Applicant states fear western land buy-up

Date: 11/06/1998

By Chris Johnstone

THE highly sensitive issue of foreigners' rights to own property in central and eastern Europe is set to be a key issue in the enlargement negotiations.

The Czech Republic and Poland are expected to lead the way in asking the European Commission for more time to prevent citizens of other member states from snapping up cheap property bargains in their countries. However, neither is declaring its hand on the issue, beyond saying it is sensitive and is being discussed.

“It is not expected that the government will immediately allow foreigners to own land and property on EU membership,” said Eva Zemanova, of the Prague office of international accountants Arthur Andersen.

Polish diplomats say the issue has prompted a great deal of debate, but stress that no final position has been taken. But Ryszard Czarnecki, head of the national parliament's European integration committee, has cited property rights as one area where Poland will seek EU exemptions.

The Commission has already said that it wants new members of the Union to be given few derogations and, where they are granted, for the shortest time possible.

Yet foreign ownership is a hugely sensitive issue, specially for countries bordering rich EU member states such as Germany, Austria and Italy. Property prices are up to four or five times lower in the Czech Republic and Poland than over the border in Germany.

On the face of it, both countries ban foreign citizens from owning property. However, this can be side-stepped through a relatively complex process under which a local company is created to make the purchase.

A recent poll in the Czech Republic found that two thirds of those questioned would object to foreigners being allowed to own land and property as soon as their country enters the EU.

For the Czech Republic and Poland, a crucial question is that of Germans' rights to property abandoned when they fled, or were driven out of the countries in the dying days of the Second World War.

The Polish government is currently facing a string of restitution claims from Germans who used to own land in western and northern Poland, while the Czech government faces repeated demands from the vocal former Sudeten Germans for their land to be given back.

This dispute exploded into a row between German government coalition parties last week.

The Christian Social Union (CSU) said Germany should take a hard line on Czech entry into the EU unless Prague gave more ground on the rights of the expelled Sudetens, many of whom fled to Bavaria after the war and now play a vociferous and influential role in the CSU.

But German Foreign Minister Klaus Kinkel, a leader of the Free Democrats, branded the demands unrealistic and irresponsible, adding that past issues should not cloud current negotiations.