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On 24 April 2005, the European Union (EU) signed an accession treaty with Bulgaria and Romania, paving the way for the second phase of enlargement to embrace the former communist countries of Eastern Europe. The two Balkan states will join the EU on 1 January 2007, but they each face a tough remit meanwhile, as entry is conditional on their implementation of further reforms to root out corruption and inefficiency, strengthen judicial and administrative systems and revise their rules on state aid to industry. If they do not, the membership of Bulgaria and Romania could be put back to 2008.
The welcome that Bulgaria and Romania will receive from existing EU members, especially the founder members of Western Europe, will thus be a guarded one as the two countries will become locked into the EU's zone of prosperity and they become recipients of billions of Euros in aid to repair delapidated infrastructures, modernise outmoded industries and clean up the environment.
The governments of Bulgaria and Romania heartily look forward to EU entry, which they expect will herald their transformation into modern societies, accelerated by an influx of capital from overseas. There is much ground to make up in comparison with existing EU members, especially as economic output in Bulgaria and Romania is below 40% of the EU average. The two countries missed the first wave of the eastward enlargement of the EU in May 2004, when ten countries joined the 15-member dub, because they had to catch up further and their reforms were initially slow after the fall of communism in 1989.
Both Bulgaria and Romania have major agricultural economies, and one continuing legacy of the old communist regimes is nitrogen-based fertilizer industries that were geared to serve the formerly state-controlled agricultural sectors. In both countries, progress towards restructuring and rationalisation has been difficult for the leading fertilizer producers, and they have been further hobbled by the imposition of anti-dumping duties by the EU. Over the past 15 years, the domestic fertilizer producers in both Bulgaria and Romania have endeavoured to adapt to new market realities, as well as higher feedstock prices, and the leading companies have been privatised. How have they fared overall, and how well placed are they to cope with the new business climate within the enlarged EU?
In Bulgaria, the results have been mixed. One producer, Agrobiochim, went out of business; two others--Neochim and Agropolychim, invested in additional capacity and diversified into non-fertilizer products, with a resulting boost in profitability; the fourth, Chimco, has faced tougher times, and is still seeking a formula to secure its future. The main …