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Eastern Europe - Out of the frying pan, into the fire

EU membership has its down-side. As eastern Europe seeks to join up, its raw capitalism could be stifled by all the rules and regulations. Recovering from years of central planning the last thing these economies need is dirigisme and subsidies, Brussels-style. But that’s what they are about to get. Although it has failed to reform itself, the EU insists that new entrants implement all its 80,000 pages of directives. Some candidates are so enthusiastic they also want to adopt the euro. Economists warn that these ambitions could cost them dearly, killing off enterprise and making economic management difficult if not impossible.

In preparing for EU membership it's important that aspirants not only do the right things but say them too. That's why among east European applicants most of the public complaints about the cumbersome procedure are about the lack of a target date, the risks of delay and the prospect of being foisted with second-class membership with limits on freedom of labour movement and reduced subsidies for agriculture.

In private, however, senior officials from governments in Poland, Hungary, the Czech Republic, Estonia and Slovenia - the countries most advanced in their negotiations - are starting to express different worries. They fear that the EU's heavy-handed bureaucracy and its onerous regulations could stifle the entrepreneurial spirit that has been unleashed in their countries since the fall of communism. Imposing First-world environmental and labour standards in what are still emerging markets could lose them their competitive edge, complain officials. "Sometimes talking to Brussels reminds me of talking to Moscow in the old days. They just don't understand," says a frustrated civil servant.

International investors share some of their concerns. Though viewing the applicants' membership bids as a guarantee that reforms will continue, they have mixed feelings about the high levels of grants and funding that could eventually Find their way into eastern Europe courtesy of the EU.

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