Speech by Czech Prime Minister Mirek Topolánek at the Conference "EU Enlargement - 5 Years After", 2 March in Prague

Five Years of Success

At today's conference, we want to ask and try to find answers to a number of questions. What has enlargement meant to the citizens of the new Member States and what has it meant to the old? What is the European Union like five years after the biggest enlargement in its history – a move breaching, for the first time, the lines of the former Iron Curtain which, for four decades, had partitioned the free world from the Communist empire? Political scientists, economists, sociologists, lawyers, philosophers and others are sure to offer us a plethora of responses backed by scores of arguments and data. The European Commission has drawn up a great analysis, and I would like to express my gratitude for that because it will make it much easier for me to prove that enlargement has been a huge success. In addition, I would like to thank the International Monetary Fund, the Organization for Economic Cooperation and Development and the Brussels think-tank Bruegel, whose studies will also be presented here.

The existence of an independent analysis makes my position simpler in one other respect, too. Today, on this five-year anniversary, I stand here in the role of President of the European Council and therefore I should speak on behalf of all 27 European Union countries. On the other hand, I cannot simply ignore the fact that I am the Czech Prime Minister and, in particular, I am a Czech citizen with personal experience of the whole period from the filing of the application to acceptance, and the subsequent five years in the EU. Perhaps, then, you will forgive me for being somewhat personal against the background of the European Commission’s objective report and for complementing the analysts’ findings with specific Czech feelings.

I believe it would be useful, at the start, to say that even though we all share the same values and the same objectives, we do not share the same concerns, which can be attributed to our different historical experiences and how long we have been in the Community. People in the old Member States are worried about further enlargement and some politicians are concerned that the EU could lose some of its coherence, discipline, and social guarantees. For our part, we are afraid that the Union will become isolationist and discriminatory and that it will ride roughshod over us.

A larger and stronger Europe

However, I believe that we can agree on one fundamental fact: enlargement five years ago was a success in all conceivable aspects. First, it was a huge moral success. The free world, which for forty years had had to view the evil Communist empire with trepidation, successfully managed to integrate its former enemies. This brought great moral satisfaction to people on both sides of the former Iron Curtain. Both to those who opened the door and those who longed to enter.

The slogan "Back to Europe", through frequent repetition, had become something of a cliché, although that did not make this yearning any less authentic. Nevertheless, at this point I would replace this slogan with another. After all, we never actually ceased to be a part of Europe. What we did lose, for four decades, was our freedom. For us, integration into the EU was confirmation of our return to freedom rather than a return to Europe. The slogan "back to freedom" is a much better way of reflecting what accession to the EU meant for us. It also explains our current attitudes and behaviour in the Union, including topical debates. We are simply exceptionally sensitive in all matters connected with freedom.

We can all chalk up the 2004 enlargement as a major political success. The population of the European Union suddenly increased by 120 million. More importantly, this was the first time it had admitted countries with a rather different history, thus demonstrating the viability of its mission of integration. It chose – rightly – hope over fear. This step, or rather leap, effectively meant that the EU was poised for a global role in the world.

The European Union showed that it would not be bound geographically or geopolitically. It proved that it was far more than just a free trade zone, far more than just a group of countries preoccupied with themselves, communicating only with each other and becoming more closely integrated. It proved that expanding the area of freedom, security and prosperity is its “civilizing mission” and a conditio sine qua non of its existence. The Union showed that, rather than cultivating a fortress mentality, it is a harbour we can head for with trust and hope.

I believe that the moral and political aspects of enlargement are so widely accepted and clear that there is no particular need to discuss them. Therefore, I will dwell mainly on the economic success of enlargement, which is also the primary focus of this conference. It is here that the greatest concerns lay and, indeed, economic issues are still a subject of debate. In this respect, the economic crisis and the unfair media image of "Eastern Europe" artificially formed by various “Bloombergs” would seem to play into the hands of sceptics.

