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European Stability: EU's Enlargement with the Central and East European Countries
Summary
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Danish Institute of International Affairs
February 17, 1997
Preface
The following summary is a translation of the concluding chapter of a report prepared by the Department of Analysis of the Danish Institute of International Affairs (DUPI) entitled “European Stability. EU's enlargement with the Central and Eastern European Countries”. The report was commissioned by the European Affairs Committee of the Danish Parliament on 19th June 1996. The general subject was the enlargement of the European Union (EU) to include Central and East European countries. In its mandate to the Institute, the Committee stressed that it wanted the study to focus on the issue of flexibility, in two senses. First, the Committee invited suggestions for how admitting some states as new members could be combined with an improved position, or some form of partial membership, for those other states that would not, in the near future, fulfill the conditions of membership. The Committee expressed concern for political and economic stability in those states excluded from membership in a prospective first round of expansion. A second task was to see if the admission process as a whole could be made flexible, so that all applicant countries could be introduced gradually to cooperation within the EU as part of a sliding process of membership.
The mandate stated that the report should examine each major area of EU cooperation in detail and suggest methods of gradual integration for all applicant countries, both those likely to fulfill the criteria of membership soon, and those likely to take longer. In this connection, the report was asked to view the issue of flexible enlargement in the broader context of the debate within the existing EU on flexibility in cooperation and on the prospects for future policy in this area. Finally, the report was asked to pay particular attention to the Baltic states. The Committee requested the completed report by early 1997.
In his reply to the Committee of 8th July 1996, the chairman of the Institute's governing board accepted the commission while pointing out that many, if not most, of the important policy issues involved in expansion would not be clarified within the time-frame allowed, and that this time-frame also would make it impossible to cover all policy areas in their relation to every applicant country in equal depth. Resources within the Institute would be moreover limited by its other and massive task, namely to complete the thousand-page report on Greenland during the Cold War, which was delivered in January 1997. For the same reason, the Board for its part would be able to devote only limited time to discussing the report on European Stability, although the Board naturally would assume full responsibility for its contents, as stated below.
In fulfilling the Committee's mandate, the authors of the report based themselves on an understanding of the relevant factors in recent history, in the prevailing situation, and in the near term, which can be stated as follows.
The collapse of the Soviet empire radically changed the conditions facing the governments and people of the Central and East European states. After fifty years of relative isolation they needed to adapt to political and economic developments in the West and to find their places in Europe. At the same time, German unification presented equally unexpected challenges to the internal balance of the EU. Finally, all European states, west and east, would need to find new ways of relating to both the US and to Russia.
The EU has agreed in principle to admit the newly democratic countries to the east. This promise coincides with the EU's own need to adapt to the information society and the global economy. The critical stages of integration of the previous years - the Single Market and the Economic and Monetary Union (EMU) - are frameworks for this adaptation. Within these frameworks, EU member states will need, in particular, to change the Union's decision making process and reform major policy areas.
To Central and East Europeans, joining the EU and NATO means guaranteeing stable political and economic development to a higher, Western standard. In particular, applicant countries wish to be part of the EU's system of binding, obligatory cooperation, because they see that binding cooperation produces results. They will not wish to be partial members, because only full membership entitles them to the benefits of binding cooperation.
The expansion process thus entails a dilemma. The applicant countries will have difficulty meeting the EU's criteria of full membership, while they will also be unwilling to accept anything less than such full membership. Existing member states on the other hand declare support for enlargement, whereas in fact they may be unwilling to pay the cost both in financial terms and in the risk that enlargement will derail the momentum for integration.
The report assumes the political will to secure expansion is sufficient, both in existing member countries and among the applicants, that the project will succeed. The chances are, however, that it will be a long-drawn out process. The fundamental reason we believe that expansion will go forward is that all sides appreciate the risk to stability if it does not. Because stability is a key value both for existing member states, for those who must adapt to membership, and for those who will have difficulty adapting, and because the enlargement process will put stability at some risk, we have chosen to call the report European Stability. This title points to the fact that expansion is a means to an end, and that this end is political and economic stability for all parties.
EU enlargement, as a policy issue, is a moving target. Public debate, whether among EU decision makers or more broadly, has remained on a high and abstract level. The concrete difficulties and suggestions for solving them have yet to be addressed. This report is one of the first attempts to do so. In some cases, its authors use the scenario technique to structure discussion, preferring realistic prospects to others that may be logically possible but must be judged politically unlikely. They have, moreover, endeavoured to treat and evaluate all the important variables that will affect the process.
