In the nick of time A special report on EU enlargement May 31st 2008

Illustration by Peter Schrank Republication, copying or redistribution by any means is expressly prohibited without the prior written permission of The Economist The Economist May 31st 2008 A special report on EU enlargement 1

In the nick of time Also in this section The dark side of globalisation Jobs come, but they soon go again. Page 3

The logic of the Logan Success on four wheels. Page 5

No love lost The two halves of Aphrodite’s island remain at loggerheads. Page 6

Largesse while it lasts Lots of EU money is ‡owing to Poland and the rest. It must be spent fast. Page 7

Toxic legacy What communism left behind. Page 9

Bury your hatchets If the recent entry of 12 new EU members had been delayed much ðor grind your axes? Page 10 longer, it might never have happened, argues David Rennie. That would have been an historic error Trust me N ITALY’S recent general election, voters 2004 with the admission of ten new mem• The theory and the practice of the rule of law. Iin the north of the country were greeted bers, from Estonia in the north to Cyprus in EU Page 12 by posters showing a Native American the south. In under three years the grew chief in feathered headdress (pictured from 380m people in 15 countries to half a above). The caption read: ŒThey su ered billion in 27. Give and take immigration, now they live on reserva• This report will argue that enlargement Enlargement enriches old as well as new tions. The posters were the work of the has been a force for good. Freedom of members. Page 13 Northern League, a regionalist grouping movement is a founding principle of the that blames immigrants and globalisation European Union and one of its greatest for many of Italy’s ills. The party struck a strengths. Successive waves of enlarge• chord: it almost doubled its share of the ment have injected new life into societies vote. Silvio Berlusconi, the overall winner, and labour markets across old Europe that chimed in, declaring that Italy should close were in danger of sinking into elegant, ar• its borders and open camps so police could thritic decline. track down jobless foreigners. Freedom to trade has also brought huge Acknowledgments Italians knew whom he was talking bene†ts. The most recent enlargement In addition to those named in the report, the author would like to thank the following for their time and about: an estimated half a million Roma• added a dozen mostly fast•growing, un• advice: Jonathan Faull, Heather Grabbe, Kristin nians living in Italy, many of them gypsies usually open economies to the single mar• Schreiber, Tamas Szucs, Thibault Kleiner and Friso (Roma), who are blamed for a spate of vio• ket, providing a big boost to anaemic EU Roscam•Abbing (European Commission); Janusz Onyszkiewicz (member, European Parliament); lent crimes. Romania, along with Bulgaria, growth rates. Dan Hamilton, an American Magdalena Vasaryova (member, Slovak parliament); joined the European Union at the begin• academic, calls Europe’s eastern fringes Alessandro Zazzeron (Calearo Slovakia); Donald Storrie ning of last year, giving its citizens the right Œthe China next door. (European Restructuring Monitor); Martin Simecka (Respekt, Prague); Jeremy Druker (Transitions Online); to travel freely all over their new club. The accession process that began more Nadia Vassileva (Manpower, Bulgaria); Ben Nimmo (DPA); Many duly went west. Mr Berlusconi’s od• than a decade ago provided an historic in• Irina Novakova; Valentina Pop; and others who asked to dly precise promise to round up jobless for• centive for reforms. Yet the expansion of remain anonymous. eigners was no accident. One of the few le• the club has been jarring for citizens of ol• gal grounds for expelling foreigners from der member countries (for example, Italy) A list of sources is at another EU nation is to show they have no who have discovered that their national www.economist.com/specialreports means of support. To show that they have governments are no longer in full control a criminal record is not enough: EU citizens of their borders. An audio interview with the author is at may be deported only if they gravely Many people in older EU member www.economist.com/audiovideo threaten public order. countries believe that enlargement has The arrival of Bulgaria and Romania triggered a wholesale exodus of jobs from More articles about enlargement are at completed what Eurocrats call the Œ†fth west to lower•paid east. According to a www.economist.com/enlargement enlargement of the union, begun in May 2006 Eurobarometer poll, three•quarters 1 2 A special report on EU enlargement The Economist May 31st 2008

would have been undermined. For the existing member countries, three big reasons would have made enlar• gement far more diˆcult if it had come any later than it did. These can be summarised as migration, money and Moscow.

The m•words First, migration. Immigration from the east to the EU accelerated with the 2004 enlar• gement, though it had been going on for years before that. As the Italian example shows, if any one of the 12 new members, especially Romania and Bulgaria, were still queuing to enter the EU, there would now be a heated debate about immigra• tion, and the EU keystones of free move• ment of people, capital, goods and services might soon be under attack. Second, money. During the long years of entry negotiations, many European economies were doing pretty well. Now, with the world looking bleaker, the older members might be feeling a lot less gener• ous. Back in 2002, 66% of the French sup• ported the coming EU enlargement. By early 2006, France’s then prime minister, Dominique de Villepin, was blaming en• 2 of EU citizens think that enlargement Slovakia and the Czech Republic have largement for the French rejection of the speeds the transfer of jobs to countries shown prejudice against the Roma too. But EU constitution in a referendum the previ• with cheaper labour. Yet according to the then prejudice, bad government, corrup• ous summer. ŒFrance did not say no to Eu• European Restructuring Monitor, an oˆ• tion and organised crime are not the exclu• rope, Mr de Villepin told an EU meeting in cial survey, only 8% of EU jobs lost to res• sive preserve of the new members. Some Salzburg; rather, Europe did not ade• tructuring between 2003 and 2006 in• existing members have been setting a bad quately prepare the ground for the enlarge• volved o shoring. example for them. ment of 2004. Globalisation started long before enlar• Nor was the †fth enlargement a simple The European Commission ordered an gement, but enlargement has crystallised matter of countries governed by former opinion poll in France immediately after public fears about it, often setting one cor• dissidents accepting the democratic em• the Œno vote in 2005 which identi†ed ner of Europe against another. Nokia brace of the West. Plenty of ex•communi• three main reasons why French voters re• bosses were heavily criticised earlier this sts smoothly relabelled themselves and jected the constitution: it would shift jobs year when they announced the closure of hung on to power across the block. Brus• out of France; the document was overly a mobile•telephone factory in the German sels is full of talk about Œbacksliding to de• liberal and pro•market; and the economy city of Bochum and the transfer of the scribe the way that politicians in the new was ailing. (A similar poll carried out after work to Cluj in Romania. A German minis• member countries forgot, or actively un• Dutch voters said no in their own referen• ter demanded assurances that EU funds dermined, reforms that the EU demanded dum, days later, found that only 7% of re• would not be used to subsidise the move. during accession negotiations. Corruption spondents were worried mainly about the In truth, EU †rms have been investing and organised crime blight many of the loss of jobs overseas. The most common heavily in central and eastern Europe since newcomers. Parliaments and ministerial explanations were Œa lack of information soon after the Berlin Wall came down, and suites shelter too many bad men. and concerns about national sovereignty.) Italy was home to about 350,000 Roma• All this has led some to suggest that en• Money worries would play a bigger nian migrants before Romania joined the largement happened too soon, and that part if the latest round of EU enlargement union. Yet public fears about Polish plum• many of these problems could have been were still being debated now. Poorer coun• bers and other bogeymen are real enough. avoided by waiting until the accession tries have been admitted before. When Even though German exporters have ‡our• countries were better prepared. This report Greece joined in 1981, its GDP per person ished by selling to the new member states, will argue the opposite: that enlargement stood at 58% of the then European Com• 63% of Germans, according to Eurobaro• came in the nick of time. Inside the candi• munity average (at purchasing•power par• meter, think that enlargement is making date countries the †rst victims of further ity). When Spain and Portugal came in †ve Europe as a whole less prosperous. delay would have been reformers who for years later, their income was around 70% Some of the newcomers have not years had been pushing painful changes as and 56% of the EU average respectively. But helped their cause since joining. Nasty vital for achieving EU membership. Had the newcomers are in a di erent class of populists have done well in elections in the public started to doubt that entry was poverty. For Poland, the †gure at entry in several countries, and Romania, Bulgaria, fairly imminent, the drive for reforms 2004 was about half the EU average. When1 The Economist May 31st 2008 A special report on EU enlargement 3

