EU turns its attention and resources to East By Graham Bowley International Herald Tribune MONDAY, JULY 18, 2005
PLZEN, Czech Republic One recent afternoon, Petr Osvald, a broad- shouldered director of European affairs for the city council in Plzen, stood on the bridge above the Mze River and imagined the benefits that money from the European Union would bring to the city, just an hour's drive from the German border. They would include renovated housing in the decaying high-rise apartment buildings a few miles away, he said, a water treatment plant in the suburbs and a glittering new science park in an abandoned military airfield on the outskirts. "Plzen was a dark city before," said Osvald. "In Communist times, they didn't invest any money here. Now we have to catch up. That's the main thing." Since the Czech Republic joined the EU last year, Brussels has injected 1 billion, or $1.2 billion, into projects to bolster this young country, part of the 10 billion that the EU pledged to pour into the 10 new member states annually through next year. Now, the EU's richer Western nations are poised to step up this investment even further. For years, the EU's traditionally poorer countries, like Ireland and Spain, enjoyed the EU's largess, using it to establish themselves over the past decade and a half as two of the fastest-growing members of the Union. Now, the EU is set for a massive reorientation of funds from those now-prosperous countries in the West to its new and relatively backward regions beyond the former Iron Curtain. If the Union's chief paymasters - Germany, France and Britain - can resolve their differences, as they usually do, over the budget for 2007 to 2013, then the moment has come for the former Communist nations of Central and Eastern Europe to bask, for a few years at least, in the revitalizing spirit of billions of euros of EU subsidies. "We want to use all the potential of Europe, and, due to Europe's recent political history, we have huge disparities," said Danuta Hübner, the commissioner for regional policy, who oversees the EU's regional aid budget, in an interview in her office in Brussels. "Every citizen has the right to benefit from growth in Europe." At first glance, it is not clear that a city like Plzen needs the new money. Big brand names like Tesco, the British supermarket chain, line the highway approaching the city of 165,000 people. An Audi and Porsche showroom, a Carrefour supermarket and a Panasonic factory crowd the 120-hectare, or 300-acre, industrial park near the university. A Mercedes-Benz research center occupies a former airfield barracks. Foreign investment abounds. Even the celebrated brewery in the city center has been taken over and polished up by SABMiller, and it now receives 150,000 guests a year, many from just across the German border. It seems a riot of activity and a testament to Plzen's embrace of free-market economics since liberation from the Communist Party 16 years ago, just as in the rest of the Czech Republic, where the gross domestic product is forging ahead at an annual rate of around 4 percent. In fact, the biggest slice of the more than 20 billion that the West is likely to begin transferring to the East each year beginning in 2007 will go to Poland, the Czech Republic's large neighbor and the most populous of the new member states. But the Czech Republic is also expected to see its funding rise as much as fourfold, to around 4 percent of the country's GDP. Most of the funding, said Vera Jourova, deputy minister of development in the Czech government in Prague, will probably go to the east of the country and to the northwest, close to the Polish border and the border with the former East Germany. These were coal- mining and steel regions that received investment under communism but have collapsed in the new era, leaving an uncomfortable social and environmental legacy. Plzen, too, depended on old-style heavy engineering, and the sprawling, rusting Skoda works, half-hidden by crumbling walls, is a sad scar near the city center. Plzen's largest EU-funded project is a 55 million wastewater treatment system scheduled for completion by 2008. The European Commission has set strict water standards for the new member states that they must meet by 2010 or face fines. The EU is providing 39 million, and the rest is being financed by a loan from the European Investment Bank. Osvald's next plan is for a science and technology park valued at 200 million koruny, or $8 million, to be built among the decrepit aircraft hangars of the military airfield next to the industrial park. The principle behind all of these projects, according to Hübner, is to "provide the basic infrastructure, which is a precondition to be competitive and to attract private capital" and so participate fully in the EU's single market for goods and services. According to Jourova, one of the biggest benefits of the new money is the strategic thinking it forces on the Czech government and regional authorities, which are all now busy preparing long-term programs and applications for the promised funds. "After communism, we were exhausted with planning, and everything happened in a rush, but then Europe came with strategic planning," she said. "It was pretty new, and we have to sit around the table in partnerships nationally and regionally and think about the aim - enhancing the competitiveness of the Czech economy." Of all the EU's current major recipient countries, Ireland, she said, is the best example for the Czech Republic. "Everyone is inspired by Ireland, the tiger," she said. Her aide, Miroslav Danek, responsible for structural funds in the Ministry for Regional Development, explained: "They hired the best people, and followed the concentration principle, which is to go for big projects that make a difference instead of spreading the money around." Jourova conceded that the Czech Republic faced difficulties, not least finding the quality projects to absorb the new money, a problem that has dogged some other recipient countries in the past. There is also the problem of cofinancing. To qualify for EU investment, the Czech government or local authorities must contribute around one-quarter of a project's cost, not always an easy task for cash-strapped local budgets. Administering the funds is complicated by the mind-set of a public bureaucracy used to the ways of the Czech state and not that of Brussels, Jourova said. But the most immediate problem is the uncertainty caused by the delay in EU governments' decisions on the budget for 2007 to 2013. Countries like Germany and Britain are unwilling to pay a lot more into the EU budget to finance the new countries' development, while recipients like Spain are reluctant to give up their past payments. The delay is already endangering the start of some projects, Hübner and others warned. "It is difficult to make strategic decisions because we don't know the budget," said Osvald. The delay is especially frustrating for the Czech Republic. It wants to exploit the coming budgetary period to the full because, with its rapid growth, it probably will not qualify for EU funds when the next budget is negotiated for the years after 2013. Unlike Ireland, Spain and Greece in the past, the Czech Republic and other accession countries like Poland and Slovenia will only have a few years in the EU's budgetary sun. "We don't want to be a burden forever," Jourova said. "One day we will contribute ourselves." After the next budgetary period ends in 2013, these countries will face pressure to surrender their new entitlements. By then, the EU will have other commitments. Bulgaria and Romania are scheduled to join the Union in 2007 and are likely to be an additional strain on resources. The EU may also have to prepare for future membership by Ukraine and Turkey and the massive financial commitments that integrating those two economies would involve. Next: The lessons of Spain and Portugal for EU integration. http://www.iht.com/bin/print_ipub.php? file=/articles/2005/07/17/business/funding1.php *** sustineti [romania_eu_list] prin 1% din impozitul pe 2005 - detalii la http://www.europe.org.ro/euroatlantic_club/unulasuta.php *** Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/romania_eu_list/ <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
