|     Êàðòà ñàéòà     |  
   Áèçíåñ ïðàâî
   Âåäåíèå áèçíåñà
   Ìàðêåòèíã
   Ìåíåäæìåíò
   Îïåðàöèè
   Ñòàòèñòèêà
   Ñòðàòåãèÿ
   Ó÷åò è àóäèò
   Ôèíàíñû
   Ýêîíîìèêà
   
   Êàðüåðà
   Ìîè ÌÂÀ ïðîåêòû
   Òåñòèðîâàíèå
   Ôîðóì
   Êîíòàêò
   
 
Ïîèñê íà ñàéòå
Ïîèñê íà Êóëè÷êàõ

 
 
 

online dating
HotLog

Rambler's Top100

Ìîè ÌÂÀ Ïðîåêòû
Accounting      Consumer Behavior      Economics       Finance Management         Human values in organizations

"EU enlargement to include East and Central Europe will cost money. The current and future EU budgetary spending plans are inadequate to cover the costs of enlargement."

   To discuss question about costs of EU enlargement, we must distinguish between so-called direct costs, which are easily traced in budgets and indirect ones, created by such huge external shock as enlargement. The overall macroeconomic consequences of enlargement is not only about its monetary price for current members plus trade and growth potential, but also about redistribution of income, changes in real GDP, exchange and interest rates, prices and current account. In this project I will try to identify costs and benefits of EU enlargement, who must pay for it and how effective is EU budgetary politics.

 1. Benefits of EU enlargement.

 This topic seems quite obvious and not related to this project, yet to discuss costs, we must compare them with benefits and make rough estimation what seems preferable or attractive for which current and prospective members of EU and who is going to be the main contributor into common budget. We must also take into consideration the fact, that interests and cost-benefit calculations behind the EU enlargement may differ in the east, as well as the west of the continent. First of all, the geographical position of each country influences its interests. Secondly, the most important defining questions like security, economy and culture rate differently in each single country. Thirdly, the interests concerned will change with time. However, despite these changes and differences, each European country will benefit from enlargement in the global sense.

 1.1 Global benefits

 EU enlargement must be viewed in context of the worldwide globalization process, which brings both challenges and opportunities; states are no longer in a position to solve these difficult problems alone. Europe must assert itself against keener global competition and take advantage of the opening up of the markets and the integration of newly-industrialized countries into the world economy.

  In political terms, EU enlargement will “extend the zone of stability in Europe, thus contributing to security and peace throughout the continent” [1] , the enlarged EU will carry greater weight in world affairs and will be a stronger partner in international trade negotiations; economically it’s the extension of the single market from 370 million to 480 million and stimulation of economic growth and new opportunities for business throughout Europe.

  EU will secure democracy in Central and Eastern Europe. Through enlargement, “more countries will participate in a Union that promotes the principles of democracy, good governance, the rule of law and respect for human and minority rights.” [7] This will of course make Europe more stable and European borders more secure.

  Enlargement will make continent safer for its citizens: the threats today -crime, terrorism, drugs, and pollution  can be stopped only through joint action across the continent, and prospective members, including Turkey, may be viewed as some kind of gate keepers to the EU. 

  There is no comparable common market with such great purchasing power anywhere else (even in North America), and the applicant countries all have enormous growth potential. We may predict considerable increase in potential purchasing power of integrating countries, which in turn will lead to growth of prosperity in the region. A larger internal market also provides increased

competition, thereby, it works in favor of the consumers.  In economics such effect deals with the theory of monopolistic competition: creation economies of scale, product variety, etc.

  Eastern enlargement will also help the European Union and Europe as a whole to enhance its global competitiveness, especially with USA and Japan, through transnational specialization and modern intra-industrial division of labor. For the foreseeable future the present “EU with its 15 members does not seem able to increase the speed of its own economic development” [5] and presence of  dynamic regions on its neighborhood will create “qualitative conditions for growth in Europe.”[5] 

  The benefits of economic integration with Central and Eastern Europe are distributed very unevenly among existing EU members: some would benefit more, some would less, and the dominant  interest of all of them is in intra-EU trade.

