The European Union’s explosive expansion across Central and Eastern Europe in 2004 was an economic success, despite the financial turmoil now sweeping the region, the EU’s executive said in an analysis of how the newcomers performed. “The enlargement has emerged as a major success for the EU and its citizens ... It has greatly boosted the economies and improved living standards in the new member states, thereby also benefiting the old member states,” the European Commission wrote in a report.

The Commission’s report was released ahead of the fifth anniversary of the enlargement on May 1 and came as new members across Central and Eastern Europe are struggling to cope with the global economic crisis, with warnings that they are now failing so badly that it contradicts what the Commission said, although there was no explanation about the disparity.

Latvia and Hungary have already been forced to seek multibillion- dollar rescues from the International Monetary Fund and their economies have been teetering dangerously. Last week, credit-rating agency Moody’s sparked widespread financial panic when it warned of the risks to the banking market in the region. Those risks were, in part, driven by the explosive growth which accession brought, the commission’s report said.

“Foreign investment in the new member states surged fast ... However, in several countries, rapid and unchecked domestic credit growth, fueled by foreign borrowing, overheated the economy and led to large external imbalances,” it said. But it rejected the idea that enlargement was to blame for those problems, saying they “are not unique to new member states; some of the old member states face similar problems.” Rather, the new member states are better positioned than their non- EU neighbours to weather the storm, because the bloc can give them both advice and emergency funds, it said.