Post-Communist States and the European Union

Abstract

Since the collapse of the state socialist systems of Central and Eastern Europe and the Soviet Union at the end of the 1980s, the countries of the region have undergone a variety of transformation paths, in some cases involving integration into the European Union through a continuing process of enlargement. Three major groups of countries in the region can be identified: Central European and Baltic states, South-East Europe, and the Commonwealth of Independent States, with different experiences and prospects; Turkey is also part of the process of engagement with the European Union. Various problems can be identified that make it unlikely, except for small countries in Central Europe, that further enlargement will take place. Realistic political alternatives for countries at present and possibly permanently left outside are new forms of association not leading to EU membership.

In January 1986, when Portugal and Spain joined the European Community, prospects for enlargement appeared limited to Austria, Sweden and Finland, all of which entered in 1995. Only Turkey's application of 1987 constituted the agenda of ‘unfinished membership’. At the end of the 1980s, policy was to ‘deepen’ rather than to ‘widen’ the European Economic Community, particularly through the free movement of people (the Schengen Agreement) and the policy of monetary union. These assumptions dramatically changed with the fall of the socialist states. Their transition to capitalism was accompanied by the applications of the Central European states to join the European Union. By 1993, 12 more ‘candidate’ states began their pre-accession process in preparation for membership. In 2004, ten were admitted; Bulgaria and Romania joined in January 2007. Turkey, Albania, Croatia and Macedonia have the status of candidates. Bosnia and Herzegovina, Montenegro and Serbia are potential candidates, as Kosovo may be if its status is resolved in the form of statehood. The boundaries of the European Union have shifted eastwards to Russia (Kaliningrad), Belarus and Ukraine. To the south lie the North African states and to the south-east Israel, Jordan and Palestine. This article outlines the changes that have taken place in the EU and the post-communist states. The discussion of any further enlargement needs to be framed in the context of the question of why the EU has widened its membership, and specifically of why it moved from deepening to widening. What were the dynamics of the move to capitalism in the post-communist states and how were they linked to the enlargement process?

The collapse of the former communist regimes, and the subsequent transformation of their political, economic and social systems, called for a major change in their international links. Hence relations with the European Union, and its enlargement, were inextricably linked to the internal policies of transition from communism to capitalism. One theoretical possibility, politically, was for a neutralized Central and Eastern Europe. It was also widely thought (in the West as well as in the post-communist countries) that both the Warsaw Pact and NATO could be disbanded in favour of strengthening the pan-European Conference on Security and Co-operation in Europe (CSCE, now the Organization for Security and Co-operation in Europe – OSCE). Economically, the former countries of the Council for Mutual Economic Assistance (CMEA, or Comecon) could have continued in a trading bloc, conducting free trade with third parties. This could have taken the shape of either a customs union or bilateral trading links with what was then the European Community. Either of these courses, though to different degrees, would have retained the existing pattern of trade and production while leading to a gradual reorientation to world markets. A rapid and comprehensive transformation involving a simultaneous move to the market and comprehensive privatization of state assets would not have been needed, and a gradual internal adjustment could have taken place. The danger of a shock therapy of free trade between a group of advanced economies (the EU) and less developed ones in the east is that it might destroy the industries of the latter.

None of these choices, however, was adopted. A major group of Central European countries (initially the Visegrad countries of Poland, Hungary, and the Czech and Slovak republics, later followed by others) looked for economic integration with the European Union and for strategic security in the North Atlantic Treaty Organization (NATO). The leading Western states (though to different degrees) sought to accommodate them within these institutions – although again they differentiated between different groups of states. Both NATO and the EU had complementary policies towards the new independent states, which had to meet conditions for membership.

What was the basis of this mutual attraction? From the point of view of the Central and East European countries (CEECs), there were six main reasons. First, the symbolic attraction of a return to their ‘European home’ and a sharp break with the Russian-dominated Soviet past. ‘Europe’ would be a positive form of identity: economically rich and culturally civilized. The anti-communist movement was geared to a return to Western Europe, to its capitalist system, electoral democracy and international networks. Second, there was a perceived need for security provision against a possible revival of Russian power and the need to secure protection against ‘soft’ security threats from international crime, terrorism and illegal movement of people. ‘Joining democracy’ would secure peace, as democracies did not engage in wars (at least not with one another). Third, it was claimed that membership of the European Union would be economically beneficial: it would increase the size of the market, liberalize trade by reducing tariffs and increase foreign direct investment.

