EU ENLARGEMENT: History, Conditionality and Fatigue

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EU ENLARGEMENTHistory, Conditionality and
Fatigue

• Igor Guardiancich
• Fairfield-Princeton University Summer Programme
  in Florence 
• Intensive Course on the European Union
• 28 June 2011

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History of EU enlargement - I

• Timeline
• Belgium, France, (West) Germany, Italy,
  Luxembourg, Netherlands
• Denmark, Ireland, United Kingdom
• Greece
• Portugal, Spain
• Austria, Finland, Sweden
• Cyprus, Czech Republic, Estonia, Hungary, Latvia,
  Lithuania, Malta, Poland, Slovakia, Slovenia
• Bulgaria, Romania
• Candidates Croatia, Macedonia, Turkey
• Scrutinized Albania, Iceland, Montenegro
• Potential Bosnia and Herzegovina, Kosovo, Serbia

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History of EU enlargement - II
The fifth, aka Eastern enlargement
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History of EU enlargement - III
2011 Members Candidates Potential
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The enlargement process - I
Art. 49 TEU states that any European country can
apply for membership if it respects principles of
liberty, democracy, respect of human rights and
the rule of law. The eastern enlargement is the
first, which has an institutionalized (evolving)
process and a DG. Previous ones were ad hoc and
not subject to strict conditions. Timeline 1989 Co
llapse of socialism. The EC was unprepared no
Marshall plan or Treuhandanstalt. Early 1990s.
Association (Europe) Agreements signed after
first aid programs. They entailed a structured
framework, asymmetric trade liberalization, but
also important exceptions i) ECSC products,
textiles, agriculture ii) tariff facility for
infant/restructuring industries in NMS iii)
safeguard rules.
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The enlargement process - II
1993 Copenhagen. 3 criteria i) political -
stable institutions guaranteeing democracy, rule
of law, human rights, protection of minorities
ii) economic - a functioning market economy and
capacity to cope with the competitive pressures
within the EU iii) ability to take on the
obligations of membership, including the
adherence to political, economic and monetary
integration. i) ii) to start negotiations, iii)
to accede. 1994 Essen. Pre-accession strategy
devised and a White Paper to specify the internal
market acquis. Great emphasis on institutional
structures. 1995 Madrid. Preparation of the
opinions and of Agenda 2000 (CAP reform and EU
budget 2000-06). 1995 Customs union with Turkey.
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The enlargement process - III

• 1997 Opinions published, followed by Regular
  Reports.
• 1997 Luxembourg. Candidacies recognized,
  Accession Partnerships (with SR and MR goals)
  handed out, bilateral negotiations with CZ, CY,
  EE, HU, PL, SI.
• 1999 Berlin. Agenda 2000 CAP and budget.
  Helsinki. Bilateral negotiations with BG, LT,
  LV, RO, SK.
• 2000 Gothenburg. Timetable for accession (EP
  elections).
• 2000 Stabilization and Association Process with
  Western Balkans.
• 2001 Laeken. Call for Convention for the future
  of Europe due to institutional concerns.
• 2003 Thessaloniki Agenda and closure of all
  chapters.
• 2004 First wave of the Eastern enlargement.
• 2005 Three new candidates FYRoM, Croatia,
  Turkey.
• 2007 Accession of Bulgaria and Romania.

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Conditions for success
Mandatory requirements Copenhagen criteria,
closure of all negotiating chapters (35),
Accession Treaty approved by EP, Council and
Commission, ratification by all MS. More
demanding than previous enlargements Acquis is
bigger, more complex (Schengen, EMU, SEM),
growing constantly (ECJ jurisprudence) and there
are no opt-outs (95 of acquis as opposed to
80). Limited transition periods - The acquis,
the whole acquis, and nothing but the
acquis. Adaptation was faster (EFTAns had 20
years). NMS starting point was lower for
political, economic and institutional
adaptation. Conditions were more far-reaching and
ambiguous, way beyond the acquis.
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Triple transition I

• Even though the 5th enlargement was about
  overcoming the Yalta agreementits biggest
  challenge was coping with the triple transition.

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Triple transition IIPolitics, economics,
sovereignty

• Politics from socialism to democracy
• Economics from central planning (or
  self-management) to a market economy
• Sovereignty from limited to full sovereignty
• Two main goals of Central, Eastern and
  Southeastern European peoples after 1989/1991
• Higher living standards Greater individual
  freedom
• Paradoxically these were precisely the objectives
  that Communism committed itself to.

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Triple transition IIIa rationale for the
Copenhagen criteria

• CESE countries after 1989/1991 had to
• - construct a liberal democratic environment
  through Constutionalization of fundamental
  political and social rights
• - build a market economy from the depths of the
  transformational recession
• Hence, the 3 Copenhagen criteria were the minimal
  guarantee for Old Member States to grant
  accession.