However, I am convinced – and the European Commission study I have mentioned provides me with plenty of ammunition – that the opposite is true. Enlargement in 2004 and 2007 benefited the citizens of all countries in today’s EU-27. It enhanced the efficiency and global competitiveness of European firms, and increased prosperity and the quality of life enjoyed by the population here. Enlargement has made the European Union better prepared to counter the effects of the world crisis. The European Union is larger, more powerful, more flexible. These are hard facts.

A more united and more efficient Europe

I will present at least a few basic facts documenting the success of enlargement.

Following its enlargement in 2004 and 2007, the EU is the largest integrated economic zone in the world. Its share of global GDP is 30% and its share of world trade (excluding trade within the internal market) is 17%.

Admission to the European Union has increased economic performance and brought higher living standards and better quality lifestyles to the citizens of new Member States. Whereas per-capita income in 1999 stood at 40% of the level in the old Member States, by 2008 it was 52%. Some new Member States have already overtaken some of the old members in terms of per-capita GDP and productivity. Trade integration and the synchronization of economic cycles with the core of the EU are greater among some new members than older Member States. So let’s stop referring, generically and incorrectly, to the region of Eastern Europe and, instead, assess each Member State on the merits of its own circumstances and performance.

The populations of the old Member States also benefited from enlargement. Fears that they would have to pay for the entry of ten poorer countries out of their own pockets proved unfounded. There was no reduction in economic activity, the labour market was not awash with Polish plumbers, and the welfare systems did not collapse. On the contrary, EU enlargement gave the old members a huge growth impetus because unprecedented investment and business opportunities arose. They had access to new, unsaturated markets and favourable production capacities literally next door. This helped Western companies to strengthen their global competitiveness and to protect domestic jobs.

The States in which the concerns about enlargement were most acute actually benefited most from enlargement. Moreover, the old Member States were drawing on all these advantages long before enlargement, on the basis of association agreements which unilaterally opened up the markets of candidate countries. This fact is often forgotten. We were paying for the benefits of joining the EU in advance. The new Member States saw returns on their investment only after a time lag. Nevertheless, the results of the cost-benefit analysis are positive.

I have already mentioned the political success of enlargement. A larger and stronger Union has a much better position in negotiations on a global level, whether in relation to GATT, the G20, the WTO, climate change or energy. The gas crisis revealed this potential European strength, but also our weakness, absolutely clearly – it highlighted the need to learn to make better use of the power of unity.

The essential difference between the original fifteen and the new ten (now twelve) no longer lies in their involvement in different layers and structures of European integration. It focuses on the Schengen area, access to the single currency, the EU Council Presidency, and representation in EU institutions.

The Iron Curtain is no longer an imaginary dividing line even in the field of economic policies, progress in structural reforms or the implementation of the internal market. Countries can be found among both the new and old Member States that, as a result of sound or poor domestic policies and the reforms they have or have not carried out, are now either managing the world economic crisis relatively well or are facing serious problems. The old and new countries are therefore converging quite rapidly in economic and institutional terms. This convergence is not at the expense of citizens of the original EU-15; in fact, it offers them clear benefits. The serious problems that do persist in European integration after five years are connected with the completion, or rather the non-completion, of the liberalization of the internal market. I am convinced that completing the common market is more important for the integration and future of the EU than the reform of institutions.

Europe as a community of values

Before I continue on how to take advantage of past experience in the future, allow me to reflect at least briefly on the causes of the huge success of enlargement. This achievement is based on the willingness and ability to share common values. We spent four decades living in a Communist zoo. Yet we never ceased to be Europeans: life in a cage did not turn us – figuratively speaking – into totalitarian animals. That said, in their reports and comments just before enlargement the Western media may have cast us in that light on occasion and, in some instances, I feel they still do...

We were poorer, we had worse legal awareness and less information. But, as regards commitment to freedom and democracy, there was no difference between citizens on either side of the continent. The fact that we belonged to a common area of civilization was formally confirmed by the Copenhagen criteria. These criteria were hard enough to ensure our readiness to join the EU but were also adequately fair and non-discriminatory.

