EU enlargement: creation of a two-party system?

  • 2005-05-11
  • By Ben Nimmo
RIGA - One year after EU entry much of the media in the Baltics concluded that accession simply meant "business as usual." For the accession states, this is largely true. For the EU, it is anything but. Expansion has diluted Western Europe's domination and imbibed the union with a new spirit of debate about what it means to be competitive and innovative.

To be sure, in the Baltics, the year 2004 saw a strengthening of existing trends 's GDP growth was the fastest in the union, for the fourth consecutive year 's and an outbreak of new ones. Tourism underwent an explosion in all three countries, easily outstripping previous records, and the transport and agricultural sectors were shaken up by increasing competition.

But in general, accession has not brought great change to the Baltic business environment. As Jekaterina Kolosova, analyst at Bridge Capital in Latvia, says, "The acceleration in business and investment began in early 2003, when it became clear that enlargement was coming."

Nikolaj Harris, first secretary of the Danish Embassy in Vilnius, agrees. "Denmark has always had the Baltics high on the agenda, so the Danish business community has been aware that accession was coming for a long while," he says.

The one economic sphere where there has been a striking change is the balance of trade between old and new member states. Latvia provides the most striking example: among the country's top eight export markets in 2003, the U.K., Germany, Sweden and Denmark all saw their share of total exports diminish, while Lithuania, Estonia and Poland grew. The same was true in imports, where Germany and Finland saw significant falls in market share (from 16.1 percent to 14.5 percent in Germany's case), while Lithuania, Estonia and Poland all saw rises (from 9.7 to 12.4 percent for Lithuania).

Similar patterns are also visible in Estonia and, to a somewhat lesser extent, Lithuania. It is important to note that this concerns market shares, not overall trade volumes, which have increased for all countries concerned.

But the pattern is clear. So far, the main effect of EU expansion on trade has been a strengthening of ties between the new member states.

Young influence

There has been a parallel evolution on the political level. Here, EU accession has brought much greater changes: the new states have, if anything, more influence in the European Parliament and Commission than their populations would indicate (17 percent of EU population, 22 percent of MEPs, 32 percent of seats on the commisison).

This has certainly not weakened diplomatic relations with the old members. Carsten Wilms, press officer of the German Embassy in Tallinn, describes bilateral cooperation between Estonia and Germany as "continuing with the same high intensity as before accession," while Pierre Mazzoni, first secretary of Tallinn's French Embassy, says that "diplomatic links have accelerated enormously."

Juris Poikans, an official at Latvia's Foreign Ministry, highlights the Baltics' traditional strong relationships with the Nordic states: "Nothing will replace those links."

To their credit, the new EU states have not shied away from taking the initiative. The highest-profile action in this field was undoubtedly the Lithuanian-Polish role in mediating Ukraine's disputed elections, but there have been notable others: Polish-Baltic moves to condemn totalitarian communism in the European Parliament and Commission, and the Baltics' "3+3" dialogues with Georgia, Armenia and Azerbaijan.

Even before accession, the new states took their own stance in the Iraq debate, penning an open letter in support of the U.S.A., while in arguably the most significant development since EU enlargement, "the Visgrad four of Poland, Slovakia, Hungary and the Czechs recently expressed their desire to strengthen relations with the Baltic Three," according to Poikans.

With diplomatic and economic cooperation growing rapidly, and Romania and Bulgaria soon to join the Union, the new states could yet form a bloc within a bloc.

For the EU, this is radical. Never before have so many nations with such similar economic, strategic and geopolitical imperatives joined the EU at one time (see sidebar). Of the 10 accession states, eight have near-identical post-communist economies. Seven have direct land borders with Russia, Ukraine and Belarus. All have wage and pricing structures below the EU average. All 's except perhaps Poland 's are small, and thus have an interest in forging alliances. There has been no similar event in EU history.

Quite simply, last year's enlargement took the union off the edge of the political map.

West bristles

And the older states have not been slow to notice it. Even before accession, French President Jacques Chirac reacted to the accession states' Iraq letters with the now-infamous phrase: "They missed a good opportunity to shut up." EP President Josep Borrell Fontelles allegedly belittled the Polish-Lithuanian initiative in Ukraine as "American controlled."

On the economic front, 12 of the 15 old EU states have instituted legal barriers to new members' access to their job markets, and since enlargement France and Germany have both campaigned vigorously to, in Chirac's words, "protect social Europe from ultra-liberalism."

As for Russia, a recent summit saw the leaders of France, Germany and Spain meeting Russia's President Vladimir Putin in Paris to allegedly discuss the Baltics, although Mazzoni maintains that this is a misrepresentation based on inaccurate media coverage. There is a real possibility that, in foreign-policy terms, and especially concerning Russia, those countries which do not share the accession states' opinions will sidestep the EU forum in favour of bilateral meetings.

Hence the French-led debate over the EC directive on the free movement of services, a code seen by the accession states as the key to successful development but by many old-EU states as a threat to their social systems. The French president (ironically, a right-wing politician) intervened in person to have this directive delayed. If France had any intentions of sidestepping the EU, it would certainly not have used such a high-profile figure in the debate.

Invigorated debate

Enlargement has changed the whole level of EU debate. In many fields 's liberalization, relations with Russia, further expansion 's the East European accession states have brought a new urgency, as traditional EU players realize that there is a new factor to reckon with in the equation, whether by allying with it, as the UK and Ireland have done on liberalization, or by moving to counter it, as with the French and Germans.

What is happening in the EU is not a debate about keeping new states out: It's a fight over the union's direction now that the new states are in.

And the fight will be a long one. The accession states' needs are governed by long-term factors 's population, location, economy. The established states' needs are equally deep-rooted: control of their own labour markets and international affairs.

These differences will take decades to resolve. And as long as they last, two conflicting visions of European development will seek to dominate Brussels. For the Baltics, EU accession meant business as usual. For the EU, it may come to mean the beginning of a two-party state.