1.2. Benefits for some EU members

  Recent studies [4] show that the EU-15 are projected to gain about 10Bn Euro in  real income from the enlargement, and this gain is likely to be distributed as follows: Germany, France and the UK would together get 70% of the total. The CEE countries’ gain is 3Bn EUR (1.5% of their GDP), but taking into consideration also the investment multiplier, CEE states would gain 30 billion EUR, somewhat over 15% of their base year GDP [4].

Table 1. Distribution of trading profits derived from eastward enlargement by EU members

 

Share of total EU-15 real income gain, %

Germany

33,8

France

19,3

United Kingdom

14,1

Italy

8,5

Spain

7

Netherlands

4,6

Sweden

3,9

Belgium/Luxembourg

2,6

Austria

2,6

Denmark

1,9

Finland

1,4

Ireland

0,3

Greece

0,3

Portugal

0,4

Table 1 shows distribution of trading profits received by western companies from trade with countries of central and eastern Europe. [5] Germany is clearly the most important beneficiary of economic integration with the East. Its trade with Central and Eastern Europe comes to 9% of its total external trade   and around 34% of total EU trade with this region (although its economy accounts for only around 25% of the EU economy in terms of GDP). “Already, Eastern European markets together are more important for Germany than the US and other markets” [2] The “core” countries for trade with Eastern Europe, i.e. Germany, France, United Kingdom and Italy have the best chances for economic growth and can carry out significant structural changes on the East. This creates additional demand for goods from other EU countries, particularly from less developed Mediterranean region and countries of the Mediterranean and Central and Eastern Europe will deepen their trade relations.

  So all EU countries are going to benefit, either directly or indirectly, from this expansion of trade; of course benefits for all does not mean the same benefits for each participant.

2.Costs of enlargement.

  A major objective of the EU is economic and social cohesion, as well as economic, monetary and political union. Cohesion refers to the attempts to reduce disparities between the levels of economic development of member states and harmonizing their policies and practices in industry, agriculture, regional development. 

  This process will involve an increase in EU budget expenditures and in receipts. “It is too early to assess the overall impact of enlargement on the EU budget.”[1]  The greatest impact of enlargement is likely to occur in the common agricultural policy and in the structural funds, the two largest components of EU spending. Work on both is continuing on the basis of Agenda 2000 priorities.

2.1. Opportunity costs of non-enlargement.

  Current economical and political situation shows highly asymmetrical East-West interdependence: on the one hand, the CEE countries cannot credibly threaten to close their markets to the West and thus deprive the EU of the benefits of trade integration;  on the other hand, it is not convincing to argue that, without the prospect of EU membership, the CEE countries would become politically and economically unstable, threatening Western European security and welfare with illegal migration and organized crime. It is in the self-interest of the CEE governments to develop stable political and economic systems. Going even further, some authors [3]  argue: “why shouldn’t the EU be able to defend itself efficiently against the spill-over of Eastern European instability?  Countries that do not achieve internal stability on their own and export instability beyond their borders are excluded from the benefits of association and have no prospect of becoming EU members whatsoever.”

  More importantly, the EU members are able to receive maximum benefits of  trade integration without granting the CEE countries full membership. Under the current association regime, economic integration has progressed toward a free-trade area. Western corporations benefit from advantageous terms of trade, and the EU has realized each year a trade surplus with its Eastern neighbors. Direct investments in the region are growing. What is more, association allows the EU to protect the sectors in which it is “particularly vulnerable to competition and to prevent migration more effectively than it would be possible after enlargement.” [3] For example, Hungary, regarded as one of the most dynamic countries of Eastern Europe, offers now very favorable conditions for foreign investors in acquiring property, establishing business, taxation. It is must, however that after enlargement, the country will be forced to change own status of the “tax heaven” in order to be less “competitive” on enlarged European market .

  Trade with the EU for CEE countries is much more important than trade with the CEEC’s for the EU in proportion 1:20 [12]. Due to the fact that the size and economic power of new member states is quite small compared to EU-15, the derived impact of their own development on the present Union is also likely to be small.

