EU final warning to new members before enlargement

The European Commission will issue a last warning today to the 10 countries set to join the European Union next May that they must speed up preparations to apply EU law or risk losing markets and cash.

Even though the EU executive will give a clear green light for the 15-nation bloc's most ambitious enlargement, many of the existing member states worry about the readiness of the 10, especially Poland, for accession.

The Commission will couple its final monitoring reports on the eight ex-communist central European countries and two Mediterranean islands set to join with letters demanding they take "decisive and immediate action" in 39 different sectors.

These range from food hygiene and farm inventories to public administration and mutual recognition of diplomas.

But none of the shortcomings is regarded as a show-stopper. "If solutions are not found before enlargement, the problems will be more for the candidate countries than for the (old) European Union," a senior EU official said. "It is they who will pay the price."

If they failed to complete preparations in time, acceding states could see their produce barred from the EU's single market, or be denied agricultural or regional subsidies if their inventories and administration were not up to EU standards.

While all 10 states - Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Lithuania, Latvia, Estonia, Cyprus and Malta - would receive the warnings, the official said Poland was by far the most serious problem.

"They're sending letters to everyone to camouflage the real warning to Poland," one EU diplomat said.

The Commission will also release progress reports on three other candidates for membership - Bulgaria, Romania and Turkey.

While Bulgaria can expect some warm words, Romania seems set to fall short of the coveted "functioning market economy" status in a move that may herald a delay in the accession target date for both countries of 2007, diplomats said.

Turkey's government will earn praise for recent political and economic reforms, but the EU executive will point to lingering obstruction inside the Turkish state and hammer home the need for implementation of minority language rights and a real end to torture, the official said.

Ankara will also be told that failure to permit a deal on the reunification of Cyprus could scupper its hopes of winning approval in December 2004 to open EU accession negotiations.

The official said Brussels had received encouraging signals on the issue from Turkey, but hardline Turkish Cypriot leader Rauf Denktash still had strong support in the Turkish military and political establishment for his rejection of a deal.

Exasperation with Poland, by far the biggest acceding state with almost 40 million citizens, is running high in Brussels because of its tough stance on voting rights in the current negotiations on a first EU constitution.

"This is the last chance to be tough on Poland, the last chance to apply the thumbscrews," said Heather Grabbe, deputy director of the London-based Centre for European Reform.

"Poland is in the worst position because its preparations are just not looking credible," she said.

The potential economic benefits to the new members are huge, but their integration will strain the Union's institutions and its relatively small 100-billion-euro annual budget.

The applicant countries are struggling to implement more than 80,000 pages of EU legislation and prepare their economies fully for competition in the single market.

Poland, Slovakia and Hungary, for example, have yet to establish agencies to pay direct EU farm subsidies.

"Of course it would be safer to have our IACS agricultural system ready in November, but we'll have it in January. We believe we'll be ready in time," Polish Foreign Minister Wlodzimierz Cimoszewicz said in Brussels last week.

In one sign of growing market confidence in their prospects, credit ratings agency Fitch Ratings raised the outlook for seven of the 10 accession countries yesterday to positive from stable.

The countries affected were Cyprus (A+), Latvia (BBB+), Lithuania (BBB), Malta (A), Poland (BBB+), Slovakia (BBB) and Slovenia (A+). It did the same for Estonia (A-) on October 22.