What Are the Benefits and Costs of European Enlargement?

Outline

The main reason for many nations wants to be part in the enlargement of EU is that it will improve their economic and political interest. Further, EU membership offer wider European market access and a share in the European budget. (Sjursen 499). It makes borderless conglomeration of various states where one individual is free to travel and take up employment anywhere within EU without visa or passport. (Zielonka 1). However, the applicant nations have to reform their economies and judiciary to cope with the EU regulations. This research essay analyses both empirically and theoretically, the benefits and costs of EU enlargement in detail.

Introduction

At the start of this new millennium, EU is said to be witnessing a major issue: the enlargement of Union towards erstwhile communist nations in Central and Eastern European nations. Though the expansion will no doubt will bring more benefits, but also it may bring some disadvantages for the European project. The recent expansion of Eastern and Central Europe in EU indicates that how the EU transformative authority can strengthen prosperity, stability and security. Further, EU has opened its membership door to nations of Balkans and Turkey. It has also fostered a “neighborhood policy “towards other nations and some of these nations’ longs to become future members. Thus, EU now functions on a continental scale. (Bloomberg, Peterson and Stubb 179).

European Union was originally formed with the 15 European nations. (EU15). Then, another 13 candidate nations (EU13) was in the process of preparation for integration into the European Union, and it was named as the “Enlargement Process “at the close of the twentieth century.

Ten new countries were admitted into European Union on 1 May 2004 (EU10) and they are the Czech Republic, Cyprus, Hungary, Estonia, Lithuania, Slovakia, Lativa, Malta, Slovenia and Poland.

Other than Malta and Cyprus, all other remaining New Member States were all part of the erstwhile Soviet block which was instituted after World War II. Since all the erstwhile communist nations have undergone a radical transformation from planned economy to market economies , which started in 1989 and proceeding on until around 1995 , they were also known as the “ transition economies.”

On 1 January 2007, two more of this “transition economies “namely Romania and Bulgaria joined the European Union. Out of the 13 candidate nations (EU 13) that were part and parcel of the Enlargement process, Turkey is the only one nation still in the process of preparation for joining the EU as of date.

Further, Croatia has gained the rank of “candidate nation “and might be chased by many more nations, especially from the Western Balkans. (Turlea & Bogdanowicz, 12).

In this research essay , I endeavor to corroborate how enlargement in European Union helps to attain both market and economic growth for member nations , how new member nations derive benefit out of it and what are the cost of such enlargement by both empirically and theoretically.

As the result of enlargement, EU has become much more diverse. Administration and running of EU have witnessed more turmoil after the enlargement. However, the new economies have performed well in the period leading up to the 2004 enlargement.

However, after 2004, enlargement is likely to become more complex and assorted as analogous negotiation has been initiated with Turkey, a vast nation with many diverse and unique issues and with the number of smaller nations of the Western Balkans.

Since 1950s, there has been five rounds of enlargement.The pace of expansion will solely depend on the EU’s ability to take in new members. Throughout the Europe, EU’s replica of liberal democracy and market economy is well acknowledged by all. Hence, all the European nations, either big or small, rich or poor who are non-members as of now want to become members of EU.

Moldova, Georgia and Ukraine are in the east of the EU and membership of these nations could be taken up sometime in the future. After the millennium, all these nations have experienced democracy and have shifted away from the direct political impact of the Russian Federation. On the enlargement list, these nations are given low priority status since the impact on the EU’s budget, the poor condition of their economies and the requirement to consolidate the political reforms that have taken occurred. (Barnes & Barnes & M. Cini 432).

Benefits of Enlargement

The main reason for nations to join EU is that it will improve their economic and political interest. For instance, UK application was prompted by the potential advantage of common market for its economic and trade growth. In the case of Spain, Portugal and Greece, their application was motivated by their desire to return to democracy. Further, EU membership offer wider European market access and a share in the European budget.

For the ten nations of Eastern and Central Europe, EU membership helped for their transition to market economy from central planning. After the collapse of Russia, these nations preferred EU membership mainly for their national security and as a prelude to NATO membership.

The main aim of the EU enlargement policy is focused on policy coordination and macroeconomic convergence, which resulted in the introduction of EURO in January 1999 and elimination of national currency in EU in 2002.

The integration process of EU is complex in nature as there are twenty-seven EU member nations with varied traditions, culture and stages of economic growth.

