EU Enlargement: The Agenda Ahead
Augusto Lopez-Claros Robert Beange
The timing of EU enlargement and the numerous issues that need to be resolved in the coming months to bring the process to a successful conclusion are quickly moving to the top of policymakers’ agendas, both in the candidate countries (EU-10) and in the capitals of EU-15 members. There is every expectation that the current phase of negotiations with each of the 10 candidate countries will draw to a close by the Copenhagen Summit in mid-December and that, therefore, as seen from the perspective of the EU-10, governments will have signed off on all remaining chapters of the acquis. In the paragraphs that follow we present an outline of a “smooth” scenario for EU enlargement which sees the emergence of an EU-25 by 2004. Along the way, we identify some of the associated risks and pitfalls and their ramifications.
A smooth scenario for EU enlargement
In the near term, the Brussels Summit on 25 October is expected to report on the status of negotiations with the 10 candidate countries and their compliance with respect to the acquis, including progress made in the implementation of Copenhagen criteria. In a very clear sense, the main task of this summit is to issue invitations to those members judged to have made adequate progress with respect to the benchmarks established at the outset of accession negotiations. In this scenario, all 10 members would be invited to join the EU, provided that any unfinished business can be successfully completed in time for the Copenhagen Summit.
In this scenario the next stage of enlargement, early in 2003, would begin with agreement on the language of the Treaty of Accession, on which the EU Parliament would vote by late March/early April. Since there is overwhelming support for enlargement within this body, this vote would deliver an unambiguous “yes”, providing an important symbolic backdrop for the rather more difficult stage to follow, which will involve ratification by the national parliaments of the 15 existing members and via referendum in the 10 candidate countries.
The issues at this stage are both logistical and substantive. The ratification process would have to be concluded within a fairly narrow 8-9 month timeframe, for enlargement to be launched on 1 January 2004. By any measure this is a very tight schedule and the process could be held up in different countries for a variety of reasons: eg, elections in Austria in September 2003; the fact that the Treaty in Belgium would have to be ratified by all seven regional parliaments. Thus, there are legitimate questions as to whether, even in the presence of fairly broad-based support for enlargement within the EU-15 parliaments, the ratification process could be brought to a speedy conclusion by early 2004 (it is broadly understood that a delay of up to three months with respect to the 1 January deadline would be inconsequential).
The situation in the candidate countries is somewhat clearer, although no less complicated from a logistical point of view. The “clarity” essentially stems from the fact that a “no” vote in a particular country automatically disqualifies it from EU membership. This, however, would not jeopardize the enlargement process for any of the other members. The Nice Treaty, which regulates different aspects of enlargement - including the allocation of voting shares and the size of EU parliament representations - is clear enough on this point; the Maltese public may, in the end, vote against joining, but this would have no bearing on other countries’ accession chances
There are several risk factors, the most important of which are the Irish referendum; Cyprus’s status as a divided island; and agricultural support payments to the new member states. We review these briefly.
Ireland. The Irish referendum on the Nice Treaty, now scheduled to take place on 19 October, is perhaps the thorniest obstacle to the above scenario. A previous “no” outcome in a 2001 referendum is thought to have reflected a combination of: low voter turnout; concerns among the Irish population about the impact of possible reductions in EU subsidies and transfers stemming from the incorporation of countries with considerably lower levels of per capita income; and lack of adequate information about the intent and content of the Treaty. A number of factors are expected to improve the chances of a “yes” outcome next month.
First, Ireland’s popular prime minister, Mr Bertie Ahern, is firmly behind ratification of the Treaty; during his highly successful reelection campaign earlier this year, he unambiguously supported it and made it part of his party platform. Second, at the Seville Summit last June, Ireland was given an “opt-out” on future political cooperation issues, allaying domestic concerns about loss of the country’s international neutrality. Third, there has been more attention focused on the implications of a “no” vote for the enlargement process and what this could mean for candidate countries, at a time when Ireland is correctly perceived to have benefited enormously from EU membership. Lastly, like Spain and Italy, Ireland has been among the most pro-EU states, with little evidence of a strong euro-skeptic tradition.
For very understandable reasons, senior Commission officials and other top EU politicians have downplayed the existence of a so-called “Plan B”, that would rescue the enlargement process in the event of a “no” vote in Ireland. The EU cannot be seen as ignoring the voices of smaller states and sweeping away the results of a free and open referendum. However, equally democratically-minded voices have argued that it would not be politically credible to hold the entire enlargement process hostage to the votes of a small segment of EU public opinion. We judge that in the event of a “no” vote in Ireland, enlargement would proceed by incorporating those elements of the Nice Treaty which create the legal foundation for enlargement within the Treaty of Accession which, as noted above, would be voted on by EU member state parliaments in 2003.
