Prague, Czech Republic Since the fall of the Berlin Wall in 1989,
the people of Central and Eastern Europe have yearned to retake their
rightful place in Europe. Many see membership in the continents
supranational bureaucratic behemoth, the European Union, as their ticket
back. The EU is set to expand in 2004, absorbing 10 more states, eight
of them former communist East Bloc nations.
Its backers say EU expansion, which will stretch Europes political
frontiers from the Atlantic to the Bug River, will forever close the book
on the post-World War II order, which divided Europe into East-West camps.
Beyond the lofty rhetoric, East Europeans have more humbler hopes, namely
that EU membership will bring them the good life enjoyed by their richer
cousins further West.
But will it? Many sober critics say that is unlikely. It certainly wont
be all gloom and doom. EU expansion is likely to lead to some economic
development. But it will likely be patchy, sprinkled heavily in the regions
metropolises, like Prague, Budapest and Warsaw. Large swathes of the region,
from the rustbelts to the countryside, are likely to remain mired in poverty,
or close to it.
Chalk that up to the development strategy foisted upon the region by
Western planners, most prominently shock therapy guru Jeffrey Sachs, who
anointed foreign direct investment as Eastern Europes savior. There
would be no Marshall Plan to lift up the whole region by increasing local
demand, as people there anticipated and hoped. Instead, big business was
given free reign to scavenge the choicest industrial scraps, and in a
large degree shape the regions future, insofar as Eastern Europe
fits into the global strategies of the worlds multinationals.
And all signs so far from Brussels, the epicenter of the EU, indicate
that East Europeans will be second-class citizens in the new EU kingdom.
That became evident in January, when the EU executive arm, the European
Commission, unveiled a much anticipated plan on future farm subsidies
for new member states.
Handouts to European farmers are the biggest outlay from the EU kitty,
amounting to nearly half its 90 billion euro (about $80 billion) annual
budget.
But farmers in the 10 new EU states would initially get just a quarter
of the subsidies paid out to their Western counterparts. The plan would
hit hardest in Poland, the largest candidate country with 39 million people,
some 20 percent of whom tend the land for a living. Polish farmers fear
they wont be able to compete with EU-subsidized farmers, who will
flood the market with cheaper goods.
The firebrand leader of a Polish nationalist party, cashing in on the
countrys creeping anti-EU sentiment, lashed out at the plan, and
threatened to whip up a huge anti-EU campaign ahead of a referendum on
whether to join.
If we are not treated as equals, if the European Union tries to
exploit us and use us as a dumping ground for its goods, we will start
a propaganda war, and make sure that Poles vote No in the
referendum, threatened Andrzej Lepper, leader of the Polish Self
Defense Party.
Besides stiffing their farmers, the EU plans to shut the door on the
regions workers, as well. They will have to wait seven years after
EU entry before they can seek jobs anywhere in the EU, a right available
to workers from Western EU countries. In this case, the EU caved to fears,
mainly in Germany and Austria both of which border would-be EU
members, Poland and the Czech Republic that throngs of eastern
jobseekers will migrate westward, eager to work for next to nothing.
Although they raised a storm of protest over the farm subsidy proposal,
East European politicos have rarely raised objections, nodding their collective
head to the dictates laid down by EU officialdom.
We rush into the EU, we want to be good pupils, and
therefore, we try to meet as many EU requirements as possible, even if
theyre not beneficial to the country, explains Teodora Donsz,
a Hungarian working for CEE Bankwatch, a group monitoring the goings-on
of the international financial institutions in the region.
Germany may offer a clue to what EU expansion will look like. Its 1990
reunification in some ways mirrors the process on a smaller scale. And
while Western Germany has invested heavily in the former East Germany,
the development gap, especially in the countryside, is painfully clear,
and not narrowing. On the tenth anniversary of the fall of the Berlin
Wall, a majority of Ossis, or East Germans, told pollsters that they regretted
reunification.
Some are warning the EU not to repeat the German mistakes, and to focus
more attention on overall development in East Europe, so the East European
countries join the EU on more equal terms.
Otherwise, as happened with the five Lander of former East Germany,
the new EU will be a patchwork of rich regions, exploiting and controlling
concentrated areas of poverty and underdevelopment, wrote Jean-Yves
Potel in Le Monde Diplomatique in February 1999.
Raising the six most developed East European countries to just 50 percent
of the income level of the EU would have required a $450 billion investment,
according to the Institute for International Economics in Washington.
The West had no intention of ponying up that kind of lucre. And the EU
has steered clear of the topic in talks with East European officials,
according to Olivier Hoedeman, a researcher with Corporate Europe Observatory,
an Amsterdam-based corporate watchdog.
The negotiations have been limited to how Central and Eastern Europe
can adapt to existing EU rules and its economic model. Economic investment
with local development was ruled out from the start, explains Hoedeman.
A better solution than joining the Western-shaped EU would have
been the establishment of a Central and Eastern European Union, like the
Visegrad group, says Donsz. (The Visegrad group consists of Poland,
Hungary, the Czech Republic and Slovakia, and is named after the Hungarian
town where leaders of the four signed a declaration vowing to pursue common
goals vis-a-vis the West.)
What Western policymakers wanted and largely got was the breakup of the
economic integration of countries in Central and Eastern Europe which
existed under communism as the Comecon economic grouping, explains Peter
Gowan, author and professor at North London University. Under EU integration,
the economies of Central and Eastern Europe will be channeled to serve
the interests of the West and its businesses, explains Gowan.
While the people of both East and West Europe may be skeptical of their
impending marriage, business relishes the opportunity of unfettered access
to the region and its labor and consumer market.
It was as if we had discovered a new Southeast Asia on our doorstep,
said Keith Richardson, a former head of the European Roundtable of Industrialists
(ERT), one of the most influential corporate lobbies in Brussels, in an
interview with Corporate Europe Observatory.
Volkswagen officials who bought out Czech automaker Skoda in the 1990s
said in 1996 that a Skoda worker cost the company a tenth of what a German
automaker earns.
With EU expansion, youll have more companies moving low-wage
operations into Eastern Europe, over Southeast Asia. Thats because
of cultural reasons, and the logistics of transport between markets. Thats
why the EU is so focused on building new transport links between East
and West, explains Hoedeman.
Western businesses have already been busy, staking a strategic hold in
the region. Unilever and Proctor and Gamble have divvied up the Central
and Eastern European market for personal care products. Philip Morris
controls 70 percent of the Czech cigarette market. Most of the Wests
$100 billion plowed into the region has gone into food, cigarettes, chocolate,
soft drinks and alcohol, consumer durables and cars as well as the service
sector.
East Europeans first believed Western investors would bring much-needed
technological know-how to the region. Today, many are not so sure, finding
instead that Western investment is more about controlling assets and markets
than sharing technology.
When General Electric bought Tunsgram in Hungary, it closed down the
companys production of vacuum equipment, electronic components,
floppy disk and magnetic tape products, all of which were considered profitable
by Tunsgrams management. The Hungarian cement industry was bought
by foreign owners who then prevented their Hungarian affiliates from exporting;
and an Austrian steel producer bought a major Hungarian steel plant only
in order to close it down and capture its ex-Soviet market for the Austrian
parent company.
The EU has facilitated Western corporate takeovers of indigenous Eastern
assets, funding the state privatization agencies, paying for studies on
privatization by Western accountancy firms and giving subsidies for the
actual purchase of assets by the EU.
This from the same EU which Eastern Europeans are hoping will lead them
to their rightful place on the continent. They may be sorely
disappointed where the EU is leading them.
Tony Wesolowsky is a freelance writer based in
the Czech Republic.
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