It is often commented that enlargement is the success story of EU’s foreign policy. No doubt, the outstanding success of the EU in extending stability, prosperity and good governance to neighboring nations by way of its membership yardstick gives enlargement a unique position among the EU’s external policies and instruments. However, enlargement is not confined to foreign policy alone. Enlargement is the method whereby the external turns out to be internal. It is concerned about how non-member nations become members and shape the growth of the EU itself. While admitting new members, EU stipulates some conditions under which they can embrace EU and thus the present members define the EU’s future collective identity and composition. Hence, enlargement can be described as “existential “policy: the EU decides its own nature whenever it selects to enlarge its membership. (Bloomberg, Peterson and Stubb 180).

The CEFTA / Visegrad nations were very much enthusiastic and eager to become a full member of EU. To attain this, these states introduced economic and political reforms to demonstrate to Brussels that they were with EU.However, while voting in the European Parliament in 2003, the 15 member states hesitated to offer full membership to these new democracies of Central Europe by claiming that EU required to deepen its own integration before expanding its membership.

Further, future expansion is also on the offspring since the admission process for new membership is presently on the way for Turkey and Croatia and some other nations in the western Balkans advocating for future membership.

Benefits of EU’s enlargement, the populace Muslim nation, Turkey’s admission into EU has raised fundamentals doubt’s about Europe’s identity.

According to study made by Hellgren and Hobson, EU expansion is contradictory. On the one part, national adaption to the visible gender –neutral economic and political norms of the EU made an exclusion of women from the public sphere and labor market. On the other part, explicit pledge to gender mainstreaming as an integral part of the EU policies offered some significant policy instruments in the enlargement procedure for both fighting against exclusion on the geographical, ethnic and social origin and increasing equality between men and women.

As some of the new EU member nations have conservative governments, the EU symbolizes a significant ally in the struggle for anti discrimination and gender equality policies in those nations.

However, it is significant to ask not only how the accession has impacted women’s movements and women NGOs especially in the new member states but also what effect the new member nations might have on gender matters in the EU. Whether the gender equality will be fortified due to the Eastern enlargement in 2004 since a high employment orientation in the erstwhile socialist nations? Alternatively, because of dominance of conventional governments and continuous attacks on reproductive rights in some of the nations like Poland should we anticipate it to end in a backfire? Immediately, after Bulgaria and Romania joined the EU in January 2007, a committee of right –wing parties in the European Parliament was established. (Roth 7).

In addition to racist and discriminatory attitudes, such as parties trying to promote “customary gender relations “i.e. women’s role as caregivers and mothers and their exclusion from the public activities. Considering these happenings, how will EU enlargement will bestow gender equality policies in the EU? In a joint effort, intervention at varied levels –household, the state, individual and civil society –required to be investigated, so as to construct an improved gender regime for integrating both unpaid and paid care and other allied work that surpasses the weakness of the old regimes of both West and East. (Pascall and Lewis 2004).

The constraints and opportunities of women’s NGOs in the accession nations differed in various stages of the European Union expansion process. (Roth 2007). The women’s nongovernmental organizations (NGOs) in the Eastern and Central European countries during an accession process could use the EU for exerting pressure on national governments to legislate gender equality laws.( Regulska et al). It is to be observed that the European Women’s Lobby (EWL), an umbrella organization for women’s and feminists NGOs has been instrumental in bringing notice of the women’s issue to EU’s agenda. (Helferrich and Kolb 2001).

Thus, in case of new member states, the EWL lobby can be most impressive. (Roth 8).

Due to enlargement, a Polish plumber does not need either a work permit or visa to work in Dublin, London or Stockholm. Thus, he is having now a free passport to work in any of the 25 member EU states. As EU enlarges, new member states people can take the benefit of liberated European labor market. Eastern and Central Europe is witnessing a lot of self-generated mobility to hunt for employment. (Schoeff Jr 38).

By joining with EU, Hungary, former Czechoslovakia and Poland were compelled to introduce political and economic reforms such as the rule of law, the economic liberalization, human rights, fair election, and multi-party systems. These countries introduced these reforms, mainly to acquire full membership in the EU. However, Brussels remained cautious of doing such a promise. (Medvec 2009).

