10 more stars - Enlargement of the European Union

As from 1 May 2004, ten new countries have joined the European Union (EU): the three Baltic States of Estonia, Latvia and Lithuania, the four Central European nations of Hungary, Poland, Slovakia and the Czech Republic, the two Mediterranean islands of Malta and Cyprus, and Slovenia. This event will not, however, be celebrated heraldically as the royal blue flag of the European Union will henceforth ad aeternam display a wreath of just a dozen golden-yellow stars.

Although the process of European integration has been regularly punctuated since 1956 by the arrival of new members, never have so many and so disparate a set of countries all joined at the same time. Partly because of the past, the gaps in wealth and income between the entrants and the old members of the EU Club are the widest ever. Portugal and Greece may well have been comparatively poor when they joined, but their economies had always been operating through private ownership even though State intervention was still quite prevalent.

However, everyone is well aware that eight of the ten new arrivals had endured fifty years or more under a Communist regime with no genuine price-regulating mechanism. Even though they have embraced the market economy for some 15 years now, the transition phase proved tough enough for serious questions to be asked about their ability to cope with the disciplines implied by the single market. Their economic structures – the imbalances between the relative sizes of their production sectors – may turn out to fit poorly with prices and costs prevalent in the EU. In this respect, the example of the former East Germany offers little by way of reassurance despite the special nature of its case.