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Eastern Europe gives more to the west than it gets backWhen EU leaders meet next week about the bloc’s next seven-year budget they will be trying to solve a €1tn riddle based on a series of misconceptions.
The budget talks are often miscast as a showdown between whining eastern and central European countries asking for more cash and frugal northerners insisting their generosity has limits. The richer countries paint themselves as charitable souls and criticise eastern European voters for electing Eurosceptic autocrats who pocket large EU cheques while railing against Brussels.
But look at the bigger picture and a different story unfolds. Much of the wealth in Europe flows from poorer countries to richer ones — not the other way around. Start with the brain drain. Europe’s periphery is haemorrhaging young bright workers whose education was paid for by taxpayers in their home countries.
Between 2009 and 2015, Romania lost half of its doctors. Every year, around 10 per cent of those that remain are actively recruited by human resources agencies seeking practitioners to treat greying western European countries.
This is not just a Romanian affair. Poland lost at least 7 per cent of its nurses and physicians in a decade. Surveys of Polish medical students show that more than half plan to leave after graduating. In Bulgaria that figure is 90 per cent. Croatia, which joined the EU in 2013, has already lost 5 per cent of its health practitioners.
This exodus is a de facto transfer of wealth — and a big one. A single doctor’s education costs the Romanian public coffers around €100,000.That spending does not appear in the EU budget negotiators’ spreadsheets but it should. The annual drain of doctors alone represents more than a quarter of the funding that the EU sets aside each year to help Romania catch up with the rest of the club.
Rich countries wishing to slash EU funds for poorer regions also leave out other important factors from the budget equation, such as transfers of private money. The profits western European companies make in central and eastern Europe far outstrip the public funding that is transferred to the east.
From 2010 and 2016, Hungary, Poland, Czech Republic and Slovakia received EU funds roughly equivalent to 2 to 4 per cent of their gross domestic products. But the outflow of profits and property incomes to the west from these countries over the same period ranges from 4 to 8 per cent of GDP.
These days, French voters may be fretting about Polish plumbers, but eastern European voters are getting nervous about French chief executives. At home in Bucharest, I shop in a French-owned supermarket, and my phone operator and my water company are French. I pay my gas bill to a French multinational, through a French bank of course.
EU membership has brought immense benefits to central and eastern Europe, but western economies also profited handsomely from the enlargement process. It is high time politicians in the west explained that fact to their constituents — EU money is not charity. It is a quid pro quo.
The idea that there are winners and losers in the EU budget game is simply wrong — we all benefit from the single market. This trope is also politically dangerous. When eastern Europe joined the EU, an unspoken pact was concluded. The east removed trade barriers, allowing western companies to carve out a share of their economies. In exchange, the west promised to transfer EU funds eastward so the former communist bloc could build the infrastructure it desperately needed.
The west made profits; the east made progress. The deal was mutually beneficial. But if the west starts reneging on those promises now, they risk tearing up the European social contract.