Initially, before joining EU, Hungary lags behind in broadband penetrations. As contrasted to EU 15, Hungary’s broadband expansion rates in 2005 was about 2.5 times lower.However , after access to EU , Hungary’s performance in the broadband sector is relatively excellent as in comparison to other EU8 nations by exceeding all of them except for Slovenia and Estonia. (Turlea & Bogdanowicz 157). Immediately, after the accession to EU, Hungary witnessed a high level and fast expansion of exports for 2004-2006, which is around 12.5%, which indicated the increased market access and integration with EU15 nations. Due to their improved competitiveness, Hungarian exporters have been able to gain larger market share now. (Turlea & Bogdanowicz 147).

UK government is vehemently supporting enlargement of EU as it saw a chance to gain not only from new allies but also new workers who would be offering to more safeguard of their national sovereignty and more Atlanticsis in its attitude. UK government can be said to be most beneficent as more than half a million European workers took abode in UK now. (Djevsky 8).

It is to be observed that benefits to EU membership existed as much in the initiatives made to qualify as in accession itself as the new entrants could revamp their economies, to redraft their laws and retrain their judges. (Djevsky 8).

The volume of trade traffic has increased drastically with expanded and integration of trade in Europe and now companies started to look at the EU as a single trading entity. (Schoeff Jr, 38).

Due to EU enlargement, the national income of EU will increase by around five percent, the population of EU will increase by 20 percent and there will be an increase of 10% of its purchasing standards. Further, accession nations will derive advantages from symmetric trade liberalization in Europe and pre-accession EU transfers. Further, EU commission has projected that the growth rate for accession nations will be in the range of 4.5 % to 6% in the period from 2005 to 2009, which is obviously above the projected 3% growth estimated in a simulation without accession. (SOLBES 2004). Investment made in EU will be less risky as EU accession nations will derive advantage from adopting the EU legal system. Accession nations will be benefited from EU transfers for decades in the future, which will be earmarked to regions with per capita income below 75% of EU average with the average per capita income level of accession nations of Eastern Europe in 2004 close to forty five percent. (Welfens 206).

During the first half of 2002, foreign investments in the Eastern and Central European nations increased swiftly and the trend is still continuing. In the Czech Republic, Hungary and Romania‘s growth was hovering around 55% while in the same time frame, foreign investment in the EU dwindled by fifteen percent (Ernst & Young 2002). Ernst & Young attributed the reason for this decline in foreign investments to the USA as it was less wiling to invest and the EU nations suffered most from this fact. The applicant nations received investments, mainly from the EU nations. For instance, about fifty percent of all German investments in the first six months of 2002 were made in the applicant nations. Hence, an applicant nation is therefore, less sensitive to the USA being less eager to invest. According to Ernst & Young, the new member nations could well become dreadful competitors of, Netherlands in terms of attracting investment. (Bruinsma, Hakfoort and Wever 36).

Costs

Agriculture sector received special importance as it plays a major role in the each economy of EU member states. However, there is no mechanism of tariff reduction for agriculture analogues to those in other industries. Trading of agricultural products among EU states was found to be more restrictive that is seen in the EU’s common Agricultural Policy,(CAP) which occupy more than two-third of its budget.

The Western reaction to the probable integration of the CEFTA / Visegrad countries into the EU immediately after the end of the cold war can be illustrated as cautious and hesitant. This created a lot of disappointments to CEFTA / Visegrad member nations. Though, Hungary, Czech Republic and Poland are the existing members of the NATO, but their prime dream is to become the member of the EU. The Visegrad Agreement acted as transitional setup for their integrations with EU. Though EU offered the impetus for understanding and cooperation among applicant nations, but there exist a number of barriers for the integration into EU prolonged to exist. Some of the such barriers are environmental damage, inequality of wealth among EU member states and CEFTA / Visegrad states, the EU’s free movement of labour policy, undeveloped infrastructure and EU apprehension as to effect of expansion into East Central Europe on agricultural subsidies under CAP. (Medvec 2009).

EU (15) is having strong economic nations as their members. Now, EU (27) is broadening its membership to include less-developed nations like Portugal, Ireland, Greece and Spain. However, the enlargement was successful only at a cost of huge transfer payments and subsidies to the weaker nations. These subsidy costs may become eventually prohibitive, particularly since CAP funding accounts for than about 70 percent of the EU yearly budget. (Djevsky 8).

Gamuts of areas of traditions, cultures and social practices may not be integrating in the EU’s enlargement as in the case of political and economic reforms. Though the new laws may bring some transformations in behavior and UK’s race relation law is a classic example as it will take longer time to transform mentalities. (Djevsky 8).

