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The danger of EU enlargement

Charles Michel (R) suggested countries like Ukraine could join the EU in 2030. Credit: Getty

August 29, 2023 - 7:00am

Speaking at the Bled Strategic Forum in Slovenia, President of the European Council Charles Michel announced that the EU would aim to add new member states by 2030. Negotiations have already started with Ukraine and Moldova, and Michel indicated that Bosnia and Herzegovina as well as Georgia might also be reconsidered, having previously been rejected.

The most obvious question is: are the two new candidates economically ready for membership? The most apt comparison is to consider the accession of eight Central and Eastern European countries (Czechia, Estonia, Hungary, Lithuania, Latvia, Poland, Slovakia, and Slovenia) in 2004. When these countries joined, they had an average per capita GDP of just over $16,000 on a purchasing power-adjusted basis.

With an average per capita GDP of nearly $14,000, Ukraine and Moldova therefore look ready to join. Even if, as the IMF believes, Ukraine will lose around a third of its GDP due to the war, this number only falls to around $12,400. And should both countries see some growth between now and 2030, they would be economically comparable to the eight countries from the region that joined in 2004.

Problems arise, however, when we consider the reconstruction of Ukraine. The World Bank currently estimates that rebuilding the country after the war will cost around $411 billion. Yet the EU’s total regional development budget in 2022 was only €30.2 billion, meaning that the costs of rebuilding Ukraine are more than 12 times the amount of cash the EU spends annually on all regional development. Perhaps the EU will not have to foot the entire bill and other countries can contribute, but reconstruction appears to be the biggest economic hurdle to overcome.

Then there is the question of whether the new countries will join the eurozone and adopt the euro as their currency. When the eight other countries joined in 2004, all of them except Poland and Hungary adopted the single currency. But the single currency comes with rules, most notably the Maastricht Criteria that limit the size of a member state’s government deficit to 3%. Ukraine currently has a government deficit of 16.3%, and while this is likely to fall when the war is over, it seems equally probable that it will have problems with revenue generation for years to come.

The biggest boon to EU economic growth will come from migration, however. Fertility rates in the EU are reaching desperate levels. In 2021 the average EU birth rate was 1.53 children per woman — far below the replacement rate of 2.1. And although Ukraine and Moldova have similarly low fertility rates (1.22 and 1.77 respectively), Ukraine’s population of 44 million people could lead to migration surges across the continent. 

As we saw with the migration movements from Eastern to Western Europe in the 1990s and 2000s, such surges could be politically controversial. But European leaders have a long track record of prioritising economic growth over calls for anything else.

The question of whether the EU should expand ultimately comes down to the perennial immigration-growth trade-off that low births across the West have foisted upon us: either we open the door and grow, or we close it and stagnate. If we choose the former, there will no doubt be ramifications in the form of the populist backlashes that have now become so frequent in the politics of Western nations. That is something of which our leaders will have to be mindful.


Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics

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Steven Carr
Steven Carr
10 months ago

‘The bloc risks repeating the errors of the early 2000s
Obviously they won’t repeat the error of having referendums as they did in Ireland in 2001.
There is always a chance people won’t know the right way to vote.

N Satori
N Satori
10 months ago
Reply to  Steven Carr

The trouble with a referendum is that you need a political class prepared to act on the result. As Brexit and various EU referenda have shown, despite the political class’ claim to value democracy above all, if the result is not to their taste they will work to subvert it.

N Satori
N Satori
10 months ago
Reply to  Steven Carr

The trouble with a referendum is that you need a political class prepared to act on the result. As Brexit and various EU referenda have shown, despite the political class’ claim to value democracy above all, if the result is not to their taste they will work to subvert it.

Steven Carr
Steven Carr
10 months ago

‘The bloc risks repeating the errors of the early 2000s
Obviously they won’t repeat the error of having referendums as they did in Ireland in 2001.
There is always a chance people won’t know the right way to vote.

