EU Accession of the Czech Republic – Opportunities and Problems

by Radek Vogl

In autumn this year, Ireland will hold a referendum on the Nice Treaty. This vote also concerns the Czech Republic. One of the arguments put forward by the Irish government is that those who are against the Nice Treaty will impoverish the former Eastern bloc and contribute to their economic disaster. To assess this argument we should take a closer look at the process by which the accession countries join the EU, for example the Czech Republic. In our country, there is a very heated debate on this problem. The Czech government is pushing ahead in order to join as soon as possible.

What the government promises …

It argues that EU membership will open up these opportunities for our country:

1 Strengthening the international position and the external security of the Czech Republic The Czech Republic will become a Member State of the most important economic group of countries in the world. Accession to the EU will mean overcoming all obstacles and barriers against Czech exports. The Czech Republic as an export-oriented country will, they say, receive preferential treatment.

EU accession will help the Czech Republic to diminish risks due to its geographic position between Germany and Russia. The Czech Republic could, as an EU Member State, have an influence on the process of creating a Europeanised Germany as well as developing a partnership between the EU and Russia.

2    Economic help of the EU and adoption of EU law will support the development of the Czech Republic As a Member State, the Czech Republic would receive financial resources of the EU. For 10 years, these subsidies would amount to some $ 1.9 billion to 2.5 billion annually, which represents about 2.9 to 3.9% of the GNP. This economic help will enable the Czech economy to grow at a fast rate and lead to living conditions more equal to those in more advanced economies within the EU.

EU-legislation regarding economic and social policies, we are told, would contribute to a fast increase in foreign direct investment and thus to a rise in the standards of living and economic development.

EU membership would also open up opportunities for Czech citizens to work in other EU countries.

… and what really awaits us

The current entry negotiations with the EU create new facts and new problems, in particular concerning direct financial subsidies from the EU to the Czech Republic. The expected financial help of $ 1.9 billion to 2.5 billion looks more and more unlikely. The Czech agricultural economy can expect subsidies which amount to only 25% of the present level in the EU. Even though the negotiations with the EU have not been finalised, it is ever more likely that the Czech Republic will become a net contributor to the EU. If one also takes into account the cost of NATO membership—which amounts to about $ 1.5 billion, the proposed purchase of 24 air-fighters Grippen at a cost of $ 2.5 billion—, we could say that Czech citizens will be paying more than they will receive.

EU wants to open up the Czech market—but not vice versa

Another very important advantage of EU accession is said to be free movement of Czech labour force in the EU. However, this right will be limited, according to the negotiations, for a period of 7 years, at least in the case of Germany and Austria. Our neighbouring countries fear an influx of cheap labour.

After the transformation of our state-controlled economy into a liberal market economy and the privatisation of the bulk of assets, the Czech government has limited the possibility to govern our economy in our own country. Virtually all banks are in the hands of the state or Czech private capital. The present social-democratic government, for instance, is trying to revive some of the metallurgy combines in a region with high unemployment, but the EU has not recommended it in view of the Association Agreement between the Czech Republic and the EU. This agreement contains rather one-sided advantages: it opens up the Czech market but the Czech Republic does not enjoy the same treatment in reverse. When the agreement was signed in early 1990, the Czech Republic was expected to join the EU very soon.

EU accession will lead to an economic catastrophe

The most important problem of EU accession, however, is the relation of wages and prices between those in our country and those in the EU. The average Czech income is about € 500 per month, and our domestic prices correspond to it. When the Czech Republic enters the EU with such wages and the price level increases to the level of those in the EU, it will be a catastrophe for our people. The experience of German reunification shows that this process is very expensive and requires free movement of labour. In the Czech Republic, we cannot expect large donations and no free movement of people for seven years.

EU supporters hoping for personal opportunities?

Given these facts, Czech supporters of the EU are focussing on the geopolitical and institutional advantages of EU accession. They argue that EU membership is not a question of economic advantages in terms of money, but a matter of securing the existing economic order and completing the transformation of our economy. They may hope for great personal opportunities for themselves in the European Parliament, the Commission and so on, while the cost of entry will be paid by the Czech citizens.

The exchange of opinions between the German and the Czech government during the election campaign in Germany was not good. The present German government supports Czech EU accession. ‘We cannot obstruct their entry; they must join’, the German Chancellor said. His opponent in the election campaign, however, Bavarian Minister President Stoiber, was of a different opinion. He wanted to see this process to be linked to the abolition of the Benesh decrees.

For your information: before World War II, there was a German minority of 3.5 million in Czechoslovakia, the majority of whom supported and helped Hitler in 1938, when he invaded our country and during German occupation from 1939 to 1945—acting out plans to liquidate the Czech nation as a whole. As a consequence of the Potsdam Agreement and the Benesh decrees, this minority had to leave Czechoslovakia.

Czech citizens are becoming more and more sceptical

In view of this information and the facts presented above, support among Czech citizens for EU entry is decreasing. Now, only about 40% are in favour of EU accession, 20% are against it, the rest has no clear position. In these circumstances, the Czech government must fear that it could not succeed in the referendum to be held on Czech entry to the EU, if it cannot negotiate better conditions for the Czech people.