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Nature of EU conditionality - I
Mechanisms of EU conditionality Dual role i) to
reassure MS that there would be no disruption
ii) to guide NMS. Limitations Copenhagen
criteria are vague and not measurable. Moving
target problem although economic conditions have
a neoliberal flavor, the EU incorporates many
varieties of capitalism the acquis is too
broadly defined and the time horizon is
vague. EUs twofold role aid donor and club
owner. Many of the norms are created for
developed countries, NMS were not. Contradictions
between regulatory and developmental state.
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Nature of EU conditionality - II
Conditionality levers of the EU Negotiations and
further stages i) good relations to the EU for
trade and aid ii) politically acceptable
government for candidacy iii) democracy and
human rights for negotiations (Turkey left out in
1999 demarche in 1997). Aid and policy advice
PHARE, twinning, CARDS. In 2007 Instrument for
Pre-Accession Assistance (11.5B). Accession
Partnerships provide a reform template and
rescission of an EU Agreement is a last resort
measure. Regular Reports from regatta approach
to country clusters. Effectiveness of
conditionality i) EU as focal point and guide
ii) EU membership as commitment
device. Drawbacks accession happens after NMS
incur costs there is no ranking of goals EU
advice is inconsistent.
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Costs and benefits for EU - I
Economic benefits There are a number of
asymmetries size (NMS 7 of EU GDP in 2003),
regional and sectoral disparities, etc. Gains
from trade (economic integration theories - FTA,
customs union, common market, EMU), achieved with
EU Agreements. FDI flowing into the region,
the EU accounts to more than 2/3. Even though
there was criticism (unemployment),
labor-intensive firms would have moved
anyway. Induced economic renewal due to i)
external shock to sectors needing reform (CAP,
SFs) ii) out-liberalization by NMS (private
pensions, flat tax).
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Costs and benefits for EU - II
Political benefits Prospects of membership
consistently improve democratic indicators in
candidates. Greater stability, security and
democracy in Europes troubled regions is the
main goal. Overcoming Yalta and 40 years of
cold war. This was the primary motive to include
the whole of Central and Eastern Europe with
Helsinki 1999. Strengthening EUs international
bargaining position through a single market of
500M consumers. With the Eastern enlargement in
2004 regained some of the credibility lost with
the Yugoslav wars 1991-2001.
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Costs and benefits for EU - III
Economic and political costs Budgetary costs
harming existing MS German taxpayers, French and
Danish farmers, the Cohesion countries. The 1999
Berlin Council created a satisfactory solution
CAP reform and Financial Perspective
2000-06. The initial defensive stance in key
sensitive sectors (chemicals, agriculture, ECSC
products, textiles) harmed also the EU.
Industries forewent induced restructuring.
Limited mobility to labor, lobbied by Austria
and Germany, up to 7 years, again showing that EU
is not an OCA. Politically, it is worth
mentioning the costs of not enlarging for
continuous regional instability.
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Costs and benefits for NMS - I
Political and security CB NMS take part in
decision-making. Crucial, as the EU deals
clumsily with countries that are neither MS nor
third. Psychological return to Europe after the
Cold War. Gains in internal and external
security, as no MS can be plausibly attacked
without an EU-backed response. Gains from EU
conditionality i) simplification of
decision-making ii) hands-tying arrangements
(Copenhagen criteria) to withstand organized
interest groups. Costs i) loss of sovereignty
reminding of Brezhnev doctrine ii) stable party
systems failed to emerge.
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Costs and benefits for NMS - II
Economic benefits Full access to the EU Internal
Market. Gains from trade are almost gone but
there are many other advantages. If the EU put
safeguards on various key NMS sectors, being a
full member lifts them permanently. Trade with
old MS tripled in 10 years, among NMS
quintupled. Becoming full members means that
regulations and practices of a market economy are
fully entrenched, as approaching membership is
akin to a hands-tying arrangement. EU rules on
competition, state aid, public procurement lower
the demand and supply of lobbying. This leads
to greater investments (FDIs constitute over 20
of total), lower risk premia and access to EU
savings.
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Costs and benefits for NMS - III
Some economic costs Clash between the
integration process and developmental goals of
NMS i) joining the CCP lowers tariff revenues
ii) the Maastricht criteria squeeze the budget
and eliminate exchange rate policy. Aid was low.
Candidates got 8.8 of the operational budget
max, though they are poorer than Mediterranean
countries. That makes 225 per head, instead of
400 in Portugal and Greece. Absorption capacity
is low. Process-related regulation (Single
Market White Paper) is too burdensome for
flexible NMS industries. Environmental regulation
is there for more developed states.
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EU enlargement fatigue - I
Waning support After the 2007 enlargement, the
support for further expansion dropped to less
than 40 in AT, FR, GE, LX (crime, loss of jobs,
delocalization). Only 44 say that EU has been
strengthened by enlargement. In prospective NMS
support fell everywhere and HR thinks the EU
brings disadvantages. Ethnic Albanians in Kosovo
are the most enthusiast. On prospects of
accession, BiH is the most skeptical (1/6 think
it will never join). High vs. low politics
enlargement is seen as anchor of stability and
democracy in the region (O. Rehn), and at the
same time used as scapegoat for current EU ills.
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EU enlargement fatigue - II
Economic concerns Both the far-right and far-left
during these EP elections equated enlargement
with unfair competition. Sarkozy tried to
repatriate parts of the motor industry (then
thwarted by liberal Commission). The Polish
plumber created labor shortages in NMS. BG and
RO paid much less than they received from the
budget. They joined unprepared and their reforms
stalled right after accession. Security
concerns Enlargement is equated with illegal
immigration. Crime gangs from NMS organize in
Western Europe, leading to the criminalization of
entire ethnic groups (Romanians in Italy). Free
movement of labor will be further penalized.
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EU enlargement fatigue - III
Political concerns At the core of political
disputes lies the accession of Turkey to the
EU. Merkel and Sarkozy are opposed to its entry
and support a special privileged status falling
short of full membership. This is creating major
discontent in the country, which introduced
dramatic reforms since 2001 under Erdogan and its
Justice and Development Party (AK Parti) and
started negotiations in October
2005. Institutional concerns Ever since the
Eastern enlargement became a possibility, EU
decision-making reforms are on the agenda. The
Lisbon Treaty, voted on 2 Oct 2009 by Ireland,
should partly accommodate more NMS.
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Thank you very much!