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

This article examines attempts by the European Union to promote the convergence of the central and eastern European states, and looks at two instruments used in its pursuit: the conditionality requirements for membership of the EU, and the convergence criteria for membership of economic and monetary union. Using Hungary as an example, it demonstrates that there are times at which these instruments are effective; but at other times, they are undermined by the more pressing need to address domestic political priorities. It concludes that in the longer term, the need to comply with the convergence agenda is likely to take precedence.

Introduction

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. …

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