The research and writing team at the Institute consisted of the Institute's Director, Niels-Jørgen Nehring, and the two Research Fellows Lykke Friis and Karsten Skjalm. Martin Jess Larsen, a graduate student of political science, was assistant to the team.
In accordance with the law establishing the Institute, its Board has sole responsibility for the report and its contents, which it hereby submits to its principal, the European Affairs Committee, and to the public.
The members of the Institute's Board are Professor, Jur. Dr. h.c. Ole Due (chairman); Professor Nikolaj Petersen (vice-chairman); Deputy Permanent Undersecretary of State Per Carlsen; Senior Advisor Per Fischer; Senior Research Fellow, Dr.phil. Frede P. Jensen; Political Director and Ambassador Per Poulsen-Hansen; Associate Professor Niels Erik Rosenfeldt; Professor, Dr. oecon. Claus Vastrup; Senior Research Fellow Ole Wæver.
Copenhagen, 17th February 1997
EU Enlargement In Historical Perspective
Article O of the Maastricht Treaty confirms that the EU is an open community by stating that any European state can apply to become a member of the Union. The EC/EU has also, in practice, shown itself to be open to admitting new members. In four rounds of enlargement, the number of member states has risen from six to fifteen. Ever more clearly the EU appears as the centre of Europe, an image confirmed by the applications of eleven countries for membership as of 1997, namely ten countries in Central and Eastern Europe, and Cyprus.
Any admission of new members is a difficult process. For existing member states, it means shifting important balances, and for new members, joining means extensive adaptation. New members must both agree to the overarching guidelines and goals of cooperation (the acquis politique) and accept its existing juridical basis and regulatory structures (the acquis communautaire). Even before joining, new members must be understood to constitute democratic societies, combining an economic system on market principles with a well-functioning public sector.
Based on how expansions have hitherto occurred, one can speak of a classic procedure of admission that includes three elements. Applicant states must accept both the acquis politique and the acquis communautaire. Second, they link up institutionally to existing areas of common endeavour by building on its existing structures. Finally, new admissions shall require no fundamental advance changes in the EU budget.
Member states which have difficulty taking on the acquis communautaire all at once can enter into transitional agreements which, in the past, have run for periods of five to fifteen years. Permanent derogations from the duty to accept the complete acquis communautaire have not been possible. Applicants have had to choose between all or nothing.
An EU expansion to the east will differ from earlier enlargements both in the number of applicants and in their economic and political development relative to the standards prevailing in the existing EU. Such an expansion is moreover coming at a time when governments and policy makers in most member states believe that the framework and patterns of existing cooperation are already stretched to their limits and that reforms are needed. Agreements already made indicate that one must expect extensive changes to agricultural and structural policies. In addition, a number of institutional matters are being discussed at the Intergovernmental Conference (IGC) of 1996-97. These facts make it unlikely that the classical method of enlargement will be applicable to the coming round.
We should probably anticipate some preliminary adaptation of institutions. It is likely that some of this adaptation will be decided at the IGC. The question of decision making in the Council of Ministers is here of special interest. If the Council grows larger as a consequence of admitting a number of small or medium-size countries, this, on present rules, will further shift the balance against the big member countries. The IGC is discussing various proposals aimed at countering this prospect. It is also debating whether more decisions in the Council could or should be taken by majority vote, and whether the rules that currently govern how the presidency rotates should be changed. The size and composition of the European Commission and the number of seats in the European Parliament are other problematic institutional matters.
Under the heading of flexibility, the IGC is considering whether the interests and the options of member states have now diverged so much that the organs of the Union should consider deviating from what has been a rock-hard principle of unitary action, by which all member states participate fully and equally in all areas of cooperation, apart from specific exceptions, limited in extent and duration. Three types of flexibility have been mooted. First, multi-speed integration, which presupposes agreement on final goals but also that some states may need more time than others to reach them. Second, variable geometry, which means that some countries are allowed to remain outside certain areas of cooperation indefinitely. Third, a la carte membership, in which member states have the right to opt out of any area of cooperation and common policy without limit of time.
In the common EU budget the two items that attract the most interest are the two biggest, namely support for agricultural policy and for the structural and regional policy respectively. Under current guidelines for structural policy support, the prospective new members from Central and Eastern Europe would receive very large amounts, in some cases up to 40 per cent of GDP. Existing members will not find this acceptable, especially as several stand to lose structural policy support that they now receive. This would happen because the overall average per capita GDP of the enlarged EU will drop when Central and Eastern European states join, so that the currently poorer members, who receive the largest support grants, would no longer be poor enough in relation to the new and lower average. But even the new members would have problems absorbing transfers of the size that current guidelines mandate. Their currencies would rise in value without accompanying gains in productivity, making their firms and industries less competitive. Nor would they be able to match subsidies to support individual projects from the EU out of national revenues, as current rules require.
