EU Enlargement: Ten years later

On May 1, 2004, 10 countries became new members of the EU: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Celebrations took place across Europe.

On May 1, 2004, 10 countries became new members of the EU: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Celebrations took place across Europe.

In May 2004, the EU embarked on its largest expansion, with the admission of 10 new member states, eight of them previously part of the Soviet bloc. In a Brussels speech two years earlier, European Commission president Romano Prodi predicted this move would be “one of the most successful and impressive political transformations of the 20th Century.”
And when the Nobel Peace Prize followed in 2012, the selection committee credited the EU with opening “a new era” in European history, because “the division of East and West has to a large extent been brought to an end….”
To gain admission, the eight post-communist states (plus Malta and Cyprus) had to meet unprecedented requirements. The hope was that the new members would integrate, be able to implement EU law, and realize its political and economic values. Nonetheless, the expansion had risks as well as opportunities for the EU — and for the new members.

On balance, enlargement has been a success in spite of the 2008 crash that led to protests against austerity measures in Greece.

On balance, enlargement has been a success in spite of the 2008 crash that led to protests against austerity measures in Greece.

Would adding more than a third to a sometimes unwieldy group paralyse already difficult EU decision-making? How would new members and old be affected economically? Would open borders encourage mass migration from East to West, causing brain drain on one side and social instability on the other? And would the enlargement push the East-West divide further east, creating new tensions with Russia?
Ten years after, the balance sheet is strongly positive, despite remaining challenges. By joining NATO as well as the EU, the new member states (except Malta and Cyprus) have been brought under the Western security umbrella. The EU’s increase in size and weight has made it an international powerhouse, especially economically. It has sewn together a previously — and sometimes mortally — divided continent. And it has encouraged and supported the democratic aspirations of the new member states. That curious mythic thing called Europe has created tangible policy implications, above and beyond the powers of individual states.
While the expanded EU has not erased the East-West divide in Europe, it has not aggravated it. Though Russia has strongly objected to NATO’s eastern bulge, it has been more accepting of the EU’s expanded borders. Only when the EU’s influence has extended into Russia’s “privileged interests” (a term used by then-Russian president Dmitry Medvedev in a 2008 interview) has Russia been threatened and threatening — as in the Ukrainian crisis.

In May 2004, the EU’s annual “open-door day” coincided with celebrations for the 10-member enlargement. Hungarian marathon runners arrived in Brussels wearing the 10 flags of the new member states.

In May 2004, the EU’s annual “open-door day” coincided with celebrations for the 10-member enlargement. Hungarian marathon runners arrived in Brussels wearing the 10 flags of the new member states.

