What enlargement means to both sides

 Lewes Links Celebration Evening, Lewes, May 1, 2004

Remarks by Stephen Quigley, European Movement, Sussex Branch

Thank you and good evening, ladies and gentlemen

 I am very pleased to be taking part in these celebrations. I have taken a keen interest in what has been happening in Eastern Europe for many years.

 Eighteen months ago I was part of a European Movement group that went to Poland on a study tour to see how the country was preparing for accession. 

 But long before that, in 1990, I was asked by IBM, for whom I was then working, to visit the region and do a report for our corporate magazine on our business there. 

 I visited East Germany, Poland, Czechoslovakia as it was then, Hungary, and Yugoslavia, including what is now Slovenia.

 It was an exciting time.  A cloud had been lifted.  The talents and skills of the peoples of those countries could now be harnessed in a free environment.

 There was so much to do to catch up. No banking system worth bothering about, poor telecommunications, infrastructure overall was inadequate for a modern state. And the environmental damage caused by uncontrolled emissions from antiquated power stations, and smoke stack industries, not to mention the ubiquitous Trabbie, was a blight in many areas.

 And the political situation was far from stable. Democratic institutions were having to be built from the ground up.  I remember interviewing Yugoslavia’s deputy prime minister in Belgrade.  He was soon gone.  

 Today the transition to a modern democratic, free market economy is virtually complete in eight countries formerly part of the Soviet Bloc.

 It’s ironic that it is also the day when the Soviet Union used to make a show of its military strength in Red Square and its power to suppress. 

 I was at a seminar earlier this week when a former British ambassador to Hungary, Sir John Birch, one of the 52 signatories, told how a local employee in the embassy got a call from his son-in-law who on an exit visa to attend a conference in Cologne.  He and his wife were not coming back.

 The man was terrified.  Would he lose his job. Would he ever get a job again. Would he lose his house. 

 ‘Joining the European Union will mean many things for the inhabitants of Eastern Europe,’ said Sir John.  ‘It will perhaps above all remove from them the fear of the hand of the state.’

 It’s 15 years since the Berlin wall came down that started the break up of the Soviet empire.  Fifteen years is a long time and there are those who believe Brussels should have brought them in a good deal earlier. 

But that would have required courage and strong leadership.

 That’s something you can’t really expect from an organization that is part communautaire and part intergovernmental and that has to accommodate so many different interests.  

 Each accession state had therefore to follow the procedures laid down by Brussels and satisfy the criteria set by the European Council in Copenhagen in 1993.  And they had to implement in their own legislation all existing European legislation, the infamous acquis communautaire contained in those 80,000 pages. 

 But whether the negotiations were protracted or not, Eastern Europe has returned, as the Poles would say, to where it belongs.

 This is what today is about.  Sure there are all the economic, social and political aspects and I will mention some of them.  You can count up the gains, and the losses, and there are some, on both sides.

 But that is rather to miss the point. Today we roll back those sad decades and give 75 million people the opportunity to become a normal part of Europe again and to live a decent life.

 There are important economic consequences to be sure.  On both sides.  But much has been anticipated and I don’t think there will be much change in the early months. 

 Western economies have been investing in Eastern Europe for some years. Especially adjacent Germany and Austria. 

 Volkswagen, the best example, is today the largest producer of cars in the region, with plants in the Czech Republic, Slovakia and in Hungary where they are building the high end Audi sports car.

 Britain does little business in the region, accounting as it does for just over two percent of its exports. That may change. Already an notable exception is Tesco that has become the leading hypermarket retailer, with 38,000 employees, £1.5 billion invested so far and investment continuing at £250 million per annum.

 International steel companies are merging with local companies and bringing them up to modern standards of productivity.

 The appeal of Eastern Europe to businessmen in the west is low labour costs at about a quarter to one fifth of western rates. And the good skills base. Even during Soviet rule the education system was fairly good especially at tertiary level.

 And though the combined GDP of all 10 new members is about the size of that of the Netherlands, their economies are growing at more than twice the rate of the EU. It’s a promising market place.

 The risk assessment that any business makes before investing in emerging economies is today by an order of magnitude more favourable. 

 And there are some large successful companies in East Europe that will grow stronger through mergers, investment and exports such as Cez the power company that already largest exporter of electricity in Europe after France’s EdF.

