At Last, Enlargement Day Has Come. Will ItBring

The big bang has gone off. Now is the time for second thoughts. Among newcomers and old-timers alike, politicians are scrambling to reassure skeptical electorates that May 1 will bring no harmful changes. Not so. While the long-term economic and social consequences of EU enlargement will almost certainly be positive, one thing is certain: some unpleasant surprises will come along the way.

To be sure, new Europe's architects have good cause for optimism. Economic growth in the 10 countries joining the European Union was 3.7 percent last year--nearly 10 times that of the existing eurozone. U.S. and foreign multinationals, quick to scent big opportunities, are investing heavily, both in the East and West. Yet a whiff of overconfidence taints the air. The EU's new members all hope to follow in the footsteps of Spain and Portugal, which joined in 1986 and thrived. They don't speak as loudly of duplicating Ireland's "economic miracle," where per capita incomes rose from 62 percent of Europe's average in 1973 to 121 percent today, surpassing its former imperial ruler, Great Britain. But that's the dream.

Reality is more sobering. The successes of yore were made possible by large infusions of cash. Spain and Portugal received EU subsidies totaling as much as 10 percent of GNP. As for Ireland, besides the subsidies it became the preferred launchpad into Europe for American multinationals, which generate more than two thirds of the country's exports and spurred the country's famous high-tech boom. Rural Irish unhappy about EU entry were quickly bought off with generous investments funded by the Union.

Today's EU is very different. From the earliest days of European integration, Germany was the paymaster that made all good things financially possible. But after spending a trillion euros over a decade on the former East Germany, money in Berlin--and hence Brussels--is much tighter. Led by Germany, the six net contributors to the EU budget have called for a break. And despite the funds and factories coming in from America and elsewhere, Eastern Europe is probably too large and too diverse to replicate the Irish experience.

Nor have all poor EU members done as well as Spain and Ireland. Greece is Exhibit A. Its workers earn a third less than the EU average, roughly on the same level as in 1981. Greek politics and administration are widely viewed as inefficient and corrupt; foreign policy is at best inconsistent. For years officials in Brussels openly regretted allowing Athens to join. It was a case study, Eurocrats agreed, on the dangers of accepting countries not fully prepared for membership.

Among the lessons policymakers drew from the Greek experience--relevant to the present--is that joining the EU can create tensions, not only among states but within the new members themselves. Enlargement above all is a strategy for political and economic modernization. The goal: to establish new habits and standards of responsible participation among states, on matters ranging from human rights to tax policy. That's indisputably good for societies recovering from decades of authoritarian rule, whether it's Slovakia today or the Spain of yesteryear. But it can also be destabilizing for fledgling democracies whose institutions are not yet firmly rooted.

Consider how EU membership can alter the relationship between governments and the governed. To join, would-be members must embrace modern European values. That fosters democracy, yet by the same token it constrains debate. The requirement that tens of thousands of pages of EU regulations be fully implemented, no questions asked, has been an especially heavy burden for the recent crop of members. One consequence is that their governments must now administer rules set in Brussels--an agenda that neither they nor their own voters have had much say in choosing. Rather than craft new or creative solutions to their countries' problems, leaders have measured their effectiveness by delivering on Brussels' expectations instead of those of their own people. Politics without real policy choice undermines political legitimacy--and breeds public cynicism.

Small wonder, then, that people across the region are coming to view their most moderate national parties and parliaments as meaningless rubber stamps. The pent-up frustration of citizens denied real influence could be a time bomb, fueling a populist backlash. Constituencies in all the new member nations flirt with nationalism. The recent presidential election in Slovakia brought back the autocratic Vladimir Meciar, who succumbed in a second-round ballot to Ivan Gasparovic, a former ally who by many accounts is only slightly less nationalistic (and some say antidemocratic) than Meciar himself.

The Greek Cypriot rejection of a United Nations plan for reunifying the divided island is equally troubling, for it demonstrates how little influence Brussels really has over the leaders of its new members. And then there's Poland, where the unpopular socialist Prime Minister Leszek Miller stepped down one day after accession. Recent surveys report that 61 percent of the population does not trust the EU--the highest level ever. The radical populist Samoobrona party currently leads opinion polls, which could spell disaster for moderates in the next elections--and possibly for the country's pro-market reforms.

The bottom line is that while the economic benefits of joining the EU are clear, the longer-term consequences for capitalism and democracy are less so. Two decades from now, will the EU's new members look more like Ireland--or more like troubled Greece? All we know now is this: if reforms fail or voters revolt, it won't just be a national problem, but a European one.