Fourth, it would secure a legal framework for private property and the market and a low-wage and educated labour force would provide business opportunity and investment. Fifth were the realistic political alternatives open to the new states. The collapse of the Warsaw Pact and Comecon had left a political vacuum. The economic and political weaknesses of the Central and East European states were such that they had to look to the West for economic and political security. Finally, Eastern Eurosceptics recognized that the costs of staying out of the European Union might be greater than the costs of going in, even if this initially involved severe economic dislocation and unemployment as the economy spontaneously adapted to a new system. It was also recognized that if membership application were successful, it would mean the loss of national sovereignty – at least to some extent. The political and economic elites were fairly united in supporting a move towards integration with the EU. At best, the CEECs would achieve political and economic stability and a rising standard of income; at worst, it was better than staying out. Ironically, perhaps, having opposed the hegemony of the USSR, the newly independent CEECs had to acquiesce in accepting limitations on their independence required by the conditions imposed on prospective members of the EU.

Why should the EU-15 support expansion and the admission of the new independent states to the east? First, the ideology framing the evolution of the EU was supportive of expansion. There was a presumption that European states should be able to join. In terms of its constitution, the European Economic Community, which pre-dated the EU, was open to new members. Article 237 of the European Economic Community Treaty stated that ‘The conditions of admission and the adjustment to the Treaty necessitated thereby shall be the subject of an agreement between the Member States and the Applicant State’.1 However, it was not contemplated that what were then communist-ruled countries would be able or willing to join.

After 1989, the possibilities for enlargement changed. Further expansion, it was claimed, would promote the security of the existing members. The reasoning of its founders, Robert Schuman and Jean Monnet, that the formation of a European Community would make war ‘materially impossible’, still remained valid: enlargement would contribute to peace between European states. Second, the economic reasons for accession states to join were reciprocated by the existing members: a larger market and opportunities for investment would stimulate sales and profits and consequently employment and wealth in the common market. Those engaged in trade would have much to gain and little to lose by an enlarged market. Based on a neo-liberal conception of political economy, the free movement of goods, services, capital and labour would promote economic well-being. This line of argument depended on the assumption that the joining members would be able to adapt positively, on the basis of their comparative advantage, rather than adjustment leading to de-industrialization and unemployment. ‘Creative’ destruction, rather than simple destruction would occur. This option, however, required the creation of a market capitalist economy compatible with the neo-liberal objectives defined above.

Third, an economic and political union with the new states would ensure that their economic and political conditions would be compatible with the economic and political situation in Western Europe: a legal system would give rights to private property, and the inclusion of the new countries in the EU would be an irrevocable step on the way to capitalism; a democratic system would preclude the rise of a state-centred form of corporatism. Bearing in mind that the transformation process in the post-communist societies was still under way, the promise of EU membership would act as a catalyst for economic and political change in the countries themselves. The conditions that the EU placed on candidates for membership would have a direct effect on the transformation of these societies, giving rise to states compatible with the economic and political conditions of the Union. The offer of membership would be a significant stimulus to the applicants to accept such conditions. The opportunities open to potential new members in the EU would legitimate the costs of adjustment – particularly factory closures and unemployment. Being constituent members of the EU would prevent slippage back to neo-communism.

Fourth, there was the less tangible argument that the EU possessed a collective identity which involved obligations to, as well as economic and political benefits from, the post-communist societies. The states of the EU had a moral duty to assist the new countries in the transition to democracy and capitalism after they had dismantled communism. These values then, it is claimed, motivated the member states collectively to accept the new members, even though individually they may not have had much to gain.2

Steps to Enlargement

Even before the collapse of the communist system, the European Union had conducted negotiations on an individual basis with the Central and East European states. It had concluded trade and co-operation agreements with Hungary in 1988 and with Poland and the Soviet Union in 1989.3 In the post-communist period, the EU put in place ‘association agreements’. These had earlier been arranged with Turkey from as early as 1963 and led to a customs union with that country in 1996. European ‘association agreements’ were important because they defined the states which the EU thought to be most compatible with a market economy and a pluralistic electoral democracy. By being so defined, those countries then introduced reforms to make themselves compatible.

