The strangest, but potentially most troubling, is Cyprus. The Greek two-thirds of the divided island is among the six top candidates for the next round of entries, but many EU countries harbor misgivings about admitting a state deeply at odds with its Turkish neighbor on the other third of the island. Western European companies are already pouring billions of dollars in direct investment into Central Europe's manufacturing industries. But customs and duties are the least of their worries, businesses in the region say. Budapest-based Ikarus Szerszamgyar Rt. makes tools and dies for a client list that includes Germany's Volkswagen AG and Bayerische Motoren Werke AG and France's Renault.
Mistakes can be costly.
Three years ago, a Ford assembly line at Genk, Belgium, was idled for a week when a truck loaded with Ikarus's dies got held up at the Austrian border. Because labor costs are about a quarter of those in Germany, Ikarus has a clear cost advantage over its Western competitors. If we don't have the chance to compete on an equal basis and if our wages keep going up, we'll reach a level where we aren't competitive. Later membership also could slow the flow of foreign direct investment, some believe. A negative message from Brussels about membership could turn that inflow into a net outflow, says Andras Vertes, president of GKI Economic Research Co., a Budapest think tank.