No tests had been required for previous enlargement, as it had involved countries with similar development and experience; admission took place solely on the basis of a decision to join a functional community. We, after forty years of Communist isolation, did not have the same degree of credibility. However, we managed to comply with the Copenhagen criteria – and I know well how hard they are – relatively quickly and to close all the accession chapters.

This is an important precedent for the future. Other countries further east and south will certainly need more time to pass this test. But there is no reason to reject them in advance because today they are perhaps too poor, or too different historically and culturally. The criteria are an impersonal, stringent, but fair test of how seriously these countries intend to integrate into the EU and how much they are prepared for it. Therefore, I am in favour of hard testing, but I am against the a priori exclusion of new candidates or the creation of new barriers in the form of additional conditions. Since we are talking about the Copenhagen criteria here, I must compliment the Danish Presidency, and Prime Minister Rasmussen in particular, for definitively bringing our ten countries, including eight postcommunist countries, under the wing of the EU. The perseverance, firmness, calm and ability to find consensus he showed in achieving this offer me great inspiration and the hope that even a small country can successfully manage the European Union at a historic moment.

Through its enlargement five years ago, the European Union rejected the temptation of isolationism and stepped out of its shadow by extending beyond the former Iron Curtain. This was a bold political decision that did not have the unwavering support of the public in the old countries. Today we are reaping the fruits of that courage and statesmanlike wisdom. We, who were only timidly knocking on the door and wondering in trepidation whether we would be found eligible to enter, feel a huge commitment. An enormous obligation to those who remain outside. And a responsibility towards today’s European Union. We know the difference between waiting outside and standing inside. And we also know how beneficial new members of the Community can be. If we deny them the freedom to enter, we deny ourselves a piece of our own freedom. If we rob them of hope, we lose a part of our own hope.

The successfully managed enlargement is convincing proof that Europe is primarily shaped by its values, not its institutions. In this respect, I would like to make one more fundamental observation from the point of view of a citizen of a new Member State. The inhabitants of the old Member States have had decades to experience these common values. Despite stumbling over and enduring failed referendums on a few occasions, the process of European integration continued advancing. Recently, however, it has accelerated appreciably. We only had a few years to digest changes larger than those experienced in the European Communities in the space of forty years. We submitted an application at the time of the Maastricht Treaty, we acceded under the Treaty of Nice, and five years down the line, we have the Lisbon Treaty. We definitely require less time than the generations of citizens from the traditional EU Member States had before us.

Yet we need time to absorb changes internally, not only formally. This is in keeping with the concept of the EU as a community of values. A community which is voluntary and open. A community for which, in the words of the first Czech President, “democracy is discussion”. And it is in keeping with the motto of the European Union: In varietate concordia, Unity in Diversity. In this sense – and only in this sense – a larger Europe also means a stronger Europe.

The process of enlargement and the deepening of European integration are often claimed to the contradictory. I do not think this need be the case if both integration and enlargement are guided by the principle of the voluntary adoption of values, not by the enforcement of uniformity. We have not had good historical experience of compulsory uniformity. Conversely, we associate joining the EU with our return to freedom and we are keen for it to remain that way.

A Europe without barriers, a Europe of rules

Over five years we have achieved undeniable success, which I believe can be attributed to our sharing of the same values. How should we handle this success in the future – how can we expand and safeguard it? And how should we learn from past mistakes?

As I mentioned, we have failed to complete the internal market. Of the four fundamental freedoms, only two operate without hindrance: the free movement of goods and capital. The situation is far worse with the free movement of services, which account for only five per cent of trade in the EU-27. This is despite the fact that they generate 70% of GDP and employ two thirds of the European Union’s workforce. Large-scale bureaucracy and regulations which small firms in particular are unable to cope with are to blame. And it is the consumers who suffer.