An early differentiation of former communist states occurred. European agreements were negotiated between the EU and the CEECs from the 1990s. As early as December 1990, the EU negotiated with Czechoslovakia, Hungary and Poland on the content of the agreement that was signed with these states in December 1991. The agreements aimed to regularize relationships between the EU and the CEECs and were conducted on a bilateral basis between the EU and each country. At this stage, however, an agreement did not commit the EU to giving membership: it covered free trade, financial and technical assistance, energy, environment and communications.

Agreements also covered the development of laws compatible with the single market, affecting particularly state subsidies, and freedom of competition. The objective was to realize the goals of the EU – the free movement of capital, commodities and people. Consequently they influenced the political and economic changes (described below) taking place in the CEECs in the direction of compatibility with EU relations. The PHARE programme (Poland and Hungary: Assistance for Economic Reconstruction – later extended to other countries) was introduced in 1990 and defined the front runners; it provided aid and technical help to the CEECs.4 Technical assistance was later widened to include the fostering of political and economic structures compatible with a market economy. From 1992, conditionality required the recipient states to promote democratic practices, human rights, and the rule of law. Between 1994 and 1996, 29 per cent of the PHARE budget was devoted to civil society, public institutions and education. In the early period (1990–93), over a quarter of expenditure (26.7 per cent) constituted support for the private sector, and the second highest expenditure was on agriculture (12.3 per cent).5 These figures illustrate the fact that joining the EU is not the same as becoming a member of a free trade association where political and legal conditions do not apply.

After 1991, countries of the Commonwealth of Independent States (CIS, comprising former Soviet republics now independent) received assistance under the TACIS (Technical Assistance to the CIS) programme. Its objectives were to promote a country's transition to a market economy and to encourage democracy and the rule of law. These sums were much lower in total than those committed to PHARE. For comparison, in 1996 PHARE had a budget of €1,222.9 million, compared with €536 million for TACIS. When one bears in mind the population of Russia and Ukraine, the ratio of expenditures is even more favourable to PHARE countries.6 A distinction might be made that TACIS prepared the conditions for a market economy outside the EU, whereas PHARE prepared countries to become members of the EU.

Agreements were undoubtedly asymmetrical in character as the EU was able to determine conditions to the eastern countries. By 1995, ten CEECs with association agreements already formed an inner ring of Western-orientated countries: the Czech Republic, Estonia, Hungary, Poland, Slovenia, Slovakia, Bulgaria, Latvia, Lithuania and Romania. The EU strongly influenced their political and economic development. The type and speed of transformation in the CEECs was to a considerable extent a consequence of the EU's conditionality for membership. The East European societies strove to meet the conditions that would supposedly enable a successful application to take place. Domestic politics were significantly dependent on the fulfilment of the conditions for joining the EU. The form of ‘transformation’ was defined in terms of a desired neo-liberal conception of pluralist electoral democracy, civil society and a reduction in state provisions. The dominant countries of the west sought to further their own political security and economic interest by expansion to the east. This entailed the compatibility of the economic and political institutions of the CEECs. This is not to say that the conditions of membership were thrust on to unwilling suitors: elites, by and large, accepted them and even utilized them to legitimate changes they sought to make for their own reasons. In some cases, though, the EU used its political power to secure its objectives. In the case of Romania, for example, Geoffrey Pridham (in this collection) contends that ‘EU pressure was the decisive factor in explaining Romania's compliance with and implementation of conditionality’ – although in this case it was more so than in other would-be member countries.

A major incentive for these countries was the expected benefits of EU membership. In June 1993, at the Copenhagen meeting of the European Council, a commitment to joining for select states was made. EU enlargement was now policy, but the ‘Copenhagen criteria’ had to be met by applicant countries before membership would be given. The major components were:

1. stability of institutions: guarantee of democracy, rule of law, human rights;

2. a functioning market economy, involving considerable de-statization and the formation of privately owned enterprises;

3. capacity to cope with competitive pressures and market forces within the Union;

4. capacity to take on membership obligations (the acquis communautaire), including adherence to the aims of EMU (economic and monetary union) and political union.