Agriculture is a relatively larger part of the economy in applicant countries than in the existing EU, particularly in the relative size of the agricultural workforce. Agriculture in the Central and Eastern European countries employs over a quarter of the workforce, according to figures from the Commission, whereas the figure in the EU is below 6 per cent. Plans for admitting these new countries to the EU agricultural support program thus mesh with existing negotiations for reform, following on GATT agreements entered into by existing members. The main tendency in these negotiations is to try to shift agricultural subsidies from market (price) support to income support for farmers. Uncertainty about the future of agricultural policy is a particular problem for applicant states, whose policy makers have difficulty deciding what reforms to undertake in order to join the EU.
Even though one can argue, in the area of structural policy support for example, that large transfers to Central and Eastern Europe can cause distortions, this should not blind us to the point that the transition process may demand large transfers if the substantial differences in average prosperity between Europe West and Europe East are to be erased or even decisively reduced within the foreseeable future.
The Reform Process In Central And Eastern Europe
Central and Eastern European states and societies are moving through three transition processes: toward democracy, market economies, and recovering national identities and a new strategic location. These processes interact and are all significant in judging whether any particular country or set of countries is ready to become a member of the EU. Regardless of common problems flowing from the communist past, such an evaluation will show that the countries differ both in their relevant history and in their present situation.
The transition to free markets presupposes decisions at several levels. Most Central and Eastern European governments liberalized prices and trade and introduced stabilization policies in the first years after the Wall fell. The Balcerowicz Plan in Poland was an example of such a combined strategy. In the first instance, such strategies led to falling production, unemployment, and hyperinflation. In 1993-94 the trends in most countries reversed themselves, although only in one country, Poland, has production reachieved the level of 1989. In the most recent years the macroeconomic stabilization strategies launched at the start of reform have begun to take hold. Inflation remains much higher than in Western Europe but is everywhere, except in Bulgaria, below the 40 per cent annually that the World Bank considers to be the critical outside limit for a functioning market economy. Some countries are even running fiscal deficits that are lower than the Maastricht convergence criteria; here, however, one should bear in mind that, in most cases, the costly programs to develop a modern administration and to develop a social safety net have not yet been launched.
Trade has, to a considerable degree, been reoriented to the west, and the EU is today (1997) much the largest trading partner for most Central and East European economies. Intraregional trade remains limited. The agreement in 1992 to establish a Central European Free Trade Area (CEFTA) has not changed this picture greatly. Economic actors in these countries consider each other to be more unreliable as trading partners than their western neighbours. At the level below the comprehensive liberalization of trade and exchange and of the macroeconomic stabilization policies, we consider it essential that applicant countries begin changing the structural and framework conditions for economic activity, so that they will motivate firms to adapt to market incentives. Different governments have here followed different procedures. Many countries have taken the path of large-scale privatization. Estonia and Hungary have sold former state-owned businesses to the highest bidder, including foreign investors, a policy that has often brought with it better access to high technology and management expertise. In other countries, such as Poland, Slovakia, Lithuania, and Romania, the preferred method has been to permit or encourage takeovers by management or employees.
Business planning presupposes a supportive environment in the shape of property rights laws, rules of bankruptcy, and mechanisms that promote financial discipline. Policies to govern and facilitate financial services and credit are essential here.
Finally, the transition to market principles of economic activity requires a functioning and reliable public administration, some degree of regulation, for example in environmental policy, health and education reforms, and a social safety net.
No less fundamental is reforming the political system. The communist regimes permitted no significant dissent or diversity. No political structures organized and divided by cleavages of value or interest exist on which to build. Political activity generally appears discredited to many people because of the communist abuse of power. Nevertheless, all the countries in question have formulated new constitutions and have held several parliamentary elections, without incurring serious criticism. These elections have resulted in swings between the political poles familiar in the West. It is important to note that the transfer of power has, in all cases, happened peacefully. Even though reformed communist parties, which in some respects are the heirs of the old regimes and the old apparats, have in some cases returned to share power in government offices, this has not led to doubts about the reform process itself.
Opinion polls in these countries generally show falling confidence in the policies of reform, but in view of the expectations that politicians had built up and promoted, such skepticism is not surprising.
The greatest deficiencies in the democratic reform process are to be found at the lower levels of politics and administration, where much of EU law will have to be received and carried out. Also needed is a vigorous civil society with organized interest groups, arenas of independent debate, and grass-roots movements. Third, Western principles of media independence have yet to break through entirely.
