15 years on from 2004 wave of EU accessions, convergence but a patchy overall record for CEE countries

15 years on from 2004 wave of EU accessions, convergence but a patchy overall record for CEE countries
Celebrations in Brussels marked the largest ever wave of EU enlargement in 2004.
By Clare Nuttall in Glasgow May 1, 2019

It’s a decade and a half since celebrations across eight Central and East European states from Estonia in the north to Slovenia in the south marked the first wave of accession to the European Union (EU) for Europe’s post-socialist states. 

The largest ever enlargement of the EU saw the entry of the eight CEE states — the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, plus Cyprus and Malta – on May 1, 2004. 

For the post-socialist states, the entry to the EU was not only the realisation of a dream held since the fall of the Berlin Wall almost 15 years earlier, but also cemented their place alongside the West European nations in the Euro-Atlantic camp. “EU accession marked the most important of several steps of integration into Euro-Atlantic institutions, anchoring the EU-CEE countries in the Western sphere (this is particularly important for the Baltic countries, but not only for them),” says a new report from the Vienna Institute for International Economic Studies (wiiw) celebrating and assessing the event.

There has been significant changes across the EU members in the CEE region in the last 15 years, not to mention within the EU as a whole. The wiiw report takes a cautiously positive stance, calling the decade and a half of EU membership of the CEE8 a “qualified success”. 

Economically, the headline figures speak for themselves. All of the 2004 entrants from CEE have significantly increased per capita GDP, and with the exception of Slovenia, they have all converged economically with Germany. wiiw’s research also shows that since at least some have quite low inequality, the benefits of convergence have been shared among their populations. 

Countries across CEE have benefitted substantially from EU funding inflows, especially to revamp their infrastructure, which in turn has helped attract export-oriented FDI. However, it remains to be seen whether they will continue to benefit to the same degree going forward, as Brussels mulls adjusting the criteria on which funds are allocated in the next EU budget. 

And there are further caveats. Firstly, according to wiiw, many people in the region are disappointed with the pace of convergence. The convergence process became more uneven with the onset of the international economic crisis in 2008, and is expected to remain so with the states furthest behind the major West European economies having the biggest convergence gains ahead of them. For more advanced states like the Czech Republic, “much may depend on their ability to reorient themselves towards more profitable parts of the value chain."

Accession to the EU has hastened the impending demographic catastrophe in CEE. Added to the low birth rates in much of the region, there has been a millions-strong wave of migration to western EU member states since accession in 2004, incentivised firstly by the still significant wage differentials between the east and western sides of the bloc. 

While émigrés and their western hosts have benefited, wiiw describes the outcome for the EU-CEE members as “mixed”. “On the one hand, those eventually returning bring back valuable skills and expertise. However, on the other hand the massive outward migration has put big pressure on EU-CEE labour markets. Health sectors in the poorest parts of EU-CEE such as Romania are facing desperate shortages of doctors and nurses,” writes the report’s author, wiiw deputy director Richard Grieveson. “Massive labour shortages are now visible in the region, which apply a clear constraint to growth.”

Firms in CEE countries are looking at options such as automation as they respond to the growing labour shortages, yet, Grieveson warns, “There is also a risk that EU-CEE countries are stuck in the production portion of the value chain, which could cap their convergence potential.” Moreover, as wages increase and the pool of available labour becomes smaller, foreign investors are likely to start looking to alternative destinations such as Turkey or North Africa unless CEE countries can continue to offer the twin advantages of better infrastructure and labour quality.  

Illiberal democrats take on Brussels 

On the political front, relations between Brussels and the “illiberal democracies” of Central Europe — specifically Hungary and Poland — have become fraught. 

Aside from economic growth, the wiiw report also points to “generally better institutions, freer media, and higher education and environmental standards” across the EU members that joined in 2004. However, the positive developments are not uniform. Progress in fighting corruption, for example, is described as “mixed, and in many cases rather disappointing”. More worryingly, in some countries, notably Hungary, progress in the area of institutions, corruption standards and media freedom has been reversed recently.

wiiw warns that, “Recently, authoritarianism and state capture have been on the rise in the region. Institutional convergence has gone into retreat in some EU-CEE countries.” This has resulted in fiery clashes between national leaders and EU institutions. 

In December 2017, the European Commission triggered the so-called “nuclear option” against Poland for undermining the rule of law. Should the procedure – known as Article 7 – get to the final stage, Poland would be stripped of voting rights. 

Hungary is at risk of having the same procedure triggered. In September, the European Parliament endorsed a report condemning Hungary for breaches of democratic values, authored by Green MEP Judith Sargentini. The document says there is a "clear risk of a serious breach by Hungary of the values of the European Union", and calls for launching Article 7. 

However, the chances of either country being stripped of their voting rights are slim since the Commission needs unanimity among member states in order to impose the sanctions. Both countries have said they will stand by the other. 

This led wiiw’s Grieveson to comment that, "The EU has so far proven toothless in combatting these trends in some member states.”

On the other hand, while there has been plenty of eurosceptic rhetoric, such tussles have not led to large popular movements for leaving the EU in any of the CEE member states. Ironically in the Czech Republic negative sentiment to the EU is high, according to a recent poll, approval is growing again. And antagonism between Warsaw and Brussels, for example, is not reflected in a wish of the Polish people to leave. The same is true of Hungary. 

Enlargement has certainly slowed since the great wave of accessions in 2004. After that, Romania and Bulgaria joined in 2007 and — with the slowdown at least partly because neither country was revealed to be completely ready especially when it came to tacking corruption — Croatia was the final entrant in 2013. 

Since Turkey’s accession process has decisively stalled amid strong criticism from Brussels over President Recep Tayyip Erdogan’s authoritarian rule, the aspiring members today are all from the Western Balkans. When the long drawn out process was revealed to have resulted in a backsliding on reforms and democratisation in the region, Brussels belatedly sought to revitalise the process, with a new European Commission strategy published in early 2018 for the first time putting forward a tentative accession date of 2015 for the two countries furthest advance din the process, Serbia and Montenegro. 

However, wiiw’s Grieveson writes, “a further great leap forward in EU integration looks unlikely in the coming years, with a “muddling through” scenario appearing more realistic.” He expresses scepticism about 2015 as an accession date, noting that: “The accession of Western Balkan countries also faces formidable obstacles, not least a distinct lack of enthusiasm in parts of Western Europe.” On top of this is the need to resolve outstanding conflicts among the prospective members, in particular between Serbia and Kosovo. Economically, states from the region are also considerably behind where the CEE countries were on accession 15 years ago. 

Meanwhile, the EU is in a different place from where it was 15 years ago. The migrant crisis of 2015 and 2016 was followed by the UK’s vote to leave the bloc, causing a crisis of confidence. While the latter event appears to have pushed the EU27 closer together, other questions about the future of the union — not least the degree of convergence in future — remain outstanding.