Hamish McRae: The lost appetite for Brussels

Prague – If, in the past few weeks, the focus of economic attention in the US and Britain has been on coping with financial damage, across much of central Europe it has been on coping with physical damage. The floods have receded but the mopping-up continues and rebuilding will take months. The Metro system, for example, will not be functioning as normal until the end of the year. The cost is huge. Estimates vary but it could run to $3bn, some 5 per cent of GDP. Foreign earnings, which depend heavily on tourism, are naturally sharply down.

But cities get rebuilt and the Czech Republic has an enormous body of both experience and resources, derived, after 40 years of communist neglect, from the reconstruction of historic buildings. The more lasting effect of the disruption may be a greater sense of independence, of self-reliance, even, and that could change the whole arithmetic of EU enlargement. There will be financial support from outside but the Czech people will do the heavy lifting themselves.

The change in mood towards the European Union in the Czech Republic is reflected in a new scepticism across many of the applicant countries. Among the present EU members, the assumption is that the applicants will of course want to join the club – that they are lucky to be allowed to join. Our worries are about the mechanics of enlargement; theirs about whether it is really such a good idea. The Polish Prime Minister recently warned that foreigners would come to pick over the economy "like crows". Here in the Czech Republic, the opinion polls show the majority of the "yes" camp is shrinking and it is not at all a foregone conclusion that membership of the EU will be ratified by the people. Arguably the central and eastern European countries can get most of the benefits and suffer few of the disadvantages by staying out.

Three or four years ago this would have seemed absurd. But three things have changed. One is that the economic performance of the large continental economies has deteriorated. The second is that central and eastern Europe is doing very well. And the third is that the potential disadvantages of membership, particularly over matters like migration, have become more apparent.

So much has been written about the disappointing performance of the big three eurozone economies, Germany, France and Italy, that there is little point in adding to the tale. But of course it is noted by the Czech people that unemployment in Germany is above four million and that EU membership has failed to do much to create jobs in the one former Soviet-bloc country that has joined the club, East Germany. That may be unfair: the problems of East Germany have more to do with the botched merger with West Germany than with membership of the EU itself. But it is a warning of the dangers of externally imposed rigidities on economies still escaping from decades of communist mismanagement.

Not all of central and eastern Europe is booming. Poland, in particular, is struggling. But the Czech Republic is still managing between 2 and 3 per cent growth, with living standards rising by more than 4 per cent over the past year (see graph above). That is a faster growth in consumption than in any continental EU country. In recent months unemployment has climbed somewhat and is now over 9 per cent – worrying, but no worse than the situation across most of the Continent – while inflation has just about disappeared. Yes there are problems, but the Czechs have come through the present world downturn in rather better shape than their neighbours in the EU.

And then there is migration. My own reason for visiting Prague was to attend a conference on migration organised by the Foreign Policy Centre, the British Council and the Czech President's office. In a paper at the meeting, two Czech writers made the effective but simple point that the establishment of a Czech national identity had been associated with the move from being an ethnically diverse nation to a homogenous one. After the Second World War, Germans and Hungarians were expelled; and the break with Slovakia took place only nine years ago. Having achieved this, does it really want to mingle with the EU family of nations?

To put the point bluntly, after centuries of having others trample over your lands, and periods when many of your own people were forced into exile, it is quite nice to run your own show. Why give that up to be bossed around by Brussels? Access to foreign investment? There has been plenty of that already. Access to foreign job markets? The Czechs have a reputation for being stay-at-homes. Looking over the roofs of Prague on a beautiful late-summer afternoon, it is not hard to see why.

None of this is to predict that the enlargement of the EU to include the Czech Republic, Hungary and Poland, plus the smaller applicants, is off. But it is not at all a foregone conclusion. It may be that these are just the usual doubts and reservations you would expect in any democracy whose electorate is faced with a big decision about the future direction of the country. It may be that everyone will fall into line. But if several of the current batch of applicants reject membership even when offered, then the dynamics of the EU change. It is no longer a club that is likely to grow much further. The better the outsiders do relative to the insiders, the less attractive membership becomes.

We will see. The political elite in the applicant countries (despite those reservations in Poland about crows) will be in favour of pressing on. But the electorates may not follow, and if they don't, we will all surely think of the EU in a different way.