1 May 2004: the doomsday pundits got it badly wrong

In 2004, the EU achieved its biggest enlargement ever, taking in ten countries and 75 million people.

Before it happened on 1 May, European newspapers were full of doomsday predictions. There would be a flood of people moving from east to west in search of work, many claimed. The enlargement would bankrupt the EU because of the transfer of funds to the new member states. And the EU itself would be paralysed, unable to take decisions and address the concerns of its citizens. The press reported many other worries as well, but none of the disaster scenarios has materialised.

In fact, the enlargement went remarkably smoothly, given its scale and scope. Labour migration from east to west has been modest in the past two years, with the influx of workers rarely reaching even 1% of the active working population of the countries which opened their labour markets.The new workers have helped to ease labour shortages in sectors such as agriculture, construction and tourism.

The European Commission's research has found clear economic benefits from increased labour migration. For example, the arrival of workers from the new member states has helped to sustain the Irish economy's high growth-rate. In the UK, workers from the east have helped to fill a small number of the country's half a million job vacancies.

Following the positive experience of these countries- and Sweden - after opening their labour markets, Finland, Portugal and Spain have decided to do the same, while others - such as France and the Netherlands - are contemplating at least a partial liberalisation.

Overall, employment in the 25 EU countries - both old and new members - grew 1% on average in 2005. The workers who have migrated are generally paying taxes, increasing the revenues to the state in their host countries. Legal migration is easier to control than a shadow economy of illegal workers. This is better for the rule of law and better for the workers, who are protected from exploitation.

What about the prediction that enlargement would be very expensive? In fact, to the average citizen in the old member states, the cost of reuniting Europe was around the price of a cup of coffee a month. In 2004-06, the 15 old member states paid an average of EUR 26 a year per person into the EU budget for enlargement. Meanwhile, the citizens of the new member states have contributed more than double this amount, at an average of EUR 58 per year.

At their December summit, EU government leaders agreed on a new budget for 2007-13. The new members - as well as Bulgaria and Romania - will receive just over half of the EU's regional aid budget. The consensus among the 25 member states was that priority should go to the least developed regions of the enlarged Union, where the added value of EU spending is most evident. But the old member states will also continue to benefit from regional policy - both within and outside the poorest regions.

The Commission's internal monitoring has shown that relocation of production from the old to the new member states remains a marginal phenomenon. It is mostly driven by global competition. Even if central and eastern Europe suddenly vanished from the map, companies would continue to relocate production, both to seek new markets and to cut costs, particularly to Asia. It is global competition, rather than enlargement, that causes outsourcing and relocation. Companies will always seek lower costs, technological innovation and other factors that give them a competitive edge. European companies face global competition, for example from China and India. Expanding eastwards can help European industry to preserve jobs and create growth throughout Europe.

For example, relocations in car manufacturing and banking services are creating growth and jobs in both the new and in the old member states. Enlargement therefore helps European companies to face the challenges of globalisation, increasing internal and external trade and thus keeping and creating jobs. Fragmented markets do not make sense economically. Within the enlarged EU, many firms do not move production completely, but rather expand production into central and eastern Europe, often catering for different markets.

The ten new members have growth rates that on average are more than twice those of the old members. Not only has this brought a healthy dynamism to the EU economy, but this increasing prosperity translates into new markets and business opportunities for the old members too. In addition, trade has grown enormously, creating jobs across the EU; trade between the new and old members quadrupled between 1994 and 2004. This is win-win for the whole Union.

What about the impact on European integration? Can the Union take decisions at 25? It is doing so every day. The EU's institutions continue to function: new members of the European Parliament are playing an active role in its political groups; the Barroso Commission is working effectively with 25 commissioners; the new member states perform well in transposing EU law, and; in the Council decisions are prepared and taken as before.

The EU at 25 has managed to take important steps in the past two years. To mention just the three largest: they agreed a new financial package, settling one the most notoriously difficult and usually acrimonious issues among the member states relatively amicably. The 25 countries also revised their strategy to create more growth and jobs in the EU. And they started a bold new programme to strengthen freedom, security and justice in the EU.

Finally, the enlargement process helped the central European countries to achieve a remarkably fast and peaceful transition to democracy, liberty, respect for human rights, rule of law and market economies. These are the common values at the heart of the EU and they are now shared by 25 countries. Now these values are being extended into the Balkans and Turkey, enhancing the stability and prosperity for all of Europe. Let us remember this positive experience when hearing doomsday scenarios about future enlargements.

Commentary feature by the European Commissioners for Enlargement, Olli Rehn and for Regional Policy, Danuta Hübner, saying that two years on, the EU's biggest enlargement ever had been a success for both old and new Member States. Looking at a number of pessimist predictions from before the 2004 enlargement - on migration, on the costs of enlargement and on the impact on European integration - the authors come to the conclusion that none of these had materialised two years later.
Article is part of a European Voice Special Report, 'EU enlargement'.

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