2 Bulgaria and Romania joined last year, block the eastern expansion of the EU. tougher today than it did †ve years ago. theirs were 38% and 40% respectively. In reality, Russia’s then president, Vladi• Earlier this year Mr de Villepin, now The newcomers are di erent in other mir Putin, raised only two big concerns safely out of oˆce, told a Belgian newspa• ways too. Romania, which added 4.5m ahead of the event, recalls Günter Verheu• per that enlargement was proof of Eu• farm holdings when it joined, now ac• gen, a former EU enlargement chief. One rope’s Œgenius for getting along with oth• counts for a third of all the farms in the was to protect the status of the Russian lan• ers. Had it, he mused, been in Europe’s union. (It also brought several thousand guage and the rights of non•citizens in Es• interest to open its doors to the nations of wild bears, more than doubling the EU’s tonia and Latvia. The second, and trickier, the east? ŒNo. But Europe had no other bear population overnight.) The new• one involved Kaliningrad, a chunk of Rus• choice but to hold out its hand. comers have changed established views of sian territory sandwiched between Po• This report would not dispute that Eu• EU history, which had long concentrated land and Lithuania (see map, previous rope had no choice, but it will also contend on the West and Franco•German reconcil• page). To the horror of eastern European that enlargement was very much in the iation. As one oˆcial puts it, they are full of governments, Mr Putin proposed linking union’s interests. It will describe an en• people for whom 1945 was not a Œmagic Kaliningrad with the rest of Russia by a rail• larged Europe that is changing fast, in terms year but the start of a new occupation. way corridor drawn across Lithuanian ter• of globalisation, infrastructure or e orts to That occupation was ordered from ritory. At a summit in 2003, Italy (then, as resolve the remaining legacies of commu• Moscow, and Russia’s increasing assertive• now, led by Mr Berlusconi) backed Russia’s nism. It will ask why EU membership has ness is the †nal reason to believe that en• plan, with encouragement from France. so far failed to end the frozen con‡ict in Cy• largement happened just in time. EU enlar• Britain, Sweden and Germany opposed it. prus, and whether that is about to change. gement brought dramatic changes in Residents of Kaliningrad now travel On all these fronts, it will argue, it is a good Russia’s backyard and reduced the coun• through Lithuania on a simpli†ed visa. It is thing that half a billion Europeans are now try’s sphere of in‡uence. Yet Russia did not not hard to imagine Russia playing even in this together. 7 The dark side of globalisation

Jobs come, but they soon go again

DECADE ago, Samorin‹a small town river town has already lost a factory to o • Ain western Slovakia, on the banks of shoring. Samsonite closed its plant in Wild east 1 the river Danube‹was one of many good 2006, shedding all 350 sta and shifting Labour-cost index, GDP and inflation places in which to watch the e ect of glob• production to China. % increase on a year earlier alisation on central Europe. The town was Like its neighbours, Slovakia has seen Labour-cost index, Q4 2007 Inflation, full of cheap, experienced workers in need wages rising fast as new jobs arrived and GDP, Q4 2007 March 2008 of jobs, with unemployment at 20%. For• many of its own people headed west. In eign investors duly arrived, notably Sam• most of the new member countries, unem• 0 5 10 15 20 25 30 sonite, an American luggage•maker, which ployment rates are lower than at any time Latvia set up a factory there in 1997. The town’s lo• since early 2000. cation helped, near a four•way border But rising labour costs are only part of a where Slovakia, Hungary, Austria and the more complicated story. Slovakia is still Romania Czech Republic meet in a cat’s cradle of big cheaper than the Czech Republic. In Samo• roads and railway lines. There are scores of rin, unskilled workers might earn 12,000• Estonia similar towns across the region that at• 15,000 crowns (¤380•480) a month. La• tracted jobs from higher•cost, more highly bour costs have risen faster in other new Lithuania regulated labour markets farther west. EU members too. In overheating Latvia, Workers, trade unions and politicians pay in the fourth quarter of 2007 was 30% Bulgaria in old Europe mourned each factory mov• up on a year earlier (see chart 1). ing east. But, as a European Commission Samorin is a witness to the way that Poland oˆcial explains o the record, such shifts globalisation is fragmenting as supply were fully expected: o shoring Œwas the chains break into ever smaller parts, send• Slovakia whole idea of enlargement. The process, ing jobs in all directions. The European though wrenching to some, made the Eu• Restructuring Monitor (ERM), an EU out†t ropean Union as a whole more competi• that tracks globalisation, has analysed Hungary tive and spread the bene†ts of global trade about two dozen cases of o shoring from EU Czech to every corner of Europe. new members of the , often involving Republic So far, so familiar. But things have complex moves. In one example, a Ger• moved on in Samorin. Even though new man lighting company shed 400 jobs in Slovenia investment and jobs are still arriving in Slovenia and sent the manufacturing end Slovakia, and proximity still counts, this to China but the engineering and research Sources: European Commission; Eurostat 1 4 A special report on EU enlargement The Economist May 31st 2008

2 jobs back to Germany. In another, a Hong Fico, won oˆce as a †ery left•wing pop• Kong•owned textile•maker shut up shop in Stars and laggards 2 ulist, for example, but was then careful to Latvia, citing a Œlack of workforce in the 15-year-old students, difference between leave in place business•friendly policies region, and shifted production to Macedo• national score and OECD average, points like a ‡at tax, devised by a previous gov• nia and Vietnam. Science Reading Maths ernment. Günter Verheugen, now EU commis• Citizens of the world 100 75 50 25– 0+ 25 50 sioner for enterprise and industry, has Slovakia is currently a European cheer• Estonia been touring some of the new member leader for open markets and free trade. In a countries, urging governments to prepare Pew Global Opinion survey last year, Slo• for rising labour costs. The newcomers’ vaks were more enthusiastic than Ameri• Slovenia success was based on three things, says Mr cans, Swedes or Britons about multina• Czech Verheugen: cheap labour, skilled and moti• tional companies, with 72% agreeing that Republic vated workers, and an existing industrial big foreign companies were good for their base. Now costs are rising but productivity country, a European record (55% of French Hungary is growing painfully slowly, from a low respondents thought foreign †rms were base. The newcomers face the same prob• bad for them, setting a record in the oppo• Poland lem as Spain and Portugal did on entry: re• site direction). But will Slovaks remain so lying too heavily on foreign investors to upbeat if the jobs stop coming in? Latvia bring technologies and jobs, rather than Vladimir Osvolda, the former boss of creating indigenous centres of research Samsonite’s Samorin factory, thinks his fel• and development. In the longer term, if Slovakia low Slovaks have no choice. Western Eu• new EU members Œcannot compete on ropeans over 40 remember a working life costs, they have to compete on quality and that was Œvery comfortable, he says: the Lithuania innovation, says Mr Verheugen. iron curtain shielded them from competi• The cliché that eastern Europe is tion in central and eastern Europe, China Bulgaria crammed with highly educated boˆns did not yet present a threat and strong and poetry•spouting intellectuals has long trade unions guarded their interests. East Romania been disproved. In the OECD’s latest PISA Europeans never had that comfortable life, survey of educational standards in sci• he says, and never will. Source: OECD, PISA report 2006 ence, reading and mathematics, only Mr Osvolda lost his own job when young Estonians and Slovenians per• Samsonite left; he now runs a factory for lasted just nine years. ŒEverything is get• formed above the OECD average in all an Italian †rm. He suspects that not all his ting faster and faster. three. Young Bulgarians and Romanians sta understood that they lost their jobs to Not all east Europeans are as philo• were way below average (see chart 2). globalisation. All they knew was that they sophical as Mr Osvolda. The big test will were made redundant †ve times before, in come if (or when) growth rates in the ex• Body•shopping the tough years that followed the collapse communist block slow to match those in Alarmingly, the idea has taken hold across of state socialism, so they felt resignation old Europe and pay falls in real terms. central and eastern Europe that the most rather than shock. Companies with strong trade unions‹ pressing crisis is a shortage of people. Ev• Mr Osvolda managed Samsonite’s mostly former state concerns‹have al• ery day, newspapers report plans to ship in start•up in 1997. He recalls that Samorin felt ready seen strikes over pay. Romanian Vietnamese textile•workers, Ukrainian like a mirror of a Samsonite factory in the workers recently downed tools at a Re• road•builders or Moldovan waiters to †ll Belgian town of Turnhout. ŒThey would nault subsidiary that makes the Logan, a vacancies. There may well be some immi• lay o 100 sta , we would take on 100. His low•cost car (see box, next page). gration, but it will not be the cure•all some employers had to deal with three trade Nils Muiznieks of the University of Lat• seem to expect. unions when shedding sta in western Eu• via says his country is too small to dream In sleepy Samorin, the Œmigrant work•1 rope. ŒHere, there was no trade union. about keeping out foreign threats. For Not that the Americans were ruthless, those who are not happy with their pro• 3 he says. They rather overpaid people in Sa• spects, he says, Œthe policy option here is Now part of the in-crowd morin. Labour costs were higher than in not protectionism, it’s emigration. EU15 trade with the 12 new member states Asia, but location trumped cost advantage. Meglena Kuneva, the Bulgarian mem• ¤bn The factory’s role was to manage peak de• ber of the 27•strong European Commis• 300 mand for the highest•priced products. sion, draws a dividing line, not between 250 What killed his plant was the e ect of old and new Europe but between Œlazy Exports higher labour costs on suppliers, who one and zealous Europe. The new members 200 by one moved to Asia. By the end, the fac• will thrive as long they do not become lazy, 150 tory was having to ‡y in materials to †ll ur• she says. 100 gent orders at great expense. To date, the newcomers’ governments Imports ŒSamsonite was in Belgium 30 years be• have remained fairly liberal on matters 50 fore they decided the perfect solution was such as ‡exible labour markets and tax 0 to invest in Slovakia, notes Mr Osvolda. policies (their support for free trade is spot• 1995 97 99 2001 03 05 07 The company’s Samorin business model tier). Slovakia’s prime minister, Robert Source: Eurostat The Economist May 31st 2008 A special report on EU enlargement 5

