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Eastern Europe: Austrian Region Fears Hungarian EU Membership

By Sue Tapply

Vienna, 15 January 1997 (RFE/RL) -- An Austrian provincial governor who has made controversial remarks about the European Union's eastward expansion has found unexpected support -- from a Hungarian regional official.

Karl Stix, Social Democrat (SPOe) governor of the eastern province of Burgenland said that Hungary's early admittance to the EU would be an economic "catastrophe," particularly for Burgenland.

Stix said Hungarian employees and businesses would have unlimited access to Burgenland's market and Hungary's lower wage costs would push Burgenland's companies out of business.

Stix insisted that he was an ardent "European" but added early membership "will not do Hungary any good and it won't do the EU any good."

On a broader scale, he expressed concern that integration of the countries already within the European Union "will not have taken a strong enough grip," and further expansion will lead to destabilization. And this destabilization, he said, will give the populists in some countries a boost and could result in "dangerous" developments.

Stix suggested that instead of bringing in new eastern members, the EU could let Austria serve as a bridge to the eastern states. He said he understands that Hungary will be upset by his attitude, but that at the beginning of the new century -- when Hungarian membership could realistically be approaching -- the EU would still be recovering from the introduction of monetary union due to come into force in 1999.

Stix has been severely criticized by members of his own party and the other party in Austria's coalition government, the conservative People's Party (OeVP). Burgenland's vice governor, OeVP politician Gerhard Jellasitz, said he felt it was unfair to "take down the iron curtain and put up an icy curtain" and said it would do Austria's economy "no harm at all" if the businesses in the reforming countries had to come up to western standards.

But understanding for Stix's position has come from an unexpected quarter, namely the head of Vas country in West Hungary, Gyula Pusztai.

Pusztai is reported to have said that he agrees Hungary has a long way to go before reaching a level of economic activity equal to that in Austria. And he saw Stix' fears as "justified," but that Austria and Hungary should discuss the problems together and work out solutions.

An RFE/RL correspondent in Vienna quotes from a recent German report which says that the West Hungary region, bordering Austria, is the most innovative region in that country and is developing more rapidly then East Hungary. Foodstuffs and the drink industry formed 36 percent of the region's industry, vehicle and machine production 17 percent each, textiles, leather and clothing 9.6 percent and chemicals 8.5 percent.

Burgenland on the other hand has long been a source of worry for the Austrian government. The 7.8 percent unemployment in 1995, is higher than the Austrian average of 6.6 percent, and productivity is also lower than the Austrian average.

Our correspondent reports, however, that Burgenland is now recovering its reputation as a wine growing area, and the government has taken steps to encourage industry to move there by improving the infrastructure and offering tax advantages to entrepreneurs in order to build up both industry and tourism.

Burgenland's economists have been worried by the threat that opening the eastern border may cause migration of either jobs or personnel, but some also take an optimistic view, arguing Austria would be a useful place for Hungarian companies to set up offices to deal with EU administration, distribution, logistics and marketing, opening up the whole German-speaking market.

Figures from 1995 released recently by the Burgenland Chamber of Commerce show that Burgenland's industry produced goods to the value of 13,000 million schillings (about $1.1 billion), with the electronics industry, foods and metals and the clothing industry being prominent. Almost half of what is produced is exported, mostly to Western Europe, but 10 percent to Eastern Europe.

After travel regulations for Hungarians were liberalized in 1988, the number of Hungarians buying consumer goods in Burgenland blossomed. But this boom has died down since 1993 with the introduction of stricter regulations on travel, and the improved state of Hungary's own market.

The tendency now is for cost-conscious Austrians to go shopping in Hungary, Slovakia and Slovenia, to the detriment of the home market.