Back To Europe: Central And Eastern Europe And The European Union

Back to Europe

Back to Europe: Central and Eastern Europe and the European Union Edited by

Karen Henderson University of Leicester

© Karen Henderson 1999 This book is copyright under the Berne Convention. No reproduction without permission. All rights reserved. First published in 1999 by UCL Press UCL Press Limited 1 Gunpowder Square London EC4A 3DE UK and 325 Chestnut Street 8th Floor Philadelphia PA 19106 USA The name of University College London (UCL) is a registered trade mark used by UCL Press with the consent of the owner. This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” British Library Cataloguing-in-Publication Data A CIP catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data are available ISBN 0-203-98253-3 Master e-book ISBN

ISBNs: 1-85728-886-6 HB 1-85728-887-4 PB

Contents

Preface

vi

List of tables and figures

x

Notes on contributors

xi

Chronology

xiv

Map

xvii

Introduction 1

EU policy to central and eastern Europe Jackie Gower

2

Part I: The new security agenda in Europe 2

Security and democracy: the EU and central and eastern Europe James Gow

20

3

Enlargement and the Common Foreign and Security Policy: transforming the EU’S external identity? Helene Sjursen

34

4

The NATO factor: a spanner in the works of EU and WEU enlargement? Martin A.Smith

49

Part II: The structural problems of EU enlargement 5

The challenge of EU enlargement: EU and GEE perspectives David Phinnemore

65

6

The pre-accession strategy and the governmental structures of the Visegrad countries Michael Alexander Rupp

82

7

Agricultural, Structural Policy, the Budget and eastern enlargement of the European Union Brian Ardy

99

v

8

EU accession and labour markets in the Visegrad countries Janice BellTomasz Mickiewicz

123

9

“Whatever happened to the environment?”: environmental issues in the eastern enlargement of the European Union Brian Slocock

144

EU enlargement and co-operation in justice and home affairs Gerhard Eisl

161

10

Part III: Central and east European politics and the EU 11

Central and east European views on EU enlargement: political debates and public opinion Heather GrabbeKirsty Hughes

176

12

Polish domestic politics and accession to the European Union Frances Millard

194

13

Slovakia and the democratic criteria for EU accession Karen Henderson

210

14

Slovenia: from Yugoslavia to the European Union Irena Brinar

230

15

The Baltic states and EU enlargement Graeme P.Herd

247

Conclusion Future perspectives Jackie GowerKaren Henderson

263

Glossary and abbreviations

267

Bibliography

270

Index

280

Preface

When 1989 heralded the collapse of communism in Europe, the division of the continent, which had lasted more than 40 years, was finally at an end. At the same time, barriers between areas of academic study also dissolved. Research on the European Union, and often “European Studies” as a whole, had traditionally focused largely on the politics, economics and international relations of western Europe. In the 1990s, however, the ideal of creating a truly united Europe embracing both east and west increasingly became a reality. Ten states which had formerly belonged to the communist world applied for membership of the EU, and in July 1997 the European Commission presented its opinions— avis— on their progress in preparing for membership. The European Council, Parliament and Commission agreed to open detailed accession negotiations with five of these states, while also endorsing the continuation of a broader accession process. As the governments of the Member States of the European Union decided on enlargement and pondered on the institutional challenges that it would pose, the European Commission had set about tackling the practical issues of helping the new candidates surmount the formidable political, legal and administrative hurdles they needed to overcome in preparation for membership. For scholars of European integration, this presents a fascinating test of the Union’s capacity to adapt and enlarge. Within the new democracies of central and eastern Europe, the prospect of joining the EU symbolized the ultimate achievement of their goal of returning “back to Europe”, but initial excitement was tempered by the gradual realization that membership was far more than a symbol. It involved not only freedom, democracy and growing economic prosperity, but also demanding and painstaking work in harmonizing multifarious aspects of their everyday lives to the detailed regulations prescribed by the Union’s existing members. For students of post-communism, this presents the most stringent test of the new democracies’ capacity to master political, social and economic change of an intensity scarcely imaginable to those living in the stable polities of existing Member States. This book’s primary goal has been to bring together both these perspectives: researchers whose major work is devoted to study of the European Union have

vii

combined forces with area specialists on central and eastern Europe to produce a comprehensive analysis of the many different issues involved in the process of enlarging the EU eastwards. Since the two fields of research are now organically linked, such co-operation will in future years be taken for granted; indeed, younger scholars who research EU eastern enlargement have difficulty identifying a primary allegiance to either field of study. The idea of preparing this edited volume was initially conceived at a workshop sponsored by the University Association for Contemporary European Studies (UACES), which was held at the Centre for European Politics and Institutions of the University of Leicester in February 1997. The workshop had deliberately recruited participants who were actively researching EU eastward enlargement both through UACES and through other organizations specializing in the study of post-communist central and eastern Europe. We discovered that in all of them there was a universally high level of interest in the process of European integration. The chapters of this book were commissioned from workshop participants across a broad range of disciplines, as well as from some additional contributors in the UK and abroad whose areas of interest complemented those of the original participants. The aim of the book is to provide a comprehensive guide to the challenges of EU enlargement which presents original research as well as being easily accessible to both readers with a background in EU studies and those interested in the states of post-communist Europe. It is designed to provide an essential resource for students of European Studies, politics, international relations and economics who are following courses on European integration or post-communism. At the same time, it should be of interest to anyone whose work involves them in cooperation between the Member States of the EU and the prospective EU members in central and eastern Europe by providing them with an insight into the complexities of future relationship between both. The book starts with an introductory chapter by Jackie Gower that recaps on the main developments in EU policy towards the central and east European countries (CEECs). This is followed by three parts, which deal with the broader international ramifications of enlargement for European security, the structural problems of enlargement, and the domestic political debates on enlargement within the CEECs. Part I examines the significance of the European Union and eastern enlargement in the context of the new European security order. It opens with James Gow’s discussion of the linkage of security and democracy in the EU’S role in the post-communist world, in which he focuses both on the significance of EU involvement in the Yugoslav war and on broader issues of its involvement in central and eastern Europe. Helene Sjursen then takes a more theoretical look at the relationship between enlargement and the EU’S Common Foreign and Security Policy. Finally, Martin Smith analyzes the actual and potential impact of the ongoing NATO enlargement process on the EU and the Western European Union.

viii

In Part II, David Phinnemore begins by looking in more detail at the challenges that eastern enlargement poses to the institutions of the European Union, and at the prospects of EU membership for CEECs which are unlikely to be included in the “first wave”. Individual issues are then analyzed in detail in the following chapters. Michael Alexander Rupp examines the structures that have been created to liaise between the EU and the CEECs, and investigates in particular how four of the applicant states (the central European Visegrad countries) have adapted their own governmental organization to cope with the demands of preparing for accession to the EU.Brian Ardy then assesses the economic and financial implications of enlargement on such sensitive areas as the Common Agricultural Policy and Structural Funds. Janice Bell and Tomasz Mickiewicz return to the perspective of the applicant states and examine how far economic transition in central Europe has prepared labour markets for EU membership. Finally, two specific policy areas are reviewed. Brian Slocock focuses on the impact of the EU on environmental policy in the applicant states, while Gerhard Eisl looks at the challenges of integrating the CEECs into the EU’S “third pillar” —justice and home affairs. Part III focuses on the internal politics of the applicant states, where differing perceptions of the advantages of EU membership may prove crucial in the later stages of accession negotiations. The section is introduced by Heather Grabbe and Kirsty Hughes, who examine the general and specific responses of the CEECs in the course of negotiating the different stages of pre-accession, as well as the importance of domestic public opinion in the individual candidate members. Frances Millard then looks at Poland as a case study of a prime candidate for the “first wave” of eastern enlargement in which debate on EU membership has reached a relatively high degree of complexity. Karen Henderson analyzes the specific problems of the Slovak Republic, which is exceptional in being the only CEEC excluded from the first round of accession negotiations because of difficulties that are primarily political rather than economic. Irena Brinar then examines the rather different situation in Slovenia— the only Yugoslav successor state with a strong chance of gaining early EU membership. Finally, Graeme P.Herd investigates the position of the three Baltic states, which were once part of the Soviet Union and consequently have a strong interest in the security advantages of European integration. Acknowledgements The editor would like to express her gratitude to UACES for providing the initial impetus for this book by sponsoring, as part of its regular support for workshops in the area of EU studies, the initial gathering at the University of Leicester’s Centre for European Politics and Institutions where the authors were first able to exchange ideas. Particular thanks go to Graham Timmins of the University of Huddersfield, who co-organized the Leicester workshop and made an invaluable contribution to conceiving its original diverse programme. Jackie Gower of

ix

Thames Valley University has also provided much help and advice throughout the project, both as the Secretary of UACES and as a contributor to the book. K.H. Leicester Michael Alexander Rupp should like to note that he wrote his chapter on the basis of his research as an academic, and the views expressed do not necessarily reflect the opinion of the European Commission. Similarly, Gerhard Eisl wrote his chapter on a strictly private basis, it does not necessarily reflect the opinion of the Austrian Foreign Ministry.

Tables and figures

Figures 8.1 Unemployment rate 1990–96 8.2 Ratio of wages to productivity and the unemployment level 8.3 Economic activity rate

134 136 137

Tables Chronology xiv Relations between the CEECs and the EC/EU, 1988–97 xvi 7.1 The central and east European countries and the EU: basic data 1995 100 7.2 The impact of successive enlargements of the EU 101 7.3 Population eligible for Regional Specific Aid under the Structural Funds102 7.4 Agenda 2000 expenditure on structural operations 104 7.5 Structural operations expenditure 1995, 1999 and 2006 105 7.6 Projected structural expenditure in the FG-5, 2006 106 7.7 Agriculture in central and eastern Europe and the EU 108 7.8 The EU budget, 1995 114 7.9 Contributions and receipts from the EU budget, 1995 115 7.10 EU budgetary expenditure 117 8.1 Visegrad countries: basic economic characteristics, 1996 123 8.2 Employment by sector (%), 1994 133 8.3 Employment in the Czech Republic 134 9.1 Trends in air pollution in central and eastern Europe: percentage change 145 1985–94 9.2 European Commission opinions on the state of environmental policy in 154 the applicant states of central and eastern Europe, July 1997 10.1 European Commission opinions on the ability of applicant states of 166 central and eastern Europe to meet the JHA acquis, July 1997 11.1 Trends in positive views of the EU, 1990–96 177 11.2 Attitude to EU membership in candidate countries 178 13.1 Slovak attitudes to the European Union according to party preferences, 223 November 1996

Notes on contributors

Brian Ardy is Head of European Studies at Thames Valley University where he teaches on undergraduate and post-graduate courses in European Studies. He has developed distance learning packages on the European Business Environment and European Integration, which are now being used extensively in Poland and Bulgaria, and has worked on EU projects in Hungary, Poland and Latvia and with the national administrations of Poland and Latvia. His research interests include the EU Budget, the Common Agricultural Policy, EU-Russia Relations, economic transition in Poland and of course EU Enlargement. Janice Bell is Lecturer in Economics of Transition at the School of European Studies, University of Sussex. Her research interests include the politics of economic reform in post-communist countries, unemployment and electoral politics, and she has written on these subjects in Europe-Asia Studies and Most. Irena Brinar is Assistant Lecturer in European Integration, International Economic Relations and International Relations and a researcher in the Centre of International Relations of the Institute of Social Sciences at the Faculty of Social Sciences, University of Ljubljana. She is participating in the long-term research projects “The Place and the Role of Slovenia in International Relations” and “Small States in the International Community”, where she focuses on relations betwen Slovenia and the European Union. She is the author of several articles and chapters in books on different aspects of the European integration process, published in Slovenia and abroad. Gerhard Eisl is a diplomat in the Austrian Foreign Ministry, where he is currently in charge of bilateral relations with western and northern Europe. He was previously affiliated to the department for international co-operation in Justice and Home Affairs, where he worked in particular on the Third Pillar and the Schengen Agreements. His major research interests are Justice and Home Affairs, the Common Foreign and Security Policy and EU enlargement. He collaborates in his academic work with the Research Institute for European Affairs at the University of Business Administration and Economics and the Institute for the Danube Region and Central Europe in Vienna.

xii

James Gow is Reader in War Studies at King’s College London. He is author of Triumph of the lack of will: international diplomacy and the Yugoslav war (Hurst, 1997) and Legitimacy and the military: the Yugoslav crisis (Pinter, 1992), as well as co-author with Carole Birch of Security and democracy: civil-military relations in central and eastern Europe (Brassey’s, 1997). Between 1992 and 1997, he ran a series of EU funded projects on security and democracy in central and eastern Europe. From 1994–98, he acted as expert advisor and expert witness for the Office of the Prosecutor at the UN International Criminal Tribunal for the former Yugoslavia in The Hague. In 1997, he was appointed to the UK Secretary of State for Defence’s expert panel for Strategic Defence Review. Jackie Gower is Jean Monnet Principal Lecturer in European Integration at Thames Valley University, London. Her current research interests are EU enlargement to central and eastern Europe and EU relations with Russia. She is responsible for Tempus projects in Poland and Lithuania and has worked with the Westminster Foundation for Democracy organizing courses for MPS and officials in Poland. She is the Honorary Secretary of the University Association for Contemporary European Studies. Heather Grabbe is Research Fellow in the European Programme at the Royal Institute of International Affairs. Her major research interest is the impact of the EU on post-communist transition processes in central and eastern Europe. Her publications include Enlarging the EU eastwards (with Kirsty Hughes; RIIA/ Cassell, 1998). Karen Henderson is Lecturer in East European Politics at the University of Leicester. She researches into the domestic politics of east-central Europe with particular reference to issues of EU enlargement, and has written numerous articles on the politics of the Czech and Slovak Republics. Recent publications include Post-communist politics (with Neil Robinson; Prentice Hall, 1997). Graeme P.Herd is Lecturer in International Relations at the University of Aberdeen. His main research interest focuses on Baltic security, especially Russian—Baltic relations, and he has published articles in The World Today, Security Dialogue, Brassey’s Defence Year Book and Strategic Comments. He is currently the Project Officer on a two-year EU PHARE Project “Democratic Security Building in the Baltic States”. Kirsty Hughes is Head of the European Programme at the Royal Institute of International Affairs. She has written extensively on eastward enlargement, on Britain’s relations with the EU, European competitiveness, and foreign direct investment in central and eastern Europe. Her recent publications include Foreign Direct Investment in central and eastern Europe: multinationals in transition (with Saul Estrin and Sarah Todd; RIIA/Cassell, 1997). Tomasz Mickiewicz is Lecturer in Economic Restructuring at the University of London, School of Slavonic & East European Studies. His research and published work has focused mainly on labour markets in central and eastern

xiii

Europe. He received his phD from Lublin, Poland and his academic career has included a year at the University of California at Davis and several shorter visits to European universities, most recently Central European University, Budapest. Frances Millard is Senior Lecturer in the Politics of the Visegrad States at the University of Essex. She is the author of Polish politics and society (Routledge, forthcoming), The anatomy of the new Poland (Elgar, 1994) and numerous articles on aspects of Polish politics and social policy. David Phinnemore is Lecturer in European Studies in the Department of International Studies at Liverpool Hope University College. He has gained a phD on association with the EC, and his main research interests are EU enlargement, Romania-EU relations and EU Treaty developments. He is currently working, with Clive Church, on a second edition of European Union and European Community (Prentice Hall). Michael Alexander Rupp has been researching on the politics of European integration for the past five years. He studied at the University of Heidelberg and the University of Hull, and until recently he was Research Officer at the Centre for European Studies of the University of Leeds, where he conducted a research project on the EU’S pre-accession strategy vis-à-vis the Visegrad countries. Since October 1997 he has been working for the European Commission. Helene Sjursen is Senior Researcher at Arena, University of Oslo. Her publications include A Common Foreign Policy for Europe? Competing visions of the CSFP (co-edited with John Peterson; Routledge, 1998 forthcoming). Brian Slocock is Senior Lecturer and Head of Politics in the Department of Applied Social Studies, University of Paisley. His principal research interests are in the comparative politics of environmental policy-making in eastern Europe, and interest group formation in post-communist societies. He is the author of The eastern European environmental crisis: its extent, impact and solutions (Economist Intelligence Unit/Business International, 1992) and articles on environmental policy in Poland and the Czech Republic. Martin A.Smith teaches and researches in the Department of Peace Studies at the University of Bradford, where he received his phD in 1994. He has published a number of articles and book chapters on European and international security issues and is currently co-authoring a book looking at EU and NATO enlargement in comparative perspective.

Chronology

March 1957

January 1973 January 1981 January 1986 June 1988

November 1989 November 1989 December 1989 April 1990 November 1990 February 1991 February 1991 June 1991 September 1991 December 1991

Treaty of Rome establishing the European Economic Community signed by Belgium, France, Germany, Italy, Luxembourg and Netherlands. Denmark, Ireland and the United Kingdom join the EC. Greece joins the EC. Portugal and Spain join the EC. Joint EC-CMEA declaration establishes mutual recognition, leading to Trade and Co-operation Agreements between the EC, Hungary (1988) and later other communist and postcommunist states. The fall of the Berlin Wall symbolizes the end of Europe’s division into two political camps. EBRD established after Paris summit of EC leaders (starts March 1991). PHARE programme of aid for economic restructuring introduced by EC, initially for Poland and Hungary. The Dublin European Council requests negotiating mandate for first Association Agreements with CEECs. Hungary becomes the first CEEC to join the Council of Europe. The Warsaw Pact decides to dissolve itself. Visegrad Declaration signed by Czechoslovakia, Hungary and Poland. The Slovenian declaration of independence marks the start of the Yugoslav war. The Soviet Union recognizes the independence of Estonia, Latvia and Lithuania. Maastricht European Council agrees on the treaty for political union and a timetable for EMU.

xv

December 1991 The first Europe Agreements are signed with Czechoslovakia, Hungary and Poland. June 1992 The Commission presents report “The Challenge of Enlargement” to the Lisbon European Council. July 1992 PHARE Democracy Programme introduced for strengthening social and political foundations of CEE democracies. December 1992 The Commission presents the paper “Towards a new association with the countries of central and eastern Europe” to the Edinburgh European Council. January 1993 The Czech Republic and the Slovak Republic become independent states. June 1993 The Copenhagen European Council agrees in principle on the CEECs becoming EC members, and defines membership criteria. November 1993 The European Union formally comes into existence. February 1994 The first Europe Agreements (with Hungary and Poland) enter into force. March 1994 Hungary becomes the first CEEC to apply to join the EU. December 1994 The Essen European Council agrees pre-accession strategy for EU applicant states in CEE. January 1995 Austria, Finland and Sweden join the EU. June 1995 Cannes European Council adopts the Commission’s white paper on the Internal Market. December 1995 The Czech Republic joins the OECD as the first CEEC. December 1995 The Madrid European Council envisages opening negotiations with some of the CEECs six months after the conclusion of the IGC commencing in 1996 and asks the Commission to prepare its opinions (avis) on their applications. March 1996 IGC opens. April 1996 The Commission sends the CEECs detailed questionnaires to help prepare its opinions. June 1997 The IGC concludes with the draft Treaty of Amsterdam. July 1997 The NATO summit in Madrid invites the Czech Republic, Hungary and Poland to negotiate membership. July 1997 The Commission publishes its opinion on the applications for EU membership from the ten CEECs, and recommends that accession negotiations should be started with five. December 1997 The Luxemburg European Council agrees to launch an accession process comprising the ten CEECs and Cyprus on 30

xvi

March 1998, and to commence accession negotiations with the Czech Republic, Estonia, Hungary, Poland and Slovenia (as well as Cyprus) in spring 1998.

Relations between the CEECs and the EC/EU 1988–97

Hungary Poland Czechoslov akia Czech Republic Slovak Republic Romania Bulgaria Estonia Latvia Lithuania Slovenia *The

Diplomatic relations with EC established

Trade and co- Europe operation Agreement agreement signed signed

Europe Agreement comes into force*

Application to join the EU submitted

August 1988 September 1988 September 1988 January 1993 January 1993 February 1990 September 1988 August 1991 August 1991 August 1991 April 1992

September 1988 September 1989 May 1990

February 1994 February 1994 –

March 1994

January 1996 June 1995

May 1990

December 1991 December 1991 December 1991 October 1993 October 1993 February 1993 March 1993

May 1992

June 1995

February 1995 February 1995 February 1995 February 1995 pending†

May 1992

June 1995

pending†

May 1992

June 1995

pending†

April 1993‡

June 1996

pending†

– – Oct 1990

April 1994 –

July 1995 December 1995 November 1995 October 1995 December 1995 June 1996

trade provisions of the Europe Agreements had entered into force at earlier dates under interim agreements, with the exception of the three Baltic states, where relations with the EU were governed by Free Trade Agreements, signed in July 1994, which came into force in January 1995. †In late 1997, the Europe Agreements with the Baltic states and Slovenia had not yet been ratified by all EU member states. ‡A Trade and Economic Co-operation Agreement between the EU and the former Yugoslavia had existed from 1980.

Map

Introduction

1 EU policy to central and eastern Europe Jackie Gower

The dramatic events at the end of the 1980s that resulted in the collapse of the communist regimes in central and eastern Europe (CEE) took the European Community (Ec)1 (like practically everyone else) by surprise and revealed a considerable policy void. Throughout the previous 30 years, the EC had only a very limited relationship with those countries that belonged to the Sovietdominated Council for Mutual Economic Assistance (CMEA)2 and there appears to have been no serious thought given to the possibility that they might one day join with their western neighbours in the grand “European project” of political and economic integration. However, as the new governments in central and eastern Europe embarked on radical reforms to create liberal democratic political systems and market economies, they made it clear that they saw rapid and full accession to the EC as an essential milestone on their journey “back to Europe”. The initial reaction by the EC was cautious: it offered practical technical and financial assistance to support the reforms and went some way towards normalizing trade relations with the countries of central and eastern Europe. However, it was extremely reluctant to make any specific commitment to even the principle of central and east European enlargement, let alone set a date and identify future candidate members. Gradually, however, a broad policy strategy has evolved, albeit more in response to external demands and events than any clear vision of the kind of European Union that would meet the needs of the next century. By the end of 1997 it was possible to identify which states are considered future EU members, the criteria by which they will be judged to be ready for accession and the general strategy for the conduct of the negotiations. There remain, however, a number of crucial questions that are as yet unanswered and make it impossible to predict with any degree of certainty which states will actually join and when, and how the EU itself will be changed by the accession of the central and east European states. The purpose of this chapter is to trace the development of EU policy to central and eastern Europe and to identify the key principles of what is now officially designated the “pre-accession strategy”. It will also highlight the outstanding issues and questions that have yet to be resolved and which will be considered in more detail in the chapters that follow.

EU POLICY TO CEE 3

The initial response to CEE reforms One of the main obstacles to the development of closer relations between the EC and its eastern neighbours had been the absence of any official contact between the CMEA and Brussels and the generally negative attitude of the Soviet Union towards the EC. Gorbachev, however, saw the normalization of economic relations with western Europe as an important part of his economic reform strategy. On his initiative a Joint EC-CMEA Declaration was agreed in June 1988,3 which established mutual recognition and opened the way for the negotiation of Trade and Co-operation Agreements (TCAS) with Hungary in 1988 and Poland and the USSR in 1989.4 Although not really going beyond affording the standard most favoured nation treatment permitted under GATT rules, the TCAS were an important symbolic encouragement to the reform process. Similar agreements were extended to all the former communist states in 1990 when it was clear that they too were embarking on fundamental reforms. The Trade and Co-operation Agreements were part of the standard repertoire of economic instruments used by the EC in relation to third parties. The PHARE5 programme introduced in 1989 to provide financial and technical support for the economic restructuring of Poland and Hungary was a more innovative response intended to meet the specific needs of the central and east European countries (CEECs). It involves the Commission in a close partnership with the governments and other institutions and agencies in the CEECs engaged in projects designed to consolidate the market reforms and restructure the economies. On the initiative of the European Parliament, the scope of the programme was widened in July 1992 with the introduction of the PHARE Democracy Programme to strengthen the social and political foundations of a democratic system. Particular importance is attached to the development of a vibrant civil society, so many of the projects involve working directly with a wide range of non-governmental organizations in order to encourage a more participatory political culture. The PHARE programme was extended to Czechoslovakia, Bulgaria and Yugoslavia in 1990 and, significantly, also to the three Baltic states in September 1991—the only former Soviet states to be included in the PHARE programme. A different aid programme, TACIS, was developed for Russia and the other newly independent states, so it would appear that even as early as 1991 the Baltic states were regarded as part of the central and east European family of nations for the purposes of EC policy. In addition to administering the PHARE programme, the Commission was also given the responsibility in July 1989 for co-ordinating aid from the G24 states and various international financial institutions such as the World Bank and the International Monetary Fund. This was welcomed as an important acknowledgement of the EC’S status as an international actor6 and further strengthened the Commission’s pivotal role in providing external encouragement and support for the domestic reform process in central and eastern Europe.

4 JACKIE GOWER

Although it was officially maintained that the TCAS and the PHARE programme represented a “considerable upgrading of relations between the Community and the CEECs”,7 they failed to satisfy the expectations of the new CEE governments. There was considerable frustration and resentment at the continuing restrictions on trade despite the movement towards market economies, and disappointment that the level of financial assistance fell far short of the Marshall Aid received by western states in the post-war period to support their reconstruction. Furthermore, in the early years at least, there was a widespread perception that much of the financial assistance actually went to western consultants and experts rather than the CEECs themselves. Above all, there was no commitment forthcoming from Brussels in respect of CEE membership, although some national leaders, notably Germany’s Chancellor Kohl, made reference to what were clearly extremely optimistic dates for their accession that only served to raise popular expectations to an unrealistic level. The Europe Agreements In response, therefore, to both the scale and pace of the reforms taking place in the CEECs and the pressure from their governments for a more substantial political response, the Commission was asked to draw up proposals for association agreements that would have a significant political as well as an economic dimension. The intention was to create “a special type of relationship reflecting geographic proximity, shared values and increased interdependence”.8 The preambles contained a rather anodyne statement that the agreement would “allow (the associated state) to take part in the process of European integration”9 but despite strong pressure from the CEEC governments during the negotiations, there was no commitment to their future accession. The only concession was the inclusion of a statement “recognizing the fact that the final objective of (e.g. Poland) is to become a member of the Community and that this association, in the view of the Parties, will help to achieve this objective”.10 Although criticized at the time as falling short of the expectations of the CEECs, it is perhaps worth remembering that the first three Europe Agreements were signed in December 1991, barely two years after the fall of the Berlin Wall, and when the stability of the new democracies was still far from certain. While there may have been a certain lack of vision, there was also an understandable degree of caution. The Europe Agreements themselves were explicitly conditional on the continuation of both the political and the economic reforms, including respect for the rule of law and human rights, and future relations clearly depended on the success of the transition. Although the political characteristics of the Europe Agreements were seen at the time as potentially the most important in shaping future relations between the EC and the CEECs, it was the trade liberalization measures that had the most immediate impact. In part, this was because they came into force within a few months as “Interim Agreements”, while the protracted ratification process

EU POLICY TO CEE 5

required for the more overtly political Europe Agreements themselves led to delays of two to three years.11 The economic provisions of the Europe Agreements represent a significant advance on the earlier Trade and Co-operation Agreements, providing for the progressive movement towards free trade in industrial goods over a ten-year period, with the EC removing tariffs, quotas and other restrictions much more quickly than the CEECs. Most agricultural trade, however, is excluded and there are significant exceptions made for so-called “sensitive” goods such as steel, chemicals and textiles. This overt protectionism on the EC side was widely condemned both in the CEECs and by many western economists,12 who argued that what the nascent market economies most needed was the stimulation of free access to the market, not financial aid. The sectors where EC protectionism prevailed were invariably those where the CEECs enjoyed a comparative advantage and, therefore, in which export-led growth would have been expected.13 Further concessions have been made over the years, but the difficulty in persuading Member States to risk alienating powerful domestic lobbies is a warning of the potential problems that lie ahead during the accession negotiations themselves. Despite the limitations of the Europe Agreements, there has been a significant growth in the volume of trade between the EC/EU and CEE and a dramatic reorientation of CEE exports from the former CMEA countries to EU Member States.14 However, some force is given to the criticisms of the EU’S continuing protectionism by the evidence of a large trade surplus in its favour, particularly with Poland, Hungary and the Czech Republic.15 The Europe Agreements also contain modest proposals for the gradual realization of free movement of services, capital and labour, but both sides were reluctant to go as far as the European Economic Area model in the short term at least. However, the commitment by the associated states to approximate the majority of their economic laws to EC law is of major significance and will considerably facilitate their integration into the single market and their adoption of the acquis on accession. The political provisions were intended to complement the gradual economic integration of the CEECs into the European economy with the development of a “European political area”. An institutional framework of Association Councils and Committees at ministerial, parliamentary and official levels has been created to encourage political dialogue on a wide range of issues of mutual concern, including foreign policy, security, international crime and the environment (see Chapter 6). After a rather slow start, regular meetings were established but both sides seem to have found them rather frustrating. Certainly, from the perspective of the CEECs, political dialogue is regarded as a poor substitute for actual EU membership and direct representation at the decision-making table. The political provisions, therefore, proved disappointing and in no way diminished the CEECs’ determination to attain full EU membership. The opening of negotiations with the European Free Trade Agreement (EFTA) applicants in

6 JACKIE GOWER

February 1993 increased the pressure on the EU to spell out precisely what the CEECs needed to do before they too would be considered ready for membership. The Copenhagen criteria The Commission’s Report “The Challenge of Enlargement”, presented to the Lisbon European Council in June 1992, had put the issue of CEE enlargement firmly on the agenda by declaring that “the integration of these new democracies into the European family represents a historic opportunity”.16 The following year, the Copenhagen European Council proved a watershed in the development of EU policy to the CEECs by deciding that the associated countries in central and eastern Europe that so desire shall become members of the European Union. Accession will take place as soon as an associated country is able to assume the obligations of membership by satisfying the economic and political conditions required.17 Although no indication of the timescale envisaged was given, the statement marked a major shift in EU policy. Henceforth, the debate would be concentrated on when rather than if the CEECs would become EU members. In particular, attention shifted to the necessity for them to meet the economic and political conditions spelt out at Copenhagen: Membership requires that the candidate country has achieved stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities, the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union. Membership presupposes the candidate’s ability to take on the obligations of membership including adherence to the aims of political, economic and monetary union. The Union’s capacity to absorb new members, while maintaining the momentum of European integration, is also an important consideration in the general interest of both the Union and the candidate countries.18 Thus two distinct and equally important sets of issues were identified at Copenhagen: preparing the applicant countries so that they can meet the criteria, and preparing the EU itself so that a much larger and more heterogeneous Union can continue to act effectively. The first was based on the affirmation of what Preston has called “the classical Community method of enlargement”19 and put the onus on the CEECs to adopt a whole series of measures to bring themselves in line with current EU practice and enable them to take on the acquis.20 Much of the Union’s own energies have also been devoted to assisting them in this task, and the pre-accession strategy discussed below has been conceived precisely for this purpose. Thus the debate

EU POLICY TO CEE 7

has tended to be focused on whether the applicant countries are “ready” to become EU members and the Commission’s opinions published in July 1997 explicitly measured their transition against the Copenhagen criteria.21 The second set of issues surrounding the need for the EU itself to adapt has until recently attracted rather less public comment. However, as they involve both institutional and policy reform they may in the long term prove even more difficult to resolve as they impinge directly on the interests of the existing EU Member States. Underlying much of the debate has been the old academic chestnut about the relationship between “widening” and “deepening” of integration and the inability to agree on what a Union of perhaps 25 to 30 states might actually be like. The Commission has repeatedly argued that “widening must not be at the expense of deepening. Enlargement must not be a dilution of the Community’s achievements.”22 It has also been determined to ensure that the enlargement agenda would not deflect the Member States from their commitment to the timetable for economic and monetary union. Decisions concerning the adaptation of the EU to enable enlargement to proceed were deferred, therefore, until the Intergovernmental Conference scheduled to begin in 1996. The Copenhagen European Council thus left many questions still unanswered but at least provided a framework for the development of future policy. In particular, by explicitly linking the Europe Agreements with the expectation of EU membership, the future political map of Europe was delineated. By the mid-1990s, there were, therefore, ten Europe Agreement states which were regarded as candidate members: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. Croatia and Albania are also expected to acquire Europe Agreement status when their domestic political situation improves. However, Russia and the other former Soviet states, with the significant exception of the Baltics, have not been offered Europe Agreements. The Partnership and Co-operation Agreements that govern their relations with the EU make no mention of future accession even as a goal, and it is clear that they are not regarded as even potential members.23 Thus a dividing line seems to have been drawn across “the new Europe”, although the precise basis for this differentiation has not been made explicit. The Essen European Council and the pre-accession strategy Germany has always been in the forefront of pressing for its eastern neighbours to be admitted to the Union, so it was to be expected that the German Presidency would try to ensure that a major initiative would be agreed at the Essen European Council in December 1994. The Commission had been invited to draw up concrete proposals to draw together all the various EU policy instruments into a coherent strategy to prepare the countries of CEE for accession.24 The goal for the period before accession was to be “the progressive integration of the political and

8 JACKIE GOWER

economic systems, as well as the foreign and security policies of the associated countries and the Union, together with increasing cooperation in the fields of justice and home affairs, so as to create an increasingly unified area”.25 The key elements of the pre-accession strategy were identified as the Europe Agreements, with further trade liberalization conceded by the EU; the PHARE programme, which was to play an increasingly important role in supporting the efforts of the CEECs to meet the criteria for accession; the full development of the structured relationship between the EU’S institutions and the associated countries that had been agreed at the Copenhagen European Council; and the white paper26 on integration into the internal market which the Commission was asked to prepare for consideration at the Cannes European Council the following year. The structured relationship was seen as an important attempt to find a new political formula for involving the CEECs constructively in the work of the EU during what was generally accepted would be a lengthy period before they were able to become full members. It was acknowledged that the political dialogue provided for in the Europe Agreements had not been very satisfactory, at least in part because of its bilateral nature. It was therefore proposed that regular multilateral meetings with the heads of government and ministers of the CEECs would be built into the EU calendar to provide a forum for discussion of issues of common concern. These meetings usually take place just before or after one of the normal Council meetings, e.g. General Affairs (foreign ministers), Agriculture, Transport, Environment, Justice and Home Affairs, which has given rise to the perception that they are “shadow Councils”. However, as the CEEC ministers are only too aware, the crucial difference between the two meetings is that it is only the Council of Ministers that has legislative powers and thus takes the key decisions. The structured relationship therefore has not been entirely successful in establishing its political credibility in the eyes of the CEECs although it clearly has some symbolic and psychological significance.27 It was noted, for example, in the Presidency Conclusions in June 1995 that “their presence here in Cannes today provides confirmation that they are destined to join the Union.”28 The white paper on the preparation of the CEECs for integration into the internal market of the Union was by contrast seen by the CEEC governments as precisely the kind of “action plan” they wanted to provide a focus for their national integration strategies. It identified in considerable detail the key measures in each sector of the internal market that the associated countries needed to adopt, including an enormous volume of what is rather euphemistically termed “legal approximation”, i.e. bringing their economic laws in line with those of the EU. It also suggested a logical sequence for the legislative programme, while leaving it up to each of the associated states to draw up its own timetable. Although clearly a major challenge, it was one which the CEECs’ governments and officials accepted with a surprising degree of enthusiasm as at least it gave a sense of making real progress towards the goal of accession. The

EU POLICY TO CEE 9

Commission, however, has been quick to warn of the dangers of simply “ticking off” the required laws that had been transposed into national law. In the white paper it was stressed that “the creation of the conditions for establishing a single market” go beyond the approximation of legislation, and must involve the creation of adequate structures for regulation, implementation and enforcement to ensure that the legislation is effective. Increasing emphasis is now placed on the need to help develop effective administrative and legal institutions and a pool of appropriately trained officials to ensure that the single market functions correctly once accession is achieved. Technical assistance under the PHARE programme was enhanced and adapted to reflect these new priority objectives. The Madrid European Council’s decision on the accession timetable Poland and Hungary formally delivered their applications for EU membership in 1994 and Romania, Slovakia, Estonia, Latvia, Lithuania and Bulgaria did likewise during 1995.29 The formal procedures for accession, therefore, were finally put in motion and the Commission was requested to prepare its official opinions (known as avis) on the applications. At the Madrid European Council in December 1995 the EU Member States expressed the hope that the initial stage of the negotiations with the CEECs might coincide with the commencement of negotiations with Malta and Cyprus, which were scheduled to begin six months after the conclusion of the 1996 Intergovernmental Conference (IGC).30 One of the main objectives of the IGC itself was to reform the EU’S institutions with a view to the next enlargement, and it was clear that the prospects for CEE accession were directly related to the outcome of its deliberations. The great fear in the capitals of CEE was that the IGC might drag on over several years and therefore delay even the consideration of their applications indefinitely. The 1996 Intergovernmental Conference Unlike the 1991 IGC, which deliberately avoided examining the implications of further enlargement, the 1996 IGC was conducted with the knowledge that its membership might double during the next decade.31 It is the sheer number of potential new members that is the main cause for concern, not the particular characteristics of the CEECs themselves, although the fact that most of them have relatively small populations is a factor in the debate. The Commission’s official paper Reinforcing political union and preparing for enlargement32 identified a number of significant and politically highly controversial issues that needed to be resolved before the next enlargement: the institutional implications of the increased number of member states, the need to eschew unanimous voting and the introduction of a system of flexibility so that the Union would not be held back by its slowest members.

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In the case of the four previous enlargements, the composition of the institutions had simply been increased so that each new member nominated a commissioner, or two in the case of the large states, sent a judge to the European Court of Justice and elected members to the European Parliament. However, there was a widespread consensus that this arithmetical adjustment had reached its limits with the EFTA enlargement and further accessions would require reform if the EU were to retain its capacity to act effectively. The viability of the system of the rotating Council Presidency was also raised, particularly in view of the large number of small states in the queue for accession. However, the difficulty was that most proposed reforms seemed to threaten the interests of the existing small Member States who feared the loss of “their” Commissioner or their turn to hold the Presidency, or a reduction in the number of seats they had in the European Parliament. The proposal to make qualified majority voting (QMV) in the Council of Ministers the general rule in order to avoid stalemate also aroused a great deal of controversy among the Member States. The UK and some others were cautious about extending the use of qualified majority voting to new policy areas, and particularly held out in relation to the Common Foreign and Security Policy. There was also concern that the present “weighting” of the votes in the Council was over-generous to the small states. Fears were raised over the possible implications of a large number of small but very poor states wielding a disproportionate number of votes, particularly in relation to the spending programmes.33 Again, however, the existing smaller Member States vigorously resisted proposals to reduce their own votes in the Council. Finally, “flexibility” had been introduced into the debate to try to allay the fears of the more committed federalists that a larger and more heterogeneous Union would necessarily slow down the movement towards greater political and economic integration. However, others feared the further consolidation of the “hard core” that was already expected to emerge with economic and monetary union and the adoption of the single currency. The prospect of first and second class membership developing, particularly if based on the different levels of economic development of the member states, was seen as contrary to the whole spirit of European integration and threatening its legitimacy. The Amsterdam European Council It had been feared that the institutional reforms would prove so difficult to resolve that the IGC might continue into the Luxembourg Presidency in the second half of 1997. It was therefore a great relief to the CEECs’ governments and all those who were committed to enlargement that the Amsterdam Council concluded the IGC on schedule in June 1997 and thus cleared the way for dealing with the applications. It was agreed that, at its meeting in Luxembourg in December 1997, the Council would, “with a view to enabling the actual opening of negotiations as soon as possible after December 1997…take the necessary

EU POLICY TO CEE 11

decisions on the overall enlargement process including practical arrangements for the initial phase of negotiations.”34 However, the initial euphoria was quickly dispelled when it became clear that the institutional reforms that had been agreed at Amsterdam were very modest and most of the difficult issues had been fudged or postponed. There was a limited extension of the use of QMV in decision-making in the Council but no decision taken on the controversial issue of modifying the weighting of the votes. Instead, a separate protocol to the Amsterdam Treaty commits the Member States to resolve the issue prior to the first enlargement, explicitly linking reform of the voting system in the Council to acceptance by the larger states that in future they should only nominate one Commissioner each. The Commission has subsequently urged that the decision should be taken “well before 2000”,35 but whether the required unanimity among the Member States can be attained remains uncertain. However, it would appear that even if agreement is not reached, the first wave enlargement would probably still proceed. Article 2 of the protocol, however, is potentially a serious threat to the prospects for a second wave enlargement. It stipulates that at least one year before EU membership exceeds 20, a further IGC will be convened to “carry out a comprehensive review” on the composition and functioning of the institutions. There has been considerable speculation as to whether this means that further enlargement is dependent on agreement on much more far-reaching institutional reforms. In the Commission’s opinion, this is clearly the position,36 and several Member States are known to share its view. There is therefore a distinct possibility that membership of the EU will be effectively closed to those not included in the first wave through no fault of the applicants themselves. Agenda 2000 Despite the disappointment with the reforms agreed at Amsterdam, it did enable the Commission to go ahead as planned in July 1997 with the publication of a set of key documents on enlargement and the future of the Union itself. Entitled “Agenda 2000”, it comprised a detailed assessment by the Commission of a whole range of issues concerning the development of the EU into the next century, including enlargement, the reform of the Common Agricultural Policy (CAP) and structural policies, and the new financial framework for 2000–2006, as well as the Commission’s avis (opinions) on the ten applications from the CEECs.37 Together these documents constitute a detailed strategy for further enlargement identifying both the general principles that will govern it and the practical measures that must be taken by both the EU and the applicant states for it to be achieved.

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The verdict of the avis: differentiation between the applicant states The avis were prepared by the Commission on the basis of the replies to identical detailed questionnaires sent to all the applicant states in April 1996. They contained over one thousand questions covering economic, political, legal, social and environmental conditions and requiring an enormous amount of statistical data to be collected. In addition to the information provided by the applicants, the Commission also used studies and reports prepared by Member States, independent agencies and international financial institutions such as the World Bank and the European Bank for Reconstruction and Development.38 Inevitably there have been some complaints about specific points, but in general the avis have been accepted as accurate and fair and certainly have not glossed over any of the outstanding problems in even the states judged to be most advanced in their transition. Furthermore, whereas for many years the Commission had been scrupulous in avoiding any statement that might have indicated that some states were considered to be closer to accession than others, the avis were remarkably frank about the situation in each of the applicant states and explicitly differentiated between them. The Copenhagen criteria provided the framework for the assessment of each applicant’s eligibility for membership. In relation to the political criteria, the Commission examined not just the formal constitutional framework for democracy but also the relationship between institutions and the role of political parties, non-governmental organizations and the media in order “to assess how democracy actually works in practice”.39 Nowhere was the rule of law seen as entirely secure and there were reservations about respect for minorities in many of the states. However, only one state, Slovakia, was deemed “not to satisfy the political conditions laid down by the Council in Copenhagen”.40 Since the Treaty of Amsterdam considerably strengthens the requirement for Member States to be fully democratic, and indeed for the first time provides for suspension of membership in case of serious violations of democratic principles, it is clear that until the political situation in Slovakia improves, it has no prospect of joining the Union. The Copenhagen economic criteria contain two distinct elements: the existence of a functioning market economy and the capacity to withstand competitive pressure and market forces within the Union. Hungary and Poland were judged to be closest to meeting both criteria and the Czech Republic and Slovenia were seen as being “not too far behind”. Estonia meets the first criterion of having a functioning market economy but not the second, whereas Slovakia could withstand competitive pressure but was seen to have some deficiencies in the operation of its market economy.41 Although encouraging comments were made about the other applicants’ recent economic progress, it is clear that they are seen as being quite a long way behind the others.

EU POLICY TO CEE 13

The final Copenhagen criterion is “the ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union”. The Commission concluded that none of the applicants would be likely to meet the convergence criteria required for participation in EMU at the time of their accession but as some existing Member States probably will not be in the Euro area either, that is not an obstacle to their accession. In relation to the rest of the acquis, the main problem was seen to be the weakness of their administrative and judicial capacity to apply and enforce it satisfactorily. The position in Hungary, Poland and the Czech Republic was seen as significantly more promising than in the other states, but even there considerable further improvements will be required.42 On the basis of these detailed assessments, the Commission concluded that none of the ten CEE applicants fully satisfies all the Copenhagen criteria at the present time. However, it considered that “Hungary, Poland, Estonia, the Czech Republic and Slovenia could be in a position to satisfy the conditions of membership in the medium term if they maintain and strongly sustain their efforts of preparation.”43 It therefore recommended opening accession negotiations with these five states together with Cyprus early in 1998. However, the final decision as to which states would be invited to begin negotiations for membership lay with the Member States and some at least were known to oppose differentiating between the applicants at this stage. There was therefore intense diplomatic lobbying in the months leading up to the Luxembourg Council in December 1997 to try to win support for the “regatta approach” whereby all the applicants would begin the accession negotiations at the same time even if some would inevitably pass the finishing line first. The Luxembourg European Council The compromise formula was ingenious but will almost certainly lead to some confusion in the future: the Council agreed “to launch an accession process comprising the ten Central and East European applicant States and Cyprus”,44 while convening “bilateral intergovernmental conferences in the spring of 1998 to begin negotiations with Cyprus, Hungary, Poland, Estonia, the Czech Republic and Slovenia on the conditions for their entry into the Union”.45 Therefore, the Commission’s recommendation to differentiate between the applicants was accepted but at the same time, the Council emphasized that all ten applicants “are destined to join the European Union on the basis of the same criteria and they are participating in the accession process on an equal footing”.46 It was thereby hoped to avoid the damaging labelling of the applicants as “ins” and “outs”, and instead to emphasize that the latter are in reality “pre-ins”. The core of the “accession process” is to be a new legal instrument governing relations between the EU and each applicant country, to be known as an “Accession Partnership”.47 It will bring together in a single framework all the various forms of EU financial assistance available to assist the applicant states to

14 JACKIE GOWER

adopt the acquis. It is expected therefore that it will improve the coherence and effectiveness of the EU’S pre-accession strategy and the overall amount of aid is also to be substantially increased. For its part, the applicant state will be expected to make “precise commitments…relating in particular to democracy, macroeconomic stabilization, nuclear safety and a national programme for adopting the community acquis within a precise timetable”.48 The Commission envisages developing a very close bilateral relationship with each of the applicant states with the objective of assisting it to meet the accession criteria. However, it remains to be seen whether the CEEC governments will be willing to accept the level of tutelage that the Commission seems to believe they need.49 The other major proposal, aimed particularly at maintaining the morale of the “pre-ins”, is the establishment of a standing European Conference to provide a forum for the EU Member States and all the applicant states, including Turkey, to discuss issues of common concern. It is intended to replace the much vaunted “structured relationship” of the earlier pre-accession strategy on the grounds that the large number of bilateral meetings expected to take place within the framework of the new Accession Partnerships are likely to prove more useful. It is envisaged that the conference will meet annually at the level of Heads of State or Government and the President of the Commission and at other times at ministerial level. The main agenda items are to be those coming under the Union’s Common Foreign and Security Policy (CFSP) and justice and home affairs issues, such as the fight against organized crime, terrorism and illegal immigration. However, there does not seem to be much enthusiasm for the conference except in France where the idea originated, and it remains to be seen whether it manages to create a sense of genuine inclusion for the “pre-ins” or “second wavers”. Conclusion: prospects for CEE enlargement By the end of 1997, the EU’S enlargement strategy had been clarified: differentiation between the CEE applicants had been made on the basis of the Commission’s avis and the accession negotiations would be opened at the end of March 1998 with Hungary, Poland, the Czech Republic, Slovenia and Estonia. The applicant states would be expected to take on the full acquis as it exists at the time of their accession and there would be no derogations or opt-outs. Although it was recognized that transitional arrangements may be needed in some areas, such as agriculture and free movement of persons, they were to be “limited in both scope and duration”.50 The negotiations themselves are expected to be both complex and difficult, and the earliest possible date for the first wave enlargement to take place is 2002–2003. However, this is recognized as optimistic as it depends on the ratification of the treaties of accession by the applicant states, all 15 EU Member States and the European Parliament. It is also difficult to predict with complete confidence which states will be among the first to join and which will constitute the second or third waves. The

EU POLICY TO CEE 15

Commission proposes making an annual review of each of the applicant’s current position starting in late 1998,51 and it has been stressed that it would be possible for one of the laggards to “catch up” with the front-runners and perhaps even overtake them in attaining membership. Transition is a volatile process and it is not inconceivable that one or more of the current front-runners will suffer a major economic setback or that at least one of those excluded from the initial accession talks might catch up and be in the first wave. Above all, the decision on who joins when is ultimately a political one for the Council of Ministers and wider concerns such as security and stability might prove decisive, particularly if voiced by a powerful “sponsor” among the existing EU Member States. The significance of which states make the first wave is obviously dependent on the degree of confidence that there will be subsequent opportunities for accession. Although the rhetoric from all quarters is firmly reassuring, there must remain some doubt about the prospects of the EU expanding to nearly 30 members in the foreseeable future, as discussed in more detail in Chapter 5. Enlargement to even an additional five or six states would be the largest single enlargement the EU has ever had to cope with in its history and it is bound to impose considerable strains on its political, financial and administrative systems. There remain, therefore, many outstanding issues and uncertainties about the CEECs’ accession to the EU. The following chapters will examine them in greater detail from both the perspective of the EU and the central and east European applicant states themselves. No one expects enlargement to be either easy or quick, but it is important that the wider political vision of a peaceful, prosperous and stable Europe does not get lost in the inevitable arguments about financial and institutional issues. The European Council in Luxembourg in December 1997 proclaimed that “With the launch of the enlargement process we see the dawn of a new era, finally putting an end to the divisions of the past.”52 The challenge facing all those involved in the negotiations is to ensure that it does not prove to be a false dawn. Notes 1 The European Union only came into being in November 1993 when the Treaty on European Union (Maastricht) came into effect. Where the text clearly refers to the period before this, the designation European Community has been used, but elsewhere the standard convention to use the term EU has been followed. 2 For a good overview of EC relations with the CMEA states, see J.Pinder, The European Community and eastern Europe (London: Pinter, 1991). 3 Commission of the European Communities, 22nd General Report on the activities of the European Communities (Luxembourg: Office for Official Publications of the European Communities, 1989). 4 For example, see Council & Commission of the European Communities, “Agreement between the European Economic Community and Hungary on trade and commercial and economic co-operation”, Official Journal L 327, 30.11.1988.

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5 PHARE stands for “Poland, Hungary: Aid for Reconstruction of the Economy”, but was quickly extended to the other reforming CEECs. 6 U.Sedelmeier & H.Wallace, “Policies towards Central and Eastern Europe”, in Policy-making in the European Union, H.Wallace & W.Wallace (eds), 359 (Oxford: Oxford University Press, 1996). 7 Commission of the European Communities, 24th General Report on the activities of the European Communities, Point 658 (Luxembourg: Office for Official Publications of the European Communities, 1991). 8 Commission of the European Communities, Association Agreements with Poland, Czechoslovakia and Hungary, Background Brief (Brussels, February 1992). 9 The quotation is from the agreement with Poland, but they are all remarkably similar. See Council and Commission, “Europe Agreement establishing an association between the European Communities and their Member States and the Republic of Poland”, Official Journal L 348, 31.12.1993. 10 Ibid. 11 The Europe Agreements are officially designated “mixed agreements” rather than straight trade agreements and therefore have to be ratified by all the Member States as well as the European Parliament. This process can take several years and is a source of considerable frustration to the CEECs, who are understandably anxious to see them put into force as soon as possible. 12 See for example, C.Hamilton & L.J.Winters, “Opening up international trade with Eastern Europe”’, Economic Policy 14, 77–116, 1992 and J.Rollo & A.Smith, “The political economy of Eastern European trade with the European Community: why so sensitive?”, Economic Policy 16, 139–81, 1993. 13 C.Preston, Enlargement and integration in the European Union (London: Routledge, 1997). 14 H.Grabbe & K.Hughes, Eastward enlargement of the European Union, 27 (London: RIIA, 1997). 15 Ibid., 31. 16 Commission of the European Communities, “Europe and the challenge of enlargement”, Bulletin of the European Communities, Supplement 3/92, 9. 17 Council of the European Union, Presidency Conclusions: Copenhagen European Council (Brussels: 1993). 18 Ibid. 19 C.Preston, “Obstacles to EU enlargement: the classical Community method and prospects for a wider Europe”, Journal of Common Market Studies 33, 451–63, 1995. 20 The acquis communautaire refers to all the rights and obligations, actual and potential, arising from the Treaties, EC law and the jurisdiction of the Court of Justice plus declarations, resolutions and international agreements adopted within the Community framework. The Commission, in particular, sees full acceptance of the acquis as the only possible basis for accession. 21 European Commission, “Agenda 2000”, Bulletin of the European Union, Supplements 5–15/97, 1997. 22 Commission of the European Communities, “Europe and the challenge of enlargement”, op. cit., 10. 23 B.Ardy & J.Gower, “Relations between Russia and the EU”, Post-Soviet Business Forum Briefing 10 (London: Royal Institute of International Affairs, 1996).

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24 Commission of the European Communities, “The Europe Agreements and beyond: a strategy to prepare the countries of Central and Eastern Europe for accession”, COM(94) 320 final and “Follow up to Commission Communication”, COM(94) 361 final, 1994. 25 COM(94) 320 final, 1. 26 Commission of the European Communities, “White paper: preparation of the Associated Countries of Central and Eastern Europe for integration into the internal market of the Union”, COM(95) 163 final. 27 M.Maresceau (ed.), Enlarging the European Union: Relations between the EU and Central and Eastern Europe, 10 (Harlow, England: Longman, 1997). 28 Council of the European Union, Presidency Conclusions: Luxembourg European Council (Brussels: 1997). 29 The Czech Republic seemed determined not to appear over-eager, and waited until January 1996 to lodge its application. The tenth application was Slovenia’s in June 1996. 30 European Commission, General report on the activities of the EU 1995, Point 689 (Luxembourg: Office for Official Publications of the European Communities, 1996). 31 Apart from the ten Europe Agreement states, applications from Cyprus, Malta, Turkey and Switzerland were on the table, although the Swiss application was not being actively considered since the rejection of the European Economic Area Agreement in the Swiss referendum in December 1992. 32 European Commission, Commission opinion: reinforcing political union and preparing for enlargement (Luxembourg: Office for Official Publications of the European Communities, 1996). 33 Foreign and Commonwealth Office, A partnership of nations: the British position at the 1996 IGC (London: HMSO, 1996). 34 Council of the European Union, Presidency Conclusions: Amsterdam European Council (Brussels: 1997). 35 European Commission, “Agenda 2000. For a stronger and wider Union”, Bulletin of the European Union, Supplement 5/97, 13, 1997. 36 Ibid. 37 European Commission, “Agenda 2000”, Supplements 5–15/97, op. cit. 38 Ibid., 39. 39 Ibid., 40. 40 Ibid., 42. See Chapter 13 for a fuller discussion of Slovakia’s domestic political problems. 41 Ibid., 44. 42 Ibid., 47. 43 Ibid., 57. 44 Council of the European Union, Presidency Conclusions: Luxembourg European Council, Point 10 (Brussels: 1997). 45 Ibid., Point 27. 46 Ibid., Point 10. 47 Ibid., Point 14. 48 European Commission, “Agenda 2000”, Supplement 5/97, op. cit., 53. 49 European Voice, 15–21 January 1998, 10. 50 European Commission, “Agenda 2000”, op. cit., 52.

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51 Council of the European Union, Presidency Conclusions: Luxembourg, op. cit., Point 29. 52 Ibid., Introduction.

Part I The New Security Agenda in Europe

2 Security and democracy: the EU and central and eastern Europe James Gow

The EU has played a role and will continue to play a role in the development of security and democracy in central and eastern Europe.1 It will do so because it has responsibilities and interests in the region. This is the kind of role that only a body such as the EU can play. It is a role which complements the more military oriented work of NATO. Whereas NATO is singularly placed to address essentially military matters, it is only the EU which has the resources to play a significant part through its Common Foreign and Security Policy (CFSP) in developing the values, practices and institutions of a security policy culture to underpin a more stable security environment.2 To outline how and why this is the case, the following analysis will look at EU policy towards the former Yugoslavia, where a number of issues have been sharply focused, before analyzing the EU’S role vis-à-vis central and eastern Europe as a whole. Although there may be a number of different regions in central and eastern Europe, the problems of shaking off the legacy of communism are shared—and the imperatives for the EU to act are the same. By looking backwards at the role it played over the break-up of the Socialist Federative Republic of Yugoslavia (SFRY) and then forwards to the role it will have to take in the future in that region, the analysis will show that throughout central and eastern Europe, the EU must use its resources to foster security and democracy. This is a role that will not be diminished in the medium term by either prospective NATO or EU enlargement: it will continue to be of importance regarding both those countries first embraced by the processes of enlargement and those not initially offered invitations to open accession talks. The EU and the former Yugoslavia There is much to be understood about the EU’S role regarding central and eastern Europe through examination of its specific role over the dissolution of Yugoslavia and the accompanying war.3 In the first instance, the Yugoslav war exemplifies the way in which states join collective bodies for benefits and because of the value to be gained from membership, as well as the corollary that membership creates interdependent interests. At the beginning of the crisis over

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Yugoslavia, many in the UK, for example, asked what the problems there had to do with the UK. This was a question that could not be answered in a sound-bite. On the superficial and immediate evidence, the obvious answer would seem to have been nothing at all. However, a closer and more sophisticated examination would observe that the UK’S security policy is predicated on membership of various bodies, notably the EU, NATO and the UN. Although Yugoslavia was not next door to the UK, Yugoslavia was next door to Italy, which was an EU member, as well as to Austria, a prospective EU member—and not far from Germany, an EU member which particularly felt the impact. The UK could not be a member of the various bodies concerned and take the benefits sought from membership without seeing that, if others faced problems, these would require the UK to play a responsible role. That which was of interest to some members was, in some senses, inevitably going to be of a degree of interest to the others. It is not possible, however, to seek the value and benefit of being a member of an international organization, especially in the security sphere, without being prepared to play a role and to act—however reluctant we may be, initially, to become involved. It is necessary for each member to judge that it is of value and benefit to be a member of a particular body and to play a role. Assuming this to be the case, then it is in each country’s interest to play its role when others face difficulties, otherwise the relevant bodies will become discredited and lose their strength, purpose and value for the members. The wellbeing of a collective body of which a state is a member is an interest of each member state. When the problem of one or more members is addressed in that collective forum, then it becomes an interest of all members to see the problem dealt with effectively. If this does not happen, then the value of the organization and the benefit derived from it by a member will be diminished, if not critically damaged. This is what happened regarding the EU and the former Yugoslavia, as well as the subsequent broader international involvement that followed. There were four reasons why the EU intervened. The first of these was a sense of responsibility, stemming from the EU’S prior policy. Before the breakup, in the absence of a good idea of what to do, the EU had tried to encourage the maintenance of the SFRY as it was. Although there were people looking at the prospect of break-up and how to manage it if it came, the conclusion was generally drawn that the “first prize” was keeping the federation together because anything else would be too hard to face.4 In the end, as the federation broke apart, there was a sense that the previous policy with its emphasis on the maintenance of a single Yugoslavia had been too rigid and, in fact, had made matters worse. EU intervention, therefore, was an attempt to remedy a problem to which it had contributed. The second reason was the nascent concept of CFSP. This was only in prospect at the time of Yugoslavia’s demise in 1991, but all Member States, through advanced political co-operation, were working towards a Union in which there would be common action in the fields of foreign and security policy. It had

22 JAMES GOW

become increasingly important for the EU Member States to work to- gether and to have a common policy. For those who believed most strongly in the most closely linked versions of the European project, Yugoslavia seemed like a very good opportunity to demonstrate the capacities of CFSP. In retrospect, this proved to have been hubris, as is generally agreed. CFSP failed to meet the test in terms of crisis management. This had grave consequences for the Union (as discussed below). The third mainspring of EU intervention, of a lesser nature, was the fact that the SFRY bordered two EU Member States, Greece and Italy. Indeed, the first major fighting occurred on Italy’s border with Slovenia, at that time part of the SFRY. More generally, Yugoslavia was a bridge between those states. Yugoslavia, therefore, played a role in trade and communications between EU Member States. In addition, there was the question of the economic relationship between Yugoslavia itself and the EU countries. While Yugoslavia benefited from an $800000 million assistance scheme from the EU, the EU also accounted for 40 per cent of exports from the federation. The relationship between Yugoslavia and the EU was strong. Finally, again in the sphere of ideas, there was a concern for the impact questions of nationalism and self-determination might have. Within an EU working towards common policy and deeper integration, it was impossible to avoid the sense that, German unification notwithstanding, ideas of selfdetermination were against the grain of European development. If selfdetermination was seen to rise on the agenda and if nationalism became a stronger force, this would have implications for dynamics within the EU. There was a strong sense, epitomized by German Foreign Minister Hans Dietrich Genscher, that events in Yugoslavia were spoiling the European idea—which was dangerous for the future of Europe. Having identified the mixture of reasons behind the EU’S stepping into the Yugoslav fray, it is appropriate to look at the three ways in which the EU played a role. These were the diplomatic role of the troika, the deployment of the European Community Monitoring Mission (ECMM) and, finally, a substantial role in the organization and support of two continuing conferences dealing with the Yugoslav divorce and war. The troika, first of all, had already developed as a useful device for the EU. It comprised the present, preceding and succeeding presidents of the European Council (the political executive of the EU, of which the presidency rotates each six months). At the time the Yugoslav crisis broke into a major issue, the troika comprised Luxembourg, Italy and the Netherlands. (There is room to speculate that if one of the EU’S more powerful members had been part of the troika, the course of EU action might have been different.) The claim by Luxembourg Foreign Minister Jacques Poos that this was the “hour of Europe” certainly echoes ironically.5 There were three distinct elements to the troika’s diplomatic role. The first of these was that it did something at all. Another element was to introduce external

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coercion and, linked to this, to recognize the independent international personality of those states emerging from the SFRY which sought this. Regarding coercion, already, under the Dutch presidency in the second half of 1991, there was a clear pattern of coercion emerging, albeit in the sphere of economic and diplomatic threats. By November, senior Serbian figures were accusing Netherlands Foreign Minister Hans van den Broek of bullying Belgrade and asserting that if this approach continued, co-operation in the talks would be ended.6 EU coercion was the first step away from merely being a bystander offering assistance and mediation, if wanted, towards being a player trying to achieve something.7 By taking this step, the EU placed a clear stake in the outcome of the Yugoslav crisis and conflict where previously there had been a more vague sense of responsibility and interest. Having set out to achieve something, there was a need to make progress and, above all, to avoid failure. The final element to the EU’S diplomatic countenance was the recognition of the independent international personality of Slovenia and Croatia in January 1992, as well as the later acts of recognition regarding Bosnia and Hercegovina, and Macedonia. Recognition was, in a sense, a measure of coercion. But, it was qualitatively different because it changed the status of the conflict and, whether the EU countries liked it or not, it further increased their responsibility and stake in what would happen afterwards. Because the EU Member States had changed the status of the conflict, particularly regarding the onset of armed hostilities in Bosnia and the many allegations that the EU role prompted the war there,8 it could not walk away from the situation. The second role played by the EU—the deployment of the ECMMS—was technically a role played on behalf of the Organisation for Security and Cooperation in Europe (OSCE). In reality, it was an EU initiative, with the OSCE giving its blessing to EU plans in the absence of any alternative scheme. The EU, therefore, organized the deployment of monitors from its Member States, as well as four other OSCE states which co-operated in this. The role of the ECMMS was crucial as the conflict evolved and it became possible to deploy monitors, first in Slovenia, then in Croatia and, crucially, Bosnia. The monitors were primarily former military personnel, often with intelligence experience, who could observe on the ground and report back what was really happening. This permitted a far clearer picture to emerge, as opposed to earlier external and more impressionistic views. The ECMM was the most clearly successful part of the EU’S involvement, continuing to play a useful role in some areas in the years after armed hostilities formally concluded. The EU’S third, major role was contributing to the organization of the two international conferences on the Yugoslav war and crisis. The first of these was entirely the responsibility of the EU, beginning work in The Hague in September 1991. Although it remained in existence afterwards, the work of the EC Peace Conference on Yugoslavia effectively ended with the decision of the European Council to offer recognition to Slovenia and Croatia.

24 JAMES GOW

The second conference, which formally succeeded the first, was organized jointly with the United Nations and began work in London in August 1992. Known as the International Conference on Former Yugoslavia (ICFY), this enterprise gave rise to a number of peace plans—Vance—Owen, the socalled Owen—Stoltenberg plan9 and finally the Contact Group plan. Even after the us-dominated Dayton peace process, which brought the war in Bosnia to a close at the end of 1995 (at which time the joint conference still continued to exist technically), elements of the EU’S responsibility continued through the work of the Office of the High Representative—for example, the tasks of the minorities working group and succession issues. The ICFY was significant not only with regard to the EU and the former Yugoslavia, but also in terms of the UN. This had two dimensions. The first was that EU diplomatic initiatives had resonance for the UN and led to the UN’S involvement as a complement to the EU. Secondly, with regard to the future development of the United Nations, ICFY began to show the way ahead for global-regional co-operation and interaction in dealing with matters of international peace and security. This was a major step in terms of the evolution of international relations. The EU continues to have responsibilities and interests regarding the former Yugoslavia. The responsibilities stem from its role prior to Yugoslavia’s collapse, its role in beginning the process of coercion and thereby placing a clear stake in the outcome, the consequences of the decision on recognition of those states seeking independence and, finally, the “butterfly effect” of the decision taken by the European Council at the end of June 1991 to take a role in and to change the circumstances of the conflict. It is clear that the EU’S role changed the conflict, first in terms of perception and analysis of the Yugoslav People’s Army which, despite earlier worries, had concluded in the final period before the conflict that there would be no external intervention. However, the diplomatic intervention of the troika proved that assumption to be false and left the Yugoslav military at first hesitant and confused, and then part of a plan to take territory from Croatia and Bosnia.10 Crucially, the EU intervention changed the circumstances because it was the first part of an incremental increase in the EU and international stake in the outcome of the crisis. At the outset, there was an interest in stability around the borders of the EU, in preventing outflows of refugees and in maintaining trade patterns. Interest and involvement might have remained at this level and, certainly, could have remained limited, despite the occurrence of armed hostilities on the border between Slovenia and Italy, if that further step had not been taken (although it may be debatable whether or not that step could really have been avoided). Instead, involvement went from the initial small-scale EC offer of assistance to the point where, in 1998, NATO, with non-member countries, militarily, and the EU, with non-member countries, in the civilian sphere, are very heavily involved in the process of peace implementation.

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Regarding interests, first, there is a primary need to recognize that responsibilities and the maintenance of values count in this respect. If meaning is not seen to be given to that which a country, or international organization, represents, or if there is a failure to deliver on commitments, then that will lead to internal weakening. It will undermine those things for which political com- munities stand and the values inherent in them. Crucially, it will call into question the practical benefits of joining an international body, such as the EU or NATO. Secondly, the devastating EU failure, in terms of CFSP, has meant that there is a need to continue activity. CFSP regarding crisis management was removed from the agenda for the foreseeable future. The deepening and enhancing of CFSP was pushed well into the future. It is in the interest of the EU and its Member States to restore as quickly as possible, probably through low level activity, some sense of the purpose and value of a common policy. What this means, in effect, is the EU’S trying to repair the damage done to CFSP by the Yugoslav experience and to make amends for the mistakes that were made. Ultimately, the Member States of the EU know that they will need and want to get CFSP right one day. Finally, there is an interest that has emerged because of the growing stake identified above. In particular, because of the military role being played by NATO and the link with the United States, the EU countries will find it increasingly important to show that they too are playing a role in Bosnia and over the former Yugoslavia as a whole.11 This is not only because of the immediate situation, but precisely because of the relationship with the United States. The EU states do not want to create a situation in which the United States says that despite its resources, the EU is not pulling its weight. In the past, whenever this American refrain was heard, the Europeans, sometimes uncomfortably, could demonstrate commitment. Involvement in the eastern Adriatic showed that it would become increasingly important in the future for the EU countries not to be seen as relying on the us. This is of relevance for thinking on the evolution of the EU’S role in the security sphere, as will be seen below. The EU and central and eastern Europe It is inevitable that a look at the role of the EU regarding the former communist countries of central and eastern Europe should be through the lenses of the war in the former Yugoslav lands. But, it is necessary also to look beyond that to the other parts of central and eastern Europe. In all cases, there are two levels on which to understand the EU’S role—in terms of its responsibilities and in terms of its interests (with the former, in effect, becoming one of the latter). While the EU has specific additional burdens arising from the course of its engagement in the former Yugoslavia, it has broad responsibilities throughout central and eastern Europe that stem from conscience and an ethical dimension, although these, in fact, represent a logic derived from the value of the EU to its

26 JAMES GOW

Member States, rather than from a priori normative reasoning. The countries of western Europe clearly benefited from the cold war divide in a way in which their counterparts from central and eastern Europe did not. That benefit came in terms of economic and political development, as well as in terms of processes of integration. It is a benefit that could not be limited to the existing members of the EU if the meaning attributed to the Union was to be retained. The cold war legacy in central and eastern Europe was not only that those countries were poorer and did not experience democracy. Crucially, it was that the form of political system there left societies without the resources, capacities and institutions for autonomous decision-making and for the understanding of the great range of problems.12 The sense of appropriate ways to deal with those problems was absent. The EU, therefore, has a continuing responsibility towards the countries of central and eastern Europe. That responsibility is to ensure that societies which were victims of the cold war are not sacrificed in post-cold war complacency. The “western way” and ideas of European integration were important parts of the cold war struggle: to deny them to aspirant countries would have been tantamount to admitting deception—an admission that would have an impact on the western countries themselves. This was one way in which the EU had a function regarding security. In this sense, the responsibility towards the central and eastern European countries is, in effect, a multifaceted interest. In the first instance, to undermine the value system on which western polities and the EU are based would be to precipitate inner corrosion: if the EU and its Member States were not true to those things for which they stood, then they would cease to have the same value for their Member States. A failure to reach out to central and eastern Europe would result in the EU’S losing its meaning. Once its meaning is lost, the EU will cease to provide the desired benefits for the existing Member States. On a second level, one of the very reasons for the EU to have emerged was the benefit to be accrued in security and other areas through co-operation and integration. The logic of the process involves extending the zone of co-operation and integration as widely as possible, thereby maximizing the degree to which stability and security are present. At the same time, the types of problem that generate disruption and insecurity are minimized, leaving scope for trade and social prosperity. On a third level, there is a crucial EU interest in using its resources to go beyond an understanding of democracy based on holding elections, and to encourage the development of democratic institutions and processes in the former communist countries that help to diffuse power, make decision-making accountable, and generate political equilibrium within countries. These arrangements are more likely to result in responsible decision-making both inside and outside an enlarged Union, and these decisions will be less likely to be disruptive in terms of European security. This is to say that the EU not only has an interest in the preservation and the continuing development of the EU itself,

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but also in fostering stability around the EU’S borders, in what might be termed its “near abroad”. If there is instability on the borders, then, one way or another, this will be disruptive within the borders of the EU and its Member States—as is shown by examples such as the influx of Kurdish refugees from Turkey placing question marks against the passport-free integration of Schengen Europe at one end of the scale, and, at the other, the Yugoslav war. Within central and eastern Europe, two countries in southeastern Europe might be seen as afterthoughts, or as left behind—Romania and Bulgaria.13 There has been a great focus in the West on those countries which were genuinely thought of as candidates for NATO or EU enlargement: Poland, the Czech Republic, Hungary, Slovenia, and for some time Slovakia. Similarly, there has been attention to the difficult cases of the three Baltic states, with Estonia emerging in economic terms as a candidate for the EU, but still suffering deficits in terms of security and democracy, as with Latvia and Lithuania.14 Because of its peculiar situation, the former Yugoslav Republic of Macedonia received attention. Finally, because of its links to the Macedonian and other former Yugoslav questions, Albania prompted security interest—even before the internal crisis prompted a number of European countries, led by Italy, to deploy an Italian-led multinational armed force to stabilize the country.15 However, despite the attention generally paid to central and eastern Europe, there was virtually no attention to Bulgaria and very little to Romania, with the exception of France (which, based on a notion of “Latin” solidarity, used Romania as an issue with which to place pressure on its partners and allies over NATO enlargement at a late stage). These two countries were left behind, in part because they had not been central to the cold war strategic equation and, therefore, did not warrant the same degree of interest in the West. This was also because they were always further behind in terms of political and, especially, economic development. With the prospect of NATO and EU enlargement, it became imperative, in terms of stabilization around the edges of the EU and the Union’s meaning, through PHARE and other assistance programmes to remain engaged in this area. This is particularly relevant in terms of the meaning of the EU. Bulgaria is a bankrupt country. It is in many ways in advanced political decay. Political and intellectual life is characterized not by groups aggregating interests, but by a culture in which the solution to every problem appears to be division and the formation of a new political movement, or a new research foundation (in both cases, often resulting in the personal aggregation of wealth by those involved). The only question that focuses consensus in Bulgaria is Europe. It is hard to understand why this is the case, given that it takes great imagination to see the prospect of Bulgaria’s joining the EU in any foreseeable future. Yet, something is required that will continue to foster the idea that Europe has meaning for Bulgaria. If this is not done, then the one part of southeastern Europe which has avoided trouble might become one more broken part of the region. It should be noted that this need not necessarily involve eventual

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accession, although that option was put in place by the Copenhagen criteria of 1993. Although it could happen, it should not be anticipated that all the countries of central and eastern Europe will eventually accede to the EU. A role for the EU For the EU to meet its responsibilities and look after its security interests in central and eastern Europe as a whole, it must play certain roles. On one level, these would be extensions of roles already played. During the Yugoslav war and since its end, there has been an enormous contribution in terms of finance and resources. (This contribution was roughly on a par with the costs of the military contribution organized by NATO.) Resources were not only made available for Bosnia, but throughout the region through assistance programmes. This is vital. While Bosnia is central to understanding any of the problems and activities likely to be seen in the region, it is not alone. There needs to be a focus not only on Bosnia, but on the importance of playing a wider role. Thus, the EU’S responsibility was not just to look at the former Yugoslav and, later, Albanian crises, but to make sure that, in southeastern Europe, Romania and Bulgaria are part of a package. A failure to do this could result in good work done in one place being likely to be undone by problems in another. It is something which has been and can be done primarily in the economic spheres, but it is also something which could be done in the social and political spheres. The crucial role that others, notably the us, are less well placed and less able to play is in the fostering of broad, dynamic democratic security communities; that is, generating those elements in society which, in a democracy, essentially diffuse power and understanding of issues, as well as creating understanding of issues. As a result of this questions can be posed to address the exercise of power. The elements in this involve getting the rules right (political, legal and social) and building the capacity both of individuals and of institutions in governmental and political arenas, as well as outside them. These are the autonomous elements in society which, if they take root, will together serve to stabilize the region. To foster democracy would be, ultimately, to enhance security.16 The likely opposite of this is that personalized power will be left in place. Often this will be in the hands of former communist technocrats who know how to wield power. Failing this, it could be in the personalized control of undesirable extreme nationalists. In either case, these power holders can be a destabilizing influence, possibly generating conflict. This phenomenon could be seen, for example, in developments in the Federal Republic of Yugoslavia in 1997 and 1998, with the apparent electoral choice in Serbia between Milan Milutinović, the candidate of arch communist manipulator Slobodan Milošević, and the ultranationalist Vojislav Šešelj. The fostering of broad, dynamic democratic security policy communities continues to be essential. While the identification of potential candidates for both

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NATO and EU enlargement gave greater definition than had previously been the case to the European security map, it did not remove the critical importance of enhanced work regarding the democratic management of defence and foreign policy. This was equally the case regarding those countries invited to open accession talks with one or both of the bodies and those not initially given invitations. Although invitations to begin negotiations on accession to NATO or the EU might seem to suggest that questions of security and democracy have been answered à propos of these countries, this is not the case. In some ways it increases the salience of them. The transition from communism remains some way from completion, both in those more comprehensively transformed countries given invitations and in those not receiving them at the beginning of the inclusion process. Vis-à-vis those countries included in either the EU or NATO, there will be an emphasis on minimizing problems within those bodies through responsible decision-making and democratic management of security policy so as not to disrupt relations within the Union or the Alliance. A propos of those initially left out completely, including Bosnia, Croatia and the Federal Republic of Yugoslavia (Serbia and Montenegro), there will be an equal need to encourage the same qualities so as to avoid crises and tension of the kind witnessed regarding the Yugoslav war. At the heart of this is the requirement to establish the institutional and political framework for the democratic management of defence and foreign policy.17 Above all else, this means encouraging the evolution of stable civil-military relations and the strengthening of the various elements, especially autonomous institutions, engaged in policy discussion and formation. The presence of such communities should not only make it possible for the countries in question better to act in their own interest, but also better able to manage their relationships with each other and with the EU and NATO—whether as members, or not. It is in the interest of the EU to foster such communities as expeditiously and coherently as possible.18 This can only be to the advantage of the existing Member States, as well as to the EU as a body and other relevant international organizations, and, ultimately, the central and east European countries themselves. Promoting and developing stronger policy-making communities in societies where independent activity was anathema and, especially regarding security questions, wholly absent, is a long process. But, stronger security policy communities—and, thereby, strengthened democracy—will enhance security: and, greater security will increase the opportunities for deepening democracy. Security and democracy, therefore, can be seen as mutually reinforcing. A further aspect of strengthening stable, democratic security policy communities could be to foster forms of integration and co-operation that do not exclusively focus on the EU. Indeed, it could facilitate one of the things that is increasingly of interest for Brussels: to see countries around its periphery adopting the essence of the EU formula of integration and co-operation, without necessarily looking to the EU itself for membership. This is the case in terms of

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southeastern Europe’s looking the other way to a zone of Black Sea cooperation. This was an idea proposed by Turkey in 1991 to involve the former Soviet countries around the Black Sea, as well as Bulgaria and Romania, and possibly others. One perspective for Brussels could be to foster democracy and co-operation in and among these countries, not as preparation for membership of the EU, but as a group that will emulate the EU—to create their own community in the image of the EU. This would avoid the kind of potential overstretch that might eventually break the often fragile cohesion of the EU. While the EU, through its enlarged sphere of interest and involvement as well as its promotion of democracy and cooperation, could be seen as a quasi-imperial body in danger of overstretch, there are important distinctions to be drawn. For example, while the EU espouses certain values and seeks to export them, non-EU countries are generally eager to join the EU, rather than being forcibly included. Moreover, there is a crucial difference between this and the type of imperial overstretch historically experienced by colonial powers.19 All of this also has implications for the EU’S position regarding the us. The evolution of transatlantic relations, the evolution of NATO and the future of a European Security and Defence Identity are all tied together in the need for stronger security policy communities. Enlargement will move the centre of gravity in the EU and NATO to central Europe.20 This is a process that could be inadvertently reinforced by the move of the Federal Government in Germany from Bonn to Berlin in 1999. Thus the weight of security questions, leaving aside southern European concerns regarding north Africa, will be in central Europe. In that situation, it will be important that both those on the “inside” and those on the “outside” are capable of making sound decisions in a stable, democratic manner (although sound decision-making in democracies should not be taken for granted). Enlargement will not only shift the balance of security concerns in Europe. It will also alter the balance within NATO between North America and Europe. Crucially, the us, while experiencing some confusion over the matter, has persistently and genuinely sought to encourage greater European responsibility on the military side of security policy. As a consequence, if the Europeans are to retain the advantage of the transatlantic relationship in the longer term, it will be necessary to develop further European capabilities to act. NATO will not be the only option for the deployment of armed forces at some stage in the future, although, if anything is done, in military terms, then NATO will be important. The only way in which anything appropriate can emerge in this context is if the central and eastern European countries newly within the Alliance add to European strength in policy terms and those outside either make a similar contribution through the Euro-Atlantic Partnership Council, or, at a minimum, have democratic policy-making communities that serve to enhance stability and security. In addition, the evolution of greater European defence provision, possibly via the Western European Union as the defence arm of the EU, will be relevant.

