w 109 long-run economic aspects of the european union's eastern ...

LONG-RUN ECONOMIC ASPECTS OF THE EUROPEAN UNION’S EASTERN ENLARGEMENTautaire. It seems utterly misplaced that an inefficient agricultural policy thatbenefits a very small group of (mainly rich) farmers, receives about the samepolicy attention on the EU agenda as the political and economic stability of Europe.The EU ’s system of financial transfers lacks transparency and objectivity. Its largestpart, the expenditure related to the CAP, damages the processes of integration andenlargement. Therefore, it is proposed here to reform both the CAP, the StructuralFunds and system of own resources. New reforms in the EU should be negotiatedbefore the first enlargement. A failure to redress these shortcomings before enlargementwould require reforms with over 20 members taking part in decisionmaking.Reforming an enlarged EU whose new members are undergoing a difficulteconomic transformation will only render this process more difficult. Indeed, thechances of another crisis, this time with some candidates in as members, are veryreal. Furthermore, a larger Union with obscure and unclear expenditure systems,corrected by even more obscure and blurred rebate systems, will reduce citizens’confidence in EU institutions. For this reason, renegotiating these issues shouldstart before the next financial framework for 2006 to 2012. This means thatproposals should come forward in 2001 for decisions to be taken in 2002.152CAP support should be de-coupled from production. Food safety and quality, theprotection of the environment and of cultural heritage as well as the establishmentof alternative activities in rural areas should become the foundations of support,whether financed by CAP funds or in new funds. The CAP should thus cease to be asystem to foster intensive production.The Structural Funds have clearer targets and coherent aims, and they lack thefundamental flaws inherent in the CAP. Their effectiveness can be improved withoutdeep reforms. Thus, some criteria (such as the special eligibility criteria of apopulation density under eight persons per square kilometre and some otherspecial concessions in Objective 1) should be revised. However, problems ofabsorption capacity and the quality and selection of projects are the real issues.For the CEECs, very large investments will be inevitable for a long time. StructuralFunds will have to be particularly well co-ordinated to cope with a large number ofproblems. It is important to focus on the need for long-term sustainable growth ingeneral, and the creation of infrastructure and environmental protection in particular,two areas in which the applicants’ problems are more severe than those of thepresent EU -15. The EU has to put more emphasis on the effectiveness and efficiencyof structural funding, to ensure that the depth of the cohesion process is not damageddue to the expected fall in the budgetary funds available per citizen as EUfinances will be stretched.The continuation of the Cohesion Fund is more questionable, since it lacks economicrationale. Here it is proposed either to abolish this Fund for members of the