After forty-odd years of communist power and of being subject to the Soviet Union, people in Central and Eastern Europe have put national identity back on the agenda. So far, the predominant theme in the identity debate has been “back to Europe,” as evidenced by the applications to join both the EU and NATO. These imply not only that the people of these countries hope, by joining the EU, to transform their own societies in a Western image, and by joining NATO, to be made safe against threats of new Russian dominance. They also, most certainly, imply that people see a high symbolic value in being accounted part of the West. One can, of course, find signs of a latent, opposing movement “back to ourselves.”If expectations of joining the Western organizations are not met, we may expect such opposing trends to gain force. Opinion polls show continuing high, if falling, support for joining the EU. That some are skeptical about surrendering a newly-won national sovereignty should not surprise us. More serious perhaps is that the vast majority of people in Central and Eastern Europe have very little knowledge about the EU and about what joining might mean.
The EU's Policy Towards Central- And Eastern Europe: From Europe Agreements To Pre-Accession Strategies
When the Berlin Wall fell, it changed the parameters of integration in the EU. The Union and its members faced two new strategic challenges. The first was how to tie a united Germany with its increased political and economic clout to continued close cooperation with its European partners. The second was how to deal with the consequences, if reform failed in Central and Eastern Europe. These strategic challenges arose at a time when the EU had already decided to continue developing the Single Market into an Economic and Monetary Union (EMU). The answer to both was to give internal integration priority by deciding also to prepare a Political Union. Relations with Central and Eastern Europe, on the other hand, were initially tackled with traditional means, that is, by trade and association agreements and by offering a program of technical support for the transition to democracy and markets, called PHARE. EU aid was, in this phase, based on distinguishing between the different countries of Central and Eastern Europe, so that those countries that made the most progress in reforming themselves were the first to receive PHARE subsidies and to be offered association agreements.
The most important element of these Europe agreements was to open, asymmetrically, free trade in industrial goods, with the EU markets opening first. Since, however, the EU insisted on longer transition periods to full free trade in precisely those areas — coal, steel, textiles, agricultural products — where the Central and Eastern European countries were most competitive, people in those countries not unexpectedly had critical things to say about the agreements.
The Europe agreements contained no explicit promises of membership in the EU, and this lack elicited more general objections. The EU side tried to meet these by proposing to include Central and East European governments in various procedures. An example of this was the proposal by Frans Andriessen, a member of the Commission, to offer so-called affiliated membership, which would give the right to take part in Council meetings without voting rights. Another proposal from the Commission in 1992 for a so-called European Political Area was formulated more explicitly as a preliminary to membership. Neither of these proposals commanded enough support to become policy, mainly because existing members feared diluting the institutional structures.
The European Council at its regular biannual meeting in Copenhagen in June 1993 passed a turning point in that it concluded the meeting by formulating a prospect of admission for those states that obtained Europe agreements. This new policy also broke with the original policy of distinguishing among prospective applicants. The European Council established criteria of admission as follows: stable democracy, a functioning market economy, the ability to assume the duties of membership, and finally, that admitting new members not undermine the dynamic of European integration.
These so-called Copenhagen criteria were rather vague and therefore potential applicants found it difficult to use them to measure how far they had come, or needed to go, to be able to apply successfully to join the EU. France launched a proposal for a stability pact encouraging applicant states to solve minority questions by mutual agreement in a common framework. One reason for this plan was the wish to spell out the criteria in more detail. The stability pact can also be seen as an attempt to stimulate regional cooperation among applicants, something that some of them, for historical reasons, had reservations about.
In the period following the Copenhagen meeting, the EU developed its pre-accession strategy which was a broader effort to concretize the general criteria of membership. At the European Council's meeting in Essen in December 1994, members presented a comprehensive pre-accession strategy envisaging, first, a broadened, so-called structured dialogue on all aspects of relations between the EU and the associated states; second, concrete plans for adapting conditions in applicant countries to important policy areas such as the Single Market; third, the beginnings of an in-depth analysis of agricultural policy. Following the Essen meeting, the EU organs prepared a White Paper on the Single Market in order to demonstrate to applicants what obligations they would have to live up to.
Critics have pointed out that the pre-accession strategy is focused unilaterally on what is required of applicants and not on necessary reforms within the EU. The IGC, which continues as this report is being written, is dealing with a range of institutional matters of importance for the prospective expansion. Budgetary reform however, including the politically difficult issues of how to reform the Common Agricultural Policy and regional and structural policy, will not be discussed until after the IGC is completed. As far as applicant states is concerned this means that they still do not know how far and in what areas they have to adapt, nor how fast.