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It is incumbent on the EU, therefore, to provide the resources to foster security and democracy. Conclusion Expansion of the sphere of responsibility, if not of membership, of the EU could risk disaster in terms of overstretch. It is likely to be better to take the route of fostering security and democracy. But, there is no guarantee that this route might not finish in either internal fragmentation, or in engagement with issues that might, somehow, otherwise have been avoided. For the EU, expansion of the membership as well as of the EU’S role vis-à-vis a stable environment could have implications for processes of deepening, and most likely retarding it. As the EU’S involvement in handling the Yugoslav war demonstrated, the EU Member States are bound in a web of mutual interests, focused on the need to ensure that the Union continues to offer them value and benefits. To ensure this, successful programmes of action are required—either failure or inaction serve to undermine the Union’s image and credibility. Whereas that which the EU could do regarding the Yugoslav war proved to be limited and based on a premature and hubristic vision of CFSP, the future needs for the evolution of the EU regarding matters of security, including the development of a European Security and Defence Identity, began to be seen. This also indicated the areas in which the EU could play a role in a division of labour with other bodies, such as NATO. Above all else, that which the EU could offer in terms of security policy was support for the development of democratic policy communities. The EU is well placed to play a role in fostering these communities because of the resources it has and because of its very nature. Without such communities around Europe’s periphery, peace and stability could unravel, above all, in the countries of southeastern Europe and the Baltics. Should this happen, it would, inevitably, lead to problems affecting the EU and its Member States internally. A propos of those states invited to join either the EU or NATO, these questions are equally important. The absence of a stable and responsible security policy community could, hypothetically, cause serious disruption to the Alliance or to the Union. Democratic policy-making communities, particularly when it comes to security policy, are essential, therefore, to the evolution of central and eastern Europe and central to the role of the EU. Notes 1 The term EU is used throughout for convenience to refer both to the European Union and the European Community, although properly, the latter should be used when referring to the period before 1 November 1993. 2 Z.Brzezinski, The grand chessboard: American primacy and its geostrategic imperatives (New York: Basic Books, 1997) offers an American-focused analysis

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3

4 5 6 7 8

9

10 11 12 13

14

15 16 17 18

which echoes the notion that values constitute interests regarding the deepening of democracy in central and eastern Europe, especially, and in the world in general. The present analysis draws on J.Gow, Triumph of the lack of will: international diplomacy and the Yugoslav war (London: Hurst, 1997), where an expanded examination appears. John Major, UK prime minister, quoted in L.Silber & A.Little, The death of Yugoslavia, 175 (Penguin: London, 1995). Quoted in Catherine Guicherd, “The Hour of Europe: lessons from the Yugoslav conflict”, Fletcher Forum of World Affairs 17(2), 1993. Branko Kostić, vice-president of the Serbian-dominated rump Yugoslavia, reported by Tanjug, 3 September 1991. See J.D.D.Smith, Stopping wars: defining the obstacles to cease-fires, Chapter 8 (Boulder, Colorado: Westview, 1995). Among those making this type of accusation was Lord Carrington, who had been the chair of the EU peace conference on Yugoslavia: interview with Carrington, in A soldier’s peace—with Maj. Gen. Lewis MacKenzie (retd.), Programme 1 (Screenlife, 1994). Although frequently referred to as the “Owen-Stoltenberg plan”, that initiative was, in fact, not devised by those international representatives, but one jointly proposed to ICFY by the Croatian and Serbian presidents. See Gow (1997), op. cit., 33. See Ivo H.Daalder, “Bosnia after SFOR: options for continued us engagement”, Survival 39(4), 1997–98, 33. See, for example, G.Schöpflin, Politics in central and eastern Europe (Oxford: Blackwell, 1995). I avoid the term “Balkans” as it is extremely negative, connoting trouble, chaos and confusion—all the kinds of thing that politicians and diplomats would rather not address. Bulgaria, in particular, perhaps, has suffered from the trend, with its remarkably stable and peaceful transition first unnoticed, then left to wither, largely because the country was in the Balkans and lost behind the miasma of the Yugoslav war. It is therefore preferable to use more neutral terms, such as southeastern Europe, or, in certain cases, eastern Adriatic. The latter term is used to cover the countries that continue to be associated with the challenges posed by the Yugoslav war and its outcome: Croatia, Bosnia and Hercegovina, the Federal Republic of Yugoslavia (Serbia and Montenegro), the former Yugoslav Republic of Macedonia, and Albania (the last included because of its inevitable link to Serbia and Macedonia because of the kin-populations there). See Chapter 15, as well as J.Gow & C.Birch, Security and democracy: civilmilitary relations in central and eastern Europe, London Defence Studies No. 40, 31–2 (London: Brassey’s, 1997). Gabriel Partos, “Albania”, Le Monde atlantique (65), December 1997. See Gow & Birch (1997), op. cit. Ibid. This analysis may well be applicable to north Africa, that other part of the EU’S periphery, as well. There could well be a need for the EU to play a role in fostering democracy and security there, not because it is a priori what might once have been termed “the white man’s burden”, but because stability around the periphery enhances the EU. It is a question of self-preservation, or looking after oneself. If

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attention is not paid to difficulties in neighbouring areas, then serious problems could arise within. There is a logic that suggests that the greater the need to have a stable periphery, the further it would be necessary to reach out. In doing so, the EU and its Member States would be attempting to preserve their own position. 19 There are parallels here with the us role in the world, with people talking about the us as a hegemon, but America having no interest in territorial expansion and an increase in its responsibilities; as far as the us is engaged around the world, this is up to the point where it needs to do things to hold on to values at home, rather than from a desire to venture for conquest and to be all-powerful. See Brzezinski (1997), op. cit., 28–9. 20 For an analysis of how this has developed through a Polish-German community of interests, especially the way in which that community has pulled French concerns towards the east, see R. Freudenstein, “Poland, Germany and the EU”, International Affairs 74(1), 1998, esp. 53–4.

3 Enlargement and the Common Foreign and Security Policy: transforming the EU’S external identity? Helene Sjursen

Little attention has been paid to the relationship between enlargement and the Common Foreign and Security Policy (CFSP) of the European Union. Discussions about the widening of the EU refer largely to its implications for the Community pillar (the “first pillar”). However, eastern enlargement also poses important challenges to the CFSP, or the “second pillar”. Not only does it raise questions about the CFSP’S ability to function effectively, but also, by redefining the EU’S borders, it promises to introduce new issues and new tasks into the scope of the CFSP. This chapter starts out by highlighting different approaches to understanding the CFSP. Secondly, it looks at enlargement as a specific form of foreign policy. Thirdly, it examines the various issues raised by the prospect of enlargement to central and eastern Europe. The final section discusses the implications of enlargement for longer term trends in the development of the CFSP. Understanding the Common Foreign and Security Policy It has often been pointed out that the CFSP, as well as its predecessor European Political Co-operation (EPC), is poorly served by theory.1 Students of international relations have not yet succeeded in developing concepts that allow us fully to understand foreign policy co-operation within the EU and the EU’S role in the international system. Much of the literature on this dimension of European integration identifies itself as “pre-theoretical”,2 and focuses on the intergovernmental nature of its institutions: the GFSP is seen, at best, as little more than the sum of the foreign policies of the Member States. In addition, given its limited capabilities in security and defence (if they exist at all), the CFSP is considered to be much less influential in foreign affairs than individual Member States. The failure of the CFSP to resolve the crisis in Yugoslavia gave renewed ammunition to its critics. The wave of optimism about the European Community’s ability to forge a new and more influential place for itself in the inter- national arena at the end of the cold war died down. Although traditional security and defence capabilities were seen to matter less, the EU’S dependence on the United States in situations of crisis did not seem to have declined. Furthermore, by 1995 NATO had started to develop the kind of collective

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security mechanisms that many had expected to see emerge within the EU framework. The more ambitious CFSP of the 1992 Treaty of Maastricht, which replaced the old European Political Co-operation, had increased expectations of a strengthened performance in foreign policy.3 What had previously been a relatively modest attempt at co-ordinating the foreign policies of EC states within EPC was supposed to develop into a common foreign policy for the new European Union in the context of the end of the cold war. Nonetheless, the EU continued to be divided on foreign policy issues, and the development of a common, cohesive European foreign policy seemed to remain remote. Jacques Poos’ exclamation on the eve of the Yugoslav war that the “hour of Europe” had arrived seemed mostly to indicate a considerable lack of realism in the EU’S own foreign policy ambitions.4 If we draw exclusively on realist assumptions about international relations, the difficulties of the CFSP are unsurprising: in an anarchical world “national interests” will inevitably clash and co-operation will remain the exception to the rule. However, there is also an increasing body of literature that points to the influence exerted by the EU, if not in the international system, then at least in Europe. Despite the EU’S obvious difficulties in handling international crises, it is often seen as a key force in the longer term reshaping of international politics in Europe after the end of bipolarity. The vast number of applicants wishing to join the EU is a further sign that external actors perceive the EU as an influential actor in the region. In other words, the empirical “reality” does not seem to fit entirely with theories available in international relations literature. There is a risk that, in assessing the CFSP, the pendulum has swung too far the other way after the enthusiasm at the end of the cold war. Political co-operation has actually proved extremely durable. According to Allen & Smith, the difficulty in studying western Europe’s international role is that “the notion of a ‘foreign policy’ carries with it a conceptual framework which is inseparable from the state-centric view of world politics”.5 We tend to get stuck in this state-centric view when analyzing European foreign policy, and therefore find it difficult to account for the growing significance of the EU’S international role. They suggest that by using the concept of international “presence”, it is possible to study the impact of the EU in different policy areas of the international system, and to show that the EU “has considerable structure, salience and legitimacy in the process of international politics”.6 Building on the notion of the EU’S “presence” in the international system, Hill has suggested that the EU is best seen as a system of external relations in which “the Europeans represent a sub-system of the international system as a whole…a system which generates international relations— collectively, individually, economically, politically—rather than a clear-cut ‘European foreign policy’ as such”.7 This European sub-system has three dimensions, to which we should pay attention: the national foreign policies of the Member States, the CFSP and the “external relations” of the first, Community, pillar.

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Such interpretations of the EU’S international role are often based on “nonrationalistic” assumptions about politics and international relations.8 Rather than defining states as “billiard-ball” actors whose interests are defined exogenously, and regarding the decision-making process within the EU as one of bargaining between conflicting interests, the possibility that states’ interests are shaped through interaction is considered. This “non-rationalistic” literature includes factors such as ideas, values and identities, which are often set aside in the rationalist analytical tradition. It is suggested that states can gradually become socialized into a shared community of values. Applied to the EU, such approaches indicate that foreign policy making within the CFSP is a dynamic process where interests and objectives emerge as a result of interaction at the domestic, national and European level. Consequently, the clear distinction between the “national” and the “European” might gradually be blurred, even in the area of “high politics”. A process of “Europeanization” of foreign policy, in which shared norms and rules are gradually accumulated, might be closer to describing accurately the CFSP than the image of rational bargaining leading to agreement on a policy of the lowest common denominator.9 Some evidence of a “Europeanization” of foreign policy can be found in the literature on national European foreign policies. Tonra has found that, in the cases of Ireland, Denmark and Holland, “political cooperation improved the effectiveness, broadened the range and increased the capabilities of foreign policy making”.10 Hill & Wallace refer to an engrenage effect in foreign policy co-operation:11 they point out that the preparation of foreign policy now takes place in the context of European consultation and that, as a result, “Officials and Ministers who sit together on planes and round tables in Brussels and in each others’ capitals begin to judge ‘rationality’ from within a different framework”.12 A classic example would be the so-called “co-ordination reflex” between Political Directors13 so often mentioned even in the early literature on EPC. However, this does not mean that the CFSP is a common foreign policy in the sense prescribed by the Treaty of Maastricht. According to the Treaty, the CFSP shall be “supported actively and unreservedly by its Member States in a spirit of loyalty and mutual solidarity”. Furthermore, the CFSP is supposed to cover “all areas of foreign and security policy”. Yet it would be naïve to pretend other than that national foreign policies remain strong and that reaching a consensus, in particular in situations of crisis that require rapid responses, remains difficult. Identifying shared interests and reconciling different national foreign policy traditions is a challenge. Thus, this literature does not confirm traditional assumptions about integration. It does not see an automatic link between economic integration and the development of a common foreign policy. Neither does it suggest, in neo-functionalist fashion, that it is only a matter of time before control of foreign policy is moved from the national to the supranational level. It merely points out that it is possible to detect a gradual process of change even in foreign policy-making. Furthermore, it suggests that we need to pay closer attention to the dynamic interaction between the national and the European levels in order to

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understand political co-operation. We do not know the end of this process and we must reflect on the possibility that it may never lead to one single European foreign policy in the traditional sense of the word. This literature is not directly concerned with enlargement. However, the different approaches are likely to lead us to different conclusions about the impact of enlargement on political co-operation. If one takes an intergovernmentalist perspective, it seems probable that enlargement will “atomize” the CFSP. Successful inter-state bargaining is more difficult with 20 or 25 Member States than with 15. However, if one considers foreign policymaking within the EU to be a process where national and European levels interact and mutually influence each other, different conclusions may be reached. The neo-functionalist perspective does address the relationship between enlargement and foreign policy co-operation. Schmitter uses the concept of externalization14 to suggest that integration has negative effects on actors outside the EU, and that their applications for membership should be seen as a direct response to a fear of exclusion from European co-operation. In turn, he expects increased membership to strengthen activities in external relations as a result of the new trade and diplomatic relationships brought into the EU’S “orbit” by the new member states. Hence, the concept of externalization “partially explains why non-members press the EC to act as a unit; what effects this outside charge has on the EC; and the outcome of EC foreign policy actions that are executed in response to outside pressure”.15 As we shall see later, the notion of externalization and spillover does seem to have some relevance for enlargement. Nonetheless, one does have to be careful to avoid the sense of inevitability of such developments. Whatever the external pressure to enlarge, it did not lead to a strengthening of the CFSP framework in the Amsterdam Treaty. Before looking more closely at this issue it is useful to examine how the enlargement process in itself is an important foreign policy instrument for the EU. Enlargement as foreign policy Enlargement of the European Union is, in itself, a form of EU foreign policy. It puts the EU in a position to shape large parts of applicant states’ domestic and foreign policies. Traditional principles of non-interference in the domestic affairs of other states seem to be set aside in this process. At the same time, because enlargement aims at including external actors, it is ultimately only a passing phase in a longer process that “domesticates” what were previously foreign relations. In turn, enlargement is often then seen to threaten the very foundations of the policy that made it possible. As Karen Smith notes, after the Eastern enlargement it is possible that “the logic of integration will stall, having produced the very policy that now renders uncertain its future vitality”.16 Despite the fact that it was only officially put on the EU’S agenda at the Copenhagen European Council in 1993, the issue of enlargement became the predominant theme in the EU’S policies towards central and eastern Europe

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immediately after the end of the cold war. As the communist regimes collapsed in central and eastern Europe, the new governments made the “return to the West” one of their principal foreign policy objectives. Assessments of the EU’S policies in response to these demands diverge. To many, EU policies towards central and eastern Europe confirm the general failure of the EU’S foreign policy and demonstrate the EU’S inability to play a central and positive role in constructing a “new” Europe in the aftermath of the cold war. Such criticisms come in particular from the applicant states in central and eastern Europe,17 but also from the academic community in the West.18 Critics point to the EU’S initial reluctance to accept the idea of enlargement towards central and eastern Europe, and to the fact that, after accepting it in principle, the EU dithered in the face of demands for a timetable for the opening of membership negotiations. Early versions of the Europe Agreements have been criticized for focusing too much on protecting EU markets and not enough on helping central and east European economies improve their competitiveness.19 Changes have since been made to these agreements, but restrictions to trade in so-called sensitive sectors such as textile and agriculture still exist, and are often taken as indications of the EU’S reluctance (or inability) to adapt its present structures and policies to a new political context. Perhaps unfairly, the EU and its Member States are accused of being more interested in ensuring the continued success of economic integration within the existing EU than in expanding its benefits to the rest of Europe, and of merely reacting to external events rather than developing a clear strategy towards central and eastern Europe. Others see the EU’S policies towards central and eastern Europe since 1989 as evidence of the EU’S ability to construct a common, coherent, external policy in situations where it shares common interests.20 They highlight the importance of the Commission in formulating an external policy for the EU as a whole, as well as the interplay between the CFSP pillar and the external relations of the first pillar. According to Karen Smith, EU policies towards central and eastern Europe are not the result of agreement on a “minimum common denominator”. Rather, by representing the middle ground, the Commission successfully upgraded the Community interest in the EU’S policy towards central and eastern Europe, thus partly confirming neofunctionalist expectations about a connection between external pressure and further integration.21 The G7 decision in 1989 to give the European Commission the task of co-ordinating the PHARE programme of western aid to Poland and Hungary, and later also to the rest of central and eastern Europe, is often considered as the event that propelled the Commission forward in this area. It certainly led to a considerable strengthening of the Commission’s international status, in which the Commission was for the first time a foreign policy actor in its own right.22 In turn, this helped reinforce the Commission’s role inside the EU and gave it a central role in developing the EU’S own policy responses to the rapidly changing political land- scape of central and eastern Europe. The difficulties that the EU has experienced in developing coherent, long-term strategies towards central and eastern Europe are

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logical, given the general surprise in the West at the collapse of communism and the need for time to readjust to new political realities. In this sense, the problems encountered by the EU in its relations with central and eastern Europe at the end of the cold war are not radically different from those that national foreign policies had to grapple with. The divergent assessments of the EU’S policy towards central and eastern Europe are in part the result of conflicting views on how the EU should balance the choice between what it ought to do and what it is able to do. The Commission argues that enlargement is both costly and time consuming and that not only the EU but also the applicant states would lose out economically as well as politically by starting the process too soon. Yet, at the same time, the key role played by the Commission in moving the enlargement issue forward on the EU’S agenda should not be underestimated. The Commission has not, however, been able effectively to communicate its views to prospective member states and to convince them of the legitimacy of its approach. Furthermore, Member States have given somewhat contradictory signals to central and eastern Europe about their positions on enlargement.23 This has at least contributed to creating the large gap that now exists between the way in which the applicant states perceive the EU’S initiatives and the way in which the EU itself views the same issues. This is a general problem in the EU’S external policies. It has been captured in Christopher Hill’s concept of a “capabilities-expectations gap” in the EU’S foreign policy.24 In its relations with eastern Europe, the EU has a tendency to talk up its capabilities in foreign policy, and thus to create expectations that it cannot live up to. This reinforces the heavy historical baggage of East-West relations in Europe: the image of the West abandoning eastern Europe at the end of the Second World War—however inaccurate it may be— remains powerful and continues to colour east European perceptions of western policies. On the positive side, the experience in central and eastern Europe does seem to suggest that the economic and political dimensions of the EU’S foreign activities are better integrated than is often assumed. Finding institutional mechanisms to ensure coherence and consistency between the Community’s external relations and the CFSP were a central concern in the negotiations leading to the Maastricht and Amsterdam Treaties. It is only recently that Member States have become more relaxed about the possibility of using external relations instruments to support the CFSP. Relations with eastern Europe have principally been handled through the Europe Agreements. As Jackie Gower writes in the Introduction (see pp. 5–7), they are so-called mixed agreements, which means that the first pillar rather than the second pillar has most of the initiative. However, the CFSP has also been involved in the development of the EU’S policies towards central and eastern Europe through the Stability Pacts.25 As one of the first so-called “joint actions” of the CFSP, aimed at promoting peaceful mechanisms for dispute settlement, the Stability Pacts became a means of bringing new life into the CFSP after what was considered a dismal performance in the former Yugoslavia. Originally ridiculed as a futile attempt at conference

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diplomacy with little real impact, the Stability Pacts have since been considered a fairly successful enterprise.26 To what extent is this experience applicable to other areas of the EU’S foreign relations? Karen Smith suggests that eastern Europe is a special case where the production of a common policy with supranational elements was feasible owing to eastern Europe’s geographic proximity, the sense of a shared history between East and West in Europe, and a belief that the EU has a particular responsibility for events in central and eastern Europe.27 These particular circumstances cannot easily be reproduced in other areas of the EU’S external activities. Michael Smith has given this a different interpretation by suggesting that the CFSP is in fact marginal to the EU’S external policies.28 Against the backdrop of the wider process of globalization, the “special status” of foreign policy is being reduced. What matters increasingly in the international system are economic and trade issues. Consequently it is through its external economic relations that the EU develops its presence in the international system and it is here, rather than at the CFSP, that we should be looking when examining the EU’S external role. The challenge of enlargement: internal and external actors The prospect of enlargement to central and eastern Europe presents the CFSP with a number of challenges. Developing a cohesive foreign policy will be far more difficult if the EU has five or ten extra members. As a result of their geographic location and different historical experiences, the new member states in central and eastern Europe will bring new foreign policy perspectives and interests into the EU. Together with different foreign policy interests also come new neighbours and different relations with third states.29 We do not as yet know enough about how interests are formed at the EU level, and we need to reflect further on how the interests and ideas of new member states affect, and are affected by, the overall dynamic of foreign policy cooperation. Experience from previous enlargements seems to suggest that Member States’ perceptions of their interests undergo change as a result of membership. Consequently, taking presumed “national interests” as a starting point for examining the possible effects of enlargement on the CFSP may not be satisfactory. Before the 1995 enlargement to Sweden, Austria and Finland, there was much concern about the consequences of the inclusion of three neutral states for the EU’S plans to develop a common security policy. The expectation that the inclusion of these states would prevent further initiatives by the EU in the security field was, in part, misguided. Sweden and Finland contributed to the strengthening of the security dimension in the 1996–97 Intergovernmental Conference (IGC) by proposing the inclusion of the Petersberg tasks30 into the new Treaty. For these states, the meaning of neutral- ity has changed with the end of the cold war and with their membership in the EU. In Finland, the status of neutrality was seen as irreconcilable with EU membership given the nature of the EU and its implicit assumptions of solidarity between Member States. In Sweden,

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similar debates on the country’s traditional stance of neutrality have emerged, with former Prime Minister Carl Bildt supporting the idea of Swedish membership in NATO. However, if the CFSP were to move towards a “common defence”, these states might still have difficulties. Security issues are also likely to come into focus as a result of enlargement to central and eastern Europe. Security concerns are often cited as an important factor in motivating these states to join the EU. What this will mean for the EU’S ambitions to develop a security and defence policy is nonetheless uncertain. It is possible that membership in the EU as it stands is considered a sufficient security guarantee, and that there will be no particular desire on the part of the central and east European states to strengthen European security policy. It is equally possible that the central and east European states—in particular those who will also become members of NATO—will see the United States and NATO as the most useful guarantors of security in Europe. In terms of increased interaction with third states, enlargement to central and eastern Europe will bring relations with Russia and its former Republics to the fore. So far, the EU has taken only limited initiatives towards Russia and the former Soviet Republics, concentrating instead on relations with applicant states. Despite their focus on relations with the West, the central and east European states’ connection with their eastern neighbours remain an inescapable factor in their external relations, and this will be brought into the EU. The classic solution within the EU to the dilemmas of increased diversity after enlargement has been to try to strengthen central institutions. So far, the EU has not managed to tighten substantially decision-making in the CFSP. The 1996–97 IGC, which resulted in the Amsterdam Treaty, did little to change the fundamentals of the institutional set-up (see Chapter 5). A timid attempt was made at expanding qualified majority voting by writing into the Treaty that, after unanimous agreement on common strategies, the Council may proceed with majority voting for “joint actions” and “common positions”. This provision is further restricted by a provision allowing Member States “for important and stated reasons of national policy” to oppose the adoption of a decision by qualified majority voting. Hence, the French interpretation of the Luxembourg “compromise” of 1966 has for the first time been formally included in the Treaty. The principle of flexibility, which has sometimes been presented as a solution to the difficulties and complications resulting from increased membership, does not cover the CFSP. Nonetheless, the possibility of “constructive abstention” does, in practice, allow a limited number of states to take initiatives in foreign policy without the full participation of all Member States. How, and whether or not, this will be practised remains, in early 1998, an open question. The ability of the EU to act cohesively could also be strengthened by reinforcing the role of the Commission. From being almost completely excluded from the former EPC, the Treaty of Maastricht increased the Commission’s influence in the CFSP. Although the changes fell short of the Commission’s own ambitions in foreign policy, it did for the first time become

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“fully associated” to all aspects of the EU’S foreign policy and was given the right to propose policies.31 In response to this increased recognition, the Commission’s services were reorganized. A group composed of the six Commissioners with involvement in external affairs (popularly referred to as the “Relex Group”) was established and began to meet regularly under the chairmanship of the new Commission President Jacques Santer.32 A new Directorate-General was also established to deal specifically with the CFSP and to prepare the Commission for participation in foreign policy co-operation. However, this trend was not taken any further with the Amsterdam Treaty. It has even been suggested that Amsterdam represented a setback for the Commission in foreign policy, after a period of gradual encroachment on the territory of the Council and the Political Directors.33 It is possible that the Commission’s active role in the early 1990s has produced a backlash, with the Member States again being more reluctant to increase its influence in foreign policy.34 The ability of the Commission to play an effective role in foreign policy is also hampered by problems of legitimacy. With no real democratic accountability for the Commission and little sense of clear EU foreign policy interests, it becomes difficult to justify the Commission’s taking centre stage.35 There is also some concern that the Presidency will become an even more inefficient institution with a larger number of small member states. It is difficult to ensure consistency in the EU’S external representation when leadership rotates every six months. Furthermore, there are some signs that the larger member states have reservations about subordinating their foreign policy to the successive leadership of the small member states. It was not possible for member states to agree on a reform to the Presidency at the 1996–97 Intergovernmental Conference. An effort to strengthen cohesion in the EU’S external representation, and to give the EU a single visible voice in the international system, was made by the decision to nominate a “High Representative” of the EU (a Mr or Ms CFSP) in the person of the Secretary General. This reform is considered, by the Commission as well as France and Britain, to be potentially the most important change to the CFSP. Overall, it is too early to give certain predictions about the impact of the reforms introduced in the Amsterdam Treaty. One should not exclude the possibility that the Treaty will allow an enlarged Europe to develop a more cohesive foreign policy. Much will depend on the way in which the institutional changes proposed are implemented, as well as on the political commitment of Member States to use the new provisions. Regelsberger & Wessels consider many of the problems of the CFSP to stem from the Member States’ reluctance to “play by the rules of the game which they themselves established”.36 The authority and influence of the new “Mr or Ms CFSP” will, for example, have much to do with the personality nominated. Some Member States, such as the UK, wish to see the post filled by a civil servant, whereas others, such as France, would like a senior politician to take the lead. Likewise, the efficiency of the new Planning Unit, which is intended to help provide the EU with a long-term

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perspective in foreign policy, will in part depend on the willingness of Member States to share information with representatives from the Commission and the Western European Union. Even if the EU were to succeed in strengthening the institutional network of the CFSP, this may not in itself be enough to ensure a common foreign policy — and particularly not in a larger EU. The CFSP already has difficulties identifying common interests, and it is not at all certain that institutional provisions, on their own, would suffice to change this. A coherent foreign policy would also require some basis in a common identity. In this respect, the challenge of the eastern enlargement is larger than with previous enlargements that took place in the context of fixed political borders: Europe was neatly divided into two opposing military blocs. Comfortably within one camp, certain fundamentals, such as the EU’S identity as “western” and the geographical limits to the EU’S extension, were unproblematic. As the EU enlarges eastwards in the beginning of the next century, it will contribute to drawing up new institutional, political and economic boundaries in Europe. The EU will find itself in the front line of the on-going process of redefining the structures of the international system after the end of the cold war. The idea that enlargement is simply a matter of moving the borders of the West further East will not necessarily be helpful. There is a risk that the new borders of the EU will be more fragile and contested than they have previously been. There may also be disappointment among those that remain outside. Dealing with this issue will be one of the principal tasks of the EU’S external policies. The challenge is no doubt partly “material” in the sense that it will be important to develop economic and policy instruments to strengthen relations across the new borders. Nonetheless, the perennial issues of “what is Europe” and who the EU can legitimately claim to represent will inevitably arise. They go to the core of the EU’S efforts to develop a foreign policy. What type of borders will the EU have, how permeable will they be in economic and human terms, and how will they be perceived on the outside? Ideally, answers to such questions should emerge as a result of systematic debate, but nonetheless, the EU’S tradition for incrementalism seems likely to prevail. The CFSP, enlargement and the transformation of European political space According to Allen, the CFSP suffers from an inherent contradiction: “the determination to preserve national foreign policy is ultimately at odds with the ambition to create a European foreign policy”.37 He suggests that two “cultures” compete for control of European foreign policy—one representing the desire to preserve national autonomy in foreign policy (institutionalized in the Council) and one aiming to create a common foreign policy (represented institutionally by the Commission). The possibilities of strengthening the EU’S performance in international relations while maintaining what is essentially an intergovernmental framework are considered limited. Nonetheless, neither the

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Maastricht nor the Amsterdam Treaty made serious attempts at moving beyond intergovernmentalism. The changes introduced to the institutions can be characterized as further “tinkering” with an essentially intergovernmental framework. Against this backdrop, logic would suggest that the CFSP will become more ineffective after eastern enlargement, and that it might even be brought to a complete standstill. The struggle to identify shared interests in foreign policy will be even more complicated at 20 or 25 than at 15. Likewise, the basis for a common “identity” will be further diluted. We have suggested that the relationship between enlargement and the CFSP is more complex than is suggested by the widening-deepening dichotomy. There are also indications of change in European foreign policy that cannot be captured by concentrating exclusively on the institutional characteristics of the CFSP, and which suggest that enlargement does not have to atomize political co-operation. One dimension to the changes taking place in European foreign policy is what Allen has referred to as the process of “Brusselization” of European foreign policy.38 Although foreign policy remains in the control of the nation state and has not been transferred in any substantial way to the European Commission, it has become more difficult for the foreign ministries of the Member States to control the foreign policy process. Foreign policy is increasingly made in Brussels, by national representatives. This gradual transfer of decision-making from national capitals to Brussels has developed in parallel with efforts in the Treaties of Maastricht and Amsterdam to increase cohesion between the first and the second pillar. One consequence has been that rivalries have developed between the Political Directors (who traditionally deal with the CFSP) and the Permanent Representatives. In terms of enlargement, this tendency towards Brusselization suggests that centrifugal forces within the EU are quite strong and that the foreign policies of new member states are likely to undergo important changes after enlargement, rather than that the CFSP will break down. Without the corresponding development of a shared identity, the “Brusselization” of foreign policy is unlikely to lead to a cohesive foreign policy. In this area, the signals are mixed. There is no European foreign policy identity. Nevertheless, the identities of Europe’s “nation states” seem increasingly ambiguous. Laffan has suggested that issues of identity have reemerged at three levels in Europe: within states, in the European Union and at the wider European level.39 It is often argued that the nation state is too small to handle the consequences of economic globalization on its own. According to Laffan’s thesis, there is a parallel development according to which the nation state is too large for issues of identity that now emerge at regional level. We must at least reflect on the possibility that the very fundament of national foreign policy is changing. Still, it is not clear that this will lead to a transfer of loyalty to “Europe” or to an effective “European” identity that may underpin the CFSP. At the height of the war in Yugoslavia, public opinion called for Europe to “do something” to stop the war, thus suggesting a view, in the public at large, of the EU as a community of values with a right and a duty to take initiatives in foreign

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policy. At the same time, the support for further European integration seems fragile and the domestic foundations for a European foreign policy are limited.40 Traditionally, the EU’S external identity has been built around the notion of a civilian power. According to Waever, the efforts to build a European identity are now given a slightly different meaning.41 He argues that efforts to build a European identity are increasingly being linked to the issue of security. This, according to Waever, gives a sense of urgency to integration: its alternative— fragmentation—is presented as destructive to the whole European project. Efforts to build an identity based on the idea of integration as a process of securitization seem close to the perspective of the applicant states in central and eastern Europe. In other words, enlargement will not necessarily hinder efforts to build a European identity on this basis. They might, nonetheless, provoke less desirable counter-effects outside the EU. After enlargement, one of the principal tasks of the CFSP and the EU’S external relations will be to develop external policies that do not create a sense of exclusion in the rest of Europe. It may still be that enlargement will provoke new divisions between existing Member States and thus lead to changes and even blockages within the CFSP. Francoise de la Serre has pointed to such concerns in France. She argues that there are two “contradictory fears” in French EU policy: “seeing Germany dominating the Community and/or distancing herself from the EC in order to have a very active policy in central and eastern Europe”.42 The Stability Pact, or the Balladur plan as it was originally known, is often seen as an expression of such concerns and as a French attempt to regain the initiative in policies towards eastern Europe, in particular in comparison with Germany. The CFSP is unsettled. It is being “constructed” against the backdrop of a broad and complex process of change in European inter-state relations. Inside the EU, it is becoming more difficult to distinguish between domestic and foreign policy. Increasingly large parts of what was traditionally under the control of foreign ministries is now taken care of by “technical” ministries. In this context, it is often suggested that a system of “multilevel governance” is developing in Europe, but such analyses are rarely extended to cover the EU’S foreign relations. It is nonetheless difficult to imagine that the CFSP can remain totally immune to the broader process of Europeanization. Although, with enlargement, more states will be brought into the CFSP, the process of foreign policy cooperation is unlikely to break down altogether. Conclusion This chapter has highlighted the different ways in which the CFSP is assessed, both by policy-makers and in the academic literature. It has suggested that although Europe does not have a common foreign policy in the traditional sense, foreign policy co-operation within the EU has a significant impact both on individual Member States and on the world outside. Consequently, enlargement to central and eastern Europe certainly promises to influence the content of the

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EU’S external policies and raise important challenges in terms of how to manage relations with new neighbours, but it does not need to be seen as a threat to the continued functioning of the CFSP. Indeed, the applicant states themselves have an interest in keeping the CFSP going. Notes 1 M.Holland, “Introduction: EPC theory and empiricism”, in The future of European political cooperation, M.Holland (ed.), 2 (London: Macmillan, 1991). 2 C.Hill, “The capability-expectations gap, or conceptualising Europe’s international role”, in Economic and political integration in Europe: internal dynamics and global context, S.Bulmer & A.Scott (eds), 103–26 (Oxford: Blackwell, 1994). Reprinted from Journal of Common Market Studies 31, 305– 28, 1993. 3 Ibid. 4 Jacques Poos is quoted in A.Kintis, “The EU’S foreign policy and the war in former Yugoslavia”, in Common Foreign and Security Policy: the record and reforms, M.Holland (ed.), 148 (London: Pinter, 1997). 5 D.Allen & M.Smith, “Western Europe’s presence in the international system”, in The future of European Political Cooperation, M.Holland (ed.), 95 (London: Macmillan, 1991). 6 Ibid., 116. 7 Hill (1994), op. cit., 120. He also builds on Sjostedt’s analysis of the EC’S international actorness: see G.Sjostedt, The external role of the European Community (Farnborough: Saxon House, 1977). 8 We are following Matlary’s classification here. She argues that there are political “constructs” or ideas that are more “real” than tangible structures and that these cannot be captured by the rationalist approach, which privileges one type of actor— the states—and one type of interest—money and/or power. See J.Matlary, “Epilogue: new bottles for new wine”, in Reflective approaches to European governance, K.E.Jorgensen (ed.), 201–13 (London: Macmillan, 1997). 9 C.Hill (ed.), The actors in Europe’s foreign policy (London: Routledge, 1996). 10 B.Tonra, “The impact of Political Cooperation”, in Reflective approaches to European governance, K.E.Jorgensen (ed.), 97 (London: Macmillan, 1997). 11 The notion of engrenage suggests that co-operation within the CFSP has had unintended consequences: it has led to the gradual accumulation of shared norms and values among the Member States of the EU. 12 C.Hill & W.Wallace, “Introduction: actors and actions”. See Hill (1996), op. cit., 12. 13 The Political Directors are high level civil servants within the Member States’ foreign ministries whose principal responsibility is to deal with political cooperation within the EU. 14 Schmitter’s externalization hypothesis is discussed in R.Ginsberg, Foreign policy actions of the European Community: the politics of scale (Boulder: Lynne Rienner, 1989). 15 Ibid., 25.

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16 K.Smith, The making of EU foreign policy: the case of Eastern Europe. PhD thesis (London School of Economics, 1995), 404. 17 See C.McManus, “Poland and the Europe Agreements: the EU as a regional actor”, in A common foreign policy for Europe? Competing visions of the CFSP, J.Peterson & H.Sjursen (eds), 115–32 (London: Routledge, 1998). 18 H.Kramer, “The European Communities’ response to the new Europe”, Journal of Common Market Studies 31, 213–44, 1993; D.Allen, “Who speaks for Europe? The search for an effective and coherent foreign policy”, see Peterson & Sjursen (1998), op. cit., 41–58. 19 Kramer (1993), op. cit. 20 Smith (1995), op. cit.; J.Pelkmans & A.Murphy, “Catapulted into leadership: the community’s trade and aid policies vis-à-vis Eastern Europe”, Journal of European Integration 14, 125–51, 1994. 21 Smith (1995), op. cit., 399. 22 S.Nuttall, “The Commission: the struggle for legitimacy”, see Hill (1996), op. cit., 142. 23 MacManus (1998), op. cit. 24 Hill (1994), op. cit. 25 The pact on Stability in Europe, proposed by French Prime Minister Eduard Balladur, sought to establish a security framework stabilizing relations between the central and east European states, supported by the west Europeans. 26 U.Sedelmeier & H.Wallace, “Policies towards central and eastern Europe”, in Policy-making in the European Union, H.Wallace & W.Wallace (eds), 353–87 (Oxford: Oxford University Press, 1996). 27 Smith (1995), op. cit. 28 M.Smith, “Does the flag follow trade? ‘Politicisation’ and the emergence of a European foreign policy”, see Peterson & Sjursen (1998), op. cit., 77– 94. 29 For example, after the 1972 enlargement, Britain’s former colonies were brought into the EC’S external relations framework. This led to a reorganization of the EC’S trade agreements with the third world. The so-called Yaoundee agreements, which mainly covered France’s former African colonies, were replaced by the Lome agreements. 30 In response to the EU’S decision to turn the WEU into the security arm of the EU, the WEU issued the Petersberg declaration of June 1992. The declaration attempts to identify what a common European defence policy would be about. The so-called Petersberg tasks include humanitarian and rescue tasks, peacekeeping and crisis management. They form core functions of the WEU. 31 Nuttall (1996), op. cit. 32 F.Cameron, “Building a common foreign policy: do institutions matter?”, see Peterson & Sjursen (1998), op. cit., 59–76. 33 Allen (1998), op. cit. 34 Smith (1995), op. cit., 398; Allen (1998), op. cit. 35 Nuttall (1996), op. cit. 36 E.Regelsberger & W.Wessels, “The CFSP institutions and procedures: a third way for the second pillar”, European Foreign Affairs Review 1, 42–3, 1996. 37 Allen (1998), op. cit., 42. 38 Ibid.

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39 B.Laffan, “The politics of identity and political order in Europe” Journal of Common Market Studies 34, 82–101, 1996. 40 A.Forster & W.Wallace, “Gommon Foreign and Security Policy”, in Policy making in the European Union, H.Wallace and W.Wallace (eds), 411–25 (Oxford: Oxford University Press, 1996). 41 O.Waever, “European security identities”, Journal of Common Market Studies 34, 123, 1996. 42 F.De la Serre, “France: the impact of Francois Mitterand”, in The actors in Europe’s foreign policy, C.Hill (ed.), 32 (London: Routledge, 1996).

4 The NATO factor: a spanner in the works of EU and WEU enlargement? Martin A.Smith

It is now clear that both the European Union and the North Atlantic Treaty Organization are being positioned by their Member States for further enlargement. The EU has of course already enlarged its membership once during the 1990s with Austria, Sweden and Finland joining in January 1995. Two and a half years later, NATO member governments decided to open accession negotiations with three central European states—the Czech Republic, Hungary and Poland —with a view to completing enlargement in time for NATO’s fiftieth anniversary in April 1999. Nearly all debates and studies about enlargement have focused on either the EU or NATO and warnings about the possible negative consequences of this tunnel vision have been few and far between.1 The discussions in this chapter, which focus mainly on NATO, have two objectives. First, they examine the extent to which the two enlargement processes have impacted upon each other to date, and secondly they assess the problems that may emerge if greater linkage between the two is not developed. The evolution of “incremental linkage” An initial and cursory examination of the course of the two enlargement processes to date suggests that each has proceeded entirely according to its own dynamic and has had no concrete impact on the other. Indeed, officials and political leaders working within both institutions have appeared anxious to project this impression. EU summit communiques and Commission documents have barely referred to NATO enlargement at all while the officially-approved Study on NATO Enlargement published in September 1995 stated that “the enlargement of the two organizations will proceed autonomously according to their respective internal dynamics and processes. This means they are unlikely to proceed at precisely the same pace”.2 The whole NATO enlargement project has been and remains fundamentally the child of the Clinton administration in the United States. It was conceived in late 1993 and early 1994 as part of a package of policy initiatives designed to reassert American international leadership and defy the critics who had been charging that Clinton was weak and vacillating in the foreign policy arena.

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In this context it is important to understand that the Clinton administration has pursued NATO enlargement as much as a means of trying to preserve us leadership of NATO as for its own merits. At the NATO Brussels summit in January 1994 the president had pushed for a clear statement that NATO was open to expansion in principle. This was agreed. In referring to this success in congressional testimony shortly afterwards Stephen Oxman, then Assistant Secretary of State for European and Canadian Affairs, said that “sitting in the room at the NATO Summit and watching the president of the United States make his intervention, I think every leader in that room felt the reassertion, the reemergence of American leadership in the Alliance, and I think that is a very good thing for our country”.3 With the leadership factor in mind, Clinton administration policy towards enlargement has betrayed what William Wallace has called an “irritating undertone of imperial hegemony…with arguments that the United States must ensure that NATO, rather than the EU, defines the structure and boundaries of a wider Europe”.4 The us agenda has been shaped by two related concerns that have been maintained consistently by the us since 1993–94. The administration has wanted NATO to be in the lead in enlarging into central Europe, if at all possible, and under no circumstances has the us wished to see the NATO enlargement process failing to keep pace with that of the EU. The passage in the NATO study quoted earlier about the pace of the respective enlargement processes reflects this American agenda and a concern that overt linkage in terms of dynamics would put the brakes on the NATO process. It has been widely accepted that the EU enlargement process will proceed at a naturally slower pace given the relatively greater institutional adjustments and demands of new members that are required. Although no overt or formal linkage has to date been established between the two processes, this does not mean that each has been completely unaffected by the other. Rather, the evolution of what may be called “incremental linkage” has been apparent. The term describes the tendency for significant moves forward in the EU enlargement process to have a kind of knock-on effect on NATO — particularly American—policy. This was most evident during 1993 and 1994. EU member governments opened the door in principle to the enlargement of the European Union into central Europe at the Copenhagen European Council in June 1993, a decision which galvanized the Clinton administration into action. Before then it had shown scant interest in the possibility of enlarging NATO’s membership in maintaining the laid-back approach adopted during 1991 and 1992 by President Bush. After June 1993, however, us policy slowly but perceptibly began to change. The shift gathered pace in September following statements by Russian President Boris Yeltsin on visits to Warsaw and Prague, which indicated that Russia’s leaders would not regard NATO expansion into central Europe as being contrary to their country’s security interests. The us suggested that a NATO summit be convened and, as noted, successfully pushed at the summit for member governments to agree to NATO enlargement in

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principle. By the end of January 1994, NATO was on the same formal footing as the EU with the members of both having agreed to future enlargement in principle. Incremental linkage was further developed over the course of 1994. Following a mandate granted by the Corfu European Council in June, the Commission set to work on preparing an EU “pre-accession strategy” designed to persuade doubters in central Europe and elsewhere that the EU did have a concrete intention to expand into central Europe at some point. If carried through without response from the us and NATO, adoption of a pre-accession strategy would place the EU clearly ahead in developing an actual enlargement process. It was therefore no coincidence that the Clinton administration did respond. Just before the Commission published its draft recommendations in July 1994, the us decided —without prior consultation with its European allies in NATO—to seed the ground for steps forward in developing a NATO enlargement process. On an official visit to Warsaw the president announced that “bringing new members into NATO…is no longer a question of whether, but when and how”. Shortly thereafter, then Secretary of State Warren Christopher announced that the us intended to bring the NATO allies together “soon” for the purpose of deciding upon “the next steps”.5 The Americans had, quite deliberately, acted unilaterally in going beyond the agreement at the Brussels summit not to engage in any concrete follow-up work for the foreseeable future. This American unilateralism contributed in significant measure to a deterioration in transatlantic relations that marked the second half of 1994. It culminated in the leaking- quite possibly with official connivance—of a secret memorandum to the German government from its ambassador to NATO warning that cracks were appearing in allied cohesion in large part because of perceptions among west European member governments that the us was using a “backdoor method…to present the alliance with a fait accompli in the form of predetermined agreements, non-compliance with which is bound to cause political damage”.6 European—especially German—complaints did induce the us to compromise. At the regular half-yearly meeting of NATO foreign ministers in December 1994 it was agreed to set up American-led study groups at NATO headquarters to consider modalities of eventual NATO enlargement but not to name specific candidates for membership nor to set out a timetable for the accession of new members. However, this compromise still gave the us the substance of what it wanted: the publication of NATO’s own pre-accession strategy, the Study on NATO Enlargement, in September 1995. In the same month as this NATO compromise was agreed, EU Member States took a decision at their Essen European Council that effectively took the steam out of emergent institutional competition in the enlargement stakes with NATO. They agreed that negotiations for the accession of new EU members would not begin until after the completion of the “Maastricht II” intergovernmental review conference in 1996–97. This decision, in effect, guaranteed that nothing

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fundamental would happen on the EU front for at least two years. It cleared the ground and ceded the initiative to the United States and NATO, ensuring that the us would be able to move beyond the terms of the December 1994 compromise during 1995 and 1996 and ensure, without serious opposition from among its European allies, that NATO would agree to take in a first wave of new members at the Madrid summit in July 1997. The Essen Council decision thus had the effect of bringing the first period of emerging incremental linkage to an end. More recently there have been indications that a new phase is evident, but this time with the EU striving to generate and maintain momentum in its own enlargement process in order to catch up with NATO. It is surely more than coincidence of timing that thę European Commission chose the week following the Madrid summit to unveil its mammoth “Agenda 2000” in which it gave a series of detailed opinions on the suitability for accession to the EU of applicant states from central Europe, southeastern Europe and the Baltic region. Furthermore, the Commission deliberately chose to recommend that negotiations be opened with five eastern states (in addition to Cyprus) despite reports that at least some member governments, including the German, would have preferred a more limited approach which confined initial negotiations to the three Visegrad states due to join NATO in 1999. The Commission’s approach can be interpreted as reflecting a desire to move beyond the enlargement which NATO had just agreed.7 The membership congruence issue Does it actually matter whether or not the two enlargement processes are linked, and would continued development of incremental linkage not be enough to avoid problems? Thus far, as noted earlier, very few analysts have applied themselves systematically to attempting answers to these questions, although many observers do seem to have a vague feeling that it would be a good idea for the two to be linked. So far this appears more evident on the NATO side than the EU one, which in itself is revealing of important tensions in American outlook and policy. On the one hand, the us, for the reasons discussed earlier, has been anxious to avoid linkage connected to the pace of the two enlargement processes. On the other hand, the Americans have become keen to try to ensure that EU enlargement proceeds in such a way as to ensure membership overlap between an enlarged EU and NATO, to the greatest possible extent. This does not mean that the Americans believe that complete congruence in the European membership of the two institutions is an attainable or even desirable goal. This does not, of course, exist at present. Four EU members (Ireland, Austria, Sweden and Finland) are non-members of NATO and three European NATO members (Iceland, Norway and Turkey) do not belong to the EU. This seems unlikely to change in the near future. What the us wishes to try to ensure is that future rounds of EU enlargement do not add to existing membership incongruences.

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American concerns were made evident following the 1995 round of EU enlargement which brought in three non-NATO member states. us anxiety focused on the issue of the relationship between these three new members and the Western European Union (WEU). To briefly recap: the WEU was a moribund defence alliance consisting of seven west European countries—all members of the then European Community—at the time of its revival in 1984.8 Since then Spain, Portugal and Greece have been admitted to its ranks and, more importantly, in 1991 the organization was written into the Maastricht Treaty on European Union (TEU) as being simultaneously the defence component of the new European Union and the means to develop the “European pillar” of NATO. It is well known that this formula reflected an uneasy compromise between the EU’S security “Europeanists” led by France, who had favoured full-scale absorption of the WEU into the EU as a means of equipping the latter with the theoretical means to organize joint military operations without the United States, and the “Atlanticists” with the UK in the vanguard, who were opposed to this and to developing the WEU in any way that might conceivably weaken or undermine NATO. The us was not, of course, a direct participant in the Maastricht negotiations but the Bush administration nevertheless made quite clear its own support for the Atlanticist position.9 Contrary to much received wisdom, the Americans have not really been concerned about the WEU evolving into an institutional challenger or competitor to NATO. The gap between the two in terms of size, assets and general institutional development is simply too big for that to be a real possibility. Although in operational terms the WEU is not quite the paper tiger popularly depicted, its actual achievements since Maastricht have been limited. In the summer of 1992, WEU Member States used the organization as the framework for deploying a small naval task force to monitor compliance with UN sanctions against the rump Yugoslavia in the Adriatic, although this flotilla was effectively taken over and subsumed under NATO command in 1993. Since then a few small-scale police operations have been organized by the WEU on behalf of its Member States in the Balkans. us officials and policy-makers have been more concerned about the risk of what some of them have called “underlapping security guarantees”.10 Seen from the us perspective, underlapping security guarantees are made possible by the terms of the TEU which encourages (although it does not compel) members of the European Union to also join the WEU. The Americans fear that this provision will allow into the WEU over time a growing number of non-NATO states in Europe. Their governments might then assume that they were covered de facto by a us guarantee of their military security because they themselves had entered into a mutual security guarantee, under the terms of the WEU treaty, with those EU/WEU members that are also members of NATO.11 The January 1995 EU enlargement was the first occasion since the ratification of the TEU when the us found itself confronted by the spectre of underlapping security guarantees. In the event the issue has remained moot because the three

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countries concerned—Austria, Sweden and Finland—have contented themselves with observer status at the WEU. But there is legally nothing to stop any or all of them from joining the WEU as full members while continuing to remain outside NATO, and the United States has been keen to try to ensure that future rounds of EU enlargement do not leave open such an option. The American agenda is reflected clearly in the Study on NATO Enlargement, which contains the following paragraph: All full members of the WEU are also members of NATO. Because of the cumulative effect of the security safeguards of Article V of the modified Brussels Treaty [the WEU treaty] and of Article 5 of the Washington Treaty [the NATO treaty], the maintenance of this linkage is essential. Both enlargement processes should, therefore, be compatible and mutually supportive. At the same time, the WEU is being developed as the defence component of the European Union, which strengthens the relationship between the two organizations. An eventual broad congruence of European membership in NATO, EU and WEU would have positive effects on European security. The Alliance should at an appropriate time give particular consideration to countries with a perspective of EU membership, and which have shown an interest in joining NATO, in order to consider, on the basis indicated in this study, how they can contribute to transatlantic security within the Washington Treaty and to determine whether to invite them to join NATO.12 How realistic are hopes that the “broad congruence” in membership that the us seeks will be attained in practice? The signs do not appear propitious. To begin with, as Simon Duke reminds us: “the Maastricht Treaty and subsequent documents link accession to WEU to membership of the EU, not of NATO”. Duke goes on to identify a core problem that would be inherent in any attempt to change this: “if NATO membership became the criterion for WEU expansion, the us would then be in the unacceptable position of exercising a veto over the eastward expansion of the WEU”.13 Few if any serious analysts believe that the us will or should be given a formal veto of this kind. Nevertheless many have argued that the EU cannot afford to be insensitive to us concerns and will therefore need to exercise voluntary restraint by not offering WEU membership to all future members. The position of the Baltic states is especially relevant in this context. NATO eschewed offering accession invitations to either Estonia, Latvia or Lithuania in July 1997. This was mainly because Russia had barely acquiesced in enlargement into central Europe and its leaders had made quite plain that the accession of one or more of the Baltic states in addition would provoke a fierce and possibly violent reaction. In naming Estonia as one of the five eastern countries with which it believed EU accession negotiations should be opened, the publication of Agenda 2000 by the European Commission just after the Madrid summit raised the prospect of the

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EU enlarging into the Baltic region first. Given the desire inside the Commission not to let NATO get too far ahead in the enlargement business it is quite possible that this was a factor in deciding whether to recommend any Baltic candidates for the next wave of EU enlargement. Yet the Clinton administration itself had been supporting suggestions that at least one of the Baltic states be offered the firm prospect of EU membership as a kind of compensation for NATO’s refusal to open its doors to the region in the foreseeable future. The prospect of Estonia joining the EU within the medium-term future is bound increasingly to focus minds on both sides of the Atlantic on the WEU question. Some analysts seem quite relaxed about this on the grounds that there is no great enthusiasm amongst current EU members, even France which is traditionally regarded as the main champion of an EU security role, for extending west European security guarantees via the WEU into the Baltic region.14 Anatol Lieven has been particularly bullish on this score in arguing that “EU member governments are terrified of giving the Balts Western European Union security guarantees without NATO membership to ensure that the United States would back them up in a crisis. Estonia therefore would have to be given EU membership without the WEU”.15 The prospect now arises of Estonia becoming theoretically entitled to membership of the WEU some time early in the next century. If the existing EU members decided not to offer Estonia and other non-NATO joiners the option of full membership of the WEU, or if a second wave of NATO enlargement took place at the same time and embraced these states, then the problem of underlapping security guarantees would not arise. The prospects of either scenario coming to pass are by no means certain, however. To begin with, it is not as yet clear when or even whether a second wave of NATO enlargement will take place. The current member governments have committed themselves to nothing beyond keeping those countries that have expressed a desire to join under consideration for future membership and reviewing the situation when the three Visegrad states have joined in 1999. Secondly, the EU side has to date given little indication of real interest in or concern about the problems of a growing incongruence in membership between the two institutions. Indeed, negotiations in the intergovernmental review conference during 1996–97 produced agreement on the draft Treaty of Amsterdam which included the pledge that “the Union shall foster closer institutional relations with the WEU with a view to the possibility of the integration of the WEU into the Union, should the European Council so decide”.16 If EU member governments ever did “so decide”, this would signal an important change in the nature of the European Union’s defence and security dimension, and it is highly likely that it would provoke profound unease in the United States, especially if 119 corresponding European attempt to address the membership incongruence matter was made. The evidence to date suggests, however, that membership incongruence has not thus far seriously concerned policy-makers within EU Member States. The

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draft Treaty of Amsterdam fails to make any mention of it. The Commission’s Agenda 2000 package does do so but devotes only a single para- graph to the issue. Nevertheless this one paragraph does get to the heart of the matter in terms of what the Treaty of Amsterdam says. It notes the decision made in Madrid to enlarge NATO membership into central Europe and goes on to state that this “means that the issue of congruence in membership of the EU, Western European Union and NATO remains an open and delicate question, the outcome of which may also affect the objective of integrating the WEU into the EU” [emphasis added].17 With these words the Commission appeared to be warning EU member governments of potential trouble ahead if they attempted to move towards integration of the WEU without addressing the issue of congruence of membership with NATO. Yet the detailed recommendations and opinions contained in the Agenda 2000 package offer no practical advice or views on how the EU might go about this. The scope for tension and divisions As things now stand, and given that the process of expanding the European Union’s membership into central and southeastern Europe and the Baltic region is getting underway, there is a significant and real risk of tension, argument and outright disagreement breaking out on a number of fronts. This has the potential to pose a serious threat to cohesion within the main western institutions because the wider issues raised by the EU-WEU-NATO membership congruence debate relate closely to core debates about the future of European security, and in particular the nature and form of security relations between Europe and the United States. The potential for transatlantic tension and disagreement is perhaps most obvious and certainly most often discussed. But if the political temperature does rise it is unlikely that future rows could be neatly contained and managed within a straightforward transatlantic framework. To do so would require that EU Member States solidly cohere around single jointly-agreed positions. But it is more likely that fissures would reappear among the EU membership along similar lines to those that were apparent during 1990 and 1991 during the negotiation of the TEU. Then, as noted, west European governments had splintered into an Atlanticist camp led by the UK and a Europeanist one led by France. The Federal Republic of Germany—not for the first time—endeavoured to avoid committing itself firmly to one side or the other. The main issues of contention in the early 1990s were generally similar to those that suggest themselves today: the broad matter of the most appropriate institutional relationship between the EU and NATO and, as a subset of this, the specific question of whether the WEU should be absorbed into the EU or retain a distinct institutional identity of its own. That round of debate was effectively won by the Atlanticist group, with the victory being attributable chiefly to skilful British diplomacy. The UK induced the Italian government to abandon its

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advocacy of the idea of “transplanting” the WEU into the EU and instead to throw its support behind the British idea of the dual “bridging” role for the WEU, standing between the EU and NATO, which was eventually written into the TEU.18 The UK position is likely to remain important in determining both the nature and the depth of future intra-EU disagreement. Previous Conservative administrations under Margaret Thatcher and John Major maintained consistent opposition to any suggestion that the EU should take over the WEU and thus acquire directly its own defence component.19 The outline agreement reached in Amsterdam in June 1997 that this might actually be considered in future thus appears to represent a significant concession by the new Labour government. Caution is in order in making this assertion, however, because the Amsterdam text does not say that the WEU will actually be absorbed into the EU; it merely opens up that option if a consensus among Member States can be forged in its support. The draft treaty text also pledges that such action will not harm the security co-operation that already takes place with the us through NATO. On the other hand, assuming that the Treaty of Amsterdam is ratified, the door will then be formally open to the absorption of the WEU by the EU, which was not the case under the terms of the Maastricht TEU. Correspondingly, it can be argued that the scope for future intra-EU disagreements on this question, and by inference the problem of membership congruence with NATO, will increase too. The likely position of France is also of interest in this context given the French government’s role in heading up the Europeanist side of the debate in 1990 and 1991. Since that time, and especially since Jacques Chirac became president of France, much has been made of an apparent desire for a rapprochement with NATO, which some believe will soon lead to a French decision to rejoin the integrated military command and planning structures from which President de Gaulle progressively disengaged during the 1960s. Recently, however, this process appears to have stalled as disputes have crystallized around us refusal to countenance giving up command of NATO’s southern region to a European (i.e. French) commander. American tetchiness and refusal to compromise on this issue can itself be interpreted as a sign of irritation with the way things went in Amsterdam and more generally with the perceived reluctance of most EU governments, and especially the French, to take seriously the problem of underlapping security guarantees.20 In sum, it certainly cannot be said that the French political and military elite has ditched its enduring Europeanist perspective, and France remains the most likely leader of a coalition supporting a reduced American presence and profile in European security structures and posture should active debate once again be engaged on these issues in the future. A final potential focus of tension and disagreement should be noted: that which might increasingly develop between current EU members and would-be new members during the course of accession negotiations. Tensions might possibly arise if western governments made clear that they felt EU and WEU enlargement in themselves were sufficient for the easterners and in effect ruled

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out further NATO enlargement in future. Many commentators in western Europe have assumed rather condescendingly that EU membership ought to be enough on the grounds that what the eastern states really need are not military security guarantees but rather the economic progress and political stability that membership in the EU is supposed to promote and entrench. This is not how many leaders in central Europe and the Baltics see things, however. Many of them make no distinction between EU and NATO membership and have made clear that they want both. Given the historical insecurities of central Europe and the Baltics arising from their geographical status as “the lands between” major powers in both the East and the West, the fact that many of their leaders are concerned with gaining access to what they see as being effective security guarantees through NATO should really come as no surprise. In addition, there has existed a powerful sense that nothing less than accession to both institutions will be adequate to ensure that eastern states are accepted as full members of “the West”. Dana Allin, among others, has warned of the risks if these aspirations are disappointed: East-Central Europe’s political elite—and this includes the former communists—have staked their legitimacy on their countries’ gradual but steady adherence to the West. Rightly or wrongly, this is understood to have essentially two institutional meanings: the European Union, and NATO… To turn back now, to close the doors of either or both institutions, would very likely delegitimize that Western orientation among large segments of these societies. No one can be certain that the consequences would be catastrophic, but it is easy to imagine them as intolerable.21 Eastern leaders have sometimes gone so far as to argue that they consider accession to NATO a more urgent priority than accession to the EU. President Václav Havel of the Czech Republic made this argument in an interview with a German newspaper in 1995, saying that: For reasons of security, being accepted into NATO is indeed more urgent for us than being accepted into the European Union. No-one knows what the further developments in Russia will be like and whether we will not experience unpleasant surprises there. Now time is really ripe to seriously negotiate about our membership in NATO; it alone offers a security guarantee. Integration in the European Union remains a long-term process.22 The Commission opinions published in Agenda 2000 dealt with the applications of ten candidate countries in total. Of these, three (the Czech Republic, Hungary and Poland) had, it was noted, been invited to open accession negotiations with NATO. All of the other seven (Slovenia, Estonia, Romania, Bulgaria, Slovakia, Latvia and Lithuania) had, in the identical phrases used in each separate

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Commission opinion, “made clear its desire to become a member of the WEU and NATO as soon as possible” [emphasis added]. Furthermore, when indications surfaced in 1996 that both the us and some EU Member States were considering the consolation prize option of effectively offering early EU membership to the Baltic states in compensation for limiting prospects of their ever joining NATO, the latter’s governments were quick to go on record at a senior level in deploring the idea.23 Conclusion: are frictions inevitable? For all the reasons discussed in the preceding section, tensions and disagreements are certainly possible: within the EU, within NATO, and between members and non-members of both institutions. But there are several related developments underway that could at least help to mitigate the problems examined above. Probably the most important of these has been the widespread participation by states throughout Europe in the NATO-led multinational forces which have been responsible for overseeing the implementation of the peace accords in Bosnia since the beginning of 1996. Although there is a danger of reading too much significance into ground-level military co-operation it would be equally foolish to underestimate or disregard its importance altogether. The widespread national participation in multinational operations in Bosnia has cut across traditional membership boundaries between NATO and the EU as well as across those distinguishing members from non-members of either institution. All four of the non-NATO members of the European Union were participating in the NATO-led stabilization force in Bosnia during 1997. So were all five of the applicant countries recommended for EU membership in Agenda 2000. The importance of this kind of co-operation has been noted by Asmus & Nurick, who are particularly interested in the Baltic region. They have argued that: NATO can…contribute to new patterns of cooperation among key regional actors in creative ways. In the current [1996] set-up in Bosnia, for example, NATO created a situation in which the Nordic brigade— comprising NATO Danish and Norwegian troops, non-NATO Swedish, Finnish and Polish forces as well as contingents from the Baltic states— operates next to Russian troops, all under us command and Alliance auspices. Thus, nearly all the key players in Baltic security find themselves cooperating on the ground in Bosnia under an Alliance umbrella… Although a modest step, this underscores how the Alliance helps bridge a variety of existing fault-lines and brings together countries in unprecedented patterns of defence cooperation.24 In addition to the operational co-operation that has been developed in Bosnia, three of the four non-NATO EU states (all except Ireland), together with the

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five leading applicants and also the five eastern states whose applications to join the EU were deferred in Agenda 2000, participate in the broader opportunities for regular political and diplomatic dialogue and consultation provided for by the various co-operative councils and committees that have developed around the parent NATO structures since 1991. One of the agreements reached in Madrid was to consolidate and enhance these by bringing them together under the auspices of a new “Euro-Atlantic Partnership Council” (EAPC). This, it was stated, would give the non-member states opportunities to “develop a direct political relationship with the Alliance”.25 The importance of this lies in the fact that, while the international operations in Bosnia will presumably be either wound-up altogether or at least gradually reduced within a finite period of time, the EAPC is envisaged as a permanent forum for consultation and co-operation. Complementing it within a year or two may be a series of joint military exercises, training and actual deployments of what in NATO parlance are known as “Combined Joint Task Forces” (CJTFs), defined as “a multinational, multiservice, task-tailored force consisting of NATO and possibly non-NATO forces capable of rapid deployment to conduct limited duration peace operations beyond Alliance borders, under the control of either NATO’s integrated military structure or the Western European Union”.26 CJTFs will help to institutionalize the kind of military co-operation that has been seen in Bosnia since 1996 and make it easier to organize and deploy multinational forces to future hot spots in which Americans and/or Europeans believe their security interests are at stake. The CJTF concept was formally adopted by NATO at the Brussels summit in 1994. In the summit declaration the term was used specifically to describe “a means to facilitate contingency operations, including operations with participating nations outside the Alliance”. The concept was also taken up and used by those who wished to focus on another passage of the declaration that opened up the possibility of making “collective assets of the Alliance available… for WEU operations undertaken by the European Allies in pursuit of their Common Foreign and Security Policy”.27 Since 1994 progress on working out the details of the CJTF concept has been slow and it still cannot be said to be up-and-running. Nevertheless, merely adopting the concept as an official NATO objective has had the effect of promoting the development of better day-to-day relations between NATO and the WEU. A number of agreements between the two have been signed dealing with, for example, modalities governing the exchange of classified military information. Given the political sensitivity of the whole question of relations between NATO and the WEU for the United States in particular, anything which assists in developing links between the two deserves to be viewed in a positive light. Recently, there have also been hints that a broader institutional dialogue may soon get underway between NATO and the European Union. During 1996 and 1997 reports surfaced in the media of informal meetings between Javier Solana,

THE NATO FACTOR 61

the Secretary-General of NATO, and European Commission President Jacques Santer to discuss security matters. These get-togethers have apparently been very tentative and both sides have been reluctant to confirm that they have even been held. That such meetings have taken place at all is an improvement on the situation that prevailed during the cold war years, however. Then there was absolutely no contact between officials of the two institutions, despite the fact that the European Commission and, from 1966, the NATO headquarters were both located in Brussels. All of the developments discussed here are valuable to the extent that they help to blur boundaries and make less sharp the distinctions between NATO member states, non-NATO members in the WEU/EU, and aspirants for membership of both institutions. In themselves, however, none of them will resolve the EU-WEU-NATO enlargement dilemma. The process of expanding NATO does have the potential to disrupt and perhaps derail the EU enlargement process—to become a “spanner in the works” of EU enlargement—unless the member governments of both NATO and the EU are prepared to address head-on the risks of increasing membership incongruence. For this to happen, both an awareness of the risks of allowing the two processes to proceed unlinked and, of course, political will to do something about them are going to be required on the part of the member states of both institutions. Neither commodity has been sufficiently in evidence to date. Notes 1 For a rare and honourable exception see M.Ruehle & N.Williams, “NATO enlargement and the European Union”, The World Today 51(5), 84–8, 1995. 2 Study on NATO Enlargement, 8 (Brussels: NATO Information Service, 1995). 3 House Foreign Affairs Committee, The NATO Summit and the future of European security, 2 (Washington DC: us Government Printing Office, 1994). 4 W.Wallace, “On the move—destination unknown”, The World Today 53(4), 101, 1997. 5 For Clinton’s Warsaw speech see Public Papers of the Presidents of the United States: William J.Clinton 1994 (Book 1), 1210 (Washington DC: us Government Printing Office 1995). For Christopher’s remarks see BBC Summary of World Broadcasts EE/2043 9 July 1994. 6 A condensed English-language translation of the text of the leaked memorandum was published as “Cracks are appearing in the alliance”, Financial Times, 2 December 1994. 7 For evidence of support for limited EU enlargement among member governments see Wallace (1997), op. cit. Also “No turning back from brave new Europe”, Financial Times, 17 July 1997; “EU expands beyond the Iron Curtain”, The Independent, 17 July 1997. 8 The members of the WEU in 1984 were: West Germany, France, Italy, the UK, Belgium, the Netherlands and Luxembourg. For good general introductions to the history and evolution of the WEU see A.Cahen, The Western European Union and

62 MARTIN A.SMITH

9

10 11

12 13 14 15 16

17 18

19

20 21 22 23 24 25 26

NATO (London: Brassey’s, 1989). Also R.Laird, The Europeanization of the Alliance, Chapter 2 (Boulder Co.: Westview, 1991). To the chagrin of many Europeanists the administration engaged in a number of direct lobbying activities. See A.Menon, A.Forster, W.Wallace, “A common European defence?”, Survival 34(3), 105, 1992. This phrase was used by several us officials based at NATO headquarters in Brussels and interviewed by the author during the course of 1992. Article V of the WEU’S treaty states that: “If any of the High Contracting Parties should be the object of an armed attack in Europe, the other High Contracting Parties will, in accordance with the provisions of Article 51 of the Charter of the United Nations, afford the Party so attacked all the military and other aid and assistance in their power”. Study on NATO Enlargement, op. cit. S.Duke, “The Second Death (or the Second Coming?) of the WEU”, Journal of Common Market Studies 34, 184, 1996. See R.Asmus & R.Nurick, “NATO enlargement and the Baltic States”, Survival 38 (2), 123, 1996. A.Lieven, “Baltic iceberg dead ahead: NATO beware”, The World Today 52(7), 179, 1996. Draft Treaty of Amsterdam, Title V Article J.7(i). (Brussels: General Secretariat of the Council of the European Union, 1997). It should be noted that at the time of writing the draft treaty had not been ratified by all EU Member States and thus had yet to enter into force. European Commission, “Agenda 2000. For a stronger and wider Union”, Bulletin of the European Union, Supplement 5/97, 103, 1997. The bridging concept was formally put forward in a joint Anglo-Italian Declaration on European Security and Defence in October 1991 (text supplied by the UK Foreign & Commonwealth Office). For earlier Italian proposals for transplanting the WEU into the foreign and security policy-making dimension of the new European Union see “Rome says EC should consider forming its own ‘army for defence’”, The Independent, 19 September 1990; “The EC’S security options”, Jane’s Defence Weekly, 27 July 1991, 150–2. See, for example, the firm statement of official British opposition by the British ambassador to NATO and the WEU published in 1996. Sir John Goulden, “The WEU’S role in the new strategic environment”, NATO Review 44(3), 23–4, 1996. During 1997 the us reportedly rejected several French efforts to reach a compromise. See “Riling NATO”, The Economist, 21 June 1997, 41–4. D.H.Allin, “Can containment work again?”, Survival 37(1), 62, 1995. Quoted in J.Morrison, NATO expansion and alternative future security alignments, 80 (Washington DC: National Defense University Press, 1995). See “Baltics may have to take ‘second best’”, Financial Times, 22 November 1996. Asmus & Nurick (1996), op. cit., 136. The Euro-Atlantic Partnership Council (Brussels: NATO Information Service, 1997). C.Barry, “NATO’s Combined Joint Task Forces in theory and practice”, Survival 38 (1), 84, 1996.

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27 See the text of the Brussels Declaration reproduced in NATO Review, 42(1), 31, 1994.