But whatever difficulties there are in getting along with Russia in the shared neighbourhood, they are not primarily a product of EU enlargement. Indeed, Poland has become a strong voice for constructive engagement with Russia ever since Donald Tusk became prime minister in 2007. In 2011, for example, Poland and Russia co-operated on visa-free cross-border transit between Poland and Russia’s exclave Kaliningrad Oblast. The sense of security that EU membership provides for states bordering Russia may well, over time, reduce the emotion that lingers from their difficult shared histories. However, beyond the EU’s borders, the Ukrainian crisis is sparking new division in Europe.
The EU has always been in a state of becoming rather than being, adapting to new members while preparing for further applicants. That said, the 2004 “Big Bang” expansion eastward required a rethinking of decision-making. But precedents made that easier — notably when the U.K., Ireland and Denmark joined in 1973. This big change required renegotiation of EC funding. Particularly controversial was the Common Agricultural Policy and the UK’s net contribution. The admission of Greece in 1981, the Iberian enlargement of 1986 and the addition of Austria, Sweden and Finland in 1995 had lesser effects on the union’s fundamental processes, but still required adjustments as they changed the balance of influence within the union. For example, the 1995 enlargement shifted policies regarding the North and the environment. But more members also meant less influence for the Big Three — the UK, Germany and France.  While most new members have thrived economically, even before the latest crisis Greece has done relatively poorly.
Before and after the 2004 enlargement, there were attempts to accommodate the now much-larger size. After a failed attempt to adopt an EU constitution (blocked by referendums in France and the Netherlands in 2005), negotiations led to the Lisbon Treaty, which went into force in December 2009. It extended the use of “qualified majority voting” — a requirement demanding the agreement of 55 percent of member states representing at least 65 percent of the EU’s population — to additional policy areas such as external border control and asylum. This has eased decision-making. While it is often difficult to gain consensus among the 28 member states of the EU on some issues, such as social policy and foreign policy, differences are, by and large, not a result of EU enlargement. Most disagreements have not fallen on an East-West axis.
Economically, on balance, enlargement has been a success, even if the crisis that took off in 2008 (and the ensuing Eurozone crisis) has complicated matters. Despite those relatively poorer countries arriving all at once, they have not contributed to the EU’s sovereign debt crisis. The new members have been among the least debt-laden in the union. One of them, Poland, was the only EU country that escaped an economic slowdown following the 2008 crash.
Though the 2008 crunch was tough for weaker economies, they have largely emerged intact enough to adopt the euro. The first new member states to adopt the euro were Slovenia (2007),  Cyprus and Malta (2008), then Slovakia (2009), Estonia (2011) and Latvia (2014). Eurobarometer surveys reveal higher levels of trust in EU institutions among respondents in the new member states than in the EU overall, and more trust in EU institutions than in their national ones.
The expansion of the EU has brought economic benefits to the new members as well as to the 15 countries (the EU-15) that were part of the club before the 2004 expansion. Financial assistance, such as that provided to Central and East European candidate countries under the PHARE program before they joined the EU, has partly continued for the new members, even if in a different form. For example, benefits are now channelled through cohesion and structural funds that aim at reducing regional disparities in the EU.
But economic advantages for new members have mostly resulted from single-market integration. Trade had been partly liberalized and barriers to foreign direct investment were eliminated before 2004; however, EU membership reduced risk for investors even further, since EU states are perceived to have more stable institutions and better economic prospects. So after 2004, there was an explosion of foreign direct investment, portfolio investment and private and official borrowing from global credit markets and international financial institutions. In 2012, the level of foreign direct investment ranged between approximately 35 percent of GDP in Slovenia and 85 percent in Estonia; about 80 percent of the new members’ exports went to the rest of the EU, and about 10 percent of the previous 15 EU members’ exports went to the newcomers.
A less tangible — but nonetheless real — effect of increased trade and investment is sharing of knowledge, technology and ideas; this has meant increased productivity, business transparency and corporate accountability. More diverse and better consumer goods and economies of scale have brought lower prices and transaction costs, reducing the costs of doing business. Additionally, open doors for the free movement of labour give people greater freedom of choice, while their remittances represent a cash flow for some of the new members: Poland saw about 33 billion such euros come home from 2004 to 2011.
At the same time, the EU-15 have also gained. There’s now a larger market for their products, services and investment. And since the new member states have lower labour costs, some firms based in the EU-15 countries moved plants to the new ones, lowering production costs and increasing efficiency.
It wasn’t all economic sunshine. The new members had to pay and pay as they adopted almost 100,000 pages of EU rules and regulations. The European Commission estimated in 1998 that it would cost the 10 countries of Central and Eastern Europe (eight that joined in 2004 plus Romania and Bulgaria) 100 billion euros to implement EU environmental regulations and 50 to 90 billion euros over 15 years to upgrade roads and railways to Western standards. EU assistance would cover only four percent of these costs. But paying up has meant better roads and better environmental quality.
However, EU rules and regulations deprived the new member states of some advantages — new labour market regulations raised labour costs and killed jobs. Likewise, Western standards of food production pushed some producers out of business, but such requirements have improved the quality of life for many residents of these countries.
Getting into the EU exposed the new member states to international financial markets through trade, financial integration and large capital inflows. But reliance on international finance was not always a good idea. Lax domestic policies, such as no restrictions on capital flight, meant they wouldn’t develop enough exports to finance more domestic consumption. Their banks wouldn’t match the growth in credits with a growth in deposits. When the global economic crisis erupted, many businesses couldn’t compete internationally. Joining the EU was not the direct cause of these difficulties, but it created an environment that encouraged this problematic strategy.
Enlargement has not been without costs for the EU-15 either. Some received lower amounts of cohesion and structural funds to address regional disparities once the May 2004 accession took place. This is because regions qualify for this financial assistance if their per-capita gross domestic product (GDP) is lower than a certain percentage of the EU average. Once the poorer countries of Central and Eastern Europe joined, the EU average decreased. Likewise, extending some EU policies, such as the common agricultural policy, to new member states has created more problems for the EU as a whole thanks to the creation of more farmers’ lobby groups that will push in the future for more agricultural support.
But one fear hasn’t materialized. There has been no important flood of migrant workers from the east taking jobs from the domestic workforce in the west. At first there were limits on labour migration into certain EU-15 countries, but these restrictions have now expired. People from the eight post-communist states living in EU-15 countries increased from 900,000 in 2004 to 2.4 million in 2010, most of them in the U.K. and Ireland. This represents less than one percent of the working-age population of the EU-15. The number of such migrants to Germany and Austria has slightly increased since restrictions on mobility into these countries were removed in 2011. And research shows that migration has boosted GDP in EU-15 countries that liberalized their labour markets.
Another fear was that businesses would move to the new member states, seeking cheap wages and lax rules and regulations. In fact, this happened in the short term from some EU-15 countries. However, as jobs flowed to the new states, opportunities arose for new investment in the EU-15.
Will this success story be repeated? The countries of the West Balkans (successors to the former Yugoslavia, plus Albania) remain on the EU’s enlargement agenda. Croatia was admitted in 2013, and Serbia, Macedonia and Montenegro are candidates. Past instability in this region notwithstanding, the mission to stabilize Europe remains a fundamental raison d’être of the union.
Beyond that, the future is less clear. Additional enlargements, if they occur, will likely be bit-by-bit, not a dramatic shift like the one in 2004. Turkey (in accession negotiations since 2005) and Ukraine (which has not been given a membership date) are large countries whose admission to the EU would have geopolitical significance. Turkey would move the EU presence to the Middle East, and the prospect of Ukrainian membership is deeply unsettling for Russia, as can be seen from the latest crisis. Such speculations also run up against “enlargement fatigue,” a concern that the EU may become overstretched. Before it does stretch again, existing policies, such as those designed to prevent sovereign debt crises, need to be consolidated and implemented.
Looking to the East and South may require other tools as well. Most challenging right now is finding an accommodation with Russia that does not sacrifice the interests of the EU’s other eastern  neighbours. Finding a response to instability in Northern Africa and the Middle East will require a more unified and resolute EU policy.

Joan DeBardeleben is a professor in the Institute of European, Russian and Eurasian Studies and in the Department of Political Science at Carleton University. She is director of the Carleton EU Centre of Excellence, the Centre for European Studies. Crina Viju is an assistant professor in Carleton’s Institute of European, Russian and Eurasian Studies. David Long is a professor at Carleton’s Norman Paterson School of International Affairs.

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Joan DeBardeleben is a professor in the Institute of European, Russian and Eurasian Studies and in the Department of Political Science at Carleton University. She is director of the Carleton EU Centre of Excellence, the Centre for European Studies. Crina Viju is an assistant professor in Carleton’s Institute of European, Russian and Eurasian Studies. David Long is a professor at Carleton’s Norman Paterson School of International Affairs.

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