News Analysis: Bears, birdcatchers and herring: the price of EU expansion

After four years of painstaking talks by ministers on the EU's eastwards expansion, furry animals, colourful birds and minute fish swimming in the Baltic Sea must count as some of the clearest losers.

Under concessions granted in labyrinthine negotiations, Estonian hunters will still be allowed to shoot lynx and (occasionally) bears while Maltese birdcatchers can continue to trap finches. Latvian fishermen can also catch herring as small as 10g in weight.

If these are mere footnotes in the historic reconciliation of the east and west of Europe, they are also an illustration that – for once in EU affairs – the personal and the political are inextricably entwined.

Barring last-minute crises, 10 countries – Poland, the Czech Republic, Hungary, Slovakia, Slovenia, Latvia, Lithuania, Estonia, Cyprus and Malta – will this week be invited to join the EU on 1 May 2004. And the deal to be signed this week in Copenhagen will affect the daily lives of millions.

Thirteen years after the fall of the Berlin Wall, leaders of the 15 EU members will use tomorrow's Copenhagen summit to proclaim the dawn of a new era of reconciliation in Europe. By the time of the next European elections in June 2004, the EU will encompass 25 countries and more than 450 million people, stretching from the west coast of Ireland to well inside the frontiers of the old Soviet Union.

But, as Jack Straw, the Foreign Secretary, admitted yesterday, this has been no picnic for the negotiators. Required to agree 80,000 pages of European law, the 10 nations about to join the EU have fought hard for their share of EU subsidies and for a host of temporary exemptions from EU law to ease the pain of membership. As Mr Straw puts it: "We are now in the most complex matrix of negotiations in which the EU has ever been involved." This is the largest enlargement attempted by the EU, presenting it with the challenge of absorbing 10 different nations with their different languages, customs and traditions.

The last time the EU enlarged in 1995, it brought in Austria, Sweden and Finland – Norway voted against in a referendum – all prosperous Western nations. By contrast, the current 10 applicants have a joint gross domestic product equivalent to that of the Netherlands, a medium-sized EU member state.

Most observers believe it will take a decade to absorb 10 nations whose per capita gross domestic product is less than 40 per cent of the EU average.

Poland, with 38 million people, is the only big country to be joining but its economy is still in transition after the post-Communist boom. One in four of its adults gains some income from working the land. A recent report from the Commission,which argued Poland should be admitted to the EU, also criticised Warsaw – among other East European capitals – for corruption.

For months, the delegations of the applicant countries have exchanged e-mails each day with officials in Brussels, on subjects ranging from tobacco taxes to suckler cow premiums.

As ever, the central questions have been financial. There have been two sets of talks going on: one with the countries about to join the EU and the other with the existing members whose contributions will increase.

At a fractious summit in Berlin in 1999, EU leaders set a ceiling on the amount of money to be spent in the next "financial perspective" between 2000-06, with a total of €42.2bn (£26bn) set aside for enlargement. At the time, the assumption was that six countries would be admitted in 2002, rather than 10 in 2004.

In October, after juggling the figures, the EU produced a package of subsidies worth a total of about €39bn but insisted farmers in the new member states would not be funded as well as their rivals in the 15 current member states. Instead, they would receive 25 per cent of direct agricultural subsidy payments, rising to 100 per cent over a decade.

This deal was never going to be easy to sell, particularly in Poland where the decision not to give Polish farmers full subsidies provoked fears that agriculture will collapse.

Meanwhile, Polish politicians face the difficult task of explaining why Warsaw will be paying €232m towards the British budget rebate in 2004. (Under the EU's arcane funding rules, the rebate is a separate heading in EU finance).

Since October a number of concessions have been offered, including the right to top up direct payments from other agricultural subsidies they will be offered. Meanwhile, lump sum compensation has been offered to ensure that countries will not be worse off after accession in 2004 than in 2003.

The current offer is worth more than €40bn, although it falls short of spending all the cash allowed under the Berlin ceiling (how much depends on who is doing the calculation: France says just €400m is left spare; the UK around €2bn). And the applicant countries argue that, when their contributions to the EU budget are taken away, they may be net beneficiaries by no more than €12bn.

While the Commission backs the idea of giving more concessions, most member states are resolutely opposed to spending more cash. Per Stig Moeller, the Foreign Minister of Denmark, which holds the EU presidency, argued yesterday: "The purse is in the pocket and is not coming out again." Although six of the 10 aspiring member states have provisionally settled, Poland – by far the most aggressive of the new nations – was still fighting to up its offer, demanding a bigger lump sum payment and an increase of 1.9 million tons in its milk quota (Poland argued, under current plans, it would have to slaughter much of its national herd, then import milk).

To complicate the problems, the Danish presidency of the EU knows only too well any increased offer to Warsaw would prompt the other candidates to raise their demands, unravelling the whole deal.

One senior EU diplomat argued last week: "We will just have to be firm with the Poles. I know they have terrible public opinion at home – but we all do!" The horsetrading has tended to conceal the fact that, in general, there are good grounds for optimism on enlargement. Yesterday, Britain acknowledged that fears of mass immigration from eastern Europe were unfounded, deciding to allow citizens of the nations joining the EU to work in Britain from 2004 instead of a later date.

Meanwhile, the economists agree that, whatever the costs to the existing EU states, they will be more than repaid by the expansion of Europe's internal market. A recent report by Deutsche Bank cited the advantages including cheaper labour and imports and intensification of trade in goods and services and added: "Enlargement is clearly a win-win situation if perceived as a long-range political investment." The Commission argues that the process could boost economic growth in the applicant countries by between 1.3 and 2.1 per cent, acting as a motor for the whole European economy. In other words, it is cheap at the price.

But reaching this position still requires one more effort of will on both sides to close a deal this week. Tomorrow's summit in Copenhagen, designed to last 24 hours, now seems destined to descend into a long night or two of wrangling. Even optimists believe that there will be more birth pains before the arrival of the new, expanded Europe and, en route to Copenhagen, Mr Straw has made known that he is packing no fewer than five clean shirts.