Part II: The Structural Problems of EU Enlargement

5 The challenge of EU enlargement: EU and CEE perspectives David Phinnemore

Eastwards enlargement is undoubtedly one of the biggest challenges with which the European Union has ever had to deal.1 Never before has it been faced with so many countries wishing to join. As discussed in Chapter 1, the Copenhagen European Council in June 1993 stated that central and eastern European countries (CEECs) that so desired shall become members provided they meet certain criteria, and expectations of accession within each of the CEECs rose. Eastwards enlargement appeared to be firmly on the EU’S long-term agenda. However, although ten CEECs expressed their desire to become EU members and submitted membership applications, there is no guarantee that all will join the EU. Certainly, the candidate states need to overcome many obstacles if they are to accede, but even if they do successfully negotiate these, it could be that the EU proves neither able nor willing to admit all aspirant members. The chapter focuses in more detail on the problems that the EU and the applicant countries may encounter in the enlargement process. An initial examination of how the enlargement agenda has been clarified in 1997 sets the scene for the discussion. It is assumed that the EU will not admit all central and eastern Europe (CEE) applicants en masse. Rather, enlargement will proceed in waves. The second section of the chapter therefore examines the prospects for a first wave of enlargement. Here, attention is drawn to the various real and potential obstacles that must be overcome if new members are to be admitted into the EU. The third section then focuses on the less bright prospects for a second wave of enlargement. In this section, as in the previous one, emphasis is placed on the position of the EU and its Member States in determining the enlargement process. Attention is drawn to Bulgaria and Romania, two of the weakest candidates for EU membership.2 Clarifying the enlargement agenda Ever since the Copenhagen European Council in June 1993 committed the European Union to eastwards enlargement, three questions have dominated the enlargement debate: when will it take place; who will be admitted; and how will the EU continue to function effectively with more than 15 members? The

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European Council’s announcement at Madrid in December 1995 that negotiations on eastwards enlargement would take place as soon as possible after the conclusion of the 1996 Intergovernmental Conference (IGC) provided a partial answer to the first of these questions. It was not until 1997, however, that further progress was made in removing the uncertainty hanging over the enlargement agenda. Three key events took place. First, the European Council in June 1997 reached agreement on the Treaty of Amsterdam and announced that it would take the decisions on the overall enlargement process, including practical arrangements for the initial phase of negotiations, at its meeting in Luxembourg in December 1997. The second key event in 1997 came in July when the Commission published the voluminous “Agenda 2000” documents3 containing detailed avis on each of the CEECs’ applications as well as proposals on how the EU could enlarge. In producing Agenda 2000, the Commission provided its answers to the questions of who and how. On the first of these, it advocated opening negotiations with five CEECs—the Czech Republic, Estonia, Hungary, Poland and Slovenia—while negotiations with the other applicants should be delayed until they were in a better position to assume the burdens of membership. As for the question of how the EU should manage enlargement, the Commission suggested that the five CEECs concerned could be admitted under the existing budgetary ceiling. To enable this, detailed proposals for reform of the Common Agricultural Policy (CAP) and the Structural Funds were put forward. The third key event concerning enlargement was the European Council meeting in Luxembourg in December 1997. This cleared up some of the remaining details to do with when and who by announcing that an “accession process” involving all CEE applicants plus Cyprus would be launched on 30 March 1998.4 In general, however, the Council accepted the Commission’s recommendations on enlargement. Formal bilateral negotiations would then begin with the five states (Czech Republic, Estonia, Hungary, Poland and Slovenia) given positive avis by the Commission in July 1997. It was made clear, however, that the decision to enter negotiations did not imply successful completion. Hence, no date was set for the entry of the first CEE country. Whether the events of 1997 will lead to the EU enlarging eastwards to include all the CEE applicants is open to question. The conclusion of the IGC, the publication of Agenda 2000, and the announcements made at the Luxembourg European Council helped clarify the enlargement agenda, but when the first wave will take place is still open to speculation. The year 2002 is seen, however, as the earliest realistic date. A second wave might then take place five years later.5 Both dates would appear to be optimistic. There is considerable scope for delay given the need to reform the EU, and the need to obtain the approval of all existing Member States and the European Parliament (EP). It is also possible that events may distract the EU away from enlargement, and that some CEE states may lose interest in membership. As for a second wave, the impact of a first wave will be significant. Insufficient reform could delay or jeopardize

CHALLENGE OF EU ENLARGEMENT 67

enlargement beyond first-wavers. Equally, the enthusiasm of the EU and of the CEE states for further enlargement may wane. Maintaining the prospects for enlargement will be a key challenge for the EU in the medium-term. Prospects for a first wave of enlargement Approaching enlargement on the assumption that CEE applicants will be admitted in waves would appear to be the most realistic strategy available to the EU. Significant issues need to be dealt with before enlargement can take place, and it would be irresponsible to raise expectations. The EU’S track-record on major policy and institutional reform in no way suggests that it is either likely or able to resolve these in a manner that would facilitate the speedy admission of all CEE applicants. With the EU most likely to proceed with eastwards enlargement in waves, the implication is that some CEE countries, such as Bulgaria and Romania for example, are unlikely to gain EU entry for quite some time. Equally, optimism concerning early entry on the part of potential “first-wavers” should be constrained. Arguably, the challenges facing the EU in preparing itself for the admission of even five or fewer new members may prove difficult to meet. As a result, enlargement could be limited, or even postponed. Institutional reform As far as EU preparations for enlargement are concerned, there are two main areas where reform is needed if new members are to be admitted: institutions and policies.6 On the former, several reforms are necessary. First, it is widely recognized that in an enlarged EU the continued requirement for unanimity within the Council could lead to decision-making paralysis. Hence, there is a need for qualified majority voting (QMV) to be extended. Secondly, an enlarged EU will result in an increase in the number of small member states. This will further reduce the voting power of the larger Member States in the Council. To redress the imbalance between population size and votes, either votes will have to be redistributed or a new system of voting introduced. Thirdly, the size of institutions such as the Commission and EP will have to be limited for practical as well as efficiency-related reasons as the EU enlarges. Each institution’s membership cannot simply be increased on a pro rata basis each time a new state joins. As far as the Commission is concerned, arguably there is already an insufficient number of portfolios for the present 20 members. Meanwhile, few would eagerly welcome the potential logistical and organizational problems raised by an EP with a membership several hundred more than the current 626. Finally, any further increase in the number of smaller member states in the EU casts doubts over the suitability of the current system of a rotating Presidency for the Council. Arguably, some smaller member states do not have either the resources or international standing to run an effective Presidency. Hence, the

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larger member states should preside more often. Such a shift in practice would, however, undermine the sense that all Member States have equal rights. The need for institutional reform was reflected in the mandate of the IGC.7 One of its key tasks was reform of decision-making procedures. The IGC was also due to address issues concerning the composition and functioning of key institutions, but the Treaty of Amsterdam provides for little more than partial reform. The only relevant reforms of note were the strengthening of the Commission Presidency, which should provide for stronger leadership, and agreement that the EP should have a maximum of 700 members. These, however, do not represent an adequate response to reform needs.8 Following Amsterdam, the distribution of votes within the Council and the mechanics of qualified majority voting remain untouched, as does the composition of most institutions. Hence, the EU remains institutionally ill-prepared for enlargement. Indeed, where agreement on institutional matters was reached, it was in agreeing to defer reform. In a protocol introduced by the new Treaty, the Member States agree that at the time of a first enlargement, the number of Commissioners will be reduced to one per member state “provided that, by that date, the weighting of the votes in the Council has been modified, whether by reweighting of the votes or by dual majority, in a manner acceptable to all Member States”. The reweighting of votes is intended to compensate the large states for giving up their second commissioner and therefore a possible “payoff” has been identified to break the apparent deadlock. Furthermore, at least one year before the EU exceeds 20 members a new IGC is “to carry out a comprehensive review of the Treaties on the composition and functioning of the institutions”.9 The need for reform is therefore recognized. However, although the protocol is legally binding, it only proposes a review. There is no guarantee that reform will follow. Indeed, the failure of the IGC and the European Council at Amsterdam to deal with institutional reform clearly implies a lack of will to address a key enlargement-related issue, and this increases the likelihood of enlargement being delayed. The absence of will on the part of the Member States to reform the institutions was acknowledged by the Commission in Agenda 2000. Here, it noted that the proposed changes contained in the protocol “will not be sufficient to proceed with a substantial enlargement”. Consequently, an IGC as soon as possible after 2000 should produce a “thorough reform” of treaty provisions concerning the institutions and involve the introduction of QMV “across the board”.10 Clearly, the Commission was emphasizing the need for reform at the earliest opportunity and prior to enlargement. However, the difficulties in implementing reform were reflected in subsequent comments from Commission members. These indicated that an enlargement to 21 members does not automatically trigger an IGC.11 Hence from a Commission perspective, an initial enlargement wave to include the Czech Republic, Estonia, Hungary, Poland, Slovenia and Cyprus could proceed without reform.12

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While the Commissioners’ comments were telling in so far as they implicitly recognized the difficulties in obtaining unanimous support for reform among the Member States, the position of the Commission is of limited importance since it cannot block enlargement. By contrast, the Member States can. Hence, their positions are of greater relevance. Belgium, for example, has long been prominent in demanding institutional reform before enlargement.13 Indeed, Belgium, France and Italy have already indicated that institutional reform is a precondition for any further enlargement of the EU. In September 1997, their governments issued a joint declaration, subsequently noted in the Treaty of Amsterdam when signed in October 1997, insisting that “substantial progress towards reinforcing the institutions” is “an indispensable condition for concluding the first accession negotiations”.14 Of note here is the unholy nature of the alliance behind the declaration. On the one hand, Belgium and Italy have traditionally been advocates of a greater integration involving decision-making by supranational institutions (e.g. Commission and EP). On the other hand, France has long championed intergovernmental approaches and the retention of the national veto with greater responsibility for decision-making lying with the Council and European Council. With French support for eastwards enlargement at best lukewarm, establishing reform as a precondition provides a seemingly legitimate means of encouraging delay if not limits to enlargement. Clearly, the need to reform the institutions before enlargement has been recognized. It has not, however, been acted upon. Hence, at present, the EU still has to deal with a key issue if enlargement is to take place. Its inability to do so to date does not bode well. Policy reform The second type of reform necessary for enlargement is policy reform. This is basically owing to the financial costs the EU would incur if new members were to be included in the CAP and made eligible for payments from the Structural Funds. Initial calculations suggested that extending the CAP and structural fund entitlement at current levels would prove prohibitively expensive. For the Structural Funds, it was estimated that admitting the Visegrad Four (Czech Republic, Hungary, Poland and Slovakia) would cost ECU 19.5 billion per annum, thus requiring almost a doubling of expenditure, while admitting Bulgaria and Romania as well would raise the figure to ECU 29.5 billion. A further ECU 30–40 billion per annum would be required to meet the extra cost of extending the CAP and the Cohesion Fund to CEE countries.15 Given opposition among existing Member States to increased budgetary contributions, this would have made enlargement extremely difficult, if not impossible, to achieve. However, estimates of the costs involved in enlarging the EU have decreased (see Chapter 7). This partly reflects the realization that CEE economies do not have the capacity to absorb levels of structural fund aid comparable to existing EU recipients. Also, estimates for the extra expenditure required on CAP

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have been revised down to within a range of ECU 5–15 billion per annum for the Visegrad Four. Consequently, independent studies of enlargement costs have produced less alarming figures, and the Commission has revised down its cost projections. Indeed, in Agenda 2000 it suggests that enlargement in 2002 to include five CEE countries and Cyprus can be achieved without any increase in the budget beyond the current ceiling of 1.27 per cent of EU GDP.16 Affording enlargement requires, however, radical reform of CAP and Structural Fund spending. On the former, further shifts from price support to direct payments is envisaged. With regard to the Structural Funds, the Commission proposes to concentrate and simplify measures via a reduction in the number of objectives from seven to three, and to reduce the percentage of the EU’S population covered. Although Member States acknowledge the need for reform in preparation for enlargement, it is doubtful whether they will all accept radical change. This reflects the fact that they will have to accept a reduction in their receipts from the EU. Indeed, initial responses to Agenda 2000 show that opposition exists to both lower receipts and reform. The Spanish government has indicated that it will not support a proposed reduction of ECU 3 billion in the Cohesion Fund. The Greeks, likewise, are resistant to reform,17 and Ireland and Portugal are likely to resist as well. Among the richer Member States, too, there is opposition. Germany, for example, opposes the proposed CAP reform, arguing that the incomes of German farmers could be cut by 15–20 per cent as a result.18 Given the existence of such opposition, whatever emerges as a result of the reform process will undoubtedly be a watered-down version of the Commission’s proposals. Whether this will be sufficient to enable enlargement to proceed remains to be seen. Traditionally, enlargement has been facilitated by richer Member States increasing their contributions to the EU budget. This is no longer seen as an option. Hence, an additional constraint is imposed on the enlargement process. Indeed, France, Germany, the Netherlands and the United Kingdom are all adamant that they will not pay in extra funds.19 The situation has been exacerbated by German and Dutch demands that their contributions to the budget actually be lowered.20 Admitting new members without increasing the budget will prove difficult enough, but meeting the demands for reduced payments from net contributors could impact seriously on the ability of the EU to enlarge and extend policies and funds to any new members. The position of the Member States In principle, all Member States currently support the EU’S eastwards enlargement. Such support is vital given that the admission of new members requires unanimity in the Council and ratification by each of the existing Member States.21 However, unanimity is not a foregone conclusion as the above discussions on policy and institutional reform show. Also, France and southern

CHALLENGE OF EU ENLARGEMENT 71

Member States have always been reserved about eastwards enlargement. Not only would this result in Germany becoming more influential given its geographical position, it is also argued that increased trade would benefit northern Europe while leading to fiercer competition for French and southern producers.22 Moreover, once enlargement enters domestic political debate, there is the possibility that support among the Member States will weaken. Public opinion, which is lukewarm at best to admitting new members, could turn sharply hostile if enlargement is blamed for CAP and Structural Fund reforms. With well organized farmers fearing competition from cheap imports, opposition could be vociferous. Equally, the prospect of the free movement of people from CEECs if they are admitted to the EU could see right-wing populists attempting to raise and exploit fears of mass immigration. All this could effect enlargement in two ways. First, faced with resistance or opposition at home to the admission of CEE countries, national ministers could pander more to domestic lobbies and adopt less flexible negotiating positions. This would undoubtedly slow down negotiations and make their conclusion more problematic. Ultimately, negotiations could even grind to a halt. Secondly, there is the possibility that opposition to reform and enlargement could threaten national ratification. Although rarely the subject of detailed discussion in national parliaments, acts of accession cannot be guaranteed safe passage. Of note here is Greece’s threat to delay and possibly veto the next enlargement if Cyprus is not included.23 Also, it is not clear whether any existing Member States will hold referenda on the EU admitting new members. Although not usually part of the ratification process, a referendum on the 1973 enlargement was held in France. Evidently, there is a need for enlargement to be presented positively if it is to be accepted in principle and ratification within the EU is to be successful. The position of the European Parliament The Member States obviously play a key role in deciding whether a given applicant may join the EU. Similarly, the EP is important since it must, by an absolute majority of its members, give its assent to any enlargement.24 Traditionally, the EP has been cautious in supporting increased membership of the EU. Indeed, it is acknowledged within the EP that there are many members “who would quietly rejoice were enlargement to be almost indefinitely delayed”.25 Rather, the EP advocates a deepening of integration before enlargement. Indeed, in May 1996, it warned that “over-hasty accession…[of the CEE countries]…on purely political grounds would undermine the internal market and would result in the Union functioning less effectively”.26 Hence, given the extremely limited progress the EU has made in introducing institutional reform, the EP is wary of proceeding quickly with eastwards enlargement. In June 1997, MEPS voted in favour of a resolution which assumed “that no enlargement negotiations would be concluded in practice before the

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necessary institutional reforms have been introduced”.27 Later, in November 1997, a second resolution was adopted. In this, MEPS affirmed that institutional reforms “should be completed before enlargement” and called on the European Council “to affirm that no new members will be admitted before the completion of the institutional reform necessary for the proper functioning of an enlarged Union”.28 At present, one can only speculate about the position the EP will adopt when presented with accession treaties for its assent. The resolutions noted suggest the possibility of the veto being threatened if adequate institutional reform is not introduced first. However, whether the EP would withhold its assent to new members is open to question. Based on the experience of the 1995 enlargement, the EP is reluctant to use its power. In May 1994, despite opposition to the Ioaninna Compromise,29 the EP failed to wield its veto and, somewhat unexpectedly, overwhelmingly approved the accession of Austria, Finland, Norway and Sweden. All the same, the fact that the EP does have a veto means that it can threaten the enlargement process. The EU’S internal agenda The existence of so many issues potentially delaying the enlargement process is clearly cause for caution in projecting the timetable for enlargement. Delay may also be affected by other items on the EU internal agenda. Two key issues stand out: economic and monetary union (EMU) and ratification of the Treaty of Amsterdam. By late 1997, stage III of EMU looked set to go ahead on 1 January 1999 as planned, but the reality of EMU could divert attention away from enlargement if its implementation proves to be problematic or unpopular. The risk of the Amsterdam Treaty not being ratified did, however, begin to recede in the first half of 1998. In late May, the Danish people, who had initially voted “no” to the Treaty on European Union (TEU) in 1992, approved the Treaty of Amsterdam in a referendum. This followed popular approval of the Treaty in Ireland a week earlier despite the potential for opposition to policy reform and the prospect of lower receipts from the Structural Funds post-enlargement. Similar concerns may still apply, however, to ratification in the Mediterranean states, notably in Portugal where a referendum will be held. Alternatively, it could be argued that problems in implementing stage III of EMU or ratifying the Treaty of Amsterdam might, in fact, hasten enlargement as the EU seeks to divert attention away from its own problems. Certainly, the decision in 1992 to bring forward the start of negotiations with Austria, Finland, Norway and Sweden was, in part, a reaction to the problems facing ratification of the TEU. However, the 1995 enlargement was far less challenging for the EU than the prospect of admitting CEE countries. In 1992, it was faced with the prospect of admitting rich and established market-based economies.

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The situation in the applicant states The discussion so far has focused predominantly on how the situation within the EU may affect the prospects for eastwards enlargement. Attention needs also to be paid to the situation of the CEE applicants. Currently, it is almost assumed that each of the CEECs, if offered membership, would automatically accept it. Indeed, opinion poll findings show widespread popular and political support for EU entry in the CEE applicants (see Chapter 11). Any referendum that might take place on EU membership would be expected, therefore, to produce a positive result. However, knowledge and understanding of the EU in CEECs is notoriously limited.30 Arguably, as the prospect of entry draws nearer, the debate on the merits of membership currently confined to the margin of politics in these countries will move centre stage. While the sense of being part of Europe as a consequence of membership is likely to prove attractive, some CEE voters may fear a loss of independence so soon after having removed the constraints imposed by Soviet hegemony in the region. Also, the terms of accession will play an important role. If CEECs are required to assume early on the more economically burdensome elements of the acquis, such as environmental, health and safety standards, fears of job losses could dampen enthusiasm for membership (see Chapters 8 and 9). Already the Commission has estimated that it could cost the CEECs ECU 120 billion to bring their environmental standards up to EU norms.31 The situation in each of the applicant states cannot therefore be ignored. Prospects for a second wave of enlargement As already indicated, enlargement is likely to proceed in waves. The participants in a second (or even third) wave are most likely to be those countries which the Commission did not recommend for negotiations in Agenda 2000. These are Bulgaria, Latvia, Lithuania, Romania and Slovakia. It is also possible that they will be joined by some of the first group to negotiate. That these countries will enter the EU as part of a second wave is not, however, a foregone conclusion. Just as obstacles stand in the way of an initial eastwards enlargement of the EU, hurdles have to be overcome if a second wave is to occur. Indeed, it is arguably the case that the obstacles standing in the way of a second wave are considerably more daunting and potentially even insurmountable. Not only will the EU have to deal (again) with issues already raised in the context of a first wave of enlargement, it will also have to contend with the impact of any new members on the EU. As far as the CEE applicants are concerned, the domestic consequences of noninclusion in a first wave could change attitudes towards membership.

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Institutional reform The failure of the Treaty of Amsterdam to introduce institutional reform is clearly of concern to all would-be members. It should, however, be particularly worrying for those most likely to remain excluded from a first round of enlargement. The current lack of political will among existing Member States to introduce institutional reform suggests that any reform in advance of a first eastwards enlargement will be characterized more by fudge than by fundamental change. Consequently, further reform will be required if a second wave of enlargement is to take place. The chances of reaching agreement on such reform will be limited. First, in a post-enlargement EU, the unanimity required for institutional reform will simply be even more difficult to achieve. Secondly, as the EU proceeds towards a membership well in excess of 20, it is arguably the case that the institutional reforms necessary become more radical. Such reforms, however, will be more difficult to achieve given differences among the Member States on the preferred roles for the institutions. Also, whatever scope for compromise on institutional issues existed prior to the first enlargement will probably have been exhausted in any reform negotiations. Finally, it is necessary to recall that the reforms will have to satisfy the EP as well as the parliaments of the more integrationist Member States (e.g. Belgium) if ratification of any accession treaty is to proceed. By not addressing the need for institutional reform in advance of a first wave of enlargement, the membership prospects of potential second-wavers are undoubtedly reduced. Policy reform A similar argument applies to policy reform. If a second wave of enlargement is to take place, further policy reform will be necessary. Prospective second-wavers are generally poorer economically than the likely first-wavers. The GDP per capita of both Bulgaria and Romania as a percentage of the EU average is only 7 per cent, compared to 16 per cent for the five CEECs recommended for accession negotiations (see Table 7.1, p. 108). Hence, demands on the Structural Funds will be considerable. Also, most of the five CEE applicants not yet invited to negotiate accession are heavily reliant on agriculture. In Bulgaria and Romania, for example, agriculture employs 23.2 per cent and 34.4 per cent of the workforce, respectively, compared to an average of 7.1 per cent for the “recommended” five CEECs (see Table 7.7, p. 116). Whether it will be possible to achieve further agricultural or Structural Fund reform is open to question. First, reform could prove elusive given the greater difficulties in reaching unanimous agreement within an enlarged EU. Secondly, not only will existing Member States continue to defend their positions, but the new Member States will defend vigorously any hard-fought concessions gained at the time of their accession. Equally, once admitted, they will undoubtedly add their own priorities and interests to debates. Indeed, admitting CEE countries

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will increase the number of poorer Member States benefiting from the Structural Funds and the CAP. Hence, there will be an even larger bloc resistant to further enlargement. This bloc also features prominently in a third policy-related obstacle to a second wave of enlargement: the need for budgetary reform. The budgetary perspective currently being proposed is only due to cover the period until 2006, and experience already shows that agreeing any increase in the budgetary ceiling is problematic in the extreme. Added to this is the fact that existing net contributors are already demanding decreases in their payments. To compound the situation, the CAP is also due for review in 2006. The impact of a first wave of enlargement is likely to prove influential here, too. The impact of a first wave of enlargement and the EU’S internal agenda A further hurdle to the inclusion of CEE states after a first wave of enlargement is the EU’S own agenda. While officials in CEE states may argue that once a country fulfils the criteria for membership it will be admitted, there is every possibility that the EU’S enthusiasm for eastern enlargement, however limited it may already be, will wane. As noted earlier, ratification of the Amsterdam Treaty and EMU could divert the EU’S attention away from enlargement. Similarly, EMU and the speed and extent of integration could dominate the agenda thereafter. Also, it is worth noting that no country is likely to enter the EU if it does not have a prominent champion among the existing members. At present, champions of the likely “first-wavers” do exist. The Czech Republic, Hungary and Poland can all rely on Germany’s support; Estonia can count on Finland and Sweden; and Slovenia is supported by Italy and Austria. By contrast, Bulgaria and Romania currently lack prominent backers. Greece, for economic and strategic reasons, has expressed its support for their candidacies, and Romania can normally rely on France to advance its case. But most statements of support amount to little more than routine diplomacy. “Second-wavers” will need prominent backers to see their causes advanced. A further possible hurdle to a second wave of eastern enlargement is whether the Union will have the will or capacity to continue enlarging after a first wave. To go beyond the envisaged 21 members—or indeed, even to enlarge from the current 15—could seriously endanger the functioning and integrity of the EU.32 The more pro-integration or federalist-minded Member States also fear that a larger Union will prevent further integration. Arguably, the weak provisions for closer co-operation (flexibility) contained in the Treaty of Amsterdam cannot be easily used and hence do little to reassure these states. Without the means by which further integration can be assured, the more integrationist Member States may apply the brake on the enlargement process. Added to such fears, there is the distinct possibility that a first wave of enlargement will deter the EU from proceeding with a second wave. Admittedly, the EU is relatively experienced in enlarging itself, and a first wave of eastwards

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enlargement will be the fifth time the EC/EU has increased its membership. However, experiences to date have involved admitting no more than three new members in any one enlargement, and no more than two economically weak countries at once. The EU has no experience of accommodating and adjusting to countries with economies in transition towards a market economy. The challenges may prove too demanding and disruptive. Strong resistance to further enlargement to include even less economically advanced CEE applicants could emerge. The situation in the applicant states Evidently, the situation within the EU is a major factor in determining whether and when a second wave of enlargement will take place. Equally, however, the economic and political position of the applicant country is important. No country is likely to receive an invitation to negotiate membership unless the EU is satisfied that it can meet the Copenhagen criteria. So Slovakia will have to tighten up its record on democracy and human rights while Bulgaria, Latvia, Lithuania and Romania will have to make considerable progress with domestic economic reform and promote greater economic stability if their chances of EU entry are to be improved. Whether such reform can be achieved is open to question for several reasons. First, the long-term commitment to reform in each of the countries concerned may weaken, particularly given the scale of what, according to the Commission, still needs to be done. Bulgaria and Romania have only recently begun to grapple seriously with the requirements of the reform process, and, although they have expressed their commitment to reform, there is no guarantee that reform will continue. Considerable effort was made under new governments during 1997 to highlight the reforms in the hope of influencing favourably the Commission’s avis. Rejection from a first round of negotiations may lead governments to question the value of reform, particularly if the EU is not willing (before 2000, at least) to reward any progress made. It is worth noting here that officials in Romania, for example, did not expect the country to be among the first to be included in an eastwards enlargement. What was hoped for was the opening of negotiations as a clear signal that the reform effort was being acknowledged and that Romania was firmly on the road to EU membership. This was necessary for international and domestic reasons. On the former, the impact on foreign direct investment (FDI) could be significant. The Romanian economy, for example, is in need of investment, yet FDI is more likely to go to those CEE countries with the best medium-term membership prospects. Those countries excluded from a first wave could see FDI levels fall.33 Whether the decision to launch the accession process in March 1998 will prove sufficient to encourage foreign investment remains to be seen. The importance at the domestic level of being invited to negotiate, relates to a second reason questioning whether the reform process will continue: the

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significance of popular support. Given that the prospect of EU membership has been used to help justify the severity of the economic reforms introduced so far, non-inclusion in a first wave of enlargement could increase popular disillusionment with the reform process, reform-minded governments and the EU. It should be noted that the Commission’s avis were published barely a week after NATO announced at Madrid that it would be issuing membership invitations to only three countries: the Czech Republic, Hungary and Poland. Hence, for Bulgaria, Latvia, Lithuania, Romania and Slovakia, the NATO decision and the Commission avis represented a double rejection. Also, support for reformminded governments may decrease if the electorate associates non-inclusion in NATO and the EU as a failure in government policy. Election results in CEE countries since 1989 provide ample evidence of voters reluctant to re-elect reform-minded governments. Where, as in Romania and Bulgaria, the government is a coalition, this could also undermine cohesion and reduce longevity. Finally, any sense of rejection may lead to a further decline in support for EU membership within CEE countries. Eurobarometer polls show worryingly high percentages of undecided, opposed and “don’t knows”, particularly in the Baltic states.34 Thirdly, whether or not the CEE countries have the capacity to reform further will also affect their chances for EU membership. Here reference should be made not only to what still needs to be done, but also to the resources required. The Commission’s avis noted in the case of Romania, for example, that it had “neither transposed nor taken on the essential elements of the acquis, particularly as regards the internal market”. Moreover, “considerable efforts will be needed in the areas of the environment, transport, employment, social affairs, justice and home affairs as well as agriculture”. Clearly, although recognition is given to the “considerable” progress in creating a market economy, additional reforms need to be introduced. Equally, implementation and enforcement will need to be addressed. As the Commission noted, “substantial administrative reform will be indispensable if Romania is to have the structures to apply and enforce the acquis effectively”.35 Similar comments were made concerning Bulgaria. Maintaining the prospects for enlargement Evidently, non-inclusion in a first wave of enlargement could have a negative impact on affected countries and their chances of admission at a later date. Conscious of this and the EU’S commitment to admitting all CEE applicants, the European Council in Luxembourg in December 1997 announced four initiatives based on Commission proposals contained in Agenda 2000. The first was an enhanced pre-accession strategy “intended to enable all the applicant states…eventually to become members”. The second was an annual European Conference involving CEE applicants and EU Member States and designed “to address questions of general concern to the participants and to broaden and deepen their cooperation on foreign and security policy, justice and home affairs, and other areas of common concern, particularly economic matters and regional

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cooperation”.36 Thirdly, each applicant’s progress towards accession would be reviewed annually. Finally, applicant states would be allowed to participate in some EC programmes and sit as observers on relevant management committees. As far as the enhanced pre-accession strategy is concerned, this will bring together existing forms of EU support within a new single framework, the Accession Partnership. Arguably, therefore, it offers little more than a repackaging under a new more positive title of existing forms of assistance. All the same, the emphasis of the Accession Partnership is clearly accession-oriented. It will “mobilize all forms of assistance” and link financial assistance “to compliance with the programme for the adoption of the acquis”.37 Also, as part of the enhanced strategy, pre-accession aid will be “increased substantially”. The existing PHARE programme will be refocused and have two priority aims: the adoption and implementation of the acquis; and reinforcement of administrative and judicial capacities. PHARE assistance, scheduled to be ECU 1.5 billion per annum during 2000–2006, will also be supplemented from 2000 with agricultural and structural instruments similar to those in the EC’S own Cohesion Fund. Support will be directed particularly at those CEE states with the greatest need. How much extra aid will be made available was not stated, although initial Commission estimates in Agenda 2000 suggested that extra financial support of ECU 1.5 billion per annum would be needed.38 For the five CEE applicants not invited to open negotiations in March 1998, the extra assistance will be welcome. Whether it will be sufficient to meet their needs, however, is open to question. Germany’s experience of unification suggests that even the most generous amounts of aid will fall short of what is required. Also, it is questionable whether the European Conference and the annual reviews announced at Luxembourg really meet the needs of the five non-invitees. In many respects, the European Conference is simply a revamped, yet higher profile, version of the higher levels of multilateral dialogue already in existence between the EU and the CEE applicants. Indeed, it could be argued that the Conference’s main purpose was to provide Turkey with some form of compensation for having its membership aspirations dampened once more.39 As for the review process, the commitment to regular Commission reports will ensure that the prospect of further accession negotiations does not disappear totally from the EU’S agenda. It should also provide the applicants with regular checklists of what remains to be done in adapting to the acquis. All the same, annual reviews do not commit the EU. Moreover, a positive review will not necessarily provide CEE governments with any tangible rewards for continuing with the reform process. Arguably, the enhanced pre-accession strategy could improve the membership prospects of those countries that will not be included in a first wave of enlargement, but the strategy will have to be implemented in full. Financial assistance will have to be forthcoming and appropriately targeted; the European Conference will have to be more than a mere talking-shop and involve genuine and purposeful dialogue; the annual review will have to be constructive with the

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EU, as well as the applicant states, responding to new developments and challenges; and involvement in EU programmes will have to be extensive and worthwhile. In addition, the promised integration into Trans-European Networks will have to be realized. The EU could also improve further access to EU markets for agricultural goods; and, with regard to Bulgaria and Romania, it could remove remaining visa restrictions where these still apply. Tangible evidence of integration and the EU’S desire to admit CEE applicants beyond a first wave is vital if faith in the EU’S commitment to ongoing eastwards enlargement is to be sustained. Conclusion The fact that the EU is edging closer to admitting its first CEE members suggests that the political will, if not necessarily the political enthusiasm, to enlarge does exist. Enlargement will almost certainly proceed in waves, with the five countries invited to negotiate in March 1998 having the best chances of early entry. When this will take place is open to speculation. The EU’S failure to date to prepare itself for eastwards enlargement means that significant institutional and policy reform issues remain to be resolved. Further prevarication on these will simply see enlargement delayed. For those countries due to negotiate as part of an intended first wave, any further delay, while frustrating, will not be catastrophic. The fact that the EU has committed itself publicly and on several occasions to enlarge should be reason enough to expect at least one eastwards enlargement to take place. For those countries not included in a first wave, however, any delay will strengthen the argument that the EU’S enthusiasm and capacity for enlargement is limited. Also, considerable obstacles exist to a second wave of enlargement. These relate not only to the need for further institutional and policy reform, but also to the effect an initial eastwards enlargement is likely to have on the EU. Moreover, it is possible that non-inclusion in a first wave of enlargement will impact negatively on the affected countries thus reducing their chances of meeting the accession criteria. The challenge of eastwards enlargement is considerable. Meeting this challenge will not be as smooth as many might have hoped. Notes 1 C.H.Church, “What necessity for European Union enlargement?”, Annuaire Européen/European Yearbook 41, 1–16, 1995. 2 Romania and Bulgaria are usually ranked ninth and tenth respectively in informal assessments of the ten CEEC prospects for EU entry. See The Economist, 31 May 1997, 17; Business Central Europe, September 1997, 20–21. Where unattributed, observations made with regard to Romania draw on interviews carried out with

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3 4 5 6

7

8

9

10 11 12 13

14

15 16 17 18 19

20 21

officials at the Ministry of Foreign Affairs in Bucharest in June and September 1997. See European Commission, “Agenda 2000”, Bulletin of the European Union, Supplements 5–15/97, 1997. Council of the European Union, Presidency conclusions: Luxembourg European Council (Brussels: 1997). The Economist, 19 July 1997, 35; H.-D. Jacobsen, “The European Union’s eastward enlargement”, European Integration online Papers 1(14), 8, 1997. R.E.Baldwin, Towards an integrated Europe (London: CEPR, 1994); Federal Trust, Enlarging the Union (Federal Trust Papers 13, London, 1996); H. Grabbe & K.Hughes Eastwards enlargement of the European Union (London: RIIA, 1997). B.Laffan, “The IGC and institutional reform of the Union”, in The politics of European Treaty reform, G.Edwards & A.Pijpers (eds), 288–305 (London: Pinter, 1997). Indeed, an enlargement of the EU to 18 member states including Poland would require a redistribution of seats in the EP if seats were allocated in line with the existing proportion of members to population size. See W. Wessels, “Der Amsterdamer Vertrag: durch Stückwerksreformen zu einer effizienteren, erweiterten und föderalen Union?”, Integration 20(3), 126, 1997. European Union, Treaty of Amsterdam, Protocol on the institutions with the prospect of enlargement of the European Union (Luxembourg: Office for Official Publications of the European Communities, 1997). European Commission, “Agenda 2000. For a stronger and wider Union”, Bulletin of the European Union, Supplement 5/97, 13, 1997. Financial Times, 11 July 1997, 2. Were Slovakia to be invited to negotiate on the basis of a favourable review in 1998, the possibility of enlarging without reform would decrease. See, for example, the attempt of the Belgian government to have an extra declaration added to the Amsterdam Treaty in July 1997. European Voice, 3 July 1997, 7. European Union, Treaty of Amsterdam, op. cit., Declaration by Belgium, France and Italy on the Protocol on the institutions with the prospect of enlargement of the European Union. See also European Voice, 18 September 1997, 1; Financial Times, 16 September 1997, 2. H.Leipold, “The cost of enlargement”, Aussenpolitik 46(2), 131, 1995. See also Grabbe & Hughes (1997), op. cit., 38–44. European Commission, “Agenda 2000”, op. cit., 66. Financial Times, 17 July 1997, 3; Financial Times, 15 September 1997, 2. Financial Times, 18 July 1997, 5; Financial Times, 17 September 1997, 28. Financial Times, 17 July 1997, 3. A reduction in the UK’S annual rebate has often been seen as one way of increasing the size of the budget in preparation for enlargement. However, no doubt sensitive to the political fallout of proposing such a move, the Commission argues in Agenda 2000 that re-examination of the rebate mechanism be postponed “until immediately after the first enlargement”. Financial Times, 21 July 1997, 2; Financial Times, 15 September 1997, 2. Treaty on European Union, Article O.

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22 J.von Hagen, “The political economy of eastern enlargement of the EU”, in Coming to terms with accession, L.Ambrus-Lakatos & M.E.Schaffer (eds), 6 (London: CEPR, 1996). 23 Financial Times, 26 February 1997, 2. 24 Treaty on European Union, Article O. 25 T.Spencer, “Enlargement: a parliamentary practitioner’s perspective”, European Business Journal 9(2), 11, 1996. 26 European Parliament, “Resolution on the white paper: preparing the associated countries of central and eastern Europe for integration into the internal market of the Union”, Official Journal C 141/135, 1996. 27 EP Directorate for Press and Audiovisual Services, Session News—The Week, 17 June 1997, 23. 28 EP Directorate for Press and Audiovisual Services, Session News—The Week, 17 November 1997, 21. 29 The Ioaninna Compromise allows for qualified majority votes in the Council of Ministers to be delayed if a blocking minority of 23–25 votes exists. See “The Ioaninna Compromise—towards a wider and weaker European Union?”, Common Market Law Review 31, 453–7, 1994. 30 See R.Rose & C.Haerpfer, “Democracy and enlarging the European Union eastwards”, Journal of Common Market Studies 33, 445–6, 1995; J.Moorhouse, “Central and eastern Europe: accession to the European Union”, Aussenpolitik 47, 368–78, 1996. 31 European Voice, 25 September 1997, 14. See also the World Bank projections of ECU 30–40 billion for Poland alone, as cited in European Voice, 17 April 1997, 1. 32 P.Taylor, The European Union in the 1990s, 130 (Oxford: OUP, 1996). 33 Business Central Europe, July/August 1997, 12. 34 European Commission, Central and Eastern Eurobarometer No. 7, Figure 9 (Brussels: European Commission). 35 European Commission, “Agenda 2000. Commission opinion on Romania’s application for membership of the European Union”, Bulletin of the European Union, Supplement 8/97, 79, 1997. 36 Council of the European Union, Presidency Conclusions: Luxembourg, op. cit., Point 5. 37 Ibid., Points 14–15. 38 European Commission, “Agenda 2000”, Supplement 5/97, op. cit., 53. 39 Turkey applied for EC membership in 1987. It received a generally negative avis in 1989 and has since found itself relegated to the bottom of the list of prospective new EU members.

6 The pre-accession strategy and the governmental structures of the Visegrad countries Michael Alexander Rupp

This chapter will look in more detail at the European Union’s pre-accession strategy for the central and east European countries (CEECs). In particular, it will examine how the Visegrad Four (Czech Republic, Hungary, Poland and Slovakia) have responded to the need for more effective and efficient policy formulation and implementation that the pre-accession strategy triggered. Analysis will focus on the bodies liaising between the EU and each of the four states, and will assess the efficacy of the different internal arrangements adopted. The government structures within the Visegrad Four (V4) are of considerable importance: they were designed to streamline the procedures for making and implementing decisions on European policy, but they also represent in an embryonic form the structures that will remain in place after accession to the Union. The focus on the four Visegrad states arises from their historical trajectory. In 1990 the presidents of Czechoslovakia, Hungary and Poland met in Visegrad, Hungary, and agreed to co-operate in the foreign and in the foreign economic policy field with the explicit aim of joining the European Community. The three states (later four after the division of Czechoslovakia) had several things in common that made them attractive candidates for early accession. Of all the CEECs, their break with the past had been the easiest, their reform policies were the most determined and they had the clearest understanding of the need for effective political, economic and social transformation. They also had the highest expectations of the European Community, but were the quickest in turning early disappointment about the length of time it would take them to join into a thrust of proactive policy-making within the institutions of the Europe Agreements. Their relatively thorough appreciation of the Community’s, and later the Union’s, underlying mechanisms enabled them to extract clearer promises and unequivocal action from the EU, and this helped drive the integration process forward. Since the Visegrad states were the first to sign Europe Agreements with the EU, they are an ideal group to use for analyzing the institutional effects of the pre-accession strategy. The first section of the chapter discusses the institutional dimension of the three central components of the pre-accession strategy: the Europe Agreements, the Structured Dialogue and the PHARE programme. The

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second section discusses how these three components have affected the institutional set-up in the V4. The three central elements of the pre-accession strategy The Europe Agreements The association status established by the Europe Agreements differs substantially from the model of association status prevalent in international organizations. It does not confer on the associates any rights of participation within the EU institutions at all—not even passive participation in the decision-making process. On the other hand, the Europe Agreements are more substantial in terms of policy than most association agreements. Each Europe Agreement covers a wide variety of policy fields. It consists of over 120 articles separated into IX titles. Several of the titles are further separated into chapters containing more detailed regulations. Title III is the most important part of the Europe Agreements for the Visegrad countries since, together with the attached protocols, it regulates market access for V4 exports. The most important aspect is the establishment of a free trade area with far-reaching, reciprocal obligations. Most parts of the Agreements, however, are not detailed enough to be directly enforceable. Indeed most of the areas—like, for instance, all policy fields mentioned in Title VI under the heading of economic co-operation— necessitate further regulation. Thus, the most important function of the Agreements is that they open up the possibility for closer co-ordination between the associated states and the EU in all fields of EU competence. Beyond the trade provisions, the Europe Agreements cover a whole raft of policy fields in which co-operation is projected, but which need en détail implementation. For co-operation in these fields, the Europe Agreements have created a variety of co-operation mechanisms. In order to facilitate implementation of the general clauses within the Europe Agreements, the EU and the Visegrad states have established three main Association institutions: the Association Councils, the Association Committees and the Joint Parliamentary Committees. These permit discussion between the CEECs and all three major institutions of the European Union: the Council (the main decision-making body which represents the governments of the EU Member States); the Commission (which is the EU’S executive and administrative arm); and the European Parliament (comprising members directly elected by EU citizens). The Association Councils—established under Article 104 of the Europe Agreements—include the foreign ministers of the EU Member States, government representatives from the respective associated country and the EU Commissioner of Directorate-General IA (DG IA—External Political Relations), Hans van den Broek. The Association Council meets once a year with the chair

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alternating between the current EU Presidency and the respective associated state.1 Art. 106 of the Europe Agreements prescribes that Association Councils take decisions where provided for in the Europe Agreements, and that these decisions are binding on all the parties. They do not establish a rule for how these decisions are arrived at. The Europe Agreements leave this to the rules of procedure, which each Association Council establishes itself. Meetings of the Association Council usually last one to one and a half hours. This does not, of course, permit the representatives to conduct detailed discussions. The meetings are concerned, therefore, with broad political objectives. Every party represented puts forward its statement, and there are no more than two or three interventions. The Association Council serves mainly to ratify agreements and position papers developed at a lower level in the Association Committee. According to Art. 108, Association Committees are staffed by representatives of the members of the Council (the Member States), the Associates and the Commission at senior civil servant level. This normally results in representatives being in the rank of councillors from the representations of the EU Member States and of the associate state. The Commission is usually represented by the director of Directorate B in DG IA in charge of relations with central Europe. Like the Association Councils, the Association Committees determine their own rules of procedure. Most have done so by delegating the preparation of the meetings to the chair of the Committee. The majority of the co-ordination and preparation work for the Association Councils is done by the Association Committees, which meet once or twice a year. Significantly, the Association Committees appear to operate in practice somewhat differently from the formal stipulations. According to officials, the Member States’ representatives act only as observers in Association Committee sessions, and the discussion on the EU side is always conducted by the Commission or the Presidency. In most areas under discussion, the representatives of the Commission have a distinct advantage over the Presidency owing to their material competence, and thus only areas of shared competencies are discussed under the aegis of the Presidency. The structure of the EU means that it is not possible for the Member States and CEECs to reach direct political agreements during sessions of the Association Councils because the whole dossier on a particular issue would have to go back to the Council of Ministers for reconsideration. From an EU perspective this is normal, because the process of achieving agreements within the EU is very complex. Before an Association Council session, the Commission takes proposals through its structures and submits them for approval to the Council of Ministers. Here, the policy documents and position papers are discussed by the Central Europe Working Group and the Enlargement Group, fed through the Committee of Permanent Representatives (COREPER) and then finally adopted by the General Affairs Council before they are approved as negotiating positions

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for the EU’S representatives in the Association Council and Association Committee. This means that almost no contentious issues are discussed in the Association Council because these are usually sorted out at the Association Committee level and then channelled through the structure above for final approval on the EU side. The delegates representing the EU in the Association Council can, after all, only commit it to decisions and action that have previously been agreed by the General Affairs Council. As the EU side arranges its common position in such detail before the meetings of the Association Council, any decision tabled as an EU proposal in an Association Council session is almost impossible to alter.2 This situation makes it all the more imperative for the Visegrad countries to try to influence decisions beforehand at the lower levels. This has produced a major incentive for the V4 states to adapt their domestic institutional structure to be as effective as possible in representing their interests. However, the Europe Agreements are not restricted to government level, and include broader political contacts between the EU and the V4. In addition to the Association Councils and Association Committees, Art. 110 of the Europe Agreements establishes Parliamentary Association Committees as a forum for members of the V4 parliaments to exchange views with members of the European Parliament (EP). The task of establishing close political contacts between the EU and the candidate countries at a parliamentary level was taken seriously by the EP. Drawing on the right to determine their own rules of procedure (Art. 111 Europe Agreement), one of the EP’S first moves was to alter the name provided for in the agreement from Parliamentary Association Committee to Joint Parliamentary Committee (JPC). JPC has now become the commonly used term, and the contacts and work of these committees have become more and more elaborate. The JPCS established by the EP and each Visegrad state involve 30 members. The EP forms a delegation of 15 MEPS that meets with an equally strong delegation from the associate’s parliament twice a year, alternately in the associated state and in Brussels. The JPC sessions are chaired jointly by the heads of the EP and the V4 parliamentary delegation. In contrast to the EU’S representatives to the other two institutions, the position of the EP delegation is not very tightly co-ordinated. In the Association Council and Committee meetings, V4 diplomats experience a much clearer insider—outsider distinction than in the JPCs. In most cases the EP side only discusses the main themes in a general debate and does not want or need to establish a clear front vis-à-vis the deputies from the V4. One reason for this is certainly that, by the letter of the Europe Agreement, the JPCs are not very important. They are to be kept informed by and make recommendations to the Association Council, but they do not have to be consulted before a decision is made. Also, the reports that the two JPC delegations draw up for their respective executive institutions have only limited impact. The EP delegations’ statements are usually little observed by the Commission, the Council of

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Ministers or even in the European Parliament’s own resolutions or decisions.3 Altogether this makes the JPC the weakest form of co-operation between the EU and the V4, and perhaps as a consequence the one which has least affected the institutional structures in the V4. Apart from the three above institutions, the Europe Agreements also established the “Political Dialogue”. This was an early sign that the EU meant to be flexible in its relations with the V4, as it offered the V4 a mechanism that would go beyond the low politics of trade and economic co-operation and include a genuinely political dimension. The Political Dialogue between the EU and each Associated state aims at creating “lasting links of solidarity and new forms of co-operation” and facilitating the integration of the states “into the community of democratic nations”. The Political Dialogue stipulations explicitly emphasize that “the economic rapprochement provided for in this Agreement will lead to greater political convergence” and to “increasing convergence of positions on international issues” and “the rapprochement of the Parties’ position on security issues” (Art. 2). The procedures and mechanisms of the political dialogue have a dual character. Art. 4 prescribes summit meetings of the president of a candidate state with the presidency of the EU and the president of the European Commission, to take place “as appropriate”. It also mentions meetings at political director level and somewhat vaguely “taking full advantage of diplomatic channels” and “any other means” to develop this dialogue further. In addition, the task of developing the Political Dialogue is assigned to the Association Council (in Art. 3) and the Parliamentary Association Committee (in Art. 5). As the Political Dialogue is not further defined, these articles give broad scope to the policy fields that are dealt with by the Association Council (and, by extension, the Association Committee) and the Parliamentary Association Committee. The Political Dialogue has already heralded some significant developments in the field of the Common Foreign and Security Policy (CFSP). After a few years of practice, the EU and the Associates agreed that the latter can associate themselves formally with declarations by the EU. It is now common practice that the V4 and other CEECs associate themselves with the EU’S foreign policy declarations. The Structured Dialogue It soon became clear that the Political Dialogue had only limited effect in speeding up the integration of the V4 into the EU, and demands grew for a broader agenda and closer co-operation in an “enlarged Council”.4 In 1992 the European Commission proposed the multilateralization of the relations between the V4 and the EU, but its wide-ranging proposal was rejected by the Copenhagen European Council.5 However, as a consolation prize for the V4, the Council launched the “pre-accession strategy”, and with it the wide-ranging network of “structured dialogue” in several areas linked to integration (foreign

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policy, security policy, domestic and legal issues, education, environment, research, telecommunications). The Structured Dialogue (as distinct from the co-operation mechanisms discussed above) was to be genuinely multilateral. It was initially rather vaguely defined and was eventually formalized under the German Presidency in the second half of 1994. The Essen European Council in December 1994 officially approved the “Strategy for Preparing Central and Eastern European Countries for Future Accession to the European Union” (pre-accession strategy) in the form of a report prepared by the Commission and sent, after approval by the Council of Ministers, to the European Council. Included in the report was the “Structured Relationship”—now called the “Structured Dialogue”—between the CEECs and the institutions of the Union. Thereafter and until mid-1997, the “Structured Dialogue” involved: – Annually, the invitation of the heads of states and governments of the CEECs to the European Council for the second day of the meetings. – Semi-annually (once during each Presidency), meetings with the foreign ministers of the CEECs on the second day of the General Affairs Council. These meetings are supposed to allow discussions on the full scope of relations with the associated countries, in particular the status and progress of the integration process. – Joint Ministerial Meetings (JMM), in which ministers of the EU and the CEECs responsible for a specific field meet and discuss co-operation and progress. They take place annually (for finance, economics, agriculture, transport, telecommunications, research and environment as well as culture and education) or semi-annually (justice and home affairs) in connection with corresponding meetings of the Council of Ministers. The agendas for JMMS are prepared by COREPER and the respective Directorate Generals of the Commission, with the Presidency of the EU responsible for consultation with EU Member States and the CEECs. There was an attempt to reform the Structured Dialogue and make it more efficient after a number of CEECs registered their disapproval. In particular, there were complaints that the Dialogue was ineffective because the views and needs of the candidate states were so divergent. The V4 felt that their clear lead in political reforms and their need for more precise measures did not receive enough support through the rather general discussions in the Structured Dialogue. Reforms were carried out under the Italian Presidency, but the Visegrad states did not feel that the Dialogue had improved substantially. The PHARE programme The acronym PHARE (Pologne, Hongrie, Assistance à la Réstructuration Economique) was adopted by the EC initially to cover the programme providing

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immediate relief to Poland and Hungary. In the first seven years of the 1990s, the PHARE programme was enlarged from 2 to 12 recipient countries, and its staff increased from 12 to over 150 in the Commission alone. Since its inception, the PHARE programme has sought to involve the recipient countries in the strategic and operational activities of the programme and thus sparked off a number of internal developments within the V4. From 1990 to 1995, the EU allocated more than ECU 2357.4 million to the Visegrad countries.6 The variables according to which PHARE funds are allocated are the GDP of a country, the GDP per capita and the commitment to reform. Once the Indicative Programmes have been drawn up and the funds allocated for each country, the Commission only administers the dispatch of funds to the Programme Management Units in the V4 states. These units consist of civil servants from the V4 and some seconded from the EU. As soon as the first Europe Agreements were signed, the PHARE programme and the association policies were closely connected in terms of both policy and human resources. Officials working on association issues co-operate with officials on the PHARE programme, and the heads of units are in constant contact. In the wake of the Copenhagen and Essen European Council decisions to change the character of the relationship from “association” to “pre-accession”, the PHARE programme has expanded enormously. The effects of the pre-accession strategy on the institutional structures in the Visegrad Four The EU and the prospect of membership in this exclusive club has had a variety of effects on the Visegrad countries.7 The EU has been a political, economic and social model. Politically, all the Visegrad countries took the modern system of democratic government as its blueprint, whether leaning more towards a parliamentary system (the Czech Republic, Hungary and Slovakia) or a semipresidential system (Poland). In the economic sphere, the privatization drive and the imposition of hard budget constraints—although success has been variable— is testimony to the near wholesale adoption of the free but social market model. The opening of the markets to competition through the Europe Agreements and the approximation of laws governing the market place through the white paper have shown that the pre-accession strategy can expedite the transformation of economic structures in the direction of EU structures. Similar developments can also be observed in the structures of government. Here the most conspicuous effect is not the change in the political system, but—as in the economic sphere— the functional effect of the pre-accession strategy on the institutional structures. The Europe Agreements: co-operation structures Before this section turns to a country by country analysis of EU induced changes to the institutional structures in the V4, three closely interlinked issues need to be

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mentioned in advance because they apply to all the V4 and indeed also to the other CEECs. Public administrations in the V4 were and still are facing a very steep learning curve with regard to policy implementation in a completely new and alien policy environment. The “revolutions” of 1989 almost completely interrupted the sociopolitical relations within and between political systems. Even in 1997, politics and administration in the V4 was still getting used to the complexity of implementing laws in a democratic and pluralistic society guided by the rule of law rather than the rule of the party. The governments of the Visegrad states are also characterized by a profound lack of experience in multilateral co-operation. Triggering learning processes among the elites of these states is thus a priority. This difficult situation is aggravated by the fact that the governance of the EU into which these states are trying to become integrated is not only a multilateral but also multi-level. Thus all levels of national and regional governmental administration within the CEECs will have to acquire the political finesse of governing within multiple layers of competencies. The political actors within the Visegrad states thus have to develop a high degree of skills necessary for successful politicking within the EU in an extremely short period of time. Structural reforms—i.e. the creation of the functionally most efficient administrative structures for carrying out the formulation and implementation tasks of public administration on the national and regional level—will have to be part and parcel of overcoming the human resource bottleneck. The Czech Republic The Czech Republic is a most interesting case of structural reform. Initially, the Czech Government created an Interministerial Group at head of department level, with different sub-groups working on special issues, to deal with issues of European integration. In mid-1995, the whole of the structure was overhauled and the Interministerial Group was renamed the Committee for the Implementation of the Europe Agreements. Most detailed work on EU matters is done in this committee. After preparing a document, the committee sends it to the Government Committee on European Integration for consideration and adoption. The Government Committee is composed of ministers whose departments are directly concerned with EU policy questions. It is chaired by the prime minister. The tasks of this committee are to outline the general approach to the EU and to adopt documents on the subject submitted to it by the Committee for the Implementation of the Europe Agreements. All proposals relating to European policies are approved by it before being formally adopted in the Cabinet. In comparison with EU Member States, the governmental structure in the Czech Republic is still relatively flexible because the workload involved in formulating and implementing European policy, although steadily increasing, is less than that in full Member States. However, flexibility appears to become ingrained as a virtue in itself. Some issues that need to be cleared with the EU do not go through any of the committees mentioned above. The Ministry of Justice,

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in particular, frequently contacts EU institutions directly and only keeps the committees briefed about the issues and responses. Other ministries also deal with technical matters in this manner, although not to the same extent. The Czech institutional structure is generally considered appropriate both for negotiating implementation policies at Europe Agreement institution level and for implementing the decisions taken there at the national level. Czech institutions have proved competent in the approximation of laws, which appears to be at the forefront of their integration policy. It is significant, however, that the work done in implementing policies by the Czech public administration structure has not reached the same high standards. The Commission’s July 1997 opinion on the Czech Republic’s application for EU membership noted that “since 1990 consecutive Czech(oslovak) governments have given low priority to the necessary reform and modernization of the public administration,” and, more worryingly for the future, that “there are no indications that this position is changing”.8 The reason for this—apart from the general malaise of CEEC administrations—is that the government of Václav Klaus showed little interest in the reform of public administration. Ideologically on an ultraliberal course and thus opposed to “big government”, it neglected public administration reform in spite of the fact that this was urgently required. Czech administration has also been afflicted by a severe brain-drain, aggravated by the fact that there is no law governing the civil service. All administrators have individual contracts. Experts have called the situation “dramatic”. Where technical support for the white paper programme is concerned, there has been little response from the Czech side. As the processes are demand-driven, the Czech Republic may lag behind other CEECs in this respect. Hungary Until early 1996, the Hungarian government had a Secretariat for European Integration within the Foreign Ministry and a European Department within the Ministry of Industry and Trade. In addition, every ministry had a European Unit that dealt with the European dimension of legislation and administration in its respective field. Owing to several internal management problems, in 1996 the Hungarian Government decided to shift most of the staff from the European Department within the Ministry of Industry and Trade to the European Integration Department in the Foreign Ministry. Just below this Secretariat is an Interministerial Committee for European Integration, which is staffed by senior civil servants at deputy secretary of state level. All issues of policy-making and implementation are channelled through the Integration Secretariat in the Foreign Ministry and the Interministerial Committee. From 1996 onwards, the Secretariat in the Foreign Ministry was responsible for administrative co-ordination. At the same time the function of the European units within each ministry was reduced to implementation in their specific fields. The government also installed a Cabinet for European Integration at the highest level, which is chaired by the prime minister. In normal session, it includes only a limited number of ministers, namely the foreign minister and the ministers of the interior, justice, industry and trade, finance and agriculture. Other

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ministers attend if the topic under discussion relates to their responsibilities. The Cabinet is there to discuss issues of strategic importance. It directs the preparation of decisions, and reaches decisions where the Interministerial Committee has been unable to agree. A prominent feature of the institutional set-up in Hungary is the Strategic Task Force. This is an advisory body to the Integration Cabinet and the Secretariat and consists of 19 working groups, chaired by experts from non-governmental sectors, like academics, members of chambers of commerce or of private enterprises. It is headed by the well known expert on EU integration issues András Inotai (the Director General of the Hungarian Academy of Sciences Institute for World Economics). The Strategic Task Force holds monthly meetings to discuss working papers on current policy issues facing Hungary, which are then submitted to the Cabinet.9 To keep the advisers in touch with grass-roots interests in Hungarian society, these experts continue to work in positions outside the government. Hence the Hungarian political elite appears to be inclusive in its European policy-making. It has understood the significance of European integration and the effect it will have throughout society. The inclusion of practitioners from all walks of life in the decision-making process shows an enlightened attitude that may result in Hungarian negotiators having a slightly different approach in the pre-accession and accession process. After a period of institutional nebulosity, the new structure brought about an important clarification of competencies. The foreign ministry emerged as the leading player in the intra-Hungarian co-ordination of individual ministries’ policies. Close observers have praised the new structure as a major breakthrough for guiding Hungary’s integration strategy on a long-term basis. However, the grand terms and apparently well adjusted structure notwithstanding, little new policy formulation is going on within the Hungarian Government. Despite the institutional status of the Strategic Task Force, most policy initiatives react to outside events rather than set the agenda. One explanation for this situation is the context of integration. There are far more regulations in the EU than within Hungary and the V4 overall, so reactive responses to European regulation demands prevail. Yet another reason is that the day-to-day reality pours water into the wine of the “theoretically ideal structure”. Respondents mentioned that Hungarian officials appear to have particular difficulty overcoming the stiff bureaucratic way of allocating responsibilities. Pooling resources in an informal way to achieve the optimal outcome is not “the done thing” within the Hungarian bureaucracy, and they remain reserved to extensive network-like co-operation. Constant small-scale conflicts within the Hungarian administration, deriving from attempts to preserve the power of individual ministries, limits the capacity of Hungary to advance its policies. Within the DG IA in Brussels, it has long been realized that these issues create problems on an almost daily basis. The main weakness remains the lack of co-ordination between the different parts of the administration.

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The Commission’s opinion on Hungary recognized that within Hungary— in contrast to the Czech Republic—“the importance of administrative reform is widely accepted, and the planned reforms are generally well designed.”10 However, the implementation of public administration reform is being hindered by the same problems it wishes to address, such as a lack of management skills and insufficient or ineffective departmental co-ordination and co-operation. Poland Fluidity of the internal structures for the formulation and implementation of European policy also characterizes Poland. Because of frequent changes of government and fundamental domestic problems about the allocation of competencies between prime minister and president, there has been a built-in conflict on European issues between the foreign ministry, the president and the prime minister. As the pre-accession strategy steadily diversified into a higher number of policy fields, the tension eased. Nevertheless, problems were caused by the fact that responsibility was concentrated in the hands of one man, Jacek Saryusz-Wolski, the “Plenipotentiary” for European integration who was attached to the Prime Minister’s Office in the position of an under-secretary of state. All domestic aspects of EU integration, the white paper exercise and the use of PHARE moneys for integration-related internal policies went through the hands of the plenipotentiary. There was a danger that more technical and complex matters, which necessitated detailed domestic interest definition, would be left aside. Overall, this arrangement did not assist the more broadly based incorporation of all departments of government into the European process. Everything changed at a stroke in December 1996 when the Committee on European Integration was established. The Committee comprised seven ministers, one parliamentary deputy and one leading academic, and began to function as a “ministerial umbrella” for the European Integration Office, whose director, Danuta Hübner, was the Committee’s chair. Co-ordinated by this centralized structure, a European Unit has been created within each ministry. The meetings of the Committee are on a weekly basis. The Committee discusses all important issues that need to be decided by government authority and most importantly, it has arbitration powers in case of conflict between different ministries. Under the old structure, the role of the plenipotentiary was a major flaw in the system, because—as an outsider to the Cabinet structure—his influence on the internal solution of problems was rather limited. The change-over to the new structure was felt almost immediately after the first meetings of the Committee at the end of December 1996. The new arrangement brought the government a big step forward in maintaining an overview of complex and multifaceted developments, and in providing fast solutions to problems. Some obstacles, however, remained: there was still no clear delimitation of competencies between the Committee and the foreign ministry, and this led some observers to be cautious in their assessment. Yet from the EU perspective, the Polish position had gained tremendously in clarity. Since the new structure had facilitated contacts at all levels, the EU side could now

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develop a clearer picture of the complexity of some issues for the Poles. One observer described the structure as “by far the most efficient in the V4”. In parallel, the Polish domestic scene also changed since the administration began mtegrating sectoral interests into the policy formulation process, thus developing a national viewpoint on European policy. The feeling that Poland was operating in a new multi-level policy-making environment began to filter down to all quarters of government and to influence policy-making. This development was made possible because Polish public administration was reformed by a new law of September 1996. This created a Super Ministry of Economy and a Super Ministry for Public Administration and the Interior. The creation of the latter was extremely helpful in dealing with justice and home affairs matters and with the very complicated and “sovereignty-sensitive” border issues between the EU and Poland. The Commission’s opinion on Poland generally praised the efforts made to strengthen the Polish civil service both at the top level and throughout the organization. The most crucial factor was that reform of the central administration was a key government policy.11 The new government of Jerzy Buzek, which took office in October 1997, was committed to amending the civil service law and to a broader reform of the central government administration by decentralizing functions to new regional and county tiers. It also moved quickly to reinstate Jacek Saryusz-Wolski, who became secretary of the newly created Committee for European Negotiations. The negotiating committee was responsible for relations with Brussels, while working alongside the Committee of European Integration which continued to co-ordinate the process of ensuring that Polish legislation was in line with that of the EU. Slovakia By comparison with the other three Visegrad states, Slovak institutional structures dealing with European integration remained remarkably stable in the mid-1990s. By 1997, only one small change had taken place in the process initially set up. Originally, everything to do with the implementation of the Europe Agreement was co-ordinated by the Council of the Government for Integration of the Slovak Republic into the EU, which is an advisory body of the Slovak government. Members of the Council were state secretaries and leading representatives of other central bodies in the state administration. In addition to this, the Slovak government established by governmental decree sections devoted to European integration in all central bodies of the state administration.12 The Office of Government is responsible for ensuring that the European sections in all the individual ministries have a systematic approach. This set-up at the top level was only slightly changed when the Council for Integration moved one stage up to be composed of ministers instead of state secretaries. At the same time, the Slovak government established a specialist institution in the administrative substructure, the Institute for the Approximation of Laws, which deals with the important issue of legal integration. This Institute is directly responsible to the Deputy Prime Minister for Legal Affairs. The Institute’s

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responsibility is the drafting of bills concerning the approximation of law. These drafts are subsequently discussed in the Council for Integration before they are formally adopted by the government. The Institute plays an advisory role in checking for conformity with EU standards any laws that are prepared within the state administration. The Institute also has the task of co-ordinating the process of amending laws that cross over ministerial boundaries. By comparison with other V4 administrations, there appears very little doubt who actually initiates European policy: respondents stated that policy initiation is very clearly done through the foreign ministry. The Commission’s opinion on Slovakia recognized that the Slovak government places a high premium on public administration and its reform, especially with regard to European integration, but also that it has a long way to go. In particular “the co-ordination capacity within the Office of Government has proved to be weak, resulting in delays in preparing key strategic documents, the related legislative programme for the approximation of legislation and the implementation of that programme.”13 The symptomatically high turnover of civil servants is a further problem and “is particularly critical at the high level, given that policy-making, legal, managerial and planning capacities, essential to the accession process, are in short supply.” In the Slovak Republic, however, the problem of staff turnover “has been exacerbated by the level of politicization of the civil service.”14 The Dialogues The institutional effects of the Political Dialogue have to be judged as meagre. One possible reason for this is that the most prominent policy field within the Political Dialogue is foreign policy, and this is characterized by declarations and general statements rather than by action that has to be implemented by an administration. An exception appears to be the opportunity for the V4 governments to associate themselves with declarations of the EU. This has induced them to react, to an extent, with institutional change. By 1997, all of the Visegrad countries had installed CFSP contact points in their foreign ministries to deal with their national viewpoint on EU declarations and to decide whether to be associated with the viewpoints of the EU. All except Slovakia also began designating posts in all their embassies and missions to deal with this issue. The effect of the Structured Dialogue has been even more meagre. Its initially limp start meant that the impact on domestic institutionalization in the V4 was almost nonexistent. On the foreign policy front, the workload is carried solely by the foreign affairs ministries and by diplomats already working on similar questions on a bilateral basis within the Association Council. Respondents from the V4 stated diplomatically that the degree of results would not merit any institutionalization of V4 mechanisms beyond the existing ones.

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The PHARE effect The political and institutional effects of the PHARE programme stem from two different sources. The first source is the express intent of the PHARE programme to strengthen and stabilize the administrative structures of the V4. This is one of the priority items on its agenda. The second source is the institutional effect that comes from the actual co-operation in a number of areas. Among the many examples of PHARE’s influence on the administrative structures of the V4, only two will be mentioned. First, with the funds allocated to the modernization of public administration PHARE provides short-term and long-term support in developing reform strategies. It does so, for example, by building homegrown consulting capacities in the V4.15 Secondly, PHARE finances expert assistance and training of V4 civil servants in order to increase the capacity of the V4 to take on the responsibilities of membership. It also supports key government services responsible for the functioning of an enlarged single market such as customs, statistics, competition or standards administration.16 Examples of the effect of the actual functioning of the PHARE programme are less obvious, but no less real. The mechanisms of the PHARE programme yield important institutional learning benefits for the Visegrad states and other partners because the whole programme management is highly decentralized. The National Programmes upon which the whole PHARE engagement in a specific country is based are developed by the ministries in a Visegrad state and the national co-ordinators of the PHARE programme. The Commission merely administers the dispatching of funds to the Programme Co-ordination and Programme Management Units in the partner countries. These Units consist of civil servants from the V4 and some seconded ones from the EU. Until the Essen European Council, the sole purpose of this decentralization was efficient technical and financial management. It was designed to allow Programme Management Units in the capital of each partner country to have responsibility for the implementation and management of projects purely because management in the field would be more useful for the projects than having to go through Brussels all the time.17 An agreeable side effect, however, was that from the start these Units provided a very important learning experience for the work that has to be done by the administration in the Visegrad states when they become EU members. Through co-operation with EU delegates, government officials, and non-governmental actors who are seeking funding, administrators are prepared for the multi-level policy process in the Union that they seek to join. The decentralized character of PHARE decision-making, and thus the institutional learning effect, was strengthened further by the Essen declaration. It became clear that prospective Member States were to take a more active role in defining and managing their own programmes in so far as these were linked to the aims set out in the Europe Agreements and the pre-accession strategy.18 The

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general result was that tasks were progressively shifted from the Brussels headquarters to the partner countries. The PHARE funds also came to be allocated multi-annually until 1999, and this contributes to the strategic view of the PHARE programme as a bridge into normal Community funds from intra-Community programmes after the accession of some of the Visegrad states. PHARE has already introduced a unified system for the administration of funds for all partner countries, the Decentralized Implementation System.19 The application of common contract and procurement rules implicit in the package will shape the bureaucratic habits in the V4 and thus bring their bureaucratic culture closer to that of the EU. In many institutional aspects the PHARE programme succeeds where the Structured Dialogue fails. V4 countries have long demanded full partnership in an “enlarged Council” where they would be allowed to have an equal say with the Member States. In the sub-area of cross-border co-operation programmes, PHARE keeps the promises that the European Councils did not make. The crossborder programme encourages the creation and development of co-operation networks on both sides of the borders by bringing together local and regional authorities from adjacent EU and V4 regions. It is designed to make them develop cross-border networks of co-operation to master common challenges for their regions. This is a clear incentive for the V4 partner states to strengthen the competencies of their regions. After all, the cross-border programme expects the local and regional authorities to provide for the relevant planning, implementation and monitoring of activities.20 The PHARE multi-country programmes even go beyond this institutional development. It established a multi-country co-ordination group consisting of the National Aid Co-ordinators of the PHARE partner countries and excluded the EU Member States from decision-making in this sub-field. The co-ordination group has an annually rolling presidency so that each CEEC’s National Aid Coordinator assumes this role. Slovakia held the presidency in 1997, with Albania, Estonia, Latvia and Lithuania following.21 In the multi-country programmes the programme management is even more strongly decentralized than in the general programming sphere. A co-ordination group representing the PHARE partner countries nominates one of the beneficiaries for the establishment of a coordination group for one sector.22 The 1995 improvement of management processes and the financial reporting systems increased the overall tendency of the PHARE programme to support the institutional decentralization of decision-making. This is true both with regard to the EU-Visegrad relationship and with regard to the administrative structure within the V4. This impetus for decentralization is likely to increase as accession draws nearer.

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Conclusion Looking comparatively at the political structures within all the Visegrad states, it becomes clear that all of them have been adapted to cope with the intense policy formulation and policy implementation pressures emanating from the cooperation with the EU. When co-operation based on the Europe Agreements and the Dialogues is examined, we can discover three general trends in the structure of the domestic institutions dealing with European issues. The first trend is the shift to the top level of government. At the beginning of the EU-V4 integration process, most of the V4 states created interministerial committees to deal with co-operation, thus keeping co-ordination firmly at the level of state secretaries. However, in all the V4 states there has been a general shift of responsibility from lower levels of political seniority to the higher, ministerial level. The main reason for this shift appears to be that the process of integration has gathered pace enormously. As a result, governments have recognized that co-operation calls for genuinely political rather than merely technical results. It became increasingly important for the V4 governments to keep political control of the policy-formation process at the European level, and also to keep control of the implementation of policies deriving from the Europe Agreement in their domestic systems. The second general trend is that the work done at the intermediate stage of the domestic systems is intensifying. Individual ministries are expanding the units that deal directly with European issues. It is at the intermediate stage that the V4 structures differ most from one another. The third trend contrasts with the second. Where the intermediate level is charged with administering “foreign assistance” (that is, PHARE moneys) in the Visegrad states, it tends to converge in structure. The “PHARE effect” can be explained by the fact that the structures here are integrated to a stronger extent into a unified decision-making and implementation mechanism centred in the Commission. The paradox of decision-making becoming more decentralized while at the same time becoming structurally more homogenous should be noted. In summary, the pre-accession strategy has induced all the Visegrad countries to effect a process of administrative streamlining at the top level of government. The reinforcement of the pre-accession strategy proposed by the Commission in the Agenda 2000 may well intensify this process. Notes 1 Unattributed material in this chapter was collected by the author in a series of interviews conducted between 1995 and 1996 with employees of EU institutions, officials from the Visegrad countries and MEPS. 2 B.Lippert, “The Europe Agreements: beyond eurocratic language”, The International Spectator 39(1), 114, 1994. 3 Ibid.

98 MICHAEL ALEXANDER RUPP

4 “Memorandum of the Governments of the Czech and Slovak Federal Republic, the Republic of Hungary and the Republic of Poland on strengthening their integration with the European Community and on the prospect of accession”, Agence Europe (5843), 23 October 1992, 56. 5 “Towards Closer Association”, Europe Documents (1814), 9 December 1992. 6 European Commission, “The PHARE Programme Annual Report 1995”, COM(96) 360 final. 7 This is also true of the other CEECs, although that is beyond the scope of this chapter. 8 European Commission, “Agenda 2000. Commission opinion on the Czech Republic’s application for membership of the European Union”, Bulletin of the European Union, Supplement 14/97, 76, 1997. 9 Hungarian Government Office, Strategic Task Force (Information leaflet). 10 European Commission, “Agenda 2000. Commission opinion on Hungary’s application for membership of the European Union”, Bulletin of the European Union, Supplement 6/97, 73, 1997. 11 European Commission, “Agenda 2000. Commission opinion on Poland’s application for membership of the European Union”, Bulletin of the European Union, Supplement 7/97, 74, 1997. 12 European Parliament, “Notice to Members. Delegation to the EU-Slovakia Joint Parliamentary Committee”, 9.10.1995, JPC/CCEE/GH/md, 6. 13 European Commission, “Agenda 2000. Commission opinion on Slovakia’s application for membership of the European Union”, Bulletin of the European Union, Supplement 9/97, 71, 1997. 14 Ibid. 15 European Commission, “PHARE 1994 Annual Report”, COM(95) 366 final, 51. 16 European Commission, “The PHARE Programme Annual Report 1995”, op. cit., 17. 17 European Commission, PHARE 1994 Annual Report, op. cit., 14. 18 Ibid. 19 European Commission, PHARE 1994 Annual Report, op. cit., 15. 20 European Commission, PHARE Cross-border Co-operation Programme, Brussels DG IA, 1995, 7. 21 European Commission, PHARE Multi-Country Programmes, May 1996, 7. 22 European Commission, PHARE 1994 Annual Report, op. cit., 13.

7 Agricultural, Structural Policy, the Budget and eastern enlargement of the European Union Brian Ardy

The fundamental principle upon which EU accession negotiations proceed is that potential members must accept the acquis,1 but the negotiation process and adjustment subsequent to membership mean that enlargement ultimately requires substantial adjustments to the acquis. Nowhere are these adjustments greater than in agriculture and structural policies because these are the policy areas that dominate EU budgetary expenditure. Changes in these areas can provide compensation or side-payments to give the necessary flexibility that is difficult to achieve in other areas of enlargement negotiations. The importance of these policies is reinforced by the fact that they impinge directly upon politically very important constituencies and thus rank very high on the accession negotiation agenda. The central and east European countries (CEECs), with their large total population, significant agricultural potential and low incomes, pose unique problems for enlargement. This chapter, therefore, will begin by comparing the prospective members and the existing 15 EU countries (EU-15). Then the nature of the EU’S Structural Policy and the implications of its extension to central and eastern Europe (CEE) will be examined. Next, attention will shift to the agricultural situation in these countries and the effects of the extension of the Common Agricultural Policy (CAP) to them. Finally, the aggregate effects of the impact of enlargement on the EU budget will be evaluated. The countries of central and eastern Europe In population terms, most CEECs are small. Poland, the largest, has a population equivalent to that of Spain (see Table 7.1, p. 108). Romania has a population between that of the Netherlands and that of Spain. All the other CEECs have populations of ten million or less. Although individually relatively small states, the combined population of the Czech Republic, Hungary, Estonia, Poland and

100 BRIAN ARDY

Table 7.1 The central and east European countries and the EU: basic data 1995. GDP at market prices Population Country

millions

Czech Rep. Estonia Hungar y Poland Sloveni a FG-5 Bulgaria Latvia Lithuani a Romani a Slovak Rep. SG-5 CE-10 Luxemb ourg Denmar k German y Netherla nds Spain Greece Portugal EU-15

total

GDP at PPS per capita

billion ECU 36.1

% of EU-15 0.6

ECU

10.3

% EU-15 2.8

1.5 10.2

0.4 2.7

2.8 33.4

38.6 2.0

10.4 0.5

62.6 8.4 2.5 3.7

per capita

3490

% EU-15 20

% EU-15 55

0.0 0.5

1850 3340

11 19

23 37

90.2 14.2

1.4 0.2

2360 7240

14 42

31 59

16.8 2.3 0.7 1.0

176.7 9.9 3.4 3.5

2.7 0.2 0.1 0.1

2820 1180 1370 930

16 7 8 5

36 24 18 24

22.7

6.1

27.3

0.4

1200

7

23

5.4

1.5

13.3

0.2

2470

14

41

42.7 105.3 0.4

11.5 28.3 0.1

57.3 234.0 13.3

0.9 3.6 0.2

1342 2220 32370

8 13 187

13 32 169

5.2

1.4

132.1

2.1

25260

146

116

81.5

21.9

1845.2

28.6

22600

131

110

15.4

4.1

302.5

4.7

19750

113

107

39.2 10.4 9.9 371.6

10.5 2.8 2.7 100.0

428.1 87.4 77.1 6441.5

6.6 1.4 1.2 100.0

10920 8360 7770 17260

63 48 45 100

77 66 67 100

Source: European Commission, “Agenda 2000. For a stronger and wider Union”, Bulletin of the European Union, Supplement 5/97, 138, 1997.

Slovenia—the first group of CEECs to start detailed accession negotiations with the EU, which have been labelled for the purpose of this chapter as First Group 5 (FG-5)2—represents 16.8% of the EU-15 population, and the ten CEECs together represent 28.3%. However, the critical difference between the CEECs

AGRICULTURAL, STRUCTURAL POLICY, THE BUDGET 101

and the current EU Member States is the low level of their total and per capita income. Poland, the largest economy in east-central Europe, has a total GDP of only ECU 90.2 billion—slightly larger than that of Greece—and six of the other CEECs each have GDPS similar in size or smaller than that of Luxembourg. The total GDP of the FG-5 is only 2.7% of the EU-15 GDP. The FG-5 on average have a GDP per capita at market prices of only 16% of the EU-15 average. This ranges from 11% in Estonia to 42% in Slovenia, compared to 45% in the current poorest EU Member State, Portugal. Bulgaria, Latvia, Lithuania, Romania and Slovakia (Second Group 5, SG-5) are mostly even poorer. Taking account of the lower price levels prevailing in CEE, calculating GDP per capita at Purchasing Power Standards (PPS) gives a clearer picture of relative living standards because it makes allowance for the lower price level in poorer countries. However, even at PPS, the Table 7.2 The impact of successive enlargements of the EU.* increase in

EC-9/EC-6 EC-10/EC-9 EC-12/EC-10 EU-15/EC-12† EU-20/EU-15 EU-25/EU-15

Average per capita GDP EC-6=100

area

population total GDP per capita GDP

31% 9% 34% 17% 17% 33%

32% 4% 16% 6% 16% 28%

24% 2% 9% 8% 3% 4%

−6% −2% −8% 1% −12% −19%

94 92 85 86 75 69

* Based on 1995; †Including German reunification. Source: European Commission, “Agenda 2000”, op. cit. Own calculations.

FG-5 have an average GDP per capita of only 36% of the EU-15 average, which ranges from 23% in Estonia to 59% in Slovenia, in comparison to 67% in Portugal. The crucial way in which CEE enlargement differs from previous enlargements is the low income of the potential members and the extent to which they will lower the average per capita GDP of the EU (see Table 7.2). If enlargement proceeds with all the FG-5 it will add to the EU the equivalent of a country with a population the size of France, but with an economy smaller than Austria’s and a GDP per head one-third that of Portugal. The inclusion of all ten CEECs would add to the EU the equivalent of a country with a population as large as that of Germany, Belgium and the Netherlands put together, but with an economy smaller than that of the Netherlands and a GDP per head little more than one-quarter that of Portugal.

102 BRIAN ARDY

Structural Policy and central and eastern Europe The Structural Policies of the EU consist of the European Regional Development Fund, the European Social Fund, the Guidance Section of the European Agricultural Guidance and Guarantee Fund and, since 1993, the Cohesion Fund. The aim of these policies is to improve the economic and social cohesion of the EU, which is defined in Article 130a of the EC Treaty as “reducing the disparities between the various regions and backwardness of the least favoured regions”. With the widening of income disparities consequent upon enlargement the need for economic and social cohesion is even greater because “it makes a vital contribution to the stability of the Union”.3 The structural policies have always had redistribution as a tacit objective, seeking to reduce income disparities among the Member States of the EU. Increasingly, structural expenditure has been concentrated in poorer regions and therefore in poorer countries. These poorer areas are designated as Objective 1 regions, with GNP4 per capita less than 75% of the Union average. These regions are predominantly in the EU’S poorest countries, and encompass the whole of Greece, Portugal, Ireland, most of Spain, and southern Italy. In the more prosperous Member States, Objective 1 regions are confined to the new eastern Länder of Germany and a few other regions. Cohesion Fund expenditure is exclusively for poorer Member States, defined as those with a per capita GNP less than 90% of the Union average— Spain, Greece, Ireland and Portugal. For the 1994–99 Budgetary Agreement, 68% of structural expenditure is committed to Objective 1 regions.5 The accession of new member states poses problems for the overall level of Structural Fund expenditure and its distribution among member states. Under current rules, all the CEECs would qualify for Objective 1 status and the highest level of regional aid. If there were no change in designations in the EU-15, the proportion of the population in areas receiving regional assistance in the EU-20 would be 57.2%, and in the EU-25 61.1%, compared to 49.9% in the EU-15 (see Table 7.3). The inclusion of new poor states will lower the average EU GNP per capita as shown in Table 7.2, and therefore also the threshold for Objective 1 and Cohesion status. Existing Member States could lose funding as a result of redesignation of regions consequent upon enlargement, and the diversion Table 7.3 Population eligible for Regional Specific Aid under the Structural Funds.* Eligible population (thousands) Using current designations† Eu-12 1989 140600 EU-15 1995 185600 EU-20 2002 248300

Eligible population (% of EU total)

Objective 1 population (thousands)

Objective 1 population (% of EU total)

40.2 49.9 57.2

69700 94000 156600

19.9 25.3 36.1

AGRICULTURAL, STRUCTURAL POLICY, THE BUDGET 103

Eligible population (thousands) Eu-25 2006+ 290400 Under Agenda 2000 proposals‡ EU-15 2002 111000 Eu-202002 173600 EU-15 2006+ 85500 190800 EU-25 2006+

Eligible population (% of EU total)

Objective 1 population (thousands)

Objective 1 population (% of EU total)

61.1

199800

41.9

29.9 40.0 23.0 40.0

79600 142200 64600 169900

21.4 32.7 17.4 35.6

* Based

on 1995 population; †With EU-15 regional specific designations as at present and new member states as Objective 1 regions; ‡Based on Agenda 2000 proposal with FG-5 joining in 2002, SG-5 joining in 2006 and GNP growth 1995–2006 at 2.5% in EU-15 and 4% in FG-5. Sources: European Commission, “Agenda 2000”, op. cit., 112; Court of Auditors, “Annual Report 1995”, Official Journal C 369, 12.11.1996, 129 (Table 5.3); European Commission, First Report on Economic and Social Cohesion, 145 (Table 24) (Brussels: 1996); Eurostat, “Per capita GDP in the regions of the EU”, Statistics in Focus Regions 1, 4–6, 1997. Own calculations.

of funds to the new member states. Such a loss of structural funding would, of course, be difficult for existing Member States to accept. With the unanimous agreement required for enlargement, enlargement negotiations must reconcile additional structural expenditure in the new Member States with the requirements of existing member states. One influential early calculation of the costs of enlargement to the Structural Funds6 estimated 1999 structural fund spending in the poorest EU-15 states, Greece and Portugal, at ECU 400 per head. Applying this figure to only the Visegrad Four7 would cost ECU 26 billion, which would have almost exhausted the projected structural expenditure of ECU 30 billion. As various authors have pointed out,8 expenditure at these levels is unrealistic because of problems of cofunding and absorption. For the Structural Funds, except the Cohesion Fund,9 the general rule is that only 50% of the project expenditure is met by the EU; the remainder has to be supplied by the Member State or from other non-EU sources. Even with growth of 5% per annum from 1995–2006, ECU 800 per head (400 from the EU and 400 from the Member State) would imply that structural fund projects would account for between 8.4% (Slovenia) and 27.9% (Estonia) of GNP. This level of expenditure is unrealistic: it would totally skew public expenditure and economic activity, and it would be impossible to devise sufficient projects to achieve these levels of expenditure (the problem of absorption). The practicalities of the operation of the Structural Funds in the FG-5 would suggest that the new member states should attract a lower level of expenditure with which they can more easily cope, preferably with a lower rate of national contribution.

104 BRIAN ARDY

The Commission10 has proposed a package of reforms, part of the purpose of which is to restrict expenditure in existing and potential member states. Structural expenditure is to be reduced by restricting the number of areas eligible for regionally targeted aid. Only two types of region would be eligible for such aid, and these would cover 35 to 40% of the EU population as opposed to the current 51%.11 The Objective 1 criterion is to remain but is to be applied strictly. Ad hoc arrangements will be made to treat the outermost regions of the Union as Objective 1 regions. Objective 2 aid would be available to regions suffering from structural problems defined by “simpler, transparent and specific eligibility criteria”.12 To facilitate adjustment to the new situation, regions losing funding status would benefit from transitional arrangements.13 To limit expenditure in central Europe “total transfers from the Structural Funds and Cohesion Fund to a present or future Member State should not exceed 4% of its GDP”.14 Given the difficulty of expanding the budget, the overall ceiling on structural expenditure is to continue at its 1999 level of 0.46% of EU GNP. This will finance a real increase in total structural appropriations15 from ECU 34.3 billion in 1999 to ECU 42.9 billion in 2006 (see Table 7.4). Appropriations in the EU-15 are planned to peak at ECU 35 billion in 2001 and then to fall to ECU 31.2 billion in 2006. The CEEC would be eligible for pre-accession structural expenditure of Table 7.4 Agenda 2000 expenditure on structural operations. ECU billion 1997 prices

EU-15 Structural Funds Cohesion Fund New Member States* Pre-accession aid Total

1999

2000

2001

2002

2003

2004

2005

2006

31.4 2.9

31.3 2.9 0.0 1.0 35.2

32.1 2.9 0.0 1.0 36.0

31.3 2.9 3.6 1.0 38.8

30.3 2.9 5.6 1.0 39.8

29.2 2.9 7.6 1.0 40.7

28.2 2.9 9.6 1.0 41.7

27.3 2.9 11.7 1.0 42.9

34.3

*

Including participation in Cohesion Fund. Source: European Commission, “Agenda 2000”, op. cit., 74 (Table 3).