2 ers are from the poorer east of Slovakia, a are not working, he says. Across the re• his new factory in Samorin, Mr Osvolda few hours’ drive away, but the locals see gion, governments have failed to keep peo• has started recruiting toolmakers and even eastern Slovaks as a race apart. They ple over 55 in the workforce, an urgent other specialist workers from eastern Slo• get drunk and sometimes †ght, says Irvin problem because ex•communist popula• vakia. But he notes that once he has per• Sarmany, a municipal oˆcial. Some blame tions are greying fast. Millions of Roma are suaded skilled workers to uproot them• the newcomers for a rash of burglaries. widely seen as Œunemployable. Large selves and move 300•400km westward, Miroslav Beblavy, director of the Slovak numbers of young people now go to uni• some of them will keep going to Britain or Governance Institute, a think•tank, argues versity. Too many are studying fashiona• Ireland to earn two or three times more. that the newcomers’ governments should ble things like social sciences rather than Everything is becoming more mobile, start by improving their policies at home. engineering or computing. making life more complicated. But many Employment rates in Slovakia, Hungary Small, mundane changes would help. central and eastern European workers re• and Poland hover at or below 60% of the In some countries workers who have tak• member the days when they were not free working•age population, compared with en early retirement would lose their pen• to move. They are a tough, ‡exible bunch Denmark’s 77%. ŒYou can’t complain about sions if they went back to work. Bulgaria and do not think the world will stop for labour shortages when so many people has no laws covering temporary work. At them. The EU is lucky to have them. 7

The logic of the Logan Success on four wheels

S THE pace of globalisation quickens, Dacia but sold by Renault dealers. Most Athe vocabulary of its European critics French buyers know that it is made in Ro• is failing to keep up. Search the French in• mania (hence the price of ¤7,600 for the ternet for the Logan, a low•cost car made basic model), but Œthey don’t really think in Romania that is a surprise hit for Re• it’s a Dacia, says Mr Detourbet: they nault, and the word délocalisation crops think it is a Logan, meaning a Renault. up a lot. But the ugly word misses an inter• In France the Logan’s main competi• esting point. True, French sales of the Lo• tion is secondhand cars. Its buyers range gan grew by almost 75% last year, despite from people without much money to bet• boxy styling and a minimal marketing ter•o customers who resent spending budget. But Renault never planned to hefty chunks of their income on a car. In build or even sell the Logan there. Nor is it Romania the Dacia name has a positive an old model of some west European car, image and the car is not seen as cheap. In given a second life in the east. For the the rest of eastern Europe people remem• French, it was never local. ber the brand from communist times, but Renault’s idea was to produce a robust with a shudder, so Renault has had to reas• new car with few gadgets from scratch Cheap and cheerful sure buyers that this car is di erent. The and sell it in emerging markets such as company’s pro†t margin on the Logan is eastern Europe, Turkey and north Africa. average of about ¤450 a month. A three• over 6%, double that on the full•price Re• The Logan was designed to meet Eu• week strike at the Dacia plant ended in nault range. Production has now spread to ropean Union norms because some of the April with a pay award of 28%. Russia, Morocco, Colombia and Brazil, target markets were due to join the EU, but Months after the Logan’s launch, Re• and to Indian and Iranian joint ventures. to sell at a much lower price than standard nault learned of unoˆcial imports into As labour costs converge across new models. Cheap labour was part of the France from Romania, prompted by press and old Europe, will the Logan remain a plan. The car Œwould not make sense pay• coverage of the car, so it rushed to organise European car? Certainly more and more ing French or Spanish wages, says a Re• distribution in western Europe, beginning suppliers will leave the EU. There will be nault boss, Gérard Detourbet. But a bigger with France. Last year nearly 80,000 Lo• more robots and fewer workers in east Eu• factor was proximity to customers: cars gans were sold in western Europe. ropean car plants in future. But given the are expensive to ship over long distances. Mr Detourbet remembers a time when cost of hauling cars to customers, produc• Production began in 2004 in Romania, Western carmakers kept quiet about their tion in the EU will not vanish. where Renault had bought a local car• factories in the ex•communist east. That For all the talk about délocalisation, maker, Dacia. Low Romanian salaries changed as Western buyers became less perhaps the Logan is distinctively Eu• were only the Œcherry on the cake, says interested in who built their car and more ropean in a way that harks back to the †rst Mr Detourbet, who heads the Logan pro• concerned about the brand name and the years of post•war motoring. A cheap, odd• ject. That is just as well, because the †rm’s manufacturer’s guarantee. The Logan looking car that takes cobblestones and salaries in Romania have been rising ever brand is even harder to pin down. In the pot•holes in its stride: what could be more since. Last year they jumped by 20%, to an EU and north Africa the car is badged as a French than that? 6 A special report on EU enlargement The Economist May 31st 2008

No love lost

The two halves of Aphrodite’s island remain at loggerheads

OR a restaurant built in ten days ‡at and It has been possible to cross the Green crossing, with its tubs of ‡owers and smart Fopened only †ve days before your cor• Line in a few places since 2003, but after awnings, the old barrier still snakes its way respondent’s visit, the Corado kebab the initial enthusiasm the number of peo• through the city, guarded by troops. house in Nicosia grills a pretty good ple making the journey dropped sharply. The †rst four years of Cypriot member• chicken. The restaurant lies a few metres This latest crossing, on Ledra Street, the old ship amount to a failure for the EU’s enlar• north of the Green Line that has been sep• commercial heart of the capital, is di er• gement policy. Turkey does not recognise arating the Greek•speaking majority from ent. Crossing elsewhere takes planning; at the Republic of Cyprus, even though it is it• the Turkish•speakers in the north for more Ledra Street, you can cross on a whim. Af• self a candidate to join the club of which than 40 years, cutting the island of Cyprus ter the bland modernity of Greek•speaking Cyprus is now a member. Turkish•Cy• into two. On a recent spring evening busi• Nicosia, the Turkish side o ers a jumble of priots were promised access to all the fa• ness was humming as kebabs were rushed crumbling mansions and scru y bazaars, miliar instruments of European soft to tables in the alley outside its open• mosques of honey•coloured stone and power. Direct trade with the EU was to be fronted kitchen. Four other restaurants weed•†lled ruins. encouraged, and ¤259m was to be spent on opened nearby in the space of a week. Numbers of those crossing northward things like scholarships, waterworks and This mini•boom was prompted by in• nearly doubled to some 55,000 in the projects to foster links between the two creased freedom of movement. Politicians week after Ledra Street opened, with Cypriot communities. But progress has and security chiefs from both sides agreed crowds of Greek•Cypriots joined by the foundered on Turkish•Cypriot demands to open a new crossing•point round the odd sunburnt tourist. Sta at the Corado for direct trade and Greek•Cypriot block• corner from the Corado on April 3rd. The thought their new customers were at• ing of any project that implies recognition opening followed the election defeat of tracted by the low prices. Greek•Cypriots of the authorities in the Turkish north. A the island’s hardline president, Tassos Pa• said curiosity was a bigger lure. Either way, deadline for using the cash promised in padopoulos. The new president, Demetris being able to cross at Ledra Street feels long 2004 is drawing near, yet by March 2008 Christo†as, and the northern Cypriot overdue. The Republic of Cyprus, which in only 5% of it had been spent. leader, Mehmet Ali Talat, know each other legal terms means the whole island, joined well: they are comrades from the pan•Cy• the EU in 2004, and Cypriots on both sides All or nothing priot trade•union movement. This has of the Green Line are citizens of the union. In Brussels, Cypriot diplomats’ obstruc• sparked cautious optimism about fresh Yet the frozen con‡ict has only partly tion of EU projects designed to end the iso• peace talks launched in March. thawed. Around the corner from the new lation of the north cause anger. Many say Cyprus should never have been admitted as a divided island. In truth, the EU had no choice. Greece made it clear that it would not approve any new expansion of the EU unless it included Cyprus. Cypriot oˆcials often have the law on their side. The European Commission ad• mits, for example, that it is hard to plan in• frastructure projects in the north when an estimated 78% of private land there be• longs to Greek•Cypriot families. But insist• ing on those legal rights has costs. Free movement of goods, people and services is not just a technical aspect of life in the EU: the EU’s transformative power is based on economics. It was never likely that western Europe stopped warring and borders disappeared because Europeans became kindlier or more prepared to observe international treaties. Clearly, prosperity made sharing easier and cross•border trade made all par• ticipants better o . But in Cyprus, the past four years have o ered a demonstration of what happens when politics blocks that A new take on the Green Line economic alchemy: peace stalls. 1 The Economist May 31st 2008 A special report on EU enlargement 7