  However, considering opportunity costs of not pursuing an eastern enlargement, it is worth raising also political issues. Most obviously these are defense  costs and affected attitudes of foreign investors. Today, the EU has a “historic opportunity and it would be tragic if monetary considerations which are relatively small should delay or even reverse this process” [13]. 

2.2. The monetary costs of enlargement

  It is obvious that all CEE countries would become structural net recipients. For the foreseeable future, EU transfers to these countries will outweigh by far their contributions to the EU budget. Because the new members from Central and Eastern Europe must be treated in the same way as are the present member states, the monetary cost of enlargement is estimated be equal to payments according to the Common Agricultural Policy and the Union’s structural and regional policies, which together comprise around 80% of the Community budget. Therefore the correct answer to the question about the cost of enlargement is: “Enlargement will cost whatever member countries agree to pay because all member countries have to agree on the budget.”[3] 

  Agriculture is always a major issue in the enlargement of the EU because of the political strength of the agricultural lobby and the dominant role of the CAP in EU budget expenditure. Common Agricultural Policy would be seriously affected because the CEE countries, whereas producing only 3% of the EU GNP, possess 44% of the EU productive land and attain 30% of the EU agricultural production. Some experts  [7] expects that agricultural production will rather increase than decrease as a result of economic recovery, and that participation in the CAP would give the CEE countries an additional incentive for agricultural production because EU prices in many areas of agriculture are well above world market prices. The reasoning for this is a very protectionist agricultural policy: as production rose and surpluses developed, high internal EC prices were maintained by a system of intervention purchases and “by variable levies on imports” [8]

  The main problem in CAP is direct payments to CEEC farmers [7]. They were also called 'compensatory payments', because they were introduced to 'compensate' EU farmers for the price cuts implemented in connection with the last round of reform of the CAP. These reforms were unavoidable in the past decade, because CAP depressed and destabilized world prices and made market situation unacceptable to other agricultural exporters, “most importantly the United States” [8] 

  Present EU countries argue that there is no justification to pay farmers in the Central and Eastern Europe compensation because these farmers will see their prices increase, not fall, after accession. For example, agriculture plays an important role in economics of Poland, the biggest among the candidate countries, and agricultural policy is very sensitive issue for this country. “If we apply the present CAP in Poland, agricultural income would go up by 47%. Thus the application of an unreformed  CAP would benefit CEEC farmers substantially but only at substantial cost to the rest of the economy” [10]  The prospective members retort that it would create a serious distortion of competition if their farmers, who are already poor and less efficient, had to compete with EU-15 farmers without being “on a level playing field in terms of financial support received from the EU.” [7]

  Predicting the budgetary cost of applying the CAP to CEE is difficult, because this depends on production levels, on world price levels and Euro-$US exchange rates.  For the entire group of advanced candidates in CEE, joining EU in 2004, these direct payments are estimated to be in enormous range between 6 and 10 billion Euro p.a. [1,3,7]

  Are these large or small numbers? The right answer is both: even 6 billion Euro is very large, indeed representing one-half, of the value-added of agriculture in the CEEC, which is around 12 billion Euro. “Yet 6 billion Euro is peanuts (less than one-tenth of one percent) when compared to the EU GDP of around 8,000 billion Euro, and only a bag of peanuts (around 6%) if compared to the EU budget of close to 100 billion Euro” [7] 

  The fact that direct payments would be so important for farmers of CEE countries (i.e. mostly Polish) implies that they will fight very hard to get them. But for the EU budget this might constitute the a real problem with the only decision: to reduce direct payments for everybody over time (called degressivity by experts). Given that direct payments to EU-15 farmers amount to about 25 billion Euro, one needs a reduction about  20% of the basis on which direct payments are calculated. This would be sufficient to keep spending on direct payments to farmers constant while treating the CEE countries and the EU-15 equally. “This is just another consequence of the difference in economic size: only a small cut by the EU-15 is needed to make room for transfers to the new members, which would be very substantial for the CEE countries.” [3] But it is also true, that such reduction will inevitably lead to income reductions for the EU farmers as well as to either lower transfers to “the comparatively disadvantaged EU regions or to fewer regions eligible for financial support.” [7] So, it is highly unlikely that candidates countries would be eligible for the same level of financing in CAP, even under generally accepted principle of “equal treatment” for all member states. 