These components constituted a comprehensive bundle of conditions from which intending members, unlike existing ones, could not opt out.

In 1994 a strategy of pre-accession was adopted in Essen. In December 1995, the Madrid session of the European Council requested that the Commission prepare ‘opinions’ on the ten post-socialist candidate countries (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia) and Cyprus. These considered the effects of enlargement on the Union, particularly the agricultural and structural policies, and the long-term budgetary outlook. The Commission Report – Agenda 2000: For a Stronger and Wider Union – was delivered in July 1997. There followed a detailed screening process of each country, which negotiated bilaterally with the Commission. The candidate countries had to show the extent to which they had met the conditions of the 31 chapters of the acquis communautaire.

Accession negotiations showed that the post-socialist states were at a great disadvantage in bargaining, and they had to accept the conditions of the acquis in their entirety. They had no opportunity to back out of crucial chapters. Unlike ‘old’ members, they had to accept in principle joining the European Monetary Union (EMU) when they were ready, and could not opt out (as did Britain, Denmark and Sweden). They also had to have independent central banks, a condition that constrains a government's economic policy. The establishment of a sound currency has been a major economic policy of the EU, aimed at maintaining the value of the currency to keep down inflation and stabilize exchange rates. Financial stability ruled out Keynesian-type state investment promoting growth, although it should be noted that new members (such as Ireland and Spain) have benefited from large EU transfers that have boosted investment. The new members have had to become part of the Schengen visa regime and adopt EU visa policy with respect to third parties. Reductions in levels of state expenditure, cuts in social benefits and welfare have been imposed to fulfil monetary policies. The objective of the accession negotiations was to allow the entry of the new states into the economies of the EU without disruption. It was realized that the opening up of competition from the west would lead to closures and unemployment, before the positive effects of ‘creative destruction’ would take place. The expected benefits of membership (as, for example, in Ireland) united the political elites in applicant countries in support of EU membership.

Convergence to and Divergence from the European Union

The former European state socialist countries all attempted to restructure their economies in the direction of market-type competitive democratic capitalist societies. However, they have not all done so at the same speed or to the same degree.

An initial effect of the fall of state socialism was a significant decline in economic activity. The rate of economic recovery and renewal is shown for the Central and East European and Baltic countries on the right-hand axis of Figure 1A: the data show GDP in 2005, compared with 100 in 1989. The average for all countries is 133; Lithuania is below the 1989 level and Latvia only 1 point above (101). At the other end of the scale are the more successful countries: Poland with a recovery of 148, followed by Slovenia at 132. One might conclude that all the Central European states have made a positive recovery, though the Baltic ones have been less successful. No doubt the support of European Union restructuring funds has contributed to the relative success.

Figure 1. GDP RECOVERY 2005 (BASE 1989-100), FDI PERCAPITA 1989–2005 (AVERAGE)

A. CENTRAL, EAST EUROPEAN AND BALTIC STATES

B. SOUTH-EASTERN EUROPE

C. COMMONWEALTH OF INDEPENDENT STATES

The vertical bars on the chart plot the level of Foreign Direct Investment, expressed as the cumulative total per capita for the whole period 1989 to 2005. The level of foreign investment varies tremendously between years, especially during the period of privatization: the privatization of a large company in a small country, for example, could have a significant impact on the investment level. Data in Figure 1A are the average for the whole period of transformation. There have been considerable differences in the economic performance of the individual countries that joined the EU in 2004. Here the top performers are the Czech Republic with $5,061 per capita, followed by Estonia and Hungary. Lithuania, Latvia, Poland and Slovenia all have investment below the average of $2,714. The modernization of management and the transfer of industrial know-how are, to some extent, related to levels of foreign investment, as foreign owners influence the operation of the company under their control.

Sixty-one per cent of all foreign direct investment (FDI) in the CEECs stems from the EU-15. Germany is the top single country with 19 per cent of all FDI in the CEEC, followed by the Netherlands, the USA and France.