Peter B
Peter B
10 months ago

“But European leaders have a long track record of prioritising economic growth over calls for anything else.”
Really ?
Then why is the EU’s share of world GDP in sharp and continuing decline ? Even as it continued to add new member states ?
Why has the EU’s strong position in technology and innovation slipped so far that it’s now both way behind the USA and also behind many Asian countries ?
Why have they pursued expensive anti-growth energy policies ?
Why have they prioritised expensive and unecessarily large welfare states which have made the member states uncompetitive against Asia ?
Why do they continue to pursue protectionst agricultural policies ?
Why has the real cost of EU government continue to rise every year and take an ever greater share of wealth away from private industry ?
Why is the EU the most over-regulated economic area in the world ?

Hugh Bryant
Hugh Bryant
10 months ago
Reply to  Peter B

Whenever I encounter someone pushing the economic case for the European Union I simply ask them to name three iconic European businesses that are less than fifty years old.

Katharine Eyre
Katharine Eyre
10 months ago
Reply to  Hugh Bryant

…and which haven’t imploded due to being based on large scale fraud

Ted Ditchburn
Ted Ditchburn
10 months ago
Reply to  Hugh Bryant

In some business areas the EU is virtually absent… hence Apple, Google(Alpha), Meta (Facebook), , Amazon, YouTube, and, to a surprising extent, electric vehicles, as China has both the supply chain and loads of partner investment in branded EU electric cars, and Tesla is more valuable than the entire EU vehicle industry.
God knows how bare the bare cupboard would look if the EU had not been prioritising growth these last 50 or 60 years.

Katharine Eyre
Katharine Eyre
10 months ago
Reply to  Hugh Bryant

…and which haven’t imploded due to being based on large scale fraud

Ted Ditchburn
Ted Ditchburn
10 months ago
Reply to  Hugh Bryant

In some business areas the EU is virtually absent… hence Apple, Google(Alpha), Meta (Facebook), , Amazon, YouTube, and, to a surprising extent, electric vehicles, as China has both the supply chain and loads of partner investment in branded EU electric cars, and Tesla is more valuable than the entire EU vehicle industry.
God knows how bare the bare cupboard would look if the EU had not been prioritising growth these last 50 or 60 years.

Peter Buchan
Peter Buchan
10 months ago
Reply to  Peter B

Because complex systems are subject to Emergence. No system is exempt (no, Mr B, not even European-run systems). And unconstrained, excessively ideological systems – like Western liberal turbo-capitalism – will, eventually and always, “self-select” a certain kind of leader.
The current breed, sprouting the “ideals” so many on UnHerd like to crow, sold “Project Europe”…and I daresay Fukuyama’s History-ending American version, down the river.
While “the people” proselytized from debt-constructed soapboxes.
Chickens are home, and roosting…

Hugh Bryant
Hugh Bryant
10 months ago
Reply to  Peter Buchan

It’s usually a good idea to stay off the sauce whilst posting online.

Ted Ditchburn
Ted Ditchburn
10 months ago
Reply to  Hugh Bryant

:))

Ted Ditchburn
Ted Ditchburn
10 months ago
Reply to  Hugh Bryant

:))

Hugh Bryant
Hugh Bryant
10 months ago
Reply to  Peter Buchan

It’s usually a good idea to stay off the sauce whilst posting online.

Hugh Bryant
Hugh Bryant
10 months ago
Reply to  Peter B

Whenever I encounter someone pushing the economic case for the European Union I simply ask them to name three iconic European businesses that are less than fifty years old.