  Due to their low levels of wealth and income, the CEE countries would benefit  from the Structural Funds. The Berlin Council decided that the candidate countries could at most absorb payments from the Structural Funds amounting to 4% of their GDP. 

  The Structural Funds, the Cohesion Fund were instituted to reduce disparities within the EU to achieve a “minimum level of convergence between member states”[9]. This financial assistance can be seen as compensation for poorer member states to agree to the completion of the single market as well as the development of EMU. A political function of these funds is to promote solidarity, “demonstrating that EU membership provides benefits all round as well as imposing costs” [9]. 

  There are three Structural Funds: the European Regional Development Fund (ERDF), which supports infrastructure and employment creation in the poorer regions, the European Social Fund (ESF) which supports training and development programs, and the Guidance Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), which supports economic diversification and employment creation projects in rural areas. In addition, the Financial Instrument for Fisheries Guidance (FIFG) which provides functions in fishing industry similar to those in agriculture by EAGGF, is formally regarded as part of Structural Funds. The Cohesion Fund supports transport infrastructure and environmental projects in the poorest countries of the Union (Greece, Portugal, Ireland and Spain). 

  The nature and distribution of structural aid is also a politically sensitive issue. For new CEE countries, as the poorest areas of the EU, payments have come to be viewed as the means to encourage their national government’s support for potentially damaging EU actions, for example, when the removal of tariff barriers will increase the competitive pressure on industries of these new member states. 

  It seems to be little dispute about the Structural Funds and the ceiling of 4%, that has been more or less accepted by the candidates. [7] However, today it’s became clear that such ceiling is inadequate for financing structural policies in the CEE countries.  If one deducts his own contributions to the EU budget from this figure, the net transfers to the new member states under current rules would thus be only about 3% of their GDP. [7] As their combined GDP is less than 300 billion Euro, this implies that net Structural Funds’ transfers to the new members will be below 10 billion Euro p.a.  It means that the new countries get 126 Euro per capita, amount which will be increased to 137 Euro per capita in 2006 (this will represent nearly 2,5% of total GDP of the new countries). The amount proposed is considerably lower than the average of 231 Euro structural expenditure per capita (Structural Funds and Cohesion Fund) in 2006 for the four present EU cohesion countries (Greece, Ireland, Portugal and Spain). 

  Transport improvements are seen as an essential part of economic development in CEE countries. It has been estimated [9] that the likely investment costs for establishing the Union’s trans-European transport network is for CEEC between 50 and 90 billion Euro over 15 years. This estimate includes merely upgrading roads and railways to Western European standards, without including any new links. 

  Last year EU have spent around 1.2 billion Euro on transport and environment projects in the CEEC, launching 94 projects in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. Most of the projects focus on the modernization of urban and municipal water supply, waste water systems, and road, motorway and railways' rehabilitation and construction. These projects are undertaken together with beneficiary states and international financing institutions, which provided financing of 1,1 billion Euro. Making some extrapolation of required 50 billions in the next 15 years with the most probable spending 1,2 billion p/a, it is difficult to say that such amount of financing would really be raised. 

2.3 Strategies of cost reduction

  Given the monetary price, which current member states would have to spent on the enlargement project, it is necessary to discuss how they can try to reduce  costs and whether it’s politically or economically feasible. 

  First, the EU could limit its Eastern enlargement to the six CEE countries with which it currently conducts accession negotiations. For example, Bulgaria received clear message from the EU that it would never became a member of the Union, unless level of economical growth and effectiveness of government policy are improved significantly. However, this group is still much below EU economic standards and comprises some of the most potent agricultural producers (therefore recipients of financial aid) of the region.