In the leadup to the European Council meeting in Madrid in December 1995, Germany broached the idea of once again distinguishing between prospective members and only opening negotiations for accession with the strongest candidates. This idea was not taken up, and the conclusions of the Madrid meeting are more generous: “The European Council hopes that the preliminary stage of negotiations will coincide with the start of negotiations with Cyprus and Malta,” that is, six months after the IGC closes. The European Council summit also decided that the Commission's opinions about the prospects for each applicant country would be made available immediately after the end of the IGC.
Contrary to the common view of only two years ago (early 1995), it is now likely that NATO will expand to include a select group of Central and Eastern European states before the EU does so. This new prospective sequence of events raises the question of how the two expansion processes are related to one another. Will, for example, a narrow NATO enlargement become a precedent for a similarly narrow expansion of the EU? Or will the mere fact that NATO is able to carry out an enlargement pressure the EU to launch its own process of expansion? The prospect of NATO enlargement going ahead soon also raises the interesting question of a potential division of labour between the two organizations, the EU and NATO.
Scenarios For Eastern Enlargement
When the time comes to put into practice the political goal of expanding the EU to include Central and Eastern European states, both the EU and the applicant countries will be in a situation more complex than any in the history of the EC/EU. It is therefore difficult to exclude completely any scenarios in advance. We discuss three scenarios. The first, that expansion will be delayed, perhaps indefinitely, because the problems to be solved are too difficult. The second, that the parties involved decide on a non-traditional method of enlargement, for example by means of partial membership, which most likely would mean joining the second and third pillars, but not the first. The third, that the point of departure is the classical method of enlarging the EU and that this will be applied, with appropriate modifications.
We have above outlined some of the questions that must be solved before anyone can know which of these scenarios will come closest to reality. A meagre result of the IGC, leaving many problems unsolved, will by itself create problems for enlargement. So would obstacles to implementing the Third Stage of the EMU and to carrying out the expected reforms of EU finance and budgeting, especially the important changes to agricultural and structural support policies. Applying a logically conceivable worst-case scenario to these three areas, that is, assuming few or no practical results, it is hard to imagine any other decision on enlargement than to postpone it. If we nonetheless consider such a decision unlikely, it is because we believe that policy makers in both the EU and in applicant states are committed to solving the enlargement question or at least to begin solving it. Member states and applicants will likely also recognize that abandoning the enlargement project will in itself have some negative effects. The EU as a framework for cooperation would itself be compromised, but more important would be some concrete effects, such as massive refugee flows in the likely case of instability to the east, and the related possibility that German policy makers might feel themselves forced to act unilaterally to stabilize the region.
The second scenario, involving partial membership in which new members participate fully in the second and third pillars, may seem to offer a good solution to applicants' difficulties. They will quickly join those areas of cooperation where they are best able to function while they will be given a grace period to prepare for economic integration. Such a scenario presupposes changes to the Treaties, but that could be dealt with as part of the negotiations on admission. In the best case under this scenario, the first partial memberships could be in place in the year 2000. However, such a solution is not without problems. EU policy makers have hitherto been skeptical toward partial membership, on the grounds that permitting them might dilute the core institutions. This concern has only been strengthened by the Maastricht Treaty's commitment to developing a common institutional framework. The contracting parties, including Denmark, emphasized that the interrelations between the pillars of the Treaty were so close that many questions required a common institutional framework, for example the connections between parts of the first and second pillars (trade policy and foreign policy), and between parts of the first and third pillars (Single Market and border controls). A more decisive point may be that partial memberships of the type described could be taken as replacing the need for or the thrust toward full membership. By restricting the integration of new members to pillars two and three, both existing members and applicants would be relieved of the pressure to execute the reforms necessary to make full membership practicable for new members. This is a risk that concerns especially those countries where reforms have already had some success or seem likely to do so.
The third scenario, finally, envisages an enlargement process based on existing procedures, modified so that the necessary changes of institutions and policies take place beforehand. Expansion would occur, in this case, by using transitional arrangements, or integration at various speeds to use the language of flexibility. Comparing this enlargement round to earlier ones indicates that, this time, longer periods of transition may be necessary. On the other hand, the Single Market pushes in the direction of shorter transitions. It is difficult to enforce transitional arrangements when borders are open.
Assuming, as one must, that all applicants cannot be admitted simultaneously because they vary so widely in their political and economic development and situation, one then needs to ask whether negotiations for accession should start with all parties at the same time — the single train option — or whether one should only start negotiating with those countries deemed best able to take on the duties of membership — the multi-train option.