The new members are also questioning the cost of not having a common European defense and foreign policy. EU enlargements have done a greatest damage to the relations with Russia. The outcome is a poisoned scenario, hinder for probable fruitful provinces of cooperation in the areas like energy and change in Russian focus towards China and Central Asia. Enlargement of former Russian states in EU has in poisoned the Russia and EU relations, and it may take a century to recover.

Some critics are of the opinion that precipitous expansion to the East could have the destabilizing impact of slowing in further enlargement. The first victim of EU’s hard approach is Turkey since EU will henceforth onwards may extend the quantifiable entry stipulations more meticulously but questions about cultural and social compatibility could be appended to the agenda. (Dejevsky 8).

Even though, there is free mobility of labor within the EU member states, each member nation can enforce its own eligibility criteria for social benefits. This is evidenced from the fact that there is no surge of movement of working population from weaker EU nations to richer ones to take benefit of welfare programs. (Schoeff Jr 38).

The enlargement was only possible at a cost of huge transfer payments and enormous subsidies to the weaker member nations. These costs may become discouraging particularly when CAP funding accounts for more than 66 percent of EU’s annual budget. Analogues scenario has arisen as the Visegrad/ CEFTA nations, particularly Poland with its huge agricultural base, join the EU. The abolition of borders and economic convergence could increase regional and social inequalities. (Medvec 2009).

The enlargement that has taken place in 2004 brought many nations into the EU, the majority of which were not richer than the existing members. If Bulgaria and Romania join EU, these tendencies will prolong. In case of Croatia, which has a population of 4.5 million people has a per capita income of about 35 percent of the EU average. Like this, Turkish income also is about 26% of the current EU mean in 2004 with a population 70.7 million. These poor nations if they are admitted into EU, they will get a lion’s share of EU funds for poor nations. (Barnes & Barnes & M. Cini 438).

Conclusion

In its impact and pace, the expansion of EU has been remarkable. However, after augmenting its membership to 27 nations from that of 12 and its population by thrice in the period from 1995 to 2007, the EU is expected to enlarge with utmost caution in the near future. Further, EU will restrict its enlargement to the nations of the Balkans and Turkey whose embracement is vague and in any case, is not going to happen in the near future. (Barnes & Barnes 4). If Norway, Switzerland and Iceland apply for membership, they would definitely get a berth more rapidly. In a broader perspective, EU may be forced to accept other East European nations like Ukraine, but in the meantime they remain within the structure of its Neighborhood policy. Hence, the final boundaries of the EU are likely to result from the course of events and succeeding political decisions instead of a strategic option made in advance. (Bloomberg, Peterson and Stubb 202).

Works Cited

Barnes & Barnes & M. Cini (ed). Enlargement in European Union Politics. Oxford: OUP, 2006.

Barnes, Ian and Randerson, Claire “EU expansion and the political economy of former communist states’ accession: The case of Hungary’s ‘convergence.’.” Capital & Class 93 (2007): 179-197. Academic Search Premier. EBSCO. Web.

Boomberg, Elizabeth, Peterson, John & Stubb ,Alexander. The European Union: How Does it Work? Oxford: Oxford University Press, 2008.

Bruinsma, Willy, Hakfoort, Jacco and Wever E. Expansion of EU; Between Hope and Fear. London: Van Gorcum, 2005.

Dejevsky, Mary “EU expansion the unspoken cost.” New Statesman 137. (2007): 8-9. Academic Search Premier. EBSCO. Web.

Medvec, Stephen E. “The European Union and Expansion to the East.” International Social Science Review, v 84 (½), 2009.

Schoeff Jr, Mark.”EU expansion eases mobility on continent.” Workforce Management 85.3 (2006): 38. Academic Search Premier. EBSCO. Web.

Sjursen, H.”Why Expand? The question of legitimacy and justification of the EU’s enlargement policy”, Journal of common market studies, 40, (2002); 491-514.

Smith, M & Cini M. (ed), EU external relations in European Union Politics.Oxford: OUP, 2006.

Roth, Silke. Gender Politics in the Expanding of European Union. New York: Berghahn Book, 2008.

Welfens, Paul JJ. Innovations in Macroeconomics. New York: Springer, 2008.

Zielonka, J. “How new enlarged borders will reshape the European Union”, Journal of common market studies, 39, (2001); 507-536.

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