  Second, the EU can introduce a partial membership, which excludes participation in the CAP and the structural policies. However, this is only a theoretical option, which would not only be difficult to legitimate politically but which also meet serious practical obstacles: current market situation in candidate countries, attitudes toward enlargement, equal treatment for all member states, etc. 

  Finally, the EU could postpone enlargement significantly. Probably, the costs of CEE membership will diminish while candidate countries modernize their industries and increase rates of economic growth. Nevertheless, the CEE countries would still remain a EU periphery and net recipients of the community budget. Moreover, this strategy only affects the structural policies positively (provided that CEE growth rates continue to exceed EU growth rates). In the case of the CAP, an increase in CEE agricultural productivity would mean an increase in expenses instead: EU would have to compensate and support poor eastern farmers in order to retain the same levels of production and prices in agriculture.

3. Who will pay for enlargement?

  So, it is clear how much the eastward enlargement would cost, the remaining is to look at the structure of EU budget and to find out who would pay. This issue, however appears not only from financial point of view, but also from political and even social ones. 

  All EU politicians claim to be in favor of enlargement, but they also say in unison that somebody else should pay for it. The current net beneficiaries (see Fig. 1) argue that they cannot be asked to accept less because it would be unfair to finance enlargement by cutting transfers to the poor. The current net contributors argue that their populations will simply not accept any increase in the present levels of their transfers to the EU budget.

  It is widely accepted that enlargement “constitutes a positive sum game: all participants will gain in the end.” [7] But the distribution of the budgetary costs constitutes a strictly zero sum game: if one country pays less, other countries have to pay more. This game is now being played out and creates basically the biggest problem in implementing the enlargement project: unfair (at least, for net contributors) or unequal distribution of enlargement costs among all member states. 

  However, lets look from the other point of view. Research by an experts at the Vienna Institute for International Economic Studies [3] came to the surprising conclusion that the eastern candidate countries may become net payers into the EU budget. The potential new member countries receive pre-accession aid today. They get financial transfers from Brussels but do not have to pay into the EU budget. After membership, the situation changes. There will be potentially much higher exchanges available from the EU budget, but they will also have to pay their contributions. Using figures published in part by the European Commission,  researchers [3] calculated that the group of new members - expected to number up to 10 countries - may end up owing 400m Euro to the EU budget for the first year of membership, 2004, alone. And that, they say, is an optimistic estimate. The key factor in these calculations is the ability of the newcomers to “meaningfully absorb and utilize the routine financial transfers which Brussels is prepared to make to them as members, particularly under the headings of regional funding and agriculture.“ [3]

  It’s not surprising that the European Commission strongly denies that it will be receiving net income from the new member states, “whose standards of living are mostly well below that of the average of the current EU” [1]; moreover Commission has proposed compensatory payments in order to avoid newcomers becoming net payers. “The margin (in commitment appropriations) under the overall ceiling - 816m Euro in 2004, 800m in 2005 and 814m in 2006 – should therefore be available as contribution to budgetary compensation payments.” [1] As a result no applicant country would be forced to accept worse economical terms after membership than offered before.

  I can make two conclusions from this issue: either enlargement would cost more, which is more likely, or accession countries may became net payers, which is less likely. And, again, the main problem in this issue is not “financing enlargement, but the will of certain EU states to pay.” [7] 

  The reason of such unwillingness is obvious: the member states do not seem ready to openly address the problem that their net balances are going to deteriorate significantly. This deterioration is clear if we look at the situation after the assumed  entrance of only six new member states: Czech, Estonia, Hungary, Poland, Slovenia, and Slovakia. (Figure 1) [11]

 


Fig. 1 Effect on net budgetary balances in 2006 - EU15 vs. EU21

Legend:

1- UK

2- Sweden

3- Finland

4- Portugal

5- Austria

6- Netherlands

7- Luxembourg

8- Italy

9- Ireland

10- France

11- Spain

12- Greece

13- Germany

14- Denmark

15- Belgium

The picture shows spending and receipts of EU countries in two cases: when new members join the Union ( EU-21: only 6 CEE candidate countries) and when number of members remains the same (EU-15) It is clear from this picture that the costs for the net contributors exceed any benefits, despite the assumption that the CEE countries’ economic growth will be double (4%) the assumed average for the EU (2%).