2 Strictly speaking, EU law is Œsus• warning that Turkish•Cypriot opinion has pended in the north, home to about become disenchanted with the EU in the 30,000 Turkish troops who never left after past four years and there is a real threat of invading the island in 1974 and driving a permanent partition. ŒIn Cyprus, the econ• third of the Greek•speaking population omy is a secondary issue, he says. He does from their homes. In the Turkish telling of concede that the recent adoption of the it, their troops came to bring peace after in• euro in the south solves one problem that ter•communal violence and a military has caused rows in the past: how to merge coup in the south aimed at uniting Cyprus currencies in a united Cyprus. with Greece. Since 1983 the northern side In his (much larger) palace on the south• has called itself the Turkish Republic of ern side, Mr Christo†as o ers just one rea• Northern Cyprus, an isolated non•state son for the failure of EU policies to pro• recognised only by Turkey. A recent study by a Norwegian group, mote free movement and trade. The In the eyes of Greek•Cypriots, the occu• the Peace Research Institute of Oslo (PRIO), Œso•called isolation of the north is Œa re• pation must be ended by a peace settle• suggests that a reuni†ed Cyprus could gain sult of the invasion and the occupation by ment under which all Turkish troops leave ¤1.8 billion a year from increased tourism the Turkish army of this part of the island and stolen Greek•Cypriot property is re• and freed•up trade with Turkey. Manthos of the Republic of Cyprus, he says. turned or proper compensation paid. A Mavrommatis, head of the Greek•Cypriot The largely unseen presence of that week before Cyprus joined the EU, Greek• chamber of commerce, notes that Greek• huge Turkish garrison is enough to dam• Cypriot voters rejected a United Nations Cypriot businessmen are a swashbuckling pen the optimism of many Greek•Cy• peace plan that they felt did not o er lot, investing in tough spots from Russia to priots. Mr Talat is widely dismissed as an enough on either front (but Turkish•Cy• Syria, yet Turkey is seen as o •limits even incidental †gure, with mainland generals priots voted yes). though it is the biggest market in the re• seen as the real powers in the north. Oˆcial †gures show two•way trade gion. Turkey’s refusal to open its ports and That points to another lesson Cyprus across the Green Line to be worth less than airports to Cypriot ships and airliners (de• o ers about EU enlargement. The EU’s ¤500,000 a month, with black•market spite a promise to do so) is driving away structure‹which pretends that all member trade perhaps †ve times as large. Turkish• more and more shipping business to rivals states, of whatever size, are equally impor• Cypriot goods are unwelcome in the such as Malta. tant‹does not †t well with the hard• south. Turkish•Cypriots themselves‹or at headed business of relations with big, least the 82,000 or so who hold Cypriot ID Right or might? powerful neighbours. In the EU’s calcula• cards‹come to the richer south for shop• Yet politicians rarely make an economic tion of how hard to push Cyprus and Tur• ping and free medical care. Greek•Cypriots case for peace. At his (legally non•existent) key respectively, Cyprus has EU member• head north for beaches, casinos and broth• presidential palace, the northern leader, ship, as well as the law, on its side, whereas els. But although workers are in short sup• Mr Talat, asked how he would try to per• Turkey can muster big strategic arguments. ply in the south, thanks mainly to a proper• suade Greek•Cypriots to back a future set• For a union that swears by the rule of law ty boom, only 6,000 Turkish•Cypriots tlement, does not mention free movement but has big strategic ambitions, that is an commute to work in the south. of people or goods. Instead, he issues a unacknowledged dilemma. 7 Largesse while it lasts

Lots of EU money is ‡owing to Poland and the rest. It must be spent fast

N APRIL, the red•and•white trains of the station stands a large billboard bearing the luted rivers and, above all, roads, bridges, IWarsaw metro †nally made it to Slodo• European Union’s blue•and•gold ‡ag sewers and other infrastructure. wiec in the north of the Polish capital, add• which explains that more than a third of Poland struggled, as newcomers al• ing an 18th station to the city’s single•line the 858m zloty (¤251m) cost of the new sta• ways do, to spend even the limited funds underground system. It had taken 25 years tion came from EU funds. on o er during its †rst years of member• of stop•start tunnelling to get there. Not counting farm subsidies, estimated ship. Since 2007, the start of a new seven• This summer a contract will be at ¤14 billion between now and 2013, Po• year EU budget period, the money taps awarded for a second metro line, running land’s slice of gross EU payments will have been wide open. EU cash must be from east to west. The tender says a main come to more than ¤80 billion, or ¤2,000 spent within a few years or it will be taken central section must be built and open to for every Pole. There is ¤13.2 billion for Œru• back, so governments across the region passengers in 46 months, in time for the ral development (say, tourism or light in• have to get organised, and Poland’s more Euro 2012 football tournament which Po• dustry in country areas), ¤734m for †sher• than most. land is co•hosting. That startling change of men and a staggering ¤67 billion for Slovenia and Slovakia have some good pace will require two things: lots of money Œcohesion policies that help poorer parts motorways. Riga has a gleaming airport. and a wholesale change in oˆcial thinking. of the union catch up. Cohesion funds pay The Czech ŒPendolino train from Prague The money is there. Outside Slodowiec for things like job training, cleaning up pol• to Bratislava is so impressive that it was fea•1 8 A special report on EU enlargement The Economist May 31st 2008