ECU 1 billion from 2000 onwards and, assuming FG-5 enlargement took place in 2002, there would be structural expenditure of ECU 3.6 billion rising rapidly to ECU 11.7 billion in 2006. The inclusion of the FG-5 would in 2002 reduce the GDP per capita threshold for Objective 1 status by 11.3%, and the strict application of this criterion would reduce the proportion of the EU-15 population in these regions by 15% (see Table 7.3). The regions excluded are mainly in richer Member States, which, despite already being above the threshold, are exceptionally granted Objective 1 status. Enlargement and the proposal to reduce the share of the EU population

AGRICULTURAL, STRUCTURAL POLICY, THE BUDGET 105

eligible for regional aid to 35 to 40% does have a profound effect, reducing the population of the EU-15 in regions entitled to region specific funding from 50% to 30%.16 This is because the FG-5 alone account for over one-third of the population living in regions entitled to region specific funding. If structural aid is fixed at 0.46% of EU GNP and the FG-5 receive aid equal to 4% of their GDP, then the aid available to the EU-15 is effectively fixed. Reducing the number of eligible regions therefore entails the concentration of structural aid in fewer regions and countries of the EU-15. My estimates suggest that structural spending will be increased in Portugal and Spain at the cost of substantially reduced expenditure in most other countries, especially in the UK, Germany and Ireland (see Table 7.5). Ireland is hit hard because the whole of the country loses Objective 1 status. If Irish growth continues to outstrip the rest of the EU it will also lose its Cohesion status before or soon after enlargement, further reducing its structural funding. Restricting Structural Funding to 4% of GDP is obviously designed to limit expenditure in the FG-5. It does, however, have bizarre effects because it means that the richer countries among the new members will receive more structural expenditure per capita in absolute terms than the poorer ones. Assuming 4% real economic growth in the period 1995–2006, the richest FG-5 state, Slovenia, will receive nearly four times the Structural Aid per capita of the poorest, Table 7.5 Structural operations expenditure 1995, 1999 and 2006. ECU million

Portugal Greece Spain Ireland Italy UK Finland Netherl. Sweden France Belgium Austria Germany Denmark Luxemb.

GDP p.c. ECU p.c. Total % EU-15 1995 1995 % GDP

Total 1995

Total 1999*

Total 1999†

Total 2006‡

45 48 63 80 83 83 108 113 116 117 118 128 131 146 187

2447 1957 6100 1073 1940 1115 168 227 133 1282 230 169 2122 120 17

3504 2818 8720 1539 2800 1610 242 327 191 1851 331 244 3064 173 25

2900 2915 6961 1216 3573 2142 273 432 215 2465 346 260 3586 139 17

3354 2858 7691 446 3439 1438 231 332 180 1902 215 191 1752 115 14

247 192 156 298 34 19 33 7 15 22 23 21 26 23 44

3.2 2.2 1.4 2.2 0.2 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

106 BRIAN ARDY

ECU million GDP p.c. ECU p.c. Total % EU-15 1995 1995 % GDP

Total 1995

Total 1999*

Total 1999†

Total 2006‡

* Based

on the distribution of expenditure in 1995; †Based on the planned distribution of expenditure 1994–99; ‡Based on the planned distribution of expenditure 1994– 99. 2006 figures are derived as follows: actual expenditure is predicted to be 80% of the Agenda 2000 planning totals to reflect the fact that payments are generally lower than plans; Objective 1 expenditure is concentrated on fewer areas as a result of the strict application of the GNP threshold; areas that lose Objective 1 status are assumed to become new Objective 2 areas; and nonObjective 1 expenditure is then distributed among countries according to the 1994–99 plans. Sources: Court of Auditors, “Annual Report 1995”, op. cit.; European Commission, “Annual Report of the Cohesion Fund 1995”, COM(96) 388, 1996; European Commission, “7th Annual Report of the Structural Funds 1995”, COM(96) 502, 1996; European Commission, First Report on Economic and Social Cohesion (Brussels: European Commission, 1996); European Commission, “Agenda 2000”, op. cit., 21; Eurostat, Per capita GDP in the regions of the European Union (Luxembourg: Office for Official Publications of the European Communities, 1997). Own calculations.

Estonia (see Table 7.6). The other odd effect is that the more successful the new member, the more Structural Funding it will receive. If the GNP of the FG-5 grew at 5% per annum rather than 4%, the structural funding provided would not be sufficient to cover 4% of GNP expenditure in these countries. It would have been better to create a new category of very poor regions with a lower absolute level of structural funding, perhaps accompanied by a sliding scale of national contributions. Despite these effects it is likely that, given the relatively generous level of Table 7.6 Projected structural expenditure in the FG-5, 2006.

Slovenia Czech Republic Hungary Poland Estonia

GDP at 1997 market prices ECU billion

Structural Expenditure ECU million

Structural Expenditure % of GDP

Structural Expenditure ECU per capita

21900 55600 51400 138900 4300

876 2224 2056 5556 172

4.0 4.0 4.0 4.0 4.0

438 216 202 144 115

Source: European Commission, “Agenda 2000”, op. cit. 74 (Table 3) & 178. Own. calculations.

aid, these proposals will be acceptable to the FG-5. The crucial issue, therefore, is whether they are acceptable to the existing EU-15. They will protect structural

AGRICULTURAL, STRUCTURAL POLICY, THE BUDGET 107

expenditure in the poorest Member States at the expense of Ireland, Germany and the UK. With Germany and the UK among the countries most concerned about their net contribution, this could present problems. The Common Agricultural Policy The Common Agricultural Policy (CAP) as developed in the 1960s and 1970s was a more protectionist policy than the national policies it replaced. Internal prices and levels of protection were high and a system of intervention purchases ensured that high prices were maintained when, as was inevitable, supply exceeded demand. For some products where international agreement or substitutes prevented high protection there were subsidies. Two fundamental pressures, the budget and external trade relations, have led to reform of the policy. The budgetary pressures arose because increasing surpluses were exceeding the EC’S capacity to finance their disposal. External trade problems occurred because the major method of disposal was subsidized sale on world markets (dumping). The original CAP was complicated enough with different products subject to individual regimes, but reform has multiplied this complexity. Two different contradictory approaches were taken to reform: production control, and price reductions compensated by direct payments to farmers. Production control was undertaken either by production quotas (limits on production with penalties for excess production) or set-aside (paying farmers to leave land fallow). Quotas applied to milk and sugar required the monitoring of each individual farm’s production. Price reductions moved EU prices nearer to world prices but were compensated for by subsidies applied to the area cultivated up to a maximum determined by previous cropping patterns. This system requires detailed infor- mation on previous farming patterns and monitoring of current cultivation patterns (using satellite surveillance!). Unsurprisingly, the CAP has been subject to vociferous criticism because of its manifest deficiencies. The policy wastes resources, growing food at a cost substantially in excess of world market prices. There is a substantial transfer from consumers and taxpayers to farmers, landowners and food processors. Much of the cost is borne by poor consumers, and much of the benefit goes to wealthier farmers because the benefits for farmers are generally proportional to output. The policy is very expensive to administer at European and national level. The differences between world and EU prices, the substantial subsidies and the complexity of the policy lead to widespread fraud. The EU is such a large player in world agricultural markets that the CAP depresses and destabilizes world prices, distorting patterns of trade often to the disadvantage of poorer countries. External trade conflicts, particularly with the United States, have been the result. The present form of the CAP has been sustainable because the EU—made up as it is of predominantly wealthy countries—has consumers and taxpayers who have been able to afford to maintain the policy. The political weight of the EU in

108 BRIAN ARDY

GATT world trade negotiations meant that the agreement reached on agricultural trade permitted the continuation of the (albeit modified) policy. Within the EU, a combination of political factors has made the policy extremely difficult to reform. The agricultural lobby is extremely strong and well organized both at national and EU level. It represents not only farmers and rural interests, but also the agricultural supply industry and substantial parts of the food processing industry. Consumers’ groups are typically less well organized and effective. The political systems of some European countries—notably Germany and France— give undue weight to agricultural interests. The EC decision-making process and the divergent interests among Member States make it difficult to achieve agreement on radical reform. Yet while the CAP has been able to continue as the EEC-6 has expanded to the EU-15, its suitability for a further expansion and differentiation of EU membership is another matter. Central and eastern European agriculture and the CAP The importance of agriculture in the CEECs, and especially the large numbers of people it employs, raises its political significance in the accession negotiations. The CEECs are much more agricultural than the EU-15: the FG-5 would increase the current EU-15 agricultural land area by 22.7%, arable land by 30.4%, but population by only 16.8% (see Table 7.7). The SG-5 are even more agricultural, and would add 21.2% to EU-15 agricultural land and 24.4% to arable land, but only 11.5% to the population. There is considerable diversity in agriculture among the CEECs. The importance of agriculture in the economy measured by its share of gross value added (GVA) varies in the FG-5 from 5.0% in Slovenia to 8.1% in Estonia. Agricultural employment shows even greater variation, ranging Table 7.7 Agriculture in central and eastern Europe and the EU. Agriculture Country

Czech Rep. Estonia Hungary Poland Slovenia FG-5 Bulgaria Latvia Lithuania

Population as % of EU-15†

Agricultural Arable land land as % of as % of EU-15* EU-15*

% of Gross Value Added†

% of employment

2.8 0.4 2.7 10.4 0.5 16.8 2.3 0.7 1.0

3.1 1.0 4.4 13.5 0.7 22.7 4.5 1.8 2.5

5.2 8.1 6.2 7.6 5.0

6.3 13.1 8.0 26.9 7.1

13.9 9.9 9.3

23.2 18.5 23.8

4.2 1.3 6.1 18.5 0.3 30.4 5.2 2.2 3.0

†

AGRICULTURAL, STRUCTURAL POLICY, THE BUDGET 109

Agriculture Country

Romania Slovak Rep. SG-5 CE 10 Germany France UK Greece EU-15

Population as % of EU-15†

Agricultural Arable land land as % of as % of EU-15* EU-15*

% of Gross Value Added†

% of employment

6.1 1.5 11.5 28.3 21.9 15.6 15.7 2.8 100.0

10.6 1.7 21.2 43.9 12.5 21.8 11.5 – 100.0

20.5 6.3

34.4 9.7

8.6 1.0 2.5 1.6 14.7 2.4

22.5 3.2 4.9 2.1 20.2 5.3

12.1 1.9 24.4 54.9 15.3 23.5 7.8 2.9 100.0

†

*1993;

†1995. Sources: European Commission, “7th Annual Report of the Structural Funds 1995”, op. cit.; European Commission, “Agenda 2000”, op. cit., 138; Eurostat, Basic Statistics of the European Union, 33rd edn 1996 (Luxembourg: Office for Official Publications of the European Communities, 1997).

from 7.1% in Slovenia to 26.9% in Poland. EU agriculture is also very diverse with the share of GVA varying between 1.0% in Germany and 14.7% in Greece and of employment between 2.1% in the UK and 20.4% in Greece. Generally, however, agriculture is a much less important industry in the EU-15 than in the CEECs, as it only accounts for 2.4% of GVA and 5.3% of employment. The CEECs’ agriculture production is concentrated on those products that cause the greatest problems for the CAP: meat, dairy products and cereals. Despite their agricultural potential, since 1989 the CEECs have become net food importers, with the EU as their major supplier.17 As in other sectors of the economy, the immediate effect of transition was a fall in output, but in agriculture this fall in output was prolonged, from 1990 to 1993.18 There was a decrease in demand resulting from falling incomes and rising retail prices as food subsidies were reduced. Input prices were rising, but rising processing margins, low demand and, in some countries, price controls meant low farm prices and a price-cost squeeze. Prices were also squeezed by competition from imports that benefited from the greater efficiency of the EU food processing industry and sometimes from subsidies. Agricultural privatization and consequent restructuring has also had a depressing effect on output, although in the short term these problems are less in the FG-5 than the SG-5.19 Although agricultural production is now recovering, it is still constrained by the lack of capital for investment, uncertainty over land ownership, structural problems, the age and poor training of farmers, the inefficiencies of the food chain beyond the farm and the difficulty of raising quality and low prices compared to the EU. In 1995, farm gate prices were generally 40–80% of those in the EU.20 Although these price

110 BRIAN ARDY

differences might be expected to erode as a result of food price rises in the CEECs, owing to a rising real exchange rate and some moderate price reductions in the EU the CEECs, and the FG-5 in particular, have agricultural production potential significantly in excess of their agricultural demand. At present this potential is constrained by problems in the industry and low agricultural prices. Application of the current CAP to the CEECs would have complex effects on production, consumption and farm incomes. Increased prices would be expected to increase total production—an effect dependent upon increasing yields and labour productivity. Price increases would not, however, be evenly spread: they would be greatest for milk and beef, next would be cereals, then poultry, and finally pork. The rise in the price of cereals would further dampen the effects of price increases for dairy and meat products, for which cereals are an input. Changes in relative prices should also encourage substitution in production, with farmers switching crops. These effects would be distorted by production quotas for milk and sugar and set-aside for cereals. Thus for milk, with quotas calculated on current depressed production levels, CEEC farmers would be denied the opportunity to expand output in line with comparative advantage. The application of the CAP to the CEECs would have significant inflationary and distributional effects because in these countries food is a more important component of consumption. In the EU, the effects of higher farm food prices are muted by the higher costs of the food chain above the farm, the higher average extent of processing and consumers’ greater ability to pay. The desirable restructuring and consolidation of farms would also be delayed because incomes would be sustained by higher prices and direct payments. It is, however, rather extreme to suggest—as the Commission did in 1995—that “a strong increase in incomes for farmers alone through direct (compensatory) payments risks to create income disparities that could rapidly lead to social unrest in the countries and regions concerned”.21 Indeed, it could be argued that higher rural incomes and a slower rate of population decline could be a stabilizing factor in a time of transition and high unemployment. Yet subsidies at current EU levels would be excessive to achieve these ends. As far as central and eastern Europe is concerned, the current CAP is unsuitable for its needs. The Common Agricultural Policy and enlargement The extent to which the CAP will be modified to meet the new requirements of an enlarged EU is constrained by a combination of internal and external factors. In practice, three constraints are likely to determine the nature of CAP reform in response to enlargement: first, GATT Uruguay Round Agreement (URA) commitments; secondly, budgetary cost; and thirdly, the political difficulties of achieving agreement on reform. The URA placed a number of restrictions on the CAP. EU agricultural markets had to be opened up to imports, so the complex array of border measures is to be converted into tariffs, which then have to be progressively reduced. The share of

AGRICULTURAL, STRUCTURAL POLICY, THE BUDGET 111

imports in the EU agricultural market has to rise to a minimum of 5%. Export subsidies and the volume of subsidized exports are to be reduced. Overall support of agriculture, the aggregate measure of support (AMS), has to be reduced, except for measures that do not encourage increases in production.22 Once enlargement takes place, the CEECs become included in the EU’S commitments. This is not likely to present problems for levels of protection, which have been fixed at a very high level in the CEECs.23 The URA restraints on imports, AMS, export subsidies and, most significantly, the volume of subsidized exports are, however, likely to present significant constraints on the CAP for an enlarged Union, so further CAP reform will be required to ensure compliance with the URA commitments in an enlarged Union. CAP expenditure is constrained under the current Interinstitutional Agreement: until 1999 it is permitted to grow at only 74% of the growth of EU GNP.24 This constraint, which has been in operation since 1988, is likely to continue. A combination of high world agricultural prices, production restraints and a lowering of the ECU-US$ exchange rate have meant that expenditure has been kept fairly comfortably within this guideline. This is despite the introduction of direct subsidies in the last reform of the policy, which switched the cost of the policy from consumer prices to the budget. Thus in 1995, 71.0% of CAP Guarantee expenditure was on price compensation.25 There are different views about the likely future CAP expenditure: some authors believe that the CAP expenditure can easily be kept within the ceiling,26 others that it will be exhausted before enlargement.27 Predictably, the Commission is optimistic, with an estimated expenditure 7.9% below the ceiling in 1999.28 Realistically, enlargement will have to be accomplished within a constrained agricultural budget. All economic predictions need to be treated with caution, but there are particular problems with predicting the cost to the CAP of enlargement. The first set of difficulties relates to transition countries: these are poor data, particularly pre-1989, and the problematic nature of projections made in a situation of discontinuity. Both make it especially hard to predict the level of CEEC agricultural productivity. The second category of complication relates to the many imponderables: the date of entry to the EU, which countries become members, the speed of implementation of the CAP, the nature of the CAP by the time of entry, and the effects of CAP reforms. Finally, the operation of the CAP is affected by external factors such as world agricultural prices that, given the instability of agricultural markets, are difficult to predict. Given these problems, it is not surprising that there were large variations in the earlier estimates of the effect of enlargement on the CAP. Thus one early estimate29 spanned ECU 4–31 billion, whereas others ranged as high as ECU 37 billion for Visegrad Four enlargement.30 More recent estimates, however, show greater consistency because better data has become available,31 the effects of transition on CEE agriculture have become clearer, and the outcome of the 1992 CAP reforms on EU agriculture production

112 BRIAN ARDY

and expenditure have become apparent. The original Commission estimate was that enlargement to include the CEEC-10 would add ECU 12 billion to EU agricultural expenditure by 2005.32 The latest Commission estimate is slightly lower at ECU 11 billion, only 2.5 billion of which is for market support; most of the additional expenditure is on direct payments (7 billion).33 The reason for the low level of market support is that low yields in the arable sector mean that the CEECs will not become significant cereal exporters. The market support costs would be mainly for milk, where demand would be cut by higher prices so that there would be an increasing surplus despite production being constrained by quota. These Commission estimates are a little low compared with recent academic estimates that suggest a cost of extending the unreformed CAP to the Visegrad Four of between ECU 5 and 15 billion, with around ECU 10 billion as a midrange estimate.34 Sticking with the ECU 10 billion for the FG-5, this would represent 20% of the agricultural guideline expenditure in 2006.35 Thus enlargement under the current CAP would strain the agricultural budget. The Commission makes a number of proposals in Agenda 2000 to adapt the CAP to the changing circumstances after 2000, including enlargement.36 The cereal intervention price is to be reduced by 20%, but an increase in the area subsidy compensates for half the price reduction. This would mean that the average arable farmer will receive a subsidy of ECU 369.6 per hectare in addition to the value of the crop grown.37 Compulsory set-aside is to be abandoned as a production control measure. The continuing decline in the demand for beef means that a 30% cut in the beef support price is proposed. This reduction in beef prices would be offset by an increase in the subsidies paid for cattle. In the dairy market, quotas are to remain at their present levels but prices are to be cut by 10%. As compensation, an additional subsidy of ECU 145 per year for each dairy cow is to be introduced. Expenditure within the EU-15 is predicted to rise because the cost savings owing to price reductions of ECU 3.7 billion would be more than offset by an additional ECU 7.7 billion of expenditure on subsidies. These price reductions and, presumably, the imposition of milk quotas will go a considerable way to ensuring compliance with the GATT URA for the enlarged Union. The budgetary cost of agriculture expenditure in the FG-5 is to be contained by transitional arrangements, and by not extending eligibility for direct payments to the new member states. “In the context of acceding CEECs and during a transitional period, instead of applying the regime of direct payments to farmers, it seems more constructive to spend a significant amount of money for structural reforms and rural development.”38 With EU agricultural prices reduced to near world levels and other production constrained by quota, little market support expenditure will be required in the FG-5. Thus by 2006, agricultural expenditure in the FG-5 will only be ECU 4.1 billion and there will be a further ECU 2.6 billion of pre-accession aid to the SG-5.39 As the largest single category of EU expenditure, the CAP has a significant impact upon the receipts of Member States from the budget and upon the

AGRICULTURAL, STRUCTURAL POLICY, THE BUDGET 113

distributional effects of EU policies.40 With the switch from price support to direct subsidies, the budget figures for CAP receipts are becoming better representations of the benefits of the policy. When the CAP supported farmers by high prices, these were paid for by consumers, so national benefits depended mainly upon the extent of surplus production. The switch from prices to subsidies means that national benefits (costs) from the CAP depend increasingly upon the volume of production rather than surpluses (deficits). Thus it is not surprising that the main losers from the 1992 reform were France, the Netherlands and Ireland; benefits were more widely spread but Mediterranean countries tended to gain.41 The Agenda 2000 agricultural reforms are likely to add to Ireland’s problems with structural funding and Dutch concerns with the budget.42 These proposed reforms seem at best a limited and interim solution to the problems, including enlargement, facing the CAP. It is unlikely that the system of direct acreage payments will be accepted as production neutral under the next WTO43 round because they prevent one of the responses to price reductions, i.e. a decrease in the acreage planted. If area payments are applied to the existing but not the new member states, EU-15 farmers will be able to undercut the FG-5 farmers because the area payments make a substantial contribution to the fixed costs of production. While it is possible to accept that since “payments per hectare or per animal were compensation for the reduction in price support in these sectors”,44 they should not apply in the new member states. This merely compounds the unjust nature of the direct payment system: there is no attempt to limit the amount of payments a farm can receive, and no time limit on these payments. It is difficult to see how such differentiated payments can continue in the long run. Since area payments are not to be extended to the new member states, compulsory set-aside has to be abandoned because its justification is to limit production when area payments are applied. The application of set-aside would also have meant that the CEECs would become net cereal importers.45 The looming problems in the milk sector are not dealt with because the large price or quota cuts needed would either require excessively expensive compensation or would trigger potentially violent protests.46 Finally, although Agenda 2000 pays compulsory lip service to the environment, no specific environmental measures are included. Despite Agricultural Commissioner Franz Fischler’s declared policy of switching the emphasis from agricultural support to an integrated rural policy,47 the package does not repre- sent even the beginnings of such a development. Extra CAP Guarantee expenditure is to be financed largely by transferring the cost of environmental, afforestation and early retirement schemes to the agricultural guidance budget. Thus the proposed reforms of the CAP do not even resolve the current problems, let alone meet the needs of the future enlarged Union.

114 BRIAN ARDY

The EU budget and enlargement In past enlargements, budgetary flexibility has permitted adjustments of policy to provide compensation and side payments for existing and new members, thereby enabling agreement to be reached. The Iberian enlargement of 1986 involved compensation to the Mediterranean regions of the existing 12 Member States (EU-12) in the form of the Integrated Mediterranean Programme, and a substantial revision of the Structural Funds of benefit to the poorer existing Member States and to the new member states. These policy adjustments invariably led to increased budgetary expenditure, which was made possible by an improvement in the EC/EU’S budgetary position as a result of enlargement and/ or by an expansion of the budget and increased net contributions by existing Member States. CEEC enlargement will worsen the EU’S budgetary position, but existing Member States are increasingly unwilling to finance enlargement. This is the result of the current financing arrangements of the EU and the growing budgetary pressures on EU governments as a result of growing unemployment and the EMU convergence requirements. The EU’S finances are raised from four resources: agricultural and sugar levies, customs duties, VAT and GNP contributions (see Table 7.8). Agricultural and sugar levies and custom duties are declining in importance and now supply less than 20% of EU revenue. Today over three-quarters of all EU revenue comes from the VAT and GNP based contributions, thereby making national contributions roughly proportional to GNP. EU expenditure is concentrated upon two Table 7.8 The EU budget, 1995. Revenue Agricultural levies Sugar levies Customs duties VAT GNP based resource Other revenue Surplus from 1994 Total million ECU

Expenditure 1.1% 1.5% 17.1% 50.6% 20.1% 0.8% 8.7% 75479.5

Agricultural guarantees Structural Funds Research and Development Foreign Aid Administration Other

52.0% 29.3% 4.0% 5.1% 5.8% 3.8%

Total million ECU

66915.2

Source: Court of Auditors, “Annual report 1995”, op. cit.

areas: agricultural guarantees and the Structural Funds. It is the receipts under these policies that largely determine the net budgetary position of Member States. Net contributions substantially exceed net receipts because a substantial proportion of EU budgetary expenditure cannot be allocated to individual Member States (e.g. administration and foreign aid). Although the figures need

AGRICULTURAL, STRUCTURAL POLICY, THE BUDGET 115

to be treated with some caution,48 Member States are likely to use them in budgetary negotiations. These arrangements have resulted in the EU budget being heavily dependent upon Germany, the net cost of past enlargements having been largely underwritten by an expansion in Germany’s net contribution (see Table 7.9). However, the German budget has been put under enormous strain as a result of the continuing cost of German unification, the effect of the recession and high unemployment, and the need to meet the 3% budget deficit criterion for monetary union. Thus, to the traditionally parsimonious UK can be added Germany49 as well as the Netherlands, which is also concerned about the high level of its net contributions.50 With all other Member States’ budgets under pressure as well, there is generally little willingness to expand the size of the EU budget to finance enlargement. Since any expansion of the EU budget revenue beyond the 1999 limit of 1.27% of EU GNP would require unanimity among Member States and ratification by national parliaments, enlargement will have to take place within the existing budgetary ceiling. Enlargement will therefore have to be financed out of the headroom in the Table 7.9 Contributions and receipts from the EU budget, 1995. Country

Contribu Receipt tion million ECU

Net Share of Net cont. ECU per contribut net as % capita ion contribut GDP % ECU ion %

GDP per capita as % EU average %

German y UK Netherl. France Sweden Austria Italy Belgium Finland Luxemb.

21324.1

7893.1

13431.0

54.0

0.7

164.8

131

9251.6 4349.6 11876.8 1658.3 1762.9 6413.7 2680.1 887.4 167.6

4531.4 2344.9 10149.6 721.0 857.8 5799.6 2368.9 722.8 122.8

4720.2 2004.7 1727.2 937.3 905.1 641.1 311.2 164.6 44.8

0.6 0.7 0.1 0.5 0.5 0.1 0.2 0.2 0.3

80.7 130.2 29.8 106.5 113.1 11.2 30.8 32.3 112

83 113 117 116 112 83 118 108 187

1295.4

1601.1

−305.7

19.0 8.1 6.9 3.8 3.6 2.6 1.2 0.7 0.2 100.0 −1.2

−0.2

−58.8

146

664.8 864.9 985.2 3645.2

2551.7 3246.0 4474.1 10863.3

−1886.9 −2381.1 −3488.9 −7218.1

−7.6 −9.6 −14.0 −29.0 −61.4

−3.8 −3.1 −4.0 −1.7

−524.1 −240.5 −335.5 −184.1

80 45 48 63

Denmar k Ireland Portugal Greece Spain

116 BRIAN ARDY

Country

Contribu Receipt tion million ECU

Net Share of Net cont. ECU per contribut net as % capita ion contribut GDP % ECU ion %

GDP per capita as % EU average %

Source: Court of Auditors, “Annual report 1995”, op. cit. Own calculations.

current budget, with extra revenue resulting from the growth of GNP, savings on current policy commitments and the limited additional funds from the new member states. The planned 1999 budget has little in reserve with payments 1. 25% of EU GNP, leaving a margin of only 0.02% below the ceiling of 1.27%. By 2006 the FG-5 will provide only 3% of EU budget revenue while receiving 13. 5% of total expenditure from agricultural and structural operations alone. Not surprisingly, the predictions for the period beyond the current budgetary perspective are based on optimistic assumptions. The economy of the EU-15 is predicted to grow at 2.5% per annum throughout 1996–2006, leading to a similar expansion of the budgetary ceiling. Yet over the period 1986–96, the EU achieved an average growth rate of only 2.3%.51 Agricultural guarantees and structural operations are not only the areas of expenditure most heavily affected by enlargement: they also account for the lion’s share of EU budgetary expenditure (80.7% in 1995).52 Thus, it is what happens to these categories that will dominate the effect on the budget of enlargement. Agricultural expenditure in 2006 in the existing EU-15 is expected to be little changed over 1999 (see Table 7.10), yet the EC/EU has never succeeded in stabilizing real agricultural expenditure over a seven-year period. Current levels of CAP expenditure are also benefiting from the benign situation in world markets, but the switch to direct subsidies has made CAP expenditure more predictable and less dependent upon external events. Expenditure in the new member states is also anticipated to be low—the result of transitional arrangements, continuing low agricultural productivity, constraints on production, and their general exclusion from direct subsidies. For the Structural Funds, it is assumed that expenditure in the existing Member States will be maintained at current levels from 1999 to 2002 and that in 2002–2006 real expenditure will decline by 12.8%. Expenditure on the Cohesion Fund is expected to remain the same in real terms throughout 1999–2006. Such a reduction in structural expenditure is going to be difficult for the “Cohesion States”53 and Italy to accept. These states have since 1988 become used to steadily rising structural expenditure. Their current economic circumstances are generally difficult, yet they are required to accept a fixing and then reduction in structural expenditure over the period when they are entering into, and experiencing the adjustment problems of, monetary union, as well as having to compete with new low wage member states. The Structural Funds are the major mechanism for aiding the new member states and by 2006 they are expected to receive 27.2% of total structural expenditure. In the other areas of

AGRICULTURAL, STRUCTURAL POLICY, THE BUDGET 117

expenditure, internal policies growth is at the same rate as GNP but external action and administration are assumed to grow more slowly than GNP. The reduction of external action expenditure is to be expected with the inclusion of former areas of substantial activity within the Union. The EU has succeeded in controlling administration expenditure in the past, but whether this can continue with the inclusion of countries with underdeveloped administrative capacity is another matter. In short, the Commission has been able to reconcile enlargement with an Table 7.10 EU budgetary expenditure. (1997 prices ECU billion)

Reformed CAP expend iture: EU-15 New rural measur es: EU-15 Structural Funds: EU-15 Cohesion Fund: EU-15 EU-15 GAP market measur es: FG-5 New rural measur es: FG-5 Structural Funds: * FG-5 Pre-accession aid: FG-5

1999

2000

2001

2002

2003

2004

2005

2006

40.1

39.3

40.3

40.5

42.3

42.0

41.2

40.5

1.8

1.8

1.8

1.8

1.8

1.8

1.8

31.4

31.3

32.1

31.3

30.3

29.2

28.2

27.3

2.9

2.9

2.9

2.9

2.9

2.9

2.9

2.9

74.4

75.3 0.0

77.1 0.0

76.5 1.0

77.3 1.1

75.9 1.1

74.1 1.1

72.5 1.2

0.0

0.0

0.5

0.9

1.3

1.7

2.1

0.0

0.0

3.6

5.6

7.6

9.6

11.7

1.8

1.8

0.8

118 BRIAN ARDY

(1997 prices ECU billion)

FG-5 Preaccession aid: SG-5 Internal Policies: EU-15/ 20 External Action: EU-15/ 20 Administrati on: EU-15/ 20 Other policies: EU-15/ 20 Reserves Total† % of GNP Margin % of GNP Own Resources Ceiling

1999

2000

2001

2002

2003

2004

2005

2006

0.8 0.5

1.8 1.2

1.8 1.2

5.1 3.0

7.6 3.0

10.0 3.0

12.4 3.0

15.0 3.0

6.1

6.1

6.4

7.3

7.5

7.7

7.9

8.1

6.6

6.6

6.8

7.0

7.1

7.3

7.5

7.6

4.5

4.5

4.6

5.1

5.2

5.3

5.4

5.5

17.2

17.2

17.8

19.4

19.8

20.3

20.8

21.2

1.2 92.5 1.25

1.0 94.1 1.24

1.0 96.6 1.24

0.8 101.1 1.22

0.5 103.9 1.22

0.5 106.5 1.22

0.6 108.9 1.22

0.6 111.4 1.22

0.02

0.03

0.03

0.05

0.05

0.05

0.05

0.05

1.27

1.27

1.27

1.27

1.27

1.27

1.27

1.27

*Including participation in the Cohesion Fund; †This total is appropriation for payments; the table sums to a greater amount because figures for Internal Policies, External Action, Administration and Reserves are appropriations for commitments. Source: European Commission, “Agenda 2000”, op. cit., 73–4. Own calculations.

unchanged budgetary ceiling only by making the following assumptions. First, that existing Member States will accept the fixing of real agricultural expenditure with simultaneous reductions in structural expenditure. Secondly, that the situation in agricultural markets and the EU economy will remain favourable. Thirdly, that new member states accept in the immediate future a differentiated agricultural policy. Agenda 2000 therefore represents the minimum change to EU

AGRICULTURAL, STRUCTURAL POLICY, THE BUDGET 119

policies consistent with enlargement, but these changes are probably sufficient to ensure that enlargement can be financed within an unchanged budgetary ceiling. Conclusion As the Amsterdam Treaty indicates, this is not a favourable time for fundamental reform in the EU. Public support for further integration is weak; many national governments are in fragile positions, which results in a lack of leadership; the public is tax averse, governments are generally in difficult financial positions, and their energies with regard to Europe are concentrated upon monetary union. It is unsurprising, therefore, that Agenda 2000 can be characterized as a timid response to the challenge of enlargement. While the revision of the structural policies in general seems sensible, the special arrangements for the new member states seem to be concerned merely with limiting expenditure. The reforms to the CAP represent minimal adjustments to the status quo to make enlargement possible; the new member states are accommodated through their exclusion from the subsidy system, but with some compensatory structural expenditure. There is to be no addition to EU revenue resources: the budgetary impact of enlargement is to be managed within the existing Own Resources limit, which will be a difficult undertaking. But was it ever thus? All the current Member States must agree to enlargement, so the arrangements under which it takes place are inevitably going to tend towards the status quo with minimal adjustment. Once new member states are incorporated in the Union, reform can take place.54 Therefore, that enlargement take place is undoubtedly more important than the conditions under which it takes place. In some respects, minimal reforms may be better from the point of view of the applicant states because when the inevitable adjustments do take place, the new member states will be able to influence the outcome. So it is possible to give a half-hearted welcome to the Agenda 2000 proposals since they provide a realistic possibility of enlargement. Notes 1 See C.Preston, “Obstacles to EU enlargement: the classical Community method and the prospects for a wider Europe”, Journal of Common Market Studies 33, 451– 63, 1995. 2 We have also used the term “Second Group 5” (“SG-5”) to designate the CEECs which the European Commission and European Council judged in 1997 not yet to be ready for detailed accession negotiations. It is hard to find an official designation differentiating these two groups of CEECs since such labelling is a politically sensitive issue. 3 European Commission, “Agenda 2000. For a stronger and wider Union”, Bulletin of the European Union, Supplement 5/97, 21, 1997.

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4 Whereas Gross Domestic Product (GDP) measures the total value of the output of a country in a year, Gross National Product (GNP) is equal to GDP plus net property income (NPI) from abroad. For most countries, the difference between the two is relatively small. 5 European Commission, The Community Budget: the facts in figures, SEC(95) 1400, 13 (Luxembourg: Office for Official Publications of the European Communities, 1995). 6 T.Courchene et al., “Stable Money—sound finances”, European Economy 53, 1993. 7 Czech Republic, Hungary, Poland and Slovakia. In the early 1990s, it was assumed that these would be the first CEECs to join the EU. 8 B.Ardy, “Central European enlargement and the European Union budget”, Society and Economy in Central and Eastern Europe 18, 98–112, 1996; H.Grabbe & K.Hughes, The eastward enlargement of the European Union (London: Royal Institute of International Affairs, 1997). 9 For the Cohesion Fund the rate of funding is 80–85%. 10 European Commission, “Agenda 2000”, op. cit., 21–6. 11 Ibid., 22. 12 Ibid., 23. 13 Objective 3 aid would be available to regions not receiving Objective 1 or 2 aid “to adapt and modernise systems of training, education and employment”. Ibid., 24. 14 Ibid, 21–2. 15 Appropriation commitments are planning limits on expenditure. Actual payments are always lower. In the case of the structural funds in 1995 actual expenditure was 75% of the financial perspective appropriation commitments. 16 Assuming the 40% upper limit is applied. 17 By contrast, the FG-5 have an export surplus: see A.Buckwell & S. Tangermann, “The CAP and central and eastern Europe”, in The Common Agricultural Policy, 2nd edn, C.Ritson & D.R.Harvey (eds), 307–41, (Wallingford: CAB International, 1997). 18 OECD, Agricultural policies, markets and trade in transition economies: monitoring and evaluation 1996, 171 (Paris: OECD, 1996). 19 Agriculture in Poland and Slovenia remained predominantly private through the communist era. The Czech Republic and Hungary’s state farms have generally been turned into private co-operatives, minimizing restructuring problems. 20 European Commission, “Agenda 2000”, op. cit., 114. 21 European Commission, Agricultural strategy paper, CSE(95) 607, 26 (Brussels: European Commission, 1995). 22 Subsidies for set-aside and area payments for arable crops were accepted as production neutral and thus do not have to be cut. 23 At least in the FG-5: see S.Tangermann & T.Josling, Pre-accession agricultural policies for central Europe and the European Union (Brussels: European Commission, DG 1, 1994). 24 European Parliament, Council and Commission, “Interinstitutional Agreement on the Budget”, Official Journal C 331, 7.12.1993. 25 European Commission, The Agricultural situation in the European Union 1996, 136 (Luxembourg: Office for Official Publications of the European Communities, 1996).

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26 A.Mathews, “The disappearing budget constraint on EU agricultural policy”, Food Policy 21(6), 497–508, 1996. 27 Tangermann & Josling (1994), op. cit. 28 European Commission, “Agenda 2000”, op. cit., 73 (Table 2). 29 P.Brenton & D.Gros, The budgetary implications of EC enlargement, CEPS Working Document No. 78 (Brussels: Centre for Policy Studies, 1993). 30 K.Anderson & R.Tyers, “Implications of EC expansion for European agricultural policies, trade and welfare”, in Expanding Membership in the European Union, R.Baldwin, P.Haaparanta, J.Kiander (eds), 209–39 (Cambridge: Cambridge University Press, 1996). 31 M.Jackson & J.Swinnen, A statistical analysis and survey of the current situation of agriculture in Central and Eastern European countries (Brussels: European Commission DG I, 1995). 32 European Commission, Agricultural strategy paper, op. cit., Table 3, 19b. 33 European Commission, “Agenda 2000”, op. cit., 115–16. 34 R.E.Baldwin, J.F.Francois, R.Portes, “The costs and benefits of eastern enlargement: the impact on the EU and central Europe”, Economic Policy 24, 127–76, 1997. 35 See European Commission, “Agenda 2000”, op. cit., 73 (Table 1). 36 European Commission, “Agenda 2000”, op. cit., 29–33. 37 Agra Europe, “Panorama from Brussels, Santer Plan leaves four unanswered questions on the CAP”, Agra Europe, 11 July 1997. 38 European Commission, “Agenda 2000”, op. cit., 116. 39 The reforms in Agenda 2000 are incomplete; further proposals for tobacco, olive oil and wine are to be brought forward. F.Fischler, “Agenda 2000: CAP reform proposals” (Speech to Informal Council of Ministers of Agriculture, Echternach, 7– 9 September, 1997). 40 See B.Ardy, “The National incidence of the European Community budget”, Journal of Common Market Studies 36, 401–29, 1988. 41 R.W.Ackrill, R.C.Hine, A.J.Rayner, M.Suardi, “Member States and the preferential trade and budget effects of the 1992 CAP reform: a note”, Journal of Agricultural Economics 48, 93–100, 1997. 42 H.J.Brouwer, “A new budget deal means policy reform”, in Do we need a new EU budget deal, Philip Morris Institute (Brussels: Philip Morris Institute, 1995). 43 The World Trade Organisation (WTO) was the new organization established by the URA to replace the GATT in administering world trade rules. 44 European Commission, “Agenda 2000”, op. cit., 116. 45 Ibid., 115. 46 M.Tracy, Agricultural Policy in the European Union and other Market Economies, 2nd edn (Brussels: APS Publications, 1997). 47 Fischler (1997), op. cit. 48 See Ardy (1988), op. cit. 49 “We want our pfennigs back”, The Economist, 9 August 1997, 28. 50 Brouwer (1995), op. cit. 51 European Commission, European Economy, Supplement A, 5, May 1997, 15 (Table 1). 52 Court of Auditors, “Annual report concerning the financial year 1996”, Official Journal C 369, 12.11.1996, 18. 53 Greece, Ireland, Portugal and Spain.

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54 Sometimes this process can be time consuming and bruising as in the case of the “British” problem with the budget, which was an issue of contention from entry in 1973 until 1984.

8 EU accession and labour markets in the Visegrad countries Janice Bell1 and Tomasz Mickiewicz

The economic challenges of enlargement do not solely concern the ability of the EU to assimilate new members into a larger market. There is also a need to think about the impact of integration for central and east European economies, and the areas in which their institutional structures need to be adapted to meet EU standards. Implications for labour markets are central to any economic policy considerations. The unemployment rate and wages will have direct implications for social welfare and political support for EU membership. For applicant states, concern regarding the impact of accession on the labour market centres not only on obtaining freedom of movement for its citizens, but also on the costs of meeting the acquis on labour market regulation and the potential net impact on employment and wages. While EU concerns appear to hinge on the fear that central and east European countries will use cheap labour to undercut the higher wage costs of EU firms, the states themselves are concerned about becoming a low wage “dumping ground”, where wages remain depressed and working conditions poor. The extent to which labour can become more productive and efficient will be a key factor in determining whether central and eastern Europe will achieve its goal of becoming a region of affluent participants in the EU marketplace, creating gains from trade and positive external effects for all member states. This chapter examines the relationship between the process of EU accession and the labour market in the central European countries gathered under the Visegrad agreement which formed the Central Europe Free Trade Agreement. These countries—Poland, the Czech Republic, Slovakia, Hungary, as well as Slovenia2—are in the forefront of post-communist economic reform.3 Although Slovakia was excluded from invitation to membership negotiations in 1997, this was not for economic but for political reasons. Some basic economic data on the Visegrad countries, including Slovenia, are summarized in the table below: Table 8.1 Visegrad countries: basic economic characteristics, 1996. Czech Republic Hungary Poland Slovakia Slovenia Population (million)

10.3

10.2

38.6

5.4

2.0

124 JANICE BELL AND TOMASZ MICKIEWICZ

Czech Republic Hungary Poland Slovakia Slovenia Employment (million) GDP (% real growth) GDP ($billion) Average monthly wage ($) GDP per capita ($) GDP per employee ($) Annual wage/GDP per capita (%) Annual wage/GDP per employee (%) Unemployment rate (%)

5.0 4.1 55.0 356 5340 10904 80

2.6 1.3 42.2 307 4333 17320 85

8.8 2.0 6.1 6.9 133.3 18.9 323 266 3453 3500 15076 9283 112 91

0.7 3.1 18.5 954 9250 24832 124

39

21

26

34

46

3.5

10.7

13.2

12.8

14.4

Source: Business Central Europe database; CESTAT Statistical Billetin, 1996(4), 1997 (3).

Labour market integration demonstrates how multidimensional the problem of EU accession is. Thus, the chapter discusses first the institutional elements of labour market adjustment, notably the role of worker protection and social insurance legislation. Next, the economic side is presented: some findings on unemployment and the progress in restructuring of employment and production in the central European countries. The phenomenon of low unemployment in the Czech Republic is discussed in detail. Institutions and law: labour market issues in the accession process The level of unemployment and the rate of employment restructuring are affected both by incentives generated by shifts in demand and supply (“market forces”) and economic policy, and by constraints resulting from the institutional and legal framework. In this section, we concentrate on the institutional and legal framework, with some reference to policy-making. Institutional factors can be divided into three general areas: wage setting and collective bargaining, laws on employment conditions including regulation of redundancy and minimum wages, and social insurance systems, incorporating the level and duration of unemployment benefits. Other issues that are important elements of the Europe Agreements and will figure in accession negotiations include health and safety regulations and anti-discrimination legislation. The issues listed above are present in the fundamental laws of European organizations—including the Treaty of Rome, the EU Social Policy Agreement,4 the 1989 Social Charter,5 and the Council of Europe’s European Social Charter. These charters reflect the view that the labour market is a social institution and that it does not simply function like any ordinary market for commodities or services. Employment receives special consideration as a source of individual

EU ACCESSION AND LABOUR MARKETS 125

purpose and social participation as well as a means of supply and remuneration of labour. The integration of the Visegrad countries’ labour markets into European institutions therefore extends beyond the burdens of restructuring to questions of whether enterprises in the central European countries can implement basic EU labour law and still maintain and increase competitiveness. Labour market issues have already constituted an important element of EU— Visegrad relations. Each of the Europe Agreements contained provisions on cooperation and harmonization of labour law on health and safety standards on the job, social security system modernization and labour market policies. From the perspective of the European Commission, while labour market issues probably do not threaten to derail accession talks, they still may erupt as a politically sensitive area in the negotiations. The free movement of labour under the Single Market provisions is a related but separate issue, which will not be addressed in this chapter. The acquis in the realm of employment cannot easily be separated from social policy in general, especially with regard to social assistance and unemployment benefit systems that are funded by payroll taxes, not to mention the incentive effects of various levels of benefits and eligibility. Moreover, national interests are particularly strong in regard to labour market issues. The Visegrad countries have all been making considerable progress in the implementation of labour codes and laws on social insurance that meet EU standards with reference to both the more abstract charters and the more concrete directives. For instance, Poland has already made “far reaching amendment” of its existing codes on labour law and social policy, particularly in the area of employment law, collective labour relations and social security.6 However, while central European governments appear remarkably sanguine about some issues arising from their lower level of development and about general problems of implementation, Commission opinions are more reserved (but by no means alarmist) about the potential challenges of labour market integration, notably free movement of labour. What follows is not a comprehensive presentation of the prerequisites of harmonization of labour law and social policy, but it will focus on the areas that will have either the greatest potential impact on equilibrium unemployment rates, and/or pose the greatest challenges of implementation in the Visegrad countries. Collective bargaining institutions and wage setting The right of employees and employers alike to form organizations to represent their interests in collective negotiations is enshrined in European protocols and law. For instance, Art. 6 of the Council of Europe’s Social Charter covers these rights, and the EU Social Chapter emphasizes the importance of employee consultation, which takes place primarily through these representative organizations. All the Visegrad countries also have some form of tripartite

126 JANICE BELL AND TOMASZ MICKIEWICZ

negotiations on wage setting and related policies between the “social partners”: employers, employees and the state. Generally speaking, one of the main shortcomings of labour policy in the Visegrad group in this regard is the weakness of employers’ organizations, particularly those representing the private sector. The dominating view in the literature is that there is a reversed u-shaped curve for wage inflation as a function of the degree of centralization of wage negotiation: both fully centralized and fully decentralized models are good for wage restraint, but systems that are neither here nor there tend to have a more adverse impact on wage increases. The reason for this is that mixed/intermediate models represent trade unions that are strong enough to affect wages, but not sufficiently centralized across regions and industries to internalize general macroeconomic consequences.7 In Poland, employers’ associations have been at an organizational disadvantage to the country’s strong and vocal trade unions, but there are signs that employers’ organizations are starting to congeal. The largest of these has joined both the Union of Industrial and Employers’ Confederations of Europe (UNICE) and the International Organization of Employers, indicating a greater organizational coherence and awareness of European issues. Polish law also has a pro-labour bias. For instance, while employees have the right to strike, employers do not have the right to use a lock-out during industrial disputes. Poland has not ratified Clause 4 of Article 6 of the European Social Charter, which extends the right of collective action to employers and employees alike.8 EU advisers have indicated the need to redress this imbalance between the social partners, which currently weighs heavily in favour of labour. Instituting these changes will continue to be difficult, as the two largest parties in the Polish parliament, elected in September 1997, both have very substantial and influential participation from Poland’s two largest trade union organizations. Poland has a Tripartite Commission that is involved in setting norms for wage rises. This body began functioning in 1995. Prior to March 1995, Poland had an excess wage tax that regulated wage rises in the state sector. The main participants of the Tripartite Commission are the Solidarity and OPZZ trade unions on the employees’ side,9 the Confederation of Polish Employers and representatives of the Polish government. Collective negotiations have a much greater influence over wages and employment standards in the state than in the private sector, and thus the coverage of the economy is only partial. In 1996 and 1997, there were growing concerns that this forum for wage setting has a harmful, accelerating effect on pay in much less productive state sector firms. Certainly, official statistics on average wages show that since the start of transition public sector wages have consistently been higher than private sector wages for equivalent work. In Hungary, there are several employers’ organizations and trade unions, though labour organizations have participated more in European organizations. The three largest trade unions in Hungary have all joined the

EU ACCESSION AND LABOUR MARKETS 127

European Trades Union Council (ETUC), but none of the employers’ organizations have joined UNICE. In terms of tripartite arrangements, the Hungarian “Interest Conciliation Council” has been functioning since 1992 as a forum for dialogue among the social partners. However, the fragmentation of organizations on both sides of the bargaining table indicates that greater cooperation and mergers are required in order to increase the coherence and efficiency of these groups. Union representation in Hungary is slightly more fragmented than Poland’s two warring camps, but the European Commission’ s evaluation of the functioning of this body is more positive. In Slovenia, the trade unions have become the legal partner in negotiations with the government. The Collective Agreement was signed by trade unions, employers’ representatives and government. There are several trade unions, but the Independent Trade Unions of the Republic of Slovenia is the largest one. According to legal requirements, each employer has to provide conditions for trade union representatives to work inside the company. As in the other countries, the union position is quite strong in the state sector and weak in small private companies. Employers are organized in the Chamber of Commerce of the Republic of Slovenia and the Handicraft Chamber.10 The Slovak Confederation of Trade Unions and the Slovak Association of Employers’ Unions are both part of the broad European organizations ETUC and UNICE. However, their functioning has not become depoliticized and since 1993 the government has tended to make politically motivated interventions in the organizations of the social partners. In the Czech Republic, wage norms have been set by a tripartite body since 1991 (before the break-up of Czechoslovakia). With the agreement of the trade unions, an excess wage tax was used to limit the growth of real wages. However, it was abolished in July 1995. Despite the comparatively long track record of the tripartite mechanism and its apparent success in maintaining social support for the policy of real wage restraint, there are some questions about the efficiency of this law. The “maximum” wage growth indicator was used more as the norm than as a ceiling. As in Poland, real wage rises in the first two years of transition kept below the regulated wage norm, but exceeded it thereafter. Since 1993, real wages have been growing fast, and 1996 brought an 8.5 per cent increase.11 The European Commission opinion on the Czech application for EU membership commented that the government had “not helped to encourage employers to negotiate within the framework of the social dialogue”.12 In the light of the quickly rising real wages and sluggish growth rates, the failure to maintain moderated wage growth could lead to a further erosion of labour productivity and thus competitiveness. The exchange crisis in the summer of 1997 suggested that consumer demand is fuelling increased domestic prices, which in turn puts pressure on the koruna’s value and reduces the competitiveness of Czech exports. During the current phase of dynamic capital investment, which requires imports of modern capital equipment from western European and other coun- tries,

128 JANICE BELL AND TOMASZ MICKIEWICZ

relatively low wages are needed to keep production costs down in the period before the new investments come on line. The overall picture, therefore, is that the corporatist institutions established in the core Visegrad countries have had varying degrees of representativeness and effectiveness in wage setting. For example, the dominating presence of labour interests in Poland’s competing trade unions and in its two largest political parties complicates this picture in a different way to the intermingled relationship between government and business in the Czech Republic. Ironically, the result of both may be a more lax attitude towards state and privatized enterprises with residual state ownership, resulting in excessive wage increases. Employment legislation There are a number of areas where employment legislation has been important in determining developments in post-communist states. The first problem that should be highlighted is that of mass redundancies. All OECD countries with the exception of the us have redundancy laws, and under these laws mass redundancy is treated differently from claims for unfair dismissal. Mass layoffs are understood not to be a disciplinary action, but rather to be motivated by economic forces. In EU countries, notice periods—the length of time before which employment can be terminated—range up to six months. Severance pay is normally calculated as a multiple of average monthly earnings, and while this often varies with the length of employment it can equal up to one year’s earnings in Italy, Spain and Portugal.13 The primary impact of these laws is probably to dampen the speed of adjustment rather than to raise or lower longer-run employment levels. Different forms of employment protection, whether notice periods or severance pay, work to further reduce the reflexivity of employment to changes in output. While redundancy laws serve to blunt the flows into unemployment, they also make firms more cautious in their hiring practices, potentially slowing outflows from unemployment in less certain economic circumstances. While mass layoffs (especially in the state sector) are politically sensitive events in any industrialized country, for ten years the transition economies have been faced with the potential for a string of mass redundancies in inefficient and overstaffed state enterprises. It was expected that transition economies would experience a wave of redundancies as state firms shed “excess labour” that had been rationally accumulated under the soft budget constraints and annual planning systems of the socialist economy. It was also expected that a number of firms would face bankruptcy, liquidation and closure, and that even more would be forced to shed up to an estimated 25 per cent or more of their workforce.14 Collective redundancies in the transformation process can be understood as an exaggerated version of the restructuring policies occurring primarily in large industrial enterprises in western Europe. Mass redundancies were especially feared in transition economies: compounding anxiety about the appearance of

EU ACCESSION AND LABOUR MARKETS 129

open unemployment, labour markets that were suddenly clogged with idle labour fed into many observers’ predictions of destabilizing, stop-start reform or even policy reversal,15 unmanageable levels of social spending on unemployment benefits, and the social misery of mass unemployment. The reality, however, failed to measure up to the worst expectations. Mass layoffs have been relatively rare in transition economies, including that of high unemployment Poland. The Polish law on redundancies was approved by parliament at the end of 1989 as part of the body of law enacted in anticipation of the “big bang” reform programme started on 1 January 1990. The law on mass layoffs16 is not far from European standards. Compensation is granted at up to three months’ average pay, and there is a three month requirement for prior notification of redundancies. Workers (through their representative bodies) have the right to access full financial records of the firm, and to propose alternative solutions to the firm’s management. Management, however, is not legally obliged to follow any recommendations made by employees, and in this their decision to make redundancies is constrained only by wide definitions of permissible reasons for making redundancies (e.g. organizational restructuring, economic reasons) and by the need to make severance payments. While the body of the law itself appears to fall within standard EU practice on mass redundancies,17 the Commission opinion on Poland’s application for accession specifically mentions that local labour offices have been less than thorough in ensuring that enterprises meet their responsibilities.18 A common theme in the question of harmonizing labour law is ensuring not simply that the right laws are on the books, but that they are enforced and that violations will be detected and punished. The Czech law,19 which dates from prior to the “velvet divorce” from Slovakia, contains similar provisions to the Polish law in terms of procedure, although the notice period is only one month (two months before 1991). However, the main difference is that from 1990–91 the redundant worker was entitled to severance pay equal to five months’ average pay, reduced to two months in 1991. In a transition economy, the function of the redundancy law is not simply to protect workers’ living standards when faced with unemployment in a highly uncertain environment. Its other purpose is to discourage too rash hiring and firing decisions by firms. If firms expect demand to recover in fewer than five months, it is worthwhile keeping workers on instead of firing them. It also encourages firms to release redundant labour more gradually, which eases conditions on local labour markets. Higher severance payments increase this deterrent effect. In this regard, the 1990 Czech labour market regulations aimed to encourage the retention of labour in employment more than the 1991 law. In contrast, the Hungarian law on mass redundancies is much less rigorous than in Poland and the Czech Republic. The Commission opinion on Hungary notes that its labour codes need to strengthen the guarantee of protection of workers’ rights in the case of mass redundancies or sale of the firm (“transfer of undertakings”).20 Slovak law on collective redundancies is close to

130 JANICE BELL AND TOMASZ MICKIEWICZ

EU standards, and is considered to be advanced for the region. However, once again, having the law on the books does not always ensure that workers receive the level of protection to which they are entitled. One area of shortcomings indicated by the Commission are problems with ensuring compliance with measures aimed at safeguarding employees in the instance of insolvency or failure of the firm.21 Overall, redundancy legislation in the Visegrad countries is much less rigorous than in EU countries. Notice periods are shorter, and relative compensation levels are lower. This reflects an awareness in transition economies that the labour market has to be kept flexible, and that—at least at this stage in development—restructuring and job creation has top priority. A further particularly important area of employment legislation relates to the minimum wage. In the European Union, the average minimum wage is equivalent to approximately 60 per cent of the median wage, rising to more than 70 per cent in the Netherlands and Portugal.22 In Italy and Germany, minimum wages are set by sectors through collective negotiations, while in the other countries—except the UK and Ireland, which have not had a minimum wage— the government sets one basic rate. The minimum wage is not irrelevant; in countries where it applies, estimates suggest that 10 per cent of the workforce is paid at this level.23 In central and eastern Europe during the period of “real socialism”, minimum wages played a central role in economic policy and regulations. Many social benefits were linked to the minimum wage. These included unemployment benefits, child care allowances, wages of the “budgetary sphere”,24 retirement pensions and school and university grants. Because of this link, the level of minimum wages has been manipulated after transition as part of income policy efforts to suppress wage/income inflation. In most of the countries, the ratios of minimum to average wages were allowed to fall drastically and minimum wages lost any significance in relation to the labour market. The only exception is Poland, where social benefits were disconnected from the minimum wage. It is the only country where minimum wages actually rose in proportion to the average wage after transition. They have been regularly adjusted, each quarter, on the basis of the cost of living index.25 Equal treatment—equality of opportunity and the equal pay for equal work by men and women—is another key principle included in all the main European laws and charters on employment and social rights. It is part of the legislation aimed at promoting equity among the labour force and protecting the rights of part-time, seasonal and temporary workers. The problem, again, is in enforcement. In Poland, for example, laws prohibiting sexual discrimination are included in the labour code, and have been since the socialist period. Under the present labour code, Art. 11 states that sexual discrimination in the workplace is illegal. However, it is impossible to bring an employer to court for violation of this law. Poland’s Labour Code has undergone many revisions, and the legal department of the Ministry for Labour and Social Affairs is currently drafting a new Labour

EU ACCESSION AND LABOUR MARKETS 131

Code that will meet EU standards. However, in the last revision of the Labour Code, the ministry failed to include a clause whereby people can sue for violation of the anti-discrimination law. This article was simply not included on a list of violations that can be pursued in the courts. Whether this was simply an oversight (which is probably the case) or a sign of deeper discriminatory views (unlikely as most of the long-serving Labour Ministry lawyers are women) is unknown. Yet this neglected clause will not be amended until the new Labour Code is adopted. Another important area of policy reform is the social safety net, including income support, unemployment benefits, pensions and nationalized health care. In so far as these benefits are financed through payroll taxes, social policy becomes a labour market issue. Change is needed in a number of areas. The heavy burden of payroll tax acts as a disincentive to job creation, dampening the potential growth of jobs in small, private sector enterprises. The incentive effects of high benefits, particularly unemployment benefits, for the efficiency of job searching is also an important factor for aggregate employment levels. The issue of unrecorded employment, with its concurrent avoidance of payment of taxes, also acts as a drain on fiscal revenue and excludes the worker from legal protection under the labour law. Finally, all the Visegrad states must alter their pension systems from the current pay-as-you-go system where there is no individual link between contributions and benefits, and they are experimenting with differentiated, multipillar arrangements where voluntary investments and mutual funds are created from shares of privatized companies. Pay and work-related benefits are a policy area in which not all the central European countries are confident that they can meet European standards without causing further job losses. Poland has not ratified the clause of the European Social Charter that guarantees workers a wage which is sufficient to support them and their families at a decent standard of living (Clause 1, Art. 4). The level and duration of unemployment benefits also vary widely from country to country, and can affect unemployment levels. Typically, generous benefit provisions were introduced initially and then tightened for fiscal reasons. In the Czech Republic, at the beginning of 1992, the period of benefit payments was shortened to six months; they also became “front-loaded” as 60 per cent of average earnings is paid during the first three months and 50 per cent during the next three. This replacement ratio is almost the same as the average ratio for the European Union, where it was 61 per cent in 1994.26 It is interesting to observe that Czech eligibility regulations, while more restrictive than the Polish and Hungarian, are fairly similar to the British. For entitlement to benefit, Czech regulations require 12 months of employment within the last three years. In the UK, according to the Jobseekers Act of 1995, a person is entitled to “jobseeker’s allowance” if he or she paid National Insurance employee contributions for one of the preceding two years and has been credited or paid contribu- tions for the remaining year. That is obviously slightly more constrained than in the Czech case. The allowance in Britain is paid for 182 days, which is similar to the Czech case.27

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It is important to remember that most European provisions for social and employment policy allow discretion to the national government in setting levels. In Poland, there has been concern over tightening criteria for social assistance. It is difficult to measure the actual impact of stricter or more generous provisions, whether for unemployment benefits, redundancy compensation or minimum wages, on the level of unemployment and labour market restructuring in Poland. The measure of a “fair” labour market defies quantitative measurement. Yet many of these qualitative issues such as worker consultation and workplace safety provide important benefits to the working population. European policies on unemployment benefits are moving towards a regime of lower replacement rates and stricter eligibility requirements. However, central European countries lack, to a greater or lesser degree, the implicit guarantee of indefinite duration benefits that characterize EU social policies. The social welfare system is not generous. In this respect, labour market institutions in the Visegrad states do not discourage people from seeking employment. Labour markets: from transition to accession The transition process in CEE has been marked by the emergence of (open) unemployment, shifts in the structure of employment across ownership and industrial sectors, and by revolutionary changes in the way labour markets operate. At the outset of the transformation process, it was widely acknowledged that unemployment would emerge because employment levels in socialist enterprises were too high, and too many of these jobs were in the “wrong” sectors.28 In comparison to the post-industrial, service-dominated, economies of the OECD countries, the CEECs began the 1990s encumbered by an oversized, outdated, energy-intensive and inefficient industrial sector. Additionally, nearly all industrial enterprises were state owned. The inevitable result of marketization was restructuring, and the shock of liberalization was amplified (or more exactly, preceded) by the initial stabilization programmes. Sectoral restructuring Transition has been characterized by a shift in employment from manufacturing to services in retail and trade, finance and community services (education, health, social services). Therefore, while the Visegrad states lag far behind EU per capita income levels, the structure of employment is converging towards that of existing Member States. As shown in Table 8.2, the Hungarian labour structure is comparable to that of Spain, that in the Czech Republic to the Netherlands, and Poland may be most similar to the Greek economy, primarily

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Table 8.2 Employment by sector (%), 1994.

Agriculture Manufacturing Construction Trade and retail Community services Finance

Poland

Hungary

Czech Republic

Netherlands

Spain

24.0 21.2 6.2 12.7 22.0 5.4

9.0 24.4 5.5 15.9 27.1 5.5

7.0 29.7 9.2 15.0 21.0 6.5

4.0 16.2 5.9 18.5 34.8 10.6

9.8 19.8 9.0 21.5 26.3 6.4

Source: OECD, Labour Force Statistics 1974–1994 (Paris: OECD).

because of the large share of private agriculture. It should also be noted that the present day EU is not composed of identical market structures across countries:29 in general terms the countries with a Mediterranean coastline are characterized by a larger agricultural workforce and a less developed finance sector, and it is arguable that the key differences between development levels are detectable through agriculture and financial sector employment. Whereas Greece had 20.8 per cent of employment in agriculture in 1994, farming accounted for only 2.1 per cent of jobs in the UK. In contrast, the banking sector in the UK provided 13. 5 per cent of the total number of jobs, and only 6.1 per cent in Greece. The level of restructuring that has taken place in central European countries is apparent in the changes across sectors since the start of transition. In Poland, the dominance of manufacturing in employment had been declining even before the start of transition. From 30.2 per cent of employment in 1978, manufacturing provided 27.8 per cent of jobs in 1988,30 and in 1992 this figure was down to 20. 5 per cent.31 After this point, there was a rise in the share of manufacturing in the Polish economy, but this is attributable to a faster growing share of manufacturing jobs in a growing economy rather than a fall in total employment. Another good sign of economic development is the rising number of people employed in banking and finance. Official statistics for Poland placed banking sector employment at a mere 0.8 per cent in 1988, which increased to 5.4 per cent in 1994—a remarkable result, given the challenge presented by the lack of relevant skills and qualifications. Comparable data for employment by sector is available for the Czech Republic. In Table 8.3, employment breakdowns for 1979, 1989, and 1994 are provided. From these figures, a shifting pattern in labour demand can be detected. It is interesting to note that the share of employment in the Czech financial services sector has not changed very much. However, rising relative pay in the banking sector may indicate greater demand for skills. Total employment may not have changed much, but the type of labour demanded has shifted to more skilled and more highly remunerated staff. Moreover, other research into wages and the incidence of unemployment across educational attainment strongly indicates that labour markets in transition economies have experienced a shift in

134 JANICE BELL AND TOMASZ MICKIEWICZ

Figure 8.1 Unemployment rate 1990–96.

labour demand to more skilled and educated labour similar to that observed in post-OPEC OECD countries.32 Table 8.3 Employment in the Czech Republic.

Agriculture Manufacturing Construction Trade and retail Community services Finance

1979

1989

1994

12.5 40.7 7.9 10.8 14.5 6.8

11.9 34.4 7.5 11.3 15.8 7.3

7.0 29.7 9.2 15.0 21.0 6.5

Note: 1979 and 1989 year end, 1994 year average. Source: OECD, Labour Force Statistics 1974–1994 (Paris: OECD).

Restructuring and unemployment: convergence towards EU levels? It is often believed that there is a trade-off between the speed of transition and the unemployment rate in post-communist countries, and unemployment is seen as a necessary intermediary stage in the process of restructuring. In most of the Visegrad states, unemployment rose sharply in the early 1990s before stabilizing and gradually declining in the middle of the decade (see Figure 8.1). It is also true that faster reformers such as Poland have experienced higher unemployment rates than slow reformers such as Russia. At the end of 1995, the official unemployment rate in Russia was 3.4 per cent, while at the same time it was 13.3 per cent in Poland, having already peaked in 1993.33 The standard explanation was that faster reforms—such as the imposition of hard budget constraints on state firms—force enterprises to shed excess employment more quickly, and the accumulation of jobless people results in high

EU ACCESSION AND LABOUR MARKETS 135

unemployment rates. Early in the transition, the assumption was that the high unemployment rates observed in fast reforming countries could be avoided by implementing reform more gradually, thus reducing the “social costs” of transition.34 Until recently, empirical evidence did indeed suggest that there is a transition-unemployment trade-off and that the unemployment rate mirrors progress in restructuring. Yet new developments provide evidence that the relationship between unemployment and restructuring is more complicated than it initially appeared. Countries such as Poland, which were more decisive reformers, are now enjoying strong economic growth. Unemployment rates stabilized and then, with a one or two year lag, began to fall steadily. In contrast, official and unofficial jobless rates have started to grow in those countries that until recently had much lower unemployment. Russia is the most notable example here,35 and the Czech Republic and Estonia the most notable exceptions. Suspended restructuring (the “Russian” model) does not result in sustainable low unemployment, but in delayed unemployment.36 If this is true, then we have to re-examine the assumptions about the higher social cost of rapid reform.37 A recent study by Jackman & Pauna38 makes an explicit case for arguing that the unemployment rate is not a reliable indicator of the extent of employment restructuring in an economy. They compare data on changes in total employment across nine sectors39 of the economy in Visegrad and EU countries. Within the Visegrad group, unemployment rates in Poland have been consistently much higher than those in the Czech Republic, while the level of employment restructuring in the two countries (as measured by cross-sector shifts in aggregate employment) has been very similar. Studies of hiring in the private sector in Poland and Hungary also confirm that while labour shedding, particularly in the state enterprise sector, can serve as a means of improving labour productivity within firms, the forces that bring about employment restructuring are more concerned with job-to-job transfers.40 Unemployment rates in Poland, Slovakia and Hungary now seem to be moving towards the EU average, which in 1997 was 10.8 per cent.41 However, the route and rate of this convergence have varied across the region. Poland’s unemployment rate peaked at 16.9 per cent in August 1993,42 while Hungary’s unemployment rate has been rising more gradually over the course of transition. Slovakia’s rate is nearly as high—and by late 1997 was already higher— than Poland’s, but Slovakia has not begun to experience the rapid fall in unemployment rates experienced by its northern neighbour. Jobless rates in the Czech Republic have steadily remained in the low single-digits, giving rise to talk of the “Czech miracle”.43 If current growth rates remain high in Poland, and if they are able to accelerate in post-austerity Hungary, it is foreseeable that there is the potential for unemployment in the Visegrad states to fall significantly below that of the EU average. The Czech unemployment rate is remarkably stable at a level far below most EU countries, but questions remain about whether the Czech Republic will be able to maintain low unemployment levels in the current environment of real

136 JANICE BELL AND TOMASZ MICKIEWICZ

Figure 8.2 Ratio of wages to productivity and the unemployment level.

wages rising faster then productivity. If not, we might expect a convergence of unemployment rates within the Visegrad group as well. Explaining the Czech exception Since the low Czech unemployment rates are such an unusual phenomenon in central and eastern Europe, examining the possible causes in more depth throws some light on the functioning of labour markets in transition economies as a whole. First we may notice an apparent link between the ratio of wages to productivity and the unemployment level. This is shown in Figure 8.2: the x-axis plots the registered unemployment rate, which records the percentage of the workforce who are officially recorded as seeking employment; and the y-axis represents the ratio of the average wage to GDP per employee. This ratio provides a rough indicator of the relation between the remuneration and productivity of the average worker. That is to say, it shows the relation of the cost of each worker to the value of what is produced in the economy per worker. It would appear that higher wages/GDP per employee ratios are related to higher unemployment, resulting in a trend line lying from lower left to upper right. The Czech Republic deviates from the implied trend line set by the other Visegrad countries. Its unemployment rate is lower than would be expected. The growth of real wages in the Czech Republic has accelerated since 1993, affecting the wage/productivity ratio,44 but the Czech Republic remains an outlier in terms of unemployment, not only in the Visegrad group, but in the whole of the former Eastern bloc.45 The Czech Republic is also unusual in another respect. Contrary to what might be expected, the low unemployment rates in the Czech Republic have not been facilitated by displacing a high proportion of productive-age people out of the active labour force. Low unemployment in the Czech Republic is coupled with an activity rate46 that is still higher than in the other Visegrad countries, as shown in Figure 8.3. Low Czech unemployment has, in fact, been accompanied by the

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Figure 8.3 Economic activity rate (ILO methodology).

lowest reduction in employment among the four core Visegrad countries. Of the net loss of 550000 jobs that did occur between 1990 and 1993, more than 300000 can be explained through reductions of the very high activity rate of pensioners and women. It has also been noted that 100000 people took early retirement during these years.47 Most job shedding, therefore, was not translated into unemployment. While fewer jobs were lost in the Czech economy, only Slovakia underwent a more severe transitional recession than the Czech Republic. As a result, the GDP/ employment (“labour productivity”) ratio fell more in the Czech Republic than in the other countries presented above.48 However, the persistence of excess employment levels cannot automatically be assumed to be equivalent to a lack in restructuring. While unemployment is now on the increase in Russia, the Czech Republic is still succeeding in keeping joblessness at a low level. One of the important differences between Russia and the Czech Republic is that in the Czech Republic the level of employment has been kept high not by delays in state sector restructuring, but by a faster growth of the new private sector since 1990 from almost immeasurably low levels. The critical decision now appears to be that private sector growth was initiated early in the period of “transformational recession”.49 Plus, unlike in Poland, the de novo private sector50 in the Czech Republic is able to offer higher wages than the state sector, arguably in order to attract workers from state sector jobs. It should be noted that recently the activity rate has remained fairly stable in the Visegrad group, and it also remains high compared with the corresponding level in the European Union. Activity rates in the EU range from 47.4 per cent in Italy to 61.5 per cent in the UK. The most relevant points of reference are probably the relatively less developed, southern European countries of Greece, Spain and Portugal. In these three, the activity rate is 49.2 per cent, 48.2 per cent and 58.1 per cent, respectively.51 Therefore, one may expect the activity rate in the Visegrad countries to decrease further in the future, except in Hungary, which already has lower economic participation than the other four. A further reason for the low Czech unemployment rates relates to labour market policies. It has been asserted that the relatively high unemployment levels

138 JANICE BELL AND TOMASZ MICKIEWICZ

in central and eastern Europe have resulted not so much from fast inflows from employment into joblessness, but rather from slow outflows from unemployment to jobs.52 Boeri argues that “…‘transitional unemployment’ has all the characteristics of a stagnant pool. The risk of becoming unemployed may not be as high as usually thought, but once in the pool, it is very difficult to get out”.53 Given very low outflow rates, even a slow inflow into unemployment can result in a large stock of jobless over a period of several years. In this context, the success of the Czechs’ unemployment policy may result from higher outflow rates than in other transition economies. Indeed, between 1991 and 1995, the outflow rates from unemployment to jobs in the Czech Republic oscillated between 5 per cent and 20 per cent with an average of around 13 per cent. In contrast to this, they stayed below 5 per cent for Poland, Hungary and Slovakia.54 For the Czech Republic, that picture is confirmed by the stable participation rate, which implies outflows into new jobs and not out of the labour force. The hiring rates from unemployment provide the indication that, contrary to the other Visegrad countries, the outflow in the Czech Republic was highest in the early stage of “transition”, i.e. in 1992.55 It can be argued that outflows during the early years of transition (during the “transformational recession”) were important, as pulling people out of unemployment tends to be much less costly before they are transformed into long-term unemployed. The Czechs implemented active labour market policies (ALMP) at the time when it was needed most. The high level of spending on ALMP in the Czech Republic (and Slovakia) in the early years of transition contrasts with the Polish and Hungarian cases, where it remained low despite some political efforts to increase it, and also with some other transition countries where ALMP spending has been quickly “crowded out” by payments of unemployment benefits, as in Bulgaria and Romania.56 Yet simply spending funds on ALMP policies may not be sufficient to prevent high unemployment, as evidenced by Slovakia’s worse employment record despite high levels of spending. There is one interesting characteristic that may be related to a successful ALMP: the number of registered unemployed per staff member of public employee service. It can be argued that successful ALMP requires individualized advice and services oriented towards the unemployed as there are hardly any standard problems and solutions. In the Czech Republic this ratio is exceptionally low (30:1), very much lower than in the other transition countries and in the EU as well.57 The Czech Republic is clearly an outlier in terms of low unemployment, not only among the Visegrad countries, but in eastern and western Europe in general. This cannot simply be explained by macroeconomic factors. As indicated already, the transitional recession in the Czech Republic was more serious than in either Poland or Hungary.58 The Czech Republic succeeded in preserving a high level of employment by restricting the inflow into

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unemployment while successfully encouraging outflows from unemployment into work, especially during the early period of “transformational recession”. Yet labour flows do not tell the entire story. The Czech Republic has been initially successful in containing wage demands and keeping the wage/ productivity ratio on a low level. Despite the fall in labour productivity resulting from almost the same number of workers producing much less during the “transformational recession”, wage restraint enabled the wage/productivity ratio to remain relatively stable. (More recently, however, there is growing pressure for real wage rises.) The rate of inflows into unemployment may also be linked to the level of unemployment benefits and the characteristics of existing labour market regulations. Countries with generous replacement rates and loose eligibility requirements can expect higher flows into unemployment than countries with stricter regulations. Similarly, there is evidence that active labour market policy has been instrumental in the Czech Republic in pulling people out of unemployment. Inflow and outflow rates can both be influenced by the incentives that policy regimes provide to workers. Thus, we can attribute the Czech phenomenon to a successful mixture of policy and institutional reforms, which produced low pressure on wages, no excessive incentives to claim unemployed status, and also effective means of pulling people out of unemployment. Last but not least, Czech employment policy did not impede structural changes. Final comments For the Visegrad countries, accession to the EU means more than an outstretched hand looking for Structural Funds. For workers, EU standards promise better working conditions, equal opportunities, improvements in living standards and the introduction of means to enforce these rights. For employers, they promise more equal treatment vis-à-vis organized labour. To date, worker-employer relations in the Visegrad states may be considered as a dual labour market. Small, privately owned firms are characterized by inadequate levels of legal protection of employees’ rights and labour unions are almost completely absent. On the other hand, industrial enterprises with their roots in the old system—including both state-owned and privatized firms—are not only subject to more provisions of the labour code, but are also dominated by organized labour. The Visegrad states may thus be moving towards a model of unionization not unlike that in advanced market economies such as the US, UK or France, where union membership dominates in state employment and is weaker in the private sector. Integration of the whole central European labour market into the European Union is a multidimensional problem. The need for reform of EU institutions such as Structural Funds has been widely discussed. However, from the perspective of the Visegrad states, the main challenges are harmonization of

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labour law and social insurance provisions to meet EU standards, as well as the economic burden of further opening domestic markets which, less than ten years ago, were relatively isolated, centrally planned economies. The transition is not complete. Yet it is already apparent that those countries which have made greater advances towards restructuring production and labour markets will have an easier time integrating than countries that have delayed hard decisions. In terms of legal reform and adoption of EU norms, the Visegrad states have been careful not to import western European inefficiencies. The general consensus is that they will not be able to exploit the competitive advantage of low wages for very long. The challenge for all the formerly planned economies of central and eastern Europe is to convey the short to medium-term advantage of low relative labour costs into a sustainable advantage based on capital-intensive investment. Foreign direct investment will continue to be an important component of this strategy. This kind of forward-looking development is essential for long-term growth and continued convergence with west European economies. An essential part of this strategy, at least in the medium term, is to keep labour markets more flexible than in higher income EU countries. Notes 1 Research for this chapter was supported in part by a grant from the International Research and Exchanges Board (IREX), with funds provided by the National Endowment for the Humanities and the United States Department of State under the Title VIII programme. None of these organizations is responsible for the views expressed. 2 Slovenia, which joined CEFTA in January 1996, has been included with the Visegrad countries, but it differs from the others for at least three major reasons: the level of incomes is much higher; the starting conditions were different, as Slovenia was formerly part of Yugoslavia, which followed a different model of “real socialism”; and it is the smallest country in terms of population. Romania also joined CEFTA in July 1997, while this chapter was being written. 3 See, for instance, the transition indicators presented in the annual report of the European Bank for Reconstruction and Development, Transition Report (London: EBRD). 4 The “Social Chapter” agreed by all EU members except the UK at Maastricht, incorporated in the “Social Protocol” to the Maastricht Treaty. See J.Lowrie, The Social Chapter (Research Papers 97/102, House of Commons Library, 1997). 5 The “Community Charter of the Fundamental Social Rights of Workers”, signed by 11 Member States, again minus Britain, in December 1989. This document is a political declaration of intent and is not legally binding. Ibid., 10. 6 M.Sewerynski, “Prospects for the development of labour law and social security in Central and Eastern Europe in the twenty-first century”, Comparative Labour Law Journal 18, 182, 1995. 7 See R.Barro, “The persistence of unemployment”, American Economic Review. Papers and Proceedings of the American Economic Association 78, 32–7, 1988;

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8 9 10

11

12 13 14 15

16

17

18

19

20

21

22 23 24

L.Calmfors & A.Forslund, “Wage formation in Sweden”, in Wage formation and macroeconomic policy in the Nordic countries, L.Calmfors (ed.), 63–130 (Stockholm: Center for Business and Policy Studies, 1990); R.J.Flanagan, D.W.Saskice, L.Ulman, Unionism, economic stabilisation and income policies, European experience (Washington DC: The Brookings Institution, 1983); R. Layard, S.Nickell, R.Jackman, The unemployment crisis (Oxford: Oxford University Press, 1994); R.Jackman, Unemployment and wage inequality in OECD countries (Discussion Papers 235, Centre for Economic Performance, London School of Economics, 1995). Rzeczpospolita, 23 June 1997, 5. For more details, see Chapter 12. S.Gavez & M.Letonja, “Social security in companies. The case of the Republic of Slovenia”, in Enterprise and social benefits after communism, M.Rein, B.Friedman, A.Worgotter (eds), 187–204 (Cambridge: Cambridge University Press, 1997). European Commission, “Agenda 2000. Commission opinion on the Czech Republic’s application for membership of the European Union”, Bulletin of the European Union, Supplement 14/97, 25, 1997. Ibid., 63. Jackman (1995), op. cit. S.Chełkowski, “Co z tym bezrobociem?”, Życie Gospodarcze, 12 November 1989, 2. See A.Przeworski, Democracy and the market: political and economic reforms in Eastern Europe and Latin America (Cambridge: Cambridge University Press, 1991). There is some empirical evidence that the unemployment level does affect voting decisions: see J.Bell, “Unemployment matters: voting patterns during economic transition in Poland, 1990–1995”, Europe-Asia Studies 49, 1263–91, 1997. Passed on 28 December 1989, see “O szczególnych zasadach rozwiązywania z pracownikami stosunków pracy z przyczyn dotyczacych zakładu pracy”, Dziennik Urzędowy 5(5), Pos. 19, 1990. See, for example, the Collective Redundancies Directive 75/129, 17 February 1975, on Approximation of Laws of Member States relative to Collective Redundancies, OJ L48, 29, 1975; also ILO convention 158 (1982), Rec. No. 166. European Commission, “Agenda 2000. Commission opinion on Poland’s application for membership of the European Union”, Bulletin of the European Union, Supplement 7/97, 62, 1997. Law No. 195/1991 Sb, effective 31 May 1991, which replaced Decree of the Federal Ministry of Labour and Social Affairs No. 312/1990 Sb., 30 June 1990, amending Decree 195/1989 Sb. European Commission, “Agenda 2000. Commission opinion on Hungary’s application for membership of the European Union”, Bulletin of the European Union, Supplement 6/97, 60, 1997. European Commission, “Agenda 2000. Commission opinion on Slovakia’s application for membership of the European Union”, Bulletin of the European Union, Supplement 9/97, 60. Jackman (1995), op. cit. Ibid. Government employees, excluding production sector.