  For example, Germany would increase its net contribution by more than 3 billion Euro, the French and Italian net balances also deteriorate significantly, as well as the Dutch and Austrian.

  This figure may serve as an illustration to answer the question “Who will pay for EU enlargement ?”, especially in the context of benefits, revealed above in the paragraph “Benefits for some EU members”

 4. The budget

  The European Union’s present spending on enlargement is based on the assumption that the enlargement money “has to be in line with the expenditure ceilings agreed by the EU leaders at the Summit in Berlin” [7], in 1999. However, the Berlin Summit foresaw the admission of only 6 new countries in 2002, and the spending was simply  adapted the calculations to 10 new countries that will join in 2004.

  The EU will pay, between 2004 and 2006, 28bn Euro to finance agriculture, regional development, administration and nuclear power plants in the ten new countries. The money will be phased in progressively: in the first year the EU will only pay 5.6bn, in 2005 10.4bn, and in 2005 11.8bn.

  The largest amount of money in 2004 will be paid for agriculture and regional aid:  1,2 bn Euro will be paid for agriculture in new member states in 2004, 2,4 bn Euro for regional development, 338 million Euro for internal policies, 503 million Euro for administrative expenditure, and 668 million Euro for supplementary structural improvements:  money for nuclear safety for Slovakia and Lithuania, etc.

  In 2005, the EU will pay almost the double for agriculture and structural actions in the new countries (1,9 bn and 5,4 bn Euro respectively).

  In 2006, the European Union will further increase the funds for rural development and for structural action, and will pay in total 11,8 billion Euro for the ten new countries.

  The most controversial issue in this financial package is agriculture, because new countries get full access to the EU farm budget only ten years after accession, and the most dissatisfied with this 10 year accession period, are of course Polish farmers.  CEE countries will get in 2004, when they join, 25% of the direct payments the farmers of present EU countries get. The direct payments would increase to 30% of the EU level in 2005 and to 35 % 2006, and would reach the EU level in 2013. New countries also expected to get 55% of EU level of regional aid. 

  The EU officials underline that this financial package cannot be object of bargain with candidate countries: “it is not usual in negotiations, normally the two partners propose something and the result is somewhere in between: it won’t work in this case. The process is rigid, there are many constraints, and the proposal reflects what we hope will be the final result,” [7] One of reasons for such rigidity is the fact that budget was based on the ceilings, introduced on the Berlin summit, and “therefore the room for negotiation was very tight.”[7] 

  Of course, CEE countries can not be satisfied by such level of financing, especially in the context of the fact, that all member countries must be viewed as equal. Moreover, it seems that the financial package for enlargement is set to upset everybody: the candidate countries believe it is to little, the EU countries that pay much to the budget warn it is too much, and the European Parliament is skeptical that enlargement of the EU can be financed only with 0.08% of the Union GDP. [7,12]

5. Conclusion

  The most useful approach to make final conclusion about costs and financing of eastern enlargement is to illustrate numbers in table. Column Estimated costs shows those ones, explained in  this project in paragraph “The monetary costs of enlargement”; column Budget shows planned level of financing by EU, explained in paragraph “The budget.”

 Table 2. Estimated costs vs. Budget of the EU enlargement.

 

Year

Estimated costs,

Bn Euro

Budget,

Bn Euro

Agriculture

2004

6-10

1,2

 

2005

6-10

1,9

 

2006

6-10

2,2

Regional policy, 231 Euro per

2004

19

2,4

 Capita (current level in EU)

2005

19

5,4

 

2006

19

6,1

Structural improvements, etc

2004

3-4

0,7

 

2005

3-4

2,5

 

2006

3-4

2,8

Total

2004-2006

84-99

25,2 [1]

 The table shows, that EU enlargement will cost much more, than member states are ready to pay. Even with this insufficient level of financing, additional economic burden for  net contributors to EU budget and beneficiaries of enlargement (they are almost the same: Germany, UK, Netherlands, France, Italy) will increase significantly, posing question whether costs of full membership for the CEE countries exceed all the potential benefits of Eastern enlargement.

