Admitting new members risks a repetition of previous errors
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.
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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.