Which of these two options is preferable is, to put it simply, largely a matter of which of two issues is considered more urgent: preserving the prospect of membership for everyone, including those who will have the greatest difficulties meeting the obligations, or launching an effective process that within a few years will prove that it can yield results. Calculating on the assumption that decisive negotiations cannot occur until the EU has reformed its existing agricultural and structural support policies, we arrive at a very provisional date for accession of the first applicant countries in 2004, using the multi-train option.
If, then, considerations of efficiency imply that the multi-train option is preferable, it also has serious inherent risks, in particular, because one important precondition for it is missing. Despite attempts to spell out and clarify the criteria of membership, a decision will clearly, in the end, rest on a broader spectrum of political considerations. If, therefore, the EU turns down some who would like to be in a first round of accession talks, such disappointed applicants may well, rightly or wrongly, consider this an unfair rejection which moreover leaves the impression that the EU is really only interested in a narrow enlargement. That political forces in such disappointed countries may go “back to themselves” is a danger we have mentioned above. Another point in favour of the single-train option is that it may well be the single best way to demonstrate that the EU means enlargement seriously. If that option is followed, all applicants will have the chance to make their case and to discover their weak points in relation to others. The single-train option will also permit the time-consuming initial phase, in which the EU area for area will try to ascertain if individual countries can live up to the acquis, to begin immediately.
Although enlargement is not exactly on the agenda of the IGC, participants are discussing it within and outside the conference. The prevailing sentiment in these discussions at the beginning of 1997 is in favour of the single-train option, that is, of opening negotiations simultaneously with all applicants. One reason for this apparent common view, however, may also be that at this stage, when the results of the IGC are still in doubt, no one wants to alienate any applicant. Another is that some member states, in advocating the single-train option, have specific concerns for particular applicant states that would be excluded from the first round under the multi-train option. Thus, France acts with particular concern for Romania and Bulgaria, and the Nordic countries for the Baltic states.
These discussions also touch on NATO enlargement. A notable contribution has been made by the German foreign minister, Klaus Kinkel, who has spoken of the risk of a “double rejection shock” from both the EU and NATO.
Some Franco-German ideas concerning a permanent standing conference on enlargement may have been conceived as a way out of these dilemmas. It is unclear how such an entity is to be understood. Some German statements seem to indicate that it should be seen as an auxiliary tool in connection with the multi-train option.
Eastern Enlargement And Flexible Integration: A Possible Solution?
On every occasion that the EC/EU has expanded in the past, people have worried that decision making and cohesion would weaken because admitting new members would lead to a fragmentation of interests. Unlike earlier the EU now has an agenda that implies that steps will be taken to obviate such dangers before any eastward enlargement. The IGC is, partly for this reason, dealing with institutional matters. It is dealing with them also because many member states consider that available experience shows that the decision making process needs reform in any event. The same double motivation applies to the prospective budgetary reform.
Some believe that even with institutional changes and budgetary reform, the Union has reached a stage where interests can no longer be subsumed under a single formula and that the hitherto prevailing unitary principle can no longer be upheld. Such views rest on experiences from the ratification of the Maastricht Treaty and the subsequent debates. Of course, the prospect of coming enlargement likewise plays a significant role in shaping these concerns. We discuss below, under the heading of flexibility, what conclusions one may draw from them.
The discussions on abandoning the unitary principle are not new. They took place also in the context of earlier enlargements. One can list many examples of specific modifications of or even derogations from the unitary principle. If one takes a broad view of the concept of flexibility it will be seen that it is far from alien to the process of European integration.
The EU has employed flexibility in the shape of “multi-speed integration” when admitting new members in the past, in the shape of transitional agreements. Since some of the Central and Eastern European applicant countries will have difficulty assuming the acquis, even given lengthy transition times, one may well ask if it might not be possible to arrive at new types of flexibility vis-a-vis such countries in the course of negotiations for enlargement. In answering this question it is important to know how member states generally approach the issue of flexibility.
In 1994, two leading German policy makers in the European area, Wolfgang Schäuble and Karl Lamers, proposed a clear vision of flexibility. The aim was to avoid necessary integration being blocked by recalcitrant states. To do so, they proposed that states which were ready for it should have the ability to move forward by developing mutual integration in certain areas. The model was technically a combination of multi-speed integration and variable geometry, has been called Core Europe or a Europe of Concentric Circles.
The French prime minister, Edouard Balladur, followed up the German ideas by suggesting a modified plan in which advanced integration could be pursued by different groups of members in different areas. Such an idea would lead not to one, but to several cores. The proposal has been dubbed a Europe of Eccentric Circles.
