Thursday, May 18, 2006

Romania, Bulgaria and the EU

Romania and Bulgaria

A dim green light

May 18th 2006
From The Economist print edition

A mumbled invitation to join the European Union in 2007

ROMANIANS have a joke about driving to Greece. Tank up before you get to the Bulgarian border, lock the doors and windows, put your foot down and don't stop until you reach the other frontier. Bulgarians say the same about driving north to Hungary. Other Europeans, it seems, would rather drive elsewhere.

Romania and Bulgaria are due to join the European Union on January 1st 2007. This week, the European Commission could have advised that they get the formal go-ahead. Instead it fudged. Preparations for admission should proceed, it says—but with a further review in the autumn of progress on reforms. If either country scores spectacularly badly then, its accession could be put off for a year.

In practice, any such delay now looks out of the question for Romania, and highly unlikely for Bulgaria. Romania was originally seen as the more problematic of the two. It is big, with 20m people, very poor, and was until recently ruled by a venal and incompetent clique of ex-communists and their hangers-on. But over the past two years Romania has made startling progress, particularly in the trickiest areas of judicial administration and home affairs. The commission says it is now worried only about minor issues, such as improving slaughterhouse hygiene.

Such quibbles spare a few blushes next door, where the criticism is sharper. Bulgaria has signally failed to match Romania's new law-abiding ways. Gangland killings are frequent, and go unpunished. The suspicion is that the authorities are too scared, or too weak, to tackle the perpetrators. Or too complacent: Klaus Jansen, a senior German law-enforcement official, complained recently of a “kiss my ass” attitude among his Bulgarian counterparts.

The next five months are unlikely to change matters much. It is still possible, just, that the treaty sealing Bulgaria's membership will not be ratified by one of the current members. More likely is that Bulgaria will still join with Romania, but will be hedged about with more conditions. The dollops of EU money that both countries need, to build new roads and improve their public services, could be held back if reforms falter.

The real worry is not the pretence of pressure on the two Balkan front-runners, but the dimming prospects for membership elsewhere in the region. The peace of recent years in the countries of former Yugoslavia is largely held together by the hope that it will bring the eventual boon of EU membership. Indeed, in disputed places such as Kosovo and Montenegro (which votes on independence this weekend), the idea of a nation-state operating outside a tight international club such as the EU could be catastrophic.

An international commission on the Balkans, composed of grandees, recently urged the EU to keep open the door, to “show that it has the power to transform weak states and divided societies.” If it does not, it will “remain mired as a reluctant colonial power at enormous cost”. Such instability is one worry if enlargement stalls. Another is that more countries, notably Ukraine, are waiting for their turn, after Turkey, which has already begun negotiating. There is a deafening lack of enthusiasm for any of them.


Kagan said...

On your article about Europe's new poor.
It is a classic example of poor understanding of the subject of economics by the staff of The Economist. You simply take GDP as a measure ow wealth created, whilst it is only a measure of market activity. Take Greece and Cyprus: both countries are much poorer than Slovenia, even poorer than Poland, but have higher GDP per capita due to technicalities (see appendix below). For me the real problem with EU was money wasted for decades on Greece and premature admission of Cyprus, that was totally unprepared for joining the EU. Do you know that there is still a customs border betwen Greece and Cyprus?
According to UN: GDP encompasses the production of marketed goods and services, which includes both those that enhance welfare and those which detract from it. It measures the services of government at cost and includes subsistence output of farmers only to the extent it is imputed, and other household production, in particular that of women, only if it is sold and in practice not even then. Informal sector output is not included at all. Aggregate figures for GDP and averages for GDP per capita provide no information about the distribution of income or the economic benefits different groups in society may gain from economic growth. It says nothing about conditions of work, satisfaction gained on the job, the degree of participation in national life of different groups in society or other important dimensions of development such as demographic characteristics and political arrangements. International comparisons suffer from the failure of the exchange rate to reflect adequately the relative purchasing power of currencies over domestic goods and services. Studies of alternative methods of comparing GDP among countries based on the purchasing power parities of currencies indicate that conventional exchange rate translations may overstate significantly the relative economic distance between high- and low-income countries, as is illustrated by the fact that no one could survive in industrial countries on the incomes estimated for survival in poorer countries.
SOURCE: United Nations: Overall Socio-economic Perspective of the World Economy to the Year 2000 (New York: UN, 1990 p. 21)

Jon said...

Hello Edward

Thanks for the article.

What happened to Bulgaria? I thought they were doing OK - especially given the Caucescu legacy.


bokanon said...

Kagan, GDP calculation has reasonably little to do with economics. Rather it is an arbitrary accouting exercise, so probably a weak proxy for inferring somebody's economic credentials. There are thousand a reasons why this is not a measure of poverty, even less happiness (you quote only the most obvious ones). If you came up with a better unidimensional comparator you might earn a first accounting Nobel prize. Otherwise your comment is a wee bit petty.

Is there really a custome border between Greece and Greek Cyprus?