Chapter 3: Impact on candidate countries
and new member states
83. Our witnesses were clear that enlargement
remained one of the EU's most effective tools to promote long-term
political and economic reform in its neighbours, and thus to help
ensure stability in its neighbourhood.[70]
This chapter explores the economic, political and institutional
changes that the enlargement process—and ultimately accession—can
effect, and the impact of the requirements on new Member States
to join both the euro and the Schengen area.
Economic impact
84. The evidence we received suggested that the
enlargement process and accession offered significant economic
benefits to candidate countries and new Member States. Witnesses
told us that, despite the economic crisis, the new Member States
from 2004 and 2007 had seen rapid economic growth after joining.[71]
Figure 2 indicates the growth in GDP per capita in purchasing
power standards between 2001 and 2011, compared against the figures
for the EU-27 as a whole.
85. Ambassador Dimitrov provided us with a short
case study of Bulgaria's experience. He said that "competitive
pressure" from EU market forces had improved Bulgarian business,
and that harmonisation with consumer protection legislation and
the opportunities of the single market had benefited Bulgarian
consumers. He also told us foreign direct investment (FDI) in
the country had increased, reaching €9 billion in 2007.
86. On such measures, the enlargement process
and, ultimately, accession have been of economic benefit to the
newest Member States. However, Ambassador Dimitrov noted that
EU membership had not been an economic panacea, stating that 19.5
per cent of the Bulgarian population still lived on incomes below
the poverty line. Undoubtedly, the broader economic downturn within
the EU has dampened the economic benefits gained from membership,
and more generally Professor Mayhew noted that, in terms
of purchasing power parity, there had been a mixed picture for
the 2004 and 2007 countries.
87. It is therefore difficult to predict with
any accuracy what economic gains might be made by the current
aspirant countries as they progress towards membership. The Serbian
Embassy thought it was unlikely that the positive experience of
the Central and Eastern European countries would be fully replicated
for the Western Balkans, but nevertheless spoke positively about
the connection between stronger relations with the EU and an "influx
of investments". They pointed out that national harmonisation
with the acquis could create an improved environment for
both business and consumers, and other witnesses concurred with
this view.
FIGURE 2
Comparative GDP per capita in purchasing
power standards
Source: Eurostat
88. The Croatian government argued that it would
be "more beneficial" for the country to be within the
EU, rather than "facing the challenges" of globalisation
and the current economic downturn "alone".
89. For candidate countries, the enlargement
process can bring an influx of investment and an improved business
environment, alongside EU financial assistance to support reforms.
After joining, new Member States can expect further economic benefits
through participation in the single market and in EU funds that
seek to support growth. It is impossible to estimate with any
accuracy an exact figure that can be gained from the accession
process, but it is hard to explain why so many countries persist
in seeking to join the EU if they were not convinced of the benefits,
both economic and political.
Requirement to join the euro
and Schengen areas
90. The requirement to join the euro under Article
3 TEU remains non-negotiable for new Member States and represents
a potentially major challenge for these countries post-accession,
although there is no deadline within which countries must join,
making any such decision effectively voluntary. Similarly, under
their accession treaties, new Member States are expected to join
the Schengen area once they have met the criteria.
THE EURO AREA
91. Of the 2004 and 2007 countries, five have
already joined the euro: Slovenia, Cyprus, Malta, Slovakia and
Estonia. Lithuania and Latvia have joined the Exchange Rate Mechanism
II (ERM II), which is a precursor to adopting the euro. Poland,
the Czech Republic, Hungary, Bulgaria and Romania have not yet
joined the ERM II, and so are at least several years away from
joining the euro.
92. Of the longer-established Member States,
Sweden maintains that joining the ERM II is voluntary, and by
refusing to do so has exercised a de facto opt-out from
the euro. This follows a 2003 referendum in which 56.1 per cent
of the population voted against adopting the euro. The Czech Republic's
government has provisionally committed to a referendum on whether
the country should join the euro. Dr Tannock MEP therefore
expressed scepticism about "how seriously" the requirement
under Article 3 was likely to be "enforced" in practice.[72]
As is well known, the UK and Denmark have formally agreed opt-outs
from joining the euro.
93. A Eurobarometer survey conducted in November
2011 showed that most respondents in the seven new Member States
yet to join the euro thought the euro would have negative consequences
for their country rather than positive ones. This is part of a
trend after May 2009. Nationally, only Bulgarians viewed the euro
as more likely to have positive consequences, and only three countries
had a majority of respondents who favoured introducing the euro:
Romania, Bulgaria and Hungary.[73]
94. Montenegro and Kosovo have already adopted
the euro as their currency, raising difficulties with the technical
requirements for joining the euro, some of which are based on
the national currency. Dr Tannock MEP noted that this might
require new rules to be established. More generally, Benjamin
Leruth, doctoral candidate at the University of Edinburgh, argued
that the way in which economic criteria are applied during the
accession process may need to be altered as a result of ongoing
changes to the euro area's governance and structures.[74]
95. Given the potential impact of these significant
discussions about the euro area on the aspirant countries in the
future, Ambassador Drobnjak emphasised the need to involve candidate
and potential candidate countries "a little more in the key
debates and issues", such as enhanced integration of the
economic and monetary union, in order to "prepare the countries
in advance" for the demands of joining the euro area.[75]
96. The requirement for Member States—excepting
the UK and Denmark—to join the euro is impossible to enforce,
as Sweden's reluctance has demonstrated. It must be recognised
that, at least in the current economic climate, joining the euro
may be a formal obligation, but is in reality an aspiration. It
is unlikely that many of those still committed to entry will join
the euro in the near future.