2 tured in a James Bond †lm, ŒCasino Roy• ale, albeit disguised as a train from Mon• tenegro. But Poland has only about 500km of motorways, and most big cities are still linked by perilous, lorry•choked two•lane roads. It can take †ve hours to drive the 300km from Warsaw to Kraków. High• speed trains remain few and far between, and even Warsaw airport’s new terminal, opened this year, has been a saga of delays and money rows. That is where the second change comes in. Polish ministers say they have at last The daily grind woken up to the need to move faster, sort out their creaking public•procurement sys• Worryingly for the Poles, it may be har• will do at least as well as Spain. tem and generally play the EU game. Polish der for big countries to get this right. In a The big di erence may come later. The plans call for 1,200km of new motorways small country a dose of EU funding can EU sent large sums to Spain well into its to be built in the next six years, and for the have outsize e ects, says José Ignacio Tor• second decade of membership, but few railway network to triple in length. reblanca, a Spanish expert on EU a airs: people think that EU cash will keep ‡ow• The foreign construction and engineer• ŒYou just need one good motorway to take ing to central and eastern Europe for that ing companies pouring into Warsaw are all your goods out. long. Lope Seco Gonzalez, who heads the sceptical it will all happen on time. They Spain‹with a population of about 40m Polish oˆce of Sener, a Spanish engineer• say that successive Polish governments people, close to Poland’s‹is often cited as a ing †rm, says Poland is going through the have quarrelled and dithered over every model of how to use EU money well. In a same experience as Spain two decades public project. Incoming administrations study for the Elcano Royal Institute, Mr Tor• ago, except that Œthis is going to be much, have scrapped plans that their predeces• reblanca found that in the two decades af• much faster. sors had agreed to. The bosses of govern• ter joining the EU in 1986 Spain received ment agencies seem unable to take deci• net transfers of ¤93.3 billion (at 2004 The gain for Spain sions, says a foreign executive. The law prices), the equivalent of an extra 0.83% of Several of the building †rms most actively allows †rms that lose tenders to appeal GDP growth each year for 20 years. chasing Polish infrastructure work are endlessly. Last but not least, oˆcials betray The new member countries suspect Spanish•owned. Slodowiec metro station a widespread lack of knowledge of envi• they will not be getting the 20 years of gen• was built by Mostostal, a Polish †rm 49.9% ronmental issues, and about how seri• erous assistance enjoyed by Spain and owned (and in e ect controlled) by Ac• ously the EU takes them. other southern European countries. Enlar• ciona of Spain. Four of the †ve consorti• Elzbieta Bienkowska, appointed re• gement is an expensive business, and old ums bidding for the second Warsaw metro gional•development minister by the cen• Europe is not in lavish mood. line are headed by Spanish or Spanish• trist government of Donald Tusk last No• Vaira Vike•Freiberga, a former president owned companies. vember, agrees that her country’s record of Latvia, describes ex•communist mem• Austrian, Portuguese, Greek and even has been poor. A new public•procurement bers as being caught in a nasty pair of scis• Chinese †rms are also sniˆng around the law is needed, she acknowledges, and sors. On the one hand, they have to catch honeypot of EU money. But Spanish †rms promises one is on the way: ŒIn Poland a up on 50 wasted years. On the other, she is do not just bring knowledge of EU funding company that loses a bid can appeal and not sure that Œolder members have been as rules, says Mr Gonzalez; they spent much appeal‹and then the funding disappears. generous with the new members as they of the 1990s investing heavily in Latin The public•procurement rules were drawn have been to each other at various times. America, where many had a rough time. up by Œmembers of parliament with a con• Is enlargement being done on the Spanish †rms say they are tougher than ri• trol•freak attitude, says a senior Polish of• cheap? It is a common charge, but compari• vals from countries such as France or Ger• †cial. Much of the red tape can be seen as a sons are diˆcult. All member countries many, slightly cheaper, and unfazed by reaction to the Œwild capitalism of the contribute to the EU kitty and get money convoluted bureaucracy. ŒWe are a little bit 1990s, Œwhen anything was possible. back. Rich ones contribute much more four•wheel drive, Mr Gonzalez suggests. than they get back and poor ones draw out Foreign contractors and their Polish How not to spend it more than they pay in. What really counts partners are going to need all the traction EU money can create the conditions for ec• is net transfers. In the †rst three years of its they can get. In some countries, EU funding onomic transformation, clearing infra• membership Poland did much better than may be something of a Œresource curse, structure bottlenecks and the like. But that Spain in the equivalent period, landing says Andre Wilkens of the Open Society is only the start of it. Portugal and Greece about ¤6 billion in net transfers against Institute, a group †nanced by George So• are routinely held up as cautionary tales Spain’s ¤2 billion (at 2004 prices). ros, a veteran †nancier. Mr Wilkens is al• against squandering the bene†ts of EU en• Spain’s payments from the EU reached luding to the disruptive e ects of oil or try. Portugal built some fancy roads but full speed around 1990. In the seven years mineral wealth cascading into fragile struggled to make its economy more com• that followed, the country received some states. The next decade will see a lot of con• petitive. Greece’s income per person in its ¤30 billion (at 2004 prices) in net transfers. crete poured in central and eastern Europe. †rst decade of membership actually fell It is too early to say what Poland will get in The newcomers need to ensure it is poured relative to the rest of the club. the seven years from 2007 to 2013, but it to good ends. 7 The Economist May 31st 2008 A special report on EU enlargement 9

Toxic legacy

What communism left behind

WICE a symbol of foreign oppression, steal fuel recovered from the clean•up for mine. In theory, a thick layer of rock kept Tthe disused Czech air†eld of Hradcany, use in their tractors. The job is due to be †n• the toxic stew away from an important a couple of hours’ drive from Prague, is ished about 2012, by which time it will aquifer, closer to the surface, that provides now a happily disorganised sort of place. have cost the Czech state more than ¤17m. the region with drinking water. But the On a recent spring afternoon its concrete Even then, the ground will be too contam• miners perforated that protective layer expanses, †rst built by Nazi invaders, at• inated to build on. with 15,000 injection wells, causing mas• tracted a learner•driver bunny•hopping By an unhappy coincidence, the Czech sive contamination. past deserted bunkers that used to hold So• Republic’s worst ecological disaster lies Today, Diamo must work night and day, viet †ghter jets. On another taxiway a just a few miles away, at the site of a ura• pumping clean water into the ground woman on rollerskates led two small girls nium mine that once supplied the Soviet through a line of wells to form a hydrolog• on bicycles. At weekends, cyclists mingle Union with fuel for warheads. As at Hrad• ical barrier that uses water pressure to with kite‡yers and microlight pilots. cany, the trouble is underground. From keep the worst poisons penned in. At the The air of subversive freedom is †tting. 1974 to 1996, Soviet and Czech technicians same time the old acid is pumped up for Since the Velvet Revolution, the image of carried out what they called Œchemical treatment. If Diamo stopped all this pump• the Czech Republic’s governments has mining for uranium below the town of ing, acid waste from the mine would con• been set by ex•dissidents, not the sleek re• Straz pod Ralskem. Over the life of the taminate the North Bohemian Cretaceous formed communists who clung to power mine, more than 4.3m tonnes of sulphuric Basin, explains Mr Kaspar. Asked who re• in some neighbouring states. The Czechs acid and other toxic chemicals were lies on that basin for water, he replies: ŒFor made a better job than most of opening pumped deep underground to leach out example, Prague. the archives of their communist•era secret the uranium. The acid mix was pumped The poison cannot be sealed o with a police and trying to keep ex•spooks away back up and the uranium separated out. physical wall‹there is too much of it, too from high oˆce (see next article). Prague Acid mining is used in the West too, and far down. Instead, Diamo must keep does not just look as rich as any Western with the right local geology need not be pumping, controlling the invisible menace city, it is rich: in terms of GDP per person, it dangerous, says Ludvik Kaspar, a young with what EU experts call Œdynamic con• is wealthier than any region of France out• engineer from Diamo, a state mining and tainment while slowly treating the worst side Paris. mine clean•up †rm which now runs the contaminants. Diamo executives say the And yet here in Hradcany the toxic lega• site. Unfortunately, he says, this is a terrible site should be stabilised by 2035, but it will cy of communism persists. Under the place for the method, and communist•era never be clean: under their plan, more birch and pine trees of the air†eld, black miners botched their work. They injected than a million tonnes of contaminants will pipes and hoses snake across the sandy more acid than they pumped out, so the be left underground. soil before disappearing into small well• solution ‡owed sideways, away from the The twin environmental catastrophes1 heads. An oily tang in the air o ers a clue: this cheerful place is the site of an environ• mental disaster caused by Soviet forces. The occupiers left some 7,000 tonnes of kerosene in the soil around the airbase from where it began draining into a nearby river. Some jet•fuel leaked from shoddy pipework and storage tanks. Other spills were deliberate. Czech workers from the air†eld have said that sometimes fuel•sup• ply trains would arrive before the base had room to store more kerosene. When that happened, the newly arrived fuel was poured on the ground. When the clean•up †rst began, a well dug anywhere within an area of a dozen hectares (30 acres) around the airstrip would reveal several centimetres of kero• sene on top of the natural groundwater. ŒWe used it as fuel, recalls Jirina Machac• kova, a scientist working for a company called Earth Tech who has been helping to clean up the site for 11 years. Locals would A mine that failed the acid test 10 A special report on EU enlargement The Economist May 31st 2008

