Excerpt from:
‘If the EU were to call a formal halt to enlargement
beyond twelve new members, it would threaten the stability
of those countries left permanently ‘out’ and
hence damage its own peace, security and prosperity’.
Discuss.
With respect to the economic implications for the ‘outs’,
if the EU were to officially close the Union to further extension
of membership, the impact would be most felt in Foreign Direct
Investment (FDI) flows. This is not only relevant upon accession
to the EU, but also acts as a major cushion in the transition
processes. By adhering to, and striving towards meeting EU
conditionality, its rigidness acts as a ‘soft commitment
device’ (Bronk, 2002, 3-7), by lowering potential investors’
fears that any policies will be renegaded upon, thus substantially
increasing FDI flows. Following on from this, the economic
benefits reaped also act to prevent the reform process from
being abandoned, thus creating a reinforcing circle.
These developments are also important in financing large
current-account deficits, and to act as a major conduit for
import of Western technology, know-how and skills. The loss
of FDI would be accompanied by less political support, aid
and trade access.
Valuable assets would immediately be lost or denied to the
countries in Europe that are in most need of them as a consequence
of being formally and permanently relegated to outside the
EU’s borders. This is indicative by looking at the GDP
growth average between 1996 and 2000. With 3.9% and 4.0% average
in East-Central Europe and the Baltic respectively, the Balkans
and the CIS only managed 0.4% and 1.3% respectively (Grabbe,
2001, 4). As long as the ‘outs’ are kept out,
the gap between FDI levels will widen between them and the
accession countries.
On the other hand, the progress towards enlargement creates
tensions between specific EU demands and development needs.
This includes areas such as the environment and social policy,
which are process related areas that carry a heavy financial
burden for the CEECs. Their cost-push effect could take away
valuable resources that are necessary for economic and political
reforms. Moreover, the extent of bureaucracy demanded by the
EU would hamper the flexibility that has in various ways become
the major advantage of the ‘outs’.
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