Figure 1B illustrates the comparative situation for the South-East European countries, including Romania and Bulgaria, which joined the EU in 2007. These have done much worse in terms of both economic recovery and FDI than the CEECs. Only Albania (137) and Romania (105) are above the GDP level of 1989. The average of FDI has not been much lower: the CEECs with an average of $2,714 and the latter at only $1,134.

Figure 1C (CIS countries) shows an even more dramatic decline in GDP and a relatively small inflow of FDI. Only Belarus (123) and Armenia (111) have surpassed their domestic product of 1989 – ironically, perhaps, outperforming the 2007 intake of new EU members (Bulgaria and Romania). The large countries of the former USSR (Russia and Ukraine) have done particularly badly at 88 and 59 respectively. The average rate of recovery is only 85. A similar picture is apparent for FDI: the average for the seven states is only $286 per capita. Only Azerbaijan has any significant level of FDI – obviously related to investment in the oil industry. While Russia also has large external energy investments, as the population is large, the amount per capita is one of the lowest in the post-socialist states. As one moves to the east from the borders of the European Union, GDP recovery as well as level of GDP falls (though not for Belarus and Albania), as does the level of FDI (though with the exception of Croatia and Azerbaijan).

The other pillar of the transformation to a capitalist economy is the process of privatization. Here again we see important variation among the different post-communist states. The Visegrad countries have all made great progress, while others, even new members of the European Union, have retained state-owned enterprises. Figure 2 illustrates the progress of different groups of countries. On the left-hand axis, the share of private sector GDP is shown as a percentage. The 2004 new members of the EU have an average of 72.5 per cent of GDP originating from the private sector, South-East Europe following with an average of 65 per cent and the CIS with only 50 per cent. With the exception of Belarus, there has been a great contraction in state-owned enterprises, though clearly Russia and Ukraine still have a considerable portion of GDP originating from it. On the right-hand side of the chart, the level of privatization of large-scale enterprises is indicated. A score of 1 represents that of a centrally planned economy. At the other end of the scale a score of 4.5 is the level of a Western capitalist society (ranks based on EBRD calculations; I have converted + and – signs in the original into fractions). Clearly, the CEECs have all privatized large-scale industry – though Slovenia, Latvia, and Poland are somewhat behind the others. Only Bulgaria and Croatia fall into this category in the countries of South-East Europe and Russia, Georgia and Armenia share this position in the CIS.

Figure 2. PRIVATE SECTOR SHARE OF GDP 2006

A. CENTRAL, EAST EUROPEAN AND BALTIC STATES

B. SOUTH-EASTERN EUROPE

C. COMMONWEALTH OF INDEPENDENT STATES

While the CIS is considerably behind the other former state socialist countries, considerable strides have been made towards a market system based on private property. Only Belarus remains relatively unreformed. Clearly, though there are some minor exceptions, the economic policy pursued and achievements in the CEECs made them much more compatible with the EU than those in the countries left out.

However, despite these changes in economic conditions, convergence has not taken place. A consequence of the neo-liberal policy adopted was significant de-industrialization: the share of CEE countries in world manufacturing fell from 19.3 per cent in 1980 to 2.7 per cent in 2001.7 In an increasingly knowledge-based society, the new members are at the bottom of the scale in terms of research and development: between 1996 and 2001, per million inhabitants, the Czech Republic and Estonia had only one patent application for high technology at the European Patent Office and Poland none, whereas Germany had 49, the UK 36 and Sweden 11.8 In 2003, registered unemployment in ten Central European applicant states (including Romania and Bulgaria) averaged 13.4 per cent of the labour force, Poland 19.6 per cent and Bulgaria 18 per cent.9

Despite these economic problems, the applicants fulfilled the requirements of the EU acquis and membership was offered in 2004 to the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia (along with Cyprus and Malta). Subsequent to the ratification by the new member states, from May 2004 the membership of the EU consisted of the 15 previous members and ten new members. Bulgaria and Romania were left outside, although they remained candidates and joined in January 2007. Turkey, which had originally applied for membership in 1987, was accepted in 2004 for negotiation. Croatia, granted candidate status in June 2004, had its negotiations postponed in March 2005, pending Zagreb's co-operation with the UN war crimes tribunal, and, on 3 October 2005, accession talks began. Macedonia became a candidate in December 2005. Albania signed a stabilization and association agreement in June 2006. Negotiations are at present under way for such agreements with Bosnia–Herzegovina and Montenegro.