Peter Buchan
Peter Buchan
10 months ago
Reply to  Peter B

Because complex systems are subject to Emergence. No system is exempt (no, Mr B, not even European-run systems). And unconstrained, excessively ideological systems – like Western liberal turbo-capitalism – will, eventually and always, “self-select” a certain kind of leader.
The current breed, sprouting the “ideals” so many on UnHerd like to crow, sold “Project Europe”…and I daresay Fukuyama’s History-ending American version, down the river.
While “the people” proselytized from debt-constructed soapboxes.
Chickens are home, and roosting…

Peter B
Peter B
10 months ago

“But European leaders have a long track record of prioritising economic growth over calls for anything else.”
Really ?
Then why is the EU’s share of world GDP in sharp and continuing decline ? Even as it continued to add new member states ?
Why has the EU’s strong position in technology and innovation slipped so far that it’s now both way behind the USA and also behind many Asian countries ?
Why have they pursued expensive anti-growth energy policies ?
Why have they prioritised expensive and unecessarily large welfare states which have made the member states uncompetitive against Asia ?
Why do they continue to pursue protectionst agricultural policies ?
Why has the real cost of EU government continue to rise every year and take an ever greater share of wealth away from private industry ?
Why is the EU the most over-regulated economic area in the world ?

Hugh Bryant
Hugh Bryant
10 months ago

Ah, the old ” immigration-growth trade-off” chestnut.
For this to be real, the growth engendered would need to be greater than the proportionate population increase. This certainly hasn’t been the case in the UK since the mass immigration boom began in 2004 – GDP per capita is at least 10% lower in real terms. That’s before we even talk about the social costs that we’ve incurred.
What the ” immigration-growth trade-off” really amounts to is pleasure for the corporate elites today vs pain for everyone tomorrow.
Let’s fix the birth-rate problem by fixing the housing market and wages.

Simon Denis
Simon Denis
10 months ago
Reply to  Hugh Bryant

Precisely. It is “per capita” productivity which needs to be increased, a process delayed or even prevented by the cheap labour of migrants, which enables business to avoid the tedious task of automation. Then there are dependent migrants, guaranteed permission to settle in the host country by rafts of absurd human rights legislation once a family member has obtained his cheap job. They are then granted moneys from the state – another burden on growth, not to mention the strain which an unnaturally growing population puts on transport, health, education, housing and the environment. All this has been abundantly clear for more than twenty years, but a group-thinking political-media class has made it taboo, the shameful recourse of an intellectually bankrupt establishment, along with coded insults such as “populist” – insults which reek of snobbery, by the way. As you say, let’s fix the birth-rate by fixing housing and wages – but don’t expect them to get on with it.

Andrew F
Andrew F
10 months ago
Reply to  Hugh Bryant

I am not convinced that is sufficient.
There are cultural reasons.
Women were persuaded since the 60s that main fulfilment is in career and not in having family.

Simon Denis
Simon Denis
10 months ago
Reply to  Hugh Bryant

Precisely. It is “per capita” productivity which needs to be increased, a process delayed or even prevented by the cheap labour of migrants, which enables business to avoid the tedious task of automation. Then there are dependent migrants, guaranteed permission to settle in the host country by rafts of absurd human rights legislation once a family member has obtained his cheap job. They are then granted moneys from the state – another burden on growth, not to mention the strain which an unnaturally growing population puts on transport, health, education, housing and the environment. All this has been abundantly clear for more than twenty years, but a group-thinking political-media class has made it taboo, the shameful recourse of an intellectually bankrupt establishment, along with coded insults such as “populist” – insults which reek of snobbery, by the way. As you say, let’s fix the birth-rate by fixing housing and wages – but don’t expect them to get on with it.

Andrew F
Andrew F
10 months ago
Reply to  Hugh Bryant

I am not convinced that is sufficient.
There are cultural reasons.
Women were persuaded since the 60s that main fulfilment is in career and not in having family.

Hugh Bryant
Hugh Bryant
10 months ago

Ah, the old ” immigration-growth trade-off” chestnut.
For this to be real, the growth engendered would need to be greater than the proportionate population increase. This certainly hasn’t been the case in the UK since the mass immigration boom began in 2004 – GDP per capita is at least 10% lower in real terms. That’s before we even talk about the social costs that we’ve incurred.
What the ” immigration-growth trade-off” really amounts to is pleasure for the corporate elites today vs pain for everyone tomorrow.
Let’s fix the birth-rate problem by fixing the housing market and wages.

