Saturday, 23 July 2011


On a number of postings dealing with EU's periphery public debt crisis, I had pointed out that one of the results will be that the de facto 'two-tiered' system that the northwest EU members are imposing on the periphery under the 'patron-client integration model' entails that the eight associate members are having second thoughts about becoming full EU members of the eurozone.

The pending candidacy of Turkey and seven Eastern European associate members that could become full members by 2018 to 2020 is now in some doubt, unless of course the situation with the periphery members - Greece, Portugal, Ireland and Spain - improves in the next two to three years. After meeting with UK PM David Cameron, Romanian President Traian Basescu recently stated that integration of the eight candidates depends on the degree to which Europe remains under the cloud of economic and financial crisis. He added: “Because in order to look at the extension we will have to settle the EU’s internal problems, with Greece, Ireland, Portugal and who knows.”

Latvia, Lithuania pegged their currencies to the euro but took big hits when the recession of 2008-2011 hit, forcing Latvia to seek IMF assistance and suffer the pains of austerity programs. Similarly, the Poles and the Czechs let their currencies fall against the euro so they can achieve external equilibrium - sell more products abroad and import less.  Budget deficits soared across Eastern Europe owing to the crisis of Western Europe, thus making people think twice about joining the EU. Latvia and Lithuania have watched Estonia suffer immense hardships in order to join the EU - wages sharply down and economic growth dropping by 20%.

The UK is no more interested in adding new members than many of some of the other northwest EU nations that see greater costs and influx of new workers in their countries. This message is clear enough and one that especially applies to Turkey and has its prime minister Tayyip Erdogan raising the anti-EU rhetoric to appeal to Islamist and nationalist elements in Turkey and Turkish-speaking Northern Cyprus. 
In the past year, especially in the past six months, high level Turkish officials have unleashed strong anti-EU rhetoric, knowing that the majority of Turks and Turkish-Cypriots realize the EU will not permit Turkish membership any time soon. Calling Europeans racists and imperialists, Turkish officials have gone as far as to threaten that Turkey is a regional player without which EU and US cannot operate in the Middle East. Given that Turkey has been experiencing phenomenal economic growth in the past few years, while EU periphery is suffering, Erdogan can afford to lash out at the EU, although behind the scenes he is a loyal NATO ally. For example, Romania was compelled to support NATO bombing of Libya, although Romania derives no benefits from such military operations.
One of the issues for full membership in the EU for the eight candidates is that they follow NATO policy. Linkage of foreign and defense policy is part of the price that the members must pay for joining the EU, even as subservient client members like Greece and the periphery nations.  Serbians are even more skeptical about joining the EU than Romanians or Turks. Serbia has 20% unemployment and an average wage of 350 euros per month, or more than two-thirds lower than debt-ridden Greece - wage levels at 1960 rates and poverty levels in some areas at 1939 levels. Despite such dire economic picture, 
Serbia's economic difficulties ought logically to translate into burning enthusiasm for EU membership and the open borders and outside investment that it would bring. Yet, as it has edged closer to talks on accession, popular support for EU membership has fallen steadily. A recent public opinion poll revealed that only 53% of those questioned would vote for entry, down from 71% in November 2009. The reason for this is the realization that EU will demand the slashing of the public sector where more than 500,000 people work. A Serb official noted that: "If you look at every country that has approached accession, people start out with great enthusiasm and then, later on, they find out that they have to give something up and so they make a rational appraisal of their interests."

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