There is no reason to delay the liberalization of the services sector. Experience in other areas refutes previous concerns and clearly demonstrates that all citizens, from new and old Member States alike, benefit from the more efficient division of labour. The situation is just as bad on the labour market. Thanks to transitional measures, problems with the recognition of qualifications and the transfer of social security, a mere two per cent of inhabitants work in a country other than their home EU Member State. Yet the free movement of labour contributes to the better harnessing of EU potential, and to the growth of its prosperity and competitiveness. It also helps to reduce prejudice. Finally, but not last, it is a more convenient alternative to migration from third countries because of the cultural proximity and because, if the economic situation deteriorates, these workers return to their home country without any problems.

Restrictions on the free movement of workers clearly persist and are an unnecessary brake not only on economic growth, but also on the European integration process.

However, errors do not always lie solely in a lack of liberalization, but sometimes also in a scarcity of clear and simple rules. Large capital inflows and credit growth in the new countries have led some of them to excessive debt, an increase in external imbalances and the overheating of the economy. The global crisis, therefore, has fallen upon these countries particularly hard.

While this is in no way a problem faced by the Czech Republic, it is clear that we need to strengthen cooperation in better financial regulation and supervision at European level. But even here, given the major interlinking of the banking sector, we call for prudence. I note that, in a number of the new countries, including the Czech Republic, the foreign ownership of banks by parents from other EU Member States is almost a hundred per cent. We cleansed the banks at great expense and privatized them into the hands of renowned West European banks which are now being “recapitalized”; this is just a euphemism for nationalization and we are faced with efforts by others to manage and regulate our banks. Doubt can be ostracized; discussion is imperative.

The need for greater liberalization and, on the other hand, the strengthening of the capacity to enforce rules would have become apparent even without the crisis. The crisis has simply shone a brighter light on this issue. Despite all the difficulties, we should remember that without EU membership the new Member States would have found it much harder to come to terms with the crisis. By the same token, the enlargement has evidently strengthened the economy and businesses of the old Member States and made them more resistant to the crisis. The European Union’s share in world trade was declining even before the crisis and was cushioned by the increase in the new Member States’ trade.

The more efficient division of labour and better returns on investments have revitalized the Union. This has been made possible because Europe’s overall high degree of integration. Protectionism in international trade is always harmful, and in the case of the EU it is quite blatantly illogical. Any attempt to prefer domestic manufacturers will damage everyone on the single market. Including those companies which should have been helped because it forces them to abandon comparative advantages obtained in another Member State. Moreover, this policy is contrary to EU law.

The lessons from the crisis must be the opposite of this. We must say no to shutting ourselves off from others, no to protectionism and yes to economic cooperation and integration, which has brought so much benefit in the past five years. The common internal market is the European integration’s biggest achievement and our most powerful tool in overcoming the crisis. We cannot talk about further integration while undermining its very basis. Protectionism is not only euro-sceptical, it is literally euro-destructive. Protectionism is bad, it is venom threatening to poison the spring of European integration, it is the shadow of the Great Depression of the 1930s. I am glad that we agree on that in the EU-27.

The past five years have shown that together we can win. We cannot allow ourselves to start losing, divided, due to the crisis. Let’s learn from the success of enlargement. Success which has shown that solidarity is worthwhile for the old Member States, just as assuming responsibility has paid dividends for the new Member States. Now we are all in the same boat and, I would say, huddled on the same deck, and we must all show solidarity with others and responsibility for our own destiny. The crisis is no reason to abandon these values. On the contrary. Let’s build a Europe not of old and new, not of large and small, not of countries with and without the euro, not of North and South, East and West; let’s build a Europe of equal opportunities, shared values, a Europe of openness, flexibility, solidarity and responsibility. Let’s continue to build a Europe without barriers, but also a Europe of rules. Europe as an area of freedom inside and outside, and an area of justice for all. So that when, in 20 years time, our children ask what Europe is, we will not have to hesitate before answering.