Croatia's Entry Would Have No Financial Impact

The European Parliament adopted a resolution that states that Croatia would not be a financial burden on the budget.

At the plenary session in Strasbourg on Tuesday, the European Parliament adopted the resolution on the consequences of future expansion on the efficiency of the cohesion policy of the EU, which states that Croatia would represent next to no burden to the current financial perspective, the European budget framework for the seven-year period between 2007 and 2013. 

The resolution, which was adopted with an overwhelming majority of votes, states that Croatia, with which negotiations have progressed the furthest and which is even more developed than some of the current member states in the socio-economic sense, would pose the smallest financial burden to the Union considering the country's size, number of inhabitants, and the degree of economic development and (its entry) would not cause any statistical changes in terms of the regions that are eligible to receive regional aid, even in the current financial period. 

The resolution proposal came from the Regional Aid committee which accepted the report of the German representative Markus Pieper last month. Pieper belongs to the faction of the European People's Party and European Democrats (EPP-ED). 

This report has a positive significance for Croatia, whose entry would not affect the existing aid to European regions while, for comparison, the entry of Turkey or the Ukraine would have a huge effect, said Markus Pieper to Croatian reporters. 

Several very interesting statistics are mentioned in the resolution. With Croatia's entry, the territory of the regions that are eligible to receive means from the structural funds in the current EU of the 27 member states would rise 1.3 percent, the number of inhabitants 0.9 percent, and the average gross domestic product (GDP) per capita in the area would drop 0.6 percent. 

Those eligible to receive aid from the European Union's three structural funds are the statistical regions whose GDP per capita is below 75 percent of the European average. According to the proposal on the division of Croatia into three statistical regions, none of them are above 75 percent of the average GDP, so all three would be entitled to receive the aid from the structural funds.

For comparison, with Turkey's entry, the EU territory would increase 18.3 percent, the number of citizens 14.7 percent, and GDP per capita would drop 10.5 percent.

With Bulgaria and Romania's entry on January 1 this year, the territory of the regions eligible to receive regional aid in the EU rose nine percent, the number of citizens rose six percent, and GDP dropped five percent. With the entry of the western Balkans countries (Croatia is not treated as part of the area in this resolution), the territory would expand nine percent, the number of citizens four percent, and GDP would drop 3.5 percent. 

Apart from the three structural funds, whose purpose is to aid statistical regions, the EU has also had the Cohesion Fund since 1993, that aids those member countries whose GDP per capita, measured by purchasing power parity, does not exceed 90 percent of the European average. 

Among "old" members, those eligible to receive means from the fund are Spain, Portugal, and Greece, while Ireland lost the right after its GDP had exceeded the 90 percent of the European average. 

All 12 new member states, which have been in the EU since 2004 and 2007, also have the right to the fund.

The resolution takes into account the fear of the current member states that their regions may lose the right to receive aid if the EU expands to include even poorer countries. 

The resolution states: The future expansions should not be guided by constant reduction of the number of regions that have the right to the means from the cohesion policy as a result of the statistical effect and without eliminating the current differences in development. 

According to assessments in the European Parliament, if all the countries of southeast Europe and Turkey joined the EU today, simultaneously, more than a third of the current regions would lose the right to the aid from structural funds from Objective 1 (75 percent threshold of the European GDP). Only Baltic countries and Slovakia would preserve the right among the present member states. Those who would be affected the most are some regions in Italy, Germany, Malta, Spain, Greece, and France. Greece, Cyprus, and Slovenia would lose their right to the means from the Cohesion Fund.

European cohesion policy is considered a tangible part of European solidarity. This can be seen best on the examples of several countries that have benefitted the most from their entry in the EU.    

Owing to the cumulative effect of the structural funds, GDP in Greece, Portugal, and Ireland rose significantly. 

Many regions whose GDP was below 75 percent of the European average have managed to develop and escape the company of the undeveloped. 

The results of the expansion in 2004 are not as spectacular. There are objective reasons for this – mainly the fact that these former communist countries were at a much lower level of economic development and, at the same time, had to implement radical changes in their political and economy systems.

By expanding from 15 to 25 member states, EU territory increased 23 percent, the number of inhabitants rose 20 percent, but the overall GDP only rose five percent. GDP in the 10 countries that joined the Union in 2004 amounted to 44 percent of the European average in 1997 and rose to 50 percent in 2005. 

According to European Commission estimates, these countries put together will only reach the average of 75 percent in 2040, even though some economy institutes warn that the countries could suffer an economic slowdown, which would make this goal even more distant.