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25 G.Standing & D.Vaughan-Whitehead, Minimum wages in central and eastern Europe: from protection to destitution (Budapest: Central European University Press, 1995). 26 M.Whincup, Modern employment law (Oxford: Butterworth-Heinemann, 1997). 27 See ibid. A review of benefit systems in central Europe is presented in International Labour Office, World employment 1996/97 (Geneva: ILO, 1996); S.Golinowska, State social policy and social expenditure in central and eastern Europe (Research Papers 81, Centrum Analiz SpolecznoEconomicznych, 1996) and T.Boeri, “Labour-market reforms in transition economies”, Oxford Review of Economic Policy 13, 126–40, 1997. Two papers by J.Micklewright & G.Nagy, “How does the Hungarian unemployment insurance system really work?”, Economics of Transition 2, 209–32, 1994 and “Unemployment insurance and incentives in Hungary: preliminary evidence” in Tax and benefit reform in central and eastern Europe, D.M.G.Newbery (ed.), 145–72 (London: Centre for Economic Policy Research, 1995) are worth recommending, as they offer a detailed empirical analysis of incentives created by the Hungarian system of benefits. 28 M.Rutkowski, Labour hoarding and future open unemployment in eastern Europe: the case of Polish industry (Discussion Papers 6, Centre for Economic Performance, London School of Economics, 1990). 29 R.Jackman & C.Pauna, Labour market policy and the reallocation of labour across sectors (Discussion Papers 338, Centre for Economic Performance, London School of Economics, 1997). 30 Główny Urząd Statystyczny, Rocznik statystyczny, 483 (Warsaw: GUS, 1993). 31 Główny Urząd Statystyczny, Mały rocznik statystyczny, 111 (Warsaw: GUS, 1997). 32 See J.Rutkowski, “Low wage employment in transitional economies of central and eastern Europe”, Most 7, 105–30, 1997; M.Vavrejnova, “Income inequality and poverty”, Prague Economic Papers 5(2), 137–46, 1996;P. F.Orazam & M.Vodopiviec, “Winners and losers in transition: returns to education, experience and gender in Slovenia”, World Bank Economic Review 9, 201–30, 1995. 33 CESTAT Statistical Bulletin, 1996; International Labour Office, World Employment 1996/97 (Geneva: ILO, 1996). 34 P.Aghion & O.J.Blanchard, On the speed of transition in central Europe (Working Papers 6, European Bank for Reconstruction and Development, 1993). 35 In mid-1997, the unemployment figure for Russia was 9.7 per cent and growing (Business Central Europe, July/August 1997). The data for Poland and other Visegrad countries are presented in Table 8.1. 36 T.Mickiewicz, “The dismantling of the state sector in Eastern Europe: implications for unemployment”, Communist Economies & Economic Transformation 10, 1998 in press. 37 Ibid. 38 Jackman & Pauna (1997), op. cit. 39 Agriculture; mining; manufacturing; electricity, gas, and water; construction; trade; transportation; finance; community services. Ibid., 23. 40 J.Bell & T.Mickiewicz, “Unemployment and state sector insiders during the economic transition in Poland”, Most 7, 131–57, 1997. 41 European Commission, Directorate-General for Economic and Financial Affairs, Annual Economic Report for 1997 (Brussels: 1997).

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42 Figures from the Główny Urząd Statystyczny (Polish State Statistical Office). 43 For analysis of the reasons for high employment levels, see for example V. Flek, Wage and employment restructuring in the Czech Republic (Working Papers 60, Institute of Economics, Czech National Bank, 1996); M.Burda, “Labour market institutions and the economic transformation of central and eastern Europe”, in Unemployment, restructuring and the labour market in eastern Europe and Russia, S.Commander & F.Coricelli (eds), 289–329 (Washington DC: World Bank, 1993). 44 Business Central Europe, July/August 1997. 45 Estonia is the only other transition country that officially reports low unemployment rates, with a latest figure of 2.2 per cent. However, labour market surveys give a completely different picture, with an estimated unemployment rate of 8.9 per cent. It is the biggest discrepancy among the east and central European countries. In contrast, the labour force surveys for the Czech Republic just confirm the official data. It is also interesting to notice that Poland is the only country that is reporting higher official unemployment rates than the labour force survey results. See International Labour Office, Yearbook of Labour Statistics 1996, Table 3A (Geneva: International Labour Office, 1996). At the other end of the spectrum, former republics of Yugoslavia are characterized by exceptionally high unemployment rates: in 1997, 16.6 per cent for Croatia, 14.4 per cent for Slovenia (Business Central Europe, July/August 1997). 46 The activity rate is the ratio of the labour force (i.e. employees and unemployed) to the entire population of working age. 47 Flek (1996), op. cit. 48 ILO (1996), op. cit.; M.Gora, Central and eastern European labour markets in transition: selected issues (Paper presented at OECD colloquium on “Economic transformation and development of central and eastern Europe”, 1996); O. Blanchard, The economics of post-communist transition (Oxford: Clarendon Press, 1997). 49 Blanchard, Commander, Coricelli (1995), op. cit., 292–4. 50 This term relates to new private firms as opposed to the privatized companies. 51 Eurostat, Labour force survey, results 1995 (Luxembourg: Office for Official Publications of the European Communities, 1996). 52 This assessment has a strong empirical basis. See Bell & Mickiewicz (1997), op. cit.; T.Boeri,“‘Transitional’ unemployment”, Economics of Transition 2, 1–25. 53 Ibid. 54 Boeri (1997), op. cit. 55 Gora (1996), op. cit. 56 Burda (1995), op. cit. 57 The figure is 123 for Slovakia, 148 for Slovenia, 162 for Hungary, 235 for Poland. Within the EU, Sweden (42) and the UK (56) are the countries characterized by the low ratio. See Boeri (1997), op. cit. 58 Gora (1996), op. cit.

9 “Whatever happened to the environment?”: environmental issues in the eastern enlargement of the European Union Brian Slocock

As the states of central and eastern Europe queue up at the door of the European Union, eager for admission to what they see as the guarantor of their future peace and prosperity, a host of issues are jostling for priority in the accession process. In the midst of this mêlée the environment has been rather marginalized as an issue (despite obligatory homage paid to it in European Union documents), displaced primarily by concern for economic issues. However, we should not too quickly forget the fact that at the time of the disintegration of the “ancien régimes” in central and eastern Europe in 1989 the environment was widely seen —by both domestic and international interested parties—as one of the most urgent problems facing the region. It is not unreasonable, then, to ask “Whatever happened to the environment?” in the process of European integration across the East-West divide. The present chapter will explore this question in relation to three issues. First, what impact has the process of European integration played in the development of environmental policy in central and east European countries (CEECs) prior to the opening of formal steps for their accession to the European Union? Secondly, how have environmental issues featured within the accession process thus far? Thirdly, what role will environmental issues play in the further development of the accession process, and what will be the likely implications of accession for the environment? Before addressing these issues I will provide a brief review of the impact of economic change in central and eastern Europe since 1989 upon the region’s environmental problems. Environmental performance in central and eastern Europe since the end of the old regime Over the past eight years there has been a sharp and readily apparent improvement in the environmental situation in most of the states of central and eastern Europe, most evident in the area of air pollution, where the emission of polluting substances has fallen sharply, easing the stress placed on the environment at the domestic, transborder, and global levels. Table 9.1 summarizes data collected by the OECD on trends in air pollution between 1985 and 1994 for five of the CEECs: two of the leading performers in environmental

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policy, Poland and the Czech Republic; two “middle rank” states, Hungary and Slovakia; and one environmental “laggard”, Bulgaria. These figures show both trends in the total emission of major pollutants from sources in each country, and trends in the air quality, as measured by the concentration of pollutants in a mediumsized industrial city in each country. There has been a substantial improvement at both the aggregate level and in terms of the local, lived environment, although one should be careful in drawing precise inferences from the air quality figures, which are subject to a range of local factors and could look quite different for other urban centres. One striking feature of these figures is the weak correlation between environmental performance and the effectiveness of national environmental policy regimes. Focusing on aggregate emission figures, the states that have led environmental policy reforms in the region, Poland and the Czech Republic, have done only slightly better than a very backward regime like Bulgaria, and generally seem to have performed less well than the “middle rank” states of Hungary and Slovakia. What this reflects is the fact that thus far environmental policy has played only a limited role in determining the environmental performance of CEECs. The single most important factor has been the sharp decline in economic output throughout the region since 1989, which has been particularly heavily concentrated in the worst polluting heavy industries. Bulgaria’s “achievements” on the environmental front are almost entirely owing to the fact that its industrial output in 1994 was 47 per cent below what it had been in 1989. Taking this into Table 9.1 Trends in air pollution in central and eastern Europe: percentage change 1985– 94. Total emissions Country

SOx

NOx

Urban air quality (concentrations of pollutants) Dust

SOx

NOx

Dust

Poland −39% −27% −42% −61% −77% −54% Czech −44% −56% −64% −57% −30% −44% Rep +23%† −27%‡ Slovak −61% −12% −75% −49%† Rep Hungary −47% −29% −68% −26%‡ +3%‡ −89%‡ * Bulearia −40% −28% −23% −81% +42% −42% SOx and NOx include various oxides of Sulphur and Nitrogen, respectively, most commonly Sulphur Dioxide (SO2) and Nitrogen Dioxide (NO2). *1990–94; †1985–91; ‡1992–94.

Source: Calculated from data in Organization for Economic Co-operation and Development, Environmental indicators: a review of selected central and east European countries, OCDE/ GD(96) 156 (Paris: 1996).

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account, the Polish performance is considerably more impressive, since its industrial output had fallen only 18 per cent. Equally important, this provides a provisionally reassuring answer to the question “what happens once the CEE economies begin to grow again?”, since Polish industry has been growing steadily since 1992, while polluting emissions have continued to decline, indicating that positive environmental policies can make a significant difference. Environment policy and the integration of the states of central and eastern Europe Environmental aid to the CEECs The badly damaged environments of central and eastern Europe were widely seen —both at home and abroad—as a problem emanating from the prevailing economic and political regimes. Environmental issues played a major role in undermining the legitimacy of the ruling communist bureaucracies and often provided a focal point for the political discontent that culminated in the events of 1989. There was thus a widespread expectation throughout central and eastern Europe that extensive western aid would be forthcoming to support the process of environmental clean-up once the cold war barriers had been brought down. The European Union assumed the leading role among western countries for coordinating financial assistance for the transition process in central and eastern Europe, and the European Union’s PHARE programme is by far the largest programme of grant aid (as opposed to development loans) available to states in the region. In the six years from its inception in 1990 through to 1995, a total of ECU 5417 million in aid was allocated, although problems in the administration of the programme meant that only about half of this amount was actually disbursed. This was a relatively modest volume of assistance, amounting to about ECU 10 per annum for each inhabitant of the recipient states (compared with about ECU 250 per capita allocated to the poorer regions of the EU through the Structural Funds). Environmental assistance accounted for a significant, if modest, proportion of this total: about 8.9 per cent or some ECU 483 million in total.1 The European Commission has defended the limited scale of this assistance by arguing that it provided the transfer of essential technical knowledge and generated significant “leverage” which made it possible for CEECs to obtain further funding from other sources. Indeed, between 1991 and 1994 International Financial Institutions (IFIS), such as the World Bank and EBRD, committed an additional ECU 867 million in loans for environmental projects in the CEECs, and total environmental assistance from all sources (including IFIS, PHARE, and bilateral programmes) in the same period came to ECU 2701.5 million.2 But even with this “multiplier effect”, the impact of foreign environmental assistance has remained marginal in terms of the funding of environmental clean-up in the

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CEE region. It would seem that the average annual commitment of environmental aid (both grants and loans) from all sources in the first half of this decade has been of the order of ECU 675 million. The Commission has estimated the total cost of restoring the environment of central and eastern Europe at some ECU 270 billion over a 15-year period.3 Putting these two figures together, foreign environmental aid commitments come to about 3.75 per cent of the estimated level of need. If we take a more “realistic” perspective and look at the contribution of actual foreign financial aid receipts to actual expenditure, the figures are not much better. It has been estimated that by 1994 foreign assistance amounted to some 5 per cent of Polish expenditure on environmental protection.4 This appears to be a fairly typical figure for the region, with foreign assistance in 1994 accounting for 4 per cent of environmental spending in Bulgaria and 2 per cent in Slovakia. The exception has been Estonia, where a major programme of Finnish aid boosted the foreign contribution to environmental programmes to some 35 per cent of total expenditure.5 The modest sums of assistance provided by international environmental aid programmes have been further devalued by two distortions: first, foreign assistance has tended to reflect donor country priorities rather than recipient country needs, with most bilateral environmental aid driven by a concern to alleviate the effects of transboundary pollution on the donor countries (the motive force behind the large volume of Finnish assistance to Estonia, for example); secondly, many aid programmes—both bilateral and multilateral— have been implemented in a manner that has channelled much of the benefits to western consultants. The PHARE programme became notorious in this respect among CEE policy-makers in the early years of its operation.6 The bias towards technical “feasibility studies” in these years led to a frustrating situation where CEE environmental policy-makers were drowning in studies that they had no resources to fund. Partly in response to these criticisms—which were echoed by a resolution adopted by the European Parliament in 1994— moves have been made, from 1995 onwards, both to increase the total volume of resources available for PHARE and to redirect its expenditure from technical assistance towards infrastructural investments, with environmental projects one among a number of priority areas. Parsimony and policy integration: the “Environment for Europe” process Western governments have found themselves in something of a dilemma with regard to the transition in central and eastern Europe. On the one hand, it is clearly a historic opportunity for western economic and political interests, which have a strong stake in the direction state policy in the region will take. However, western governments have not been prepared to shift their domestic political priorities sufficiently to find space for the costs of funding an effective and smooth

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transition process in central and eastern Europe, as the level of assistance indicates. There is, however, an alternative: to focus western efforts on influencing the management of the transition process. This has been done in many fields, but nowhere more notably than in the area of environmental policy, where a thoroughgoing transnationalization of the environmental policy process began in 1991. Starting at the beginning of the 1990s, international agencies began to preach a common message to the CEECs: the cheque was not in the post, so what was required was a “realism” based on the inevitable fact that the bulk of environmental programmes would have to be financed by the CEECs themselves. The key was to make the most of what was available and ensure that limited external resources were targeted on the most crucial objectives. It was argued that a great deal could be achieved within existing constraints by establishing clear priorities through the use of cost-benefit techniques, focusing on low-cost solutions, and emphasizing the positive results that could be achieved through the building of effective institutions and the adoption of effective policies, rather than concentrating on the need for costly environmental investments.7 The most important expression of this focus on policy management and policy transfer has been the “Environment for Europe” process, which, since 1991, has provided the strategic framework for environmental policy development in the CEE region, under the aegis of a powerful interlocking coalition of international and European institutions, including the OECD, the UN Economic Commission for Europe and the European Commission. The initiative that was to lead to this process came from within the CEE region itself when the then President of the Czechoslovak Federal Commission for the Environment, Josef Vavroušek, convened a meeting of eastern and western environmental ministers at Dobříš is castle, outside Prague, in June 1991. The Dobříš is meeting took a number of important steps. Among these was the establishment of a Task Force, chaired by the European Commission’s Environmental Directorate-General, DG XI, with the participation of the World Bank and the OECD Environment Directorate, to prepare an Environmental Action Programme for Central and Eastern Europe. It was also decided to inaugurate regular pan-European ministerial conferences, with subsequent meetings taking place in Lucerne in 1993 and in Sofia in 1995 (with a third meeting due to take place in Aarhus, Denmark in 1997).8 These meetings, and the institutional structure based upon them, have become known as the “Environment for Europe” process. Although it is nominally concerned with environmental policy issues across Europe as a whole,9 its main focus has been upon the environmental problems of the CEECs, and it has come to constitute a transnational “regime” for managing the environmental problems of the CEE region. There are two key pillars to this regime. First, there is a strategic policy framework provided by the Environmental Action Programme for Central

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and Eastern Europe, which was adopted at the Lucerne Conference.10 This document is designed to provide guidance to CEE policy-makers and to lay the basis for a consensus on priorities between regional policy-makers and external funding institutions. On the basis of this Programme, each state in the region has developed a more concrete National Environment Action Plan.11 Secondly, the Lucerne Conference established a co-ordinating institutional structure incorporating the different international institutions concerned with CEE environmental problems. This structure comprises two bodies: the Task Force for the Implementation of the Environmental Action Programme, whose secretariat is provided by the OECD, and the Project Preparation Committee, with a secretariat provided by the EBRD. The Task Force is responsible for coordinating the different agencies and interests involved in implementing the Action Programme. The Project Preparation Committee provides a link to the IFIS, with a view to channelling external aid in line with the priorities of the Action Plan. Taken as a whole, this structure provided a powerful lever for shaping the direction of environmental policy and environmental investment projects throughout the CEE region. This process of transnational policy-making was further reinforced in 1995 at the Sofia Conference, much of whose proceedings centred around reviewing the progress of national governments in implementing the Environmental Action Programme for Central and Eastern Europe. CEE environment ministries devoted considerable resources to preparing progress reports for the conference, and civic organizations were strongly represented at the meeting, using the occasion for strengthening East-West non-governmental organization networks. The Sofia conference also acknowledged the need to link the work around the Environment Action Programme with the task of harmonizing CEE and European Union environmental legislation which had been initiated by the Europe Agreements signed between the European Union and a number of CEECs. An evaluation of this transnationalization of CEE policy-making has to take several issues into account. The appeal of this approach to western governments is that it combines a substantial amount of common sense with the supreme virtue of costing very little. There is thus a definite element of sleight of hand about the Environment for Europe process: the emphasis on institution building and policy reform is correct, but there is no getting around the fact that sound policies, however useful in their own right, are even more effective when backed up by resources. The transfer of western policy experience has been a useful one, even though many western policy advisors entered central Europe firmly mounted on their white hobbyhorses, for at the end of the day there is sufficient disagreement among western specialists to allow CEE policy-makers to “pickand-mix” from the advice offered and to shape the process according to their own interests and perceptions. It is hard to imagine a scenario in which substantial resources would have been transferred to the CEECs for

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environmental investments, so the existing deal was probably the best that could be done under the circumstances. Probably the most important effect of the transnationalization of the environmental policy process has been its success in reinforcing the position of national environmental policy-makers in several states, and allowing them to keep environmental policy firmly on the agenda even when environmental politics has sunk beneath a tide of other issues of popular concern.12 The environment and the accession process The process of accession by the CEE states has thus far passed through three phases: the contracting of the “Europe Agreements” in the period 1991–95; the formulation by the European Commission of the white paper in 1995, ostensibly to concretize the process of preparation for membership; and the European Commission’s response to the applications for membership submitted by ten CEECs in the period 1994–96, issued in July 1997 in a set of Commission documents collectively designated as “Agenda 2000”. Environmental issues and environmental policy play a variable role throughout these three stages, being allocated at least a nominal role in the Europe Agreements, fading from prominence in the white paper, and making something of a resurgent appearance in the Agenda 2000 documents. Environmental issues in the Europe Agreements The process of integrating central and eastern Europe into a common European political economy took a major step forward with the negotiation of the Europe Agreements with ten CEECs between 1991 and 1996. These agreements focused primarily upon trade and economic issues, but the environment was given formal acknowledgement at several points within the agreements. If we take, for example, the agreement between the EU and Poland as a typical example, a number of provisions are made concerning environmental matters. In Chapter III, Art. 69, the environment is designated as a specific area (along with 14 others) to which the “Approximation of Laws” will apply. Title VI, Economic Co-operation, also contains several provisions with environmental references: Art. 71 provides that “policies designed to bring about the economic and social development of Poland…should be guided by the principle of sustainable development”. Art. 72, on Industrial Co-operation, provides for “Community participation in Poland’s efforts…to modernise and restructure its industry which will effect the transition from a centrally planned system to a market economy under conditions which ensure that the environment is protected” (emphasis added).

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Art. 78, on Energy, specifies that “co-operation shall focus on the following in particular…the promotion of energy saving and energy efficiency; the environmental impact of energy production and consumption”. Art. 80 is specifically concerned with the Environment, providing that “the parties shall develop and strengthen the co-operation in the vital task of combating the deterioration of the environment, which they have judged to be a priority” and provides specifically for co-operation in a number of areas including monitoring regional and transboundary pollution, energyrelated issues, waste handling, the environmental impact of agriculture, economic policy instruments and global climate change. This section further allows for co-operation “within the framework of the European Environment Agency”, and “in the development of strategies, particularly with regard to global and climatic issues”.13 Despite these multiple references to an environmental dimension in the Europe Agreements, one is left with an impression of tokenism. Environmental commitments are very general and abstract, and do not seem to provide for the modification of more concrete commitments on trade and competition issues, even when these have potentially serious environmental impacts. Perhaps the most important impact of the Europe Agreements was at the institutional level. They laid the basis for “structured dialogue” between the European institutions and their CEE counterparts in several areas, including that of environmental policy. This permitted closer contact at several levels, including the ministerial level, between CEE and EU environmental policymakers, and also laid the basis for an expanded role for DG XI in the accession process. The European Commission’s white paper In May 1995 the European Commission issued its white paper “Preparation of the Associated Countries of Gentral and Eastern Europe for Integration into the Internal Market of the Union”. This document was drawn up with the objective of helping the CEECs develop priorities in their legislative harmonization programmes by identifying those elements of the Union’s acquis that are most essential for the operation of the CEE economies in the single European market. The approach adopted by the Commission involved focusing on those EU rules that have a direct impact upon tradable products. While conceding that “most community legislation could be considered as being relevant to the single market”, the Commission decided “for the purposes of the White Paper exercise… to adopt a more narrowly defined approach”, highlighting only legislative measures “which directly affect the free movement of goods, services, persons, or capital. Other legislation which only indirectly affects the operation of the

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Internal Market by, for example, affecting the competitive position of firms has for the most part been excluded from consideration.”14 The impact of this approach upon the consideration of environmental legislation was substantial. Since the white paper focused exclusively upon “product-related environmental standards” it meant that “most environmental legislation is not covered”. It was conceded that “the present exercise concerning the internal market will therefore need to be complemented by a more comprehensive approach in the environment field, which is an important objective in its own right.” But in the absence of such a document (which did not appear until September 1997, more than two years after the publication of the white paper) the Commission seemed to be setting out a set of priorities in which environmental policy could be put on the back-burner. It is unclear why the Commission felt the need to delineate “integration into the internal market” as a discrete phase of the accession process requiring separate treatment. It certainly appeared to sow some confusion in areas like environment legislation where harmonization had been proceeding for some time on a much wider front than that proposed in the white paper.15 It seems to make sense only if someone, somewhere, had the expectation that the CEECs would remain for an extended period of time at the stage of economic integration into the internal market without the full status of membership (as may well be the case for those states that are not successful in the first application round). One way of reading the white paper is as the product of an unresolved debate within the Commission over the precise shape policy towards the CEECs should take. The European Commission’s verdict: Agenda 2000 and the environment The Commission’s opinions on the ten applications from CEE states for membership of the European Union were published in mid-July 1997. The Commission recommended that negotiations for accession open with five of the applicants (Czech Republic, Estonia, Hungary, Poland and Slovenia), without rejecting the possibility of including other applicants if they make further progress in their reform programmes. With this decision, the Commission accepted that at least some CEE countries will enter the EU within the next few years, and the harmonization of environmental legislation and standards has once again become a priority concern. As a minimum condition, the Commission “expects applicants to apply all elements of the white paper in advance of accession”,16 but it further stipulates that: A basic principle for the accession of new members to the European Union is that they will have to adopt the totality of the Community acquis, and that thus all Community policies will be applied to the enlarged Union,

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subject to such adaptations or transitional arrangements as may be agreed in the accession negotiations.17 This clearly implies a renewed urgency for the harmonization of environmental legislation as part of the accession process, as is argued elsewhere: Persistence of the gap between acceding and present members for a long time after accession would put a strain on the cohesion of an enlarged Union and would distort competition within the internal market. As in social policy, national long term development strategies based on the competitive advantage of low environmental standards would be unacceptable within the Union.18 The Commission’s individual opinion on each application for membership contains a section (3.6) on “Quality of Life and the Environment”. The conclusion to each section provides a formal evaluation of the state of environmental policy in each country and their progress towards harmonization with EU legislation in this field. These evaluative judgements centre on two dimensions: the prospect for full incorporation of the acquis into national environmental legislation, and the prospect for effective implementation of this legislation. The judgement takes the form “full transposition of the acquis could be achieved in X. However, effective compliance with a number of pieces of legislation requiring a sustained high level of investment and considerable administrative effort could be achieved only in Y.” X and Y refer to “medium”, “long” or “very long” term timeframes for these respective objectives. This allows us to construct a “league table” of the CEE applicants in the environmental policy sphere, as seen by the European Commission (see Table 9.2). It is immediately obvious that all the five states accepted for the opening of accession negotiations, with the exception of Hungary, are in the top class. However, this does not reflect a high priority assigned to environmental matters in this process as much as the interlinking between the general capacity for institutional reform and achievements in the environmental policy sphere. States performing well in environmental policy terms are generally among the more successful in the wider process of political and economic reform as well. If the “classes” were to be subdivided, the Czech Republic and Estonia could be considered in a “class 1+” slightly ahead of all the other CEECs. These judgements are crude ones, but they are probably based on a more sophisticated assessment procedure than the formulaic phrases suggest. They represent an important advance over previous efforts to assess the state of environmental progress in the CEECs in that they include a significant weighting for the prospect of actual implementation of legislative measures.19 However there are some signs of political “massaging” of the final assessments in the light of wider strategic considerations: the positive assessment given to Slovenia’s

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environmental policy does not seem to conform to the critical comments that precede it, while the negative evaluation accorded to Slovakia seems unduly severe in the light of the specific comments. The clearest indication of the seriousness of the European Commission in its response to the applications is the provision they propose for funding the Table 9.2 European Commission opinions on the state of environmental policy in the applicant states of central and eastern Europe, July 1997. Class 1: Able to transpose the environmental acquis in the medium term, and to ensure full compliance in the long term. Estonia (1+: “able to fully transpose the environmental acquis and make substantial progress in effective compliance in the medium term”) Czech Republic (1+: “transposition of the whole environmental acquis as well as effective compliance with important elements of it…should be achieved in the medium term”) Poland Latvia Lithuania Slovenia Class 2: Able to transpose the environmental acquis in the medium term, and to ensure full compliance in the very long term. Hungary Slovakia Class 3: Able to transpose the environmental acquis in the medium to long term and to ensure full compliance in the very long term. Bulgaria Romania (3—: “In order to embark on a path of adaptation to the EU acquis, Romania would have to place higher priority on environmental issues”) Source: Summarized from the various Commission opinions on the membership applications of the CEECs: European Commission, “Agenda 2000”, Bulletin of the European Union, Supplements 6–15/97, 1997.

accession process and for adjusting EU budgetary arrangements in the wake of a prospective enlargement, some of which have significance for environmental assistance. The Commission proposal is that during the next EU financing period, 2000–2006, a total of ECU 21 billion will be made available for pre-accession assistance under a number of programmes (1.5 billion of it through an expanded PHARE programme), and a further ECU 38 billion will be allocated for Structural Fund assistance for new member states after accession. It is clear that sums of this magnitude, if they pass unscathed through the EU decision-making maze, will represent a qualitative shift in the level of external assistance for the transition process in central and eastern Europe. This applies equally to environmental policy support. The exact level of planned assistance here is not yet clear, but the Environment Commissioner, Ritt Bjerregaard, has suggested

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that ECU 7 billion of pre-accession assistance will be available over seven years for environmental projects.20 If this figure is even approximately correct we are looking at a more than tenfold increase in EU environmental assistance in the pre-accession phase alone. Once structural funds start to flow we can begin to talk about serious money being available to support environmental policy reform in central and eastern Europe. In lieu of a Conclusion: tentative answers to key questions I would like to conclude this discussion by offering the following answers to some key questions concerning the environmental dimension of eastern enlargement: 1. Are environmental issues likely to constitute a serious obstacle to membership of the European Union for the states of central and eastern Europe? No. The state of the environment in most CEECs presents a mixed picture: some very serious problems and badly blighted areas, especially those in the vicinity of large industrial complexes and large population concentrations (which often go together), combined with large areas of unaffected nature and wilderness. With the recent accession of a number of northern European states with a strong commitment to environmental policy, the mood in the EU is generally in favour of strengthening environmental policy and, in the event, the Commission (presumably reflecting sentiment within the Council of Ministers) has chosen to adopt quite tough environmental criteria—arguably tougher criteria than are applied to some existing Member States—for the accession process. Despite this fact, however, the environment should not present an insuperable obstacle to accession, certainly not for the “lucky five” leading CEECs. These are the states where environmental policy initiatives are the most developed, in most cases environmental clean-up having been high on the policy agenda since 1989 and kept there because of the perceived link with EU membership. Both Poland and the Czech Republic have been explicitly pursuing the goal of harmonizing national and EU legislation for the past three years. Moreover there should be some scope for negotiating transitional provisions in the accession treaties that would give the CEECs time after achieving membership in which to meet fully EU environmental standards. The situation is more complex for other states. Slovakia is really in a different category: its central problems are political, and its environmental situation is pretty much in the same league as the leading states. Once its political problems are resolved, the environment should not pose any special problems. Lithuania and Latvia—like their more favoured neighbour Estonia—have a series of environmental “hot spots” rather than widespread environmental problems. The reason for their negative evaluation by the Commission is because of their geographically sensitive location, with a high potential for transboundary impacts, and the inadequacy of their level of environmental investments, which

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gives rise to doubts about their ability to implement legislative commitments. These are issues that could be fairly readily resolved with quite small sums of additional EU financial assistance. However, in the case of Romania and Bulgaria, environmental policy is seriously lagging behind the rest of the region —but then, so are other areas of reform. In these cases the environment might come to assume some prominence as an obstacle to the accession process simply because environmental failure is subject to readily quantifiable indicators. Yet these two countries actually face a less serious environmental situation at the national level (primarily because of the fact that they did not rely on coal as an energy source) and their environmental difficulties are attributable to weaknesses in their administrative systems and to local clustering of unregulated polluters. Once the political preconditions for a serious reform programme are assembled, both Romania and Bulgaria could make quite rapid progress on the environmental front. 2. Are the costs of conforming to EU environmental standards likely to hamper the development of the economies of central and eastern Europe? This is a complex and partly open question, but on balance the answer is Probably not. The environmental acquis of the EU consists of about 200 pieces of legislation. But many of these are fairly formal in character, or will have only administrative costs associated with their implementation, such as rules on the packaging and labelling of chemicals, or the requirements for Environmental Impact Assessment. There are only a few provisions that are likely to impose major environmental investment obligations on the CEE states. The most important are the Large Combustion Plant Directive, which could require major expenditure on desulphurization and other emission reducing installations, the water directives (requiring large expenditure on municipal waste water treatment), and, to a lesser extent, those concerned with solid waste management. However the most advanced CEE states have been focusing on these objectives for a number of years. The Czechoslovak Federal Republic incorporated the provisions of the large combustion plant directive into the Clean Air Act of 199121 (subsequently integrated into the national legislation of the successor states after the separation of the Czech Republic and Slovakia) and laid down a schedule for implementation that should lead to compliance with the Directive by 1999 (ahead of Spain, which is subject to a number of derogations). Public environmental funds in both Poland and the Czech Republic have been strongly directed towards improving municipal waste water treatment. In its evidence to the House of Lords Select Committee in 1994, the Polish Government listed only two areas in which it expected to require “grace periods” before implementing EU legislative norms: the Large Combustion Plant Directive (which it needed 10 to 15 years to meet), and the Regulation on the control of waste shipments (which it needed 3 to 5 years to meet).22 There have been few serious efforts to quantify the precise costs involved for the CEECs to achieve these objectives. The European Commission has suggested

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a total cost of ECU 120 billion for the applicant states to incorporate all EU environmental legislation.23 The cost of conforming with EU directives for water and air have been put at about ECU 45 billion and ECU 30 billion, respectively.24 Even allowing for the fact that these sums will be phased over a number of years and will be spread across public and private institutions, they represent a significant cost to the economies of the region. However, there are indications that these costs can be significantly affected by the time period in which they have to be implemented. For example, if air quality standards have to be implemented in a short timeframe they will require end-of-pipe solutions that will cost something of the order of the figure quoted. If, on the other hand, they can be implemented over a longer timespan, then it may be possible to achieve much of the required improvement through technical upgrading in the cycle of capital modernization and through changes in the energy mix and the energy intensity of production, significantly lowering the cost. A more relaxed implementation schedule also makes it possible to experiment with the use of new policy instruments that can have major costs benefits.25 For this reason the exact costs of adopting the environmental acquis will depend upon the precise transitional provisions negotiated in the accession treaties. Several CEECs have shown themselves capable negotiators over these sorts of issues in the past. The European Union will, quite rightly, want terms that do not postpone indefinitely the implementation of common standards across the Union. However, in the Agenda 2000 documents it has indicated considerable understanding of the issues involved here and of the need for the CEECs to have a phased approach to the implementation of EU standards. This could lead to transitional provisions that significantly reduce environmental costs and prevent them becoming an economic burden. 3. Is membership of the European Union likely to be a good thing or a bad thing for the environment in central and eastern Europe? Again, a complex question, but the answer must be—on balance—a good thing. Certainly, there is a downside to the environmental impact for central and eastern European members of the EU. These economies are going to be “peripheral” ones within an integrated European political economy, with all that implies: they will be favoured as sites for polluting industries; will be recipients of outdated, relatively “dirty” technologies (by prevailing western standards) transferred by transnational firms; and products, production processes, and patterns of consumption will be transferred that create new or intensified environmental problems (for example, disposable packaging and increased private vehicle use). But many of these processes have already afflicted the economies of central and eastern Europe: the simple fact is that the environmental pressures introduced into CEE societies by virtue of their being on the European capitalist periphery will be less severe than those experienced over the previous 40 years as a consequence of being on the periphery of the Soviet international economic order. Moreover, there is a genuine possibility for public policy to intervene in this process. The relative separation of politics and

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economics characteristic of the capitalist state means that whatever the economic implications of EU membership, the process of political integration will strengthen the impetus for effective environmental regulation and transfer knowledge and techniques that enhance the capacity for public control of environmental damage. Without the strong social consensus on the need to pursue the holy grail of EU membership, it is unlikely that the costly implications of stronger environmental protection would have been so readily accepted in many CEECs. The clearest, and highly significant, “good news” for the environment comes from the implications of accession for financial flows from western Europe to the CEECs. EU membership will mean that for the first time western Europe will be providing serious money to assist with eastern environmental problems, rather than just smart talk and financial tokenism. The significance of this cannot be overlooked. This should not be taken as an argument for complacency on the part of those concerned with the future of the environment in central and eastern Europe. Active environmental policy intervention will be needed in the CEECs to ensure that environmental concerns are properly protected. But the prospects for environmental interest groups finding a lever in the policy process is likely to be considerably enhanced by EU membership, which will promote public access to environmental information and decision-making, offer new points of influence for pressure groups, and provide new forums for interest group co-ordination. This generally optimistic interpretation must be qualified in respect of the “unlucky five” (or whatever number eventually fail to make it through the golden portals in the “first wave”). The danger is that they will become locked into the sort of “economic union” provided for by the white paper without acquiring the status of full membership of the European political union and the attendant financial flows. These states would then become subject to the negative impact of European economic peripherality without the benefits. This would create the danger of locking them into a pattern of environmentally destructive economic growth and removing the incentive for improving environmental performance. The result would be a vicious cycle of perpetual exclusion on the “Turkish model”. It is important that EU policy-makers do not become dismissive of those states that fail to make the grade over the next few years and do not see the “Environment for Europe” process as having done its job once enlargement has taken place. Even after the accession of the “lucky five” there will be a need for continuing financial and policy assistance to ensure the integration of their unlucky brethren (and the states of the former Soviet Union) into a “common European environment”.

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Notes 1 A.Mayhew, “L’assistance financiére a l’Europe centrale et orientale: le programme PHARE”, Révue d’Etudes Comparatives Est-Ouest 4, 135–58, 1996. 2 See J.Klarer & B.Moldan, The environmental challenge for central European economies in transition, 57, Table 1.12 (Chichester: Wiley, 1997). 3 House of Lords Select Committee on the European Communities, Environmental issues in central and eastern Europe: the PHARE Programme, 16th Report, Session 1994–95, HL Paper 86, Oral evidence 35 (London: HMSO, 1995). A memorandum from DG IA is cited where the figure is given as $300 billion by the year 2010, and it is estimated that foreign assistance would amount to 7 per cent of the total—a highly optimistic figure on the trends then prevailing. 4 Ibid., Report paras. 29–30. 5 See Klarer & Moldan (1997), op. cit., 51. 6 On both of these issues, as far as aid from Scandinavian countries is concerned see R.E.Lofstedt & G.Sjostedt (eds), Environmental aid programmes to eastern Europe, Section I: Case Studies (Aldershot: Avebury, 1996); on the PHARE programme, see House of Lords Select Committee on the European Communities (1995), op. cit., paras. 78–80 and Written Evidence, 70–92. 7 See Environmental Action Programme for Central and Eastern Europe: setting priorities, Chapter I (Washington/Paris: World Bank/OECD, 1993). 8 For the origins and development of the “Environment for Europe” process, see House of Lords (1995), op. cit., Report paras. 38–41 and Oral Evidence 1–4; Klarer & Moldan (1997), op. cit., 28–34. 9 See, for example, the report compiled by the European Environment Agency at the request of the Dobříš Conference: D.Stanners & P. Bourdeau (eds) Europe’s environment: the Dobris assessment (Copenhagen: EEA, 1995). 10 Environmental Action Programme for Central and Eastern Europe (1993), op. cit. 11 See Status of Environmental Action Programs in central and eastern Europe (Budapest: The Regional Environmental Centre, 1995). 12 On this process, with particular reference to the Czech Republic, see B. Slocock, “The paradoxes of environmental policy in eastern Europe: the dynamics of policymaking in the Czech Republic”, Environmental Politics 5, 501–21, 1996. 13 Council and Commission of the European Communities, “Europe Agreement establishing an association between the European Communities and their Member States and the Republic of Poland, Official Journal L 348, 13.12.1993. 14 European Commission, “White Paper: preparation of the associated countries of central and eastern Europe for integration into the internal market of the Union”, COM(95) 163 final, Annex, 1, 1995. 15 Certainly, the team from the Regional Environmental Centre working with the Commission’s DG XI on an evaluation of the harmonization of CEE legislation found the situation unclear: “the guidelines contained in the ‘White Paper’ are limited only to those legal instruments which are relevant to the establishment of the internal market. Therefore a supplementary white paper covering the rest of EU legislation would be appreciated.” See The Regional Environmental Center for Central and Eastern Europe, Approximation of European Union Environmental Legislation, 13 (Budapest: REC, 1996).

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16 European Commission, Press Release IP/97/660. Doc/97/9. 17 European Commission, “Agenda 2000. For a stronger and wider Union”, Bulletin of the European Union, Supplement 5/97, 134, 1997. 18 Ibid., 122. 19 The opinions contrast with rather different evaluations contained in the Regional Environmental Center for Central and Eastern Europe (1996), op. cit., which, for example, rated Slovakia very highly, but did not employ any real criteria to evaluate capacity for implementation. 20 Interview with Commissioner Bjerregaard in Enlarging the environment: newsletter from the European Commission on environmental approximation 5, July 1997 <europ.eu.int/en/comm/dg11/news/enlarg/news5.htm>. 21 See B.Slocock (1996), op. cit., for a discussion of this legislation. 22 House of Lords, op. cit., Written Evidence, 86, Memorandum by the Polish Government. 23 GLOBE Network Press Release, 6 June 1997 . 24 Environmental Action Programme for Central and Eastern Europe (1993), op. cit., 2. 25 For a discussion of the Czech case, where implementation of air quality standards is proceeding in a costly, short timeframe, see B.Slocock, “Interest groups and the post-communist policy process: industry and the Czech Clean Air Act”, Contemporary Political Studies 1996, vol. 1, 581–8 (Belfast: Political Studies Association, 1996). For an example of how the choice of policy instruments can dramatically reduce the cost of implementation see the Environmental Action Programme for Central and Eastern Europe (1993), op. cit., Note 1, 4.

10 EU enlargement and co-operation in justice and home affairs Gerhard Eisl

Co-operation between the European Union and the applicant countries in central and eastern Europe in the area of justice and home affairs (the “third pillar”) is of great importance to the process of enlargement. Its aim is to assist the associate countries to achieve the political criteria established by the Copenhagen European Council: stability of institutions, the rule of law and human rights. The EU wants to export its own stability to the central and east European countries (CEECs), thereby also preventing the import into the EU of instability and insecurity. The ultimate objective is to create a European-wide area of freedom, security and justice. “Security” is no longer a question of military balance, but has developed—especially since the fall of the Iron Curtain— towards an overall notion including internal security. This chapter will begin by giving a short overview of the EU’S involvement in justice and home affairs. It will then look at the particular challenges presented by the CEECs in establishing Europe-wide security and stability, and at the existing co-operation between EU Member States and the Union’s future members. The third pillar in the EU Treaty The third pillar was established by Title VI (Articles K to K.9) of the 1992 Treaty on European Union (TEU), which defined co-operation in the fields of justice and home affairs.1 According to Art. K.1, this encompasses asylum policy; control of external borders and immigration; customs and police cooperation against serious crime including drug trafficking, terrorism and fraud, as well as exchange of information within the European Police Office (Europol); and judicial co-operation on civil and criminal matters. However, the earlier Treaty establishing the European Community (TEC) also contains certain provisions that fall under the scope of co-operation in justice and home affairs. 100c two areas of EC competence in visa policy: the determination of third countries whose nationals must be in possession of a visa for entry into the EU, and the agreement of a uniform visa format. Art. 129 covers Community action against drug addiction in connection with public health policy. Since this overlapping between the provisions of the TEC and the TEU sometimes leads to

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confusion even among experts, the structure of the European co-operation in justice and home affairs needs to be explained so that its relevance for EU enlargement, and the opportunities it offers the CEECs, may be better understood. The third pillar’s working structure developed out of TREVI (Terrorisme, Racisme, Extremisme et Violence Internationale) and a number of intergovernmental bodies. TREVI was a policy network for combating international crime that had existed since the mid-1970s, but functioned on a strictly intergovernmental basis and was outside the framework of the European Communities. The third pillar emerged at the Maastricht European Council in December 1991 as a compromise between the divergent opinions of the Member States, as some favoured enhanced Community procedures while others wanted to stick to co-operation on a strictly intergovernmental basis. The area of justice and home affairs (JHA) is particularly sensitive because it touches the hard core of sovereignty of each state: the state monopoly on the use of force. Difficulties are also created by differences between states in the functioning of legal systems, expectations of policing and perceptions of civil rights. Since the third pillar is primarily intergovernmental, the role of the Council, rather than the Commission, is predominant in its working structure. This comprises five distinct levels: the Council of Justice and Home Affairs Ministers, the Committee of Permanent Representatives (COREPER), the K.4 Committee, Steering Groups and Working Groups. Owing to the intergovernmental nature of the third pillar, the Justice and Home Affairs Council is more directly subordinated to the European Council than formations of the Council operating within the framework of the EC Treaty.2 The legal instruments in the third pillar are joint positions, joint actions and conventions. In general, these instruments are adopted by the Council by unanimity, although some decisions could be taken by a majority. The Council also very often adopts resolutions, recommendations and declarations (which are legally non-binding), although these are not mentioned in the TEU. COREPER is responsible for preparing the work of the Council. Additionally, however, a special role is allocated to the K.4 Committee, whose name derives from the fact that it is mentioned in Article K.4 of the TEU. This is a coordinating committee for activities in the field of justice and home affairs that consists of senior officials, mostly from the Member States’ ministries of home affairs and/or justice, and gives opinions to the Council and contributes to the preparation of Council meetings. Since both the K.4 Committee and COREPER are responsible for the preparation of the Council meetings, there are sometimes administrative disputes between the two on the separation of tasks. Below this level, there are three steering groups—responsible for asylum and immigration, police and customs co-operation, and judicial co-operation—which co-ordinate the different working groups. The task of the working groups is the specialist preparation of the legal acts that are to be adopted by the Council. In 1997, there

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were more than a dozen working groups on issues such as asylum, visa, immigration, customs, Europol, extradition and international organized crime. In addition, two special bodies, CIREFI (Centre for Information, Discussion and Exchange on the Crossing of Frontiers and Immigration) and CIREA (Centre for Information, Discussion and Exchange on Asylum) were set up by the Council in June 1992. These are not working groups in the narrow sense, but standing conferences of expert representatives of the Member States with logistical back-up by the Council Secretariat. CIREFI collates statistical information by the Member States on legal immigration, illegal immigration and unlawful residence, the facilitation of illegal immigration, use of false or falsified travel documents, and measures taken by competent authorities. Furthermore, it analyzes the information compiled, draws conclusions, gives advice when appropriate and exchanges information on expulsion measures.3 The main objective of CIREA, on the other hand, is to compile, exchange and disseminate information and prepare documentation on all questions relating to asylum. CIREA has prepared reports on third countries to give an overall picture of their political, economic and social situation, and it facilitates the return of third country nationals whose asylum applications were rejected, to their countries of origin.4 The expertise of both bodies makes them extremely useful in shaping a common EU approach in matters of asylum and immigration. Owing to the intergovernmental approach in the third pillar, the other EU institutions play only a minor role compared to the Council. The Commission is “fully associated” with the work in the third pillar (a vague term open to various interpretations), and it can draft proposals for legal acts in some areas such as asylum and migration, but not in the areas mentioned under Article K. 1 (7) to (9) —judicial co-operation in criminal matters, customs co-operation and police cooperation. The European Parliament has a limited consultation role, and the European Court of Justice has only very restrained judicial power. Changes after the Amsterdam European Council Chapter One of the Treaty of Amsterdam signed in October 1997 is entitled “freedom, security and justice”, and has altered the nature of the third pillar by transferring immigration and asylum into Community competence. This “communitarization” has considerable advantages, such as a relative openness of proposals, a simpler decision-making process, more effective legal instruments, and judicial control. It also creates the possibility of coherent policy-making in areas linked to the free movement of persons. However, during the first five years after the entry into force of this new Treaty few changes will actually take place. Decisions will still have to be unanimous; the European Parliament is only “consulted”; and the rights of the European Court of Justice will still be limited. After five years, however, the co-decision procedure can be introduced. This would increase the influence of the European Parliament dramatically, and the role of the European Court of Justice could be improved. The United Kingdom,

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Ireland and Denmark obtained, however, an opting-in clause in a new Title IV called “free movement of persons, asylum law and immigration” as they were in favour of keeping this area on an intergovernmental basis. They regard border controls to be part of their national sovereignty, and an adequate barrier to transnational crime. Police and judicial co-operation in criminal matters will remain on an intergovernmental basis, i.e. in the third pillar. Additionally, the Schengen Agreements, which entered into force in some EU Member States in March 1995 and established an area of free movement between them, complemented by enforced co-operation between the law enforcement agencies and also by stricter border controls at the external borders, have been integrated into the Union framework. This means that the EU institutions take over the tasks of the Schengen institutions and the Schengen conventions become part of the acquis. Schengen resulted from the realization of countries such as France and Germany that national solutions (e.g. border controls) cannot solve transnational problems such as international organized crime and illegal immigration. However, stricter border controls are viewed less positively by neighbouring countries in central and eastern Europe. The CEECs sometimes regard them as the creation of a new Iron Curtain, while for many of the Schengen countries, they are a simple (or perhaps simplistic) way of hindering illegal immigration, and were not conceived as a barrier between East and West. The major question, however, is if and when the Europe-wide stability and security foreseen by Schengen and the third pillar can be extended to the partner countries of central and eastern Europe. Although Norway and Iceland concluded a co-operation agreement with the Schengen countries in December 1996 and will be associated to a certain extent in EU cooperation in justice and home affairs, ways of co-operation with other third countries—such as the CEECs —are not mentioned in the Treaty of Amsterdam. The situation in the CEECs in justice and home affairs The CEECs present particular challenges in the area of JHA. First, the CEECs are all faced by major problems with organized crime. This has risen dramatically since the breakdown of the Communist system in 1989–90. Some of the worst difficulties are with drug trafficking, the smuggling of arms, radioactive substances and cars, trafficking in human beings, the counterfeiting of currency, robberies, money laundering, illegal gambling and economic crime—a list in which transnational forms of crime predominate. Secondly, the treatment of asylum seekers and refugees is also an enormous problem for the new democracies in central Europe, especially for Poland, the Czech Republic and Hungary. There is a need both to regulate admission and to combat illegal immigration. Illegal networks of people-smugglers have grown up throughout the whole region, and illicit migration is no longer merely a transit problem for some CEECs. Strengthening the borders of certain EU Member States such as Germany and Austria had the unfortunate effect of trapping the

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transit population in the neighbouring states, and also, as economic prosperity increases in some parts of the post-communist world, such states themselves become targets.5 Some EU Member States have tried to transfer their problems with illegal immigration to their neighbouring countries in East—Central Europe by adopting readmission agreements that allow them to rid themselves of refugees in the simplest way possible by returning them to the country through which they entered. The EU applicant countries therefore have to cope with the inflow of immigrants by adopting relevant legislation—a totally unknown legal area for them—and by establishing administrative systems to enforce this legislation. An additional problem is that the very difficult situation along the borders of some of the CEECs makes the creation of modern and effective border management systems imperative. Yet they often lack the most elementary provisions, especially in terms of modern information and communication systems.6 However, the situation in each of the CEECs differs significantly, and not all face the same problems to the same extent. The Commission opinions on the ten post-communist applicant states issued in July 1997 all contained a separate section (3.7) on justice and home affairs issues. The countries generally regarded by the Commission as being relatively advanced countries in fulfilling the Copenhagen criteria also had the least difficulties in the area of JHA. For example, four of the five states with whom the commencement of accession negotiations was recommended—the Czech Republic, Hungary, Poland and Slovenia—were considered likely to “be in a position in the medium term to take and implement measures necessary for removal of controls at its borders and establishment of these at the Union’s external border”. In the case of the remaining six, including Estonia, the Commission felt it was “not yet possible to be sure” when their border controls would be able to function as an EU external border.7 A fairly similar picture emerges if one constructs a “league table” of the CEECs’ situation in the JHA field as reflected in the Commission opinions (see Table 10.1). The CEECs themselves have slightly different priorities in the JHA area. For example, the Czech Republic regards border control and the strengthening of its administration as the main priorities, while Hungary’s priorities involve external border management and combating drugs, prostitution, corruption and fraud. Poland puts emphasis on the fight against illegal immigration and organized crime, trading of stolen cars and border protection. Bulgaria and Romania are widely considered to be lagging far behind the other CEECs, and in 1997, it was unclear if their new governments would be able to cope. The fact that the EU even has a visa requirement for the citizens of Bulgaria and Romania, alone of all ten candidate states, is regarded by both countries as a disadvantage compared to the other applicant countries in central and eastern Europe. The visa requirement has to be understood against the background of a flow of illegal immigrants from these two countries into the EU, which results from their unfavourable economic situation.

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Table 10.1 European Commission opinions on the ability of applicant states of central and eastern Europe to meet the JHA acquis, July 1997. Class 1: Likely to comply with the JHA acquis in the next few years Czech Republic Hungary Slovenia Poland (1—“could be able to meet the requirements of the acquis in the next few years”) Class 2: Significant sustained effort will be needed if it is to be ready to meet the acquis in the medium term Slovakia (2+ “should be able to apply the acquis on justice and home affairs in the medium term”) Estonia Lithuania Latvia Class 3: Difficult to meet the acquis requirements in the medium term Bulgaria Romania Source: Conclusions of the various Commission opinions on the membership applications of the CEECs: European Commission, “Agenda 2000”, Bulletin of the European Union, Supplements 6–15/97, 1997.

The governments of the CEECs are taking steps to counter their various problems in the field of JHA. In all of them, the ministries of the interior and justice are currently in a process of substantial reform. However, their ability to tackle these issues is constrained by institutional and other weaknesses, such as the need to develop a proper legal framework and an independent judiciary, to reform the police, and to meet deficits in training and equipment. The lack of trained and experienced staff is a common feature in all applicant countries.8 The reform process is hampered by a lack of financial resources and of overall strategic direction. Furthermore, the CEECs often suffer from insufficient coordination between the key ministries and bodies relevant for justice and home affairs within each state, such as the ministries of the interior and/or justice and police departments. There is also no regional co-operation among the countries concerned. This means that there is a strong disequilibrium between the growing problems in central and eastern Europe and the lack of facilities and equipment necessary to cope with them. The police forces and the administrative bodies in the CEECs are in urgent need of assistance. The governments of the CEECs consistently request training and operational equipment during bilateral and multilateral meetings both with the EU and with other countries and institutions. Particularly within police forces, the desire for western standard equipment (the new synonym in some CEECS is “Schengen Standard”) is strong. Demands vary

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from vehicles (cars, helicopters, etc.), secure communications links and technical equipment for border controls and laboratories to computer systems of varying complexity (databanks, machine-readable document equipment, etc.) and digitalized finger print registers.9 Above all, however, the police forces want to be involved in the operational work of Europol (the European Police Office in The Hague) as soon as possible. Improved information exchange and/or exchange programmes between EU and CEEC civil servants are also demanded. Information exchange, however, is greatly hindered by one problem: lack of trust on the part of officials in EU Member States towards their counterparts from central and eastern Europe. The CEECS also want to be informed on a regular basis about the activities undertaken by the European Union within the framework of the third pillar through briefings, consultations and dissemination of documents, and by meetings at all levels. However, there is sometimes a lack of understanding of the EU’S third pillar in the CEECs—especially in the national administrations and police forces—and this leads to misconceptions about what sort of cooperation between the EU and the applicant countries is possible. Co-operation between the EU, its Member States and the CEECS In view of the current situation of the CEECs in areas linked to JHA, it is evident that they need considerable support in order to reach what is commonly understood by “western security standards”, and to create the “European wide area of freedom, security and justice” envisaged by the Treaty of Amsterdam. As a formal first step, the CEECs have to adopt the acquis of the Union not only in the field of the internal market as laid down by the white paper,10 but also in the field of justice and home affairs and the Common Foreign and Security Policy. The acquis consists of the legal instruments agreed in the context of the first, second and third pillar, as well as legal instruments that were agreed before the entry into force of the Maastricht Treaty, such as the Dublin Convention on the determination of the Member State responsible for individual asylum requests, and conventions adopted in the framework of other international organizations such as the United Nations and the Council of Europe. Furthermore, there are also broader principles, such as the working practices used in applying these instruments, or the overriding Copenhagen criteria of rule of law and human rights. Apart from Title VI of the Treaty on European Union, whose areas of concern were listed earlier, the acquis in the field of JHA includes in particular: The effective implementation of the 1951 Geneva Convention relating to the Status of Refugees, minimum standards for asylum procedures, and/or joint positions relating to the residence of third country nationals. The effective management of external borders.

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The Europol convention and the existence of national legal instruments and law enforcement structures capable of effectively fighting organized crime and participating in international co-operation (including Interpol). The EU Action Plan to Combat Drugs 1995–99 and the relevant Council of Europe and UN conventions relating to drugs. Independence of the judiciary, rule of law, human rights within the prison system, international conventions on criminal matters (such as on mutual assistance, extradition, witness protection, fraud, etc.) and on civil matters (such as on enforcement of judgements, law applicable to contractual obligations, family law, etc.). A number of meetings have taken place between EU Member States and CEECS with the aim of establishing co-operation in the field of JHA. In September 1994, the ministers for justice and home affairs of the EU Member States and their counterparts from the CEECS met in Berlin for a conference on drugs and organized crime. The conference resulted in the Berlin Declaration, which was the first concrete step in co-operation with the CEECs on justice and home affairs matters. It established a list of common priorities and emphasized the need for enhanced co-operation in combating serious forms of crime, such as the illicit production of and traffic in drugs and psychotropic substances, crime involving radioactive and nuclear material, traffic in human beings, illegal immigration networks, illegal transfer of motor vehicles, and money laundering in connection with these forms of crime. The EU Member States and the CEECs also agreed regularly to exchange information on questions relating to cooperation in the fields of justice and home affairs, and to develop a form of future co-operation that satisfies all participants.11 This, unfortunately, has not been done. The Berlin Declaration was, however, followed by the Action Programme of the Member States of the European Union and the Associated Countries of Central and Eastern Europe on judicial co-operation in the fight against international organized crime. It was approved in September 1995 by the EU’S Justice and Home Affairs Council and the representatives of the associated countries, and highlighted practical aspects of judicial cooperation, training and legislative measures. Structured Dialogue The Structured Dialogue is part of the pre-accession strategy to prepare the associated countries of central and eastern Europe for membership of the EU which was adopted by the Essen European Council in December 1994.12 This dialogue was to “encourage mutual trust, and provide a framework for addressing topics of common interest”.13 Among the matters of common interest are “first pillar” areas (especially those with a transeuropean dimension, such as energy, environment, transport, science and technology), but also the Common Foreign and Security Policy and co-operation in justice and home

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affairs. In the area of JHA, each EU presidency has had a main topic agreed upon by a work programme established in March 1996. The Dutch EU presidency in the first half of 1997 put emphasis on asylum policy, whereas the following three EU presidencies were to concentrate their work on border controls, judicial cooperation and police co-operation, respectively. The Structured Dialogue is not an optimal instrument for co-operation in justice and home affairs as this multilateral dialogue has few practical, operational effects: there is extremely limited time for discussion, and consequently a lack of binding results. (It has, in fact, sometimes been called the “unstructured monologue”, as usually only the ministers of the CEECs talk while the EU representatives listen, and the aim of the dialogues is rather unclear.) Another important negative aspect is that all the CEECs are treated in the same manner in the framework of the Structured Dialogue in spite of the different situation in these countries. The only exception to this rule is CIREFI (see above), where the European Union distinguishes between the Visegrad countries (Czech Republic, Slovakia, Poland, Hungary and—more recently—Slovenia), the Baltic States, and Romania/Bulgaria. Furthermore, there is no common forum of decision-making between the CEECs themselves as they all want to be treated differently, and it is therefore very difficult for them to agree on common positions between themselves. However, there are some opportunities for bilateral talks between the EU and each applicant country within the framework of the bilateral Europe Agreements, and these also provide for a degree of co-operation in certain fields of justice and home affairs through the standard articles concerning drugs and money laundering. Furthermore, the Agreements with the Baltic States and Slovenia contain a special clause on co-operation in the prevention of illegal activities including illegal immigration, illegal drug trafficking and organized crime. The Commission has taken the deficiencies of the Structured Dialogue into consideration and Agenda 2000 contained proposals to replace this inefficient multilateral dialogue by bilateral Accession Partnerships. These partnerships would involve, at least in theory, precise commitments on the part of the applicant country, as well as a national programme on the adoption of the acquis within a precise timetable, focusing on the priority areas identified in each opinion.14 Financial assistance With the PHARE programme, the European Union provides financial assistance to support the CEECs in their process of transformation. The Cannes European Council in June 1995 decided to allocate the PHARE programme some ECU 6. 7 billion for the period 1995–9915—a relatively small amount, as it is only 5 per cent of the amount of financial assistance provided to Spain, Portugal, Greece and Ireland from the EU regional funds.16 In the initial years of operation, PHARE funding was directed to areas such as private sector development and

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enterprise support, education, health and research and agricultural restructuring, but since the Essen European Council of December 1994, PHARE funding can be allocated to actions in the field of justice and home affairs as well. Some PHARE programmes already operate within the area of justice and home affairs.17 For example, the Multi-Country Programme for the Fight against Drugs supports a global approach to the drugs phenomenon. Its aim is to encourage co-operation between the partner countries, including the development of strategies to fight against drug abuse as well as combating drug trafficking. The Multi-Country Programme for Customs Co-operation focuses on customs and legislation procedures and support for the elimination of bordercrossing bottlenecks, and also on co-operation in the fight against fraud. Similarly, the Multi-Country Consolidated Border-Crossing programme is intended to reduce border delays by modernizing the infrastructure of bordercrossing points and upgrading customs procedures. Public Administration Programmes were also started in 1993, and these have been financing reform programmes in areas such as reform of government ministries (Justice, Interior), reform of the prosecution system, assistance to law enforcement agencies, assistance with the preparation of civil and criminal legislation, and training of judges and lawyers. At the end of 1996, the Commission adopted the PHARE Horizontal Programme on Justice and Home Affairs. The overall aim of this programme is to help the CEECs to adopt the standards and practices required by the European Union in the area of justice and home affairs. The programme is managed by the Commission, working closely with the Member States. It places emphasis on interregional co-operation, multi-country activities, especially in the fields of training, information provision and exchanges, and areas of particular importance to the justice and home affairs acquis of the European Union to which it is possible that insufficient attention will be paid in national programmes. In March 1997, the Commission introduced a new “accession-driven approach” for the PHARE programme, which was to concentrate on the “real priorities”.18 These are to be set by a national programme for the implementation of the acquis within the framework of the new Accession Partnerships. As Agenda 2000 emphasized, the new PHARE programme is to focus its assistance on two key priorities for the CEECs in preparing themselves for EU membership and adopting the acquis: strengthening democratic institutions and public administrations, and supporting investment to improve business and infrastructure. The former will account for 30 per cent of the PHARE allocation, whereby particular attention will be paid to strengthening the capabilities of the CEECs in the areas of justice and home affairs. The Commission also decided to speed up project implementation by streamlining management, simplifying decision- making procedures—including a reduction in the number of small projects— and making procedures more transparent. The new orientations for

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PHARE will be progressively implemented in the framework of existing legislation. Other financial programmes In the framework of the third pillar, the Council has also adopted some programmes with financial support from the Community budget for measures involving more than one EU Member State. Projects receiving Community financing must be of European interest and involve more than one Member State, and may also involve participants in applicant countries where it will assist them in preparing for accession to the EU. These programmes comprise, in particular, training, exchange and work experience and research projects. GROTIUS19 is a programme for practitioners in the area of justice aimed at fostering mutual knowledge of legal and judicial systems and facilitating judicial co-operation between Member States. SHERLOCK20 is a programme of training, exchanges and co-operation in the field of identity documents. STOP21 is an incentive and exchange programme for persons responsible for combating the trade in human beings and the sexual exploitation of children. OISIN22 is a programme for the exchange and training of, and co-operation between, law enforcement authorities. It is difficult to evaluate the effects of this financial aid. Of course, the money is not enough per se to bring the administrative, law enforcement and judicial authorities of the CEECs up to a “western” standard. Financial assistance can only be the catalyst for the reform process in these countries. Bilateral co-operation between Member States and CEECs Bilateral assistance focuses mainly on police co-operation.23 The main type of assistance is training (especially seminars and study visits), but equipment is also offered.24 Germany has provided all the associated countries in central and eastern Europe with equipment to reinforce their police organizations, and many CEEC police officers have been involved in German police training programmes. Germany has tended to invest more money in equipment than in training, whereas France has provided almost all CEECs with police training, but has put less emphasis on equipment, and the United Kingdom has provided a variety of police training programmes to all CEECs since 1990. Other Member States have assistance programmes of a smaller scale: the Netherlands concentrates its co-operation with the CEECs mainly on institution building and training in specific police techniques. The Nordic countries have focused their police co-operation on the Baltic countries whereby assistance is provided in the form of training rather than equipment. Austria has established co-operation agreements with some of the CEECs, and puts emphasis on informal regular contacts with its neighbouring countries, for example in the framework of the so-called trilateral dialogue between Austria, Hungary and Slovakia.

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The Central European Police Academy (CEPA) was originally an example of co-operation between two states, as it began as a joint Austro-Hungarian initiative, but was later joined by Germany, Switzerland, Poland, Slovakia, Slovenia and the Czech Republic. The courses offered by CEPA are directed at specific transborder policing issues such as drug-related crime and illegal immigration. The aims of the programme are the establishment of personal contacts between national police forces, the supply of personal and technical know-how about transborder crime, and the acquisition of background knowledge about the politics, economics and society of other states. Other examples of structural police co-operation involving more than one EU Member State are the Nordic Baltic Police Academy, which covers a training programme for the Baltic States prepared by the Finnish, Swedish, Danish and Norwegian police, and Franco-Swedish co-ordination on co-operation programmes for the Baltic States. There is also a smaller amount of bilateral assistance in the area of customs work and judicial co-operation, mostly carried out together with the Council of Europe. Conclusion Co-operation between the European Union and the CEECs in the area of justice and home affairs is still not fully effective, despite the steps that have already been taken with the 1994 Berlin Declaration, the introduction of the Structured Dialogue, the opening of PHARE towards third pillar areas and the opportunity for CEECs to participate in Community financed programmes. The Structured Dialogue has been mainly a political forum with few practical effects on the operational level, and was widely recognized to be in need of improvement. The financial assistance by the European Union and its Member States has been handicapped by the lack of an overall approach and its relative small amount compared to what would be needed. Current co-operation is therefore barely sufficient to tackle the existing problems in the CEECs. The major question is whether the EU and the CEECs will be able in the future to deepen co-operation in justice and home affairs. On the one hand, the EU has to find a more coherent and well aimed approach towards the CEECs, and the CEECs, on the other hand, have to overcome their institutional and operational weaknesses. Regardless of whether the individual countries of central and eastern Europe join the European Union in a first wave eastern enlargement or later on, the stability and security in these countries has to be strengthened. The idea of an “accession partnership” already exists. This idea, however, has to be filled with content. The CEECs need to be included in the Union framework before membership in order to assist them to achieve stability and security through cooperation as outlined in the Berlin Declaration of 1994. Enhanced cooperation would make it easier for the national administrations in the CEECs to acquaint themselves with the working methods in the EU Member States. And it would also be a way for the EU Member States to take into consideration the

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needs of their counterparts in central and eastern Europe in their decisionmaking. If the European Union and the countries in central and eastern Europe do not achieve an effective common policy in justice and home affairs, problems could rise dramatically in the applicant countries, which could only lead to a worsening of internal security all over Europe. Notes 1 Title VI was amended by the Treaty of Amsterdam, and after ratification its articles will be renumbered Articles 29–42. 2 J.Monar, “The evolving role of the Union institutions in the framework of the third pillar”, in justice and Home Affairs in the European Union: the development of the third pillar, R.Bieber & J.Monar (eds), 81 (Brussels: European Interuniversity Press, 1995). 3 European Council, “Conclusions of 30 November 1994 on the organization and development of the Centre for Information, Discussion and Exchange on the Crossing of Frontiers and Immigration (CIREFI)”, Official Journal C 274/50, 19. 09.1996. 4 European Council, “Second activity report on the Centre for Information, Discussion and Exchange on Asylum (CIREA)”, Official Journal C 274/55, 19.09. 1996. 5 A.J.Langdon, Justice and Home Affairs cooperation with associated countries, 10– 12 (Brussels: PHARE Programme Service contract 95–0683.01, 1995). 6 Ibid., 17–22. 7 European Commission, “Agenda 2000”, Bulletin of the European Union, Supplements 5–15/97, 1997. 8 Ibid., Supplement 5/97, 50. 9 Langdon (1995), op. cit. 10 European Commission, “White Paper: preparation of the associated countries of central and eastern Europe for integration into the internal market of the Union”, COM(95) 163 final, 1995. 11 D.Cullen, J.Monar, P.Myers, Cooperation in justice and home affairs: an evaluation of the third pillar in practice, 82–3, College of Europe Working Papers 23, (Brussels: European Interuniversity Press, 1996). 12 For more on the structured dialogue and the pre-accession strategy, see Chapter 6. 13 European Commission, The European Union’s pre-accession strategy for the associated countries of central Europe, 5 (Brussels:1996). 14 European Commission, “Agenda 2000”, op. cit., Supplement 5/97, 53. 15 European Commission, The European Union’s pre-accession strategy, op. cit., 9. 16 J.Nötzold, “Die Osterweiterung der Europäischen Union: Probleme und Perspektiven” in Regierungskonferenz. 1996: wohin steuert die EU?, in A.Leicht (ed.), 269 (Vienna: Signum Verlag, 1996). 17 European Commission, Inventory on bilateral and multilateral assistance to associated countries in central and eastern Europe in the field of justice and home affairs, Chapter 2.2 (Brussels: 1996). See also G.Eisl, “Relations with the central

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18 19 20 21 22 23 24

and eastern European countries in justice and home affairs: deficits and options”, European Foreign Affairs Review 3, 351–66, 1997. European Commission, New orientations for PHARE Programme: focus on accession, Press release IP/97/234, 1997. European Council, “Joint Action 96/636/JHA”, Official Journal L 287/3, 8.11. 1996. European Council, “Joint Action 96/637/JHA”, Official Journal L 287/7, 8.11. 1996. European Council, “Joint Action 96/700/JHA”, Official Journal L 322/7, 12.12. 1996. European Council, “Joint Action 97/12/JHA”, Official Journal L 7/5, 10.1.1997. See Langdon (1995), 14–15. European Commission, Inventory on bilateral and multilateral assistance, op. cit., Chapter 2.1.

Part III: Central and East European Politics and the European Union

11 Central and east European views on EU enlargement: political debates and public opinion Heather Grabbe and Kirsty Hughes

Since 1989, all the central and east European countries (CEECs) have shown enthusiasm for joining international organizations to facilitate and consolidate reintegration into the world economy and departure from the Soviet sphere of influence. Membership of regional and international institutions is an important demonstration of post-communist societies’ emergence as sovereign states in the international arena, both to the world and to their own populations. For countries that are also building new nationhood as independent states, such as Slovakia, Slovenia and the Baltic states, acceptance by international organizations is often seen as an affirmation of their independence and sovereignty, as well as their success in transition. Although fulfilling conditions to join international bodies has been helpful in guiding the opening of economies and encouraging the development of democratic institutions, the symbolism of being accepted by transnational institutions from the Council of Europe to the World Trade Organization is equally important. The European Union and NATO are seen as the most important institutions to join, both because of the practical benefits of membership and also because of what they represent. Indeed, the process of Euro—Atlantic integration is the foreign policy priority of all ten applicants. The main attraction of NATO is the hard security guarantee it offers, and integration into its structures will be fairly fast for the three countries so far invited to join. Joining the EU is a much more complex process, however, given its much broader scope and aims. For this reason, there is less awareness of the implications of membership in the CEE region, and the process of EU integration is likely to play a much greater role in political debate. Views in CEE about the different aspects of EU membership are still largely unformed, with public discussion mainly focused on the historical and geopolitical reasons for joining. Although the implications of membership for a whole range of policy areas will doubtless also be controversial, only the bare outlines of the political debate to come are yet visible. Nevertheless, a number of emerging issues can be highlighted. This chapter analyzes the range of views, approaches and debates about EU accession in the ten CEECs, first looking at trends in public opinion on EU integration since 1989, secondly, at the

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development of political debates on the EU, and thirdly, at elite views on the enlargement process.1 Public opinion on EU accession Debate about European integration has been conducted mainly at elite level so far (see below), with most of the population largely uninformed about what joining the EU will mean, either for the economy and society as a whole or for their daily lives. However, gaining the support of the population for joining the EU is very important in establishing the legitimacy of the process, particularly given perceptions of a lack of popular legitimacy for the EU among its current citizens. Moreover, most of the CEECs will hold referenda on EU membership, even if they are not constitutionally obliged to do so. So far the public in most of the states involved has been generally supportive of joining, but there are variations across the ten countries and there have been some changes since the early years of transition. Here we will look at the main evidence for broad trends in public opinion.2 In most of the ten CEECs, positive views of the EU were high in the early years of transition and then declined. By 1996, public support had recovered somewhat in most countries apart from the Baltic states; on average, nearly half saw the EU’S image as positive, a further third as neutral, and a small number as negative.3 Trends in individual countries over the past six years have varied considerably (see Table 11.1). Romania, Poland and Bulgaria have the highest level of positive opinions and have also shown the most pronounced rise between 1995 and 1996; indeed, Poland and Romania are the only countries to Table 11.1 Trends in positive views of the EU, 1990–96. %

1990

1991

1992

1993

1994

Romania – 52 55 45 51 Poland 46 49 48 37 42 Bulgaria 47 46 51 42 37 Slovenia – – 45 30 37 Slovakia 43 37 35 44 37 Hungary 51 42 34 36 32 Czech 49 46 45 37 34 Republic Latvia – 45 40 40 35 Estonia – 38 32 31 29 Remaining percentage share are neutral, negative or “don’t know”.

1995

1996

50 46 27 35 31 30 36

65 58 42 35 34 33 33

35 30

26 24

Source: European Commission, Central and Eastern Eurobarometer No. 7, Annex Figures 28–37.

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have a higher level of positive views in 1996 than in 1991. There was also an increase of 7 per cent in the number of positive views in the Czech Republic over 1995, although this rise follows five years of decline from 49 per cent in 1990 down to 26 per cent in 1995. National opinion polls also suggest that there has been some recovery in support for joining.4 In Slovenia, Hungary and Slovakia, views have remained relatively stable over the past three to four years. In the Baltic states, however, there has been a marked deterioration in the image of the EU since 1991, with positive views falling by 14 percentage points in Estonia, 19 in Latvia and 27 in Lithuania. This decline in positive views has been accompanied by a large rise in neutral views, with the level of negative views still low. However, the trend in the Baltic states stands in contrast to those in most of the other applicants, where initially very high levels of positive images declined and then they later recovered to some extent. In all of the countries there remains disappointment at the EU not being more welcoming. When asked whether or not they would support EU accession in a referendum, on average two-thirds of those who have the right to vote would vote “yes” (see Table 11.2). However, this average conceals a major gap between the two most enthusiastic countries, Romania and Poland, which show 80 per cent and 70 per cent support, respectively, and the rest. In the other eight countries those who would vote for EU membership accounted for less than half of the total, ranging from 49 per cent in Bulgaria down to 29 per cent in Estonia. Around another quarter to a third of respondents in Slovakia, the Czech Republic and the Baltic states were undecided. The number of those who would vote against accession was relatively small, ranging from 17 per cent in Estonia down to 2 per cent in Romania. Table 11.2 Attitude to EU membership in candidate countries. “If there were to be a referendum tomorrow on the question of (our country’s) membersip of the EU, would you personally vote for or against membership?” Country

For

Undecided

Against

Romania Poland Candidate countries average Bulgaria Slovenia Hungary Slovakia Czech Republic Lithuania Latvia Estonia

80 70 61 49 47 47 46 43 35 34 29

8 12 15 17 19 16 25 23 24 32 35

2 7 7 4 15 15 9 11 6 13 17

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Country

For

Undecided

Against

Source: European Commission, Central and Eastern Eurobarometer No. 7, 36.

These differences in aggregate views reflect different geopolitical situations and historical experiences, although the aggregate level of these data makes it difficult to draw out reliably specific factors for each country. Nevertheless, one evident trend is that levels of positive support are lower in the newly independent countries and higher in the already established states (with the possible exception of Hungary); this probably reflects, at least in part, the experience of having left a federation recently. Opposition to accession could grow, particularly during a set of long and difficult negotiations, but on current trends it is unlikely that any of the applicants would end up with a rejection of EU membership in a referendum. All of these poll findings have to be considered against a background of quite limited knowledge of and interest in an EU that is still seen as quite remote, as evidenced in previous central and eastern Eurobarometer reports and those by the University of Strathclyde.5 Moreover, a number of factors could change in the years preceding accession, most importantly how successfully transition proceeds and how well the EU handles its own preparations for enlargement. The public seems more doubtful about who benefits from relations with the EU. By far the largest number of people feel that their country and the EU benefit equally from relations (44 per cent on average in CEE), and in the countries with most support for joining (Romania and Poland) only around a fifth feel that their country benefits most from the relationship.6 These polls suggest that the public appreciate that joining the EU may not be advantageous to their country in every respect, and yet they support accession nonetheless because of the overall benefits. Development of political debates about European integration The trends in public opinion, discussed above, suggest that political debates could begin to become more lively as people begin to see the far-reaching effects of integrating economies and societies into the EU. Public opinion on who is likely to gain or lose from closer ties provides some pointers for the groups whose causes could be taken up by political parties; however, it is not clear when, how and if disadvantages from EU membership will be perceived by voters in various CEE countries. Different issues are likely to have salience in the different countries: for example, issues related to agriculture, borders, minorities, relations with Russia and financial transfers are all sensitive, but do not have the same resonance across the CEECs.

