Waiting for the Ukrainian plumber... who won't come

Through the member states of the European Union a debate on the supposedly insurmountable cost of Ukraine's accession is currently stirring up ahead of the European elections of 6-9 June 2024. In France, for example, the far-right claims that "Ukraine's accession to the European Union would be "the tomb of French agriculture" while the far-left warns that with "a single market with a member country whose minimum wage is EUR 200 per month, (...) an economic war between workers (would be triggered). But it is true that the prospect of Ukraine's accession to the European Union also frightens beyond the extreme parties.
Matthieu Hornung
Coordinator of the "Sauvons l'Europe" association in Belgium Administrator in the PES Group of the European Committee of the Regions
It may seem difficult to understand that this debate on the cost of Ukrainian EU membership takes place without taking into account the moral dimension of the situation of a candidate state fighting for the defence of European values – freedom, democracy, the rule of law – from which soldiers and the entire nation derive their motivation to keep on their fight. Nevertheless, it is necessary to prepare the arguments in order to respond to a purely accounting vision of Ukraine's accession to the European Union, the good news being that all forward-looking studies on this issue so far tend to show that the cost of Ukrainian membership would be surmountable for the European Union and its Member States.
The lessons of Poland's accession in 2004 for the Ukrainian case

The current debate gives an impression of déjà vu compared to Cassandra's predictions that accompanied the enlargement of the European Union to Spain in 1986 or to Poland in 2004. In 1986, French agriculture was to be buried under Spanish strawberries and in 2004 the fabric of French SMEs kneeled by the Polish plumber.

However, this invasion of Polish plumbers (unfortunately) did not take place. On the contrary, the accession of Poland and the other Central and Eastern European states resulted, for example, in an increase of 0.5 in annual GDP for the Western states of the European Union, accompanied by an increase in the ratio of Polish GDP per capita to the average GDP per capita in Europe, in purchasing power parity, from 51 % in 2004 to 79 % in 2022. The regional policy funds disbursed to Poland not only made it possible to fill a large European cohesion deficit but also greatly benefited Western European companies with a "just return" for instance for construction or machinery companies estimated to be more than 50 cents per EUR 1 paid out. German companies, for example, have a higher turnover in Central Europe than they have in the United States and Canada.

Referring to the record of the enlargement of the European Union to Poland is also an interesting parameter in that Ukraine is in a similar situation to Poland in 2004, namely that if Ukraine joined the EU today it would increase its GDP by around 1 % and its population by 9 %.

But let's take a closer look at concerns about the risk of social dumping.
Risk of social dumping? Ukrainians already benefit from free movement

On this subject, Ukraine's situation is in fact somewhat different from that of Poland in 2004 as Ukrainians' access to EU labour markets is already more advanced than in previous enlargements, both because of the large-scale Ukrainian emigration to the EU prior to 2022, but above all because of the Temporary Protection Directive, which allows the more than 4 million Ukrainians who have found refuge in the European Union to work and access public services throughout the EU. Actually, those who wanted to leave Ukraine have already done so. Men of fighting age will not be able to leave the country before the end of the war. And it is likely that those who remain in the country have made the longer-term choice to participate locally in reconstruction. Finally, the risk of social dumping in the form of relocations remains very low in view of Ukraine's difficulty in attracting foreign investment during the conflict.
The impact on the common agricultural policy will be threefold capped and manageable

As regards the impact of Ukrainian accession on the budget of the European Union, the prospective studies currently available underline its limited nature. On the basis of an extrapolation of the current situation, it is estimated to be between EUR 13 and EUR 19 billion per year, roughly the amount that the European Union already pays Ukraine annually under macro-financial assistance and is expected to continue to disburse by 2027 under the "Ukraine Facility" of EUR 50 billion or EUR 12.5 billion per year. These projections do not take into account the possible resources of war reparations in the form of seizures of Russian assets, including the EUR 180 billion of assets held under the Belgian-based Euroclear mechanism.

The main part of this impact on the EU budget (90 % according to the studies cited) would be attributed to the Common Agricultural Policy (CAP). But it would be contained by several factors including a probable triple cap: a national cap, a cap per farm and a cap over time.
The national cap would result from the negotiation in the Council on the total financial envelopes of the Member States' agricultural expenditure. It is then very likely that for Ukraine a mechanism for capping by farm size will be put in place, like the ceiling of EUR 100000 which already exists in eight Member States. This cap would be all the more necessary given that the average arable land area of Ukrainian agricultural enterprises is 485 hectares compared to 30 hectares in France and 8 in Poland and that Ukraine has 166 mega-farms of 21945 hectares on average.

The time cap would simply take over the model of all enlargements since 2004 of a 10-year transitional phase for direct payments. At the time of accession, only 25 % of the total amount of direct payments are applied, with additional annual steps of 5 % or 10 % until the 100 % is reached. If Ukraine were to join in 2030, the total impact on agricultural expenditure of the EU budget would therefore only occur in 2040.

This impact would be mainly in the cereal sector as a result of Ukrainian specialisation in this field.

Perhaps it should finally be recalled that its projections are made at a constant CAP when the need for reform towards less productivism is pressing and should take place in the next programming period 2027-2033.
Ceilings to be revised on cohesion policy

Cohesion policy is also capped. Indeed, cohesion policy payments are limited to 2.3 % of GDP for Member States whose average GNI per capita (purchasing power parity/PPP) for the period 2015-2017 is below 55 % of the EU average per capita. With a GNI per capita of only 26.1 % of the EU average, Ukraine would obviously be subject to this ceiling of 2.3 % of GNI. However, with Ukraine's current GNI of EUR 143 billion, the amount paid to Ukraine would amount to only EUR 3.3 billion. Clearly, this amount appears to be far below needs and should be renegotiated in particular of the commitments already proposed by the Commission under the Ukraine Facility for 2024-2027 with annual amounts of EUR 12.5 billion representing 8.7 % of the current GNI.
While all projections on the costs of enlargement to Ukraine should silence the cries of spurry, perhaps the real question is what would be the cost of non-enlargement to Ukraine – just as there is a cost of non-Europe amply illustrated by Brexit.

Indeed, is it not also an investment in the security of the Union but also in the defence of democracy and the rejection of violence, corruption and authoritarianism as a means of living together" as embodied by the Russian state?
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