Cyprus. The EU member states have long signaled their preference for Cyprus’s entry into the EU as a united island, following a political settlement of the long-standing issues stemming from the events of 1974 and Turkey’s effective control of the northern part of the country. However, lack of resolution on this issue is highly unlikely to delay enlargement. First, because the EU has a firm policy that prevents third countries from having a say on enlargement. Second, because ahead of Turkish November elections (which may or may not take place in the end), the authorities there have not been able to move the Cyprus issue forward in a meaningful way. Lastly, because the Greek parliament would be highly likely to veto the Treaty of Accession in the event that Cyprus was not allowed to join. While politically awkward, the Cyprus issue is a worry because of the potential for straining relations with Turkey, whose role within the US-led efforts to intervene in Iraq is seen to be strategically important.
Agriculture. The issues here are trickier and fundamentally have to do with the budgetary burden of CAP support to new members at a time when existing member states seem committed to reforms of the EU’s system of agricultural supports. First, there is concern among many of the accession countries that the EU’s proposal (payment of 25% of the CAP subsidies actually due, rising to 100% over a period of 10 years) are ungenerous and, de facto, discriminate against new members and distort the system of price incentives in the EU as a whole. Countries such as Germany and Great Britain have expressed concerns that, with the 10 accession countries in, there could be a stronger constituency in favor of delaying much-needed reforms in the CAP. Related to the above is the accession countries’ desire that, whatever transitional arrangements are eventually adopted to provide financial support to the agricultural sectors of new members, they will not be allowed to be net contributors to the EU budget, at least not in the first few years after accession.
Countries like Estonia, which have had to introduce agricultural subsidies to bring their agricultural sector in line with the distortions prevailing in the EU’s CAP, would be particularly irked if they were also asked to pay for these. Indeed, were this to happen, it is not inconceivable that the Estonian referendum on the Treaty of Accession might run into trouble next year. This has contributed to the emergence of a view, shared by many of the EU’s top politicians, that it makes no political sense to mix CAP reform with enlargement. We judge that, in the end, the 10 accession countries will settle for the EU’s offer (however inequitable) on lump sum payments to agriculture because the benefits of enlargement to them far outweigh the “costs.” Indeed, enlargement and the possible financial implications for the EU budget, may have precipitated a debate within the EU about reform of the CAP which might have otherwise dragged on for a lot longer.
Other noise. There are several other issues which could well create negative headlines in the period ahead; several of them may have implications for individual countries’ accession aspirations and the timing of ratification: the possible eventual emergence of a government in the Slovak Republic identifying itself with policies and values fundamentally at odds with those contained in the various EU treaties; failure on the part of the United States to invite the Slovak Republic to join Nato during the forthcoming Nato summit in November (because of similar concerns) could raise serious questions about the country’s political readiness to assume the obligations of membership; concerns in some EU-15 members about nuclear safety at various plants in the region, particularly in Lithuania and the Czech Republic. Finally, Turkish’s disenchantment with failure to secure a firm date for the start of accession negotiations at the Copenhagen Summit could, likewise, add some uncomfortable background noise to the process of ratification, particularly against the backdrop of a possible war in Iraq.
The Copenhagen Summit in December is expected to extend invitations to all 10 member accession countries and there is likely to be a strong push to bring the enlargement process to a successful end by early 2004. The ratification of the Treaty of Accession in 2003 will be long and tedious as it will require parliamentary approval in the EU-15 and referendums in the candidate countries. Along the way, EU leaders may have to confront (or sidestep) several key issues, arguably none a “deal breaker”, but collectively capable of shifting the tone of the debate (and the enthusiasm for accession) in several of the candidate countries. We are cautiously optimistic that enlargement will take place in 2004, but the process is likely to be fraught with “noise” and it is conceivable that voters in some of the accession countries could get “cold feet” as the debates unfold. But the chances that the EU-15 will turn into the EU-(23-25) within a couple of years are quite high and this will open a new era in the development of European cooperation.
D-r Augusto Lopez-Claros,
Executive Director and Senior International Economist for
Lehman Brothers International in London,
Was Resident Representative for the IMF in Russia during 1992-95.