Ian Barton
Ian Barton
10 months ago

The EU Commission will always seek out new sources of cheap labour for its corporate friends. After Russia has hollowed out the number of working age Ukrainian men, the EU will take the rest.

Last edited 10 months ago by Ian Barton
Ian Barton
Ian Barton
10 months ago

The EU Commission will always seek out new sources of cheap labour for its corporate friends. After Russia has hollowed out the number of working age Ukrainian men, the EU will take the rest.

Last edited 10 months ago by Ian Barton
Mark O'Neill
Mark O'Neill
10 months ago

Georgia?

A country so bad that its citizens seek asylum here in Ireland

But also country good enough to consider EU membership within 10yrs.

Right.

https://gript.ie/why-do-so-many-georgians-claim-asylum-in-ireland/

Hugh Bryant
Hugh Bryant
10 months ago
Reply to  Mark O'Neill

Ireland needs to get out now before it’s too late.

Ian Barton
Ian Barton
10 months ago
Reply to  Hugh Bryant

One legacy of Brexit is that the Irish would rather cut off their own limbs than do what the U.K. did. It is already too late


Ian Barton
Ian Barton
10 months ago
Reply to  Hugh Bryant

One legacy of Brexit is that the Irish would rather cut off their own limbs than do what the U.K. did. It is already too late


Hugh Bryant
Hugh Bryant
10 months ago
Reply to  Mark O'Neill

Ireland needs to get out now before it’s too late.

Mark O'Neill
Mark O'Neill
10 months ago

Georgia?

A country so bad that its citizens seek asylum here in Ireland

But also country good enough to consider EU membership within 10yrs.

Right.

https://gript.ie/why-do-so-many-georgians-claim-asylum-in-ireland/

Katharine Eyre
Katharine Eyre
10 months ago

The idea of enlarging before the EU has properly reformed itself is utter folly, and the guys at the top know this. Macron is saying this openly. And the EU is impossible to reform.
I do not think there is much support for such an enlargement at all among the population – at least in western European nations who bore the brunt of the east-to-west enlargement immigration waves post 2004. And that’s just the legal immigration based on the freedom of movement. These countries are also the ones struggling most with illegal immigration – a problem which is not going to disappear anytime soon. Foisting unlimited immigration from Albania, Georgia & co onto them aswell would be political suicide. No politician in their right minds would give that consent (and, under current rules, all 27 countries need to consent).
Given all of that, the chances of enlargement ever actually happening are next to none. These latest utterances are simply another way of stringing the current candidates along, kicking the can down the road. Hoping that they won’t throw their dollies out of the pram with final effect and embrace Russia and China. These geopolitical considerations loom just as large in minds in Brussels as any concerning economic growth.
It all just smacks of desperation and of having made promises in a rush of idealism that you now can’t keep.

Last edited 10 months ago by Katharine Eyre
Katharine Eyre
Katharine Eyre
10 months ago

The idea of enlarging before the EU has properly reformed itself is utter folly, and the guys at the top know this. Macron is saying this openly. And the EU is impossible to reform.
I do not think there is much support for such an enlargement at all among the population – at least in western European nations who bore the brunt of the east-to-west enlargement immigration waves post 2004. And that’s just the legal immigration based on the freedom of movement. These countries are also the ones struggling most with illegal immigration – a problem which is not going to disappear anytime soon. Foisting unlimited immigration from Albania, Georgia & co onto them aswell would be political suicide. No politician in their right minds would give that consent (and, under current rules, all 27 countries need to consent).
Given all of that, the chances of enlargement ever actually happening are next to none. These latest utterances are simply another way of stringing the current candidates along, kicking the can down the road. Hoping that they won’t throw their dollies out of the pram with final effect and embrace Russia and China. These geopolitical considerations loom just as large in minds in Brussels as any concerning economic growth.
It all just smacks of desperation and of having made promises in a rush of idealism that you now can’t keep.

