Perspectives of EU enlargement

Some 15 years after the fall of the Iron Curtain, eight central and eastern European countries, plus Cyprus and Malta, are set to join the European Union in May 2004. In this report we examine the prospects for the enlarged EU, the financial framework up to 2006, the outlook for the individual accession countries and their path to monetary union.

The candidate countries have made enormous efforts to satisfy the accession criteria, and together with the Union they have pushed ahead negotiations on accession at breathtaking speed. Although the European Commission stillsees shortcomings in compliance with the accession criteria, it assumes that the countries concerned will be able to redress these ahead of their admission. The way is thus paved for more peace, stability and prosperity in Europe. But successfully as European integration may have been pursued thus far, the future of the “EU-25+” project remains uncertain. Various determinants of the enlargement process suggest that matters may take a less positive course than in the past.

Many transitional arrangements from the current round of enlargement, some of which will apply for long periods, make the inner workings of the Union less transparent and run counter to the spirit of the internal market. The Union will shortly see the limits of its capacity to absorb new members put to the test, particularly since various attempts at reform have so far done little to help create efficient institutional and financial structures. The current round of enlargement is already confronting the EU with a financial challenge which, while fundamentally manageable, does lend acute urgency to the issue of more equitable sharing in the provision of EU own resources.

That the prospect of admission to the EU has spurred the transformation process in the candidate countries, in terms of both their political and economic systems, is beyond doubt. The GDP growth that the transformation countries have succeeded in generating during their candidacy has far outstripped that in the existing EU member states.

On May 1, 2004 the ten new member states will have covered but one stage on the road to Europe, because membership of the European Union does not automatically mean membership of the European Monetary Union as well. For this, the Maastricht criteria must first be satisfied. But there is no question that the acceding countries wish to, and will, exchange their national currencies for euros at the earliest possible date. A twin-track accession process is conceivable for this, with the Baltic states and Slovenia joining the euro area at the beginning of 2007, the earliest possible date. They are then likely to be followed in 2009 by the Czech and Slovak Republics, Hungary and Poland, countries that continue to wrestle at present with grave budgetary problems.

Gregor Eder
Dr. Rainer Schäfer
Sabine Schmax
Dr. Jürgen Stanowsky

PDF (359 kb)