Stefan Eder, head of Finance & Projects for Europe, the Middle East and Africa for DLA Piper

   Stefan Eder, head of Finance & Projects for Europe, the Middle East and Africa for global law firm DLA Piper, says in an interview that accession is always big news for newly accepted EU nations, but as with the accession of 10 new countries in 2004, a transition period still applies.
   "The markets in those countries are not mature," he says of Bulgaria and Romania, adding that "there is a catalog of things those countries need to deliver" in areas like public services, court system efficiency, corruption and other technical areas.
   That laundry list was highlighted in late December, by the fact that Romanian Prime Minister Calin Popescu- Tariceanu felt the need to say the following in a speech celebrating the imminent accession and the money that comes with it:
   "Perhaps, some of the administration employees are thinking of directing this money into their own pockets," he said. "I draw their attention on the fact that they are wrong and they better renounce before trying it in order not to damage more the Romanian citizens." The tension underlying that statement has everything to do with the enmity between the prime minister and the country's president, which boiled over in January with accusations of corruption.
   Harking back to the 2004 group of countries, Eder says, "All of those countries have made enormous progress. Having been part of it, it was extremely interesting to see how quickly things have transitioned. Nevertheless, it hasn't been a perfect world for the Czech Republic, Hungary and Slovakia."
   Eder says none of the accession countries has an ideal legal environment, and all are still working on streamlining regulations. "As a matter of fact, you'll find that some of those countries have legal specialties, for example in how you provide security for transactions," he says. Some of the countries' project finance structures have issues that would not be found in the EU15, but he says the security hurdle is lowering, making deals easier to negotiate. He also points out the importance of political and investment grade ratings to pending projects,

EU First, Euro Second W hile Romania and Bulgaria attracted all the pomp with their Jan. 1 accession to the EU, Slovenia reached its own milestone on that date, becoming the first of the 10 nations admitted in 2004 to convert to the euro as its official currency. It becomes the 13th EU nation to use the euro, and does so at a time when it has also amended its domestic tax legislation as it relates to corporate income tax, personal income tax and value- added tax. The country, part of the former Yugoslavia, has a population of 2 million (compared to Romania's 22 million), but, like Hungary, is capitalizing on its geographic position connecting different parts of Europe.

with major capitals getting a more favorable nod. Many European banks have limitations on the amounts they can lend in a given country, he says, making those ratings all the more important.
   "If you go across central and eastern Europe and look at the margins banks charge, you will see there is still a large gap in terms of margin difference between western Europe and eastern Europe," he says. "It's not automatic that a big financial institution in Europe will lend into Eastern Europe. Many say, 'Let's focus on western Europe first.' Everybody competes, but the number of banks ready to lend into eastern Europe is still limited, EU or not."
   Eder says the effect of accession is immediate when it comes to real estate: Land prices go up and rates of return on investment come down. In some cases, he says, property in the Czech Republic is returning investment at rates similar to what one would find in Great Britain or France. The difference, of course, is the subsidies that the accession countries can offer.
   Asked if EU members might be approaching some sort of détente where project subsidies are concerned, he says, "It's the other way around: The new accession countries are benefiting from enormous subsidies the EU makes available, and are using it to strengthen their own economic environment to the disadvantage of the others. In a way it's an accord, but in reality it's a competition of regions in Europe for FDI. Regions have their agencies, and will do all sorts of things to lure an investor to their country, and the EU is not maintaining a system to mitigate that – it's a straight outright competition."
   Eder says Ireland is "the living example of what the EU does with their subsidies. Spain and Portugal are also now booming countries. Some of the Euro countries are not clever enough in using those funds. But in Slovakia, they have achieved enormously. They are the most important place for the automobile industry, and have been very clever in using those funds. Whether Romania and Bulgaria will achieve the same effects remains to be seen."