin (in commitment appropriations) under the overall
ceiling - 816m Euro in 2004, 800m in 2005 and 814m in 2006
– should therefore be available as contribution to budgetary
compensation payments.” [1] As a result no applicant country
would be forced to accept worse economical terms after membership
than offered before.
I can make two conclusions from this issue: either
enlargement would cost more, which is more likely, or accession
countries may became net payers, which is less likely. And,
again, the main problem in this issue is not “financing
enlargement, but the will of certain EU states to pay.”
[7]
The reason of such unwillingness is obvious: the member states do not seem ready to openly address
the problem that their net balances are going to deteriorate
significantly. This deterioration is clear if we look at
the situation after the assumed
entrance of only six new member states: Czech, Estonia,
Hungary, Poland, Slovenia, and Slovakia. (Figure 1) [11]
Fig.
1 Effect on net budgetary balances in 2006 - EU15 vs. EU21
Legend:
1- UK
|
2- Sweden
|
3- Finland
|
4- Portugal
|
5- Austria
|
6- Netherlands
|
7- Luxembourg
|
8- Italy
|
9- Ireland
|
10- France
|
11- Spain
|
12- Greece
|
13- Germany
|
14- Denmark
|
15- Belgium
|
The
picture shows spending and receipts of EU countries in two
cases: when new members join the Union ( EU-21: only 6 CEE
candidate countries) and when number of members remains
the same (EU-15) It is clear from this picture that the costs for the net contributors exceed any
benefits, despite the assumption that the CEE countries’
economic growth will be double (4%) the assumed average
for the EU (2%).
For example, Germany would increase
its net contribution by more than 3 billion Euro, the
French and Italian net balances also deteriorate significantly,
as well as the Dutch and Austrian.
This figure may serve as an illustration to answer
the question “Who will pay for EU enlargement ?”, especially
in the context of benefits, revealed above in the paragraph
“Benefits for some EU members”
4. The budget
The European Union’s present spending on enlargement
is based on the assumption that the enlargement money “has
to be in line with the expenditure ceilings agreed by the
EU leaders at the Summit in Berlin” [7], in 1999. However,
the Berlin Summit foresaw the admission of only 6 new countries
in 2002, and the spending was simply
adapted the calculations to 10 new countries that
will join in 2004.
The EU will pay, between 2004 and 2006, 28bn Euro
to finance agriculture, regional development, administration
and nuclear power plants in the ten new countries. The money
will be phased in progressively: in the first year the EU
will only pay 5.6bn, in 2005 10.4bn, and in 2005 11.8bn.
The largest amount of money in 2004 will be paid
for agriculture and regional aid:
1,2 bn Euro will be paid for agriculture in new member
states in 2004, 2,4 bn Euro for regional development, 338
million Euro for internal policies, 503 million Euro for
administrative expenditure, and 668 million Euro for supplementary
structural improvements:
money for nuclear safety for Slovakia and Lithuania,
etc.
In 2005, the EU will pay almost the double for agriculture
and structural actions in the new countries (1,9 bn and
5,4 bn Euro respectively).
In 2006, the European Union will further increase
the funds for rural development and for structural action,
and will pay in total 11,8 billion Euro for the ten new
countries.
The most controversial issue in this financial package
is agriculture, because new countries get full access to
the EU farm budget only ten years after accession, and the
most dissatisfied with this 10 year accession period, are
of course Polish farmers.
CEE countries will get in 2004, when they join, 25%
of the direct payments the farmers of present EU countries
get. The direct payments would increase to 30% of the EU
level in 2005 and to 35 % 2006, and would reach the EU level
in 2013. New countries also expected to get 55% of EU level
of regional aid.
The EU officials underline that this financial package
cannot be object of bargain with candidate countries: “it
is not usual in negotiations, normally the two partners
propose something and the result is somewhere in between:
it won’t work in this case. The process is rigid, there
are many constraints, and the proposal reflects what we
hope will be the final result,” [7] One of reasons for such
rigidity is the fact that budget was based on the ceilings,
introduced on the Berlin summit, and “therefore the room
for negotiation was very tight.”[7]
Of course, CEE countries can not be satisfied by
such level of financing, especially in the context of the
fact, that all member countries must be viewed as equal.
Moreover, it seems that the financial package for enlargement
is set to upset everybody: the candidate countries believe
it is to little, the EU countries that pay much to the budget
warn it is too much, and the European Parliament is skeptical
that enlargement of the EU can be financed only with 0.08% of the
Union GDP. [7,12]
5.
Conclusion
The most useful approach to make final conclusion
about costs and financing of eastern enlargement is to illustrate
numbers in table. Column Estimated
costs shows those ones, explained in
this project in paragraph “The monetary costs of
enlargement”; column Budget
shows planned level of financing by EU, explained in paragraph
“The budget.”