Last edited 10 months ago by Katharine Eyre
Jonathan Nash
Jonathan Nash
10 months ago

No reference to the accession of Bulgaria, whose legal system did not meet EU standards of being free from corruption, but which was let in anyway.

Peter B
Peter B
10 months ago
Reply to  Jonathan Nash

Neither Romania nor Bulgaria met the accession criteria when they were admitted. The EU’s own reports showed that. But they were waived through regardless. Not certain they meet the accession criteria even now.

Andrew F
Andrew F
10 months ago
Reply to  Peter B

No one should be surprised.
The same thing happened with adoption of Euro in Greece, Italy, Portugal and Belgium.
EU is political, quasi religious project, so economic considerations are ignored.

Ted Ditchburn
Ted Ditchburn
10 months ago
Reply to  Andrew F

Although all discussions and debate are invariably framed by economic metrics and goals. Brexit wasn’t about that but Remainers and Verhofstadt-ian, all-in EU evangelists will never discuss in any serious way the real drivers for Brexit.

Ted Ditchburn
Ted Ditchburn
10 months ago
Reply to  Andrew F

Although all discussions and debate are invariably framed by economic metrics and goals. Brexit wasn’t about that but Remainers and Verhofstadt-ian, all-in EU evangelists will never discuss in any serious way the real drivers for Brexit.

Andrew F
Andrew F
10 months ago
Reply to  Peter B

No one should be surprised.
The same thing happened with adoption of Euro in Greece, Italy, Portugal and Belgium.
EU is political, quasi religious project, so economic considerations are ignored.

Ian Barton
Ian Barton
10 months ago
Reply to  Jonathan Nash

The only accession criteria is can these guys provide us with cheap labour?

Last edited 10 months ago by Ian Barton
Peter B
Peter B
10 months ago
Reply to  Jonathan Nash

Neither Romania nor Bulgaria met the accession criteria when they were admitted. The EU’s own reports showed that. But they were waived through regardless. Not certain they meet the accession criteria even now.

Ian Barton
Ian Barton
10 months ago
Reply to  Jonathan Nash

The only accession criteria is can these guys provide us with cheap labour?

Last edited 10 months ago by Ian Barton
Jonathan Nash
Jonathan Nash
10 months ago

No reference to the accession of Bulgaria, whose legal system did not meet EU standards of being free from corruption, but which was let in anyway.

Vic Dakin
Vic Dakin
10 months ago

“Populist backlashes” might be the reaction to the ramifications. The author has conveniently chosen not to say what those ramifications would be.

Vic Dakin
Vic Dakin
10 months ago

“Populist backlashes” might be the reaction to the ramifications. The author has conveniently chosen not to say what those ramifications would be.

Swavik Dittmer
Swavik Dittmer
10 months ago

Ukraine’s population as of 2023 is about 37 million
https://www.worldometers.info/world-population/ukraine-population/
If you only take into consideration the area under governmental control, it’s closer to 31 million.
https://www.wilsoncenter.org/blog-post/ukraines-demography-second-year-full-fledged-war
Either number is very far from 44 million.

Barry Murphy
Barry Murphy
10 months ago
Reply to  Swavik Dittmer

There’s still the potential for huge migration westward if Ukraine joins the EU. Not that it matters much at the moment, because the Ukrainians are moving west in huge numbers anyway as refugees.

Ted Ditchburn
Ted Ditchburn
10 months ago
Reply to  Swavik Dittmer

Ukrainians were migrating westward well ages ago..virtually every shop worker and loads of hotel staff we came across in Salerno were Ukrainian well over 15 years ago.

