Tuesday, 5 January 2010

So what's with EU enlargement or why we shouldn't expect Croatia and Iceland to join soon

The process of EU enlargement took a major blow when it became apparent that once in the union, countries like Bulgaria and Romania can not be forced to comply with higher standards in fighting corruption and organized crime. The integration of different Western Balkan states (plus Turkey) is stalled at different stages and does not look like finishing anytime soon.

The two countries with most serious chances of becoming the 28th and 29th member of the EU are Croatia and Iceland. The progress towards membership of both seemed straightforward due to their compliance with many EU's policies, especially in the case of Iceland. However reality proved to be different.

Slovenia's determination to use its veto powers in order to solve a border dispute with Croatia delayed the negotiations with the latter. After most of 2009 was lost in disputs, the two former Yugoslav republics found common ground and negotiations resumed. However the last intergovernmental conference saw a failure to open new negotiation chapters, again due to Slovenia'a objections.

The resolution of the border dispute as seen by Slovenia.

Iceland is a member of the Schengen zone, complies with most EU policies, has a higher than the average European living standard (ranked no.1 on quality of life in the world in 2008) and is rather small country (320,000 people) which in theory meant negotiations would go fast and smootly. The two issues that have and will prove to hinder country's path to membership are the terms of the common fisheries policy and the settling of claims by continental clients of collapsed Icelandic banks. The latter might appear quite problematic given the latest developments.

Yesterday (Jan. 5) the president of Iceland refused to sign a bill that would set the framework for repaying €3,8 bn. to British and Dutch clients of the collapsed Icesave bank. The repayment is crucial in securing Britain's and Netherland's consent for opening negotiations with Iceland. The sum would have represented around 40% of Icelandic GDP and although the payment would be stretched in time until around 2024, it is seen as too heavy burden by most Icelanders. Consecutively, more than 56 000 citizens petitioned the president asking him not to sign the bill.

President Ólafur Ragnar Grímsson of Iceland.

It seems that in both cases national interests come in conflict with the integration process - the Croatia-Slovenia border dispute as well as the three-way Icesave issue. These are no precedents as Slovenia itself was forced to withdraw all claims against Italy to be allowed to join the EU in 2004. Once Croatia becomes an EU members it may well be expected that the country puts conditions on Serbia's accession given the recent history of both.

It is obvious now that the 2011 Croatian accession target will not be met. Same will hold for Iceland'a 2012 aspirations should the Icesave case remains unsolved in the near future. No one doubts that both counties could make better EU members than the likes of Bulgaria and Romania yet they suffer from other factors. Time will tell whether they are just applying for membership in the wrong time or are too stubborn in defending their own stance. In any case, under the current circumstances the EU looks set to see off the economic crisis in its present format.