  Again, lets summarize our findings in table. Column Costs shows increase in those ones when only 6 countries join the EU (see Fig. 1, paragraph 3. “Who will pay for enlargement?”). Column Benefits shows likely increase in real income due to enlargement, indicated in the paragraph  1.2. “Benefits for some EU members”, Table 1.

Table 3 Costs vs. Benefits of the East Enlargement

 

Costs

Bn Euro

Benefits

Bn Euro

Germany

3,3

3,3

France

2

2

United Kingdom

0,8

1,4

Italy

2

0,8

Netherlands

0,8

0,4

Obviously, revealed data confirm neither point of view about costs and benefits of EU enlargement. Someone may  complain that it’s a zero sum game, other – that specific country would benefit more, while other one have to pay more. I believe, that presented data are rather simplistic due to different approximations made by researchers. But I also believe, these data shows some limits in financing of the EU enlargement project, and these limits would never be overcome. Especially given, that the table does not show reduction of financing for current net recipients.

  Regardless how much might cost the project, its financing can not be increased significantly (say 5%), because it already has reached ceiling, where economical benefits disappeared and net contributors would have to pay only for political ones. Is it possible to estimate political benefits in monetary terms? I tried to identify them in paragraph “Global benefits” and believe the enlargement brings as much as people want it has to do so. Our estimation how beneficiary is the eastward enlargement depends to the great extent on our values, believes and understanding our place in the united Europe. For example, even different politicians of the same country may give different estimations, for example, of benefits having strong migration preventive borders on “poor and barbarian” East. Going further in this discussion I can make conclusion that in today’s politically stable Europe nobody is willing to pay higher price for political issues, than the current difference between  economical costs and benefits of the enlargement.

  Obviously, this project is very expensive and has different points of view about adequacy of financing. As a western European, I believe I have to pay reasonable price for creating united Europe, but I do not want to be concerned with economical situation in candidate countries, unless it may create problems in my “rich boys club”.

As a candidate to the club, I want to have equal rights and opportunities for rapid growth and reaching comparable level of  economic development, and if countries in the  club want stable Europe, they must pay for it much more.

  So, there is no clear answer, whether enlargement is adequately financed or not. Numbers show that the EU budgetary spending plans do not satisfy needs of candidate countries and lead to reduction in financing of current net recipients. On the other hand, net contributors simply can not afford any increases without significant deterioration of their national budgets.

  I believe, however that the enlargement project has potential of self-financing (by candidate countries themselves (investors, etc) and revaluation of its costs will be bringing some surprises in future.

References

1.      http://europa.eu.int Official site of the EU

2.      „Perspectives of European Integration after the European Council in Luxembourg” by Dr Werner Hoyer, Minister of State of the Federal Republic of Germany

3.      Daniel Gros “Who wants to pay for enlargement?” http://www.ceps.be/Commentary/April02/pb-22.php

4.      Richard Baldwin, Joseph F Francois and Richard Portes “The costs and benefits of EU enlargement”

5.      Eric von Breska et al “Costs, benefits and chances of eastern enlargement for the European Union”

6.      European Parliament COMMITTEE ON BUDGETS,  Round table “Financial Consequences of Enlargement”

7.      www.euobserver.com European magazine

8.      Brian Ardy “Agriculture and enlargement”

9.      Jill Preston “Enlargement and the implications for the Structural Funds”

10.  House of Lords, Select Committee on the European Communities “The financial consequences of enlargement”

11.  Jorge Núñez Ferrer “Who Will Pay for Enlargement?”

12.  Fritz Breuss “Macroeconomic effects of EU enlargement for old and new members”

13.  Jackie Gower, John Redmond “Enlarging the European Union”

 



[1] This number excludes planned administrative expenses, because I believe that they will be financed anyway.  In total, the budget of enlargement is 27,8bn Euro.

 

Îáðàçîâàíèå íà Êóëè÷êàõ ©2004. Âñå ïðàâà ñîõðàíåíû.