The Balts and the European Union

Dec 12th 2002 | TALLINN AND VILNIUS

From The Economist print edition

Words and phrases

beyond recognition – до неузнаваемости

from the Soviet capacity – из советской юрисдикции

fragile – хрупкий

miserable life further east – нищенская жизнь дальше на восток

to attract investments – привлекать инвестиции

to be almost boring – быть почти что занудой

suffering the same fate – разделить судьбу

similarly-designed – построенный по тому же проекту

to pour [‘po:] – вливать

one-third of the average – треть от средних (показателей)

around three times – почто в три раза

a good deal better – намного лучше

unevenly spread – неравномерно распределенный

extra cost of meeting – дополнительные расходы на соответствие

ranked surprisingly low – были на удивление низкими

GDP per head – внутренний валовой продукт на душу населения (general domain product)

painful changes – болезненные перемены

to lend money – ссужать деньги

tough rivalry – жесткое соперничество

The three Baltic states have already had to transform their economies beyond recognition to get into the EU. Now that they are just about in, what next?

OF ALL the stunning transformations that have changed the map of Europe since 1989, the Baltic states' shift from Soviet captivity to membership of the top western clubs is among the most remarkable. In the first fragile years of independence, prosperity and security seemed equally distant. Yet in a few short weeks this autumn, Estonia, Latvia and Lithuania have been formally offered NATO membership, and now, at this week's Copenhagen summit, they will be invited to join the European Union, probably in mid-2004. The contrast with the miserable life further east, in Russia, Belarus and Ukraine, has never been bigger.

But making normality work will be a hard slog too. “Small is beautiful when you want to move and change,” says an EU official. “It isn't so beautiful when you want to attract investments.” He is speaking in Tallinn, the small and beautiful capital of Estonia; but his words sum up the challenge facing all three.

In the past few years they have worked wonders to satisfy the nit-picking requirements of the EU. The Balts are so stable and orderly as to be almost boring—which, says Toomas Ilves, a former Estonian foreign minister, is as it should be. Now EU membership brings new opportunities and challenges aplenty. More trade and investment, freedom of movement for their citizens, and the chance to act as bridges between west and east are big pluses. But in many ways reform is still just starting.

Take the Lithuanians. They like to joke that they have the safest Soviet nuclear power plant in the world. The EU has spent millions of euros to prevent the Ignalina plant, which generates four-fifths of the country's electricity, from suffering the same fate as the similarly-designed Chernobyl reactor, in Ukraine, which blew up in 1986. And yet it is still not up to scratch, which is why millions more will be poured into helping Lithuania close it by 2009, a decade early.

Ignalina is symbolic of the Soviet legacy, from which all three Baltic economies continue to suffer. Baltic GDP per head is little more than one-third of the EU average. Business is still generally low-tech, particularly in agriculture, where Latvia and Lithuania's workforces have around three times the proportion of farmers and one-third the productivity of the EU average, and that is already a good deal better than ten years ago. EU competition will hurt not help the hundreds of thousands of small, near-subsistence farmers who cannot compete with big, modern producers. Most will have to find other work. Economic development is unevenly spread: 80% of Estonia's booming foreign direct investment, for example, is in Tallinn.

Likewise, say critics, free trade with the EU countries may be good for big businesses, but hard on small ones, and they will all struggle with the extra cost of meeting EU rules on such things as workplace safety and environmental protection. When Verslo Zinios, a Lithuanian business newspaper, polled its readers on which stories interested them most, it found that those on EU accession ranked surprisingly low. “It will come as a shock to some of them to discover that they are not a Lithuanian company but a European company,” says Rolandas Barysas, the paper's editor.

Estonia's worry is different. Nordic-mindedly open and transparent, it has virtually no trade barriers, so joining the EU means raising them. Getting into the EU is in some ways a step backwards to more barriers and bureaucracy. Of the three, Estonia is where opinion polls find the lowest support for EU membership; only in the past year has it nudged above 50%.

But petty rules and painful changes, says Mr Ilves, are the price to be paid for belonging to the club. Among the billions of dollars available in restructuring funds, which the countries will keep getting until their GDP per head reaches 75% of the EU average, are portions for agriculture and small businesses. The European Bank for Reconstruction and Development also lends money more cheaply to local banks if they in turn lend a certain amount to small firms and those outside the capitals. If anything, say officials, the countries' problem has been to come up with enough well-formulated projects to use up all the money on offer.

It will all be no good, however, if the Balts cannot find new sources of employment. Officials in all three countries talk about shifting the emphasis to high-tech, “knowledge-based” industries. These account for only 6% of Lithuania's economy, says Andrius Kubilius, a former prime minister, as against around 25% in the EU as it now is.

Each country is developing its niches. Estonia embraced information technology early (people can pay for anything from on-street parking to restaurant bills through their mobile phones), while Latvia plans to make the most of its experience as one of the Soviet Union's main pharmaceutical-development centres. But they will be in tough rivalry with each other, not to mention the rest of the EU.

Which is why there is also a debate about ways to stay competitive. Labour costs are low now, but will not stay that way for ever. One unresolved issue for Europe as a whole is whether countries should be allowed to keep control of their tax policies or have Brussels set them. Many Balts think their relatively low levels of corporate income tax (Estonia cut its rate to zero two years ago) will be one of their few selling points to foreign investors, though there is little evidence as yet that it makes a difference.

Yet despite the challenges, and sizeable Eurosceptic minorities in every Baltic country, there are no concerted anti-EU movements. All three governments are confident that their people will give their nod in referendums next autumn. The alternatives are grim—either a return to Russia's orbit like Belarus, or the in-between status of dirt-poor ex-communist countries like Moldova. As Henrik Hololei, head of Estonia's office for EU integration, puts it, “Either you're in, or you're in...somewhere else.”

The Economist Group.

Задания к тексту

1. Проработайте лексику, данную перед текстом. Прочитайте текст, не пользуясь «Англо-русским словарем».

2. Найдите, где в тексте говорится о следующем:

- о выходе прибалтийских государств из советской юрисдикции;

- никогда не было более резкого контраста с нищетою дальше, на восток;

- чтобы получать инвестиции, нужно быть и больше, и сильнее;

- прибалты сами отмечают, что они – народ «упертый»;

- советская электростанция вырабатывает четыре пятых энергии;

- европейская конкуренция ударит по мелкому производителю;

- ожидалось, что вхождение в ЕС вызовет больше энтузиазма;

- указан размер ВВП, при котором возможен вход в ЕС;