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Beyond enlargement: The EU’s “new neighbours”

Explore the key challenges and competitiveness of EU's new neighbours, covering economic growth, trade patterns, governance, and cross-border issues. Analyze potential impacts on EU-25 and the need for reforms.

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Beyond enlargement: The EU’s “new neighbours”

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  1. Beyond enlargement: The EU’s “new neighbours” Ben Slay Director, UNDP Regional Centre Bratislava UNECE Executive Forum: Competing in a Changing Europe 11 May 2004, Geneva

  2. Key challenges after 1 May • For EU-25: • Internal governance reforms • Lisbon “knowledge society” agenda • For new EU states: • EMU accession • Easy for Baltic states, not so for Central Europe • Absorption of structural, cohesion funds • For both: Trans-border “new neighbour” issues in Western CIS, Balkans

  3. Who are the EU’s “new neighbours”? • EU “hopefuls” in SEE: • Countries now negotiating for accession: Romania, Bulgaria, Croatia • Preferential access to EU markets: these countries plus Turkey, Western Balkans • Western CIS: Russian Federation, Ukraine, Moldova, Belarus • No “date for a date” • No preferential access to EU markets

  4. How do they compare?

  5. How competitive are these economies? • Potentially: very competitive • GDP growth exceeds EU averages • Particularly in Western CIS countries • Low unit labour costs • Locational, logistical advantages • Key: preferential access to EU markets • SEE countries have it, CIS countries don’t

  6. Result: Different patterns of integration • South East Europe: • 60-80% of SEE trade with EU-25 • Since 2000 SEE has attracted significant FDI from EU-focused multinationals • Repeat of Central European experience? FDI-led restructuring of manufacturing, energy, finance • Western CIS: • Russian Federation is largest export market, source of FDI (smaller levels) • EU markets very important for Russia, but largely for energy exports

  7. It’s also about cross-border issues . . . • Migration: • Legal (labour force growth) • Illegal (trafficking) • HIV/AIDS, TB • HIV prevalence rates much higher in Western CIS than new EU members • Environment/international waters • Tisa River basin • Baltic Sea • Organised crime

  8. . . . And about governance • State sector—Good governance means: • Decentralisation, to empower regions, municipalities, communities • Public administration reform, to modernise state structures, make them market friendly • Tax reform, to broaden tax bases, reduce grey economy, promote MSMEs • Private sector—Good governance means: • Corporate governance reforms, to improve investment climate • Public-private partnerships (e.g., IT sector)

  9. Conclusion: New challenges for EU-25 • Will “Schengen curtain” bring new barriers to free movement of goods, services, people? • Will “European anchor” move eastward? • Challenges for EU-25: • Reduce de facto trade discrimination against Western CIS countries • Don’t close EU’s eastern border to labour flows from “new neighbours” • Challenges for “new neighbours”: • More reform • Better governance

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