Academic journal article Capital & Class

EU Expansion and the Political Economy of Former Communist States' Accession: The Case of Hungary's 'Convergence'

Academic journal article Capital & Class

EU Expansion and the Political Economy of Former Communist States' Accession: The Case of Hungary's 'Convergence'

Article excerpt


In May 2004, the European Union (EU) enlarged to include ten new member states-the so called 'EU10', eight of which, from central and eastern Europe, are sometimes known as the 'A8'. Bulgaria and Romania joined the EU later on 1 January 2007. This enlargement widened the direct influence of the EU, and is designed to consolidate many of the political and economic reforms introduced after the collapse of communism in eastern Europe in 1989. As part of its commitment to the EU, the new members are expected to adopt and implement the acquis communautaire-the treaties, regulations and directives passed by the European institutions, as well as by the judgments of the European court of justice. One major aspect of this is the commitment to eventual membership of the euro zone. In order to achieve this, the Hungarian economy must converge with the other thirteen members of the euro zone. This process of convergence is not only a significant political commitment; it also implies the tailoring of economic policy in order to achieve this status. Hungary, along with the other new members, has therefore sacrificed a significant degree of its autonomy; but at the same time, it faces domestic pressures to move forward with reforms at home and in particular, to put an adequate infrastructure in place as well as maintaining domestic social priorities. This is a potential source of tension between the new members and their EU commitments; and in the case of Hungary, this friction is exacerbated by the tendency of successive governments to use the domestic economy as a means of promoting electoral advantage.

This article demonstrates how the independence Hungary sought in the post-1989 period has been subjugated by its membership of the EU. First, Hungary had to comply with the conditions laid down for membership, which pushed forward the convergence process; then later, it committed itself to pursuing economic and monetary union (EMU), which means complying with the Maastricht convergence criteria. There are significant similarities in these two processes, which are designed to bring the A8 into line with EU norms. Inevitably, they have created conflict between domestic priorities and the requirements of EU convergence.

The process of joining EMU is onerous, with most aspiring states having to go through a process of deflation prior to actual membership. Management of the economy is driven by the pressing need to move forward with the convergence agenda, and this means that periods of budgetary expansion, orchestrated for whatever reason, have to be paid for by periods of austerity. Convergence with EMU requirements takes a back seat to electoral considerations at times, but ultimately, Hungary is trapped into trying to accommodate the EU'S agenda.

Hungary's membership of the EU

On 8 April 1990, Hungary held its first democratic elections after the collapse of communism. In 1997, the EU decided to open membership talks with Hungary, and they began in 1998. The EU summit in Copenhagen (2002) formally invited Hungary to join in 2004, and in April 2003, a referendum approved the country's membership with 84 per cent in favour, although turnout was low at 46 per cent. Hungary joined the EU in May 2004 along with seven other central and eastern European countries.

The A8 states have generally made good progress in the post-communist period, with an economic growth record that has been superior to that of the euro zone (although from a much lower starting point). The A8 states may take several decades to catch up with the 'EUIS', but their progress has been attributed to their ability to respond to the challenge of economic and political reform. This progress has been spurred on by the incentive of EU membership, and the disciplines of meeting the EU'S condition for membership have been considered to have been beneficial. None of the A8 countries has been free of crisis at one or another stage in the transition process, but Hungary stands out as a state whose response to the EU'S reform agenda has been disappointing. …

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