In response to these German and French ideas, the British prime minister, John Major, sketched a vision that actually implied far more decisive flexibility. He suggested that apart from a narrow foundation of obligatory integration around the Single Market members should have the right to pick and choose from the whole menu of areas of cooperation.
In accordance with German and French wishes, flexibility is an agenda item at the IGC, and the two governments have here gradually spelled out their ideas. Their latest suggestion uses a multi-speed model combined with the possibility that individual member states be permitted “constructive abstention” from decisions within the second and third pillars, that is, they can abstain from taking or being bound by a decision without being able to block it. Several member states have joined in this debate and presented concrete proposals. The Italians, for example, have suggested that the Commission be given a critical role in deciding whether flexibility is compatible with the interests of integration as a whole.
The IGC is by no means done discussing flexibility, but even so one gets the impression that policy makers are increasingly worried by some of its implications, and that they are now concentrating on fixing the conditions under which flexibility can be permitted, for example, whether it should remain a condition that all parties agree to decisions. These increasing worries include concerns in some countries whose leaders believe they may not be participating in all areas of integration and will hence be marginalized, but also concerns among members of the core group who fear that countries in the outer group will free-ride and that the advantages of common decisions will be watered down.
If one follows the flexibility debate up to and during the IGC, one sees that it has not dealt with the applicant countries and their situation, but with the internal development of the Union. The problems of the vanguard have been the focus, not those of the rearguard. If one looks at the various models of flexibility that have been suggested, it is clear that each of them will affect the applicant countries differently. Thus, if enacted, the British proposal that governments decide what areas of integration they want to participate in will lower the threshold of admission and make it easier for applicants to join. In return, cooperation will be somewhat looser. An intensified integration according to the Schäuble-Lamers model, by contrast, means that the pressure to integrate on those countries that did not join the inner core will be less. In return, the road to this inner core comprising the full members of the EMU will be a very long one.
If we now consider the question of admitting new members to the integration process, we note again that flexibility in the form of multi-speed integration has been traditionally used in the form of transitional arrangements. Looking at those applicant countries whose governments cannot hope to join in a first round of enlargement, we must ask whether flexibility can be further extended so that these countries can join more quickly. The three main variants of flexibility - multi-speed integration, variable geometry, and a la carte cooperation - yield three potential models of sliding, flexible membership.
The a la carte variant suggests, in the first place, offering applicants what we might call a bespoke membership, tailored, as it were, to each country's needs and allowing each country to participate in those areas of integration where it was capable and interested. A second possibility, based on variable geometry, is for applicant countries to join integration within certain overarching, general areas. Such partial membership might involve the second pillar only, for example. In both cases the Treaty will need to be changed, and in both cases applicant countries will need to apply for full membership when they are ready. Multi-speed integration, thirdly, yields the model of Platonic membership, allowing countries very long-term transitional arrangements with no voting rights in the areas covered by such arrangements. This model requires neither a change of Treaty language nor that countries at any point apply for full membership.
The very fact that the Platonic membership model does not imply a new application when the country in question is ready, means that this model is probably the only one that cannot be excluded ex ante. The two others are unlikely to gain support because they both offer what is, in effect, second-rank membership and because both entail a risk that a temporary arrangement may become permanent. To the misgivings that applicant governments might harbour we should add that existing member states will fear diluting the process of integration. A measure of these misgivings is clearly the direction taken by the flexibility debate at the IGC.
Since flexible membership does not appear to be an obvious solution to the special problems of applicant countries, interest is focusing on how more suitable models for solving these problems can be established within the framework of existing institutions and policies.
A Developed Pre-Accession Strategy: An Alternative Solution
Having determined that new types or classes of membership are not realistic solutions to the eastern enlargement problem of the EU — because existing members will not like them, and applicants will fear that they will become substitutes for full membership — we are driven to finding models that provide a gliding transition to full membership. Such models must fulfill two conditions: they must clearly aim at full membership, and they must contain elements that realistically support the efforts of applicant states, their institutions, firms, and governments, to live up to EU demands.
Given the difficult transition process faced by applicant countries, these models must in all cases use a variety of elements and procedures. Putting these models in place will be relevant, whether or not negotiations are opened with all applicants — the single-train option — or whether they are opened with a restricted group only — the multi-train option. If the partners choose the second option, the EU must launch a special effort to help those countries not included in the first round, to compensate for the reduced prospect of membership entailed, for them, by the multi-train option. For an analogous reason, NATO in its enlargement debates has proposed to strengthen the Partnership for Peace (PfP) in the shape of a PfP+.