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Why join the EU? There is little serious debate in the CEECs about the desirability of joining the EU. The early 1990s saw some discussion of different forms of association with the EU, but this did not develop far in the context of lack of enthusiasm from the EU side for any form of “confederation” and strong will from CEE for being full members of west European clubs. A central motivation in all ten applicants from the early years of transition has been the desire to “return to Europe”, and in many of the applicant countries the political debate has not yet moved much beyond this level. In the press, public speeches and parliamentary debates, a common theme is the inevitability of the process of integrating with the European Union, and full membership both arises from and reaffirms CEE countries’ status as modern European states. It is also increasingly argued that processes of transition and of European integration are the same—even though there are clearly wider choices in transition than the EU model. Financial transfers from the Community budget do not seem to be a central aim in joining the EU, although they could play a greater role in political debates as membership draws closer. The funds from PHARE have been welcomed, however, even if there have been mixed views on the operation and impact of PHARE. Estonian and Czech leaders have stated publicly that their countries will not need transfers (not always to the approval of the rest of the political establishment) but, with the departure of Klaus (see below), Czech views are changing and more welcome is being given to transfers, especially with restructuring to come. The prospect of getting more aid does not seem to be a central part of the debate in Slovenia or the other Baltic states either, but it may take on more importance once the scale of potential transfers becomes clearer. Already, in the context of the refocusing of PHARE, some are calling for greater spending now to speed transition and reduce costs later. Overall, transfers are seen by many policy-makers and commentators as a useful way of encouraging public support for accession. In more agricultural countries such as Poland, Romania and Bulgaria, transfers to farmers could play a particularly important role. At a political level, the main issue at present seems to be the principle of equal treatment rather than the scale of the transfers; many policy-makers argue that if other member states have full access to EU policies, so should they. Transfers to compare with those to the current EU-15 are unlikely, however (see Chapter 7). This general level of motivations is the main issue in political debates on the EU in most of the applicant states so far. Arguments in favour of joining the EU tend to be presented in terms of the logic of historical precedent, geographical position and psychological need. These are often reinforced by reference to expectations that membership will bring substantial economic benefits through access to markets, trade, investment and transfers, but these are a secondary motivation. As yet, there is hardly any disagreement with the frequent statements that full membership is the only option. This reflects a strong feeling that

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membership of the EU will fulfil an emotional need to be once more accepted as a full part of Europe, as well as offering various forms of soft security. For Poland and the Baltic states, the security and foreign policy implications of EU membership are particularly important, although this aspect is seen more in terms of the EU being a community of states rather than because of any hopes for the development of the Common Foreign and Security Policy. The implicit security guarantee that is part of EU membership is very important; although there is no formal pact to do so, the emphasis on solidarity and ever-closer integration within the Union offers reassurance that EU states, many of which are NATO members, will react to external aggression towards fellow members in CEE. Moving into the EU is an important part of moving decisively out of the Russian sphere of influence, especially for the Baltic states, which had been part of the Soviet Union (see Chapter 15). The symbolic importance of joining the EU puts a heavy burden on the process of EU accession to deliver the security and political benefits expected of it, particularly given the potential costs of alignment with EU norms and taking on the acquis (the whole body of EU legislation). The experience of Member States suggests that countries which joined primarily for economic reasons (such as the UK, Sweden and Denmark) have experienced greater long-term scepticism about European integration than those with motives such as affirming their identity as small, independent states (Ireland, Luxembourg and Belgium, for example) or overcoming historical conflicts (Germany, France and Italy). In the long run, support for the EU could strengthen if the CEECs succeed in gaining their political goals; equally, however, they might experience public disappointment if EU membership fails to meet expectations. Overall, it can be seen as encouraging that the dominant motives are political. Political debates about EU integration Political debate in CEE is still mostly concerned with the general principle of joining the EU rather than the implications of membership for specific policy areas or societal groups, although with the start of negotiations, and progress in implementing EU norms, this is beginning to change. There are differences in the scope and intensity of political debates on the EU, and these are closely related to the different candidates’ proximity to accession. For the countries that are furthest from meeting EU conditions to join, the Union seems very remote and the process of integration does not have an immediate impact on central policy areas. For this reason, there is less press coverage of developments in relations or preparations for starting negotiations, even though there is considerable activity in the ministries and government. Public debate is least developed in Romania and Bulgaria, where the overall goal of joining the EU is generally uncontested and preparations for joining negotiations have until recently been at too technical a level for there to be organized opposition from interest groups or opposition parties. At the other end of the spectrum are Poland and the Czech Republic,

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where there is much more lively debate about both the specific issues due to be negotiated for accession and also the country’s relations with the EU. Nevertheless, for the countries still outside formal negotiations, the degree to which EU integration is controversial varies according to the overall nature and scope of their political debates. Bulgaria, Romania and Slovakia exhibit different tendencies in this regard. In Romania, there was very little discussion of EU issues while prospects for joining NATO dominated discussion of European integration. Following the Alliance’s decision at Madrid in July 1997 not to invite Romania to join in 1999, debate continued to focus on the rejection for NATO’s first round, although publication of the Commission’s opinion on Romania’s application called more attention to EU accession. A few fringe parties oppose EU membership, but overall there is a strong sense of inevitability about joining the EU, that it is part of the history of the country, and public support is extremely high. However, there is hardly any debate about the implications of EU membership. This reflects the fact that there are more immediate pressures while Romania is undergoing major reforms; moreover, political debate was dominated by the in-fighting of the Ciorbea coalition elected at the end of 1996, and its collapse in April 1998. Political deadlock as a result of the struggles within the ruling coalition since summer 1997 and the general tendency of post-Iliescu Romanian politics to focus on personalities rather than policy platforms have together inhibited the development of detailed debate on policy issues, including those related to EU accession. Neither coalition nor opposition parties have clear positions on the demands of taking on the acquis, and criticism of the EU from the right-wing parties focuses on limiting foreign influence rather than specific issues. Moreover, the stalling of economic reforms that resulted from the political turmoil has prevented debate on the details of the Accession Partnership, even though it demands considerably faster and deeper reforms. In Bulgaria, the issue of EU membership has a higher profile than the NATO issue (although NATO is now receiving more attention), and there are hardly any dissenting voices at all on accession. Discussion still centres on whether or not Bulgaria will be able to join, with less media attention to concrete developments in relations with the EU.7 At present, Bulgaria seems to have the highest degree of consensus on EU accession among political actors. However, at a general level, awareness may be growing of the EU as an issue. The EU’S Copenhagen criteria are used to support general arguments for reform. Since the economic and political crisis of 1996–7 and the election of the new government, there has been a strong consensus on reform together with macroeconomic stabilization due to International Monetary Fund reforms, including the establishment of a currency board. Crucial issues now for transition include reform of the administration, privatization and restructuring, and achieving economic growth. Until there is movement on these major issues, details of EU accession requirements will not receive much attention, although one outcome of the currency board has been suggestions that Bulgaria should aim to achieve the

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Maastricht EMU criteria by 2001 (with the misperception by some that this will enable Bulgaria to open negotiations). One issue that is widely discussed concerning the EU is the absence of Bulgaria and Romania (but not the other applicant countries) from the EU’S common visa list. Restrictions on freedom to travel within the EU are thus already an important issue, and there are perceptions of discrimination by the EU against Romanian and Bulgarian citizens. This may become more controversial since pressure is being put on the CEECs in the first group negotiating accession to tighten borders and introduce visas with respect to some second group countries. Slovakia provides a contrast with Bulgaria and Romania; the goal of EU membership is rarely openly opposed in itself, but progress in integration tends to become part of the intense contestation of politics. The last few years have seen the issue of EU and NATO accession become increasingly a part of the political rivalry between the main governing party, HZDS (Movement for a Democratic Slovakia), and the opposition parties. Each side blamed the other for any signs of Slovak exclusion from Euro-Atlantic structures, the opposition criticizing Prime Minister Vladimír Mečiar’s policies and undemocratic practices while the government claimed that exclusion occurred because the opposition presented a negative view of Slovakia to outsiders. The opposition was clearly more willing to implement both political and economic reforms to prepare for EU membership than the governing coalition. The requirements of membership were not much discussed (or even understood) because debate focused so much on domestic issues and inter-party battles (see Chapter 13). However, the fact of exclusion from negotiations and the increasing gap that may be seen in readiness for accession between the Czech Republic and Slovakia could increase debate and could be controversial. For all three Baltic states, a major attraction of EU membership is its security implications, which seems to have a unifying effect on views on accession. There is a general consensus on EU policy and preparations so far in all three countries, no doubt reinforced in Estonia and Latvia by the tendency of their governments to comprise grand coalitions of numerous parties. Overall, until recently there has been a surprisingly high level of consensus among political parties in the Baltic states on preparations for EU accession given the popular scepticism revealed in opinion polls presented above. Political debates on preparations for accession became more intense in Latvia and Lithuania after publication of the Commission opinions and its recommendation that negotiations be started with Estonia but not with the other two countries. Disappointment at the recommendations was accompanied by criticism in the domestic press blaming the decisions on a Commission failure to take into account economic progress in 1996-7. Some criticism also rebounded on the governments, and the Latvian minister for EU affairs was replaced. Both countries are now aiming for a decision at the end of 1998 to join negotiations in 1999, but it is more likely to be a year or more later given ongoing transition and difficult issues remaining to be resolved such as the treatment of the Russian

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minority in Latvia. Nevertheless, even if prospects for accession are now receiving more attention, debate on individual aspects of membership is still at a very early stage. There is also scope for more debate to develop among the Estonian elite. In summer 1997, there was criticism in Tallinn of the contrast between the relatively radical approach taken by Estonia to marketization and liberalization in transition and what are seen as EU attempts to protect and subsidize parts of its economy. Concern was expressed about the prospect of Estonia having to reerect trade barriers against third countries when it joins the Single Market, and the CAP has been criticized for subsidizing EU farmers unfairly in comparison with their Estonian counterparts, for example. As yet, these criticisms of the EU have not threatened the political consensus on accession, but negotiations are likely to bring out the tensions rather more. For now, Estonia sees entering negotiations as a major achievement and is aiming to build on this. So far, the liveliest arguments between political parties and in the press about relations with the EU have taken place in Poland. For the first time, there have been public demonstrations blaming the EU for unpopular economic reforms, with farmers and factory workers demonstrating in Warsaw in March 1998 against EU accession.8 Disputes over specific issues can quite rapidly raise the profile of EU accession: in early 1998, gelatine, milk, steel restructuring, and borders were all sources of controversy. In particular, tightening Poland’s eastern border has led to disruption of the grey economy and to protests. Few politicians have openly contested the aim of joining, but discussion of the implications of membership is now beginning. Some right-wing parties in particular hedge their support with arguments for more attention to the dangers of agricultural decline, cheap imports, cultural and religious influences, and the influence of Germany, arguing for Poland to take an approach based on “Eurorealism” rather than undiluted enthusiasm. Euroscepticism could grow among the peasants, pensioners, unemployed and other groups adversely affected by transition (see Chapter 12). The issue of trade relations with the EU has been controversial for several years owing to Poland’s series of high-profile disputes with the EU, and the question of agricultural trade access under the Europe Agreement has been quite widely covered in the press. There do seem to be more frictions in Polish-EU relations than with most of the other applicants, despite the strong level of support for EU membership. Poland was particularly unhappy at the discussions over its Accession Partnership agreement (imposed not agreed according to many Poles), and this was followed by disagreement with the EU over PHARE spending. These frictions may in part reflect the fact that Poland is the largest and in many ways the most complex of the applicants. This underpins a confidence and assertiveness in Poland’s approach which the EU may on occasion find difficult. At the same time, there is still considerable misunderstanding and lack of knowledge of the EU on the Polish side. Particularly, there seems to be a widespread failure to

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recognize the inevitably one-sided nature of EU negotiations and the limits to bargaining. Awareness of Poland’s geopolitical importance to the EU, especially Germany, has also encouraged policy-makers and politicians to assume that it will be among the first to join, despite warnings from the EU that it is perfectly feasible that other less problematic applicants might finish negotiations first. If Poland were seen to be lagging behind Hungary in negotiations and accession preparations, this could also widen the Polish debate. In contrast to Poland, in Hungary there is much less debate about EU issues between the parties and in the press. The degree of consensus is very high on both the overall aim and Hungary’s preparations so far for joining; European integration is one of the few policy areas where parliamentary parties usually agree. Debate could develop over negotiating strategies, however, owing to divisions in the post-communist Hungarian Socialist Party. In addition, Alliance of Young Democrats (FIDESZ) leader Viktor Orban argues that Hungary has to be tough in negotiations and prove that it is in the national interest to join. The only opponents of accession are small parties on the extreme Right and Left, although in parliament the leader of the populist Smallholders’ Party has expressed doubts about aspects of integration. In the Czech Republic, there was considerable confidence about getting into the EU and about the country’s overall progress in transition until the economic crisis in summer 1997, and both NATO and EU membership remain priorities for Czech governments. Open and high-profile criticism of EU developments from the former prime minister, Václav Klaus of the centre-right Civic Democratic Party, stimulated awareness and perhaps some scepticism in the Czech Republic about issues such as monetary union and the social dimension of EU policies. The main opposition party, the Social Democrats, argued for a more positive attitude towards EU integration, but the opposition seemed to be less involved in policy-making and kept less informed on European integration matters than in some other applicant countries, despite the fractiousness of the governing centre-right coalition. This has affected the extent of the debate; there is a general consensus on the goal of EU integration, but little discussion of the details. In addition, there is also overt opposition to joining from the far right Republican party and considerable scepticism from the Communists, which together received some 18 per cent of the vote in 1996. The economic and political problems that led to and followed the fall of the Klaus government in December 1997 represented a major shock to the Czech public and political mood, debate and system. Nor are the June 1998 elections expected to lead to a stable governing coalition. These changes and difficulties have not undermined the goal of EU accession and indeed the departure of Klaus, with his often highly critical comments on the EU, has if anything led to a more positive atmosphere on EU issues, despite some conflicts in the trade area. The much greater awareness—owing to the economic and political difficulties—that the Czech Republic still needs substantial economic restructuring may affect

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views on the EU once the restructuring gets underway and is accompanied inevitably by rising unemployment. More doubts may grow among those on the downside of transition, but there could also be a growing awareness that EU funds could help with some areas, and that EU membership could underpin a political and economic transition that is looking less robust than before. In Slovenia, EU accession is generally supported by political parties, but there seems to be less confidence about joining than in the other front-runners in transition. This can be explained partly by the long-running dispute with Italy over property restitution, which blocked Slovenia’s application until June 1996. Slow implementation of EU obligations has continued since; for example, Slovenia’s Europe Agreement was not ratified until July 1997. There seem to be more doubts about membership among the elite than in the other countries, particularly related to concern about Slovenia’s status and identity as a small nation.9 Slovenia’s unhappy experience as part of the Yugoslav federation seems to have coloured views of its prospects within the EU: although membership is seen as a way of ensuring escape from the post-war troubles still besetting the rest of the former Yugoslavia, there are also concerns that such a small country might be overlooked in the EU framework, or have its identity threatened. There are additional undercurrents in the Slovene debate owing to fears of foreign interference, particularly foreigners buying property, partly because of the small size of the country’s territory and continuing tensions in relations with Italy (see Chapter 14). What will become controversial? Until the start of negotiations, only fringe parties outside parliament argued openly against the principle of joining the EU, with some exceptions noted above. However, this lack of opposition to the goal of accession is in the context of very limited debate about what joining the EU will actually entail. Debate about the implications of accession looks set to grow now negotiations have begun and has been stimulated by the publication of the European Commission’s opinions, the Luxembourg European Council in December 1997, and the start of negotiations at the end of March 1998, all of which encouraged more press coverage and increased awareness of what joining the EU would entail. As applicants move into formal, bilateral negotiations, political debates will be affected both by the substance of negotiations and also the geopolitical impact on the region of how the EU handles the enlargement process. In those countries still waiting to join negotiations, the focus seems likely to remain on progress in meeting the EU requirements detailed in the Accession Partnerships, and on the annual reviews by the Commission which could result in a recommendation to start negotiations. Other fora surrounding negotiations, such as the standing European Conference, could also stimulate more discussion of the issues raised by integration.

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Views on EU accession can be expected to become more sharply defined as it becomes clearer which policy areas will be affected and who might lose out from integration. Debate could grow on wider issues in European integration such as national interests and sovereignty, the costs and benefits of membership, and the potential for developing eastward links as well as westward ones. Moreover, there are other potentially controversial issues that are not much discussed yet. The question of whether foreigners should be able to buy property freely is particularly sensitive in Poland, the Czech Republic and Slovenia. Long transition periods on freedom of movement of labour—expected to be demanded by the EU—will also be controversial. The impact of five of the appli- cants being in negotiations and five not could also affect domestic debates depending on how it impacts on relations between the first and second wave. Pressure from Member States such as Austria and Germany, and from the European Commission, to tighten borders and impose visa requirements not only with third countries but with respect to other applicants could lead to problems in many countries. As negotiations and accession preparations proceed in the applicant countries, it is clear that knowledge of the EU and the implications of joining the EU will increase. It is inevitable that among some groups there will be a growth in Euroscepticism as particular areas of adjustment impact on their interests and beliefs. However, on the positive side, the potential benefits of membership will also be more thoroughly aired, particularly financial transfers from the EU and increased trade and investment. Overall, national preferences in different policy areas are likely to become more clearly defined, just as has happened in existing Member States. More variety in the scope and intensity of CEE debates about accession can thus be expected to come out as negotiations proceed, given the range of different national sensitivities. What kind of member states will the CEE countries be? The political elite in the applicant countries were reluctant to discuss attitudes towards the development of the EU prior to the decision to open negotiations in 1997. However, politicians in the Czech Republic, Hungary and Poland are now more openly criticizing EU policy towards applicants and arguing for faster reforms for enlargement on the EU side. Trends in political debates point to emerging attitudes towards development of the EU. Understandably, most of the countries are concerned to protect the position of small members within the Union. Likewise, there is some wariness about moves towards political union in those countries with experience of federations or the Soviet Union (the Czech Republic, Slovakia, Slovenia and the Baltic states), and there is debate in Poland about the influence of the EU, as discussed above. Doubts about the potential scope of integration seem most widespread in these countries, whereas the Hungarian elite seems more pro-integrationist.

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There are some indications of preferences on specific EU policy approaches. In Estonia and the Czech Republic, the countries which have taken the most avowedly free-market approaches to transition, concerns have been expressed about protectionist tendencies and the social-democratic elements of the EU and its policies, although the Czech Republic is now changing (as discussed above). There has also been some debate on this issue in Poland between those who see the EU as overly beholden to social democracy and those who see it as too freemarket. There is opposition to EMU in some of the right-wing parties in Poland and the Czech Republic, but little debate in other countries. There seems to be fairly widespread recognition that joining the single currency is inevitable not just because of accession but also because of trade links with the prospective Euro-zone. However, national currencies are important symbols of hard-won independence in the region. On the budget, Poland would be likely to form alliances with net recipients such as Spain to demand more transfers, especially through the Structural Funds. Regional policy issues could also be important in countries like Estonia and Hungary owing to their different concerns about minorities. Views of political actors on the process of enlargement The impact of opening negotiations The process of enlargement will impinge on domestic debates and foreign policy in stages, as has been shown above. Prior to the opening of negotiations, a key preoccupation of CEE policy-makers was differentiation between the applicants by the EU, and whether countries might be left out of the process. Policy-makers in the five countries that were not recommended to start negotiations reacted in different ways to the opinions and the other proposals put forward by the European Commission in Agenda 2000, its blueprint for enlargement published in July 1997. Latvia and Lithuania were most vociferous in claiming that they should start negotiations at the same time as the others. By contrast, there was recognition in Romania and Bulgaria of their much more severe economic problems and a broad acceptance of the analysis presented in the opinions, but at the same time they were very anxious not to be left further and further behind as the other applicants move ahead in negotiations. The Mečiar government in Slovakia had to a large extent excluded itself from the process through various policies and political practices, while still proclaiming its desire to join. The domestic political impact of the NATO decisions and Commission recommendations in July 1997 was not dramatic. But if countries appear to be becoming excluded from the process despite reform efforts, there could be more of a domestic backlash. Formal negotiations began under the British presidency of the EU at the end of March 1998. At the same time, following the Luxembourg compromise in December 1997, the EU began a process of

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screening of the acquis for all applicants in an attempt to demonstrate the inclusiveness of the process. CEE approaches to managing the domestic political impact of differentiation varied considerably. In Slovakia, Prime Minister Mečiar muddied the waters, confusing the question of whether Slovakia was ready to start negotiations by criticizing EU views on his government’s actions. The Latvian and Lithuanian governments adopted a strategy of presenting more material and criticizing the recommendations, and are likely to have a strong case to join negotiations in the next two years, given the system of annual reviews proposed by the Commission. In Romania and Bulgaria, there was little immediate political impact from the EU’S decision, with much more attention centred on the difficult process of economic reform. The Luxembourg compromise, although strongly welcomed, was being seen as an important step forward relative to the initial Commission proposals. However, given their much worse economic problems, both Romania and Bulgaria face difficult decisions on priorities as they have been faced with taking on the acquis and dealing with immediate economic problems at the same time. The European Commission has proposed that all the EU’S aid and assistance be targeted at meeting the conditions for accession. This policy could lead to a conflict where the detailed requirements of taking on the acquis compete for resources with more central needs of political and economic transition.10 However, since the Copenhagen criteria emphasize transition to a market economy, this need not be too serious. Intra-regional relations will also be affected because the EU’S borders will divide CEE as countries join at different times. Between applicants, there could be tensions over borders if arrangements such as the Czech-Slovak customs union were disrupted. These concerns over the effect on bilateral relations are shared by the front-runner countries; policy-makers in these countries put considerable emphasis on the need for the EU to support reforms in the other five countries, as well as in the region as a whole. It is understandable that Estonia would support the other Baltic states, Poland would support Lithuania, the Czech Republic would try to help Slovakia and Hungary would be concerned about Slovakia and Romania. In this respect, it was very important that the Commission recommended opening negotiations with more than just the three countries invited to join NATO. The inclusion of a Baltic country was particularly important in sending a signal to the applicants and to Russia that this would not just be a central European enlargement. The idea of establishing a standing European Conference was endorsed by the Luxembourg European Council, in order to provide a forum for dialogue with countries outside negotiations—the CEE applicants and in particular Turkey. There is a clear need to deal with issues beyond those being decided in formal negotiations, including intra-regional relations, and the idea of the conference has received support among CEE policy-makers. However, the launch of the European Conference initiative in March 1998 was marred by Turkey’s refusal to participate in protest at the EU’S failure to treat it equally with the other 11

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applicants. It is not clear how much attention EU leaders will grant to its deliberations in the future given that other structures exist for the 11—the screening process and bilateral structures, together with the possibility of ad hoc multilateral meetings where necessary. Views on the pre-accession strategy Policy-makers and other political actors are fairly neutral on the pre-accession strategy as a whole, no doubt reflecting their weak negotiating position with the EU: to a large extent they have simply had to accept it because of the one-way nature of the strategy. The initially controversial elements of the Europe Agree- ments seem to have lost salience now that most of the restrictions on trade in industrial goods have been lifted, although a strong feeling lingers that the EU could be considerably more generous on access for agricultural goods. In the two countries which have had the most trade disputes with the EU, Poland and the Czech Republic, there are still concerns that their economies have been opened too fast, but options for dealing with balance-of-payments problems are constrained by the Europe Agreements. Civil servants in all countries have experienced major problems with taking on the administrative burdens imposed by the Single Market white paper, in many cases reflecting serious weaknesses in the administration. These have been compounded by the need to answer questionnaires from the Commission about applicants’ readiness to take on the acquis, although some policy-makers found this a useful exercise in gathering information about their economy and administration. There seem to have been a number of debates within ministries about how to approximate regulations and how to prioritize between sectors,11 but, in general, government administrations have simply had to accept the white paper’s demands owing to their status as applicants, which gives them very little political room for manoeuvre in relations with the EU. PHARE funds are generally welcomed, but the overall functioning of the programme has been widely criticized for being overly bureaucratic, inflexible and focused on paying western consultants. Many wanted its priorities to be moved towards investment and helping with implementation of the Single Market legislation and preparations for negotiations, particularly training administrators and negotiators. The Commission’s recommendations in Agenda 2000 that PHARE be re-focused on to implementation and infrastructure investment thus match CEE concerns, although there are still doubts about how the programme will work in practice.12 There has been widespread criticism in CEE of the difference in scale between PHARE funds and those made available to the Mediterranean countries prior to and after accession. Moreover, a potential problem with the new funds from the Structural Fund and CAP budgets is that whereas PHARE was previously more demand-driven, PHARE will now work in the context of the Accession Partnerships and in this sense PHARE will be more driven by the EU.

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Throughout CEE, the Structured Dialogue was seen as primarily a talkingshop to which EU members paid little attention. Slovenia was slightly more positive than the other countries owing to the usefulness of the Structured Dialogue in the process of resolving its disputes with Italy. Frequent comments on the multilateral meetings were that few EU members attended and that, although it fostered contact, its discussions were only symbolic as its lack of decision-making powers made it insubstantial. Thus, although the idea of setting up a European Conference did receive quite widespread support in CEE, there is concern that it should have more substance than the Structured Dialogue. In addition to these elements, a number of commentators point to the need for additional elements in the EU’S strategy in the run-up to enlargement. A strengthened commitment from the EU is felt to be needed, especially for the countries rejected by NATO and those lagging behind economically. A clearer system of criteria is also desired, given how general the Copenhagen conditions are. Involvement in EU structures, particularly the third pillar, is seen as useful, but a number of policy-makers argue for more help with meeting EU standards before this would be possible. Among business people there is quite a strong feeling that better market access should be granted prior to accession, particularly the removal of contingent protection provisions and restrictions on agricultural trade. However, CEE policy-makers are pessimistic about the prospects of this occurring. Views on accession dates Estimates of the likely accession date for a “first wave” of CEECs vary quite widely. Expectations in CEE of how long negotiations might take and when countries might join seem to be a function of closeness to preparations and level of knowledge; those involved in detailed preparations are generally much more cautious and prone to expect a longer period for negotiating than those whose knowledge is confined to the overall direction of foreign policy. Few expect accession before 2002–3, and while in many countries there would be considerable disappointment if the first accessions do not occur before 2005, some see this as quite likely. In general, it is considered very important that the enlargement process is seen to move ahead, even if some countries join considerably later than others. Frustration is likely to set in if the process is attenuated and the timeframe left unclear. There are differences of views within CEE elites about the issues involved in sequencing accessions and when different countries should join. A key question is whether other candidates might join before Poland, whose size and agricultural sector are likely to complicate negotiations, but whose geopolitical position makes it a priority for a number of EU Member States. Hungary is the furthest advanced in terms of preparations for accession, and its politicians have argued strongly that their country’s accession should not be delayed so that other applicants can join at the same time, although this has happened in previous EU

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enlargements. However, for Hungary the implications of joining the Schengen area before its neighbours could be very controversial, as Budapest would have to tighten border controls for Hungarian minorities living in the neighbouring states of Slovakia, Romania and Ukraine if it joined first.13 These problems will have to be addressed since it is very likely that Romania and Slovakia will be many years behind Hungary in joining the EU. These issues also face the Baltic states. The Estonian elite welcomed the differentiation between applicants that brought it into negotiations ahead of its southern neighbours; however, there is also growing awareness of the disruption that joining the EU without Latvia and Lithuania could cause to sub-regional co-operation in the Baltic Sea area, including the proposed free trade area. Conclusions In all of the CEECs, EU integration is one of the least controversial issues on the political agenda. Even in countries with generally very active political debates and vocal oppositions on domestic issues, accession is one of the few aims that is generally uncontested in national parliaments. However, despite the high degree of consensus on the overall goal of EU membership, there is already some variation between states in the scope of debate on its implications, and this provides pointers as to how national debates might develop. Emerging tendencies across the region in attitudes to the EU and to accession have to be considered against a background of very limited overall coverage of these issues in political life in comparison with other foreign and domestic policies. In no country have all the implications of EU membership been widely recognized and discussed, and the level of knowledge about the EU and its workings is still fairly low even among elites. Moreover, in all of the countries there is very little discussion of the pros and cons of different elements of the rights and obligations of EU membership, with such debate as there is mostly focused on the general principles that are perceived to guide EU policies. However, this general consensus can be expected to change as knowledge increases about what the EU is and how membership will affect different groups of people in CEE. The process of negotiations and of accession preparations will help to develop political debates and party stances because they will further understanding of the EU and the implications of membership, particularly as more concrete issues will come under discussion, such as barriers to movement of people, trade, and the size of financial transfers. Moreover, these factors will interact with political and economic developments in the different countries over the years prior to accession. The contrasting views on many domestic policy issues between political parties could have an impact on attitudes towards some aspects of relations with the EU and the speed with which countries move toward meeting EU requirements. Debate about EU integration is growing in parallel with the development of postcommunist politics. As political debate as a whole becomes more sophisticated

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and party platforms more clearly defined, issues related to EU accession can be expected to become more controversial, as has happened in current EU Member States. This process will bring new perspectives into the European integration project, and will impact on the ongoing enlargement process which will occupy the EU for many years to come. Notes 1 The discussion of policy views and political debates presented here is based on a series of interviews conducted by the authors with CEE policy-makers, journalists, academics, parliamentarians and business organizations. 2 In the interest of comparability across countries and time, the following discussion draws principally on the surveys of public opinion in the EU and CEE conducted by Eurobarometer (the survey research unit of the European Commission) since 1989, but there is some comparison with national opinion polls. The latest central and eastern Eurobarometer report is based on interviews conducted in November 1996. 3 European Commission, Central and Eastern Eurobarometer No. 7, Figure 4 (Brussels: European Commission, 1997). 4 See M.Bohatá & J.Mládek, The political economy of EU enlargement: the Czech Republic, 4 (Draft paper for ACE Project P95–2106-R, 1997). 5 See R.Rose & C.Haerpfer, “Democracy and enlarging the European Union eastwards”, Journal of Common Market Studies 33, 427–50, 1995. 6 European Commission, Central and Eastern Eurobarometer No. 7, Annex Figure 60. 7 I.Shikova & K.Nikolov, The political economy of the Eastern enlargement of the European Union: a case study on Bulgaria, 16 (Draft paper for ACE Project P95– 2106–R, 1997). 8 Reported in Business Central Europe, April 1998. 9 See N.P.Milanovich, The political economy of EU enlargement: political outlook, debates and public opinion on EU enlargement in Slovenia. Draft paper for ACE Project P95–2106-R, 27, 1997. 10 See H.Grabbe & K.Hughes, Enlarging the EU eastwards (London: The Royal Institute of International Affairs, 1998). 11 See C.Preston, Poland and EU membership: current issues and future prospects (Paper prepared for the UACES conference “Enlarging the European Union”, Birmingham, July 1997). 12 See Grabbe & Hughes (1998). 13 While Slovak citizens currently have visa-free access to both Hungary and the EU, there is visa-free access to Hungary, but not to the EU, from Romania and the Ukraine.

12 Polish domestic politics and accession to the European Union Frances Millard

Accession to the European Union was not a contentious issue in Polish politics between its first mooting in 1989 and the EU’S own affirmation in December 1997 that Poland, the Czech Republic, Hungary, Estonia and Slovenia (and Cyprus) had met the conditions for the inauguration of formal accession negotiations. Political elites saw membership as a political and economic imperative and a key element of the much heralded “return to Europe”. Each government and every successive foreign minister reiterated Poland’s strong commitment to the EU. Public opinion was also highly supportive of EU membership: in Polish surveys, 77 per cent of respondents favoured accession in June 1994, 72 per cent in May 1995 and 80 per cent in May 1996.1 The consensus appeared overwhelming and continuous from 1989 to the EU’S “Luxembourg invitation” to begin formal negotiations. It was not, however, a reflection of widespread public knowledge or public discussion: given the virtual absence of debate, and the reporting of EU matters largely in technical economic or financial terms, public support stemmed from instinctive desires to join a “rich countries’ club” and the presumption that economic benefit would derive from the association. The major polling organization CBOS referred to the shaping of public opinion by “a combination of myths, stereotypes, anxieties and hopes”.2 Indeed, in late 1997 it was not possible to predict a smooth untroubled process of negotiation, ratification and public endorsement by referendum for membership around 2002. As always, the devil lay in the details. For despite the overt consensus, there were detectable differences of emphasis, criticisms of the EU’S attitude to Poland and a measure of ambiguity in the attitudes of the Social Democrat-Peasant coalition that governed from October 1993 to September 1997. At the same time the right wing, outside parliament from 1993 to 1997 but triumphant in the 1997 elections, also included many elements that au fond contradicted its official positive view of accession.3 Developments in 1996 and 1997 suggested a significant realignment of the party system, with implications for the nature of coalition-building and significant potential problems in confronting the challenge of negotiations. This chapter therefore addresses the domestic politics of accession in two respects: the first section briefly reviews the policies of the Social Democrat— Peasant coalition, the mechanisms and procedures adopted to prepare for negotiations and the

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problems and sources of grievance encountered. The second part focuses on the political parties, especially the efforts made to consolidate the plethora of highly fragmented right-wing parties. Then we briefly assess the first steps of the new coalition of Solidarity Election Action (AWS) and the Freedom Union (UW) under Prime Minister Jerzy Buzek in October 1997. The political parties are important not because they are anti-European, but because many of their attitudes and prospective policies appeared incompatible with the broad conditions laid down by the EU itself, in the various public criticisms of Polish policy expressed by Commissioner Hans van den Broek, and in the Commission’s avis. The broad thesis is that there remained a continuing tension between international pressures for economic liberalism and domestic pressures for continuing high levels of state intervention in the economy and social policy. This was manifested in the policies of the coalition after 1993 and persisted, perhaps even intensified, after the change of government in 1997. Government policy towards the European Union 1993–97 The Social Democrat—Peasant government coalition of the Alliance of the Democratic Left (SLD) and the Polish Peasant Party (PSL)4 under Włodzimierz Cimoszewicz (February 1996–October 1997) was the seventh government and Cimoszewicz the eighth prime minister since 1989. This would not be the government actually embarking on formal negotiations with the European Union, but it was responsible for preparing for the start of these negotiations in 1998. The government’s stated aim was to achieve EU membership by about 2002 and to achieve the requirements of monetary union by about 2006. Although not stated by the EU as a condition of membership, it was widely felt that meeting the Maastricht convergence criteria would be, in practice, essential to EU membership and that in any event, the introduction of the common currency would affect Poland whether inside or outside the European Union. It was under Cimoszewicz that the government forged ahead in a number of problem areas identified by the European Union’s negotiators, and introduced a number of major institutional reforms. Earlier, under the premiership of the Peasant Party leader Waldemar Pawlak (October 1993-March 1995), the processes of economic restructuring and privatization had slowed measurably, while agriculture gained substantial new concessions. Tensions within the coalition and a deterioration in relations with President Lech Wałęsa also proved obstructive.5 The ensuing government of Social Democrat Józef Oleksy (March 1995-February 1996) was dominated by presidential hostility and the run-up to new presidential elections; however, the long-heralded Mass Privatization Programme did finally begin in July 1995. Shortly after Social Democrat Aleksander Kwaśniewski’s victory over Wałęsa in December 1995, Oleksy resigned in connection with allegations that he had spied for the USSR and later the Russian Federation.6

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Cimoszewicz brought to fruition long-standing plans for reorganization of the Polish central state administration. These included streamlining a number of government ministries and the establishment in 1996 of the Committee on European Integration. The new committee was chaired by the prime minister and included eight ministers most directly concerned with “Europe” and the committee’s secretary (Danuta Hübner). The committee was intended to serve as the strategic organ facilitating inter-ministerial co-ordination,7 the lack of which had long been recognized as a major impediment both to policy-making and to the harmonization process itself. The task of monitoring the compatibility of laws with EU legislation had been taking place for some time through independent experts attached to the Office of the Government Plenipotentiary for European Integration, but according to the National Audit Office many government bodies had failed to submit their draft legislation to that office.8 Now the committee would exact compliance and arbitrate conflicts between ministries. The EU itself welcomed the new structure warmly (see Chapter 6, pp. 99–100), though it did not eliminate conflict. Jurisdictional battles continued, especially between the committee and the Ministry of Foreign Affairs.9 The shortage of experienced, qualified personnel also remained a general problem for government ministries, including the foreign ministry itself, which failed to persuade the government to allocate extra funds for organizing EU (and NATO) negotiating teams.10 The ministries constituted the operational (secretaries or deputy secretaries of state for European integration) and working (heads of departments of European integration in each ministry) levels of preparation for accession. In January 1997 the government presented its “National Strategy for Integration”11 to parliament, where it was endorsed but received rather critically as “superficial” and “lacking clear aims”. The Strategy anticipated that within two years almost all EU goods would be free of duty, as would Polish exports except for textiles and agricultural products. Commitments to further privatization and liberalization were both general and explicit (e.g. privatization of the airline LOT and Polish Telecom). As a rule, Poland’s policy was to aim in the negotiations for as few transition periods as possible. It also assumed that external resources would be provided by the EU for key sectors. For example, an inflow of pre-accession funds, credits and special treatment was expected, especially for the restructuring of agriculture, “one of the most difficult aspects of the entire integration process”.12 The CFSP was not an issue, for “Poland already meets the requirements allowing it to participate in the CFSP”.13 Shortly before this, from summer 1996 to the turn of the year, the relationship between the Polish government and the EU Commission had become quite tense. There were even reports in the Polish press (denied by Poland’s ambassador to the EU)14 that the Commission favoured early entry only for Estonia, Slovenia and the Czech Republic. Certainly the EU was distinctly unhappy at the slow pace of change in certain sectors of the economy, notably energy, steel, banking and finance. From summer 1996, Commissioner Hans van den Broek had attacked the Polish government for its continuing favourable treatment of steel,

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where it wished to negotiate a postponement of the expected lifting of import duties from 1 January 1997, and oil, where both restructuring and price liberalization were deemed dilatory. Van den Broek accused the government of postponing restructuring for political and social reasons; he noted that many enterprises were as yet “untouched” by reforms and portrayed their continuing protection as “very short-sighted”.15 The Commission was also highly displeased at the favourable terms negotiated for the Korean firm Dae Woo, which was able effectively to dismantle vehicles into eight sections, import them as car parts and then use its Polish plants for reassembling them.16 The Commission had some support among Polish academics who saw EU pressure as essential to keep the government on the straight and narrow in terms of liberalization of the economy and resistance to protectionism. The chief negotiator of the Europe Agreement (December 1991) claimed that Brussels was rightly “furious”: “integration has become a political football. I wish I had not negotiated such a long transition period for our steel works, refineries and banks. A dose of competition would have done them good.”17 The Polish government responded to European pressure, and a long bout of negotiations with representatives of the Commission eased the situation somewhat by the early months of 1997. Agreement was reached on the mutual recognition of standards of product quality. The Polish side also yielded on Dae Woo, which according to one negotiator “was beginning to develop into a serious political conflict, and that we wished to avoid”.18 The problem of oil pricing was also speedily resolved as the Polish government yielded completely by removing all price restrictions on petroleum products on 13 February 1997. In March the Polish side informally declared its willingness, in principle, to accept the liberalization of air travel, although LOT itself was still pressing for a transition period. The government accelerated its social insurance reforms after a long hiatus, and the Sejm (parliament) passed three major pieces of pensions legislation in June. It also began to hasten the privatization process, notably with the giant copper enterprise Polska Miedź in the summer. Problems remained, particularly regarding steel, but Commission representatives in Warsaw took the changes as a remarkable sign of Polish good will. These tensions reflected contradictions within both governing parties. On the one hand the Social Democratic leaders were undoubtedly committed to Europe and indeed to “economic liberalization”, seen as essential to functioning in a global capitalist context. On the other hand, the demands of accession for rapid economic restructuring constituted a threat to important elements of the main constituents of the Democratic Left Alliance including the OPZZ trade union, anxious to protect the jobs of its members, and many other groups determined to maintain the fundamentals of the welfare state. By summer 1997, decisions could be taken to accommodate the EU, for the price would not be paid until after the 1997 election. The PSL, for its part, also remained formally committed to EU accession. However, elements within the PSL representing the small peasant holdings

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characteristic of Polish agriculture were less than enthusiastic about that commitment (the larger, capitalist farmers were more sanguine). Symptomatic of their concerns was their successful last-minute attempt to add a new provision to the new 1997 Constitution, namely that “the basis of the state’s agricultural system is the family holding (gospodarstwo)”. Indeed, the new minister of agriculture, nominated by the PSL in February 1997, maintained somewhat disingenuously that he was pro-Europe because “the agricultural policy of the EU is entirely pro-peasant, preferring family holdings”.19 Restructuring agriculture clearly constituted an economic imperative of EU accession, yet inherent in restructuring was the erosion of the PSL’S peasant constituency. As prime minister, Pawlak was instrumental in pursuing renewed state interventionism, especially in gaining greater support for agriculture. He also viewed the slowing down of privatization as one of the major achievements of his office. A few months after his removal he commented that “our contemporary proEuropeanism is turning into an ideology of servility towards the wealthy capitalist world.”20 The PSL also vigorously, if unsuccessfully, opposed a new law of 1996 making it somewhat easier for foreigners to purchase property, particularly small rural homes and city apartments. Pawlak attacked “huge opportunities for land purchase and speculation” and played on xenophobic, particularly anti-German, sentiments.21 Attacks on the EU’S emphasis on agricultural restructuring as a condition of accession aroused vocal criticism. One PSL member of the Parliamentary Commission on Europe argued that EU documents “appeared to suggest that we should liquidate Polish agriculture altogether”.22 The PSL’S treasury minister was the only member of the government to make public his criticisms of the National Integration Strategy.23 In the 1998 budget negotiations, which were subsequently thrown into turmoil by the disastrous human and economic consequences of the catastrophic floods of July 1997, the PSL argued openly for policies (greater budget deficits and higher public spending) that ran directly counter both to the government’s economic policies and to the Strategy for Integration. These comments certainly reflected the self-interest of the PSL. To some extent they also mirrored broader concerns within the Polish elite regarding EU attitudes and policies. Although rarely articulated publicly, certain grievances had arisen from EU negotiations since 1990. Many of these centred on the Europe Agreements that were signed by Poland, Hungary and Czechoslovakia in December 1991 and came into effect for Poland and Hungary in February 1994. The first criticism centred on the nature of the agreements, namely the fact that whereas the EU was devoted to promoting the four freedoms of trade, capital, labour and services, the Europe Agreements dealt with only one, i.e. trade, rather than providing a systemic, systematic approach embracing all four. Moreover, questions of trade were resolved on highly unfavourable terms, despite the Agreement’s reference to the asymmetry of the EU-East European relationship and the need to bend to the advantage of the weaker party. The exclusion of foodstuffs and the extreme caution on lowering tariff barriers for the EU’S

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“sensitive goods” made the Poles feel disadvantaged precisely in those sectors where they perceived some comparative advantage. Such arguments gained force as Poland’s trade deficit with the EU began to increase rapidly; in 1997 the deficit overtook inflation as the government’s major economic concern. Agriculture remained a thorny issue throughout, despite certain concessions from Copenhagen in 1993. Agricultural quotas were seen as part of a “ploy to prevent Polish competition” since in many instances EU importers purchased quotas without actually importing any foodstuffs, i.e. to prevent Polish products from reaching the agricultural market.24 Moreover, attempts to utilize the provisions of Article 44, Para. 3 (the right to establish firms in member states on the same terms as EU citizens) proved a dead letter, as European local authorities knew “nothing about the terms of the Europe Agreement”.25 The broad sense of injustice also hinged on the (correct) view that the EU demanded a great deal but gave little concrete in return. Above all, the lack of a legal commitment to accession remained a source of grievance: despite laying down broad principles and hundreds of detailed requirements for all the central and east European countries, the CEECs had no guarantee that meeting them would result in membership of the European Union. The establishment of general criteria of accession by the Copenhagen European Council in June 1993,26 confirmed at Essen in December 1994 as the start of a clear-cut EU “preaccession strategy”, was a welcome political endorsement of enlargement. However, although an advance, the EU was still making unilateral declarations rather than formal commitments to grant membership to states meeting the wideranging and complex criteria. It has been argued that the EU could not do so, given its nature and the complex, multifaceted nature and procedures of the formal accession process. However, it would have been possible to signal commitment in other ways than by laying down such multifarious conditions. Not much seemed to emerge from Copenhagen’s commitment to developing “structured relationships” involving the progressive involvement of the associated countries in areas of common interest (see Chapter 6). This position did not change in 1995, with the European Council’s approval of the Commission’s white paper on the Preparation of the Associated Countries of Central and Eastern Europe for Integration into the Internal Market of the Union. This merely proliferated the list of desiderata. A highly detailed annex listed relevant EU directives and the measures to be taken in a large number of areas, including the free movement of capital, the safety of industrial products, competition, agriculture, social policy, the environment and transport. As before, the white paper explicitly rejected the notion that compliance with the recommendations would lead to membership of the EU, though the political message issuing from the Union was a clear endorsement of enlargement. The conditions laid down were understandably demanding, as with each successive enlargement of the EU the task of incorporating the acquis communautaire was greater for new members. However, there was a perceived “margin of disadvantage” for all associated countries, as adopting EU standards was very

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costly but did not secure the benefits accruing to Member States.27 The view that “we have a strategy, but the EU does not” was widely held in official circles.28 The Polish Parliamentary Commission on Europe complained that relations often appeared a one-way street; for example, the EU demanded very specific changes, while remaining “enigmatic” on the adaptations that the Union itself was prepared to make.29 Academics, too, argued that the areas where the EU made specific demands were “of greater benefit to western Europe than to Poland”.30 Moreover, the Commission’s 1997 avis appeared to set standards that its own Member States did not always meet, for example in the criticisms made of press freedom in Poland. In short, since EU criteria were not laid down specifically, the aspiring members had little choice but to try to meet the desiderata without knowing their relative priority or weighting. In addition, there was a measure of anxiety at the planned procedural mechanisms, i.e. the implication of common negotiations with all aspiring members, at least in the initial stages. Polish elites clearly did not want to “move at the rate of the slowest in the convoy” and they did not want to be second-class members. Indeed, there was hostility and indignation at the potential implication that the CEECs could form a “satellite outer-circle”, consolidating the “division of Europe into ‘better’ and ‘worse’ countries…”31 In this connection the Commission’s recommendation that negotiations begin with Poland, Hungary, the Czech Republic, Slovenia and Estonia brought a huge sigh of relief that at least for a time Poland would be in the “better” category, with negotiations proceeding separately but in parallel. Thus domestic pressures, notably intra-coalition tensions, were an important factor in Poland’s relations with the European Union after 1993. Hans van den Broek was certainly right to stress the importance of political considerations; but he also needed to recognize that governments needed to be responsive to the concerns of their electors. Political strains will not disappear in the course of the accession negotiations. Indeed, the new coalition of the Centre-Right appeared to intensify them. The consolidation of the Polish right-wing After their virtual exclusion from the 1993 Parliament, the small parties of the self-styled “Polish Right” spent two years squabbling in the wilderness over who was to blame and how they should work to integrate themselves. Petty disputes and personality conflicts saw a series of initiatives fail to bear fruit in a common candidate for the 1995 presidential election. This defeat of President Wałęsa at the hands of Kwaśniewski shocked the right-wing parties into a serious push for consolidation in preparation for the 1997 parliamentary elections. The significance of this emerging party realignment for our purposes lay in the fact that a strong element of the Right remained at best implicitly, at worse explicitly, hostile to the European Union. The Catholic Church, which cautiously supported the integration of the right-wing elements into a common camp, shared a number

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of its contradictory attitudes; indeed, its pro-clerical orientation was one of the major hallmarks of a major section of the Polish Right. Until late 1997, the position of the Catholic hierarchy on “Europe” remained not only muted but at best ambiguous and profoundly ambivalent. On the one hand, there was a general commitment to European unity, to rejoining the western family of nations and re-establishing strong links to western civilization. On the other hand, there was deep anxiety regarding the pernicious influence of liberal secularism, consumerism, the permissive society and the “threat to national traditions”. Such views were represented not only by traditional elements of the Catholic hierarchy, including Cardinal Glemp, but more explicitly by fundamentalist Catholic lay elements. The Christian National Alliance (ZChN) provided one example: “we don’t want to be modern, European, and civilized but traditional, national and Catholic” was the general message.32 At the same time the ZChN was not “anti-Europe”: Poland could and should play a role in a “Europe of nations” as a major influence for its “re-Christianization”. This concept of Poland’s moral mission in turn echoed numerous statements by Pope John Paul II. This view triumphed suddenly and unexpectedly in November 1997 with a profound shift in the bishops’ position from hostile reserve to enthusiastic embrace of European integration and the positive role the Polish Church could play in “Europe”. Yet extreme anti-EU views could also be identified within the Church, especially in the broadcasts of Radio Maryja, the controversial Catholic radio station. Its nationalist xenophobia reflected one pervasive element of traditional Polish culture. Radio Maryja’s notions found echo in the arguments of theologians closely associated with this radical clerical nationalism, including stark warnings of the influence of the EU on the development of freemasonry in Poland: there is no true Christianity in the West; the European Union is the realization of the masonic plan to dominate the world.33 These views were reflected in varying combinations in the two main challengers of the new Right. In June 1996, AWS (Solidarity Election Action) was established, centring on the Solidarity trade union, now virtually a Catholic trade union transmuted from its original incarnation as a mass anti-communist protest movement. Solidarity was the magnet, the anchor and the prospective electoral trampoline for over two dozen smaller parties, groups, and groupuscules of the “Right”. AWS rose rapidly in the opinion polls, reaching parity with the Alliance of the Democratic Left (SLD) at 27 per cent in July and fluctuating between 23 per cent and 29 per cent thereafter. During the first half of 1997, both blocs stood neck-and-neck in the polls. The other major emergent force was the Movement for Rebuilding Poland (ROP), led by former prime minister Jan Olszewski. ROP did well in opinion polls in early 1996, building effectively on Olszewski’s surprisingly good performance in the presidential election (6.86 per cent), although it was rapidly overtaken by AWS and fell back considerably. ROP shared much in common with AWS, including its hostility to the liberal centrist Freedom Union of Leszek

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Balcerowicz and Tadeusz Mazowiecki, the two men most closely associated with the shock therapy programme of Poland’s first post-communist government (1989–90). The main division between them was not ideological but their different attitudes to Lech Wałęsa, AWS seeking Wałęsa’s endorsement and ROP consumed by antagonism to the former president and first leader of Solidarity. The division was far from clearcut: some elements of the Solidarity trade union, including Zygmunt Wrzodak of the Ursus Tractor Plant (whose extremist rhetoric against foreigners and minorities placed him beyond the fringe of political respectability) also supported ROP. However, Solidarity trade union structures formed the core of AWS and provided its organizational resources. The programmes of the major political parties were strikingly similar— and similarly vague—in their economic and social platforms: continuing privatization, fostering economic growth, further measures to combat unemployment, stress on education, measures to reduce crime and the like. Neither AWS nor ROP was overtly or explicitly anti-accession; indeed both were avowedly committed to EU membership. However, many of their arguments and prescriptions appeared to be incompatible with the requirements of European integration. Often, discussions about the European Union revealed profound ignorance about the nature of the EU and its decision-making processes.34 AWS itself was a political hodgepodge; at least in this respect it did resemble the original “Solidarity”. As one observer noted, if its various elements established a formal political party, it would have to be called the National Christian Democratic Conservative Liberal Agrarian Socialist Party.35 However, its leader Marian Krzaklewski (also the leader of the Solidarity trade union) certainly embraced much of the clerical agenda and set the AWS’S ideological tone. He repeated on many occasions that establishing the right to life from conception was the most significant of all current issues. After the passage in October 1996 of liberal legislation repealing the strict anti-abortion law of January 1993, Krzaklewski called for non-payment of taxes and social security contributions. (He was transported with delight when the Constitutional Court declared the liberalized abortion law unconstitutional in April 1997). Abortion per se had little to do with Europe, but Krzaklewski made much of his “Christian values” and adherence to Catholic social teaching, providing one basis for the incorporation of anti-European clerical nationalists into AWS. In his August speeches on the anniversary of the Gdańsk Agreement of 1980, Krzaklewski accused the economic liberals (including the Social Democrats) of “national betrayal”, not least because of the emotive law relaxing certain restrictions on foreign ownership of property. Although AWS also embraced a number of procapitalist liberal or Christian Democratic elements, it was clear that Krzaklewski’s voice was not only the loudest but also the most influential. This was confirmed when the AWS agreement seemed to unravel at the edges; a number of smaller parties withdrew from the alliance in the summer of 1997. In most cases disputes centred on quarrels about the ordering of candidates on party lists. However, there were also ideological undercurrents. Andrzej Olechowski,

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former minister of finance and former foreign minister, withdrew from AWS because of its lack of enthusiasm over Europe. AWS’S position was “disappointingly cautious” and lacked the emotional commitment of true Europeanism.36 AWS also maintained a commitment to revise the new Constitution, approved in the referendum of May 1997. Solidarity’s own draft Constitution had aroused some concerns within the European Commission because it appeared to give the unions an effective veto over much economic policy. It provided inter alia a corporatist-syndicalist model, with the trade unions enjoying powers of legislative initiative and a tripartite commission central to economic policy in general and to shaping the state budget in particular. It also supported “universal property rights”, to be distinguished from (and entailing the dismantling of) the current system (from 1996) of share ownership through National Investment Funds, which Solidarity consistently opposed. Furthermore, while AWS’S programme endorsed restructuring and privatization, in practice it remained ambivalent. The sectors stressed by the Commission in the avis of July 1997 were precisely those where Solidarity’s influence was greatest: chemicals, shipbuilding, the defence and extractive industries. Thus AWS implicitly collided with the European Union on the methods of economic policy-making (greater trade union influence), the nature of economic policy (more public spending, lower taxes), the scope, speed and nature of privatization (with the prospect of dismantling the National Investment Funds and delays in restructuring key sectors), foreign ownership (both capital and land) and perhaps some areas of Catholic fundamentalism. ROP for its part shared many of these views. It favoured changing the new Constitution and it endorsed the Solidarity draft. It also favoured universal property rights as well as “economic lustration”, i.e. requiring documentation of funds used to purchase property to ensure that the hands of the new entrepreneurs were “clean”. It wanted far stronger legislation on political lustration, including citizens’ access to their own files from the communist period. Its “Contract with Poland” also included broadly populist elements including wage increases, tax cuts, increased welfare provision and an “end to poverty”. ROP was described as having a programme “that Peron himself would envy”.37 ROP took the initiative in the defence of the Gdańsk Shipyard (which had been forced into bankruptcy) and called for a network of committees to defend it in full co-operation with Solidarity. “The defence of the Gdańsk Shipyard is the defence of Polish industry and Polish production, destroyed by years of erroneous policy in fiscal matters, the exchange rate and credit.”38 In November 1996, Olszewski proposed to Solidarity (the trade union, but with no mention of AWS) a common front against the “looting” of the Polish economy and the privatization of strategic sectors such as banking, energy, and insurance. He opposed the privatization of the copper conglomerate Polska Miedź (achieved in June 1997) and again stressed the dangers of foreign ownership.39 ROP’s strategy was to build on its traditional “patriotic” electorate by adding “small and

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medium-sized businesspeople…threatened by unfair competition from foreign capital and the ex-communist nomenklatura”.40 In other words, despite the formal commitment to Europe, some questions remained. ROP in particular was widely described as a party of frustration and malcontent comparable to the anti-establishment and anti-European parties of the extreme right in western Europe such as Haider’s Freedom Party of Austria or Le Pen’s National Front in France. Much in the policies of the Right looked incompatible with the EU’S demands for rapid restructuring, continuing privatization, and liberalization. Many of the Right’s “policies” had inflationary implications, while economic lustration and/or attempts to disband the National Investment Funds would clearly wreak economic havoc.41 There remained a core of discontent with Poland’s capitalist transformation (and thus with the requirements of membership of the European Union) which could easily be tapped. One survey in October 1996 showed 50 per cent of respondents opposed to foreign ownership of land and another 39 per cent accepting foreign ownership but only within certain limits.42 Foreign-owned supermarkets were another issue arousing concerns, both within the Right and also the Peasant Party, which positioned itself just prior to the 1997 elections as a potential coalition partner either for the Right or for the Left. ROP, AWS and the PSL all expressed concern that foreign-owned supermarkets were strangling small shops because of their greater efficiency, lower prices and product range and also weakening Polish producers (according to the official Bureau of Statistics only 30 per cent of goods sold in the Makro Cash supermarket were Polish).43 Atavistic xenophobic (and especially anti-German) sentiments retained the potential for political mobilization. The election of 1997 AWS did extremely well in the 1997 election, confounding expectations of a relatively narrow gap between the two major blocs, AWS and SLD, but reaffirming the growing polarization of Polish politics. AWS enjoyed electoral support from all sectors of society, including rural voters defecting from the PSL. With 33.8 per cent of the vote (the SLD got 27.1 per cent), however, AWS still needed a coalition partner. Previously it had expected that either the PSL or ROP, or both, would be favourable to participation in government; but they had done badly and had few deputies to offer: the PSL’S vote dropped from 15.4 per cent in 1993 to 7.3 per cent in 1997, and ROP just scraped over the threshold in 1997 with 5.7 per cent. This left only the Freedom Union (uw), a party whose economic and political liberalism aroused the animosity of a substantial number of the disparate groupings that made up AWS. On 17 October 1997 President Kwaśniewski designated the AWS candidate Jerzy Buzek, an academic chemical engineer from Silesia, as prime minister, and Buzek began the process of coalition-building and government formation. On 19 October, AWS parliamentarians sent the AWS-UW

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coalition agreement back for further negotiations on the grounds that it was too generous to the UW. This was the first open sign of the difficulties Buzek would face in maintaining his own party’s support for the coalition. Acrimony between the coalition partners soon emerged over patronage, particularly the appointment of new provincial governors (the wojewoda), and policy, beginning when a group of uw deputies voted not to exclude sex education from the school curriculum. The government’s stability could not, therefore, be guaranteed. Overall the AWS’S parliamentary profile remained blurred in the first months of the new government. It differed somewhat from that intended by its leaders, for many voters had declined to accept the leaders’ ordering of candidates on the electoral list, instead choosing individuals located at the list’s farther reaches. Often the voters chose nationally known politicians rather than lesser known trade unionists. Of course the trade union element was significant. About fifty deputies came from the Solidarity trade union, including 19 regional chiefs and important branch leaders (such as coal mining and defence). This suggested a strong trade union voice in areas of the economy where the European Commission had expressed particular concern, including the Solidarity strongholds of mining and shipbuilding. The nationalist-clerical element of AWS did exceptionally well, with some 20 deputies from the Christian National Union, 20 endorsed by Radio Maryja, and more than a dozen from the Association of Catholic Families (Stowarzyszenie Rodzin Katolickich). They quickly informed the government that their support must be earned, not taken for granted. At best this group was Eurosceptic, at worse Europhobic. The new government of Jerzy Buzek In the context of EU accession, the new government of Jerzy Buzek faced numerous problems but also enjoyed certain advantages. From the outset the period of preparations for the start of formal negotiations was turbulent. The scope and rapidity of personnel turnover in national ministries, provincial governments, and other state agencies was vast, while the quality of these new political appointees was often uncertain. AWS was the main beneficiary of these extensive patronage opportunities but it lacked a large pool of qualified personnel with government or administrative experience. Nor were the country’s administrative structures stable. The government was deeply committed to a programme of large-scale administrative decentralization from the centre to new, larger provinces and a new tier of county government (powiat). The substantive problems to be faced in negotiations with the EU were manifest. In September 1997 the European Commission had already set up a group of experts to provide monthly reports on Poland’s progress in the various spheres of its concern, notably in the economic sphere, including (inter alia) the restructuring of the remaining large state enterprises and agriculture, further reducing direct and indirect subsidies, banking reform, and environmental protection. All these areas were especially difficult ones for a Solidarity-led

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government, indeed for any Polish government. Even if certain technical dimensions of negotiations could be somehow isolated from the political process, the EU demanded firm action in sensitive areas. Prime Minister Buzek had to maintain good relations with the UW and to balance concessions to the UW against potential loss of support within AWS. As Buzek himself lacked a political base, his relations with Krzaklewski and the Solidarity trade union were of paramount importance. He had to maintain the support of AWS within parliament and attend to maintaining the AWS’S electoral support in the country at large. The government’s early decision to raise energy prices caused outrage among trade unionists, both because of the decision itself and because the government ignored the legal requirement to consult them. AWS was also keenly aware of its rural supporters. The previous government had failed to generate a programme of agricultural restructuring, yet the predominance of fragmented smallholdings was inefficient (agriculture embraced some 27 per cent of the economically active labour force but produced less than 7 per cent of GDP) and impeded the implementation of EU veterinary and hygiene standards. In December 1997 loud protests and demonstrations greeted the EU’S ban on the import of Polish dairy products (the grounds were hygiene and quality). Effective communication with the public was vital not only because of electoral considerations (first local government elections in 1998, then the presidential election in 2000). The government also needed popular support for EU accession in a future national referendum. Yet the Buzek government also enjoyed certain advantages. The UW was intellectually and emotionally committed to rapid accession. Buzek could count on the energy, talent and experience of uw veteran Bronislaw Geremek at the Ministry of Foreign Affairs. The appointment of Ryszard Czarnecki, former leader of the Christian Nationalists, to head the Committee on European Integration appeared puzzling, though Czarnecki was one of the most vocal proEuropeans of his (generally Eurosceptic) party. However, the government weakened Czarnecki’s role by transferring the strategic co-ordinating role from his committee to the newly established Committee for European Negotiations. Chaired by the prime minister, with first the veteran negotiator Jacek SaryuszWolski and then former Polish ambassador to the EU, Jan Kutakowski, as secretary, this committee co-ordinated the work of the negotiating groups (33 groups as of January 1998) and served as the channel for direct contact with the EU. Kutakowski enjoyed a reputation as extremely knowledgeable about the inner workings of the EU and a doughty battler for Poland’s interests. The Committee on European Integration now dealt mainly with internal matters concerning the Polish economy and the adaptation of Polish laws to European law. Finally, the weight of Poland’s most informed opinion remained very strongly pro-European. There appeared ample scope for a wide cross-party coalition of support among academics, journalists and business spokespersons. The conversion of the Catholic hierarchy added enormous weight to the proEuropean lobby outside parliament. Within parliament AWS divisions could

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(given a degree of government sensitivity and political skill) be amply compensated by the support of the opposition SLD.44 President Kwaśniewski’s commitment to and enthusiasm for the EU was unquestioned, and he took steps to increase the capacities of his own presidential staff in this area (for example by bringing in Danuta Hübner, former head of the Committee on European Integration). Conclusion At the start of negotiations in 1998 one could not be certain that the strong and stable consensus regarding Poland’s aspirations to EU membership would necessarily be maintained throughout the period of negotiations for accession. Much would depend on the EU’S own willingness to negotiate reasonable transition arrangements cognisant of the genuine political and social dislocations accompanying economic transformation in central and eastern Europe. The EU’S general argument up to the decision to proceed with negotiations was that maximum liberalization was essential to the east European economies because otherwise they would collapse under the impact of superior foreign competition; basically, stiff doses of western economic medicine might taste unpleasant but they would do the patient a power of good. However, virtually all major political parties represented in the Polish parliament favoured at least a degree of economic interventionism and social protection as well as being committed to “Europe” and capitalism. The least interventionist was the junior coalition partner after 1997, the Freedom Union, under Leszek Balcerowicz; but even Balcerowicz had learnt some hard lessons from the Polish experience of “shock therapy”. In the pre-accession period many contradictions were hidden or glossed over but they became stronger with the incipient consolidation of the Right and intensified with the electoral victory of AWS in 1997. Domestic political pressures, a pattern of frequent changes of government, the need for parliamentary support, and finally, popular endorsement in a referendum could all beleaguer the negotiations. Although criticism of the EU was muted and the sense of relief at the Commission’s July 1997 avis was palpable, there remained a sense of grievance among Polish elites over perceived EU inflexibility. The dominant partner in government, AWS, had the unenviable task of maintaining its trade union base while proceeding with the massive restructuring of key industrial sectors where Solidarity was most powerful. At the same time it was also clear that the EU retained the upper hand in relations with all the aspiring members and that for most of the Polish elite there was apparently “no alternative”.

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Notes 1 Polls of the Central Bureau for Public Opinion (Centrum Badania Opinii Publicznej, hereafter CBOS) cited in Rzeczpospolita (182), 6 August 1996. 2 CBOS, “Polish attitudes toward Poland’s integration with the European Union”, (Warsaw: CBOS, 1996), taken from http://www.urm.gov.pl/mszdpi/ cbos-ue.html. 3 There is also a tiny, fragmented radical right on the political fringe, lacking political influence but vocally expressing vehement anti-European, anti-German and antiSemitic sentiments; for details see L.Koćwin, “‘Narodowcy’ i ‘Europejczycy’ wobec problemu jedności europejskiej” in Współczesna polska myşl polityczna, B.Pasierba & K.Paszkiewicz (eds), 39–64 (Wrocław: Wydawnictwo Uniwersytetu Wrocławskiego, 1996). 4 Both were “communist successors”. The core of the Alliance of the Democratic Left was Social Democracy of the Polish Republic, the direct heir of the ruling communist party, the Polish United Workers’ Party, in alliance with the OPZZ trade union, established by the communists in 1985 but enjoying a degree of autonomy. The Polish Peasant Party was the heir of the former communist satellite party, the United Peasant Party. 5 After 1990 Poland had a directly elected president with substantial political powers. The new 1997 Constitution weakened the presidency somewhat, but Poland could still be regarded as a semi-presidential system. 6 No legal proceedings were brought against Oleksy, but the matter remained highly controversial. 7 A.Wróblewski, “Ulica dwukierunkowa”, (interview with Danuta Hübner). Polityka (5), 1 February 1997. 8 Kancelaria Sejmu Biuro Informacyjne, Biuletyn z posiedzenia Komisji do Spraw Układu Europejskiej (59), 10 April 1996. 9 Foreign Minister Dariusz Rosati cited in Rzeczpospolita (24), 29 January 1997; see also K.Kołodziejczyk, “Jeśli jest tak dobrze…”, Rzeczpospolita (243), 17 October 1997. 10 Quoted in M.Ostrowski, ‘Nie szpicą, lecz tyralierą’, Polityka (5), 1 February 1997. The British Government allocated Know-How funding in 1997 for the preparation and training of some Polish negotiators. 11 The Committee for European Integration, National Strategy for Integration, Warsaw, 1997, (mimeo, English version); hereafter cited as “National Strategy”. 12 National Strategy, op. cit., 28–31. 13 Ibid, 35. 14 Jan Truszczyński, quoted in Polityka (5), 1 February 1997. 15 Quoted in Rzeczpospolita (245), 19–20 October 1996. 16 J.Bielecki, “Najbardziej zaszkodzi nam Daewoo”, Rzeczpospolita (22), 27 January 1997. 17 Quoted in Polityka (5), 1 February 1997. 18 Quoted in Rzeczpospolita (27), 1–2 February 1997. 19 Ewa Czaczkowska, “Jestem za europeizacją” (interview with Jarosław Kalinowski), Rzeczpospolita, (50), 28 February 1997. 20 Quoted in OMRI Daily Digest (102), Part II, 26 May 1995. 21 Quoted in Rzeczpospolita (76), 29 March 1996.

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22 A.Bajoł-ek in Kancelaria Sejmu Biuro Informacyjne Biuletyn 2479/II kad., Komisja do Spraw Układu Europejskiego, 10 April 1996. 23 M.Pietrewicz, “Do Narodowej Strategii Integracji kilka uwag”, Polityka (6), 8 February 1997. 24 M.Ostrowski, “Lista zalów do Europy”, Polityka (3), 18 January 1997. 25 Ibid. 26 See Chapter 1. 27 E.Piontek, “Visehrad countries and eastern enlargement of the European Union—a comment”, paper presented at the Third Ghent Colloquium, “Relations between the European Union and central and eastern Europe: the political, economic and legal dimension”, University of Ghent, 7–8 March, 1996; E.Piontek, “Stale jesteśmy spóżnieni”, Rzeczpospolita (116), 20 May 1996. 28 Rzeczpospolita (163), 15 July 1996. 29 Kancelaria Sejmu (1996), op.cit. 30 S.Sołtysiński, “Dostosowanie prawa polskiego do wymagań układu Europejskiego”, Państwo i Prawo 51 (4–5), 34, 1996. 31 Piontek, “Visehrad countries and eastern enlargement”, op. cit., 22. 32 Rzeczpospolita (270), 21 January 1994. 33 Dr Stanislaw Krajski of the Catholic Theological Academy quoted in Słowo Ludu, 20 January 1997. 34 This was the case with professedly pro-Europeans as well. Wojciech Arkuszewski left the Freedom Union with the splinter group, the Conservative-People’s Party, which itself joined the AWS. At the beginning of July 1997 Arkuszewski, an experienced parliamentary deputy, directed a confused farrago of criticism against the National Committee for European Integration with some sideswipes at the Commission indicating just such ignorance of EU mechanisms and procedures; W.Arkuszewski, “Dryfowanie do Brukseli”, Rzeczpospolita (151), 1 July 1997. 35 J.Majcherek, “Drugi raz w tej samej rzece”, Rzeczpospolita (20), 24 January 1997; see also J.Paradowska, “Akcja ostatniej szansy”, Polityka (49), 7 December 1996. 36 Małgorzata Subotić, “Doświadczam sensacyjnych wrażen” (interview with Andrzej Olechowski), Rzeczpospolita (140), 18 June 1997. 37 M.Gulczyński, “W czym partyjny jest ambaras”, Rzeczpospolita (127), 1–2 June 1996. 38 Quoted in T.Sakiewicz, “Szach Olszewskiego”, Gazeta Polska (25), 20 June 1996. 39 Quoted in Rzeczpospolita (274), 25 November 1996. 40 Jacek Kurski, quoted in M.D.Zdort, “Partia ułanów i przedsiębiorców”, Rzeczpospolita (28), 2 February 1997. 41 This is a widely held view by opponents of ROP and AWS. See, for example, J.A.Majcherek, “Nowa siła, nowe problemy”, Rzeczpospolita (151), 1 July 1996. 42 Polityka (43), 26 October 1996. 43 Polityka (48), 30 November 1996. 44 See the conservative Ludwik Dorn’s arguments for cross-party Euro-consensus in L.Dorn, “Polska i Unia Europejska”, Kwartalnik Konserwatywny (1), 1997, 35–43.

