Download Accession candidates bear the brunt of EU inability to reform

Talking point
Accession candidates bear the brunt of EU inability to reform
The European Commission outlined on Wednesday its proposals for financing enlargement. The total amounts
proposed (see table below) are below the expenditure ceilings foreseen in the financial framework 2000-2006, which
was based on the admission of six candidates rather than ten as now envisaged. Two factors explain this apparent
conjuring trick. First, the resources needed for the larger group will be available owing to the later accession date
(2004 instead of 2002 as foreseen in the Agenda 2000). Second, the relatively long transition periods mean that the
new members will not receive the full amount of financial transfers within the term of the current financial framework.
Present EU members have little cause to complain about the costs of enlargement: at most a trifling 0.14% of GDP
of the EU-25 will be spent on expenditures in the new member states. Besides, the old members had over a decade
in which to reduce the foreseeable, high budgetary costs that will be incurred in these areas for fully equal treatment
of the new members, by reforming the Union.
Main points of the Commisson's proposals:
In the Common Agricultural Policy direct payments are to rise in the first phase (until 2006) to 35% of the present
support level. In the second phase, up to 2013, they are then to be raised gradually to 100% of the support level then
applicable. The Commission explicitly states, however, that this transitional system would not prejudge any changes
in the nature of the regime. This caveat reflects the hope that before the next financial framework (2007-2013) is
decided the EU will agree on a fundamental reform of the CAP - possibly as soon as the mid- term review of the
Agenda 2000 - under which the member states would make a considerable contribution towards the co-financing of
direct payments. Disappointing as these proposals are for most candidates, and especially Poland, they avoid
creating false incentives for distorted structural developments in the new member countries as well, and provide a
chance to give the CAP in the enlarged Union a much stronger market orientation.
For structural actions a transitional period of three years is foreseen. The restriction of regional-policy transfers to 4%
of national GDP means that, for the time being, the new members will receive considerably less per capita of their
population than the present beneficiary countries. But this level will probably exhaust the new members' absorptive
capacity in any case, particularly since a considerable amount of co-financing has to come from the national budget
for projects financed with monies from the regional fund. It therefore makes more sense, as proposed by the
Commission, to include in the new members' envelopes for structural actions a relatively higher share from the
cohesion fund (30% compared with 18% for present beneficiaries), which requires very little or no co-financing from
the beneficiary member state. In the medium term, though, the funds for structural actions will definitely have to be
concentrated on the neediest regions, and that essentially means regions in Eastern Europe.
The Commission's proposals have opened the most delicate phase of the enlargement negotiations, which the EU
wants to see completed by the end of this year. Based on the proposals, the Commission will draft a common EU
negotiating position in the course of March. It is scheduled that the common position will be finalised towards the
close of the Spanish EU presidency at the end of June, i.e. after the French elections but before the elections in
Germany. Since the differing interests of the present EU members will make it difficult enough to arrive at a common
position, there is going to be little negotiating leeway left for the candidates.
There is no doubt that the Commission's proposals do not go far enough, economically and with regard to the
financing of enlargement in the long term. A determined break with the obsolete, inefficient redistribution system in
the Union would not only be welcome but also urgently necessary in view of the new tasks facing the EU. At the
same time, it is easy to understand the disappointment of the candidates, who have been doing their bit in carrying
out radical, painful structural reforms and are now to face a considerable waiting period before they enjoy the full
financial solidarity of the EU. But it would not have helped the whole enlargement process if the proposals - which
will form the basis for the common negotiating position of the EU - had had no chance of obtaining political
acceptance among the current member states. Seen in this light, the paper must indeed be seen as the "best
possible deal" (Commissioner Verheugen), balancing the legitimate expectations of the candidate countries and the
unwillingness of the old members to make any sacrifices.
Author: Barbara B t t c h e r