In a historic redefinition of the continent's economic and political boundaries, on Saturday, May 1, the European Union will reach deep into the former Soviet bloc to add 10 new member countries. Even as the celebratory champagne goes flat, though, the free-trade club will be forced to ponder just how far it can stretch the geographical definition of Europe and address the question of whether a country can be part of the European Union without really being a part of Europe.
Of course, digesting Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovenia, and Slovakia—which will boost the union's total population by 20 percent to 455 million people and boost total gross domestic product by 6 percent—will be the first order of business. And—contrary to Groucho Marx's maxim about not wanting to be a member of any club willing to accept him—there are lots of others in line. Bulgaria, Romania, and Croatia, which didn't make the cut this time around, are on deck for admission around 2007, and a string of other Balkan countries are queuing up to join.
In December, Turkey will learn whether it will be permitted to begin accession negotiations 17 years after first applying for membership. Georgia, Lebanon, Moldova, Morocco, Ukraine, and even Russia have all been mooted as possible eventual members of the union, which has come a long way since its humble beginnings in 1951 as a way for Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany to coordinate their coal and steel industries.
Why all the interest? EU members—once they've jumped through all the hoops, a process that can take years following formal accession—have access to the single largest free-trade zone in the world, allowing not just free trade, but also (in theory, at least) the free movement of labor. A 2001 study by the European Union estimated that the GDP growth of countries joining the club could increase by 1.3 to 2.1 percentage points. EU members have the option of eventually adopting the euro. And it's difficult to overestimate the psychological boost a struggling nation receives upon being anointed as part of Europe.
The European Union is focused on expansion as part of its overriding goal of building "an ever closer union among the peoples of Europe," as enshrined in the Treaty on European Union. But before even starting accession discussions, would-be member nations have to fulfill the basic requirements for membership: democracy, the rule of law, respect for human rights, a functioning market economy, and the ability to implement EU rules and policies.
And that's the easy part. New members have to bring their national and local legislation into line with ("harmonize," in EU-speak) the 97,000 pages of rules and regulations that control everything from fiscal policies to labor conditions to environmental protection to quality standards for bananas. The bureaucracy imposed by the European Union is so daunting that critics in Central and Eastern Europe suggest that new member nations are replacing the central planning regime of the former Soviet Union with a new form of government-by-diktat, only now with Brussels, the bureaucratic heart of the union, as the despised taskmaster instead of Moscow.
Perpetually clashing national interests, and the threat that a veto by a single member state could upend months of painstaking policy horse-trading, already clog the sclerotic bureaucratic arteries of the organization. Political squabbling has delayed agreements that would institute a new decision-making framework for the expanded union. Meanwhile, the complexity of any decision or discussion increases with every additional country involved—and that's assuming that everyone will even be able to understand each other: With 20 official languages, even the act of sitting around a conference table is daunting.
The challenges for new members extend far beyond the linguistic. According to Eurostat, the fresh crop of EU entrants have an average GDP per capita equivalent to just 47 percent of that of the current 15 members. That means that the new members will be net recipients of EU funds for years to come—at the expense of the club's wealthier members. But, wary of sacrificing their hard-earned prosperity, the old guard isn't giving the latest EU rookies the same deal as economic underperformers Ireland (which joined in 1973), Greece (1981), and Spain and Portugal (1986) were offered, even though funding has fallen as they've made progress in catching up—the per capita income of star performer Ireland is now 121 percent of the EU average, according to the Economist, up from just 62 percent when it joined.
"Eastern Europeans are getting second-class status in the EU," Marian Tupy of the Cato Institute told me. For example, current EU members will restrict the movement of labor of citizens from new member states for between two and seven years after enlargement, and the amount of funding available to finance a wide range of infrastructure and development projects will be a small fraction of that set aside for previous entrants. Also, it will be a decade at least before farmers in new member states receive subsidies in line with those currently enjoyed by farmers in France and Germany. For the sake of comparison, the European Union spends twice as much as the United States on farmer subsidies.
Economic growth has more to do with investment flows, market integration, and smart economic policies than with EU handouts, argues the London-based Centre for European Reform. But, even assuming EU-beating rates of economic growth, it will take Poland 59 years to catch up to the average GDP per capita of the current 15 members; Hungary, 34 years. Cyprus leads the new entrants, with just 21 years to go.