Consequences of the 2004 Enlargement

The 2004 enlargement put added strain on EU institutions and particularly the budget. As the Federal Republic of Germany found the financing of the former German Democratic Republic to be a considerable economic drain on its resources, so did the allocation of the EU budget to the new member states. The economically rich countries – Germany, the UK, France, Austria, Sweden and the Netherlands – were unwilling to raise their proportional tax contributions above 1 per cent of GDP to the 1.24 per cent proposed by the European Commission. The essential problem here is that enlargement means in principle that the new members should receive similar levels of agricultural transfers and state aid as the old members, thus pushing up demands on the budget – to be met by the more prosperous old members. The general principle is that welfare standards should be equalized. (By comparison, the free trade area between Mexico and the USA does not involve any obligation by the USA to equalize social benefits in Mexico.)

The accession of ten new members also led to difficulties in the existing (EU-15) states: here concessions were made on the free movement of labour – existing states being able to limit access for a period of two years (followed by further review if necessary). There were also short-term limitations on the movement of goods, and transitional arrangements on the movement of capital – mainly on the purchase of second homes. The Commission agreed to transition periods for certain problem areas, for example waste, water and environmental issues. Most important was the common agricultural policy (CAP). The EU-15 recipients of the CAP support costs were unwilling to accept cuts to accommodate the new agricultural regions of the east. Initial payments to new states were fixed at 25 per cent of the levels paid to existing members, rising by 2012 to the full Union level. As the CAP accounted for 45 per cent of the EU budget in 2003, the proportional share going to the new members was unequal, although even this level in many cases represented a significant rise in living standards. Moreover, it is unquestionable that the new members benefited from the budgetary transfers. Structural and cohesion grants (structural redistribution was 34 per cent of the EU budget) transferred €12 billion (net) to the new members, with the largest share going to the largest country, Poland.

Following the admission of Bulgaria and Romania in 2007 the European Union forms a solid block of countries from Ireland in the west, to the borders of Ukraine and Belarus in the east and from Spain in the south to Sweden and Finland in the north. The enlargement of the EU has strengthened the ‘insiders’ against the ‘outsiders’ (see Martin Dangerfield's article in this collection).

The 2004 accession of the ten new members (plus two in 2007) leaves five different groupings outside the current borders of the EU.

1. There are four countries with accession status: Turkey, Albania, Croatia and Macedonia. Turkey has a customs union with the EU. Even on the most optimistic scenario, entry is unlikely before 2015.

2. Unlikely future members: the EFTA states (Iceland, Liechtenstein, Norway and Switzerland) have applied for and been offered membership but accession lacked popular political approval. These states enjoy economic inclusion in the EU even though they are not part of its customs union.

3. Potential members currently lacking accession status: Central European states – Bosnia-Herzegovina, Serbia and Montenegro.

   There are two sets of countries with ‘neighbourhood’ status:

4. The CIS states: Ukraine, Belarus, Moldova, Georgia, Armenia, and Azerbaijan; Ukraine, Georgia and Moldova aspire to membership.

5. Mediterranean neighbours: running from Morocco to Lebanon (Morocco, Algeria, Libya, Tunisia, Egypt, Palestine, Israel, Lebanon, Jordan, Syria). These countries are not European states and are unlikely to seek membership. Under the Barcelona Declaration of 1995, 27 Euro-Mediterranean states agreed to form a free trade area by 2010, and association agreements also cover human rights and terrorism.

However much the EU declares its commitment to enlargement, any further expansion is likely to be limited to very small states in Central Europe – probably Croatia, Bosnia, Macedonia, Albania and Montenegro. This would complete the jigsaw by filling in the gaps in Central Europe.

Two European countries can be excluded from the enlargement agenda: Belarus and Russia. The former is considered by the EU to be an unreformed state (though it does not yet have the status of a ‘rogue’ state). Despite a claim by John Major in the 1990s that the EU could enlarge as far as the Urals, Russia's large population (140 million) and large land mass stretching from the Baltic to China and the Pacific exclude it from membership – even if it might meet the EU's membership criteria.

