Verheugen: EU Expansion Brings Peace and Profit

Günter Verheugen is the EU executive's commissioner for expansion. German public broadcaster tagesschau.de spoke to Verheugen about the fears, expectations and future of European Union expansion.

tagesschau.de: You are the architect of this EU expansion; for years you've been working toward May 1, 2004. What does this day mean to you personally?

Günter Verheugen: Gratification, relief -- but also a very muted feeling of concern or trepidation. It can be best compared with the feelings of a soccer trainer, who for the first time sees his team go play a match and asks himself whether they will all show what they have learned. Of course, I ask myself whether everything will work, if we really did do everything right, if we perhaps overlooked problems. But my basic feeling is satisfaction for having created this large and meaningful peace project.

Many Germans see it differently. According to surveys every third German opposes EU expansion. How do you explain this skepticism?

That's very easy to explain. As always when people are confronted by something that they don't know well, they react with fear. The problem is that there hasn't been any sizable and broad political debate on this topic. And that's why expansion hasn't really registered with people. Now that it's directly imminent it has an enormous media presence: Something's coming, but what is it? The problems that citizens pinpoint in the context of the expansion -- from cross-border criminality to competition problems -- are very real. It's just that they have nothing to do with the impending expansion. Instead, they are the consequences of the collapse of the communist world of states, the fall of the Iron Curtain. That's why European integration is neither a part nor the origin of the problem, rather the reasonable, perhaps also the only, possible solution to the problem.

Even so, many people are afraid that businesses will export jobs to the low-wage countries in the EU's new east...

They have already been doing that for a long time. That will also continue, but it doesn't have anything to do with the expansion either. For, the result of the expansion is that these countries will not remain low-wage countries. Through their EU membership, the competitive situation in the old member states will improve. From (the moment of) entry, the new members must assume our social standards, our environmental standards and our professional standards; they must observe our competition and subsidy regulations. That means that the cost advantages that they now have will decrease gradually. The outsourcing or migration of production components is a process that we have been observing for 40 years. It is not a result of European integration but rather a result of economic globalization.

What does the expansion offer Germans?

In the first place, it's a peace project. It creates peace, stability, and safety in the region of Europe that immediately borders Germany. People there have known for years what political, economic and financial results instability leads to. German soldiers are in Kosovo, German soldiers are in Bosnia… In Kosovo alone, for one million people, Europe raised €10 billion ($12 billion) to maintain the ceasefire. Peace pays off, after all. As Luxemburg's prime minister, Jean-Claude Juncker, said: A year of peace costs less than a day of war!

The second is an enormous economic profit -- especially for Germany. It arises from (the fact) that this economic area will be populated after all by 110 million people, if we include Romania and Bulgaria, and everywhere here there is an immense unsatisfied demand. We have very stabile, very robust growth rates in these countries, that are noticeably above the growth rates in the remainder of the EU. The export-oriented German economy profits particularly from this quickly growing market.

But initially the Germans will have to dig deeper into their pockets for the expansion. The European Commission has demanded more money for it, more than €37 billion will be pumped into the new countries in the coming years. How can you make that appealing to the taxpayer?

The financing for this expansion round was already decided in Berlin in 1999. We are spending around €15 billion less than was then calculated and will get by with a total of €40 billion until 2006. The new countries will pay €15 billion of that themselves. All in all, the expansion will cost Germany a net total of €2.5 billion in the first three years. On the other hand, Germany will have an enormous trade balance surplus. That's why viewed economically it's a win-win situation. It makes no sense to say that the expansion will lead to an additional burden for the Germans.
The economic differential between the countries of the old Europe and many new members is huge. Lithuania and Latvia, for example, will need decades to reach our economic level. How can you ensure that economically a Europe of two speeds doesn't develop?

You could also ask why Greece, an EU member for 30 years, hasn't been able to reduce the distance to the rest of the EU -- but still no one talks about a Europe of two economic speeds. What we see is a higher speed of growth in the new countries, and that's good.

People talk about 50 to 60 years for some of the new member countries.

…But where's the problem? It took a long time with Ireland too. For Greece the distance from the average is still the same but in the meantime at a much higher level. The most important thing is that the new member countries grow, and their growth potential is large. Incidentally, individual citizens' or businesses' rights to EU funds don't arise from EU membership. It's not like it was with German unification. Unification has cost €1.25 trillion so far. In contrast, expansion cannot put us in danger in terms of costs because the EU budget is club funds by nature. The club can't spend one euro more than the members voluntarily put into the club funds.

In negotiations with countries such as Poland, people had the impression that they want to get the maximum out of Europe and only contribute a little. Did that annoy you?

Certainly not. Poland negotiated well but no tougher than others; they aren't getting more either. Even in 2013, the union's per capita benefits for Poland will be distinctly lower than the per capita benefits for Spain. Poland is a large country, a very proud nation, that needs a certain amount of time to find its place and role in the European Union. People should show a little patience and not pillory a country that is encumbered by a formidable historic burden.

Still, the new members apparently haven't completed the homework that is a condition for receiving EU funds. For example, corruption in the new member states, such as Slovakia or the Czech Republic, is high. How will you get that under control?

I can't dispute that a certain kind of corruption remains quite strong in these countries -- in connection with large-scale privatization, for example. (German Interior Minister) Otto Schily once said he thought that around 10 percent of the funds that went to eastern Germany in the context of economic reconstruction were illegal. I wouldn't estimate the magnitude to be so high for Poland and the Czech Republic. But it is a typical phenomenon.

Regarding homework, I wouldn't agree with your thesis. On May 1 we will see that the new member countries will assume (EU) community law to 100 percent. While in the old countries more than 2,000 legal actions are underway due to contract breaches, that is, due to the incomplete or completely inadequate application of community law.

Do you mean to say that the new acceding states are better prepared than earlier acceding states?

It's safe to say that. Although we have much more extensive and complicated community legislation today. Now there's much, much more to negotiate. During earlier expansions, the commission wasn't worried about whether the Greeks, Spanish or Portuguese were also capable of applying community law. This is an entirely new method that we first developed for this expansion.

The Balkan countries want to join the EU; The accession of Turkey, Romania and Bulgaria's is planned for 2007. Where do you think Europe stops?

Romania and Bulgaria are part of the current round. And then everything's open. The Balkan countries do indeed have the prospect of joining, though there's no schedule for them. They are still too far away from national or regional stability or also from economic integration -- with the exception of Croatia, whose accession application has been submitted. Turkey is a special case. It has had the prospect of joining since 1963. At the end of the year it will be decided whether Turkey has in the meantime gotten far enough to start negotiations.

For the Eastern European countries, such as Russia, Ukraine, but also the Caucasus countries or the southern Mediterranean countries, membership is not on the agenda. However, we offer these countries very far-ranging neighborhood policies.

Your time as expansion commissioner comes to an end on May 1…

Correct, I have made myself redundant. But don't forget Bulgaria, Romania and Turkey.

What will you do afterwards?

I will remain a member of the (European) commission until November 1. Beyond that nothing has been decided. I have armed myself with great patience.

Gabriele Feil interviewed Günter Verheugen for tagesschau.de (ncy)