Following the launch of the euro as EU's common currency, the EU found it necessary to shift its attention to the East. The decision to enlarge EU membership to Eastern European countries was finalized in 2002 and its first phase would have been carried out between 2004 and 2006. Here, EU negotiates what analysts perceive as a bumpy road.
belonged to the former communist bloc which just emerged from half a century of Soviet domination. Throughout this long period, they operated on a planned economy and it is only now that they are moving in unison towards a market economy. As a lingering effect of a less efficient economic system, their incomes are much lower than those of existing EU members. This poses a problem to the process of harmonizing the entry of these countries into EU.
EU enlargement to Eastern Europe will boost the European common market from 320 million people to about 470 million. Unlike Switzerland, Norway and Iceland which joined only EU's free trade area, the Eastern European countries need to be full EU members or they will not enjoy the promised benefits. This entails huge costs on the part of the new members.
Eastern Europe is a low-income region of about 100 million people whose combined income will raise the GDP of EU by a mere 5 per cent. This is very much less than the result of previous EU expansions to the North and South. It is not only their low income levels that may bring deleterious effects to EU but also the fact that these countries are in the middle of a transition phase from a centrally planned to a market economy. In addition, the new members will have to cope with more EU regulations than before because of the recent creation of the Single European Market concept.
Although many of the former communist bloc countries are convinced of the superiority of the free market, some have retained their faith in the socialist system and in the role of government in steering economic growth. Thus, many of them continue to bring up the rear on the list of world's freest economies. In the 2003 Economic Freedom of the World Report, only Estonia made it to the16th rung. Hungary was 35th, Czech 39th and Latvia 51st. At the bottom of the list were Bulgaria at 103rd place, Russia 112th, Romania 116th and Ukraine 117th. (Tupy, L., 2003)
Initially, liberalization of these economies pushed output down, but they gradually recovered. By 2002, their separate GDPs grew as foreign investment started to come in. During that year, the World Bank reported that Poland, Hungary, the Czech Republic and Sloavakia led the pack with an average 2.3 per cent growth.
Poland is the largest of these former communist bloc countries and may prove to be of strategic importance to EU since it is the gateway of Western Europe into the large Eastern European countries of Belarus, Moldova and Ukraine. (Mind Your Business, 2004) The other big countries in the East that are slated to join EU are Russia, Bulgaria, the Czech Republic, Romania, Hungary, Slovenia and Slovakia.
Signs that Poland is a possible problem child for EU became evident as soon as the homeland of the beloved Pope John Paul II took the first step of joining the union in May 2004. Polish