The Political Economy of the Eastern Enlargement of the EU

The paper analyses the Eastern enlargement of the EU from a political economy perspective. As the political economy literature has so far mainly discussed the aspects of trade liberalization, the paper develops a broader framework for analysing the political economy of EU integration. It shows that EU membership entails massive shifts in political power, favouring traditionally weak interest groups (consumers, exporters) at the expense of lobbies that otherwise dominate political processes (import-competing firms). Thus, if the enlargement process is delayed for a longer period of time, there is a risk that producer lobbies in the East might oppose EU membership for their countries. From the perspective of the incumbent members one can show that trade issues have so far played a minor role in the enlargement process. The main impediments relate to the Common Agricultural Policy, the Structural Funds and the unresolved problems of the political reform of the EU. Even an accession of only the V4 countries would considerably increase the EU budget. Thus, it would be vetoed by a coalition of German taxpayers and recipients of EU funds in Southern Europe. In order to overcome the present standstill of the enlargement process the paper proposes a `comprehensive accession strategy' (CAS) that should be embedded in the Treaty. It contains the following elements: a three-stage transition process that leads to full membership (stage III) after ten years, and a list of countries that can apply for that integration procedure. In stage I of the CAS the Europe Agreement regulations have to be applied in a multilateral way; in stage II trade liberalization will be enhanced and the macroeconomic surveillance according to Articles 102a-104c of the Treaty will be applied.