97. As the governance and structures of the
euro area undergo significant change, more should be done to engage
candidate and potential candidate countries so that the changes—and
the demands that will ultimately be laid on them—are clearly
understood.
THE SCHENGEN AREA
98. The Schengen area is an internally borderless
area that includes 26 European countries: all of the EU Member
States except the UK and Ireland, which have opt-outs, as well
as Iceland, Liechtenstein, Norway and Switzerland. However, Bulgaria,
Romania and Cyprus are not yet full members of Schengen. Membership
requires a country to have the capacity to, inter alia,
meet the responsibility for controlling its external borders on
behalf of the other Schengen States and efficiently cooperate
with law enforcement agencies across other Schengen States.
99. Bulgaria and Romania's entry into Schengen
has recently been linked to their progress in meeting the benchmarks
set out in the CVM. The EPC pointed out that both countries had
met the technical criteria for entry, and suggested that the decision
stemmed from "mistrust" owing to the high level of mutual
dependency on which Schengen relies. Professor Mayhew highlighted
that—along with visa liberalisation—Schengen membership
was "of the highest importance" to the aspirant countries.
100. As the Schengen area expands,
through enlargement or otherwise, it is right that the rules for
entry are applied strictly in order to preserve its integrity.
Political and institutional impact
101. Demonstrating compliance with the Copenhagen
criteria and respect for the values set out in Article 2 TEU may
well require a profound transformation in aspirant countries.
Consequently, Ambassador Drobnjak emphasised the need for "broad
political consensus" in order to negotiate the accession
process successfully.[76]
102. Dr Juncos told us that the reforms
demanded by the enlargement process promoted "specific models"
of political "reorganisation" that had a significant
impact on national politics, particularly "the balance of
power" between domestic parties. Assistant Professor Rinna
Kullaa of the University of Jyvaskyla reflected with approval
that, during the enlargement process, EU actors engaged with parties
from all sides of the political spectrum in candidate countries,
"elevating both the awareness and knowledge base of the opposition".
Similarly, the Embassy of the Republic of Croatia to the UK highlighted
the "europeanisation effect on political parties" throughout
the accession process.
103. Enlargement can also have a profound impact
on the national political structure, granting the Head of State
and the government "a new important set of duties" representing
the country within the EU, which in turn affected "all spheres"
of domestic policy, as well as its foreign and security policy.[77]
Ambassador Drobnjak emphasised the importance, for Croatia, of
having their Head of State "sit at every European Council
equal to the others", saying that this "matter of equality"
was a "main concern" for those aspiring to join the
Union.[78]
104. The EU enlargement process and accession
can have a profound and often positive impact on aspirant countries'
national political systems. The aspiration to 'sit at the table'
as one amongst equals within the EU can generate consensus across
the political spectrum and is a motivator that should not be underestimated.
105. In his evidence to us, Dr Adam Lazowski,
Reader at the University of Westminster, emphasised a sometimes
forgotten aspect of accession's impact on new Member States: the
impact on the administration and the national courts that must
apply EU law, demanding "tremendous investment both in terms
of legal knowledge and skills". The UK Government indicated
that the UK was involved in several bilateral projects that centred
around increasing judicial capacity within aspirant countries,
and the prioritisation of Chapters 23 and 24 also emphasises the
need to ensure that candidate countries are prepared to take up
this task of membership effectively once they have joined.[79]
106. Enlargement and EU membership are grounded
in law—the acquis. Building the administrative and
judicial capacity of aspirant countries so that EU law can be
effectively applied post-accession is vital. We hope that the
new approach to Chapters 23 and 24 will ensure that such capacity-building
remains central to the enlargement process.
70 EPC, FCO written evidence, Juncos, Macedonian European
Affairs Committee, Serbian Embassy, Tannock, Taylor Back
71
Croatian Embassy, Macedonian European Affairs Committee, Mayhew,
Tannock. This analysis was also supported by an IMF working paper
regarding the 2004 Member States: Five Years After: EU Membership
and Macro-Financial Stability in the New Member States (IMF
Working Paper, March 2009) (http://www.imf.org/external/pubs/ft/wp/2009/wp0968.pdf). Back
72
Q 90 Back
73
Flash Eurobarometer 336 Back
74
Q 90, Leruth Back
75
Q 83 Back
76
Q 77. See also: Kullaa Back
77
Kullaa Back
78
Q 78 Back
79
Commissioner written evidence, FCO memorandum Back
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