2 of Hradcany and Straz are a fair metaphor nuclear power station, must shut it on EU compiled by Transparency International, a for the legacy of communism. To a tourist orders by next year. Nuclear power plants pressure group. Estonia comes 28th. ŒThat or a business traveller, the Czech Republic, are easy to see and fret about, but there are is a good result for a new member state, Hungary or Latvia, and especially their plenty of less visible nasties. Old land†lls says Mr Hololei, Œbut without the Soviet smart capital cities, may look like any cor• across the region, for example, could take legacy Estonia might be in the top †ve. ner of the Western world. But decades of tens of billions of euros to clean. Mr Bursik, the Czech environment min• communism left poisons that linger on. Yet there are also some bright spots. Wa• ister, says ex•communist societies not only The old system’s environmental abuses ter quality in the new members, except in distrust their elites, they also lack con†• cannot be separated from other crimes Hungary, Romania and Bulgaria, is ap• dence in their own civic strength. A senior committed in the name of state socialism. proaching EU standards, says Mr Miko. oˆcial in Warsaw complains that the low The Czech environment minister, Martin Four years ago, at the time of the big•bang quality of the civil service holds his coun• Bursik, notes that ecological protests pre• enlargement, their water quality was Œlike try back, but nobody cares enough to ceded the Velvet Revolution of 1989 as citi• the West in the 1970s. change it. ŒOne of the most popular tab• zens of the industrial ŒBlack Triangle near loid stories here is that bureaucrats are Poland and Germany demanded to know Poison of the mind paid too much, he sighs. ŒAnd of course what was in their choking air. The picture is just as complex when it the opposite is true. The salaries are mi• The coming of democracy brought a comes to ideological legacies. Famously, serable, he says, and administration ‡urry of environmental legislation. But it the sweeping away of old hierarchies was wretchedly bad. ŒThere is a lack of recogni• was the prospect of EU entry that gave followed by spells of wild capitalism in tion in Poland that an eˆcient civil service such laws teeth, says Ladislav Miko, a which too many gains were ill•gotten. Yet is a big bene†t. Czech environmental oˆcial who now those years also saw a big infusion of fresh Such reformers welcome the EU as a works at the European Commission in thinking as clever, often foreign•educated source of rules and rigour. But even new Brussels. Inspectors could exert pressure reformists became government ministers EU laws can be subverted by the genius of on large †rms to †t clean technology be• at a young age, and still do. In capitals ex•communist citizens for †nding loop• cause it would become mandatory once across the region, those young reformists holes, says Mr Miko, the environmental of• the country joined the EU. (Many small draw very similar conclusions about the †cial. When transposing EU directives into †rms kept old, †lthy factories open until legacy of communism. national laws, local lobbies will often push EU accession, then declared bankruptcy.) Corruption is a huge problem, says for some ambiguous wording to be used. The EU has budgeted ¤5.78 billion for envi• Henrik Hololei, who used to be Estonia’s ŒSometimes you can work out what is be• ronmental work in the Czech Republic be• economics minister and is now a senior hind it: aha, these people want to shoot tween 2007 and 2013, but the problems Eurocrat in Brussels. ŒIn Soviet times, wolves. Sometimes the e ect of a loop• dwarf the sums available. cheating the state was like freedom•†ght• hole emerges only later. Much Western media attention has ing. He points to the contrast between Es• As in the poisoned soil and water of been concentrated on communist•built tonia and Finland, which share very simi• Hradcany and Straz, communism left men• nuclear power plants. Bulgaria and Slova• lar histories and cultures. But Finland was tal and political legacies that cannot be kia had to promise to shut plants down be• spared Soviet occupation and now enjoys walled o . But nor are they safe to be left fore joining the EU. Lithuania, which pro• top billing, jointly with Denmark, as the alone. Dynamic containment will be duces 72% of its electricity at a single least corrupt country on earth, in an index needed for years to come. 7 Bury your hatchets

ðor grind your axes?

OES it matter if the European Union’s 1980s. Often the e ect has been positive, laws committing them to opening their se• Dtop echelons include men who have bringing in people who do not take free• cret•police archives, as was done in the for• done wrong in the past or who prospered dom for granted. The union’s current for• mer East Germany. Some countries went under nasty regimes? Look round the table eign•policy chief, Javier Solana, was an un• further, establishing Œlustration policies at the governing council of today’s 27• derground Socialist in Franco’s Spain. The (the word comes from the Latin for ritual strong union, and more than half the president of the European Commission, puri†cation) that vetted senior public ser• heads of government have experience of José Manuel Barroso, was an 18•year•old vants, politicians, judges and the like with life under dictatorship‹not all of them on Maoist when revolution came to Portugal the help of secret•service †les. But such the right side. (and did his bit by setting †re to his univer• laws were often watered down or under• The EU has admitted young democra• sity rector’s car). The German chancellor, mined, and results have been mixed. cies before. In fact, nearly two decades af• Angela Merkel, grew up in former East Ger• Oˆcially, the EU takes no interest in the ter the fall of the Berlin Wall, the ex•com• many, and no dark shadows were revealed political or moral records of national lead• munist nations have a longer period of free when her Stasi †les were made public. ers as long as their actions do not breach elections behind them than Greece, Spain In the †rst years after 1989 most of the the law. Prospective member countries or Portugal did when they joined in the ten ex•communist newcomers passed have been ordered to reform their legal sys•1 The Economist May 31st 2008 A special report on EU enlargement 11

2 tems and create independent anti•corrup• pent•up suspicions exploded. A new lus• tion agencies. But the opening of secret•po• tration law sought to vet as many as lice †les or the banning from oˆce of 700,000 Poles, including journalists, local ex•spooks has never been made a condi• councillors and high•school teachers. Its tion of EU entry. War criminals are di er• scope was sharply reduced by the constitu• ent, with future membership for Croatia, tional court, but as many as 100,000 peo• Serbia and others formally linked to their ple are still being investigated. governments’ full co•operation with the In Romania it was not until 2006 that international war•crimes tribunal for for• key Securitate †les and a master index mer Yugoslavia. were handed over to an independent insti• For citizens of the new member coun• tute. This year the government had to issue tries the dividing line between corruption an emergency decree to keep that institute and secret•police links is blurred. The oli• open after a court judgment ruled its work garchs who bene†ted from the early years unlawful and threatened to annul thou• of privatisation were widely believed to sands of investigations already carried out. have had, at the least, good links with the The campaign to open †les in Bulgaria old regime’s intelligence services. has been equally laboured, says Hristo What does all this imply for the EU? Hristov, an investigative journalist and au• Some say nothing, arguing that after 20 thor in So†a. ŒLustration is usually a pop• years it is too late to revisit the past. The big ular topic among politicians when they †sh, it is argued, ensured long ago that their are in opposition, he notes. Bulgaria’s var• †les vanished from secret•police archives, ious spy archives have still not been and today’s calls for lustration are mainly handed over to an independent commis• about score•settling and factional †ghts. sion (implausibly, the government says it is Besides, who can be sure that the †les had still trying to †nd a building big enough). got things right? Names have trickled out, though. In March One good argument against lustration The Kaczynskis got vetting a parliamentary report said that one in †ve is that the privatisation era is now largely of all ministers in oˆce since 1990 had a †nished. Former agents long ago turned mir Meciar for much of the 1990s, it took past as a collaborator with the communist their secret•police connections into wealth until 2004 for †les to be properly opened. secret services. Bulgaria’s president, Ge• and forms of in‡uence that do not involve Slovenia quietly Œburied its communist orgi Parvanov, was named as a collabora• public oˆce and thus cannot be touched past after splitting from Yugoslavia, its for• tor last year. He says he was approached to by lustration, says Georgi Stoytchev, head eign minister, Dimitrij Rupel, said last year, edit a book and did not realise he was deal• of the Bulgarian branch of the Open So• putting national unity ahead of examining ing with spooks. ciety Institute, a think•tank. past wrongs. The passage of time may have helped. Others note that ex•communist coun• The Baltic states, as former parts of the In Slovakia delays in opening the archives tries are not the only ones to send bad men Soviet Union, saw most of their KGB †les meant that the truth came out Œat a mo• to ministerial gatherings in Brussels or to vanish to Moscow, and there have been ment when we could deal with it, sug• be slow to tackle the past. For example, it wrangles ever since about opening the bits gests Mr Beblavy of the Slovak Govern• took more than 50 years for Maurice Pa• left behind in Latvia, Estonia and Lithua• ance Institute. It made the evil of that time pon, a French budget minister in the 1970s, nia. A band of former KGB agents took Œtangible for a new generation. Those to be convicted of organising the wartime Lithuania to the European Court of Hu• named as informers need not be hated, he deportation of French Jews. And there are man Rights, complaining about a law ban• says. But after reading someone’s †le, he well•established links between the Ma†a ning them from both public and private adds: ŒIt is very hard to respect them. and Italian politics. employment. The court conceded that al• As far as the EU is concerned, the best though the public ban should stand, they argument for pressing on with opening A slow excavation should be allowed private•sector jobs. communist archives in the union’s newest Yet there is a hunger for greater transpar• In Hungary, it took until 2004 for a law members may be a back•to•front one. It ency. In March four oˆcials in the Czech to be passed to open the state security ar• surely says something troubling about the interior ministry were asked to resign over chives fully. Even then, it allowed names to security services and politicians in a mem• links with the old secret police. The Czech be kept secret to protect modern•day Œna• ber country if they block the release of se• press has recently developed a taste for tional security. cret•police †les from a defunct dictator• combing the †les of celebrities and enter• Poland’s †rst formal lustration law, in ship. And member countries now have to tainers. Generally, the Czechs made a 1997, was Œvery, very weak, says Andrzej place much more trust in each other’s secu• pretty good job of opening their †les. Paczkowski, a governor of the country’s In• rity and legal systems than before, thanks Shortly after Czechoslovakia split in 1993, stitute of National Remembrance, fuelling to ambitious new EU instruments in the the Czechs opened their archives to those the public’s suspicions that plots and shad• †eld of criminal justice. For example, a Eu• who had been spied on and in 2003 pub• owy networks were responsible for the ills ropean arrest warrant issued by a judge in lished a list of 75,000 agents and infor• of post•communist life, from high unem• one country must be enforced more or less mers. Thousands have been banned from ployment to botched privatisations. When automatically in other EU nations. That re• public oˆce under a lustration law. the centre•right party of Lech and Jaroslaw quires a big leap of faith. Just how big is the In Slovakia, led by the autocratic Vladi• Kaczynski came to power in 2005, those subject of the next article. 7 12 A special report on EU enlargement The Economist May 31st 2008

