A bumpy ride for the EU's poorest passengers

The Wiston House weekends are one of the benevolent secrets of the Conservative Party. For the past decade they have provided a forum for the Centre-Right parties of Eastern Europe to discuss the problems of creating modern, democratic, open-market parties in a post-Communist environment. Most of the early participants have become ministers in their countries at one stage or another.

The Conservatives take these weekends seriously. They are organised by the Conservative International Office and sponsored by the Westminster Foundation for Democracy. They are attended by MPs and MEPs; this year’s weekend was addressed by Michael Ancram as Shadow Foreign Secretary and by Bernard Jenkin as Shadow Secretary for Defence. There were representatives of 15 countries, including one Prime Minister. It was a good international occasion.

I was asked to open the Saturday afternoon session on the enlargement of the European Union, from the point of view of an independent journalist. I had found the prior discussion on the individual countries particularly interesting. It is not often that one has the opportunity, in a couple of hours, to get the perspective of 15 different European countries, given by some politicians in office, by some in opposition, and by political intellectuals and advisers. It was a good moment to hear these views, coming immediately before the next stage of enlargement of the EU, and immediately after the enlargement of Nato.

If there is a positive vote in national referendums, ten new countries are going to join the European Union. Their accession will be approved next month at the Copenhagen meeting of the EU and will come into effect on May 1, 2004. These countries fall into four groups: the three small Baltic states of Latvia, Lithuania and Estonia; the four Central European states of Poland, Hungary, Slovakia and the Czech Republic; the former Yugoslav country of Slovenia; and the two Mediterranean islands of Cyprus and Malta.

The eight Continental countries had a tragic and bloody experience in the 20th century. All of them formed part of the Russian or Austro-Hungarian empires before 1914; all of them became independent states after 1918; all of them were occupied by Germany in or after 1939; all of them became part of the Soviet Warsaw Pact empire after 1945; all of them finally regained their freedom after the collapse and disintegration of the Soviet Union and Warsaw Pact. Their hellish 20th century has left deep political, social and economic scars. Yet this history has also been a school of realism and survival. The weekend was refreshingly free of the smooth evasion of difficult issues which one meets too often in European political circles.

The new countries are largely Roman Catholic, Slav and poor, joining a European Union which is largely secular, non-Slav and wealthy. To our Western European countries, the Second World War is an historic memory; to these Eastern European countries the collapse of Soviet power is an event from the immediate past. The four Central European countries will be the most influential. Poland alone represents half the population of the new entry. In terms of size, the new Europe will consist of Germany, with about 80 million people, the United Kingdom, France and Italy, with about 60 million each and Spain and Poland with about 40 million. These will be the six largest nations of the new Europe, with most of the EU’s population divided between them.

The new applicants have been in a weak bargaining position in the negotiations for entry. They wanted both the economic opportunities and the security which membership of the EU would give them. Nato is important to them as well. The EU made them a “take it or leave it” offer. They had to accept the whole acquis communitaire, all 85,000 pages of it. They were given no option about joining the euro. In the history of negotiation this resembled Rockefeller’s Standard Oil imposing terms on a group of small independent producers.

The Polish bargain is so one-sided that it will probably be adjusted; indeed, it will have to be. Poland is a very poor country. As things stand, Poland will have to pay 100 per cent of its obligations to the EU from the starting date. At the same time the benefits to Poland from the Common Agricultural Policy will only be phased in; the rate at the beginning will be only about 25 per cent. As a result, Poland could start off as a net contributor to the

EU, despite being much poorer than any existing EU country. Even Brussels thinks that is absurd, but has not yet found a mechanism to put it right. The rich men of Europe are standing outside their cathedral asking the poor to toss guineas into their top hats.

Poland is predominantly an agricultural country; agriculture is also important to the economies of most of the other new entrants. Like almost everyone else, the Poles had expected that the reform of the CAP would take place before, or at the same time, as enlargement. They were amazed at the Franco-German agreement which has postponed the reform. They could see that such a postponement might be in the narrow interest of France, but could not understand why Chancellor Schrvder had agreed to it since Germany is the largest net funder both of Europe and the CAP.

It is not only the Poles who are worried by this failure. The new entrants do, indeed, want their farmers to have their fair share of CAP subsidies, but they do not want the CAP to gobble up all the funds which would otherwise be available to develop the economies of the new Europe.

One figure gives an idea of the impact that the CAP can have. The annual dairy subsidies given by the CAP and the European governments put together come to more than $800 per cow. That is greater than the individual income of half the world’s population including more than one country from the former Soviet Union. There is already a choice between subsidising cows or helping people.

Even if Europe were much more willing to be generous, the task of modernising the economies of Eastern Europe would be difficult as well as very expensive. Fifty years of Communism have been cruelly damaging. The bureaucracy destroyed entrepreneurship; the lack of incentives destroyed productivity; the whole culture became inefficient. Despite very large subsidies, and in the most favourable circumstances, East Germany is still much poorer and less efficient than West Germany, or than East Germany itself was, in relative terms before 1939.

The politicians I met at Wiston House are realistic. They do not imagine that the EU can or will suddenly solve all their problems. They see the EU as valuable to their countries but they also see that it is in need of reform. They believe that their nations have no choice about joining, but they do not think they will be entering a land flowing with milk and honey. They are nothing like as starry-eyed as British politicians were when we joined the Common Market.

It is not the attitudes of the candidate countries that worry me, but the attitudes of the existing European members, including Great Britain. France may be out on her own in displaying an active and watchful selfishness which will never willingly give up one inch of French advantage, but the rest of Europe is almost equally selfish, if in a more somnolent way. The enlargement of Europe is the right gamble to take, but it surely is a great gamble. To make it a success, these ten countries will have to be helped to rise to the existing European economic level.

That is the test of the policy of enlargement. The German experience has proved that this will not be a business of a few years or a few billion euros — it will be a huge task, with the possibility of failure.

That is not how enlargement in being approached. The voters of Europe have been given little or no warning of the effort and sacrifice that may be required. If the ten are accepted at the Copenhagen meeting, we will be committing ourselves to help them develop their societies to the European level. They naturally fear that they may be joining the European Union as second-class citizens; they resent and reject that idea. This is an experiment with the lives of 75 million people and the future of viability of the European Union is at stake. The EU is taking on a maximum commitment but, unfortunately, with no spirit of generosity and a minimum of thought.

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