SocialismToday           Socialist Party magazine

Issue 72, February 2003

EU enlargement after Copenhagen

TEN STATES are to join the European Union creating a 25-state bloc. Agreement was reached at the Copenhagen summit last December clearing the way for Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia to join in May 2004. The newcomers tried to drive a hard bargain, hammering away at their demands for more funding to help with the transition. Farming subsidies were the most contentious issue.

The EU can boast that enlargement has worked out cheaper than originally envisaged. According to the European Commission, the net cost of expansion will be €10.3 billion (£6.8bn). But the political cost could turn out to be much higher and hit a lot sooner than expected.

A majority – albeit a declining one – of the populations in the applicant states still favour EU membership, hoping that it will improve their living standards, introduce visa-free travel, and safeguard democratic rights. During the summit, however, it became increasingly clear that the big European powers view them as a source of cheap labour and new markets. Drawing the Central and Eastern European states into the EU sphere of influence, and away from Russia, is more important than all the rhetoric about ‘reuniting Europe for the first time since the second world war’.

Representatives from Denmark, which held the EU’s presidency during the summit, warned the Polish prime minister, Leszek Miller, that Poland risked missing out on accession completely if it bargained too hard. But Miller ploughed on, backed by the Czech Republic and Hungary. They had domestic concerns, as a senior official said: "Only by taking a tough position with finance to the last minute can we satisfy the expectations of our citizens".

In the end, they secured a meagre €433m (£290m) on top of the €40.8 billion offer. This will be shared by the ten states between 2004 and 2006. It was agreed that Poland could transfer €1 billion of long-term regional aid to immediate cash support for the government’s budget. Poland won a few other minor concessions, including the right to top up its direct payments to farmers. This failed to impress the country’s eurosceptics, especially the 27% of the population dependent on agriculture.

Opposition to the second-class status of the applicants is mounting as details of the deal become clearer. In fact, they will have to pay for the privilege of joining – €15 billion in dues. They will only get a fraction of what many existing – and far richer – members receive for infrastructure development, farming subsidies and other assistance. In 2005, the first full year of membership, Poland will receive €67 per person in aid, Hungary €49, Slovenia €41 and the Czech Republic €29. In contrast, Greece currently receives €437 per person, Ireland €418, Portugal €211, and Spain €126.

The total package is equivalent to about 0.05% of the EU’s gross ‘national’ product. The pressure to restrict the costs of enlargement, coming particularly from Germany, reflects the economic downturn hitting Europe and the growing tensions between the member states and the European Commission, and between the EU states themselves. Enlargement was conceived during a time of economic growth and political enthusiasm for a united capitalist Europe. Today, there is notably less enthusiasm as Germany and France have breached the EU growth and stability pact by running up deficits of more than 3% of gross domestic product. Italy narrowly escaped a breach with the help of some creative accounting.

The economic slowdown and the ‘one-size-fits-all’ interest rate policy, along with the European Commission’s insistence on maintaining the growth and stability pact, put new austerity measures on the agenda. This is coinciding with a mounting wave of class struggles in Europe’s biggest economies. The attacks on workers’ rights, wages and working conditions are being met with fierce resistance in Italy, Spain and Portugal, with growing opposition in Germany and France. This will add to the pressures on the growth and stability pact, which is likely to see its terms changed. Such a measure would be an immense political blow, however, further undermining the authority of the European Commission and destabilising the EU.

The enlargement process has affected the countries in competition for EU funding, such as Portugal and Greece. They have seen a steady stream of foreign clothing, footwear and textile companies relocate to Central and Eastern Europe. These companies are moving to exploit low-paid, better qualified workers nearer to the big North European markets. Portugal, which has the lowest average wages and the biggest gap between rich and poor in the EU, clearly illustrates the EU’s inability to deliver its promise of raising up the poorest countries to the EU average. This will not be lost on workers and farmers in Warsaw, Prague and Budapest.

The states of Central and Eastern Europe have been forced to implement wide-ranging neo-liberal counter-reforms as part of the process of EU accession. Labour laws have been weakened, privatisation pushed through, and the grip of multinational corporations and banks tightened.

This process is exemplified by the case of Poland which, with 38.2 million inhabitants, is the largest of the candidate countries. Miller’s government, made up of the former Communist Party (Democratic Left Alliance) and the Peasant Party, is fighting for its survival in a precarious balancing act. Last December it backed down on a plan to close seven coalmines as a step towards privatisation. The miners had voted overwhelmingly to strike against the proposed loss of 35,000 of the industry’s 142,000 jobs. In the same month, Miller fired three ministers, one of them after he had given in to trade unionists striking over cuts in the health budget in Silesia, in the south of the country. As unemployment rose towards 20% at the beginning of January the government’s approval ratings dropped to a record low of 27%.

The biggest problem for the Polish ruling class is the lack of a safe political alternative to this government. The general election in 2001 blew away the previous government made up of the right-wing Solidarity Electoral Action and the liberal Freedom Union. They failed to win a single seat, paying the price for four years of neo-liberal ‘reform’ and the drive towards European Union membership. They were replaced by extreme right-wing or populist parties, such as The League of Polish Families (which won 8% of the vote), the Law and Justice Party (10%), and Samoobrona (Self-Defence – 10%), which is now at 20% in the polls. Andrej Lepper, its founder, has extended his following from those hurt by the fall of Stalinism to those who will be hurt by EU membership. His slogan, ‘Moscow stole from you; Warsaw is stealing from you; Brussels will steal from you’, sums up a widespread feeling and represents a challenge that neither the EU nor the Polish government can meet.

Referenda on EU membership will be held in all the candidate countries this year, starting with Hungary where pro-EU sentiment is the strongest. The EU hopes that a yes vote there will encourage voters in other states to follow the ‘good’ example. In these days of economic and political convulsions, however, it will be not be straightforward. The defeat in January of the Lithuanian president, Valdas Adamkus, by the eurosceptic populist, Rolandas Paskas, shook up forecasters and could be the first of many unpleasant surprises for the political establishments.

The danger is that the effects of the euro and EU enlargement will boost the development of right-wing populist forces and nationalism. Capitalism cannot provide decent living standards for the peoples of Central and Eastern Europe. Far from unifying Europe, the capitalist system coerces the working class into a discriminatory union of exploitation. Only workers’ opposition with socialist policies can prevent this and lay the basis for genuine co-operation by breaking the power of capitalism.

Karl Debbaut



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