Trust me

The theory and the practice of the rule of law

N THE European Union, rhetoric often also has the power to suspend Europe• would lose ground. Iprecedes reality. From earliest days, its wide recognition of court judgments in Bul• Romania, Bulgaria and several other founders followed the principle that garia and Romania. That would be serious. countries admitted to the EU since 2004 where †ne words led, with a bit of luck The EU principle of mutual recognition started sliding away from the rule of law facts would follow. Sometimes, though, means that many civil rulings can be en• almost as soon as they entered. The case is the gap between what the EU declares and forced across borders. A European arrest put forcefully by Alina Mungiu•Pippidi, a what its citizens sense in their guts grows warrant can send Italian police to pound Romanian academic, who calls the EU ad• dangerously wide‹and that is when the on doors in Rome at the request of oˆcers mission process a Œnearly miraculous in• union gets into some of its worst jams. in London, and can secure a suspect’s swift centive for governments to clean up their Take the rule of law in the enlarged EU extradition. act. But the e ect wore o the day they of 27. Oˆcially, all members of the club are But few expect the sanction to be in• were in, Œlike a short•term anaesthetic. assumed to be equally committed to up• voked. EU oˆcials acknowledge the con• The EU enlargement process is aimed at in• holding Europe’s legal rules (as de†ned by tradiction involved in asking people to tegrating new members into the web of EU the 80,000 pages of Euro•law that new trust the new member states even as they standards, rules and subsidies, not at trans• members must adopt), as well as the wool• issue devastating reports about them. But forming its political rulers, says Ms Mun• lier virtues of ŒEuropean values. But does the oˆcials also say that very little would giu•Pippidi. So as long as islands of excel• anyone believe Bulgarian judges, as a be gained by suspending mutual recogni• lence within national bureaucracies were group, are as determined to crack down on tion. Crooked judges Œwill just laugh at us, able to churn out what the invigilators in organised crime as, say, their Swedish argues one oˆcial, whereas reformers try• Brussels wanted, the accession process counterparts? Since 2001 there have been ing to change the system from within trundled happily along. an estimated 120 contract killings in Bulga• Her evidence makes depressing read• ria, and not one of them has been solved. ing. For example, with accession safely ac• This summer the European Commis• The way they live now 4 complished, the Slovene parliament voted sion will publish reports on the justice sys• Agreement with these statements, % polled to close down an EU•inspired anti•corrup• tems in Bulgaria and Romania (both of tion commission, which had to be saved A market economy is preferable which are on probation until the end of to any other economic system by the country’s constitutional court. In 2009). Interim reports in February were Democracy is preferable to Latvia the prime minister tried to †re the not kind. Bulgaria, the commission found, any other political system head of his country’s anti•corruption had not produced convincing results in There is less corruption now than around 1989 agency until a public outcry stayed his †ghting high•level corruption and orga• hand. In Romania the justice minister, nised crime. Of a sample of ten high•pro• 0 10 20 30 40 50 60 70 Monica Macovei (revered in Brussels as the †le Ma†a cases registered between 2000 Slovenia country’s most e ective sleaze•buster), and 2007, only one had been concluded. was sacked three months after EU entry, ac• Ordered to clamp down on corrupt oˆ• cused by her prime minister of failing to cials at border posts, the customs service Estonia uphold Œgovernment solidarity. had suggested annual checks. This March it was the turn of the Bulgar• Czech Romania’s report uncovered less blood Republic ian interior minister, Rumen Petkov, to lose but more cynicism. ŒProcedural errors his job, this time under heavy pressure had blocked criminal probes into corrup• Romania from Brussels. A leaked intelligence report tion by serving or former ministers. Roma• said a drug gang had received top•secret nia’s parliament had made signi†cant Slovakia documents from oˆcials in his ministry, changes to a criminal•investigation law, in• and Mr Petkov admitted to having met sus• cluding a demand that suspects be in• Poland pected organised•crime bosses, though he formed in advance if their telephone was says he was trying to stop contract killings. going to be tapped, and the downgrading All this murk is having an e ect on the Lithuania of embezzlement worth less than ¤9m to a EU’s ability to push ahead with closer co• Œminor o ence. Under heavy EU pressure operation in justice and home a airs. En• the parliament is currently taking a second Latvia thusiasm for strengthening Europol, a look at this law. pan•EU police agency, and Eurojust, which The commission has already sus• Bulgaria brings together European public prosecu• pended tens of millions of euros in funds tors, has been diminished, says a senior of• for Bulgaria, for fear of fraud. Barring a dra• Hungary †cial. ŒOn the other hand, he adds, Œif you matic change, the next report may well re• want to combat serious organised crime, commend freezing billions of euros. The EU Source: EBRD you need to work with the Bulgarians. 1 The Economist May 31st 2008 A special report on EU enlargement 13