Table 2. Estimated
costs vs. Budget of the EU enlargement.
|
Year
|
Estimated costs,
Bn Euro
|
Budget,
Bn Euro
|
Agriculture
|
2004
|
6-10
|
1,2
|
|
2005
|
6-10
|
1,9
|
|
2006
|
6-10
|
2,2
|
Regional
policy, 231 Euro per
|
2004
|
19
|
2,4
|
Capita (current level in EU)
|
2005
|
19
|
5,4
|
|
2006
|
19
|
6,1
|
Structural improvements,
etc
|
2004
|
3-4
|
0,7
|
|
2005
|
3-4
|
2,5
|
|
2006
|
3-4
|
2,8
|
Total
|
2004-2006
|
84-99
|
25,2
|
The
table shows, that EU enlargement will cost much more, than
member states are ready to pay. Even with this insufficient
level of financing, additional economic burden for
net contributors to EU budget and beneficiaries of
enlargement (they are almost the same: Germany, UK, Netherlands,
France, Italy) will increase significantly, posing question
whether costs of full
membership for the CEE countries exceed all the potential
benefits of Eastern enlargement.
Again, lets summarize our findings in table. Column Costs shows increase in those ones
when only 6 countries join the EU (see Fig. 1, paragraph 3. “Who will pay for enlargement?”). Column Benefits
shows likely increase in real income due to enlargement,
indicated in the paragraph
1.2. “Benefits for some EU members”, Table 1.
Table 3 Costs vs. Benefits
of the East Enlargement
|
Costs
Bn Euro
|
Benefits
Bn Euro
|
Germany
|
3,3
|
3,3
|
France
|
2
|
2
|
United Kingdom
|
0,8
|
1,4
|
Italy
|
2
|
0,8
|
Netherlands
|
0,8
|
0,4
|
Obviously,
revealed data confirm neither point of view about costs
and benefits of EU enlargement. Someone may
complain that it’s a zero sum game, other – that
specific country would benefit more, while other one have
to pay more. I believe, that presented data are rather simplistic
due to different approximations made by researchers. But
I also believe, these data shows some limits in financing
of the EU enlargement project, and these limits would never
be overcome. Especially given, that the table does not show
reduction of financing for current net recipients.
Regardless how much might cost the project, its financing
can not be increased significantly (say 5%), because it
already has reached ceiling, where economical benefits disappeared
and net contributors would have to pay only for political
ones. Is it possible to estimate political benefits in monetary
terms? I tried to identify them in paragraph “Global benefits”
and believe the enlargement brings as much as people want
it has to do so. Our estimation how beneficiary is the eastward
enlargement depends
to the great extent on our values, believes and understanding
our place in the united Europe. For example, even different
politicians of the same country may give different estimations,
for example, of benefits having strong migration preventive
borders on “poor and barbarian” East. Going further in this
discussion I can make conclusion that in today’s politically
stable Europe nobody is willing to pay higher price for
political issues, than the current difference between
economical costs and benefits of the enlargement.
Obviously, this project is very expensive and has
different points of view about adequacy of financing. As
a western European, I believe I have to pay reasonable price
for creating united Europe, but I do not want to be concerned with economical
situation in candidate countries, unless it may create problems
in my “rich boys club”.
As a candidate to the
club, I want to have equal rights and opportunities for
rapid growth and reaching comparable level of
economic development, and if countries in the
club want stable Europe, they must pay for it much
more.
So, there is no clear answer, whether enlargement
is adequately financed or not. Numbers show that the EU
budgetary spending plans do not satisfy needs of candidate
countries and lead to reduction in financing of current net recipients. On the other hand, net
contributors simply can not afford any increases without
significant deterioration of their national budgets.
I believe, however that the enlargement project has
potential of self-financing (by candidate countries themselves
(investors, etc) and revaluation of its costs will be bringing
some surprises in future.
References
1.
http://europa.eu.int Official site of the EU
2.
„Perspectives of European Integration after
the European Council in Luxembourg” by Dr Werner Hoyer, Minister of State of the Federal Republic of Germany
3.
Daniel Gros “Who wants to pay for enlargement?” http://www.ceps.be/Commentary/April02/pb-22.php
4.
Richard Baldwin, Joseph F Francois and
Richard Portes “The costs and benefits of EU enlargement”
5.
Eric von Breska et al “Costs, benefits
and chances of eastern enlargement for the European Union”
6.
European Parliament COMMITTEE ON BUDGETS,
Round table “Financial Consequences of Enlargement”
7.
www.euobserver.com European magazine
8.
Brian Ardy “Agriculture and enlargement”
9.
Jill Preston “Enlargement and the implications
for the Structural Funds”
10.
House of Lords, Select Committee on the European Communities “The financial
consequences of enlargement”
11.
Jorge Núñez
Ferrer “Who Will Pay for Enlargement?”
12.
Fritz Breuss “Macroeconomic effects of EU enlargement for old and new
members”
13.
Jackie Gower, John Redmond “Enlarging the European Union”