Monday, June 20, 2005

EU's old & in the way hold back progress

The Financial Times carries an excellent perspective from Poland on the EU budget failure. It isn’t just Poland that will suffer but all the new EU member states in Central Europe. A shortfall in EU payments will mean a slowing down of the speed of development in the region which could in turn lead to higher and more stagnant budget deficits, and high budget deficits in these states will impact their ability to meet Eurozone accession targets.

“We see it as a fault in national egoism in many countries,” Jaroslaw Pietras, Poland's European affairs minister, told the Financial Times, naming France, Britain and Germany as particularly guilty of being influenced by the short-term concerns of the voters at home instead of the long-term good of Europe.

Senior British figures acknowledge the collapse of the deal was bad news for the EU's 10 new accession states because the lack of a budget agreement threatens to delay projects and slash structural payments.

In Poland there is a sense of unfairness that old EU members, suddenly afraid of their eurosceptical voters, have taken to defending their national interests single-mindedly without thinking much about the EU as a whole. Warsaw is mindful of the enormous benefits gained by other poor countries included in earlier enlargements such as Greece, Ireland, Portugal and Spain and is worried that similar generosity may not be on offer to the former communist states who joined last year.

It is not just a question of money. Only Britain, Ireland and Sweden allowed workers from the new member states access to their labour markets. Old Europe has also been wary about reducing barriers for service providers, hugely important for poor, high-unemployment countries like Poland.

But wealthy European self-interest may exact a price. “Rich countries cannot say that we aren't going to give you a free market and aren't going to give you much money either,” said Mr Pietras. “If we get no compensation, then we want competition.”

For Poland, the failure to pass an EU budget for 2007-2013 could have enormous consequences. If the budget is adopted next year, under the Austrian presidency, funding for some Polish projects could be delayed. If there is no new budget, then a provisional budget would go into effect that would see annual structural fund transfers to Poland cut to €4.6bn ($5.7bn, £3.1bn) from the €8.7bn under the failed Luxembourg proposal.

Poles hit out at “national egoism”
As Mr Pietras says “If we get no compensation, then we want competition.” But, as we all know Germany and France, among others, aren’t happy about competition either – remember all those noises about unfair competition on corporate tax rates etc.- this despite the fact that even the ECB is calling for more competition! It seems to me that disillusion with the EU could rapidly set in Central Europe .....

Awareness of the potential for disillusion is apparently, according to the FT - why Mr Blair is to campaign to secure a European budget deal during his six-month EU presidency, recognising that Eastern European member states feel let down by the failure to strike an accord in Brussels last week.

Sadly the prospects of a deal are pretty remote and will remain so as long as Chirac, Schroeder, Blair and their ilk remain in power. It is high time these old and in the way politicians were replaced by more ambitious leaders with a vision for the EU that is more C21st than one rooted in the depths of C20th.