(Bloomberg) — Renault SA’s Dacia brand is known for being an affordable car, but few drivers in Europe might realize the time and cost it takes for their vehicles to make it from the factory in Romania.
Trucks delivering the hatchbacks need to wait anything from a few hours to a few days in lines stretching kilometers at the border with Hungary to enter the European Union’s Schengen Area, the customs-free zone that covers most of the bloc but not Romania or Bulgaria.
After years of negotiations, the two Black Sea nations will get a concession on March 31: they will join Schengen for air and sea travel. But the land border will remain because of opposition within the EU, primarily from Austria. The queues might look different for tourists in airports, just not for trucks at checkpoints crossing into Hungary.
The problem is that entry into the free-travel zone is now caught up in politics. Austria says it fears more illegal migration just as Western European voters increasingly embrace far-right parties ahead of EU elections. Romania’s auto industry, which includes Renault, Ford and hundreds of parts suppliers, says exclusion costs it €60 million ($65.1 million) a year.
“This partial entry won’t do the auto industry any good because the big problem is the land border,” said Adrian Sandu, one of the leaders of Romania’s Auto Manufacturers Association. “Our industry is losing about €180,000 a day because of the extra logistics costs. This impacts our supply chain and our competitiveness. None of countries in the Schengen Area have this problem.”
Joining Schengen is a core tenet of EU membership along with signing up for eventual adoption of the euro. It’s been a mission for Romania and Bulgaria since they acceded to the bloc in 2007, three years after other Eastern European nations. The European Commission says they meet all the technical criteria.
On a visit to Romania in early March for a European leaders’ meeting, Austrian Chancellor Karl Nehammer was greeted with billboards across Bucharest ironically declaring “Schengen is Here!” Nehammer responded by reiterating his opposition to Romania and Bulgaria fully joining the area any time soon.
Staying out of Schengen, which includes 23 of the EU’s 27 members, is costing between 2% to 5% of gross domestic product, Bulgarian Finance Minister Assen Vassilev said in an interview, echoing similar figures for Romania.
What’s more, the situation at the border has worsened since the two countries became the major route for transit of Ukrainian grain following Russia’s invasion in February 2022. The EU is currently looking at extending Ukraine’s access to the single market for agricultural products.
The countries rely heavily on road for both imports and exports. Full Schengen entry would save Romanian transport companies about €100 million a year, according to data from the European Commission. An assessment from the Chamber of Bulgarian Road Hauliers tallied the lost profits from staying out of Schengen by land at €200 million annually.
“The miles-long queues and the difficult border crossing hinder our businesses and our countries, and this is a serious problem for Europe as well,” Bulgarian Economy Minister Bogdan Bogdanov said in November at a meeting with his Romanian counterpart at the border between the two countries.
Bulgarians, in particular, are increasingly disappointed with how the EU has handled their country’s Schengen entry process, also because of disinformation about inflows of refugees.
Austria is demanding better border controls on land and wants Sofia and Bucharest to take migrants from Afghanistan and Syria who reach the Balkan countries. In response, Romania and Bulgaria say they are not the main entry point for large migrant flows.
“We’ll do whatever it takes to convince all the EU members that it’s our right to be part of Schengen,” said Romania’s ruling Liberal Party leader Nicolae Ciuca, who is part of the same European political group as the Austrian chancellor. “Time is money, and no one wants to waste money waiting at border checkpoints.”
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