There remain two countries, Turkey and Ukraine, that share a large population and geographical area; both seek EU membership. Since large countries are more difficult to integrate than smaller entities, in this respect they start with disadvantages compared with all the countries of the 2004 enlargement, except Poland. Turkey is a long-standing applicant, having applied in 1987, and is a NATO member. Economically, it has the strongest association with the EU, having been a member of its customs union since 1996; it has a large population (65–70 million) which is growing rapidly (unlike those of the major West European states). Though a secular state, it has a large Muslim population. From a strategic point of view, enlargement including Turkey would extend the EU's borders into Asia. Its membership is opposed by many prominent figures in the EU and also by many member states (including Germany), though it is championed by the UK and the USA. Public opinion in the member countries is clearly against Turkish membership.10 There has in recent years been a decline in Turkey of popular and elite support for EU membership which is detailed in the article by Sedef Eylemer and İlkay Taş (this collection). There is a division of opinion about the advantages of modernization which would be brought by EU membership weighed against the loss of national autonomy.

Ukraine has a large agricultural population and problematic ‘rust belt’ industries, both of which would cause serious economic problems for inclusion. The country has exhibited instability since the fall of communist power and has serious internal divisions between east and west. The contested presidential elections of November and December 2004 illustrate the internal volatility. While the political elites have supported a move to the EU, they are divided between a strongly pro-EU Yushchenko, currently the president, and a prime minister, Yanukovich, seeking EU membership while at the same time trying to preserve links with Russia. The different views on the relationship of the Ukraine to the EU are well captured by the quotations at the beginning of Martin Dangerfield's article (below). While Adam Szymański, in his article, reminds us that the strong lobby provided by the Polish elite (and also other leaders of the new member states) for the inclusion of Ukraine, Poland (and the new member states) lacks political clout.

Conclusions

There are five major reasons why any further enlargement of the EU's boundaries is unlikely and why other forms of integration into the EU by neighbours are more probable. First are the consequences of the direct and indirect effects of the 2004 enlargement. For the ‘old’ members, enlargement has brought an increasing number of problems. It has created greater diversity and division and will make coherence more difficult to attain. While there was no very strong feeling of European social identity even before enlargement (the original 15 had a mix of languages, religions, types of economy and political systems), the accession of the ten countries has made the creation of a common identity more difficult. The EU is a community of nations with different identities, unlike the USA, which has national identities within a strong American identity. Second is the changed international environment since negotiations for membership went ahead with the EU-10. Decisions on the inclusion of the previous communist countries coincided with a period of ‘transition to democracy good will’ towards them, both from Brussels and from the member states, and were strongly backed by the USA. By 2007, the world scene has changed. The terrorist attacks on the USA of 11 September 2001 are symbolic of a new world situation. Soft security – against illegal immigrants, ‘trafficking’, potential terrorists, drugs – may objectively be relatively unimportant but it occupies the centre of the political space. The enlargement process and the transformation of the post-socialist states coincided with civil wars in Moldova and Georgia, and the Chechnya crisis in Russia. The fear of international terrorism has created an environment of tension.

Third, the enlargement process of 2004 itself exacerbated social and economic problems in the old member states. The opening of borders in the EU coincided with an economic downturn in continental Europe and rising levels of unemployment, making worse the fear of competition and wage depression from immigrant labour from the east and the transfer of production and services to the new member states. The enlargement has not led to a significant increase in the power of the new member states, and the European Neighbourhood Policy (ENP) has not led to the enhancement of the case for membership of Ukraine: indeed, the ENP includes the Mediterranean states.

Fourth, the larger the EU the more it will become an association of nations having economic integration, but will be increasingly difficult to operate as a political unit. It will make a move to a federal Europe more difficult and will weaken the power of the core states (France and Germany) in the decision-making process. But it will strengthen the UK's vision of an association of states, with a strong economic market, but little political cohesion. Any post-2004 enlargement would exacerbate these developments. The addition of small states (such as Croatia) will not upset the balance of power; large states, such as Turkey and Ukraine, would shift constitutional power away from the motor forces of the EU (Germany and France) and, consequently, is unlikely to be part of any future enlargement (see the article below by Karolewski).