2 The broader rule of law has also come was a big issue. ŒThere are old member ders to a neighbour’s goods. Bulgaria’s Mr under strain. Populists, of both the buf• states that would not pass that degree of Petkov was doubtless a ‡awed interior foonish and the sinister variety, have done scrutiny, the oˆcial adds. But complying minister, but he did resign in the end. His alarmingly well in elections across the with benchmarks does not prove a coun• departure was hastened by an independ• new member countries since 2004. In Slo• try is ready. It might simply mean that the ent body founded two years ago at the EU’s vakia, Vladimir Meciar, who led his coun• EU had set the wrong benchmarks. urging, the National Security Agency. try away from the democratic path in the It is also true that foreigner•bashing Vaira Vike•Freiberga, the former Lat• 1990s, returned to oˆce as a junior mem• populists have done well at recent elec• vian president who steered her Baltic re• ber of the current ruling coalition. The cur• tions across old Europe: just look at voting public through the accession process, de• rent Slovak government recently intro• patterns in France, Belgium, the Nether• scribes EU membership as a gradual duced a worryingly broad press law that lands, Denmark and Austria. But pointing process that does not end on the day of ac• allows those criticised by the newspapers to ‡aws in long•standing member coun• cession: ŒIt is not like being a born•again the right to a prominent rebuttal. tries is a double•edged argument: if EU Christian, where supposedly the Holy After their countries joined, voters in membership is an inherently civilising Ghost descends on you and from then on Romania and Bulgaria sent a clutch of process, as many Eurocrats claim, why is it you are a di erent person. hardline nationalists to sit in the European that half a century in the club has not yet In Bulgaria, Georgi Stoytchev of the Parliament. In Hungary, violent street pro• made Italy a model of good governance? Open Society Institute says the EU can tests broke out after the prime minister ad• Ironically, one force that may have never mobilise society against organised mitted to lying about the state of the econ• stunted political development in the new crime from the outside. To many ordinary omy to win re•election. Poland’s †rst years members is the process of enlargement it• Bulgarians, smuggling gangs mean Œcheap as an EU member saw a string of political self. With the best of intentions, EU oˆ• cigarettes and cheap alcohol. If gangsters crises as Lech and Jaroslaw Kaczynski, cials and Western diplomats emasculated shoot gangsters, it is one way of dealing identical twins, shored up their conserva• governments in the ex•communist block, with the problem. The government, he tive coalition government with radical na• hemming them in with action plans and predicts, will act only if it is leant on by le• tionalists and populists. targets so that it barely mattered which gitimate business lobbies. party was in oˆce, since all were commit• The best argument for letting in coun• Why the time was right ted to achieving EU membership. Ivan tries like Bulgaria and Romania sooner Do such antics add up to proof that enlar• Krastev, a Bulgarian academic, has written rather than later is the most modest of all: gement was premature? Defenders of the that for ordinary voters the accession era waiting a few more years would not have EU accession process say no, o ering vari• felt like a powerless time when they could done any good. A whole generation of cor• ous arguments to support their claim. The Œchange governments but not policies. rupt old judges will have to leave oˆce be• most widely used and least convincing is Perhaps a better argument for defend• fore things change, says an EU oˆcial. ŒMy that the accession process was extremely ing enlargement is a more modest one: that only hope is the younger generation wants rigorous. The new members underwent EU membership has proved more useful to do it di erently. Reformers in that far tougher scrutiny than previous en• than the pessimists think, despite its limits. younger generation need protecting, both trants, says one senior commission oˆcial: EU rules put a lid on the havoc that nation• for the sake of their own country and of Bulgaria and Romania faced detailed ques• alists can wreak, for instance. They make it Europe as a whole. A look at the rest of the tions about the treatment of prisoners, for unlawful to discriminate against ethnic western Balkans suggests that this is more example, and in Cyprus domestic violence minorities in the job market or close bor• easily done inside the EU than outside. 7 Give and take

Enlargement enriches old as well as new members

HIS report has looked at some of the of greenhouse gases by 2020. Fears of be• on French lines, and older oˆcials still take Tways in which the EU has changed the coming too dependent on Russia played a the quasi•Cartesian view: I regulate, there• 12 new members. But the newcomers have big part in persuading the new entrants to fore I am. But many of the newcomers also changed the EU in many ways. Here sign up to the EU’s climate•change deal have already pushed through liberal re• are some of them. (which also stresses energy security). They forms at home, perhaps during spells as ju• An expansion to 27 members would remain worried by their big neighbour to nior ministers, which makes the best of cause institutional gridlock, it was forecast. the east, and their presence has made EU them impatient when told that the EU is That turned out to be spin to justify stream• debates on Russia more hard•headed. too hard to reform. lined voting rules contained in the Lisbon The European Commission is recruit• The Vatican has done well out of the lat• treaty. Not only is there no gridlock, but ing a whole generation of Eurocrats from est enlargement, comments an oˆcial. It is with 27 countries represented round the ta• the new members who are slowly chang• not just Poland that brings Roman Catholic ble there is less wa‰e than before. ing the place. For one thing, they speak En• values to Brussels. Courts in Malta, an is• Big deals have been concluded, notably glish, not French. More fundamentally, the land nation of 400,000 people, do not is• an agreement to cut 20% o EU emissions EU institutions were originally designed sue divorces, and abortion is illegal there.1 14 A special report on EU enlargement The Economist May 31st 2008

tion, the journey cannot continue. But a clause in the French constitution (a sop for the anti•Turkey camp from the previous president, Jacques Chirac) obliges France to hold referendums before approving new accessions after Croatia’s. Given French voters’ views, the clause makes Turkish entry talks pretty pointless. Back in April Mr Sarkozy was arguing for the clause to be scrapped. After a parliamen• tary outcry he is now wavering. Go forth and multiply Turkey itself, meanwhile, seems rather disillusioned. When Eurobarometer poll• 2 Various forms of gay partnerships and is no shortage of strategic arguments in fa• sters asked Turks whether membership marriage have sprung up across the EU. vour of its accession. It is a large, secular was mainly in their interest, the EU’s inter• That would normally have prompted the Muslim democracy. It controls the Bospo• est or in the mutual interest of both, the European Commission to propose mutual rus, as well as gas or oil pipeline routes that largest block of respondents (34%) thought recognition of such unions, to avoid mud• would allow Europe to become less de• the main bene†ciary would be the EU. Per• dle when couples move. But with Malta pendent on Russia for its energy supplies. haps surprisingly, some senior EU †gures and Poland in the club, it is Œnot worth put• Such arguments mark Turkey out as impor• agree. ŒWe need Turkey more than Turkey ting it on the table at the moment, says the tant. But many Europeans clearly feel that needs us, says Mr Verheugen. oˆcial. is not the same thing as saying it should Such statements may shock Europeans, join the EU. Any enlargement of the club but they need to hear them. They are too How many more? must be agreed on by all existing members. used to seeing enlargement as a charitable The new members are generally keen on The most recent Eurobarometer poll on en• gift from a rich West to its poorer neigh• further enlargement of the union. Many largement found that 69% of Germans, bours. It is hard work for both sides. But it is would like to bring next•door neighbours 54% of French and a striking 81% of Aus• also an almost magical tool for stabilising a into the fold. Poland, for example, is a tire• trians were opposed to Turkish entry. whole continent, creating new markets less advocate for Ukraine. But the going is Olli Rehn, the EU’s current enlargement and letting free trade and free movement slow now because the easier cases are al• chief, likens the EU accession process to a build ties of interdependence. ready in the club. Croatia is not really ready journey that matters as much as the desti• For these reasons and more, Europe’s to join, if only because of organised crime, nation. Europe wants Turkey to become most recent expansion was not just a good but the EU wants to stabilise the western more modern, democratic and stable be• idea. In retrospect, it will be seen as one of Balkans, so it will get in around 2010. For cause Turkey has strategic importance as the EU’s most signi†cant achievements. It the same reason, everyone wants to en• Œan anchor of stability and a benchmark reunited a continent divided by Soviet op• courage Macedonia, Bosnia•Herzegovina, of democracy for the wider Muslim pression and brought into the European Montenegro and Albania to keep on the world, he says. The best way of achieving fold nations that had previously hovered path towards membership (Albania is go• those changes is the process of becoming on the edges of the West. If it were tried ing to take a while). Serbia, for its part, has an EU member. So to him, Œimportance now, it would be far harder to pull o . Eu• to choose if it wants to stay on the demo• and membership are inseparable. ropeans everywhere should be glad it hap• cratic path or head into self•imposed isola• If membership is ruled out as a destina• pened just in time. 7 tion, oˆcials say. Depending on its choice, it could achieve formal candidate status O er to readers Future special reports quite quickly or be out in the cold for years. Reprints of this special report are available at a Countries and regions The hardest case of all is Turkey. Its price of £3.50 plus postage and packing. The Koreas September 27th membership bid is currently in a form of A minimum order of †ve copies is required. suspended animation. Entry negotiations Business, †nance, economics and ideas Corporate o er The future of energy June 21st have been partly frozen to punish Turkey Customisation options on corporate orders of 100 Terrorism July 19th for its refusal to open its ports and airports or more are available. Please contact us to discuss The business of sport August 2nd to traˆc from Cyprus. The French presi• your requirements. Globalisation and emerging markets dent, Nicolas Sarkozy, remains publicly op• Send all orders to: September 20th posed to Turkish membership but has The world economy October 11th agreed to put high•level EU debate on the The Rights and Syndication Department subject on hold until 2010, when a report 26 Red Lion Square on the future of the EU by a Œgroup of the London WC1R 4HQ Tel +44 (0)20 7576 8000 wise (which was Mr Sarkozy’s idea) is due Fax +44 (0)20 7576 8492 to be delivered. Turkey has serious prob• e•mail: [email protected] lems of its own, starting with a court case that threatens to outlaw the ruling Justice For more information and to order special reports Previous special reports and a list of and Development (AK) party for threaten• and reprints online, please visit our website forthcoming ones can be found online ing the country’s secular order. www.economist.com/rights www.economist.com/specialreports Will Turkey ever join the union? There