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French President-elect Emmanuel Macron arrives to attend the handover ceremony with outgoing President Francois Hollande (not pictured) at the Elysee Palace in Paris, France, May 14, 2017. REUTERS/Benoit Tessier(reuters_tickers)
By Lidia Kelly and Krisztina Than
WARSAW/BUDAPEST (Reuters) - While the election of Emmanuel Macron as French president with a vision of closer European Union integration was a relief to much of Europe, for Poland and Hungary it fanned fears of losing influence.
Poland has been the most vocal among eastern EU members fearing that their wealthier western neighbours, keen to deepen cooperation among themselves, will erode the single market that has been the biggest benefit of membership in the east and, in shifting power westward, reduce financial support for less wealthy countries.
Macron's arrival, and his support for the "multi-speed" Europe idea that has been gaining support in Germany and other EU countries since Britain's decision to quit the bloc, make it more likely that a key decision-making circle could exclude the former communist capitals of Budapest and Warsaw.
It would also thwart their efforts to shift power from Brussels back to member states.
Underlining their concerns, Polish officials have accused Macron of double standards and of contravening the spirit of the single market by calling for reforms of rules on moving workers within the bloc.
"It is understandable that politicians, thinkers, are looking for solutions," Poland's deputy foreign minister, Konrad Szymanski, told an economic forum in Katowice on Wednesday.
"But an EU division, a lasting division, is the worst of possible prescriptions, because the first victim of such division would be the single market."
A decision by Whirlpool to shift a tumble drier factory from France to Poland took centre-stage in France's presidential campaign last month, with Macron's far-right opponent Marine Le Pen saying she would nationalise the plant.
Macron, an ardent defender of globalisation as well as European integration, refused to be drawn into promising the workers he would prevent the company moving its production.
But he did say Warsaw was exploiting differences in labour costs, which could not be tolerated. He alluded to the problem of social dumping - a hot-button issue in France - which refers to companies employing cheaper labour from other EU countries or moving production to lower-wage countries.
Polish Finance Minister Mateusz Morawiecki told Poland's state broadcaster that this amounted to "discrimination", and others said Macron was undermining the principles of the single market.
"It cannot be that when Poland is an export market then it is good, but when it attracts foreign investment, including from France ... that's not good any more," Morawiecki said this week.
Szymanski said that Macron's win could be good for Poland but that Warsaw wondered "whether we are not being excluded from a debate on protectionism and the single market".
"We may want to change it, but we do not want to abandon it," he said.
Macron's enthusiasm for a common euro zone budget and finance ministry - although, crucially, viewed with scepticism in Berlin - has also raised fears among eastern countries that they could lose out on EU funds.
Neither Poland nor Hungary is in any hurry to adopt the euro; both say they need the flexibility of a national exchange rate in difficult times.
"If in the end there is a euro zone budget, that means there will be less money for countries that are not euro zone members," Dariusz Rosati, a member of the European Parliament member for Poland's opposition Civic Platform, told Polish radio this month.
Poland is the largest beneficiary of EU funds and is due to receive 77.6 billion euros (£65.48 billion) in the current 2014-20 budgetary period for infrastructure projects, its poorer regions and improving the competitiveness of its economy.
While a common fiscal policy may still be some way off, the notion of a Union of countries "acting at different paces and intensity where necessary" was mentioned in the EU's 60th-anniversary Rome Declaration, reflecting the desire of the six founding members, including France and Germany, for faster integration.
Hendrik Hansen, head of International and European Politics department at Andrassy University in Budapest, said a two-speed Europe was becoming more likely, "and with Macron, the Franco-German 'tandem' as a driving force of the EU will probably become more important".
"END OF THE EU"
Poland's closest ally on the issue is Prime Minister Viktor Orban's Hungary.
"Hungary's stance on a two-speed Europe has been consistent ... this would basically mean the end of the EU," Szabolcs Takacs, Hungarian state secretary for European affairs, told Reuters this week.
A source close to Macron told Reuters on Wednesday that the idea behind reforming the euro zone was not to exclude countries from joining.
"It is to make sure that those who will join, and there will be others, join a functioning euro zone," the source said.
"Their (Eastern European countries') worry in general is that it would fragment the single market, but that's not the aim. The aim is to say that the euro zone is not properly equipped to face a possible future crisis."
Poland and Hungary, have, however, also fallen foul of western EU countries with their own policies, which Macron has chosen to highlight.
Both have come under fire along with other eastern member states for refusing to host refugees under an EU-wide plan.
Separately, the European Commission accuses Poland's government of undermining democracy, especially through an overhaul of its top court and moves to bring the public broadcaster and judiciary under more direct control.
Hungary has most recently been criticised over draft bills to tighten rules on non-governmental organisations and foreign universities.
In his campaign, Macron said the EU should be as tough on infringement of civil liberties as it was on excessive budget deficits, although the sanctions that he called for against Poland would be unlikely to secure the unanimous backing they need.
In congratulating Macron on his election, both Poland and Hungary stressed the need to talk about the future of the EU.
Poland invited Macron to visit, and Foreign Minister Witold Waszczykowski said this week that Warsaw was expecting him to "leave his pre-election rhetoric" behind and explain his ideas on how to reform the EU in person.
(Additional reporting by Michel Rose in Paris; Writing by Lidia Kelly; Editing by Kevin Liffey)