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Hopes and Fears on the Eve of Eastern EU Expansion (April 26, 2004)

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These figures alone show the magnitude of efforts to develop Eastern Germany. The problems are definitely comparable, but the method of finding a solution could hardly be more different. Eastern Germany not only received the Deutschmark at a 1:1 exchange rate, but also the West German social welfare system, while the economy abruptly collapsed, due in part to the rapid alignment of wages with those in the West. Eastern Germany has been getting infusions from the West ever since.

Initially, Eastern enlargement will also cause the EU to get weaker and poorer – from a statistical perspective – since the average GDP will drop dramatically. The established member states will presumably generate a GDP of 9,600 billion Euros this year, whereas the former Eastern Bloc countries will add barely 450 billion Euros. For all the new accession countries combined – including Slovenia, Cyprus, and Malta – the GDP will increase by roughly 9 percent. In terms of land area and population, on the other hand, the new European Union will increase by about one-third.

The countries that spent decades behind the Iron Curtain will need at least a generation before they even begin to approach the EU standard. The prosperity gap is enormous; in Poland and Slovakia, the unemployment rate is around 20 percent.

To be sure, the Eastern newcomers cannot expect to receive financial transfers like those that flowed into Eastern Germany after unification. But it also won’t work without some assistance from the old Europe – and without some conflict about how, and to which regions, future assistance will be given.

Between 2007 and 2013, the EU commission will spend a total of 336 billion Euros on the equalization of living standards within the EU. A full 80 percent of that will be used to support regions whose per capita income is less than 75 percent of the EU average.

The EU regional average will drop as a result of the Eastern enlargement from roughly 16,800 to 15,300 Euros. Based on the most recent data, 17 of the 50 EU regions that have received assistance in the past would no longer be funded as a result, including almost all parts of Eastern Germany – although living conditions there haven’t changed at all.

On the other hand, in the ten new countries, 36 of a total of 41 regions will be entitled to aid from Brussels. The total population in these areas is 69 million, making up 92 percent of the population in all of the accession countries.

[ . . . ]

Source of original German text: Michael Fröhlingsdorf et al., “Der Preis des neuen Europa” [“The Price of the New Europe”], Der Spiegel, April 26, 2004, p. 100 ff.

Translation: Allison Brown

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