13 Slovakia and the democratic criteria for EU accession Karen Henderson

You cannot give the benefit of the doubt in matters of democracy. Therefore the Commission is obliged to state that Slovakia does not satisfy the political criteria from Copenhagen, which completely excludes beginning negotiations. (Jacques Santer, President of the European Commission, European Parliament, 16 July 1997.) When the European Commission delivered its opinions on the membership applications of the central and east European countries (CEECs) on 16 July 1997, Slovakia clearly emerged as an exceptional case. In the section of “Agenda 2000” devoted to enlargement, it concluded explicitly that Slovakia was the only state not to satisfy the political conditions laid down by the Copenhagen European Council (see Chapter 1, p. 7), and therefore could not be recommended for negotiations on accession to the European Union. Slovakia was thereby consigned to a group of states with which it had very little in common: Bulgaria, Latvia, Lithuania and Romania. However, in the case of these four countries, the Commission had stated that they would have serious medium-term economic difficulties in coping with “competitive pressure and market forces within the Union”,1 whereas no such fundamental structural problems were foreseen for Slovakia. Slovakia also diverged from the other four states not recommended for accession negotiations in more general terms. Geographically, it was contiguous with none of them, and it was surrounded in the main by the three states singled out in July 1997 for NATO membership (the Czech Republic, Hungary and Poland). In terms of wealth, Slovaks were on average nearly twice as prosperous as Bulgarians, Latvians, Lithuanians and Romanians. Slovakia was, in fact, roughly on a par with the five CEECs with whom negotiations were to be commenced (the Czech Republic, Estonia, Hungary, Poland and Slovenia): Commission figures showed that per capita Gross Domestic Product (GDP) in Slovakia exceeded that of Poland and Estonia, while on the more crucial indicator for living standards— purchasing power per head—only two of the CEECs (Slovenia and the Czech Republic) could better it.2 On the Copenhagen criterion of taking on the

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obligations of membership (the acquis), the Commission’s judgements indicated that only the Czech Republic and Hungary were clearly ahead of Slovakia.3 The anomalous position of Slovakia was clearly recognized by the European Commission in its assessment of July 1997. Its conclusions on Slovakia noted that the country’s failure to fulfil the EU’S political criteria was “so much more regrettable since Slovakia could satisfy the economic criteria in the medium term and is firmly committed to take on the acquis”.4 The story of Slovakia’s relations with the European Union is therefore primarily a political one. This chapter begins by looking at the political criteria for EU membership. But to investigate the debacle of 1997, it is also necessary to understand Slovakia’s particular domestic political difficulties with post-communist development, as there is a very close connection between the crises in the relations of the Slovak government and the European Union and the crises in Slovak domestic politics. The political criteria for EU membership The principle that Member States of the European Union are democracies was first explicitly articulated in the Treaty on European Union signed at Maastricht on 7 February 1992, which stated in its Article F that: 1.The Union shall respect the national identities of its Member States, whose systems of government are founded on the principles of democracy. 2.The Union shall respect fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms signed in Rome on 4 November 1950 and as they result from the constitutional traditions common to the Member States, as general principles of Community law… While the reference to the European Convention on Human Rights in Article F (2) effectively elaborated the concept of human rights, the definition of “democracy” was left open. This is perhaps not surprising, given the diversity of definitions available in political science literature. The European Community had been founded on an instinctive, west European understanding of what was, and was not, a democracy. Threats to democracy were perceived primarily in terms of the military takeover of government power such as that experienced in Greece in 1967 (six years after its signing of an Association Agreement with the European Community), and those that at times threatened in other southern European states with authoritarian pasts such as Spain and Turkey. There was no clear blueprint of what constituted an acceptable level of democratic consolidation that could be applied to the rather different power constellations in the post-communist states of central and eastern Europe. This issue was addressed in part by the Copenhagen European Council in June 1993, which established the principle that “the association countries in central and eastern Europe that so desire shall become members of the European Union”,

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and that accession would take place as soon “as an association country was able to assume the obligations of membership by satisfying the economic and political conditions required”.5 These conditions were defined in terms more explicit than those contained in the Maastricht Treaty, and more tailored to the specific difficulties of central and eastern Europe: membership requires that the candidate country has achieved “stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities…”6 The draft Treaty of Amsterdam, which emerged in June 1997 at the end of the Intergovernmental Conference, in part incorporated this new definition of democracy by slightly expanding the reference to democracy contained in Article F (1) of the Treaty on European Union,7 which now stated that the Union was founded “on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law”. It also inserted a new Article F.1 into the Treaty,8 which allowed the European Council, by a unanimous decision of all heads of state or government of the member states, to suspend certain of the rights of a member state if there was “a serious and persistent breach” of the principles mentioned in Article F (1). Assent of the European Parliament was also required for such a step to be taken. The EU thereby admitted the possibility that a member’s democratic credentials might decline. The Commission’s 1997 opinion on Slovakia operationalized the Copenhagen definition of democracy in several respects. Most notably, the country failed “because of the instability of Slovakia’s institutions, their lack of rootedness in political life and the shortcomings in the functioning of its democracy”.9 The particular problems identified were the tension between government and president, and attacks by the government on the fundamental role of the Constitutional Court and the central referendum committee. When it came to the rule of law, human rights and respect for and protection of minorities, Agenda 2000’s criticisms of the CEECs were not aimed solely at Slovakia. On the issue of the rule of law, it noted that “in Slovakia there is still a gap between the letter of constitutional texts and political practice”, though it also stated that “all the applicant countries have flaws in the rule of law which they need to put right”. On the question of human rights, it was Romania alone which merited specific mention. In the section on “Respect for minorities”, it was noted that minority rights in Slovakia were in principle recognized, but that the Hungarian minority faced a number of problems in exercising its rights. However, this criticism was mitigated by the fact that the negative comments in the same section of Agenda 2000 named every single candidate country with the exception of Hungary.10 Perhaps more crucially, Agenda 2000’s verdict on Slovakia embodied the principle that, of all three Copenhagen criteria (political, economic, and ability to take on the obligations of membership), it was the political criteria that were the sine qua non—the primary factor in deciding whether accession negotiations could take place. While only the applicants’ medium-term ability to cope with economic pressures and adopt the acquis was judged, political criteria were assessed on the basis of the current situation in each country in June 1997. In the

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words of Agenda 2000, “the effective functioning of democracy is a primordial question in assessing the application of a country for membership of the Union”.11 Slovakia was the only country to fall at this first hurdle. The reasons for this, and the implications of this failure, therefore need to be assessed. Political conflict in Slovakia in comparative perspective The inevitable impression created by the European Commission’s avis is that Slovakia is less democratic than other central and east European states. Multinational surveys do not, however, present compelling evidence that democratic political culture is actually lower in Slovakia than in the other nine CEEC candidates and, in comparison to some, it is higher.12 Slovakia’s problem appears to be the level of political conflict in everyday practice, rather than underlying attitudes. A number of reasons may be suggested why such political problems have occurred. One difficulty faced by the Slovak Republic has been its situation as a new state, since it only came into being on 1 January 1993 on the break-up of the Czech and Slovak Federal Republic. In this respect, however, it was far from unique: of the ten CEECs that applied for EU membership, only four—Bulgaria, Hungary, Poland and Romania—had been independent countries in international law during the communist period.13 The remaining six had merely been nominally sovereign republics within communist federal states. It may, however, reasonably be argued that the situation of one of the six—the Czech Republic— was nearer to that of the former communist states used to independence. This is because the new Czech state inherited both the majority of Czechoslovakia’s population and the capital city of the defunct federation, and therefore had an adequate resource base in terms of institutions and personnel. The Czechs had long-standing experience of taking responsibility for running a state; the Slovaks, Slovenes, Estonians, Lithuanians and Latvians did not. If one thus excludes the Czech Republic, the Slovak Republic was in many respects the best prepared of the “new states” in terms of potential EU membership. Czechoslovakia had signed a Europe Agreement prior to the division of the state, and although a new Agreement had to be negotiated with the independent successor states, this was a relatively problem-free procedure that left both well ahead of the Baltic Republics and Slovenia on the road to European integration. Slovakia also benefited from having achieved independence by a political consensus within the former federation, which meant that its international recognition was granted rapidly.14 Slovakia is also faced by certain problems because it is not ethnically homogeneous. However, here again Slovakia’s composition is no more fundamentally problematic than that of the average CEEC. The country contains a Hungarian ethnic minority comprising 11 per cent of the population, and a Roma minority whose size is a matter of dispute between the Commission and the

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Slovak government.15 This means that its situation is slightly more complicated than that of the previously independent states of Hungary and Poland and the new states of Slovenia and the Czech Republic, which all enjoy a high degree of ethnic homogeneity,16 and which were recommended for accession negotiations by the Commission. Bulgaria, Romania and Lithuania contain minorities of a roughly similar size to those in Slovakia,17 while the situation in Estonia (the fifth country recommended by the Commission) and in Latvia is far more problematic. Both states contain far larger ethnic minorities (Russians), and these residents do not, in the main, benefit from citizenship.18 The factor of ethnic composition is, however, of some import. In many models of post-communist development constructed by political scientists, the Czech Republic, Hungary and Poland were grouped together as states where democratic and market reforms are proving successful, while Slovakia is as-signed to a group of more problematic cases together with Bulgaria and Romania.19 The most common explanation for this division is that the less successful group to which Slovakia is deemed to belong have polities divided by the presence of ethnic minorities, with lack of economic success considered as a contributory factor. However, the argument that Slovakia is marked by economic failure is hard to sustain: its growth rates after 1994 appeared impressive, and, while unemployment was average for the region, inflation was relatively low, and the Slovak population suffered less from economic shocks than most of its neighbours. Additionally, the argument that the presence of ethnic minorities leads to certain patterns of government rule is hard to sustain given that the Baltic states, and Bulgaria and Romania (after shedding post-communist governments in 1996 and 1997), were accepted as satisfying the political criteria of Copenhagen. Consequently, it is hard to conclude that Slovakia’s domestic political difficulties are an inherent consequence either of a low level of political culture, or of being a new state, or of being an ethnically diverse state, or of being an ethnically diverse new state. The “instability of institutions” that has proved so damaging to its application to join the EU is attributable to a polarization of society more specific to the Slovak Republic. Slovakia differed from the other “new states” among the ten EU candidates from CEE in that the achievement of independence was a controversial issue domestically even among the titular nationality of the republic. In Estonia, Latvia, Lithuania and Slovenia, the struggle for independence from the dominant nation in their federations (the Russians and Serbs, respectively), and the subsequent state-building process, were largely factors that united the nation. Even in the Czech Republic, where a majority of Czechs had stated in opinion polls that they wished to remain in a common Czechoslovak state prior to the country’s division, independence was generally accepted as a sad inevitability imposed upon them collectively by Slovak intransigence. It was not a fundamentally divisive issue within the Czech polity, whereas in Slovakia, the issue was divisive both before and after inde- pendence.20 Once Czechoslovakia had divided, the Czechs moved on to

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more routine day-to-day arguments about economic issues that did not relate to its definitions of statehood and nation. In Slovakia, however, later disputes about privatization of the economy became interwoven with questions of loyalty to the nation state. In light of the above, it is tempting to posit that it was the contentious circumstances surrounding Slovak independence that led to the political conflicts considered by the European Commission to exclude the Slovak Republic from early EU membership. However, an examination of the major incidents in Slovak politics which caused enormous disquiet within the EU, paints a slightly different picture. The domestic conflicts in Slovak politics Post-1989 Slovak politics have been marked by a high level of conflict since the broad citizens’ movement, Public Against Violence (VPN), which had been active in bringing down the communist regime during the Czechoslovak “Velvet Revolution”, split in the spring of 1991.21 The Slovak prime minister Vladimír Mečiar, a VPN member, was removed from office after protracted disputes within the movement, and became leader of the breakaway Movement for a Democratic Slovakia (HZDS). HZDS attracted a minority of VPN’S deputies in the Slovak National Council, but the bulk of the movement’s electoral support. The remaining VPN deputies stayed in government under the premiership of Ján Čarnogurský, the leader of the Christian Democratic Movement. In the year that followed, the gulf between government and opposition increased as Mečiar supported the conversion of the Czech and Slovak Federal Republic into some kind of confederal arrangement where Slovakia enjoyed more political and economic independence. In the 1992 elections, Mečiar’s HZDS emerged victorious in Slovakia, and his second period as Slovak prime minister precipitated the division of Czechoslovakia, assisted by the intransigence of his Czech opposite number, Václav Klaus.22 Mečiar retained his hostility towards the Centre-Right forces that were originally pro-federal—the Christian Democratic Movement and the Democratic Party23 and the parliamentary representatives of the Hungarian minority24— throughout both his second and, later, his third period in office.25 His conflicts with these original enemies did lead to some of the concerns that the European Commission detailed in the avis, yet they were also in a sense secondary. The EU démarches and European Parliament resolutions critical of the Slovak government (detailed below) focused far more on the vindictive behaviour of Mečiar and his third government towards politicians who had formerly been their allies but later opposed them. It was Mečiar’s disputes with his former supporters—the politics of revenge—that produced the primary cases where Slovakia was clearly crossing the line of what was democratically acceptable. In 1993 and 1994, both the HZDS and the smaller nationalist Slovak National Party (SNS) with which it governed, proved unable to remain united once the

216 KAREN HENDERSON

agenda of Slovak politics changed from one of dealing with conflicts between Czechs and Slovaks to one of managing the ordinary and extraordinary problems of an independent post-communist state. HZDS was hit by the defection of eight deputies in March 1993, led, significantly, by the foreign minister Milan Knažko. By February 1994, divisions in the SNS also came to a head, as the more xenophobic wing of the party took over the party chair, and the nationalist deputies who had supported Slovak independence on more economic grounds left the party. Shortly afterwards, HZDS lost another eight deputies, led by Jozef Moravčík, who had been Knažko’s replacement as foreign minister. Thus deprived of a parliamentary majority, Mečiar’s second government fell in a vote of no confidence held after a critical state of the nation speech made by President Kováč in March 1994. President Kováč himself could also be considered a defector from HZDS: a HZDS member when elected by parliament as the first president of the Slovak Republic in February 1993, he formally abandoned his party affiliation on assuming the presidential office, and in the course of the next year it gradually became clear that he fully intended to exercise his independence. Although the President was not a head of state who enjoyed much executive power—for example, he could (and did) veto laws he considered unconstitutional, but the veto could be overturned by a simple majority when the law was returned to parliament—the tensions between government and president were to become a major concern of the European Union when judging “the stability of institutions guaranteeing democracy” in Slovakia. After Mečiar’s second fall from power through loss of his parliamentary majority, a new government was formed, under the premiership of former foreign minister Moravčík. This was a short-lived Left-Right coalition containing the post-communist Party of the Democratic Left, the Centre-Right defectors from HZDS and SNS, and the Christian Democrats on the Right. However, this government failed to obtain popular legitimation when premature elections were held on 30 September/1 October 1994, and Mečiar again emerged as the Slovaks’ preferred leader, with HZDS obtaining 35 per cent of the vote and 61 of the 150 parliamentary seats.26 When the new parliament first met on 3/4 November, power was grasped by a more nationalist Left-Right coalition containing the newly formed Workers’ Association of Slovakia (ZRS) as well as HZDS and SNS. In December 1994, Mečiar finally formed these parties into a government. The new government’s programme stated in its first section that “the government considers the implementation of the programme of European integration its foremost task”, but its real commitment to this goal was questionable. First, only HZDS was clear in its proclamations about its support for EU and NATO membership; ZRS and SNS were always ambivalent, and their hostility later became more open, particularly with regard to NATO. Secondly, even HZDS’S commitment to European integration was questionable. Its stated aims consistently conflicted with its reluctance to make compromises to meet the basic requirements of the European Union. Mečiar’s foreign policy

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aims were subordinated to domestic policy goals. While all post-communist states tended to view membership of European organizations as a sign of acceptability to the international community and their “return to Europe”, this phenomenon was more complex in the Slovak case. EU membership would provide final “proof” that Slovakia was recognized by the international community as an independent state equal to any other. It therefore had a particularly potent symbolic value, but was consequently sometimes not perceived to be a complex issue that would concretely affect all internal aspects of the functioning of the state. The irony of Slovakia’s relationship with the EU was that it was not, in the end, the declared attitudes of the country’s political forces to the EU which were decisive in deciding the fate of its application. Far more crucial were domestic political events in themselves. Four disputes were of critical importance. The first related to the position within parliament of the Democratic Union (DU) after the 1994 elections. The DU was a new political party formed from the three waves of HZDS and SNS defectors; it was Centre-Right and became a member of the Liberal International. In the 1994 elections, it obtained 8.57 per cent of the vote and 10 per cent of the parliamentary seats. However, Mečiar and the HZDS contested its right to sit in parliament by disputing the validity of the signatures it had had to collect in order to be able to stand in the elections. Although the Constitutional Court rejected the new government’s charges, Mečiar continued to maintain that the party was in parliament thanks to election fraud. Removing DU from parliament would have been advantageous for HZDS because redistributing the DU’S 15 mandates among the remaining parties would have left the government with the 60 per cent of parliamentary deputies necessary to change the constitution. Underlying this, however, was also the issue of loyalty and allegiance: Mečiar appeared motivated not merely by rational considerations, but also by personal antipathy towards those politicians whose defection had led to the fall of the second Mečiar government. The second major issue that discredited Slovakia was the deteriorating relationship between the prime minister and president. The most controversial events in this conflict concerned the abduction of the president’s son on 31 August 1995. Michal Kováč Jnr was stopped near to his house outside Bratislava in broad daylight, knocked out by being forced to drink neat spirits, and then driven in his own car the short distance across the border to Austria, where he was deposited in front of the nearest police station. Since German Interpol wanted to question Kováč Jnr in relation to a fraud case they were investigating, the Austrian authorities held him in custody for nearly six months before deciding against his extradition in a verdict that cast doubt on the role of the Slovak government. The government had made no request to have him returned to Slovakia, in spite of the criminal way he had been removed, and had even insinuated that he had “kidnapped himself”.27 In addition, inside information quickly implicated the Slovak security service, the Slovak Information Service, in carrying out the kidnapping, and the removal of the first two police officers in

218 KAREN HENDERSON

charge of investigating the case suggested that they had reached similar conclusions. The death in an unexplained car explosion of Robert Remiáš, a friend liaising between the journalists and the Slovak Information Service informer, in April 1996, caused further disquiet about the case. The kidnapping of Kováč Jnr was, however, merely the most spectacular manifestation of enmity between the government and president. In September 1995, the parliament passed a resolution (with no constitutional or legal force) asking the president to resign, and meetings with representatives of the international community were too often used not to promote Slovakia’s interests, but merely to attack the “other side” in the conflict of prime minister versus president. Since President Kováč was not an executive president, his real power to thwart the government was limited, and Mečiar’s government would have found it easier to achieve its aim of European integration if it had chosen, wherever possible, to ignore him. The government’s campaign against him appeared, therefore, again to be motivated less by rational political calculations, and more by a desire for revenge. The third event that fatally damaged Slovakia’s image abroad as a democracy also related to issues of loyalty. In November 1996, František Gaulieder, a HZDS deputy who also sat on the parliamentary committee that supervised the Slovak Information Service, left the HZDS parliamentary faction to sit as an independent, thereby becoming the first HZDS deputy to defect since the 1994 elections. The Slovak constitution does not permit imperative mandates for deputies which oblige them to resign if they leave their party. However, in December, parliament voted to remove Gaulieder’s mandate on the grounds that he had sent a letter of resignation, notwithstanding the fact that Gaulieder disputed the letter’s authenticity.28 On 25 July 1997, the Slovak Constitutional Court finally judged that the parliament had violated Gaulieder’s constitutional rights by stripping him of his mandate, but the government majority in parliament prevented his reinstatement. The Gaulieder case was qualitatively different from the issue of the DU mandates, where the Slovak government had stepped back from the brink and not, in the end, removed the deputies from parliament. It also differed from the case of Kováč Jnr, where government complicity was never admitted or proven beyond doubt. In the Gaulieder case, it was manifest to the outside world that the Slovak government was crossing the bounds of what was constitutionally and democratically acceptable. This also applied, but to a lesser extent, to the fourth case that disquieted the EU, which was the referendum of 23/24 May 1997. The referendum was the most complex and convoluted example of the Slovak government and opposition using every legal and constitutional means in their battle against each other. A referendum on NATO membership had been requested by the government through a resolution in parliament in January 1997 (despite the fact that it was already evident by this point that when invitations to negotiate membership were distributed to east-central European states at the NATO Madrid summit in July,

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Slovakia would not be among the recipients). The opposition complicated matters by collecting the constitutionally required 300000 signatures and requesting the president to call a referendum on whether the president should be directly elected. President Kováč, who was responsible for calling referenda, fixed for both to be held on the same day, while the government disputed the legality of the question relating to the direct election of the president. The entire referendum finally ended in a complete fiasco when the Constitutional Court produced a somewhat ambiguous verdict on the presidency question two days before voting, which the Interior Minister (a HZDS member) and the Central Referendum Commission (which had a narrow opposition majority) interpreted differently. The distribution of ballot papers was thrown into turmoil, and a turnout of less than 10 per cent ensued as confusion and disillusionment reigned among both voters and those administering the voting procedures. While the above four cases—all of which derived from government hostility to former allies who had “changed sides”—were the most spectacular political conflicts in Slovakia prior to the Commission’s opinion, there were also other points of controversy that related more generally to the government’s tendency to try and concentrate power in its hands to a degree unacceptable in a pluralist society. A particular concern of the European Union was the representation of the opposition on parliamentary committees, where there had been problems since the first sitting of the parliament on the night of 3/4 November 1994. Life was also made difficult for the ruling HZDS by the fact that it governed in coalition with the nationalist SNS. Mečiar’s government signed a treaty of friendship and co-operation with Hungary in March 1995, but its ratification by parliament was delayed a year because of SNS objections. In return for their endorsement of the Slovak-Hungarian basic treaty, SNS had demanded that the draft law amending the penal code, passed in March 1996, included a section on the “Defence of the Republic”. This contained a clause threatening two years’ imprisonment to anyone deliberately spreading abroad untrue information about Slovakia that damaged the interests of the republic, as well as a paragraph forbidding public meetings aimed at “overturning the constitutional order, the territorial integrity or the defence capability of the republic or at destroying its independence”.29 Since both provisions appeared open to official abuse, they provoked widespread objections in Slovakia and abroad. President Kováč vetoed the law, and eventually, when it was returned to parliament in a modified form, it was rejected thanks to ZRS deputies voting against the government. The European Parliament also showed considerable concern about the position of the Hungarian minority, particularly because, whereas a law on the use of the state language (Slovak) was passed in November 1995, the promised law on the use of minority languages—which was guaranteed in the constitution —failed to materialize, and was finally declared unnecessary by Mečiar’s government in November 1997. In many respects, the position of the Hungarians in Slovakia appeared quite secure, as they had a strong cultural identity, and there was almost no evidence of de facto assimilation. The underlying problem, how- ever,

220 KAREN HENDERSON

was not the legal situation of Hungarians—which was far superior to that of the Russians of Estonia, most of whom did not even enjoy citizenship—but rather the attitude of hostility generated by the government.30 For some in Slovakia, inter-ethnic relations were viewed as a zero sum game, where an improvement in the conditions of one community could only be achieved at the detriment of the other. Behind all these political problems, however, there was also an economic one. This related not to Slovakia’s macroeconomic results, but rather to the political control of the economy. A first wave of privatization had been carried out in Slovakia in the Czechoslovak period, but no consensus between government and opposition had been agreed in the independent state, as a consequence of which each government reversed its predecessor’s policies. The third Mečiar government finally implemented a second wave of privatization by direct sale (mostly to indigenous purchasers) which, in the Commission’s words, “lacked transparency and was considered as inequitable”.31 A fundamental question in Slovak politics was the extent to which the government’s attempts to consolidate its political control, and its apparent hostility to political pluralism, linked with its desire to consolidate economic control. The opposition often considered the government’s economic policies to be a crude attempt to concentrate economic might in the hands of government supporters; the government’s supporters, on the other hand, endorsed its efforts to keep ownership of the newly independent state’s economic assets in the hands of members of the nation. Nationalism and economic interest, therefore, interacted in a way that prevented the Slovak party system becoming structured by the simple Left-Right divide common in western Europe. Attitudes to the European Union became intertwined in these ambivalent attitudes. European Union reactions to Slovak political developments The reactions of the European Union to Slovak political developments were closely watched within Slovakia and were gradually absorbed into the discourse of domestic political conflict. Comments from the EU basically came in three different forms. The first was statements by a wide range of individuals, from Hans van den Broek, the Commissioner of Directorate-General 1A, and George Zavvos, the European Commission’s representative at their office in Bratislava, to members of the European Parliament and ambassadors to the Slovak Republic from EU Member States or any other prominent political figure from a such a country. The second, more formal, and frequently most outspoken critical comments, came in the form of resolutions from the European Parliament. The third and most serious form of warning was a series of démarches delivered on behalf of the EU by ambassadors from the Member States. Slovakia’s major problems with the EU can be dated to the advent of the third Mečiar government after the autumn 1994 elections. A formal warning— the first démarche—was given to the Slovak prime minister, president and chair of the

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parliament on 23 November 1994 by the ambassadors of France and Germany. The démarche was diplomatically worded, but largely expressed concern about the incipient concentration of power in the hands of the incoming government which had been taking place since parliament’s first sitting on 3/4 November 1994. It was a second démarche, handed to Prime Minister Mečiar on behalf of the EU by the representatives of the Bratislava embassies of France, Italy and Spain as well as the European Commission on 25 October 1995, that became a major political issue within Slovakia itself. The démarche noted that its concerns expressed in the November 1994 démarche had not disappeared, and mentioned more specifically the possibility of “action” being taken against the president that did not correspond to Slovakia’s constitution or the democratic practices of the European Union. It reminded Slovakia of its obligations in its Association Agreement with the EU and the Copenhagen criteria, and also emphasized the importance of democratization processes allowing the free expression of differing political opinions, the EU’S concern about the difficulties faced by nongovernmental organizations in carrying out their work, and the importance of mutual toleration and respect to the different sources of authority in the state. The Slovak government’s response was largely to make light of the accusation by initially denying even that it was a “démarche” rather than a “communiqué” or “aide-mémoire”. The concerns of the EU expressed in the démarche were made more explicit in a resolution of the European Parliament passed on 16 November 1995. This mentioned, in particular, efforts by the prime minister to have members of the Democratic Union expelled from the Slovak parliament; the dismissal or resignation of police officers investigating the abduction of President Kováč’s son and the physical harassment of politicians and journalists investigating it; and the fact that opposition parties in the Slovak parliament were not properly represented in leading bodies of the parliament. The resolution further threatened that the EU might have to reconsider its programmes of assistance and cooperation under the Europe Agreement, and called on the EU/Slovak Republic Joint Parliamentary Committee (which was about to meet for the first time) to discuss these matters and reflect at its meetings the deep concern of the European Parliament.32 The European Parliament’s debate of the issue was stormy, and reflected concerns that it was inappropriate for the parliament to pre-empt the Joint Parliamentary Committee’s discussions with a critical resolution.33 The Slovak government raised similar procedural objections as well as contesting the substance of the allegations. While no further démarches, as such, were issued, EU disquiet continued and culminated in the Commission’s opinion that Slovakia should not be invited to commence accession negotiations. European Parliament resolutions critical of Slovakia became a regular event, however. These were passed in response both to the removal of Gaulieder’s parliamentary mandate in December 1996,34 and to the parliament’s refusal to carry out the Constitutional Court’s instructions to reinstate him in October 1997. The depth of the European Parliament’s concerns

222 KAREN HENDERSON

about Slovakia was finally confirmed in early December 1997, when it came close to recommending that accession negotiations should commence with all CEECs except Slovakia. What remains unclear is the real ability of the EU to affect the actions of the Slovak government, at least while HZDS is in power. The number of warnings ignored by the Mečiar government, and the consequent inevitability of Slovakia’s exclusion from initial EU accession negotiations, suggest that it was not great. The government’s desire to consolidate domestic political power was allowed to take priority when this conflicted with EU demands. It is not possible, however, to predict if the government would have taken even more measures against the opposition if it had not been constrained by the need at least to remain a candidate for European integration. At the same time, the strength of the political opposition and democratic institutional structures were also instrumental in reining in the government. Domestic political reactions to the European Union In the mid-1990s, Slovaks in general supported EU membership. In November 1996, for example, when a survey asked Slovak citizens how they would vote in a referendum on membership, 57 per cent of voters said that they would vote “yes”, 11 per cent “no”, and 32 per cent did not know or said they would not take part in such a referendum. But support correlated fairly strongly with party preferences. (See Table 13.1 for the distribution of opinions by stated party support.) It can be seen that every Slovak political party has more supporters in favour of EU membership than who oppose it. This finding has been constant in all surveys on the issue, although there has been some fluctuation in attitude, particularly among smaller parties where sampling is less reliable. The general pattern which emerges is that support is strongest among the three centre-right parties of the anti-Mečiar opposition, which in 1997 formed themselves into the Slovak Democratic Coalition. The Party of the Democratic Left, while strongly supportive of EU membership, had an electorate whose views on the EU were in the middle of the spectrum. Among supporters of the government parties, views on the EU were very divided. There are problems in distinguishing cause and effect in the pattern of attitudes. Views on the desirability of EU membership correlate not only with the party preference of citizens, but also with their sociodemographic characteristics. Groups who have generally been the “winners” in the process of post-communist transformation—the better educated, the young, those living in cities, and men—are also more attracted by the EU. Since the supporters of the various Slovak parties also have somewhat different social profiles, their views on the EU may be pre-programmed and not easily influenced by the proclaimed policies of the parties for whom they vote.35 Hence the ambivalence in attitude to the EU among the parties of the Mečiar

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government coalition is in keeping with the sort of electoral support they need to maintain. Table 13.1 Slovak attitudes to the European Union according to party preferences, November 1996. Respondents were asked how they would reply to a referendum question asking “Do you agree with the entry of Slovakia to the European Union?” Party preference

“yes”

“no”

don’t know/ wouldn’t vote

“yes” minus “no”

Democratic Party Democratic Union Christian Democratic Movement Hungarian Coalition Party of the Democratic Left Non-voters and undecided Workers’ Association of Slovakia Movement for a Democratic Slovakia Slovak National Party

84 79

3 0

12 21

81 79

76

7

17

69

66

2

32

64

60

11

29

49

46

8

46

38

45

15

40

30

49

26

25

23

40

26

30

14

Source: Politická scéna na Slovensku November 1996 (Bratislava: FOCUS, 1996), 8.

This fact goes some way to explain the apparent contradictions in the behaviour of a government which declared EU membership to be one of its foremost goals, yet failed to pursue it in a consistent manner. Mečiar government supporters who favoured membership were presented with assurances of the government’s good integrationist intentions, and its achievements in bringing Slovak legislation up to EU standards, while those less friendly towards this goal were assured that Mečiar was protecting his country’s interests and independence against foreign pressure. Most remarkably, Mečiar managed to persuade his core electoral support —about 25 per cent of the population—that the country’s failure to be invited to join the EU and NATO was the fault not of the government, but of the opposition, who were accused of damaging Slovakia’s international standing by spreading false and negative information. In November 1995, respondents in a public opinion survey were questioned about the critical resolution recently

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passed by the European Parliament, and 36 per cent of those surveyed thought that it was the opposition and not the government who should have this on their conscience because they “spoilt the image of Slovakia abroad”. This was the belief of some three-quarters of those questioned who supported HZDS or SNS, while only some 10 per cent of Hungarian Coalition and Christian Democrat supporters shared their view.36 The willingness of most HZDS and SNS supporters to blame the opposition for spoiling the country’s chances of European integration was ironic, given that these parties’ supporters—as shown in Table 13.1—were also the least convinced that EU membership was actually desirable. A later survey also showed that HZDS supporters were far more convinced than other Slovaks that government policies were going to lead to the achievement of its declared aim of EU and NATO membership.37 Such findings provide further evidence of the subordination of foreign policy to domestic policy in Slovakia. Surveys on attitudes to the EU appear actually to have measured the respondents’ trust in Mečiar and his government. Opposition supporters generally favoured European integration and blamed the Mečiar government for failure to achieve this aim. Mečiar’s supporters, on the other hand, were not wholeheartedly in favour of EU membership, but blamed the opposition for damaging the country’s chances of joining, while at the same time demonstrating an almost blind faith in their leader’s ability to achieve his aims of European integration. The issue of Slovak integration into European structures had been instrumentalized as part of the domestic political conflicts. Slovak responses to the avis The stances of the government and opposition to the Commission’s opinion of July 1997 were a continuation of former positions, whereby government and opposition agreed superficially on the country’s goals, but at the same time presented totally differing images of reality. The initial response on the government side to the Commission’s negative recommendation was a refusal to admit defeat: it was emphasized that the final decision would be taken by the European Council in Luxembourg in December, so that the Commission’s assessment was, in Mečiar’s words, “not a catastrophe”. By late August, the Ministry of Foreign Affairs of the Slovak Republic presented a more detailed, and quite skilfully written, response to the Commission opinion. While it picked up some genuine factual mistakes in the opinion, it shrugged off the most fundamental political criticisms with the statement that “the European Commission has exaggerated the importance of several partial political problems with the ongoing transformation process”.38 The opposition, predictably, gave a more accurate assessment of the true state of affairs, and laid the blame for Slovakia’s exclusion firmly at Mečiar’s door. This view was also subscribed to by President Kováč, who, in the week following the publication of the opinion, stated bluntly that “it is important to say loudly that with Premier Vladimír Mečiar and his government in power, Slovakia

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will never get into NATO or the EU”. However, in the run-up to the Luxembourg European Conference, Slovak political forces attempted to paper over their differences, and both prime minister and president, and government and opposition, jointly supported Slovakia’s application to join the EU. The government had much to gain in terms of political prestige and self-legitimation from being invited to start membership negotiations, and the opposition had much to lose from their country’s isolation from its European neighbours. Public opinion appeared at first sight to divide in its accustomed fashion. Opponents of Mečiar’s government considered the negative opinion a sad consequence of his policies, and it came as no surprise to them. Government supporters were more likely to consider it distorted, biased and hypocritical. It was common to encounter cynicism about the political criticisms, which were merely considered a mask for western discontent that the Slovak economy was being privatized by direct sale to Slovak owners rather than multinational companies. The positive opinions on Estonia and Cyprus, which both had minority problems very much worse than Slovakia’s, also undermined the Commission’s credibility in the eyes of many supporters of the Mečiar government. Few of them had actually read the avis, and western criticism had, over the years, generally displayed a strong preoccupation with the Hungarian minority, so Slovaks could easily overlook the fact that it was the bitter contestation of politics within the Slovak community that was most responsible for Slovakia’s exclusion. There were, however, also signs of an ambivalence in Slovak public opinion. A survey conducted by the Statistical Office of the Slovak Republic in September 1997 found that 41 per cent of respondents blamed the government for Slovakia’s current position in integration processes, while 28 per cent blamed the opposition and 32 per cent blamed both.39 While Slovakia’s situation looked very unfavourable, Mečiar’s reaction to the avis was in many respects advantageous for Slovakia. He avoided an openly hostile response to the EU by lauding the country’s achievements in being included by the Luxembourg European Council in the accession process to be launched on 30 March 1998, and he even claimed that the government’s greatest success in 1997 had been in the field of foreign policy. Additionally, although the parliament, with its government majority, refused to make any political concessions, continuing government endorsement of EU membership as an aim ensured that the state would continue in its commitment to take on the acquis, and therefore in the laborious tasks of harmonizing legislation. The way therefore remained open for a future Slovak government, after the elections scheduled for 26 September 1998, to satisfy the political conditions set out by the Copenhagen European Council, thereby becoming eligible to commence negotiations on membership. This was clearly the goal of the country’s main opposition grouping, the Slovak Democratic Coalition, which optimistically declared its intention of fulfilling the political criteria of Copenhagen within 100 days of taking office.40

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Conclusion Slovak behaviour towards the European Union has been marked by a dichotomy. On the practical level, where the structural issues of integration are concerned, attitudes are generally positive among most political parties. Yet where foreign policy aims conflicted with the Mečiar government’s domestic political aims, the latter would prevail. The European Union’s attitude towards Slovakia in 1997 was not dissimilar to that of the Czechs in 1992. Both the EU, facing the need for institutional and economic reform, and the Czech Republic, facing the urgent tasks of postcommunist political, social and economic reconstruction, felt unable and unwilling to assume the burden of coping with a profoundly divided Slovak society that subordinated issues concerning its relations to others to the pursuit of narrow, Slovak preoccupations. Both decided that the Slovaks had a primary need to reconcile their differences with each other before they would be capable of tackling other issues. In other respects, however, the attitude of the European Union and of the Czechs was quite different. While the Czech Republic, recognizing—if subliminally—its own weakness, divorced Slovakia forever, the European Union, being a larger and stronger entity, kept the door open. It essentially acknowledged that the country’s problems were most likely of a temporary nature, and that it was welcome to a chair at the table of the family of nations as soon as it was ready. Slovakia’s primary difficulty, however, was that it might “miss the train” of European integration. General international coverage of the July 1997 debacle accepted Slovakia’s membership of a “second group” of candidate countries along with Bulgaria, Latvia, Lithuania and Romania. In view of it having been brought down at the initial hurdle of “stability of institutions guaranteeing democracy”, some commentators even assumed that the other four countries might have better chances of European integration in the medium term. The fact that Slovakia was in most respects still far more similar to the Czech Republic, Hungary and Poland was in danger of being overlooked. At the end of 1997, Slovakia’s best chance of attaining EU membership appeared to be the possibility of a change of government in the elections scheduled for September 1998. However, even this would not produce a “clean slate” for Slovakia’s credentials. The states recommended by the Commission for membership negotiations were largely characterized by the fact that both the major government and opposition forces would be acceptable negotiating partners. For example, the post-communist governments elected in Poland and Hungary in 1993 and 1994 had continued successfully to pursue EU membership. By comparison, the political situation in Bulgaria, Romania and Slovakia was less secure. A firm guarantee of Slovakia’s long-term ability to meet the EU’S democratic standards can only be provided if both major factions in Slovak political life show a wholehearted willingness to conform to the EU’S minimal demands.

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Notes 1 European Commission, “Agenda 2000”, Bulletin of the European Union, Supplements 8, 10, 12, 13/97, Summary and conclusion, 1997. In the case of Bulgaria, the Commission was even more negative, stating flatly that it would “not be able to cope” in the medium term. 2 European Commission, “Agenda 2000. For a stronger and wider union”, Bulletin of the European Union, Supplement 5/97, 138, 1997. 3 Ibid, 45–6. 4 European Commission, “Agenda 2000: Commission opinion on Slovakia’s application for membership of the European Union”, Bulletin of the European Union, Supplement 9/97, 78, 1997. 5 Bulletin of the European Communities, 26(6), 1993, 13. 6 Ibid. 7 Article F will be renumbered Article 6 after the ratification of the Treaty of Amsterdam. 8 Article F.1 will be renumbered Article 7 after the ratification of the Treaty of Amsterdam. 9 European Commission, “Agenda 2000”, Supplement 9/97, op. cit., 77. 10 For all quotations in this paragraph, see European Commission, “Agenda 2000”, Supplement 5/97, op. cit., 40–42. 11 Ibid., 40. 12 See, for example, R.Rose & C.Haerpfer, New Democracies Barometer IV (Studies in Public Policy 262, Centre for the Study of Public Policy, University of Strathclyde, 1996). 13 The independence even of these four was, of course, limited de facto by Soviet power. 14 For example, both the Czech and Slovak Republics were admitted to the United Nations, and recognized by the Member States of the EU, in January 1993. 15 See Ministry of Foreign Affairs of the Slovak Republic, “Slovak view on the Commission’s opinion on Slovakia’s application for membership of the European Union”, 28 August 1997. Quantifying ethnic minorities in the CEECs is hard because the majority of Roma (gypsies) fail to declare themselves as such in censuses; in Slovakia the problem is complicated by disputes about whether the “missing Roma” (probably somewhere in the region of 5 per cent of the population) have declared themselves as Slovaks or as Hungarians. 16 The Commission in Agenda 2000 estimated the size of ethnic minorities to be 1 per cent in Poland, 6 per cent in Hungary, 7 per cent in the Czech Republic (of whom over half were Slovak) and 8 per cent in Slovenia. 17 By Commission estimates, 13–15 per cent in Romania, 15–18 per cent in Bulgaria and 20 per cent in Lithuania. 18 According to Commission estimates, 23 per cent of the Estonian population does not have citizenship, from a total non-Estonian population of 35 per cent; and 28 per cent of the Latvian population does not have citizenship, from a total nonLatvian population of 44 per cent. 19 See, for example, M.A.Vachudová. & T.Snyder, “Are transitions transitory? Two types of political change in Eastern Europe since 1989”, East European Politics

228 KAREN HENDERSON

20

21

22

23

24 25

26

27

28 29 30

31 32

and Societies 11, 1–35, 1997; G.Evans & S.Whitefield, “Identifying the bases of party competition in Eastern Europe”, British Journal of Political Science 23, 521– 48, 1993. A sociological survey conducted in late 1994 showed that whereas 30 per cent of Slovak citizens and only 22 per cent of Czechs alleged that they had originally supported the division of the country, 36 per cent of Slovak citizens but only 22 per cent of Czechs were now opposed. See Aktuálne problémy Slovenska. December 1994 (Správa zo sociologického výskumu), 37 (Bratislava: FOCUS, 1994). It should be noted that the Slovak figures include the Hungarian minority, who were most staunchly opposed to the division of Czechoslovakia. It might reasonably be maintained that the polarization of Slovak society was present much earlier, for example in the interwar period, when some Slovak parties took part in coalition governments with the Czechs, while the largest party— Hlinka’s People’s Party—did not. There is also evidence that the electorate splits regionally in similar patterns to the interwar period. See V.Krivý, V.Feglová, D.Balko, Slovensko a jeho regióny (Bratislava: Nadácia Media, 1996). For explanations of the division of Czechoslovakia, see K.Henderson, “Czechoslovakia: The failure of consensus politics and the break-up of the federation”, Regional and Federal Studies 2, 111–33. The Democratic Party may be considered a successor to the rump of VPN which did not follow Mečiar: it failed to pass the “5 per cent hurdle” for gaining parliamentary representation in both the 1992 and 1994 elections, and changed name and form on several occasions. Ethnic Hungarians usually voted along ethnic lines for specifically Hungarian parties or coalitions. Mečiar has been prime minister three times: from June 1990 to March 1991; from June 1992 to April 1994; and from December 1994 onwards. On the first two occasions, he became prime minister after an election victory, but left office after internal disputes in parliament with deputies who were originally his allies. For details of party political developments from 1992 to 1994, see K. Henderson, “The Slovak Republic”, in Political parties of Eastern Europe, Russia and the successor states, B.Szajkowski (ed.), 525–44 (Harlow, Essex: Longman, 1994). The latter bizarre interpretation of events was accepted in opinion polls by some 10 per cent of the population at large, including nearly a quarter of supporters of the government coalition parties, but almost no opposition supporters. See Z.Bútorová, O.Gyarfášová, M.Kúska, Aktuálne problémy Slovenska na prelome rokov 1995– 1996. (Správa zo sociologického výskumu), 90–91 (Bratislava: FOCUS, 1995). For Gaulieder’s version of events, see Sme, 28 July 1997, 5. Sme, 26 March 1996, 5. For example, the daily and weekly Slovenská republika and Zmena, awarded the L’udovít Stur prize at a reception attended by leading members of the government in the summer of 1995, regularly contain blatantly anti-Hungarian cartoons and articles. European Commission, “Agenda 2000”, Supplement 9/97, op. cit., 25. For full text of the resolution, see European Parliament, “Resolution on the need to respect human and democratic rights in the Slovak Republic”, Official Journal C 323/116, 4.12.1995.

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33 For record of the debate, see Official Journal, Debates of the European Parliament, 16.11.1995, 4(470), 240–51. 34 See European Parliament, “Resolution on the case of Frantisek Gaulieder, Member of the Slovak Parliament”, Official Journal C 20/90,–1, 145, 20.1.1997; Offieial Journal, Debates of the European Parliament, 12.12.1996, 4(492), 270. 35 For further details, see Názory, the quarterly bulletin of the Institute of Public Opinion of the Statistical Office of the Slovak Republic (Ustav pre výskum verejnej mienky pri štatistickom úrade Slovenskej republiky), and the various reports by the independent FOCUS agency. 36 See Politická scéna na Slovensku December 1995. (Vybrane výsledky výskumu verejnej mienky) (Bratislava: FOCUS, 1995). 37 Politická scéna na Slovensku November 1996. (Výsledky výskumu verejnej mienky), 10 (Bratislava: FOCUS, 1996). 38 Ministry of Foreign Affairs of the Slovak Republic (1997), op. cit. 39 Sme, 3.11.97, 2. 40 Sme, 15.12.1997, 1.

14 Slovenia: from Yugoslavia to the European Union Irena Brinar1

Each of the former communist countries is a specific case, and so, too, is Slovenia. Slovenia suffered from the Yugoslav crisis in the 1980s and only became an independent state at the beginning of the 1990s, following the tragic disintegration of the Yugoslav federation. However, Slovenian policy had already established the republic’s “European orientation” in the 1980s, and integration into Euro—Atlantic structures and European Community/European Union2 membership became and remained the strategic goal of Slovenian foreign policy after independence. The disadvantages the country incurred in its attempts at European integration from its proximity to the Yugoslav conflict have to a large extent been counterbalanced by earlier, favourable factors influencing Slovenia’s development, so that it is now one of the leading contenders for EU membership. This chapter presents some of the historic developments, problems and successes that have characterized Slovenia’s attempts to join the EU. Slovenia on the road from the Yugoslav federation to an independent state The causes of the disintegration of the Yugoslav federation at the beginning of the 1990s were numerous.3 In terms of its foreign policy, however, conflicts over its European orientation were decisive, and several factors linked to this were crucial to the development of Slovenia’s aspirations for independence. First, during the process of multinational Yugoslavia’s political and economic transformation, it became clear that its development was starting to lag behind that in other eastern European states. Furthermore, it appeared that the state as a whole was unable to take the steps necessary to complete the transition. The goals of genuine democracy, rule of law and respect for human rights seemed to be drifting into the distant future. This was interpreted— especially in Slovenia— as meaning exclusion from Europe, since it appeared that even the requirements of the Council of Europe could not be met.4 A second factor was the feelings of inequality and helplessness within the federal community of Yugoslav nations. Everybody felt exploited by everybody else: more developed parts of the federation felt exploited by less developed parts through the federal system of solidarity, which was designed to

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assist the economy of less developed parts; and less developed parts felt that the more developed parts were exploiting them as sources of cheap labour and raw materials and as markets for the expensive goods they produced. The crisis of the 1980s made existing economic and social disparities even more obvious, as political, social and cultural differences were increased by the different speed of democratization in individual parts of the federation. By the late 1980s, two opposing political concepts had been developed within the ruling Yugoslav communist leadership: decentralization of the federation, democratization and the introduction of a multi-party political system were supported in Slovenia and Croatia in particular, while Serbia and Montenegro advocated centralization at the level of the federation, stronger federal government and a restoration of the political monopoly of the ruling League of Communists. In line with these two opposing options, different—mutually exclusive—proposals for reforming the existing federation were developed.5 Although the growing economic, social and political crisis demanded immediate action and elaborate reforms, there was no political will to compromise and build the consensus necessary for economic and political reform. At the same time, the lack of consensus was blocking the existing political system: the federal constitution stipulated that major decisions at federal level were adopted by a consensus of all federal units in order to assure equality between the federal units and nations of this diverse multi-ethnic federation. Yet no consensus could be reached. Thirdly, specific political and social developments, such as intensified democratization and the emergence of several political parties in the late 1980s, necessitated substantial reforms of the existing system. In ethnically relatively homogeneous Slovenia,6 there was a general consensus that democratization and the introduction of a western type multi-party political system were desirable. However, this political orientation was widely criticized in other parts of exYugoslavia—especially in Serbia and Montenegro, which advocated a different political model. Lastly, the widening economic gap between Yugoslavia and western Europe increased the general frustration felt in Slovenia. Yugoslavia was hit hard by the debtors’ crisis of the 1980s. Slovenia, as a part of Yugoslavia, could only share the federation’s fate, although it had been the most developed part of the country since the 1950s.7 However, a wide-spread belief was present that, on its own, Slovenia could soon join the club of developed European nations by joining the European Community. The realities of the international community were poorly understood and mostly disregarded. Slovenian foreign policy Once it had become sovereign and independent—with the experience of a short war on its territory behind it, and still witnessing endless massacres in the neighbouring territories that used to be Yugoslavia—Slovenia immediately tried to become part of the existing European and global economic, political and

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security structures. After diplomatic recognition by the EC,8 Slovenia became a member of the Conference on Security and Co-operation in Europe (CSCE) on 24 March 1992 and a member state of the United Nations on 22 May 1992. Slovenia joined GATT in September 1994,9 which enabled it to become one of the founding members of the World Trade Organization on 1 January 1995. Since the war in the Balkans kept dragging on, Slovenia discussed many different security concepts, but for various internal and external reasons, no viable solutions could be found. It has had sporadic parliamentary and governmental contacts with both NATO and the Western European Union (WEU), and— although there have been some ups and downs in public opinion—there is strong support within Slovenia for joining NATO and WEU.10 At the beginning of 1994, Slovenia managed to sign NATO’s “Partnership for Peace”, and two years later, in January 1996, Slovenia became a member of the North Atlantic Co-operation Council.11 However, these developments have not substantially increased its security. Slovenia, as a small state, can hardly guarantee its security by only its own defence forces, as the financial and human potential of the country is too small for efficient defence. Collective security in the framework of NATO is thus seen as by far the best option for Slovenia. However, Slovenia’s top foreign policy priority is full EU membership. After official recognition by the countries of the EC in 1992, Slovenia was accepted into the Council of Europe on 14 May 1993. This was important as official recognition that Slovenia honours European standards for the protection of human rights, and it also offered the possibility of accession to various conventions which inter alia harmonize national laws to European standards. The next step was the Europe Agreement initialled in 1995 and officially signed a year later. At the end of 1997, this agreement was still in the process of ratification by the parliaments of the EU Member States,12 but Slovenia applied for full EU membership in June 1996, and the Luxembourg European Council included Slovenia in the first group of countries that will start negotiations on full membership in 1998. While the primary focus of Slovenian foreign policy is to determine Slovenia’s priorities and objectives and define its position in the world,13 Slovenia simultaneously has to establish institutions that can carry out the policies adopted in the area of international relations.14 Much has already been achieved during the years of independence, and this was possible in part because Slovenia had some foreign relations experience even before independence. Slovenia had played an active role in Yugoslav international politics as a Yugoslav republic. As part of a federal state, it had been able to participate in sub-national international regional organizations (e.g. the Alps-Adria Working Community, the Assembly of European Regions). Since becoming independent, Slovenia has also taken advantage of ties established with other regions, such as Bavaria and Friuli-Venezia Giulia. Research in the Alps-Adria region has shown that the level of internationalization of Slovenian companies can easily be compared with that of companies in EU Member States.15 Analysis of factors that

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determine the real power of a particular state in the international community shows that numerous sub-national regions are more equal partners for Slovenia than many states. Additionally, many activities in Europe are being settled at regional and not governmental levels. Thus, Slovenia as an independent state should continue to carry out at least part of its former foreign policy activities. Co-operation between Slovenia as a state and European sub-national regions would not be exceptional, since co-operation of states with other countries’ subnational territorial units as “lower rank” subjects is not rare in international relations.16 The only criterion for assessing such links is benefit, and not prestige. The extent to which Slovenia can participate in policy-making at both levels (national and sub-national), thereby securing itself a political position in the European arena, is entirely dependent on its own willingness to co-operate. Economic foundations Before independence, Slovenia was the most developed part of the federation, although conditions in Yugoslavia as a whole determined its economic progress. Both Yugoslavia as a country and Slovenia as one of its republics were more exposed to the practices of a market economy than the centrally planned command economies in the rest of the communist world. Slovenia shared the advantages of the early start to market oriented reforms that had taken place in Yugoslavia: firms were autonomous, planning had been abandoned in the 1950s and prices were liberalized in the 1960s. “Social ownership of the means of production” allowed the development of market relations in goods markets, but not in capital or labour markets. Foreign trade relations were not a state monopoly, so that Slovenian firms developed direct contacts with western markets. The Slovenian economy was not fully integrated into the Yugoslav economy, and trade with other republics in the federation resembled trade with the rest of the world. However, Yugoslavia and its “socialist market economy” had, by the 1980s, become unable to move in any direction. Economic deterioration turned to stagflation and, after 1983, to a kind to hyper-stagflation. All attempts by the federal government to stop the country’s declining economic performance were blocked by the republics’ pursuing their own particular interests. It became unavoidable that the economic reforms and the “stabilization programme” would collapse. At the beginning of the 1990s, Yugoslavia simply ceased to be an economic entity: taxes were not collected, money was printed everywhere, tariffs and special levies were introduced for “imports” from other republics and the republics started to build up their own economic systems. Against this backdrop, Slovenia decided that the costs of secession would be lower than the costs of facing the threatening economic, political, and social chaos that threatened Yugoslavia. Slovenian independence marked a new stage in the country’s development. After a four-year period of negative economic growth caused by the Yugoslav economic crisis and the disintegration of Yugoslavia, the Slovenian

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economy fell into a deep recession in 1991. Most badly hit were traditional industries which had been heavily dependent on the Yugoslav markets.17 However, as well as confronting its economic problems, as a newly independent state Slovenia simultaneously had to create a new constitutional and legal system; assure control of its borders; develop institutional (economic and social) infrastructure; establish and consolidate a new monetary system, postal and communication system; and establish and fund a diplomatic service, and train diplomats and representatives at various international fora. Also, a number of bilateral and multilateral agreements had to be renegotiated. All these factors influenced economic transition and transformation. Slovenia’s economic transition can be divided into three processes: transition from a regional economy inside a larger state into an independent national economy; transition from a command economy with state and social ownership into a market economy with predominantly private ownership; and transition from an inflation-driven economy to a stable economy.18 Slovenia is a small economy that is highly integrated into the international economy and market, and which therefore has to utilize its competitive advantages. Its basic economic strategy contains several major elements. First, it has to establish Slovenia as a permanent supplier of different—mostly industrial — low-price goods and services. However, this part of its strategy faces two main problems: the even lower price of labour in several neighbouring countries, which increases their competitiveness compared to Slovenia; and the risk of provoking anti-dumping measures by importing countries. Secondly, Slovenia has to distinguish itself through the quality of goods or services. Thirdly, it needs to upgrade its existing export structure in the field of differentiated products. Fourthly, Slovenia has to design a strategy of “market niches” or smaller “gardens”19 and to diversify its exports. Slovenian exports can never be so large as to threaten domestic production in importing countries, and a “niche strategy” further eliminates the fear of special trade restrictions on goods coming from Slovenia.20 At the same time, Slovenia needs to diversify its economic relations, which are currently highly concentrated on neighbouring countries and regions. By decreasing its dependence on a few (foreign) markets and diversifying its exports, Slovenia would strengthen its position in Europe and in the global economy. Slovenia is twenty-first in the world in terms of exports per inhabitant— way ahead of Spain, Portugal or Greece.21 However, its two million consumers can only provide a satisfactory market if the national economy exports more than 50 per cent of its output. Thus the prime objective for developing an effective Slovenian economy is to increase the share of exports in its GDP. Membership in international economic organizations is therefore of vital importance for Slovenia. It is also believed that, through integration, small states can gain some additional leverage and sovereignty vis-à-vis global institutions. In this context, EU membership is particularly important for Slovenia. The relative importance of exports to EC/EU countries has increased markedly over

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recent years: in 1989, about 52 per cent and in 1995 (after the last enlargement) more than 68 per cent of total Slovenian exports went to the EU area. The most important foreign trade partners are Germany, Italy, France and Austria. The increase in the share of foreign trade to the EC was to a large extent possible owing to the Co-operation Agreement between Yugoslavia and the EC which was signed in 1980.22 This was a sui generis preferential trade agreement,23 concluded for an unlimited period of time. After independence, Slovenia was to a large extent allowed to continue using the privileges of this agreement until the preferential Co-operation Agreement between Slovenia and the EC was concluded in April 1993: the preferential access of Slovenia to EC markets was granted till the end of 1992. The Co-operation Agreement allowed Slovenia to utilize export quotas that had previously been established by the agreement between Yugoslavia and the EC, and it was supplemented by a Joint Declaration on Political Dialogue, a Financial Protocol and a Transport Agreement. (The latter raised certain problems for Slovenia, since the EC/EU requires free transit of traffic through Slovenia.) However, there have been questions about whether the Co-operation Agreement encourages the profound restructuring of Slovenian economy towards greater efficiency and competitiveness, or whether, in the long run, it only contributes to slow structural changes, thereby further deepening the gap between Slovenia and the more developed EC/EU countries. The Agreement included an evolutionary clause that provided for a higher level of co-operation between the two parties, and it allowed for negotiations to begin on a “Europe Agreement” (associate membership). Slovenia had already applied for associate membership in 1993, but it took more than two years for the Council to give the European Commission a mandate to begin negotiations with Slovenia. The reason for this lay in unsolved bilateral problems between Slovenia and Italy. The “Italian problem” and Slovenia’s prospects for EU membership Although Slovenia was just across the Italian—Yugoslav border, Italian foreign policy traditionally put a higher priority on good relations with Belgrade (Serbia) and Zagreb (Croatia). Nevertheless, Italy and its foreign minister, Gianni de Michaelis, were helpful in the formal process of gaining international recognition for Slovenian independence. When it came to regularizing relations between Italy and Slovenia, Italy recognized the validity of all international treaties concluded between Italy and Yugoslavia immediately, including the Treaty of Osimo. This was a treaty between Italy and Yugoslavia signed in 1974 and at that time praised as an important result of the Helsinki process: it determined the principles for co-operation and the protection of the Italian minority in Slovenia and the Slovenian minority in Italy. It also finally estab- lished the border between Yugoslavia (Slovenia) and Italy. However, the treaty was challenged by some Italian political forces, mainly on the right. The Berlusconi Government (1994) also disputed the Treaty of Rome, signed in 1983, which obliged

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Yugoslavia to pay reparations for nationalized property owned by Italian citizens after the Second World War. The Italians claimed that the international situation had changed substantially, especially regarding relations between Italy, Croatia and Slovenia, and that all international treaties had to be renegotiated following the principle of rebus sic stantibus. They requested from Slovenia and Croatia the restitution of former Italian property (especially in Istria and Dalmatia) in nature to Italian citizens who had left this territory after the Second World War,24 and the Italian Government refused to accept the reparation money offered by Slovenia according to the provisions of the Treaty of Rome. In order to pay its share of the Yugoslav reparations to Italy, Slovenia opened a special bank account in Luxembourg where the money was—and still is—deposited in regular instalments. The Berlusconi Government also proposed a trilateral agreement between Italy, Croatia and Slovenia that would regulate the protection of minorities on a reciprocal base. The Italians considered the Italian minority in Slovenia and Croatia to be one community, and their proposal neglected the fact that Slovenia and Croatia had become two independent states. Slovenia therefore rejected the agreement on the grounds that it could not accept responsibility for the protection of the Italian minority in a third country. Furthermore, Slovenia claimed that the situation of the Italian minority in a third country should not be the criterion for the regulation of the protection of the Slovenian minority in Italy. The Berlusconi Government declared Slovenia’s position a violation of the rights of the Italian minority and decided to block the membership of Slovenia in the Council of Europe. After several fact-finding missions concluded that the level of democracy and protection of minorities in Slovenia was satisfactory, Slovenia finally became a member of the Council of Europe. However, Italy was successful in blocking the participation of Slovenia in the E-10, an informal organization of east European countries that was designed as a counterpart of G7, the club of developed nations. Italy also tried to block Slovenian attempts to become a member of other European structures. In negotiations on the association agreement with the EU that started in 1993, Italy disputed the prohibition of the purchase of land by nonSlovenian citizens that was anchored in the Constitution of the Republic of Slovenia of 1991, declaring that such a regulation violated EU principles and standards on ownership and property. As well as disputing the Treaty of Rome of 1983, the Berlusconi Government also demanded special rights for the advance purchase of real estate in Slovenia for Italian citizens.25 Slovenia rejected such demands, but has agreed to review its regulation of property rights according to European standards before becoming an EU member. Italy succeeded in convincing the EU that Slovenian property legislation was not in line with European legislation. Consequently, the EU required the change of the so-called real estate clause in Slovenia’s constitution as a (pre) condition for signature of the Europe Agreement. The new legislation should enable foreigners to purchase real property on the same terms as Slovenian

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citizens. Slovenia did not object to such requirements in principle, provided that they were conditions for full membership, and not merely a condition for the acquisition of associate status, since that exceeded the demands previously made to other associate states in comparable circumstances. Since association status itself does not guarantee full membership, Slovenia claimed that the EC/EU had no legal grounds for insisting that Slovenia had to adjust its “property legislation” if it wanted to associate. Existing Slovenian legislation enabled foreigners to purchase and/or found their own companies,26 and for the purpose of their operations, such companies could purchase property under the same conditions as companies owned by Slovenian citizens. Nevertheless, Slovenia accepted the “Spanish compromise”, by which it was obliged to modify Article 68 of the Constitution regulating the purchase of the real estate.27 This compromise was accepted after negotiations on the association agreement had been postponed several times. The relevant article of Slovenia’s Constitution was amended in 1997. The new left-wing Italian government, formed after the election in 1996, changed policy towards Slovenia, and bilateral relations and co-operation have improved substantially. The Prodi government stated that bilateral problems should not affect multilateral negotiations with the EU. This trend towards improvement in bilateral relations and co-operation continued throughout 1997. When he visited Slovenia in February 1998, the Italian Foreign Minister Dini also promised that Italy would reconsider the acceptance of reparation money according to the Treaty of Rome. It appears that most problems in the relations between Italy and Slovenia are being solved successfully. Nevertheless, Slovenia’s full integration into the EU remains uncertain. Every EU Member State could make Slovenia’s EU membership conditional on different (bilateral) concessions. Austria, in particular, has been mentioned in this context. Although the Austrian federal government has always been co-operative and supportive towards Slovenia’s candidacy for EU membership, certain opposition politicians and regional governments have expressed reservations and conditions, such as the restitution of property for Austrian citizens who left Slovenia after the Second World War, the closure of the nuclear power-plant in Krško, and official recognition of the German-speaking (Austrian) ethnic minority in Slovenia. Some regional politicians in Carinthia have even threatened to bring the problem of the Germanspeaking minority in Slovenia before different international fora, thereby blocking Slovenia’s integration into the EU. However, Austrian and Slovenian governments co-operate well and are addressing these problems successfully in their bilateral relations. Slovenia has recognized the cultural rights of the German-speaking minority, but is reluctant to make other concessions. Slovenia has not raised the problem of Austria’s need to implement Article 7 of the Austrian Constitution (Staatsvertrag) that guarantees special rights to the Slovenian minority in Austria, and the Austrian government continues to support Slovenia’s candidacy for full EU membership.

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While Slovenia awaits the ratification of its Europe Agreement with the EU, its trade elements have come into force by the way of an Interim Agreement. This Agreement largely follows the pattern of other Europe Agreements, although the Europe Agreement with Slovenia includes special provisions in the field of transport and movement of workers. European Agreements, inter alia, involve reciprocity with the EU. By 2001, Slovenia has to eliminate duties gradually and selectively in order to open its market for the free entry of goods originating in EU countries. Such measures will demand faster transformation of the Slovenian economy to international standards, but will, at the same time, incur more costs—especially social costs related to higher unemployment. Yet the Slovenian authorities appear determined to continue in their European orientation, thereby moving a step closer to the EU and a step further from the Balkans. An additional reason for this orientation is the agreement between Slovenia and GATT/WTO, according to which Slovenia’s preferential status as a developing country expired in 1997. As mentioned, the strategic goal of Slovenia’s foreign policy is full membership in the EU. Yet even in an ideal situation of consent between all parties concerned, it remains questionable if and when Slovenia will be eligible for the full EU membership. New member states have to be at least potentially fit for membership of the Economic and Monetary Union (EMU). The Treaty on European Union contains three monetary and two fiscal criteria (“Maastricht criteria”) for participation in the EMU: the annual inflation rate (which may not exceed by more than 1.5 percentage points that of the three best performing Member States), long-term interest rates (which may not exceed by more than 2 percentage points that of the three best performing states in terms of price stability), exchange rate movements, the share of public debt in GDP and the government deficit as a per cent of GDP. Slovenia had an 8.8 per cent annual inflation rate in 1997 and a relatively high long-term interest rate, which means that it has not yet met these two monetary criteria. Also, the exchange rate movements criterion has not been fulfilled as tolar depreciation has been too strong, and the interpretation of this criterion has been especially difficult owing to the floating exchange rate. However, Slovenia meets the fiscal criteria better than some Member States. The share of public debt is estimated to be less than 35 per cent of GDP, which is substantially below the Maastricht criterion of 60 per cent. Slovenia’s public finance deficit is also below the permitted 3 per cent of GDP, as it accounted for 1 per cent of GDP in 1997. Views differ on what constitutes economic eligibility. Lessons from the past do not warrant any simple conclusion. Spain and Portugal managed to adapt to EC standards of economic proficiency quite quickly, often using EC discipline as an effective weapon against domestic opponents of rapid modernization. Greece, on the other hand, provides a somewhat different lesson. However, whether or not Slovenia is fit for EU membership is one thing; whether the EU wants new members, and which ones, is a different matter. In December 1997, the Luxembourg European Council selected potential

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candidates and decided to start negotiations on full membership with Cyprus and only five of ten central and eastern European countries (CEECS). Slovenia was included in the first round of the eastern enlargement despite problems with some EU Member States, as discussed above, and the fact that its Association Agreement had not yet been ratified. The main reasons for the inclusion of Slovenia were its relatively successful economic performance and policy, and its democracy and political stability. Nevertheless, the European Commission listed its additional demands for Slovenia stating as a general rule that applicants for full membership expressed their interest to join the EU and not vice versa. The Commission expects Slovenia to open itself up to foreign investment and capital, and to complete privatization and restitution. If Slovenia is unable to convince the EU that these expectations will be met, it will not be able to become a new EU member state. Although the EU has included Slovenia in the first group of post-communist countries to start negotiations on full membership, the final outcome is therefore still uncertain. It must also be remembered that applicants currently face 16 possible vetoes, since both the European Parliament and all Member States have to approve accession treaties. According to their specific interests, every EU member—including, potentially, central and eastern European countries if they became full members before Slovenia—might yet decide to block the membership of a new country even if it fulfils all the objective criteria which have been established. Slovenia, EFTA, CEFTA and alternative strategies For Slovenia there is no adequate alternative equal to full EU membership. Nevertheless, the achievement of this goal could take some years. Hence, Slovenia needs to establish institutional links with other European structures, and these would become particularly relevant if Slovenia failed to become a member of the EU. The European Free Trade Area (EFTA)28 and the European Economic Area (EEA) would be the second best solution for many reasons. For example, the EEA offers a favourable environment for adjustment to the EU internal market; agriculture, which is a problematic issue, is excluded from the integration process; the EU and EFTA—EEA Member States represent a unified market that provides good opportunities for economies of scale; free capital movement, expansion of markets and lower investment risks would lead to an increase of Foreign Direct Investment in Slovenia from the EEA countries; and lower costs of goods distribution would improve the competitiveness of Slovenian exports. However, membership in the EEA provides little opportunity for the EFTA-EEA countries to take part in decision-making, does not provide the benefits of customs union and, for Slovenia, still requires the change in the legislation (constitution) relating to real estate ownership by foreigners. EFTA is also now of only minor importance for Slovenian foreign trade. After Austria’s accession to the EU, Switzerland became Slovenia’s most important EFTA

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trading partner, as 85 per cent of Slovenia’s trade with EFTA takes place with Switzerland. Closer co-operation at least among certain central and east European countries could also be beneficial and strengthen their negotiating position vis-à-vis the EU. Nevertheless, some believe that each of these countries has a better chance of becoming an EU member on its own. Most CEECs, including Slovenia, seem to conduct both strategies simultaneously. Slovenia is active on the sub-regional level within the Central European Initiative, and it also has contacts with members of the Visegrad group. It signed agreements on free trade zones with the Czech Republic (4 December 1993), Slovak Republic (22 December 1993), and Hungary (6 April 1994). After it signed the last bilateral agreement on free trade zones with Poland (17 July 1995) and the agreement on membership in the Central European Free Trade Area (CEFTA), Slovenia became a member of this regional group in January 1996. Tariffs and quantitative restrictions for industrial goods have largely been abolished, while for agricultural products, they will be abolished gradually. Slovenia’s membership in CEFTA is predominantly of economic interest.29 It enables Slovenia to co-operate intensively with the countries with which Slovenia does not have any formal disputes; which are close to Slovenia in a geopolitical and strategic sense; which meet Slovenia’s economic and cultural criteria;30 and with which co-operation has been traditional. However, the success of co-operation with the CEFTA countries may be threatened by the negative effects of economic instability and still inconsistent economic systems in these countries resulting from the transformation process. They also have relatively poor economies, obsolete infrastructure, financial troubles, and there could be potential political disputes among the members or economic disagreements resulting from the production of equivalent products in the various member countries. Slovenian politics and public opinion: from “Europhoria” to “(Euro) realism” If one compares two countries outside the EU, Norway and Slovenia, it might appear paradoxical that Norway, with a long democratic tradition and de facto integration in the west European market economy, refused EU membership while Slovenia is making a big effort to become a member of the EU. For the Norwegians, the dilemma is how best to sustain achieved levels of welfare. The starting point of Slovenians is rather different: how best to hit the fastest road to welfare.31 Just as there was general consensus within Slovenia about the country becoming independent at the beginning of the 1990s, there is also general political consensus in the late 1990s that Slovenia should become a full EU member. No political party publicly opposes this orientation. The EU is seen as the only viable option for Slovenia in the long run. Nevertheless, there are differing views about the speed, nature and intensity of Slovenia’s integration.

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Some parties unequivocally advocate EU membership and declare that Slovenia’s vital interests demand full EU membership as soon as possible regardless of the relatively high price. Other parties express certain reservations and caution against hasty decisions that could prove very costly. However, no party has an elaborate European and general foreign policy strategy with firmly established criteria and deadlines. Consequently, the decisions adopted are often inconsistent and pragmatic and conditioned by the current internal political situation as well as the international situation. On the other hand, the 90 members of the Slovenian parliament have made important decisions regarding Slovenia’s integration into the EU with a high degree of consensus. For example, following heated discussions between the socalled “land-protectors” and “land-sellers”, the parliament adopted the “Spanish compromise” that entailed amending the Slovenian Constitution of 1991 by 49 votes against 14. The decision to apply for full EU membership and start the necessary negotiations with the EU was also taken with a sound majority. Under international pressure, the amendment to the constitution that changed Article 68 was adopted by 81 votes against 1 in 1997. This amendment, which abolished the constitutional prohibition of the purchase of land by foreigners, had to be considered by the Constitutional Court of the Republic of Slovenia as a necessary precondition for the ratification of the Association Agreement.32 Subsequently, following the proclamation of the constitutional amendment, the parliament also passed the Europe Agreement by 70 votes against 3. The level of consensus among political parties in passing these European foreign policy decisions is almost paradoxical considering the otherwise strong party competition in domestic affairs. Public opinion on the EU is highly influenced by the current political and economic situation of the EU as well as of Slovenia. It is therefore not surprising that opinions have been shifting from more to less favourable in the last few years. In 1991, 92 per cent of Slovenians were in favour of full membership of the EC and 86 per cent in favour of an association agreement. In 1992, the EU’S positive image in Slovenia decreased to 45 per cent. There was a further decline in favourable public opinion in 1993 (to 30 per cent), though two years later, in 1995, 35 per cent of Slovenians had a positive attitude towards EU.33 The reason for the big drop in 1993 lies in the problems that Slovenia faced when it applied for associate membership. High and rather idealistic Slovenian expectations about the EC/EU were not realized. Slovenians recognized that the EU is not an ideal association and that different national interests still prevail over the interests of the EU as the whole. Slovenians now view the EU from a more realistic perspective and the percentage of those who are in favour of the EU tends to remain constant. However, one must be careful in interpreting the results of public opinion surveys. In 1996, a large majority of Slovenians (79 per cent) were in favour of joining the EU. This does not mean that they share a positive image of the EU, rather that they have become pragmatic. Similar oscillations in public

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opinion can be observed in the EU Member States: citizens are very critical towards the EU, yet almost nobody thinks of abandoning EU membership. In Slovenia, the ratio between those in favour and those against joining the EU generally provides a positive balance of answers. A public opinion survey conducted in January 1998 showed that 56.6 per cent of respondents considered EU membership beneficial for Slovenia while 23.3 per cent considered it harmful, and some 20 per cent were undecided. Additional analysis shows important differences within the sample. People with higher education are more supportive (72.5 per cent) of EU membership than those with only primary education (41.8 per cent). Support for EU membership is also higher among young people, and declines with age. Farmers are the most sceptical, with only 27 per cent supporting EU membership. The employed are generally more favourable, although there are variations: membership is supported by 57.2 per cent of those who work in industry, 65 per cent in public services, including education and the health service, and in administration, and by 67 per cent of the self-employed. However, there are no major differences regarding the party political affiliation of the surveyed population.34 Slovenians are experiencing the following dilemma: as consumers they support joining the EU because they expect that prices will fall, but they are also aware of the possible loss of jobs in certain sectors or companies. Given the similar structure of the Austrian and Slovenian economies, Slovenians follow the developments and problems in Austria after its accession to the EU. Austrians would probably still support integration into the EU, but the majority would be a tiny one. This result is not dissimilar to opinion in other member countries, but it is less favourable than the views in other central European countries.35 EU Member States currently face a myriad of economic and institutional problems: increasing unemployment, surpluses in agricultural production, the lack of money in Structural Funds for financing the emerging needs of the Member States, the undefined position of those states that will stay outside the Economic and Monetary Union, and uncertainty regarding the future development of the main European institutions such as the Commission, Parliament and Council. Consequently, the EU has lost its image as a very successful formation. As people inside the EU became less satisfied with the policies created in Brussels, so people outside the EU also become more critical and realistic in their expectations. Yet the governments of the CEECs do not always share this new attitude. These governments are still in favour of EU membership —as soon as possible, and regardless of the price. The enlargement of the EU thus depends on the outcome of the bargaining between the EU and its Member States; between the EU and the applicants; and between each individual candidate country and its citizens. It is impossible to predict the final political outcome, but the government and people of Slovenia still hope for a positive decision some time at the beginning of the next century.

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Conclusion Regardless of all the problems and inadequacies of the EU, Slovenia sees no alternative to full EU membership in the long run. It is therefore to be expected that the government of Slovenia will do its best to facilitate negotiations with the EU on full membership. Nevertheless, both politicians and public opinion claim that this orientation might change, at least temporarily, if the price becomes too high. Whatever the setbacks, however, negotiations between the EU and Slovenia should be viewed in the context of Slovenia’s general foreign policy strategy, which, as detailed above, has been marked by a strong western orientation for more than a decade. Notes 1 The author would like to thank L.J.Sharp, Marjan Svetličič, Mitja Žagar and the participants of the ECPR Workshop “Disintegrative Trends in Europe”, Oslo 1996, and ESF Research Conference “Integration and Disintegration in Europe”, St Martin 1994, for comments on earlier versions. 2 The abbreviations EC, EU or EC/EU are used in this chapter, with EC normally denoting the European Community in the period before the formation of the European Union in November 1993. 3 B.Bučar, “Political development in Yugoslavia”, in Die neue Architektur Europas— Reflexionen in einer bedrohten Welt, W.Mantl (ed.), 49–54 (Vienna, Cologne & Graz: Böhlau Verlag, 1991); B.Bučar, “Völkerrechtliche Aspekte der jugoslawischen Reform und Verselbständigung Sloweniens”, in Staatliche Einheit und Teilung—Deutschland und Jugoslawien, K.D. Grothusen (ed.), 61–70 (Munich: Südosteuropa, Ges., 1992). 4 B.Bučar & I.Brinar, “Slovenian foreign policy”, in Civil society, political society, democracy, A.Bibič & G.Graziano (eds), 426 (Ljubljana: Slovenian Political Science Association, 1994). 5 Initially Slovenia advocated decentralization and the introduction of the decentralized asymmetrical federation. When these proposals were rejected, the presidencies of the Republics of Croatia and Slovenia proposed a loose confederate union of existing Yugoslav federal units based on the model of the European Communities. See English translations of the document of both presidencies “Confederate Model among the South Slavic States” and the subsequent “Draft Treaty of the Yugoslav Confederation—the Alliance of South Slavic Republics” prepared by the Croatian presidency in Review of International Affairs 973, 20 October 1990, 11–22. Rejecting all the above proposals, the presidency of the Socialist Federal Republic of Yugoslavia—influenced more by Serbian views and positions— prepared its “Concept for the Constitutional System of Yugoslavia on a Federal Basis” that introduced centralization and strengthening of federal authorities. See the English translation in Review of International Affairs 974, 5 November 1990, 15–18. 6 Unlike the former Yugoslavia, Slovenia was ethnically relatively homogeneous. The 1991 census showed that of 23.6 million inhabitants in Yugoslavia, there were

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7

8

9

10

some 36 per cent Serbs, 19.1 per cent Croats, 9.6 per cent Muslims (Bosnians), 7.4 per cent Slovenians, 5.8 per cent Macedonians, 2.3 per cent Montenegrins, 3.0 per cent “Yugoslavs” and 9.1 per cent Albanians (the largest ethnic minority). The census registered almost 30 additional smaller ethnic groups. From approximately 2 million people in Slovenia, some 87.5 per cent are Slovenians, 2.7 per cent Croats, 2.4 per cent Serbs, 1.3 per cent Muslims, less than 1 per cent each Italians and Hungarians, and 17 other ethnic groups together comprise less than 1 per cent. In 1990, per capita GDP in Slovenia amounted to US$ 6320, and the social product was twice as high as that for Yugoslavia as a whole. See M.Senjur, “The viability of economic development of a small state separating from a larger one”, in Slovenia— a small country in the global economy, M.Senjur (ed.), 18 (Ljubljana: Centre for International Co-operation and Development, The International Centre for Economic Growth, 1993). Slovenia accounted for some 8 per cent of the total population in Yugoslavia, but contributed some 15 per cent to the GNP of the state, some 30 per cent to total exports and some 20 per cent to the national budget. Because of a complicated political and economic system, statistical figures from exYugoslavia are often disputed, but for useful statistical data see B.Ferfila, The end of Utopia—reforms of the former communist countries (Ljubljana: Samozaloźba, 1992). After declaring independence in June 1991, Slovenia was first recognized by Croatia and the Baltic states. On 16 December 1991, the EC adopted the Declaration on “Guidelines on the recognition of new states in eastern Europe and in the Soviet Union”, as well as the Declaration on Yugoslavia, whereby it decided to recognize the ex-Yugoslav republics as sovereign states, effective as of 15 January 1992. For complete information, see “Chronological list of states which have recognized the independence and sovereignty of the Republic of Slovenia”, Journal of International Relations 1, 82–4, 1994. There are disputes among experts on Yugoslavia regarding the role of recognition in the Yugoslav war. Some are convinced that (international) recognition was too early and that it caused a war in Croatia and Bosnia and Hercegovina. However, many other reasons (ethnic, religious, territorial) triggered the war, and the recognition of new states in the territory of ex-Yugoslavia made it possible to treat this war as an international conflict rather than a civil war. After Slovenia had achieved independence and before it had been recognized as a state, GATT in fact tolerated the unusual situation. However, since international trade is important for every small country, Slovenia immediately requested officially full membership in GATT. The new member entry procedure took a considerable amount of time. A working party for Slovenia was established in July 1992, but at the concluding session of the Uruguay round in Marrakech on 11–14 April 1993, Slovenia still participated only as an observer. In 1991, 44.2 per cent of Slovenians supported a western European security orientation. That percentage increased to 54.1 per cent in 1992 and dropped in 1994 to 31.8 per cent. Data are based on a public opinion survey by the Centre for Public Opinion, Faculty of Social Sciences, Ljubljana, published as “Slovenian Foreign Policy: results of the Public Opinion Survey”, Journal of International Relations 1, 214–25, 1995. According to Eurobarometer, in 1995, 71 per cent Slovenians would have voted for NATO membership. See European Commission, Central and Eastern Eurobarometer No.6, 60 (Brussels: European Commission, 1996). Public

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11

12

13 14 15 16 17 18 19 20 21 22

23 24

25

26

27 28

support may drop substantially after Slovenia’s being rejected in the first round of “eastern” enlargement of NATO. The North Atlantic Cooperation Council was devised for the ex-Warsaw pact members only and Slovenia was the first state outside the ex-Warsaw pact to join. It was given a new name—the Euro-Atlantic Partnership Council—in January 1997. As of 1 February 1998, the following nine EU Member States had ratified this agreement: Denmark, Finland, Ireland, Spain, Sweden, Germany, Austria, France and Luxembourg. Slovenia ratified it in July 1997. The European Parliament gave its assent in October 1996. M.Žagar, “Strategija slovenske zunanje politike—1, 2”, Razgledi (Ljubljana) 1034, 3 February 1995, 12–14; Razgledi (Ljubljana) 1035, 17 February 1995, 10, 12–13. By the beginning of 1997, Slovenia had established 31 embassies, 6 consulate generals, 4 permanent missions and 24 consulates with honorary consuls. M.Svetličič, “Izhodišča razvojne strategije Slovenije”, Teorija in praksa (Ljubljana) 1–2, 27, 1993. B.Bučar, “Universalism and regionalism in Slovene foreign policy”. See Senjur (1993), op. cit., 80. Economic developments in Slovenia: a country report, 7–8 (Ljubljana: Centre for International Co-operation and Development, 1992). M.Senjur, “Introduction”, in Senjur (1993), op. cit., 13. T.Hrastelj, “The implementation of the marketing approach to the European Economic Area”, in Senjur (1993), op. cit., 129. See also M.Svetličič, “The strategy of international economic cooperation of Slovenia”, in Senjur (1993), op. cit., 39. Svetličič, “Izhodišča razvojne strategije Slovenije”, op. cit., 27. Relations between Yugoslavia and the EC date back to the non-preferential agreement signed in 1970, which expired in 1973. It was succeeded by a second Agreement signed in 1973 and tacitly extended till 1980, when the preferential Cooperation Agreement was signed. In comparison with other Mediterranean agreements, it comprised several additional sectors of co-operation. One-third of Slovene territory and Istria and Dalmatia, were given to Italy by the Treaty of Paris after the First World War. Italians (mostly from the south of Italy) were settled in this territory in the interwar period. Because of the fear of Communism and the new Yugoslav authorities, a lot of them left this territory when Yugoslavia took control of it after the Second World War. Such problems are not unique in Europe. Similar problems regarding the regulation of property rights, restitution of property and reparations also exist between the Czech Republic and Germany. Austrian, German, French and Dutch banks and companies have already established companies and branches in Slovenia. Italy and Italian companies have expressed little interest in establishing companies or investing in Slovenia—a situation which could be explained in part by the weak Italian currency. This proposal was made by the Spanish Government during its Presidency of the European Council in 1995. Slovenia currently co-operates with EFTA on the basis of a co-operation declaration signed in 1992 and an asymmetric free trade agreement signed in 1995.

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29 Slovenia made many efforts to strengthen CEFTA as a trading block in the world’s trade during its presidency in 1997. Among others, several business meetings with partners from the us and other important trading partners of CEFTA were organized under Slovenia’s presidency. 30 After the disintegration of Yugoslavia, CEFTA countries became Slovenia’s main suppliers of the raw materials and agricultural produce which had been formerly “imported” from other parts of Yugoslavia. 31 I.Brinar & S.Kuhnle, “Perspectives on European integration in smaller democracies: Norway and Slovenia compared”, in Small states compared: politics of Norway and Slovenia, B.Bučar & S.Kuhnle (eds), 23 (Bergen: Alma Mater Forlag, 1994). 32 M.Cerar, “Ob prvi spremembi ustave RS (The first amendment to the Constitution of the Republic of Slovenia)”, Pravna praksa 14–15, 1–2, 1997. 33 Eurobarometer (1996), op. cit., 49. 34 N.Toš et al., Politbarometer 1/98, Ljubljana: Center za raziskovanje javnega mnenja, 30 January 1998, 16–17. 35 M.Svetličič, “A small country going into Europe: economic pragmatism and nationhood”, in Perspectives from Britain and Slovenia, D.Fink-Hafner & T.Cox (eds), 189–224 (Ljubljana: Faculty of Social Sciences, 1996).