Finally, and perhaps most important of all, the EU itself has suffered a major legitimacy crisis. The proposed constitution was rejected in the key countries of France and Holland and public opinion polls show increasingly negative feelings towards the EU. The interests of the member states now become predominant as their political elites seek to appease critical domestic publics, often orchestrated by the mass media.

In this context, further enlargement is politically unwelcome, and even the USA is reluctant to be able to persuade unwilling members of the European Union to take on further commitments, however strategically advantageous they are seen to be to Western interests. The realistic alternative to the enlargement of the EU is a form of integration without membership. The ENP is one such alternative. As Martin Dangerfield, in his discussion of the ENP, puts it in his article below: would-be members might become neighbours ‘in Europe’ rather than neighbours ‘out of Europe’. Other possibilities include ‘privileged membership’ and ‘gradual membership’ as discussed in his article in this collection by Adam Szymański. These new forms of association, however, will have two disadvantages for the ‘neighbours’. First, they will exclude them from decision making in the EU – thus not disturbing the emerging balance of power between the various interests. Second, they will exclude the associated states from the transfers from the EU budget. They may have to pay the price for entering the market, but will not receive the compensatory stabilization funding.

The articles in this collection were delivered at a specially convened conference on Strategic Elites and European Enlargement held in Kiev in October 2006 and organized by Olga Kutsenko. The support of a British Academy network award to David Lane, which made possible the organization of the conference, is gratefully acknowledged.

Additional information

Notes on contributors

David Lane

David Lane is currently Senior Research Associate at the University of Cambridge and is engaged on a Leverhulme Trust award on Transformation in Russia and Ukraine. His recent works include The Transformation of State Socialism (2007) and, with Martin Myant, Varieties of Capitalism in Post Communist Countries (2007). Acknowledgement is made to Leverhulme Trust (F/01 034/A) without whose support this article would not have been completed.

Notes

1. The full text of the original Treaty of Rome is available at <http://www.bmdf.co.uk/rometreaty.pdf>, accessed 21 Oct. 2007.

2. This line is developed in F. Schimmelfennig and U. Sedelmeier, ‘Theorising EU Enlargement: Research Focus, Hypotheses and the State of Research’, Journal of European Policy Research, Vol.9, No.4 (2002), pp.500–528.

3. These are conveniently detailed in Karen Smith, ‘Enlargement and European Order’, in Christopher Hill and Michael Smith (eds.), International Relations and the European Union (Oxford: Oxford University Press, 2006), p.274.

4. In 1990 this totalled 494 million ECU and in 1996, 1,223 million: see Mike Mannin (ed.), Pushing Back the Boundaries (Manchester: Manchester University Press, 1999), pp.38–9.

5. For details see ibid., p.40.

6. For details see John van Oudenaren, Uniting Europe, 2nd edn. (Lanham, MD: Rowman & Littlefield, 2005), p.323; Mannin, Pushing Back the Boundaries, p.39.

7. Development and Globalization: Facts and Figures (New York and Geneva: UNCTAD, 2004), p.89; cited in Erik S. Reinert and Rainer Kattel, ‘The Qualitative Shift in European Integration: Towards Permanent Wage Pressures and a “Latin-Americanisation” of Europe?’, Praxis Working Papers No.17 (Tallinn: Tallinn University of Technology, 2004), p.24.

8. Data cited in ibid., p.30.

9. Cited by David R. Cameron, ‘The Challenges of Accession’, East European Politics and Societies, Vol.17, No.1 (2003), p.30.

10. See QD15: ‘In your view, European Union accession of Turkey would be: Primarily in interests of the EU 7%, my own country 3%, Turkey 52%, both Turkey and EU 20%’. In Germany the proportions were: own country 1%, Turkey 68%; France: own country 2%, Turkey 56%; in the UK, own country 4%, Turkey 55%: see EuroBarometer, Attitudes towards European Union Enlargement, July 2006. Polled members of 25 EU states; available at <http://europa.eu/rapid/pressRelasesAction>; accessed 8 Aug. 2006.