Week of August 12, 2002
Snapshot from the Field
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10 Nations Edge toward EU Membership, but Major Hurdles Remain
by JACK LYNE,
Site Selection Executive Editor of Interactive Publishing
BRUSSELS, Belgium Europe's free-trade landscape for business locations is edging closer to getting considerably larger. The European Union (EU at europa.eu.int) has just successfully completed negotiations in Brussels on expanding EU membership.
Ten nations - Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Malta, Lithuania, Poland, Slovenia and Slovakia - emerged from the Brussels sessions well positioned to get the green light by year's end to join the EU. If all enter in 2004, the population in Europe's free-trade bloc would, in one fell swoop, increase by a whopping 20 percent, creating numerous expansion possibilities.
Considerable work remains, however, before those 10 countries can join the EU's 15 current members. In addition, the enlargement process could still be derailed by several other issues. Chief among them: questions over how the expansion will be funded and an Irish referendum that could stall the entire process.
Such issues promise "a difficult and intensive six months," Eneko Landaburu, European Commission director general for enlargement, said of the period leading up to EU's important Copenhagen summit. "We need to do a lot in a short time" before the Copenhagen meeting, where phase-one expansion decisions will likely be finalized, Landaburu emphasized.
Nonetheless the 10 "accession countries," Landaburu added, have already made major advances in adopting the EU's basic principles of supporting human rights, democracy and market economics. (And in the process, they've also tackled the formidable task of adopting the EU's voluminous rulebook, which covers a staggering 80,000 pages.)
The accession countries have now completed 10 of the 13 EU "chapters" required to attain membership. Only the agriculture, budget and competition-policy chapters remain.
"The accession countries have made impressive advances on the path to the EU and future euro-area membership", the European Central Bank (www.ecb.int) said in a recent report. "[They have made] remarkable progress over the past few years in macroeconomic stabilization, in transforming their economies into market economies and in integrating them through trade and financial relations with the euro area."
Sticky Polish, Estonian Issues SettledThe just-completed Brussels negotiations resolved two major issues that EU officials considered particularly sticky: securing Poland's borders and revamping Estonia's energy sector.
Poland's border is a major EU security concern. When Poland - by far the largest and, in many observers' view, most important applicant nation - joins the EU, its 800-mile (1,280-kilometer) eastern border will also become the EU's eastern edge.
Poland and the EU agreed in Brussels to replace the conscripted soldiers presently manning the border with professionally trained personnel. In addition, Polish officials agreed to buy security equipment (e.g., night-vision surveillance systems and helicopters) and to post consular officials in Kaliningrad, Kiev, Minsk and Moscow.
Then there was the Estonian energy settlement in Brussels, which EU officials hailed as "a breakthrough." The issue was "extraordinarily difficult," said Poul Christoffersen, who heads the EU delegation from Denmark, which currently holds the EU's rotating presidency.
Estonia's large oil-shale resources are a major engine in the country's economy, supplying 90 percent of the nation's energy. But the EU objected to the heavy greenhouse emissions generated by burning oil shale.
The EU and Estonia reached a compromise agreement that will gradually reduce the nation's dependence on oil shale. Under the terms of the agreement, Estonia won't have to begin opening its electricity market until 2009, and the market won't be fully open until 2012.
Ireland Looking at Second ReferendumEU officials, however, face another thorny issue that's out of their hands: a second Irish referendum in the fall on EU expansion.
Irish voters in an earlier June referendum rejected the Nice Treaty, the EU's blueprint for expanding membership. With less than a third of Ireland's eligible voters turning out, 54 percent voted no, while 46 percent voted yes. (The issue went to a referendum because it would require changes in the Irish constitution.)
Ireland's major political parties urged a yes vote, as did the Roman Catholic Church. The no forces were led by a coalition that included the Green Party, Irish socialists and anarchists, and some non-Catholic religious groups.
The opposition hit a hot button with voters by insisting that enlargement would ultimately end Ireland's regional and structural subsidies from the EU. Such fears gained credence from many accession nations' struggling economies. Despite their large collective size, the 10 applicant countries will increase the EU's gross domestic product by a mere 4 percent.
Irish Prime Minister Bertie Ahern's government is giving the issue another go. Irish voters this time will vote on a reworded referendum that would constitutionally ban Irish participation in EU defense activities. One of the major objections many had to the Nice Treaty was the prospect of military action by historically neutral Ireland.
If Ireland - or any current member nation - rejects the Nice Treaty, EU expansion will probably face an indeterminate delay.
Funding Issues Focus of October SummitBut even if all member nations approve the treaty, there's still the question of funding the expansion.
An EU special summit is scheduled in October for member nations to determine how to bankroll the enlargement. Few observers are expecting smooth negotiations. "If that was easy, we would have agreed on it already," Landaburu noted.
The Irish referendum and the funding issue loom so large that recent press reports have alleged that the EU is discussing possibly delaying enlargement.
"Enlargement is the top priority of my commission," European Commission President Romano Prodi said at a press conference held to rebut the reports. "We are working day and night to achieve it as soon and as successfully as possible.
"The target date of Jan. 1, 2004, for enlargement [has not been] questioned," Prodi continued. "The commission will continue to do all it can to complete negotiations by the end of 2002 and is committed to the European Council's schedule for enlargement."
Editor's note: For more on Europe's accession nations, see the
"Europe's Best Locations" feature in the November 2002 Site Selection.
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