Politics Essays

Politics Essays: EU and Expansion

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’.

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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