Eastern Europe: Bureaucracy rules as Brussels splits the East

THE EUROPEAN Union's decision last month to invite only six of the 11 nations from Eastern Europe applying for EU membership to participate in early negotiations could divide the region in half.

In recent years the prospect of EU membership has driven East European reforms along a convergent path. But now, with Romania, Bulgaria, Lithuania, Latvia and Slovakia excluded from talks, non-democratic opposition groups could exploit the fact there is little chance of early EU membership to press for a return to authoritarian rule in large parts of the region.

Specifically, Brussels's strategy on East European enlargement undercuts Western Europe's influence in the areas of establishing entry conditions to the EU and setting deadlines to meet such conditions, which the West could exercise while discussing the reform process with East European governments.

East European populations may balk at the pain caused by liberalising prices and exchange rates, building sound financial systems and establishing the rule of law. But - until the decision by the EU to talk to only six of the 11 nations in the region about early EU membership - the governments of Eastern Europe could all claim they were being pressured to take unpopular measures by Brussels.

This is similar to the way in which Japanese decision-makers have privately encouraged US counterparts to push for greater trade openness, although it is politically unpopular in Japan.

In the discussions in Western capitals of EU enlargement, too much emphasis has been placed on the number of countries to be included in the first round of negotiations. A better strategy would have been to maintain leverage by keeping the options for entry flexible, making it possible for countries now relegated to the second round of negotiations to move ahead if their reforms warranted it, and for first-round countries to be demoted if their reforms lagged.

The best strategy would have been to establish an enlargement process allowing for entry into the EU on a case-by-case basis as each East European country met the necessary standards.

Unbelievably, the size of the pool admitted for early negotiations in December was determined in large part on a technicality. Brussels has decreed that the number of its commissioners must remain constant. Consequently, enlargement of the EU means the large EU states - which supply two commissioners each - must surrender some of their slots. To date, the large EU states have agreed to give up five slots in the event of six new members from East Europe. Jockeying for representation in Brussels between West European capitals has thus confused the broader issue of which East European nations should join the EU, and when they should do so and on what terms.

Beyond the exclusion of Romania, Bulgaria, Lithuania, Latvia and Slovakia from early membership talks, there is the unresolved issue of EU membership for the former Soviet states. In these countries, where entry into the EU remains a distant dream, economic reforms have gone more slowly than in Hungary and Poland.

Economic reform in the former Soviet states could be speeded up if membership of the EU were to become a possibility. If Russia and Ukraine are to be integrated into a prosperous Europe, it makes sense that they, too, be given the chance to join the EU.

q Erik Berglof is director of Stockholm Institute of Transition Economics (SITE) and a Research Fellow in London's Centre for Economic Policy Research. Klaus Wallner is also based at SITE.