 Food processing for Poland with its low food production costs offers good prospects.  Already in 2003 when most agricultural trade barriers with the EU were removed and EU export subsidies were limited, Poland increased its sales to the EU by 44 per cent.

 The new member states will get the benefit of the EU’s various economic support programmes to a greater or lesser extent to enable their economies to grow.

 They will be beneficiaries of the Common Agricultural Policy but only at 25 per cent of the level of support received by existing members until the next budget period beginning in 2006.  Thereafter there will be eight years for the phasing in of the full amount. 

 For Poland with 28 per cent of the population employed in agriculture this is a disappointment.  But it’s one they along with other new members with a large farming industry such as the Czech Republic, have accepted with a shrug of the shoulders as the best deal they could get.

 An open market will mean increased competition and further social and economic adjustment is inevitable. Many small farms in Poland will not survive.

 And companies, newly privatized and that have to accommodate new environment requirements and health and safety standards will not find it easy. 

 The free movement of peoples has become an emotional issue among both accession and existing member states. 

 If you believe our tabloids we are about to be swamped by East Europeans who will take our jobs (despite growing economies, unemployment is high in the region), and plunder our benefits system. 

 In 1986 they said much the same about Spaniards who were expected to flood into London in their hundreds of thousands.  In fact many of those living in the UK returned to take advantage of the country’s expanding economy.  And half a million British people went to live in Spain.         

 As you know the UK and Ireland are the only older members of the EU who have no transition arrangements for immigrants as far as freedom to work is concerned.  And that may have been in our case by default but it was a good decision.

 The expectations of the CBI is that the numbers coming over will not be so high as to cause concern, that they will be well educated and will provide skills our economy badly needs.

 And as the economies rise in their home countries they like the Spaniards before them will want to return after a short time or perhaps not even leave in the first place.

 The other member states have set an interval of up to seven years before the freedom to work provision of the Treaty of Rome comes into effect.  In fact the restriction has to be reviewed after two years and thereafter after each year. It will probably go quite soon. But it is not very generous, and is hardly a welcome.

 Turning to the political scene, EU membership will help to embed democratic institutions.  It has had that effect in Greece, Spain and Portugal, which not long before joining had been repressive dictatorships.

 That is not to say there will not be concerns about political stability from time to time and with the emergence of extremist parties.  That is already happening in Poland.

 This turbulence will be a reflection of the difficulties and indeed disillusion that the new members will have over the next few years as they adjust to some of the consequences of membership..

 The Hungarian ambassador to London said at the seminar I referred to earlier, half joking, that the new found freedom to change governments is so much enjoyed that voters are opting for change at every election.  Not exactly a recipe for stability.  

 Membership of the EU will give the eight new members from Eastern Europe the security of democratic institutions.  Physical security will be strengthened by membership of NATO.

 For existing members to have security extended further east is a strengthening of their own security.

 The new members will bring political changes to the EU.  There will be stronger support for the US.  They after all represent what Donald Rumsfeld described as the New Europe.

 Inevitably the eight are grateful to the US for its the central role in defeating communism.

 But they will bring their particular experience of handling their Eastern neighbours, namely the Ukraine and Russia which will help the EU as a whole.

 They will bring a new vitality and optimism to the Commission and the Council of Ministers though decision making will certainly be more difficult. 

 Will there be losses? 

 Of course.  There are people in former Eastern Germany where unemployment is high who still miss the social support systems of the former regime. 

 Family life too may suffer.  In many places ties are very strong and for example there is the widespread tradition of families gathering together for Sunday lunch.  How long will that last given the patterns of the west.  But perhaps they will revive our old traditions.

 An MEP with long experience of the region said just the other day that totalitarian regimes produced many fine artists and writers who had to be extremely talented and subtle to survive. 

 Under an increasingly homogenized, globalised culture, they might have difficulty maintaining their individuality. 

 But I don’t see that rich cultural diversity that all 10 states will bring, and of which we see examples tonight, losing out to Hollywood and Macdonalds in the near future. 

 The reason the Hungarian embassy official’s daughter decided not to return to her country in the days of the Cold War was that she could not bear to have her children taught in school the untruths she was taught. 

 Today eight countries are reunited with their history which no longer needs to be rewritten.  That is really something to celebrate, ladies and gentlemen.