Barry Murphy
Barry Murphy
10 months ago
Reply to  Swavik Dittmer

There’s still the potential for huge migration westward if Ukraine joins the EU. Not that it matters much at the moment, because the Ukrainians are moving west in huge numbers anyway as refugees.

Ted Ditchburn
Ted Ditchburn
10 months ago
Reply to  Swavik Dittmer

Ukrainians were migrating westward well ages ago..virtually every shop worker and loads of hotel staff we came across in Salerno were Ukrainian well over 15 years ago.

Swavik Dittmer
Swavik Dittmer
10 months ago

Ukraine’s population as of 2023 is about 37 million
https://www.worldometers.info/world-population/ukraine-population/
If you only take into consideration the area under governmental control, it’s closer to 31 million.
https://www.wilsoncenter.org/blog-post/ukraines-demography-second-year-full-fledged-war
Either number is very far from 44 million.

William Shaw
William Shaw
10 months ago

“That is something of which our leaders will have to be mindful.”
Not “our” leaders.
Couldn’t give a toss what the hideous EU does.

William Shaw
William Shaw
10 months ago

“That is something of which our leaders will have to be mindful.”
Not “our” leaders.
Couldn’t give a toss what the hideous EU does.

j watson
j watson
10 months ago

Why do all the Brexit supporters care?
Obvious isn’t it – the fact nobody else has left and yet more seeking to join a painful contrast with the group-think of their project.
Now of course the EU ain’t perfect, and nor will the countries mentioned in the Article be imminent members.

Julian Farrows
Julian Farrows
10 months ago
Reply to  j watson

Did you vote for Brexit?

Peter B
Peter B
10 months ago
Reply to  j watson

Why shouldn’t we care ?
It’s not really in our interests to have a declining economic bloc on our doorstep.
I’ve also seen what’s happened to Italy over the past 20 odd years and I don’t see why they should have to put up with it.
Who knows – if they [the EU] do finally manage to reform some of their outdated and dysfunctional policies and get their act together, some of us might want to work more closely with them again. But as it stands today, certainly not a club I’d choose to join.

Dougie Undersub
Dougie Undersub
10 months ago
Reply to  j watson

Of course relatively poor countries like Moldova and Georgia are keen to join. They get a big boost to their economies while realising that they, like Hungary, Czechia etc., will be able to tell the Commission where to put their social dictats and get away with it.
The bigger economies, i.e. the net contributors, will find ways of making sure accession never happens.

Ted Ditchburn
Ted Ditchburn
10 months ago

Apart from anything else they haven’t got us chipping in a sizeable wedge nowadays.

Ted Ditchburn
Ted Ditchburn
10 months ago

Apart from anything else they haven’t got us chipping in a sizeable wedge nowadays.

Julian Farrows
Julian Farrows
10 months ago
Reply to  j watson

Did you vote for Brexit?

Peter B
Peter B
10 months ago
Reply to  j watson

Why shouldn’t we care ?
It’s not really in our interests to have a declining economic bloc on our doorstep.
I’ve also seen what’s happened to Italy over the past 20 odd years and I don’t see why they should have to put up with it.
Who knows – if they [the EU] do finally manage to reform some of their outdated and dysfunctional policies and get their act together, some of us might want to work more closely with them again. But as it stands today, certainly not a club I’d choose to join.

Dougie Undersub
Dougie Undersub
10 months ago
Reply to  j watson

Of course relatively poor countries like Moldova and Georgia are keen to join. They get a big boost to their economies while realising that they, like Hungary, Czechia etc., will be able to tell the Commission where to put their social dictats and get away with it.
The bigger economies, i.e. the net contributors, will find ways of making sure accession never happens.

j watson
j watson
10 months ago

Why do all the Brexit supporters care?
Obvious isn’t it – the fact nobody else has left and yet more seeking to join a painful contrast with the group-think of their project.
Now of course the EU ain’t perfect, and nor will the countries mentioned in the Article be imminent members.