15 The Baltic states and EU enlargement Graeme P.Herd

The slogan “Back to Europe” provides a suitably ambiguous template upon which the competing aspirations of the ten central and east European applicant states can be bolted. For all three Baltic states, it is the security benefits flowing from EU integration that are perceived to be paramount, and EU integration has primarily been viewed by the Baltic political elites as a medium-term security generator. This was evident when Agenda 2000, presented to the European Parliament in July 1997, recommended that Estonia alone among the three Baltic states be invited to participate in the first round of negotiations in 1998: in both Riga and Vilnius the Commission’s recommendation was received as a traumatic shock by the political elites. Such a reaction to the decision to delay negotiations (though not necessarily membership itself) underscores the fact that early EU membership had been invested with a greater value and significance within the Baltic region than in other CEE regions. Why was this? What was particular to the Baltic region or to the Baltic states themselves which placed such importance on the necessity of rapid and complete integration into the EU? The context of the “debate” in the Baltic region The key dynamic driving Baltic EU policy and the crucial difference between this region and others in CEE was the impact of Sovietization in shaping the post-communist Baltic political and economic landscape. The Baltic interwar republics had obtained independence from Tsarist Russia after the First World War, but these states collapsed following forcible Soviet annexation in 1940. After German occupation, Soviet armies reinvaded and “liberated” Baltic territory in 1944, driving on through to Berlin in 1945. Although Stalinization projects were imposed on all newly liberated territories in CEE, the three newly created Soviet Socialist Republics were more deeply integrated into the Soviet system, being incorporated into the USSR itself. The experience of Sovietization was to have a profound impact upon the security aspirations and perceptions of the emergent Baltic political elites in the late 1980s. The state building projects in each of the republics after independence was gained were largely framed by the Soviet legacy of direct imperial control.1 Unlike other east European satellite states, the Baltic Soviet republics had no independent armed forces or economic

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systems, and although governmental institutional structures existed, they were largely emasculated. The politico-economic infrastructure had been totally wedded, integrated and oriented towards the Soviet modus vivendi. Baltic European reorientation On achieving independence in 1991, the main danger to Baltic sovereignty and territorial integrity was perceived to arise from the danger of an ill defined postSoviet reintegrationist impulse, generated by the unholy troika of nationalist chauvinism, Soviet nostalgia and imperial patriotism. In this context, security could only be enhanced by a dramatic strategic reorientation westwards. NATO, with its Article V nuclear security, was perceived to represent the only viable security panacea for the Baltic states.2 Although other security strategies could have been adopted, they were examined and in turn found wanting. The perceived utility of neutrality was undermined after the collapse of the cold war and the end of the bipolar international system. Regional organizations, such as the Council of Baltic Sea States created in 1992 through a German-Danish initiative, had excluded security concerns (as traditionally and narrowly defined) from its remit. The Baltic Sea region did not fall within a primary us sphere of interest and Germany was bound up with the burden of unification. Moreover, the possibility of integration into the Commonwealth of Independent States (CIS)—a collective security organization created in 1992 to provide a forum through which outstanding disputes between former Soviet republics could be solved—was considered politically unacceptable, given that the Baltic states perceived the CIS to be a mechanism for Russian inspired military reintegration of former Soviet space. For these reasons the Euro—Atlantic structure, NATO, represented the foreign and security priority of all three Baltic states. However, it was quickly realized that such integration was a long-term security strategy. In the medium term the European Union could provide security commitments and benefits (but not guarantees), and in the short term successful democratization transition projects would stabilize and secure the sovereignty of these states. The EU presented the Baltic states with the opportunity of consolidating economic prosperity. In itself, membership and economic cooperation, the extension of financial solidarity, was an important security benefit “since any Russian intervention—or threat of intervention—in an EU member state would have serious consequences for its relationship with Europe as a whole”.3 Two important factors were thus already shaping Baltic attitudes towards the EU. First, in lieu of rapid NATO integration, and in the context of the elaboration of a flexible and increasingly sophisticated Russian Baltic policy, the EU was marketed first and foremost as a soft security generating institution. That is, security benefits would occur in the political, economic, societal and environmental security sectors, as opposed to the military. Secondly, embedded

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within this first expectation was the understanding that greater security was inextricably equated with enhanced stability and sovereignty. From the outset, then, the security environment that characterized the Baltic region in the early 1990s had both a defining impact upon the way in which EU membership was to be sought and upon the expectation of benefits EU membership would provide. In essence, the EU had been “securitized” as an issue. Membership/non-membership was perceived in terms of increased/ decreased stability and security of Baltic sovereignty and territorial integrity. As a consequence of this stark polarization of the issue, there was little public or elite debate on whether or not to join; debate and argument revolved only around which policies to pursue in order to gain rapid integration. While in the other central and east European states, the European idea has occasionally been undermined by the perceived threat of supranational integration after 50 years of totalitarianism, such a debate has not characterized nationalist rhetoric in the Baltic states. Indeed, as one analyst succinctly remarked, rather the opposite is true: “Emphasising the Europeanness of Baltic cultures serves to heighten what many see as a clear cultural contrast with Russian, ‘Eastern’ culture. ‘Rejoining the European family’ is seen by many as a way to bolster national identity, rather than threaten it.”4 Thus in the Baltic region, nationalists embrace EU integration as an opportunity to fulfil and further national state interests. As the issue of EU membership became “securitized” in the Baltic region, the prospect of Baltic-EU integration helped generate and focus debates over the EU’S commitment to evolving a military capability and its relationship with other regional organizations. EU membership, as well as wedding new members to the Common Foreign and Security Policy (CFSP) and the “possibility of a common defence identity”, would also open the door to membership of the Western European Union (WEU), with its conventional military benefits. However, the prospect of a merger between the EU and WEU threatened to undermine the strong Nordic EU pressure for Baltic EU integration. The possibility was strongly attacked by Sweden and Finland, who argued that the conflation of the two organizations was unacceptable as it would undermine Sweden’s supposed neutrality (although with EU membership it was now formally non-aligned) and was likely to cause Russian opposition to EU enlargement.5 The merger was ruled out. Further arguments revolved around the relationship between NATO and EU enlargement. Would NATO and EU enlargement occur hand in glove, that is, would the EU only integrate to include those countries selected for first echelon NATO enlargement, or, indeed, would EU membership prove to be a compensatory alternative to NATO integration? In short, would the NATO and EU enlargement in the 1990s prove to be a mutually supportive process, mirroring the Iberian integrative model of the 1980s? The EU was to argue strongly that EU membership was unrelated to NATO enlargement. Martin Bangemann, EU commissioner responsible for information and

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telecommunications technologies, refuted the idea that it was only NATO first echelon states that would enter the EU in the first phase of enlargement.6 Baltic co-operation: a means to an end? Moreover, although in 1997 the Commission’s recommendations were based on an evaluation of each individual state’s readiness to become an EU member, in the early to mid-1990s the EU had stressed that progress in sub-regional cooperation (co-operation among states sharing common geopolitical situations) would reflect a general capability to integrate into larger unions. The impulse to promote regional co-operation on the lines of Benelux or Nordic co-operative models co-existed side by side with the realization that aspirant states would be judged according to their individual capabilities. This apparent contradiction has generated a tension which remains at the heart of EU-integration debates within the region. Both Estonia and Lithuania had developed integration strategies that were primarily oriented towards relying upon advice and aid from their strategic partners (Finland and Poland). Sub-regional political and economic structures created to foster co-operation among the three Baltic states were perceived to be of secondary importance to Estonia and Lithuania, but were central to Latvia’s Euro-integration strategy. Thus, although the end remained the same, the means (strategies) and emphasis differed among the three states. The differences between the integration strategies of the Baltic states created a deep-seated policy differentiation between states that were also attempting to maintain and increase sub-regional partnership. Estonia, particularly, had recognized an inherent danger in this one echelon approach to EU integration: the Baltic integration convoy would only proceed at the pace of their slowest ship of state. Bluntly formulated, were this policy to be universally embraced, then each of the Baltic states would be rendered hostage to the ability of the weakest to implement the prerequisite reforms. This raised the real danger that none of the Baltic states would be integrated in the first wave of EU eastern enlargement, adrift in the grey zone between an enlarging EU and a revanchist Russia. This debate over strategic integration policy—the “state capability” versus “sub-regional cohesion approach”—was boosted in the months preceding the recommendation, when Estonia clearly reiterated its contention that EU integration should be based on the objective criteria of state capability.7 It is notable that while institution building designed to promote the integration into the EU of individual states has been effective, the ability of sub-regional instruments to deliver co-operation within the Baltic area is more questionable. Integration institutions have been most effective when created in order to promote direct EU integration. For example, European Integration Bureaus, European Integration Councils or posts of European Affairs Ministers have been created within the individual Baltic states over the past two years. In Baltic parliaments, the European Affairs Committee debates and makes public the

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issues relating to European integration and the experience of small member states such as Ireland, Denmark and Finland are utilized as a model for successful integration.8 Institutions tasked with promoting sub-regional co-operation, on the other hand, have met with less success. The Baltic Assembly, which first met in Tallinn in 1989, has attempted to become the institution that facilitates integration between the three Baltic states. Vytautas Landsbergis, Speaker of the Lithuanian Seimas (parliament) outlined the goals of the Baltic Assembly as including “the creation of a common Baltic market and of a common Baltic system of mutual economic assistance and credits, the need to abstain from economic confrontation at state level and the need to establish a common Baltic information system”.9 It focuses on economic development, environmental cooperation, and customs and passport control, but it lacks political power and is hampered by the lack of co-ordination and poor information exchange between Baltic Parliaments and lack of legislative co-ordination between the three states. The Baltic Council of Ministers represents an inter-governmental attempt to foster regional co-operation. Its effectiveness has also been questioned. It has failed to harmonize legislation: the stalled Via Baltica Project, which proposed a road linking Finland with Poland, illustrates this. It is unlikely that the idea of a Baltic Customs Union will be achieved by 1998, and the inability or unwillingness of the Baltic states to create a common free trade area or to cooperate among themselves on other projects has proved damaging as it raised questions about their ability to co-operate with others. Moreover, there was a tendency to view broader strategic integrative impulses through the narrow prism of Baltic co-operation. A Polish-Lithuanian joint Parliamentary Assembly was founded in mid-1997. It consists of 20 members of each parliament representing different factions, and aims to solve bilateral problems and co-ordinate the positions of the two countries in international politics. Fears were raised that this Assembly, and the possible regional reorientation towards CEE that its creation signified, could become more important than the Baltic Assembly and undermine sub-regional co-operation and so eventual EU membership.10 Lithuania openly argued that it expected to be integrated into the EU “together with the first [group of Central European] countries.”11 The Commission opinions (avis) and Baltic domestic reaction It was into this immediate context that the recommendation came from the Commission that the EU should initially invite five CEECs, including Estonia, to participate in EU accession negotiations. On 16 July 1997 the Commission presented its recommendations to the Estonian government. Hans van den Broek, the European Commissioner in charge of external political relations, demonstrated Estonia’s readiness for talks by stressing that economic reforms, the

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development of a market economy and liberalism in foreign trade were in Estonia’s favour. He also stressed that although the EU had to differentiate between countries, “differentiation in no way implies discrimination”.12 However, the opinion (avis) also pinpointed specific areas for Estonia where further reform was needed, which the Estonian prime minister summarized as “the position of its Russian minority; a big foreign trade deficit; uneven regional development and low GDP by comparison with the EU countries’ average”.13 The weakness in public sector legislation was highlighted, particularly the application of law in the judicial system. Within the economy, a reform of the pensions system and the need for continued modernization of the energy, fishery and agricultural sectors were underlined. Both border-crossing infrastructure and work on administrative structures dealing with refugees and asylum seekers needed to be improved. Structures created to combat organized crime (drug trafficking, money laundering, fraud and car theft) needed to be developed. On the minority question, the opinion recommended that the naturalization process be improved, with greater resources allocated for Russian speakers to learn Estonian in order to pass the naturalization test.14 Estonia reacted favourably to the recommendation, with the caveat that the talks process needed to be as short as possible and that admission ought to take place as soon as possible.15 Foreign Minister Ilves emphasized that the Estonian political agenda in the lead up to the Luxembourg European Council in December 1997 would be focused: “Our goal is to ensure that every single European Union member state supports us as wholeheartedly as the Nordic members of the European Union do”. Sim Kallas, the previous foreign minister, added: “Estonia will now be seen as a Nordic country in the European Union, even though with a slightly weaker economy.”16 The degree of political consensus over the benefits of early entry into EU accession talks was a notable feature of the Estonian reaction, although President Meri reminded Estonian society that this decision could not have been achieved without difficulties—borne by the least protected elements of Estonian society, the peasants and the elderly.17 Tallinn Mayor Egar Savisaar argued that most Estonians are indifferent to EU enlargement as they see no concrete benefits from it.18 Striking a more cautious note, Ilves cautioned against undue optimism that the recommendation would lead to membership of the EU: “The beginning of accession talks does not mean that we are in.”19 In a formal response to the recommendation, Latvia claimed that much of the data used in the European Commission’s recommendation was out of date, an objection it shared with Lithuania. In order to remedy this, the Commission agreed to correct data by bringing the information up to date for the Luxembourg European Council.20 In a detailed analysis of the opinion, the Minister for Special Tasks (responsible for EU affairs) Aleksandrs Kirsteins outlined three key differences between Estonia and Latvia. First, while Estonia had a function- ing market democracy, Latvia had only achieved progress in planning for a market economy (for example, Latvia undertook necessary reforms such as the sale of

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land into private hands later than Estonia). Secondly, while foreign investment in environmental protection is necessary in Estonia, foreign investment is necessary for both environmental protection and agriculture in Latvia. Lastly, although a Reform Council and a Reform Bureau had been created with a grant of seven million lats (about ECU 11.5 million) to the Foreign Ministry from the state budget, in Estonia the equivalent grant amounted to 12 million lats. Amendments were to be made to the internal regulations of the Cabinet of Ministers so that every time a law was passed a note would be made as to whether the law conformed to the requirements of the European Union.21 The Lithuanian response was the most vocal and sharpest in its direct criticism of the avis. Lithuanian officials disagreed that Lithuania was not ready to join the start of membership talks, and, echoing the Latvian response, claimed that the decision was political and based on outdated and inaccurate information. For example, it was claimed that Lithuania’s inflation was calculated in 1996 at 11 per cent higher than it actually was; that Lithuania was instructed to speed up privatization, but that all but 5 per cent of enterprises were out from under state control; and that the EU demand to amend the formal bankruptcy procedure had already been implemented.22 The broad Lithuanian response was to argue that it had met membership criteria for political stability and achieved results in implementing economic reforms and harmonizing legislation with that of the EU.23 From emphasizing the specific detailed weaknesses that undermined the recommendation, Lithuania then addressed the generic reasoning for starting EU membership talks with only some of the aspirant states: negotiations should not start with states that are not ready, as this could slow down the whole process of enlargement; and the EU is physically unable to start membership talks with a large number of countries simultaneously. Lithuania argued that the Copenhagen criteria had been met and that Lithuania should be invited to talks without having other specific EU requirements to fulfil. To the second substantive reason for delaying simultaneous talks, Lithuania has argued that geopolitical considerations have clouded the Commission’s judgement.24 Unlike in Estonia, overwhelming political consensus in Lithuania was undermined by the creation of a Eurosceptic movement called the National Democratic Movement. This movement opposes EU admission because it is perceived to undermine independence.25 Rimantas Sapronas, a member of parliament elected for the Lithuanian National Union, but sacked from the post of chairman and then suspended for advocating national democratic ideas and Euroscepticism, also ran in the presidential election later in the year. He argued that EU membership was not necessarily beneficial in terms of the economy, national culture, identity and independence. Sapronas promoted the idea of generating non-EU based benefits by creating a self-defence union of states, from the Baltic to the Black Sea.26

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The wider impact of the avis: sub-regional co-operation and Russo-Baltic policy The recommendation of July 1997 to begin negotiations with five CEECs was confirmed at the European Council’s meeting in December 1997. It does not follow that other countries lie outside the integration process or that actual accession needs to be staggered. As Jacques Santer had informed a Latvian audience in November, the EU would continue “bilateral co-operation with each candidate country; a report on the situation in candidate countries will be drafted annually and the European Council will decide on the start of admission talks.”27 Indeed, using the past as a guide, negotiations have taken several years until agreement between the EU and the aspirant state was reached, and then ratification by all European parliaments has added a further year to accession. Thus it is realistic to expect first echelon integration to occur only between 2003– 2005.28 Sub-regional cohesion Following the Commission recommendations, the debate concerning subregional co-operation and individual state capability resurfaced with a vengeance in each of the Baltic capitals, amplifying the tensions already vocal in the predecision debates. Latvian and Lithuanian response also confirmed that the initial trauma created by the recommendation had deep-rooted systemic implications in the formation and continued implementation of pan-Baltic integration policies. Surprisingly, perhaps, the recommendation which was most favourable towards Estonia also created a policy dilemma Estonia found difficulty in resolving. It was politically important for Estonia to continue to emphasize the importance of sub-regional co-operation, the benefits of Baltic unity and its support of the aspirations of Latvia and Lithuania to gain early EU entry. At the same time, however, Estonia made clear its determination to enter EU negotiations in the first echelon, but to enter as the only Baltic state, rather than as part of one Baltic EU echelon. As the Estonian Foreign Minister argued: “If we started demanding this, it would mean that we put the European Commission’s July decision in doubt. This may lead the Commission to conclude that the decision was wrong with respect to us as well, and Estonia also might remain behind the doors in the first round.”29 In order to sweeten the effects of this bitter pill, Estonia also adopted the “spillover” argument: “one Baltic country closer to accession will help the others by making the EU more familiar with the problems and prospects of reform in all three states”.30 Moreover, Estonia has stressed that although it may be the first to start membership talks, this does not mean it will inevitably be the first of the Baltic states to join.31 To an extent, Lithuania also faced an unforeseen policy dilemma. It had argued in January 1997 that “NATO membership of one of the Baltic states would be very beneficial to the others [Baltic states]—a blockade of diplomatic

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and political pressure would be lifted”.32 However, what was good for Lithuania’s NATO goose was considered bad for her EU gander. Latvia and Lithuania were not so readily prepared to accept the “spillover” benefits that would flow from Estonian EU membership. Broadly, Lithuania and Latvia highlighted their fears that EU Estonian fast-track integration would leave both states within a Baltic ghetto, characterized by restrictive regionalism and political isolationism. In short, the recommendation could only diminish the opportunities for sub-regional cohesion. This recommendation caused a dramatic foreign policy reorientation within Lithuania. Lithuania reiterated that it would attempt to join the first stage of European eastern enlargement; this was to become the new primary priority of Lithuanian domestic and foreign policy. Consequently, the central tenet of Lithuanian foreign policy—NATO membership—was now to be officially downgraded as a priority.33 Lithuania argued that the EU should start negotiations with all candidates simultaneously, hinted that the EU’S evaluation of Estonia was unrealistically high, and opened up an EU-wide diplomatic offensive in order to persuade EU Member States to adopt a policy of simultaneous talks at the December EU summit in Luxembourg.34 In its diplomatic efforts to break the “blockade”, Lithuania met with some success. France, for example, supported the idea that countries seeking membership of the European Union should begin talks on 1 January 1998 and promised to act as Lithuania’s advocate on the route to the European Union.35 Greece, too, advocated simultaneous talks for all three Baltic states.36 Denmark, along with all other Nordic EU countries (except Finland), stressed that Estonia would be invited to the first round of European Union enlargement, but that it would be more “just” if talks were started with all aspirant countries.37 However, this diplomatic front did not enjoy unqualified success. The Netherlands, for example, stated that both Latvia and Lithuania were not yet ready to join the EU because the differences were too large.38 Finland and Germany have also stressed that although early EU talks should begin only with Estonia, these talks will benefit both Latvia and Lithuania.39 Latvia argued that a single Baltic-EU echelon should go forward to start simultaneous negotiations and criticized Estonia’s perceived unwillingness to continue to prioritize Baltic co-operative projects, such as the proposed free trade agreement, efforts to harmonize border control procedures (particularly, for example, the Valka/Valga check-point) and customs union.40 At the 10th Baltic Assembly session in April 1997, the three Baltic Prime Ministers had signed cooperation accords to create both a single Baltic transit zone, which would have stimulated closer economic co-operation, and the exchange of information to strengthen customs, immigration and police authorities.41 Early Estonian membership of the EU also raised fears that a huge influx of portfolio investments would move from Latvia and Lithuania into Estonia, so weakening their economies. This effect was denied by Germany, which stated that rather the opposite is occurring.42

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Latvia also highlighted the critical role of strategic partners in the integration process, an observation underscored by its failure to convince Finland that talks on joining the European Union should start simultaneously with all aspirant countries. President Ulmanis argued that “even if Finland’s support for Estonia benefited all the Baltic countries, it cannot be denied that in practice Finland has supported Estonia more than Latvia.”43 Russo—Baltic relations That the reaction to the Commission’s recommendations has been much more volatile in the Baltic region than elsewhere in Europe can be largely attributed to a distrust of Russia’s Baltic policy. It is generally feared that any delays in integration leave the Baltic states more exposed to the impulse of a neo-colonial reintegration of the former republics under Russian hegemony. Indeed, Lithuania has utilized this perceived threat as an argument for one-echelon Baltic entry into negotiations: If the [European] Commission persists along its current line of pointing to just one country, Estonia, as a possible new member, then they will give stimulus to Russian radicals who will tend to see Latvia and Lithuania as a possible “sphere of influence”. The Commission’s current position is creating unnecessary tensions and problems in relations with Russia. EU politicians say this stance is aimed at satisfying the demands of the radicals, but instead of achieving this aim, they will jeopardise the Baltic countries, the EU and Russia too.44 Russia has generally perceived the Baltic region as falling within its natural “sphere of influence”. Such a perception is bolstered by a history that locates imperial expansion as a cornerstone of national identity. Russia rose to Great Power status in the eighteenth century as a consequence of her successful integration of Baltic territory, the foundation of St Petersburg and the creation of a Baltic fleet to project Russian imperial power in the region. As one admiral recently remarked: “Peter the Great did not knock a window through to Europe and open up access to the Baltic sea for us to nail this window up now.”45 In the Soviet period the Baltic region was perceived of as a buffer region, a cordon sanitaire between Russia and the West. Such a perception continues to inform contemporary decision-making. In the rhetoric of “Red-brown” discourse, the loss of Baltic territory represents an on-going “national humiliation” which should be righted. Although the political culture within each of the Baltic states is oriented towards EU integration, the unresolved issues of outstanding border disputes and Russian objections to the treatment of ethnic minorities renders integration harder. Of the issues that dominated the early post-Soviet Russo—Baltic security agenda—minorities, border disputes and troop withdrawal and

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military pensioners—only troop withdrawal has been resolved. Indeed, the issue of NATO enlargement has come to dominate the security agenda of the region. Russian “conditional opposition” to NATO “expansion”, which characterized the period 1993–96, has been transformed into what can be characterized as “opposition by proxy”. That is, Russia has elaborated a Baltic policy designed to oppose NATO enlargement by illustrating that the conditions for enlargement have not been met by the aspirant Baltic states. In February 1997, Yeltsin’s Presidential Office published a document that elaborated Russia’s long-term policy guidelines towards the Baltic states.46 The policy document outlined six interlinked issues that were central to Russo-Baltic relations. It began by reiterating Russian opposition to Baltic inclusion into NATO and stressed that until the protection of “compatriot rights” were guaranteed, border ratification would be delayed. The document emphasized the necessity of Russia maintaining profitable economic ties to the Kaliningrad oblast’ (region), while calling for Russo—Baltic co-operation to combat the threats posed by organized crime.47 Lastly, increased bilateral cultural co-operation between Russia and the Baltic states was encouraged. The insistence that Russian agreement be given for the integration of the Baltic states into NATO, coupled to the indirect linkage of the border question to the condition of the Russian diaspora, can be interpreted as representing a concerted attempt to oppose NATO influence within the Baltic region by proxy.48 As the Copenhagen criteria argued that the fair treatment of minorities is a condition for EU integration, such a policy has the indirect effect of isolating the Baltic states from all Euro—Atlantic structures, and contradicts the formal Russian policy of removing dividing lines and barriers in Europe.49 In 1997, this interpretation was still unfolding and had yet to be substantively reinforced by events. The Latvian Foreign Minister, Valdis Birkavs, has argued, for example, that Russia only indirectly linked the signing of the border treaty with the situation of ethnic Russians in Latvia, and that Russia has reacted positively to his proposal for cross-border co-operation projects financed by the European Union or within the framework of the Council of Baltic Sea States.50 Within the document lies the implicit threat that Russia could limit its Baltic economic co-operation by redirecting trade destined for the European market away from the costly Baltic transit ports towards those of Finland. The possibility of de facto economic sanctions would provide another lever of Russian influence upon the formation of Baltic foreign and security policy and hopes for EU accession. This Russian policy of differentiated engagement with each of the three Baltic states represents a sophistication previously lacking in Russian policy towards the region. The February 1997 Guidelines were reinforced by a document entitled “Russia and the Baltic states”, published by the Russian Foreign Affairs and Defence Policy Council. According to the deputy head of the Lithuanian Conservative Party faction, Rasa Rastauskiene, Russia will continue to hinder

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Baltic integration into the EU through exerting influence upon high level Lithuanian administrators.51 Conclusions In comparison to the other seven aspirant CEE states, the Baltic-EU integration process exhibits many unique features. First, the “integration dilemma”—the inherent tension between integration gains and sovereignty losses—appears to be completely lacking in the Baltic region. The political elites of all three states, if not the public, are locked into the EU integration process, exhibiting a remarkable degree of political consensus. However, while the issue of EU integration has not caused a political cleavage among parties, elite political consensus could fracture under the frustration of delayed integration. More importantly, however, could be the growing impact of Baltic public opinion in shaping state policies towards integration. As one analyst has commented: “If there are no clear prospects for joining the EU in the foreseeable future, however, the mood of the public opinion may well change, and transitional processes may slow down.”52 The inherent tension in sub-regional co-operation has been the realization that intra-Baltic co-operation is not perceived as an end in itself but the means of achieving other ends, namely, EU and NATO membership.53 Within the Baltic region it remains a central irony that sub-regional cohesion, stimulated and developed as a necessary precursor to EU integration, is now undercut by the very process it ostensibly serves to support. Without striking an unduly pessimistic note, the tensions already generated by the Commission’s recommendations of July and its confirmation by the European Council in December 1997 can only be exacerbated if the three Baltic states fail to integrate at the same time. Crucial to this outcome will be progress made in combating corruption, harmonizing legislation, and institutionalizing border-control regimes, all of which at present hinder Baltic-EU integration. More positively, although the Russian rhetoric of reintegration has not diminished, and continued conceptualization of the Baltic region as central to a Russian sphere of influence plays a dominant role among the Russian policymaking elite, two factors mitigate against the actualization of Russia’s integrationist policy. Russia has neither the economic resources nor the political capital to underpin such a policy. The domestic political agenda is of paramount interest to Russian policy-makers. This agenda is overcrowded, the dynamics of economic reform, the development of a regional policy, the simultaneous downsizing and modernization of the military and stabilization of the transition stage of Russia’s democratization project are all higher priorities than ensuring that Russia’s Baltic policy maintains its coherence.54 Baltic-EU integration will prove to be a long-term security strategy for each of the Baltic states. Both EU and aspirant state attitudes to enlargement are constantly evolving as the integration agenda becomes more explicit and the

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implications of integration clearer for all concerned. Initially, the EU was perceived primarily in terms of providing security benefits for member states; increasingly, though, it is recognized that the very process of gaining membership plays an important role in disseminating these benefits to all sectors of Baltic society. At present, the Baltic desire to integrate as quickly as possible still remains a key dynamic governing the enlargement project within this region. It remains to be seen whether this romantic attachment can survive the mundane reality of membership: “Is it better to travel hopefully than to arrive?”. Notes 1 For further details on Baltic politics, see A.Lieven, The Baltic Revolution (New Haven, Connecticut: Yale University Press, 1994). 2 For an analysis of the main dynamics in Baltic democratic security building, 1991– 95, see S.J.Blank, Russia and the Baltic: is there a threat to European security? (us Army War College, Strategic Studies Institute, 31 March 1993); P.Joenniemi & J.Prikulis (eds), The foreign policies of the Baltic countries: basic issues (Riga: Centre of Baltic-Nordic History and Political Studies, 1994); E.Bajarunas, M.Haab, I.Viksne, “The Baltic States: security and defence after independence”, Chaillot Papers 19 (Paris: Institute for Security Studies of Western European Union, 1995). 3 R.D.Asmus & R.C.Nurick, “NATO enlargement and the Baltic States”, Survival 38 (2), 134, 1996; G.P. Herd, “The Baltic States: a crisis averted?”, in Brassey’s Defence Year Book 1997, 93–116 (London: Brassey’s, 1997). 4 J.Lofgren, “A different kind of Union”, Transitions 4(6), 47. 5 Summary of World Broadcasts (SWB), SU/2883 E/1, 2 April 1997; D.Arter, “Finland: from neutrality to NATO?”, European Security 5, 614–32, 1996. 6 SWB, SU/29019 E/2, 15 May 1997. This suggestion had been proposed in a highly original and influential article written by R.D.Asmus & R.C. Nurick, “NATO enlargement and the Baltic States”, Survival, 38(2). R.D. Asmus was subsequently appointed us Deputy Assistant Secretary of State, with special responsibilities to the Baltic region. 7 SWB, SU/2917 E/1, 13 May 1997. 8 For an analysis of the creation and evolution of co-operative structures in the Baltic region, see A.Lejins, “The quest for Baltic unity: chimera or reality?”, in A.Lejins & Z.Ozolina (eds), Small states in a turbulent environment: the Baltic perspective, 147–83 (Riga: Latvian Institute for International Affairs, 1997). 9 SWB, SU/2825 E/1, 14 January 1997; SWB, SU/3076 E/1, 14 November 1997. 10 SWB, SU/2945 E/4, 14 June 1997. 11 SWB, SU/2847 E/1, 19 February 1997. 12 Eesti Ringvaade (Estonian Review) 7(29), 13–19 July 1997. Eesti Ringvaade is compiled from local news services, including BNS and ETA, and is issued by the Press and Information Department, Ministry of Foreign Affairs, Tallinn. 13 SWB, SU/2974 E/1, 18 July 1997. 14 Roadmap to reform: Estonia’s future plans in the field of European integration (Tallinn: September 1997). I am grateful to the Embassy of the Republic of Estonia, London, for kindly supplying me with relevant press material.

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15 16 17 18 19 20 21 22 23 24 25 26 27 28

29 30

31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46

47

SWB SU/2979 E/2, 24 July 1997. Eesti Ringvaade 7(29), 13–19 July 1997. SWB, SU/3020 E/1, 10 September 1997. SWB, SU/3074 E/3, 12 November 1997 (ITAR-TASS news agency, Moscow). Eesti Ringvaade 7(29), 13–19 July 1997. SWB, SU/3037 E/1, 30 September 1997. SWB, SU/2974 E/1, 18 July 1997; SWB, SU/2980 E/1, 25 July 1997. SWB, SU/2977 E/1, 22 July 1997. SWB, SU/2979 E/3, 24 July 1997. SWB, SU/3037 E/2, 30 September 1997. SWB, SU/2935 E/2, 3 June 1997. SWB, SU/2965 E/2, 8 July 1997. SWB, SU/3069 E/2, 6 November 1997. One commentator estimates Baltic entry into the EU around the year 2010, see A.Frisk, “NATO is not the security panacea”, The Baltic Times, 23, 22–28 August 1996. SWB, SU/3022 E/1, 12 September 1997. Joan Lofgren, “A different kind of Union”, op. cit., 49. See also “President supports Latvia’s and Lithuania’s EU aspirations in Strasbourg”, EESTI Ringvaade 7(43), 19–25 October 1997. President Meri argued that the inclusion of Estonia in talks would help guarantee the other two Baltic states’ inclusion in the enlargement process. At the Baltic parliamentary meeting held in Saarema to co-ordinate the Baltic states’ European policies, this argument was reiterated: SWB, SU/3013 E/3, 2 September 1997. SWB, SU/3022 E/3, 12 September 1997. SWB, SU 2825 E/2, 24 January 1997. SWB, SU/3057 E/1, 23 October 1997. SWB, SU/2951 E/2, 21 June 1997; SWB, SU/3011 E/1, 30 August 1997. SWB, SU/2970 E/1, 14 July 1997. SWB, SU/3054 E/2, 20 October 1997; SWB, SU/3011 E/3, 30 August 1997 (ITARTASS news agency, Moscow). “Danish FM says Estonia to be invited to EU talks”, EESTI Ringυaade 7(43), 19– 25 October 1997; SWB, SU/3017 E/9, 6 September 1997. SWB, SU/3051 E/3, 16 October 1997. SWB, SU/3054 E/1, 20 October 1997; SWB, SU/3057 E/3, 23 October 1997. SWB, SU/3020 E/1, 10 September 1997; SWB, SU/3016 E/3, 5 September 1997. SWB, SU/2905 E/2, 29 April 1997. SWB, SU/3054 E/1, 20 October 1997. SWB, SU/3069 E/2, 6 November 1997 (YLE Radio, Helsinki, 4 November 1997). SWB, SU/3057 E/1, 23 October 1997. SWB, SU/2694 S/1, 19 August 1996. SWB, SU/2848 B/10, 13 February 1997 (ITAR-TASS news agency, Moscow). For a more detailed analysis of this document, see G.P.Herd, “Baltic Security Politics”, Security Dialogue 28, 251–3, 1997. See also P.Goble, “Pressuring the Baltics”, The Baltic Times, 23, 20–26 February 1997. For a contemporary analysis of the role of the Kaliningrad oblast’ within the Baltic region, see “Kaliningrad: the fourth Baltic Republic?”, Strategic Comments 3(10),

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48 49 50 51 52

53 54

1997; A. Aldis, Baltic security—the long view from the region (Sandhurst: Conflict Studies Research Centre, G58, 1997). For a recent analysis of non-EU security architecture in the Baltic region, see G.P.Herd, “A helping of alphabet soup”, The World Today 53(7), 185– 6, 1997. SWB, SU/3021 B/11, 11 September 1997 (ITAR-TASS news agency, Moscow). SWB, SU/3042 B/5, 6 October 1997 (ITAR-TASS news agency, Moscow). SWB, SU/3039 E/2, 2 October 1997. SWB, SU/3048 E/1, 13 October 1997. D.Bleiere, “Integration of the Baltic states in the European Union”, in A.Lejins & Z.Ozolina (eds), Small states in a turbulent environment: the Baltic perspective, 80 (Riga: Latvian Institute for International Affairs, 1997). SWB, SU/2655 E/1, 4 July 1996. I would like to thank Dr Steven J.Main, CSRC, RMA Sandhurst for kindly making helpful suggestions in the drafting of this chapter.

Conclusion

Future perspectives Jackie Gower and Karen Henderson

In the early months of 1998, it appeared that the implementation of Agenda 2000 had commenced according to plan. The first European Conference took place in London on 12 March; the first Accession Partnerships were adopted by the European Commission on 16 March, and presented to the applicant countries at the formal opening of the enlargement process on 30 March; and on 31 March 1998, detailed accession negotiations commenced with the Czech Republic, Estonia, Hungary, Poland, Slovenia and Cyprus within the framework of six separate intergovernmental conferences between the 15 existing Member States and the individual applicant countries. However, there were also some negative developments. The European Conference failed to fulfil one of its major functions, which was as a forum in which Turkey could be included alongside the existing EU Member States, the CEECs and Cyprus. The Turks had made it clear soon after the Luxembourg European Council of December 1997 that they were offended by their exclusion from the accession process and saw no point in participating in the European Conference. Yet the Conference remained a device by which other European countries could be included in dialogue with the 26 states in the future. A further difficulty with the European Conference was that, in spite of an agenda including important issues such as the Common Foreign and Security Policy and Justice and Home Affairs, its limited, one-day duration and rather ceremonial nature (it included lunch with the Queen) made it a symbolic rather than practical occasion. As the prime ministers and foreign ministers of all the CEECs gathered in London, there was some scepticism about the usefulness of the exercise, and European Commission President Santer’s grandiose statement that “our children and grandchildren will remember this 12 March”1 sounded a trifle far-fetched. The European Conference appeared likely, therefore, to share some of the faults of the former Structured Dialogue that it had been intended to cure. The Accession Partnerships, on the other hand, were far more functional; but symbolized a far less equal partnership between current and aspiring member states. They were prepared by the European Commission, and comprised both a group of medium-term priorities and priorities to be “completed or taken forward in 1998”. In other words, they contained a set of clear instructions of what the CEECs had to do by the end of the year in order to remain on target for speedy

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membership, or—if they were in the second group—in order to have a chance of starting detailed negotiations at some future point. The EU’S conception of “working together with the applicant” involved the latter preparing a National Programme for the Adoption of the Acquis by the end of March 1998. This was to be a response to the Accession Partnership, setting out a timetable for achieving the priorities established by the EU and indicating the staff and financial resources that would be necessary for this. Some of the messages within the Accession Partnerships were stark: Slovakia was informed that there had to be “free and fair Presidential, national and local elections in 1998”. Most of the medium-term priorities, however, were concerned with taking on the acquis. All the Accession Partnerships also reminded applicants that “incorporation of the acquis into legislation is not in itself sufficient; it will also be necessary to ensure that it is actually applied to the same standards as those which apply within the Union”. Specific reference was made to the need for “credible and effective implementation and enforcement of the acquis”. The European Commission was clearly on its guard for the old tactic so beloved of communist bureaucrats: adopting resolutions and reporting that everything was alright when actually nothing at all was really happening. All in all, however, the “accession partnership” was clearly not an equal one; it was obvious that the Member States were the dominant partner in the relationship. Not surprisingly, this has led to some resentment in applicant states. The major question for the future, however, remained the timespan within which the CEECs might expect accession to the EU. The working assumption of Agenda 2000 that the first wave of eastern enlargement would take place in 2002 or 2003 was enthusiastically endorsed in the first half of 1998 by statements of political leaders in, for example, Hungary and Poland, who spoke of negotiations being completed in the year 2000, so that ratification might be completed by 2002. However, this timescale has always been regarded as rather optimistic considering that the accession negotiations with Spain and Portugal had taken six years,2 and it is clear that particular challenges confront the process of eastern enlargement. These relate both to the specific difficulties of integrating postcommunist states, including their low standard of living; the number of states involved in the accession process; and the complications of accepting new members in a Union that is becoming ever more complex and finely balanced. The solution of some of these problems lies in the hands of the CEECs themselves. Negotiations may be stalled if the applicants are intransigent on individual economic issues of import to them, particularly if newly elected governments court popular approval by taking a “hard line” in defending national interests and trying to insist on similar levels of support to those provided on accession to previous less affluent members. Many more problems, however, depend upon the attitudes of current Member States. The continued cooperation of the net contributors to the EU budget is vital for underpinning the European Commission’s calculations of the financial feasibility of enlargement, and statements from Germany and the Netherlands, in par ticular, have suggested

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that this may not be forthcoming. Arguments over the introduction of the Euro may also deflect attention from enlargement, given that political will is of key importance for promoting enlargement. The Cyprus issue also looms large as a possible sticking point: while Turkish Cypriots refuse to engage in the accession process, France’s reluctance to accept a divided state as an EU member together with Greece’s unwillingness to endorse enlargement without Cyprus threaten to impede accession by any of the CEECs. Furthermore, the need for ratification of accession treaties by all 15 current Member States means that the governments involved must weigh their own commitment to enlargement against their ability to carry public opinion with them. In a Europe increasingly troubled by the success of far right parties in national elections, the risk that eastern enlargement may become politicized in the domestic debates of at least one Member State is substantial. Eurobarometer polls conducted throughout the Member States for the European Commission show that public opinion on particular aspects of eastern enlargement varies substantially from country to country,3 and a group of countries popularly opposed to enlargement (Austria, Belgium, France, Germany and Luxembourg) can be identified.4 Further questions relate to the fact that the European Union normally expands in waves, with several states joining at the same time. Here, the sheer size of the current enlargement process may not detrimentally affect the speed with which the first accessions take place. Any country in the first group of “five plus one” commencing negotiations that lags behind in the negotiating process may realistically be dropped back into the second group; there is no need for other states in the group to be made to wait for them. But what if a state currently in the second group—or indeed one in the first group that has been beset by temporary problems—begins rapidly to catch up? The potential for delay certainly exists. For the second group, negotiations may also be complicated early in the next century by the group of candidate members extending beyond the current 11, particularly if the situation in former Yugoslavia stabilizes and Croatian membership becomes a political possibility. Once the first CEE enlargement has taken place, negotiations for the second group will be affected not only by the terms negotiated, but also the new dynamics of the enlarged EU. Enlargement before has always been a discrete rather than a multi-stage process, and it is difficult to predict the likely impact of the first accession on the timing of the second. The Commission’s approach so far has tended towards maintaining the flexibility to move individual states from one group to another. The system of annual reports on each applicant’s progress towards fulfilling the membership criteria established in Agenda 2000 does not explicitly stipulate that each state must be assessed at the same time; it is possible for the Commission to react to major positive or negative developments (for example, significant changes of government) in an individual country. The process of “screening”, whereby the acquis is systematically examined with regard to each applicant state, is also

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being conducted on an individual basis, although within two broad groups. In the case of the first group of six, the aim is to identify questions which must be the subject of negotiation. For the second group, areas are to be identified where additional effort is necessary in terms of the applicant’s legislation. The screening process, which started in April 1998, should be finished by the end of that year. At this point, the sensitive issue of where applicants require derogations from the acquis for transitional periods after entry will have to be discussed. This is where differentiation within the first group is most likely. If delays to the enlargement process set in, there will be both negative and positive results. There are fears that the resulting anger or despondency within the CEECs would impede European integration; yet which current Member State has not had ambivalent or contradictory attitudes to the European Union? Nor is time spent by the CEECs in waiting for EU membership time wasted. Year by year, the economic prosperity, bureaucratic capacity and social complexity of the formerly communist states increase. They are all an integral part of Europe, and as the European Union attains new forms in the next millennium, the countries of central and eastern Europe will find their place within it. Notes 1 Agence Europe, The Day in Politics 46 (7180), 14 March 1998, 2. 2 For full tabular details of the length of time taken by the various stages of enlargement for previous states that have acceded to the EU, see G. Burghardt & F.Cameron, “The next enlargement of the European Union”, European Foreign Affairs Review 2, 7– 21. 3 See European Commission, Standard Eurobarometer 48 (Luxembourg: Office of Official Publications of the European Commission, 1998). 4 Ibid, B.53.

Glossary and abbreviations

Accession partnership Framework for preparing applicant states for EU membership, approved in December 1997, involving precise commitments by the applicants, and provision of resources by the EU acquis (communautaire) The entire body of laws and obligations agreed by the EU which must be accepted by new members; the adjective communautaire has been dropped since the EU took the place of the EC Agenda 2000 European Commission documents issued in July 1997 on the future development of the European Union, including eastern enlargement, with opinions on the ten applications from CEECs ALMP Active labour market policies AMS aggregate measure of support avis Commission opinion on an application for EU membership AWS Akcja Wyborcza Solidarność (Solidarity Action Committee—Poland) CAP Common Agricultural Policy CBOS Centrum Badania Opinii Publicznej (Central Bureau for Public Opinion— Poland) CEE Central and eastern Europe CEECs Central and east European countries (designation for the first ten postcommunist EU candidate states) CEFTA Central European Free Trade Area CFSP Common Foreign and Security Policy (“second pillar”) CIS Commonwealth of Independent States CJTF Combined Joint Task Force CMEA Council for Mutual Economic Assistance COREPER Committee of Permanent Representatives (of Member State governments to the European Council) DG Directorate General (of the European Commission) DU Demokratická únia (Democratic Union—Slovakia) EAPC Euro-Atlantic Partnership Council EBRD European Bank for Reconstruction and Development EC European Community ECMM European Community Monitoring Mission ECU European Currency Unit EEA European Economic Area EFTA European Free Trade Area EMU Economic and Monetary Union (including introduction of the Euro as a single European currency) EP European Parliament EPC European Political Co-operation ETUC European Trades Union Council EU European Union

268 GLOSSARY AND ABBREVIATIONS

European Conference Annual conferences, commencing March 1998, to bring together EU Member States and all applicant states FDI Foreign direct investment G7 Group of seven major industrial states (Canada, France, Germany, Italy, Japan, UK, USA), which originally conceived the PHARE programme at the Paris Summit in June 1989 G24 Group of 24 major industrial states, which comprised all the OECD member states before the latter organization was joined by the first CEECs from 1995 onwards GATT General Agreement on Tariffs and Trade GDP Gross Domestic Product GNP Gross National Product GUS Główny Urząd Statystyczny (Main Statistical Office— Poland) GVA Gross value added HZDS Hnutie za demokratické Slovensko (Movement for a Democratic Slovakia) ICFY International Conference on Former Yugoslavia IFI International financial institution IGC Intergovernmental Conference JHA Justice and home affairs (“third pillar”) JPC Joint Parliamentary Committee (of the European Parliament and the parliament of an EU candidate state) MEP Member of the European Parliament NATO North Atlantic Treaty Organisation OECD Organization for Economic Co-operation and Development OPEC Organization of Petroleum Exporting Countries OPZZ Ogólnopolskie Porozumienie Związków Zawodowych (All-Poland Alliance of Trade Unions) OSCE Organization for Security and Co-operation in Europe (formally CSCE) PHARE Poland and Hungary: Aid for the Restructuring of Economies (EC/EU aid programme to the CEECs) PSL Polskie Stronnictwo Ludowe (Polish Peasant Party) QMV Qualified majority voting ROP Ruch Odbudowy Polski (Movement for Rebuilding Poland) Schengen Agreements Accords that entered into force in 1995 and established an area of free movement between all EU Member States except Denmark, Ireland and the UK. SFRY Socialist Federative Republic of Yugoslavia SLD Sojusz Lewicy Demokratycznej (Alliance of the Democratic Left-Poland) SNS Slovenská národná strana (Slovak National Party) TCA Trade and Co-operation Agreements (between EU and CMEA countries) TEU Treaty on European Union (Maastricht Treaty of 1992) troika Group comprising the current, previous and following Presidencies of the European Council UK United Kingdom UN United Nations UNICE Union of Industrial and Employers’ Confederations of Europe URAUruguay Round Agreement US United States

GLOSSARY AND ABBREVIATIONS 269

UW Unia Wolności (Freedom Union—Poland) V4 Visegrad Four (Czech Republic, Hungary, Poland, Slovakia), a group of countries that agreed to co-operate in security and economic matters at a meating in Visegrad, Hungary, in 1991. Known as Visegrad Three prior to the division of Czechoslovakia. VAT Value Added Tax VPN Verejnost’ proti násiliu (Public Against Violence— Slovakia) WEU Western European Union WTO World Trade Organisation ZchN Zjednoczenie Chrześcijańsko-Narodowe (Christian National Union— Poland) ZRS Zduzenie robotníkov Slovenska (Workers’ Association of Slovakia) Note The “EU” (European Union) was created by the Treaty of Maastricht of 1992, and came into existence in November 1993. The designation “EC” (European Community) is used in this book when referring to events that took place before the Union existed. The EC itself comprised three communities: the European Economic Community, the European Coal and Steel Community and the European Atomic Energy Community. The Union was created by adding a “second pillar” (Common Foreign and Security Policy) and a “third pillar” (Justice and Home Affairs) to the already existing “first pillar” of the European Communities. The term “European Community” is still encountered in contemporary literature to designate what was originally the European Economic Community.

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Index

accession 3, 15–16, 107–8, 110, 277–9 Baltic states 263, 264, 266, 269 CAP 115 CEE views on EU enlargement 185, 186–96, 198–201 challenge of EU enlargement 71–2, 75, 77–81, 83–5 environmental issues 151, 157–61, 162, 164–5 justice and home affairs 173, 177, 178, 179 NATO factor 53, 55, 56, 58, 61, 62 Polish domestic politics 203–19 security and democracy 23, 30, 32 Slovakia and democratic criteria 221– 40 Slovenia 243, 250 Visegrad labour markets 129–50 Accession Partnerships 15, 84, 277, 278 CEE views on EU enlargement 191, 193, 195, 199 justice and home affairs 177, 178, 180 acquis 107, 278, 279, 280 accession and labour market 129, 131 CEE views on EU enlargement 190–1, 197–8, 199 challenge of EU enlargement 79, 83, 84 environmental issues 158–61, 163, 164 EU policy to CEE 6, 7, 14, 15 justice and home affairs 172, 174, 175, 177, 178 Polish domestic politics 208 Slovakia and democratic criteria 221– 2, 224, 236 active labour market policies (ALMP) 144

administration budget 121, 122, 123, 124, 163 Agenda 2000 12–13, 104, 125, 277–9 Baltic states 259 CAP 119, 120 CEE view on EU enlargement 197, 199 challenge of EU enlargement 72, 74, 76, 79, 84 environmental issues 157, 159–61, 164 justice and home affairs 177, 178 NATO factor 56, 58–60, 62–4 Slovakia and democratic criteria 221, 223, 224 structural policy 112, 113 aggregate measure of support (AMS) 118 agriculture 41, 94, 114–21, 158, 178 accession and labour market 139, 140 Baltic states 264, 265 budget 121–5 CEE views on EU enlargement 188–9, 193, 199–200 challenge of EU enlargement 80, 83, 84, 85. EU policy to CEE 6, 9, 15 Polish domestic politics 204, 205–8, 214, 215 Slovenia 250, 251, 253 see also Common Agricultural Policy (CAP) aid and assistance 41, 120, 121, 122, 124 CEE views on EU enlargement 188–9, 198 challenge of EU enlargement 75, 84–5 environmental issues 153–5, 161, 165 EU policy to CEE 3–5, 15 justice and home affairs 177–9 280

INDEX 281

pre-accession 112, 120, 124, 161 regional specific 110–13 security and democracy 30, 31 Yugoslavia 25 see also PHARE programme air pollution 151–3, 154, 158, 163, 164 Albania 8, 30, 31, 103 Allen, D 46, 47 and Smith, M 38 Allin, Dana 62 Amsterdam European Council (1997) 11– 12, 74, 171–2 Amsterdam Treaty 12, 13, 125, 222 CFSP 40, 42, 44, 45, 47 challenge of EU enlargement 72, 74, 75, 78, 80, 81 justice and home affairs 171, 172, 175 NATO 59–60, 61 Ardy, Brian 107–28 Asmus, R and Nurick, R 63 Association Agreements 222, 232, 250, 252 Association Committees 90, 91, 92, 93 Association Councils 90, 91, 92, 93, 102 asylum 170–1, 172, 175, 177, 264 Austria 24, 43, 81, 109, 113, 196, 279 accession 53, 78 budget 122 extreme right politics 213 justice and home affairs 173, 179, 180 minorities 248–9 not in NATO 56, 57 Slovakia kidnapping 228 Slovenia 246, 248–9, 251, 253 avis (Commission opinions) 13–14, 72, 82– 3 accession and labour markets 135–6 Baltic states 263–5, 266–9 CEE views on EU enlargement 195 EU policy to CEE 10, 12, 13–14, 15 environmental issues 161 Polish domestic politics 204, 209, 212, 216 Slovakia and democratic criteria 223, 226, 230, 235–6 Visegrad pre-accession 97, 99, 100

Balcerowicz, Leszek 210, 216 Baltic states 4, 8, 83, 259–73 CEE views on EU enlargement 185–7, 189–90, 192, 196, 198, 200 justice and home affairs 177, 179, 180 NATO factor 56, 58–9, 60, 62, 63 security and democracy 30, 34 Slovakia and democratic criteria 224, 225 see also Estonia; Latvia; Lithuania Bangemann, Martin 262 Belgium 75, 80, 109, 113, 122, 190, 279 Bell, Janice and Mickiewicz, Tomasz 129– 50 Berlin Declaration (1994) 176, 180 Berlusconi government (Italy) 247 Bildt, Carl 44 Birkavs, Valdis 269 Bjerregaard, Ritt 161 Boeri, T 144 borders and border control 29–30, 46 Baltic states 263–4, 267–70 CEE views on EU enlargement 188, 192, 193, 196, 198 justice and home affairs 169–70, 172–3, 175, 177–8 Slovenia 245 Visegrad pre-accession 100, 103 Bosnia 26–8, 31, 32, 63–4 Brinar, Irena 241–57 Brussels NATO summit (1994) 54, 55, 64 Brussels (WEU) Treaty 58 budget 76, 81, 114, 121–5, 179, 189, 278 agriculture and structural policy 107– 25 Budgetary Agreement (1994–99) 110 Bulgaria 4, 8, 10, 108, 116, 144 CEE views on EU enlargement 186–7, 189–92, 197–8 challenge of EU enlargement 71, 73, 75, 79–83, 85 environmental issues 152, 154, 161, 162, 163 justice and home affairs 173, 174, 177 minorities 225 NATO 62

282 INDEX

security and democracy 30, 31, 32 Slovakia and democratic criteria 221, 224, 225, 237 Bush, President George 54, 57 Buzek, Jery 100, 204, 213, 214–16 Cannes European Council (1995) 9, 177 car crime 172, 173, 176, 264 Carnogursky, Jan 226 Catholicism in Poland 209–11, 212, 214, 215 central and east European countries (CEEC) 3–19, 277–80 accession and labour markets 129–46 agriculture, structural policy and budget 107–25 Baltic states 259–73 budget 121 CAP 115–17, 118–20 CFSP 37, 41–4, 48–9 challenge of EU enlargement 71–88 environmental issues 151–2, 153–7, 158–65 justice and home affairs 169–70, 172– 81 Polish domestic politics 208, 209 pre-accession strategy 89–104 security and democracy 23–36 Slovakia and democratic criteria 221– 40 Slovenia 241–57 views on EU enlargement 185–202 central Europe and NATO 54–6, 58, 60, 62 Central European Free Trade Agreement (CEFTA) 129, 251 Central European Police Academy 180 cereals 116, 117, 119, 120 Chirac, President Jacques 61 Christopher, Secretary of State Warren 55 Cimoszewicz, Wlodzimierz 204–5 Ciorbea 191 CIREA 171 CIREFI 171, 177 Clinton, President Bill 53–4, 55, 59 Cohesion Fund 75, 76, 84, 109–12, 123, 124 collective bargaining 130, 131–4

Combined Joint Task Forces (CJTFs) 64 Committee of Permanent Representatives (COREPER) 92, 94, 170 Common Agricultural Policy (CAP) 12, 107, 114–21, 125 budget 123, 124 CEE views on EU enlargement 193, 199 challenge of EU enlargement 72, 75, 76, 77, 81 Common Foreign and Security Policy (CFSP) 37–51, 277 Baltic states 261 CEE views on EU enlargement 190 EU policy to CEE 11, 15 justice and home affairs 175, 177 NATO factor 64 Polish domestic politics 205 security and democracy 23–5, 28, 34 Visegrad pre-accession 93, 101 compensation 107, 121 CAP 114, 117, 118, 120 redundancy 135, 136, 138 competition 7, 13–14, 41, 77 accession and labour markets 130, 133, 146 environmental issues 158, 160 Polish domestic politics 206, 208 Slovenia 245, 246, 250 Visegrad pre-accession 95, 102 Conference on Security and Co-operation in Europe (CSCE) 243 construction industry 139, 140 constructive abstention 44 contributions to budget 76, 81, 111, 113– 14, 121–3 Co-operation Agreement 246 Copenhagen Criteria 7–8, 13–14, 30, 82 Baltic states 265, 269 CEE views on EU enlargement 191, 198, 200 justice and home affairs 173, 175 Polish domestic politics 208 Slovakia 221, 223, 225, 232 Copenhagen European Council (1993) 7– 8, 9, 13, 41, 71 justice and home affairs 169 NATO factor 54

INDEX 283

Polish domestic politics 208 Slovakia 221, 222–3, 236 Visegrad pre-accession 94, 95 Corfu European Council (1994) 55 costs 75–6, 111, 208 environmental issues 163, 164 Council of Baltic Sea States 260 Council of Justice and Home Affairs Ministers 170 Council for Mutual Economic Assistance (CMEA) 3, 4, 6 Croatia 8, 26, 27, 32, 279 Slovenia 242, 246, 247 customs and customs duties 121, 169–71, 178 Baltic states 263, 267 Slovenia 249, 250 Cyprus 277, 279 accession negotiations 10, 14, 56, 72, 203 challenge of EU enlargement 72, 74, 77 Slovakia and democratic criteria 236 Slovenia 250 Czarnecki, Ryszard 215 Czech Republic 6, 96–7, 133–4, 140, 194, 277 accession and labour markets 129–30, 133–5, 137–45 accession negotiations 15, 62, 72, 203, 209 agriculture, structural policy and budget 107–8, 114 CAP 116 CEE views on EU enlargement 186–7, 189–90, 192, 194–6, 198–9 challenge of EU enlargement 72, 74–5, 81 Copenhagen criteria 13–14 environmental issues 152, 155, 159–63 Europe Agreement 8, 207 GDP 108, 130 justice and home affairs 172, 173, 174, 177, 180 NATO 30, 53, 62, 83, 221 Polish domestic politics 203, 205, 209 population 107–8, 130 pre-accession strategy 89–104 security and democracy 30

Slovakia and democratic criteria 221, 224–7, 237 Slovenia 251 de Gaulle, President 61 de la Serre, Francoise 48 de Michaelis, Gianni 246 defence see security; Western European Union Denmark 39, 78, 108, 113, 122, 190 Baltic states 260, 263, 267 justice and home affairs 172, 180 NATO 63 Dini, Foreign Minister 248 discrimination 130, 136–7, 145, 189, 191 drugs and drug trafficking 178, 264 justice and home affairs 169, 172–3, 176–7, 178, 180 Dublin Convention 175 Duke, Simon 58 economic activity rate 143–4 economic and monetary union (EMU) 121– 3, 125, 279 CEE views on EU enlargement 191, 194, 196–7 challenge of EU enlargement 78 EU policy to CEE 7–8, 11, 14 Polish domestic politics 204 Slovenia 249, 253 Eisl, Gerhard 169–82 employers’ organizations 132–3 employment 80, 83, 115–16, 129–46 legislation 134–8 Enlargement Group 92 environment and environmental issues 6, 9, 151–67 Baltic states 261, 263, 265 CAP 120 challenge of EU enlargement 79, 83 Polish domestic politics 208, 214 Structured Dialogue 177 Visegrad pre-accession 94 Environmental Action Plan 155–6 Environmental Impact Assessment 163 equal treatment 130, 136–7, 145, 189, 191

284 INDEX

Essen European Council (1994) 8–10, 176, 178, 208 NATO factor 55, 56 Visegrad pre-accession 94, 95, 102, 103 Estonia 8, 111, 113–14, 141, 259–73, 277 accession negotiations 10, 15, 58–9, 72, 203, 209 CAP 115, 116 CEE views on EU enlargement 186–7, 189, 192–3, 196–8, 200 challenge of EU enlargement 72, 74, 81 Copenhagen criteria 13–14 environmental issues 154, 159, 160, 161, 162 GDP 108–9 justice and home affairs 173, 174 minorities 225, 231 NATO 58–9, 62 PHARE presidency 103 Polish domestic politics 203, 205, 209 population 107–8 security and democracy 30 Slovakia and democractic criteria 221, 224–5, 231, 236 Euro-Atlantic Partnership Council (EAPC) 33, 64 Europe Agreements 5–7, 8–9, 90–3, 96– 101, 157–8 accession and labour markets 130, 131 CEE views on EU enlargement 193, 195, 198–9 CFSP 41, 42 environmental issues 156, 157–8 justice and home affairs 177 Polish domestic politics 206, 207–8 Slovakia 224, 232 Slovenia 243, 246, 248, 249, 252 Visegrad pre-accession 89–93, 95, 96– 101, 103–4 European Agricultural Guidance and Guarantee Fund 109 European Bank for Reconstruction and Development (EBRD) 13, 153, 156 European Commission 111, 277–9 accession and labour markets 131, 133, 135–6 Baltic states 262, 263–5, 266–9

budget 123 CAP 117, 118, 119 CEE views on EU enlargement 195–9 CFSP 41–2, 45–7 challenge of EU enlargement 72–6, 79, 82–4 environmental issues 153–4, 155, 157, 158–61, 162–3 EU policy to CEE 4, 5, 7–10, 12–16 justice and home affairs 170–1, 173–4, 177–8 NATO factor 53, 55–6, 58–60, 62, 64– 5 Polish domestic politics 204–6, 208–9, 212, 214, 216 Slovakia and democratic criteria 221– 6, 230–2, 235–7 Slovenia 246, 250, 253 Visegrad pre-accession 90–1, 93–5, 97, 99–100, 102, 104 see also avis (Commission opinions) European Community Monitoring Mission (ECMM) 25, 26 European Conference 15, 84–5, 195, 198, 199, 277 European Council of Ministers Baltic states 266, 270 CEE views on EU enlargement 185 CFSP 45, 46 challenge of EU enlargement 71–6, 78 environmental issues 162 EU policy to CEE 9, 11–16 justice and home affairs 170, 171, 175, 176 NATO factor 59 Polish domestic politics 208 security and democracy 25, 26, 27 Slovenia 241, 243, 246, 247, 253 Visegrad pre-accession 90, 91–3, 94, 103 European Court of justice 11, 171 European Economic Area (EEA) 6, 250 European Environment Agency 158 European Free Trade Area (EFTA) 6, 11, 250–1 European Parliament (EP) 4, 11, 16, 77–8 Baltic states 259

INDEX 285

challenge of EU enlargement 72–5, 77– 8, 80 environmental issues 154 justice and home affairs 171 Slovakia and democratic criteria 226, 230–4 Slovenia 250, 253 Visegrad pre-accession 90, 92–3 European Police Office (Europol) 169, 171, 175–6 European Political Co-operation (EPC) 37– 8, 39, 45 European Regional Development Fund 109 European Security and Defence Identity 33, 34 European Social Charter 130, 131, 132, 137 European Social Fund 109 European Trades Union Council (ETUC) 133 exports 6, 25, 90, 116, 118 Slovenia 245–6, 250 externalisation 40 extradition 171, 176

see also Common Foreign and Security Policy (CFSP) France 15, 30, 109, 113, 190, 279 Baltic states 267 budget 122 CAP 115, 116, 120 CFSP 44, 45–6, 48 challenge of EU enlargement 75, 76–7, 81 extreme right politics 213 justice and home affairs 172, 179 labour markets 146 NATO 57, 59, 60, 61 Slovakia and democratic criteria 232 Slovenia 246 fraud 115, 169, 173, 176, 228, 264 free movement of capital 6, 158, 250 free movement of goods 158 free movement of labour 6, 15, 195, 201, 207, 249 accession and labour markets 129, 131 environmental issues 158 justice and home affairs 171, 172 free movement of services 6

Financial Protocol 246 financial sector 139, 140 Polish domestic politics 205, 206, 212, 214 Finland 43–4, 81, 113, 122, 154, 180 accession 53, 78 Baltic states 261–3, 267–9 not in NATO 56, 57, 63 Fischler, Franz 120 food processing 115, 117 foreign direct investment (FDI) 82–3, 250 foreign policy 6, 9, 24, 31–2, 84 Baltic states 267, 269 CEE views on EU enlargement 189, 200 NATO factor 53 Slovakia and democratic criteria 228, 235, 236 Slovenia 241, 242–4, 249, 252, 254 Visegrad pre-accession 89, 93, 94, 101– 2

Gaulieder, Frantisek 229, 232 General Affairs Council 92, 94 General Agreement on Tariffs and Trade (GATT) 4, 243, 249 agriculture 115, 118, 119 Uruguay Round 118, 119 Geneva Convention (1951) 175 Genscher, Hans Dietrich 25 Geremek, Bronislaw 215 Germany 24, 108, 109, 278–9 Baltic states 259, 260, 267 budget 122 CAP 115, 116 CEE views on EU enlargement 190, 193, 196 CFSP 48 challenge of EU enlargement 76–7, 81, 84 justice and home afffairs 172, 173, 179, 180 minimum wage 136 NATO factor 55, 56, 60

286 INDEX

Polish domestic politics 207, 213 presidency of EU 8, 94 security and democracy 24, 25, 33 Slovakia 228, 232 Slovakian fraud case 228 Slovenia 246 structural policy and expenditure 110, 112–14 unification 25, 84, 109, 122, 260 Glemp, Cardinal 210 Gorbachev, President 4 Gow, James 23–36 Gower, Jackie 3–19, 42 and Henderson, Karen 277–80 Grabbe, Heather and Hughes, Kirsty 185– 202 Greece 25, 108, 222, 249, 279 Baltic states 267 budget 122 CAP 116 challenge of EU enlargement 76, 77, 81 exports 245 labour markets 138, 139, 144 NATO factor 57 PHARE programme 178 structural policy and expenditure 110– 13 Gross Domestic Product (GDP) 108–9, 111–14, 122 Baltic states 264 challenge of EU enlargement 76, 80 labour markets 143 PHARE programme 95 Slovakia 221 Slovenia 245, 249 Gross National Product (GNP) 109–13, 118, 121–4 gross value added 115–16 GROTIUS 179 Haider 213 harmonization 205, 236, 243 Baltic states 263, 265, 267, 270 environmental laws 156, 158, 159–60, 162 labour laws 131, 135, 146 Havel, President Vaclav 62

health and safety 79, 130, 131 Henderson, Karen 221–40 Hercegovina 26 Herd, Graeme P 259–73 Hill, Christopher 38, 42 and Wallace, W 39 Hubner, Danuta 99, 205, 216 human rights 5, 7, 82 justice and home affairs 169, 170, 175, 176 Slovakia 82, 222–3 Slovenia 241, 243 Hungary 4, 6, 97–9, 107–8, 114, 130, 132– 3 accession negotiations 10, 13–14, 15, 62, 72, 203, 209 CAP 116 CEE views on EU enlargement 186–8, 193–4, 196–8, 200 challenge of EU enlargement 72, 74–5, 81 environmental issues 152, 159–61 Europe Agreement 8, 207 future perspectives 277, 278 justice and home affairs 172, 173, 174, 177, 180 labour markets 129–30, 132–3, 135–45 minorities 223, 225, 226, 230–1, 236 NATO 30, 53, 62, 83, 221 PHARE programme 4, 41 pre-accession strategy 89–104 security and democracy 30 Slovakia 221, 223–6, 230–1, 234, 236– 7 Slovenia 251 Iceland 56, 172 Iliescu, President 191 Ilves, Foreign Minister 264 immigration 77, 169–73, 176–7, 180, 267 illegal 15, 171–3, 176–7, 180 imports 77, 193 CAP 116, 117, 118 Poland 208, 215 Slovenia 244, 245 incomes see wages and income Indicative Programmes 95, 102

INDEX 287

Inotai, Andras 98 institutional reform challenge of EU enlargement 73–5, 77– 8, 80, 85 Visegrad countries 92, 97, 98, 101–2 institutional stability 169, 225, 237 Integrated Mediterranean Programme 121 Intergovernmental Conference (IGC, 1991) 10 Intergovernmental Conference (IGC, 1996– 97) 10–11 CFSP 43, 44, 45 challenge of EU enlargement 71, 72, 74 EU policy to CEE 8, 10–12 Slovakia 222 Interim Agreements 5, 249 Interinstitutional Agreements 118 internal market 9, 77, 83, 158, 159, 250 International Conference on Former Yugoslavia (ICFY, 1992) 26–7 International Financial Institutions 153, 156 International Monetary Fund 4, 191 Ioaninna Compromise 78 Ireland 39, 76, 78, 120, 122, 190, 263 justice and home affairs 172, 178 minimum wage 136 not in NATO 56, 63 PHARE 178 structural policy and expenditure 110, 112–14 Italy budget 122, 123 CEE views on EU enlargement 190, 194–5, 199 challenge of EU enlargement 75, 81 employment legislation 134, 136 labour markets 144 minorities 246–7 NATO factor 60 presidency of EU 94 security and democracy 24–5, 27, 30 Slovakia 232 Slovenia 25, 27, 194–5, 199, 246–50 structural policy and expenditure 110, 113

Jackman, R and Pauna, C 141 Joint Declaration on Political Dialogue 246 Joint EC-CMEA Declaration (1988) 4 Joint Ministerial Meetings (JMM) 94 Joint Parliamentary Committees 90, 92–3 justice and home affairs 9, 15, 169–82, 277 challenge of EU enlargement 83, 84 Visegrad pre-accession 94, 100 Kallas, Sim 264 kidnapping 228–9, 232 Kirsteins, Aleksandrs 264 Klaus, Vaclav 97, 189, 194, 226 Knazko, Milan 227 Kohl, Chancellor 5 Kovac, President 227, 228–9, 230, 232, 235 Kovac junior, Michal 228–9, 232 Krzaklewski, Marian 211, 215 Kwasniewski, Aleksander 204, 209, 213, 215 labour markets 129–50 sectoral restructuring 138–42 Laffan, B 47 Landsbergis, Vytautas 263 Latvia 8, 10, 103, 108, 116, 174, 259–73 CEE views on EU enlargement 186–7, 192, 197, 200 challenge of EU enlargement 79, 82, 83 environmental issues 161, 162 minorities 225 NATO 58, 62 security and democracy 30 Slovakia and democratic criteria 221, 224, 225, 237 Le Pen 213 Lieven, Anatol 59 Lisbon European Council (1992) 7 Lithuania 8, 10, 103, 108, 116, 174, 259– 73 CEE views on EU enlargement 187, 192, 197, 198, 200 challenge of EU enlargement 79, 82, 83 environmental issues 161, 162 minorities 225 NATO 58, 62

288 INDEX

security and democracy 30 Slovakia and democratic criteria 221, 224–5, 237 Lucerne Conference (1993) 155, 156 Luxembourg 25, 44, 108, 113, 122, 190, 279 presidency of EU 11–12 Luxembourg European Council (1997) 14– 15, 16, 277 Baltic states 264, 267 CEE views on EU enlargement 195, 197–8 challenge of EU enlargement 72, 83–4 Polish domestic politics 203 Slovakia and democratic criteria 235, 236 Slovenia 243, 250 Maastricht European Council (1992) 170, 191, 204 Maastricht Treaty on European Union (TEU, 1992) 55, 57, 60, 61, 78, 175, 249 CFSP 38, 39, 42, 45, 47 justice and home affairs 169–70, 175 NATO factor 57, 58, 60, 61 political criteria 222–3 Slovakia and democratic criteria 222 Slovenia 249 Macedonia 26, 30 Madrid European Council (1995) 10, 71–2 Madrid NATO summit (1997) 56, 58, 60, 64, 83, 229 Major, John 61 Malta 10 manufacturing 138–9, 140 market access 6, 90, 189, 200, 246 market economy 7, 13–14, 81, 83 Baltic states 264, 265 Slovenia 244–5, 251 Mazowiecki, Tadeusz 210 meat 116, 117, 119 Meciar, Vladimir 192, 197, 226–36 Meri, President 264 milk and dairy products 193, 215 CAP 114, 116, 117, 119, 120 Millard, Frances 203–19 Milosevic, Slobodan 31

Milutinovic, Milan 31 minorities 7, 13, 188, 192, 202 Austria 248–9 Baltic states 264, 268, 269 Italy 246–7 Slovakia 222, 223, 225, 226, 230–1, 236 Slovenia 246–7, 248–9 money laundering 172, 176, 177, 264 Montenegro 32, 242 Moravcik, Jozef 227 most favoured nation status 4 Netherlands 25, 39, 76, 108, 113, 122, 278 Baltic states 267 CAP 120 justice and home affairs 179 labour markets 138, 139 minimum wage 136 population 107, 108, 109 presidency of EU 26, 177 North Atlantic Co-operation Council 243 North Atlantic Treaty Organization (NATO) 53–67 Baltic states 260–2, 266–7, 269–70 CEE views on EU enlargement 185, 190–2, 194, 197–8, 200 CFSP 38, 44 enlargement 30–4, 44, 53–67, 83 membership congruence 56–60, 65 Polish domestic politics 205 security and democracy 23–4, 27–8, 30– 4 Slovakia 221, 227, 229, 234, 235 Slovenia 243 Norway 78, 172, 180, 251 NATO 56, 63 Objective 1 and 2 regions 109–13 oil 206 OISIN 179 Olechowski, Andrzej 211 Oleksy, Jozef 204 Olszewski, Jan 210, 212 Orban, Viktor 194

INDEX 289

Organization for Economic Co-operation and Development (OECD) 134, 138, 140, 152, 155, 156 Organization for Security and Co-operation in Europe (OSCE) 26 organized crime 6, 15, 171–3, 176–7, 264, 269 Osimo Treaty (1974) 246–7 Oxman, Stephen 54 Partnership and Co-operation Agreements 8 Pawlak, Waldemar 204, 207 Permanent Representatives 47, 92, 94, 170 Petersberg declaration (1992) 43 PHARE programme 4–5, 9–10, 30, 41, 84, 95, 102–4 CEE views on EU enlargement 189, 193, 199 environmental issues 153, 154, 161 justice and home affairs 177–9, 180 Visegrad pre-accession 90, 95, 99, 102– 4 Phinnemore, David 71–88 Poland 6, 99–100, 114, 132, 203–19, 277, 278 accession and labour markets 129–45 accession negotiations 10, 13–14, 15, 62, 72 Baltic states 262, 263 CAP 116 CEE views on EU enlargement 186– 90, 193–200 challenge of EU enlargement 72, 74–5, 81 Copenhagen criteria 13–14 environmental issues 152–4, 157, 159, 161–3 Europe Agreement 8 GDP 108, 130 justice and home affairs 172, 173, 174, 177 NATO 30, 53, 62, 63, 83, 221 PHARE programme 4, 41 population 107–8, 130 pre-accession strategy 89–104

Slovakia and democratic criteria 221, 224, 225, 237 Slovenia 251 police and policing 179–80, 267 justice and home affairs 169–72, 174–5, 177, 179–80 Political Dialogue 93, 101–2, 104 Political Directors 45, 47 Poos, Jacques 25, 38 population 107–10, 111, 130, 162, 224–5 CAP 115–17 Portugal 76, 108–9, 122, 144, 245, 249, 278 employment legislation 134, 136 NATO 57 PHARE programme 178 structural policy and expenditure 110– 13 pre-accession strategy 3, 8–10, 15 CEE views on EU enlargement 198– 200 challenge of EU enlargement 84, 85 justice and home affairs 176 NATO factor 55 Polish domestic politics 205, 208, 216 Visegrad countries 89–105 Presidency of Council rotation 11, 25, 45, 73–4 troika 25 Preston, C 7 prices 108, 114–20, 133 Poland 206, 213 Slovenia 249, 253 privatization 95, 117 Baltic states 265 Polish domestic politics 204, 205, 207, 212–13 Slovakia and democratic criteria 226, 231, 236 Slovenia 250 Prodi, Prime Minister 248 Programme Management Units (PHARE) 95, 102–3 property ownership and purchase 195 Polish domestic politics 207, 212, 213 Slovenia 247–8, 250, 252 Public Administration Programmes 178 public opinion 48, 279

290 INDEX

Baltic states 270 CEE views on EU enlargement 186–8, 189, 201 Polish domestic politics 203 Slovakia 233–4, 235–6 Slovenia 243, 251–4 purchasing power standards 108 qualified majority voting 11–12, 44, 73–4 quotas 6, 208, 246 CAP 114, 117, 119, 120 radioactive substances 172, 176 Rastauskiene, Rasa 269 redundancy 130, 134–6, 138 refugees 27, 30, 172, 173, 175, 264 Regelsberger, E and Wessels, W 45 Relex Group 45 Remias, Robert 229 research and development budget 121 retail trade 139, 140 Romania 8, 10, 107–8, 116, 144 CEE views on EU enlargement 186– 92, 197–8, 200 challenge of EU enlargement 71, 73, 75, 79–83, 85 environmental issues 161, 162, 163 justice and home affairs 173, 174, 177, 180 minorities 223, 225 NATO 62 security and democracy 30, 31, 32 Slovakia and democratic criteria 221, 223–5, 237 rule of law 5, 7, 13 justice and home affairs 169, 175, 176 Slovakia 222 Slovenia 241 Rupp, Michael Alexander 89–105 Russia 4, 8, 44, 140–1, 143, 204 Baltic states 260–2, 264, 266–9, 270 CEE views on EU enlargement 188, 190, 192, 198 minorities 225, 231, 269 NATO factor 54, 58, 62, 63

Santer, President Jacques 45, 64, 221, 266, 277 Sapronas, Rimantas 265 Saryusz-Wolski, Jacek 99, 100, 215 Savisaar, Egar 264 Schengen agreements 30, 172, 174, 200 Schmitter 40 security 23–36, 84 Baltic states 259–61, 268, 269, 270 CEE views on EU enlargement 185, 189–90, 192 EU policy to CEE 6, 9, 16 justice and home affairs 169, 181 NATO factor 53–65 Slovenia 243 Visegrad pre-accession 93, 94 see also Common Foreign and Security Policy (CFSP) Serbia 26, 31, 32, 225, 242, 246 services 6, 138–9, 140 Seslj, Vojislav 31 set-aside 114, 117, 119, 120 SHERLOCK 179 side-payments 107, 121 single currency see economic and monetary union (EMU) single market 6, 10, 102, 131, 158, 193, 199 Sjursen, Helene 37–51 Slocock, Brian 151–67 Slovak Information Service 228, 229 Slovakia 10, 100–1, 108, 130, 133, 221– 40, 278 accession and labour markets 129–30, 133, 135–6, 140–4 CAP 116 CEE views on EU enlargement 185–7, 191–2, 196–8, 200 challenge of EU enlargement 75, 79, 82, 83 Copenhagen criteria 13–14 environmental issues 152, 154, 160–3 Europe Agreement 8 justice and home affairs 174, 177, 180 minorities 225, 226, 230–1, 236 NATO 30, 62 PHARE presidency 103 pre-accession strategy 89–104

INDEX 291

security and democracy 30 Slovenia 251 Slovenia 108, 111, 113–14, 133, 241–57, 277 accession and labour markets 129–30, 133, 140 accession negotiations 15, 72, 203, 209 CAP 115, 116 CEE views on EU enlargement 185–7, 189, 194–6, 199 challenge of EU enlargement 72, 74, 81 Copenhagen criteria 13–14 environmental issues 159, 160, 161 Europe Agreement 8 GDP 108–9, 130 Italy 25, 27, 194–5, 199, 246–50 justice and home affairs 173, 174, 177, 180 minorities 246–7, 248–9 NATO 30, 62 Polish domestic politics 205, 209 population 108, 130 security and democracy 25, 26, 27, 30 Slovakia and democratic criteria 221, 224, 225 Smith, Karen 40, 41, 43 Smith, Martin A 53–67 Smith, Michael 43 Social Chapter 131 Social Charter (1989) 130 Social Policy Agreement 130 social security 130, 131, 137 Sofia Conference (1995) 155, 156 Solana, Javier 64 Solidarity 210–12, 214, 215, 216 sovereignty 170, 172, 185, 195 Baltic states 260–1, 270 Slovenia 245 Spain 76, 122, 197, 245, 249, 278 employment legislation 134 environmental issues 163 GDP 108 labour markets 138, 139, 144 NATO 57 PHARE programme 178 population 107, 108 Slovakia and democratic criteria 222, 232

structural policy and expenditure 110, 112, 113 Stability Pacts 42–3, 48 steel 6, 193, 205–6 STOP 179 Structural Funds 110–13, 121–4, 145–6, 253 CEE views on EU enlargement 197, 199 challenge of EU enlargement 72, 75–8, 80–1 environmental issues 153, 161 structural policy 109–14 budget 121, 122, 123–5 expenditure 112, 113, 114 structural reform 96–7 Structured Dialogue 93–4, 102, 199, 277 environmental issues 158 justice and home affairs 176–7, 180 Visegrad pre-accession 90, 93–4, 101– 2, 103, 104 subsidies 114–20, 123, 214 sugar 114, 117, 121 suspension of membership 13 Sweden 43–4, 81, 113, 122, 180, 190 accession 53, 78 Baltic states 261 not in NATO 56, 57, 63 Switzerland 180, 251 TACIS 4 tariffs 6, 118, 207, 244, 251 Task Force 155, 156 telecommunications 94 terrorism 15, 169 textiles 6, 41, 205 Thatcher, Margaret 61 Tonra, B 39 Trade and Co-operation Agreements (TCAS) 4–5, 6 trade and trade relations 3, 4–5, 6, 9, 27, 77 Baltic states 263, 264, 267, 269 CAP 114, 115 CEE views on EU enlargement 189, 193, 196, 199–201 CFSP 41, 43 Polish domestic politics 207–8

292 INDEX

security and democracy 29 Slovenia 244, 245, 246, 249, 250–1 Visegrad pre-accession 90, 93 trade unions 132–4, 145–6 Polish domestic politics 206, 210–12, 214–16 Trans-European Networks 85 transport 9, 83, 94, 177, 208 Slovenia 246, 249 Treaty of European Community (TEC) 169 Treaty of European Union see Maastricht Treaty of European Union Treaty of Rome (1983) 130, 247, 248 TREVI 170 troika 25, 27 Turkey 15, 32, 84, 165, 198, 277, 279 democratic criteria 222 NATO 56 refugees 30 Ukraine 200 Ulmanis, President 268 underlapping security guarantees 57, 59, 61 unemployment 79, 117, 122, 140–5, 193–4 Czech Republic 130, 137–41, 142–5 labour markets 129–31, 134–7, 139–45 Polish domestic politics 211 Slovakia and democratic criteria 225 Slovenia 249, 253 United Kingdom 11, 45–6, 76, 190 budget 122 CAP 116 employment legislation 136–8 justice and home affairs 172, 179 labour market 139, 144, 146 NATO factor 57, 60–1 presidency of EU 197 security and democracy 23–4 structural policy and expenditure 112, 113, 114 Yugoslavia 23–4 United Nations Economic Commission for Europe 155 justice and home affairs 175, 176 sanctions against Yugoslavia 57 security and democracy 24, 26–7 Slovenia 243

United States 31, 33, 38, 44 Baltic states 260 CAP 115 employment legislation 134 NATO factor 53–64 trade unions 146 Yugoslavia 27, 28 value added tax (VAT) 121 van den Broek, Hans 26, 91, 231, 263–4 Polish domestic politics 204, 205–6, 209 Vavrousek, Josef 155 vetos 78 visas 85, 171, 191, 192, 196 Visegrad countries accession and labour markets 129–50 CAP 119 challenge of EU enlargement 75, 76 justice and home affairs 177 NATO 56, 59 pre-accession strategy 89–105 Slovenia 251 structural policy 111 voting 11–12, 44, 73–4 Waever, O 48 wages and income 107–9, 116, 117, 131–4, 212 labour markets 129–34, 136, 139, 142, 145–6 minimum 136 Wałęsa, President Lech 204, 209, 211 Wallace, William 54 Washington (NATO) Treaty 58 waste 158, 163 water 163 Western European Union (WEU) 33, 46 Baltic states 261 NATO factor 53–67 Slovenia 243 World Bank 4, 13, 153 World Trade Organization (WTO) 120, 185, 243, 249 Wrzodak, Zygmunt 211 Yeltsin, President Boris 54, 269

INDEX 293

Yugoslavia 4, 23–8, 195, 279 CFSP 37, 38, 43, 48 security and democracy 23–8, 30, 31, 32, 34 Slovenia 241–57 UN sanctions 57 Zawos, George 231