January 08, 2007	Monday	Zilhaj 17, 1427

WHILE Turkish hopes of joining the European Union received a severe blow when the European Commission earlier in November 2006 recommended a partial freeze of entry talks following ostensibly Ankara's refusal to open its ports and airports to Cyprus, Romania and Bulgaria, two of the poorest countries of Europe whose economies are far too troubled and riddled with massive corruption entered the EU as the world heralded the New Year.

The two Eastern European countries have come in despite the fact that they are well-known conduits of Southwest Asia’s drugs and are also well-known places for money laundering although the two countries are not known for any significant banking or financial expertise.

On the other hand, the EU has proposed suspension of talks with Turkey ( a country which has successfully controlled the drug trade and also is well on the road to final restructuring of the economy) on chapters covering customs, fisheries, financial services, agriculture and external relations have been suspended. It also proposed that no chapter be "closed", or completed, before Turkey lifted curbs against Cyprus.

But then the case of Romania is not much different from Turkey. It has grave disputes with Ukraine. The two have taken their dispute over the Snake island and on Black sea maritime boundary to International Court of Justice (ICJ) for adjudication. Romania also opposes Ukraine’s reopening of navigational canal from Danube through Ukraine to the Black sea.

The reaction from EU leaders at the 2006 Nato summit showed how deeply divided Europe is over Turkish accession.

Coming back to the entry of Romania and Bulgaria, the first one has a population of over 22 million and the second one nearly eight million. Both have their largest chunk of population (68 per cent) in the age group of 14-64. Both are largely Christian orthodoxies with Bulgaria bordering Turkey having a Muslim population of over 12 per cent. Both have precarious economies and are either negotiating a Standby Arrangement with the IMF or undergoing one.

Ironically both had remained under Turkish Ottoman Empire from about the end of 14th century to about 1878. After the second world war both became Soviet satellites. EU has given both countries huge financial assistance to create for them the fiscal space to introduce structural reforms, but both seem still incapable of coping with the political cost of the reforms.

Although their economies are growing fast, gross domestic product per capita barely reaches one third of the European average, and the two will contribute only one per cent to the EU's GDP.

Average wages are about £150 per month, and both states have large rural populations leading very simple lives.

They will make up six per cent of the EU's population and less than one per cent of its GDP. Two extra seats will be added to the European Commission, and 54 to the European Parliament.

In 2005, the 10 countries that joined the EU in 2004 received about four billion euros (£2.7 billion) more from the EU than they paid into the budget. In 2006,

Bulgaria and Romania received about 1.5 billion euros in pre-accession aid. However, everyone is said to benefit because of the expansion of the single market.

On the face of it, the entry of the two countries into the EU appears to bring no immediate economic or financial gains for the now 27-member economic union. At some later stage when the economies of the two countries come out of their present low level of development if they at all do, a market of 30 million would surely be a profitable location for the developed economies of the family to sell their goods.

But for them to become middle class countries in the foreseeable future, their younger population would need to stay back home and not go abroad to other EU countries which need them more as most of the developed economies of Europe are burdened with huge non-working aging population.

So, there is this dilemma for the EU. If the younger population leaves, because it is needed in the developed economies, the two would remain sluggish markets for the EU for many years to come. On the other hand ,if the younger population is forced remain within their countries and work for the development of Romania and Bulgaria, then the developed economies of the EU would have to look elsewhere for young workers which they do not want to because of the cultural problems that have arisen as a consequence of large intakes of Asian and African labour force in the last four decades.

However, contrary to expectation Britain has imposed stern restrictions on Romanians and Bulgarians coming into the country for work. It is the first time that Britain has imposed labour market restrictions on citizens from an EU member state. It follows intense cabinet debate on the "political dangers" of allowing Romanians and Bulgarians to seek work. Only Ireland has so far followed suit with similar restrictions.

The UK government underestimated the number of citizens it thought would come to Britain for work in the first wave of eastern European accession states in 2004, and how many would elect to work here for an extended time. It is still not sure what the long-term impact of the cheap labour might be on inflation and employment in the UK.

Ministers are allowing up to 20,000 low-skilled Bulgarians and Romanians a right to six months' employment in agriculture - work previously undertaken largely by Ukrainians. Otherwise they will have to seek work permits for specific highly skilled jobs, or where there are specific jobs for which no UK applicants are available. A worry for the government is whether these rules will be widely breached.

In Bucharest, on the eve of joining the EU, most people dismissed predictions of an exodus of young talent to Britain or other EU states, saying instead they wanted to make the best of EU membership at home.

The two former Soviet bloc states join under the most stringent conditions set for new entrants by Brussels and at a time when EU leaders have put a hold on further enlargement.

Both countries have been dogged by endemic levels of corruption reinforced by "Wild West" privatisation in the 1990s.The European Commission has identified corruption as a "benchmark" issue for both Sofia and Bucharest in their first six months of EU membership. Failure to comply could see both hit by legal and financial penalties.

Sofia has been warned it is not doing enough to tackle criminality, to assert the independence of its judiciary or tackle high-level corruption.

The European Commission has noted that there have been no convictions for 100 daytime assassinations in the capital over the past five years. Romania too must clear up doubts over its judicial system.

This year it should face an important test of the competence and independence of its prosecutors and judges, with former a prime minister, Adrian Nastase, expected to go on trial for taking bribes and selling influence.