EUROPEAN UNION’S TOUGH BUT
RELENTLESS DRIVE TO EXPANDFRANKFURT: Europe enters the New Year and the new Millennium
on a mission of staggering scale: an expansion of the European Union by
13 countries and some 170 million people.By EDMUND L. ANDREWS
In the decade since Communism collapsed, the European Union has made huge progress toward becoming a truly single market. Almost all trade barriers among its 15 member nations have been abolished. Citizens of any member country can live and work in any other. At the start of this year, 11 of the 15 countries adopted the euro as a common currency.
But integration has not been easy. France and Germany feuded endlessly during negotiations over the euro, which still has not been adopted by Britain, Sweden, Denmark and Greece. The new currency slumped relentlessly vis-à-vis the United States dollar, declining from $1.18 after its introduction on Jan. 4 to just above parity with the dollar by mid-December.
As a result of the transparency of the euro, as well as the elimination of the trade barriers, price competition within Europe has become brutal. And hostile corporate takeovers, until recently almost unthinkable outside Britain, have become common in France, Italy and Germany.
The path ahead could be even more grueling now as the union juggles issues of expanding membership.
Six countries -- Poland, Hungary, the Czech Republic, Cyprus, Slovenia and Estonia -- are already in membership negotiations with the European Union, and some could be admitted as early as 2003.
Six other wildly diverse countries are about to start negotiations, a process likely to last at least a decade. These countries are: the central European nations of Slovakia, Bulgaria and Romania; the tiny Baltic nations of Latvia and Lithuania, and the island nation of Malta.
But the biggest breakthrough was Turkey, which the European Union invited earlier this month to become a candidate for membership.
Prime Minister Bulent Ecevit, while acknowledging that difficulties lay ahead, said, "The acceptance of our candidacy on equal terms is a great success for Turkey."
The country has been a part of the NATO military alliance for years but was repeatedly shunned by the European Union because of its territorial feud with Greece and its human rights record.
Turkey, with 63 million people, still faces a long path. Membership negotiations will not begin until it resolves its disputes with Greece, and to become a member, it must also abandon the death penalty, even as a Turkish court is seeking to impose it on the Kurdish rebel leader, Abdullah Ocalan.
It is hard to overstate the magnitude of the project that would expand the union beyond its current members; besides Britain, Denmark, France, Germany, Greece and Sweden, they are Austria, Belgium, Finland, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. If all 13 countries under discussion become members, the European Union would constitute the world's biggest and most diversified free trade zone.
Europe's common market would encompass nearly 500 million people and extend to the borders of Russia. It would unite Europe's wealthiest nations with some of its poorest. It would bring jolting new competition to farmers in both Western and Central Europe.
And even if some nations do not make the cut -- and it would be years before any adopted the euro -- the idea of "Europe" is likely to be stretched in strange ways.
Poland, with 40 million people and a long history with the West, is likely to be one of the first countries to become a new member.
Other front-runners include Estonia, a tiny Baltic nation that was part of the Soviet Union, and Slovenia, a prosperous Adriatic enclave that managed to break away from Yugoslavia.
In principle, the deciding issues are whether a country has adopted the institutions and laws to support both democracy and an open market economy.
In practice, the aspiring members will have to adopt a panoply of detailed laws governing trade, social issues and democratic institutions. That is often easier for smaller countries, which explains why a comparatively obscure nation like Slovenia, with two million people, may well be among the first new members.
The European Union's requirements, broken down into 32 "chapters," include laws protecting investors and creditors; environmental regulations; timetables for closing Soviet-era nuclear plants, and the reduction of agricultural subsidies. To be eligible many countries must still establish the courts and regulatory agencies needed to enforce the rule of law in a credible fashion.
There is a clear financial impact from all this. Countries on the fast track generally pay lower interest rates when they sell bonds on the international market because foreign investors perceive those countries as safer. Indeed, bond investors are already speculating on which countries will be allowed to adopt the euro as their currency.
The lure of Europe's single market has also sped the transition of more statist and Stalinist regimes toward market economics. Slovakia, Romania and Bulgaria have all elected Western-style politicians in the last several years, and all have pushed heavily to impose the changes required for admission to the union.
A report by the European Commission in October concluded that Bulgaria had made big strides toward opening its markets, including those in telecommunications and media, as well as in setting up an effective civil service and court system. Romania and Slovakia, pariahs just three years ago, are now winning praise as well.
To be sure, the acceleration of market-oriented changes has increased political tension. Poland has been one of Central Europe's major success stories. By sticking firmly to a course of privatization and expanded trade with Western Europe, Poland was barely grazed by last year's economic collapse in Russia.
Yet anxiety about the European Union is rising sharply, mainly among Poland's farmers, coal miners and shipyard workers who stand to lose from reduced government subsidies and heightened competition. Recent surveys indicate that support for membership in the European Union has slipped to about 55 percent of the Polish population today from 80 percent in 1990.
Many Poles also fear that Germans will buy their land as soon as they get the chance. In negotiations with the European Union earlier this year, the Polish Government demanded that foreign land purchases be restricted for 18 years after the nation joined the union.
The anxiety flows in both directions. Germany, which borders Poland and the Czech Republic and has high unemployment, is pushing for long "transition periods" before Central European workers receive full rights to work in the West.
In a departure from its past approach, the European Union is now pursuing "flexible" targets for admitting nations, allowing countries to join when they are ready, rather than in big waves.
Most experts believe that expansion is all but inevitable. More than two-thirds of exports from Poland and Hungary already go to the European Union, as do more than half the exports from most other formerly Communist "candidate" countries.
And although the embrace of market economics is generally weaker the farther east one travels, all the candidate countries seem to be shifting toward such policies.
"Both sides profit from enlargement," said Andreas Polkowski, an economic analyst at the Hamburg Institute for Economic Research. "Under the pressure of globalization, these countries have to change regardless of whether they enter the European Union. Those that want to become members have merely accelerated the process."
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