Covet Thy Neighbor.(foreign land and home ownership in European Union)

As an advertisement for the new Europe, try the Kalvi Hotel on the Estonian coast. Its delights begin with a four-star rating, plenty of lordly splendor and a child-friendly beach. That's rare enough in a distant patch of the former Soviet Union, soon to be the northeastern fringe of the European Union. But for Eurocrats back in Brussels, the hotel's charm lies also in who owns it--the Danes. "The roof was full of holes, the walls were crumbling," says Kaj Anton Petersen, who manages the former castle. "And once we started to rebuild we realized you couldn't have a castle without some land around it." So the Danes bought that, too--2,500 hectares, including 600 cows. Visitors love the Kalvi for its off-the-beaten-path solitude and beauty. Locals welcome the investment.

Next May, 10 new countries are scheduled to join the EU, stretching its borders from the Russian frontier to the west coast of Ireland. But beware. The last time the Union blew itself up like this, in the 1980s, wealthy hordes from the old world descended on the newcomers, snapping up land and properties from Greece to Portugal and Spain. Will the same happen this time? Estonians and the other Balts might hope so, but they're largely alone. Across the swathe of Central Europe--and even in tourist-friendly Malta and Cyprus--the worry is that rich Dutch, Germans and Austrians will flood in to buy (for them) cheap farms and holiday homes and force locals out. "It's part of a general concern about identity," says Heather Grabbe of the Centre for European Reform in London. "People are asking, 'What kind of country are we?' and 'Can we really trust our neighbors?' "

It should be noted that, for the Mediterranean members of Europe's club, the "invasion" (modest as it turned out to be) was often an economic boon. Still, well-founded or not, the fears of today's newbies are real. The EU's insistence on the free movement of capital collides with ancient passions. "In Central and Eastern Europe," Grabbe explains, "land is always a big issue, partly because it's been fought over for such a long time." Foreign capital is welcome when it means new jobs and factories, unwelcome when it means ceding control of the soil. To the region's hardy crop of populist politicians, nothing less than the national soul is at stake. "Land is different," says Janos Drabik, a spokesman for the Movement for a Free Hungary, which campaigned unsuccessfully against EU membership in April's national referendum. "Without the land there can be no Hungarian nation."

With few exceptions, the incoming countries have won concessions from Brussels that preserve farms and woodlands--and sometimes holiday homes as well--from foreign buyers for "transition periods" up to 12 years. In theory, those Art Nouveau apartments in downtown Prague will be reserved for Czech buyers until 2009. West Europeans pining for a patch of forest in --Slovakia's Tatra mountains should also forget it; sales won't officially be permitted for seven years. The tiny and crowded island of Malta (with a population density among the highest in the world) has negotiated an indefinite and near-absolute ban on selling properties to overseas second-homers.

The EU considers such concessions to be the price of public acceptance. In fact, however, they may offer almost no protection. Existing restrictions have been easily sidestepped. The Czech Republic may bar ...