BELGRADE: States not invited to the European Union's May 1 enlargement ball may feel left out in the cold, but analysts say they can expect to reap some economic benefits from their Cinderella status.

The EU is due to expand to the borders of Russia on May 1, taking in eight former communist European states plus the Mediterranean islands of Cyprus and Malta to enlarge its membership to 25 countries, adding 75 million people.

Bulgaria and Romania expect to join in a follow-up wave in 2007, and Croatia hopes to catch up with them by then. Turkey's prospects may depend on the outcome of diplomatic moves for the reunification of Cyprus.

But Albania, Macedonia, Bosnia and Serbia-Montenegro, known in EU-speak as "the Western Balkans", are still years away. That may stir temporary resentment. Cinderella states may face yet more visa restrictions that make them feel second class, said emerging market analyst Alex Garrard of UBS.

"For those that do rise to the challenge, there is every chance that visa requirements will be eased as progress is made towards the EU, with Croatia heading the way," he said.

But those making no effort to integrate with the EU were "likely to become hotbeds for illegal immigrants that will find it more difficult to migrate to an enlarged EU", Garrard added. Advantages of being on the outside are also expected.

"The new EU member states will face rising costs. They will become more expensive for investors, so investors will keep going further east and south," said Vladimir Gligorov of the Vienna Institute for International Economic Studies.

"Romania, Bulgaria and Turkey will remain most attractive as part of the outsourcing drive in the EU, which seeks ways to produce goods cheaply elsewhere and sell them within the EU," he said.

Albanian analyst Remzi Lani said he believed the Western Balkans, with a combined population and economic performance equal to that of Romania, should not be left behind.

"We won't feel good after May 1 but neither should Europe feel good keeping 22 million people away," Lani said. "We should do our homework. But Europe should have a clear vision about the integration of this part."

HIGH RISK, LOW COST: Greater focus on the left-behinds is exactly what we may see, said Bank Austria Creditanstalt analyst Walter Pudschedl. "Despite the EU being busy over the next several months with enlargement it would definitely, eventually, be a boost for the Balkans' EU aspirations and the EU will work much harder on integrating the region," he said.

Gligorov said new EU members will also have their hands full. "They will have to adjust their labour laws and environmental rules to EU standards. And if the EU insists that new members adjust their fiscal gaps under the Growth and Stability Pact, their growth rates will slow down."

So while the new members would likely get top-quality investment, from multinationals active in export-oriented manufacturing, outsiders could attract capital going for higher risk, cheaper labour, lower costs and local markets.

But any gains must help these countries adjust up to EU standards. "Outsiders that are saddled with large debt overhangs, unrestructured and burdensome public sectors, high levels of corruption and low political will would progressively become more and more isolated," Garrard cautioned.

The analysts also note that the distance to Brussels is measured in more than market reforms and legislative overhaul. In the aftermath of the bloody breakup of Yugoslavia, answering for atrocities at the Hague tribunal is still a hurdle.

Both Croatia and Serbia have high-profile war crimes suspects whose extradition would be welcomed in Brussels. But Serbia, if anything, appears to be moving away from such a move.

"Serbia keeps isolating itself from the rest of the region and the European Union," said Gligorov. "It has reached no formal agreements with the EU, it keeps being at loggerheads with everybody." As long as great uncertainty surrounded its relations with the EU, Serbia would look far less attractive to investors than neighbours, he said. -Reuters

Opinion

Editorial

Dutch courage
Updated 02 Jun, 2024

Dutch courage

ECP has been supported wholeheartedly in implementing twisted interpretations of democratic process by some willing collaborators in the legislature.
New World cricket
02 Jun, 2024

New World cricket

HAVING finished as semi-finalists and runners-up in the last two editions of the T20 World Cup in familiar ...
Dead on arrival?
02 Jun, 2024

Dead on arrival?

Whatever the motivations for Gaza peace plan, it is difficult to see the scheme succeeding.
Another approach
Updated 01 Jun, 2024

Another approach

Conflating the genuine threat it poses with the online actions of a few misguided individuals or miscreants seems to be taking the matter too far.
Torching girls’ schools
01 Jun, 2024

Torching girls’ schools

PAKISTAN has, in the past few weeks, witnessed ill-omened reminders of a demoralising aspect of militancy: the war ...
Convict Trump
01 Jun, 2024

Convict Trump

AFTER a five-week trial saga, a New York jury on Thursday found former US president Donald Trump guilty of ...