We have only seen few proposals to strengthen the prospect of membership and support the efforts of all applicants to draw closer to the EU. One of them is the Franco-German idea of a permanent conference on enlargement. Such an institution may indeed help outsiders to draw closer, but up to now the discussion about it has not relieved the fear of applicants that it is primarily a way of making it acceptable to make distinctions among them.
A report from the European Parliament in November 1996, the Christodoulou Report, contains proposals aimed specifically at those countries not included in a first round of enlargement. Its main idea is to replace the current multilateral pre-accession strategy with an individualized strategy fitted to particular countries and to retool the existing PHARE programme.
The individualized strategy will begin, for a given country, at the point when the Commission issues its recommendation that such a country should not be included in enlargement talks. The strategy is thereby from the outset linked to the particular situation of an applicant. To strengthen further the prospect of membership one might include, in the individualized strategy, a deadline for reviewing the application. The strategy can also be used in the single-train option, in which case it would build on the examination of the acquis in relation to each applicant and on the initial round of talks.
The proposal to make PHARE support more effective is a simple reaction to the observed fact that most PHARE funds so far have been used to pay for Western consultants, whereas applicant countries are more in need of substantial support for infrastructure, environmental protection, and similar initiatives.
Other existing arrangements and proposals can be developed and coordination between them strengthened. One might, for example, coordinate the bilateral aid that member states currently give to Central and Eastern European countries in regional arrangements, the so-called godparent clubs.
To supplement the range of existing proposals we would like to suggest some initiatives aimed at those countries which may not be included in a first round of enlargement. These initiatives fall into three categories with different purposes, namely
The first category includes two forms of what we call “down-to-earth flexibility.” One is the possibility that applicants be permitted to attend meetings of the Council of Ministers as observers without speaking privileges. To extend such permission may have considerable symbolic value. It would also give those who attended the meetings useful training in participating in the practical work of integration. Another idea is to develop and formalize “opting in”, by which Central and Eastern European states already now are joining common actions within the Common Foreign and Security Policy. Such a procedure can be extended to the pillar three issues of the Treaty. Finally, as a defensive measure, one might consider requiring those applicants who are initially admitted not to object to further enlargement of the circle of members.
The second category, making it easier for applicants to take on the acquis, leads naturally to thinking about how to improve applicants' possibilities for trade with the EU. The Europe agreements have already liberalized trade in manufactured goods to a large extent. That leaves the agricultural sector, where producers in applicant countries are generally more competitive, but where the restructuring of support policy mandated by the GATT also means that EU members are least able to make concessions. An initiative in this category could therefore be to let EU support in the short term be given as subsidies for structural reform in the agricultural sector of applicant countries, and in the longer term as better market access when the EU has completed its own restructuring.
An additional idea for improving the ability of applicants to take on the acquis emerges from the ongoing structured dialogue which is often criticized for being too tentative and non-binding. One might consider turning this dialogue into an actual multilateral negotiation aimed at solving the common problems of applicant states. Such a forum would constitute a superstructure on and an interaction with the specific accession strategies developed for applicants. If it is to be an effective tool, the dialogue needs to be institutionalized, which again means that the chairman be given an adequate mandate and that preparatory work be improved and formalized. One could also increase organizational support for the presidency's function. In order better to implement the individual accession strategies, we also recommend strengthening the Commission's capabilities for doing so and sending adaptation teams to individual countries.
Eastern enlargement of the EU is to a large extent also a matter of stability. It is therefore not enough to look only at conditions in the EU, in member states, and in applicant countries. Stability in the entire region of the prospective EU will also depend on relations between this region and its neighbours, especially Russia, Ukraine, Turkey, and the Maghreb states.
We emphasize that it is vital for both the existing EU and the applicants that the enlargement process as far as possible not create new disagreements with Russia, but that cooperation with Russia and Ukraine be, on the contrary, improved. Partnership and cooperation agreements between the EU and these states should therefore be developed further.
Eastern enlargement of the EU should also be seen in the context of NATO enlargement and of proposals for strengthening the role of the OSCE in building the European security architecture. The Partnership for Peace Plus can here be of particular importance for those countries that may not be part of the first enlargement round of both NATO and the EU.
Proposals Of The Report And Their Mutual Connections
Even if this solution is chosen, some countries may face such long delays before they can join that they will need special measures to maintain the prospect of membership and to support movement toward membership. If, by contrast, the multi-train option is used and enlargement talks are opened with only some applicant countries, the others will be even more in need of special measures to compensate for the weaker prospect of membership.
This report will not present specific figures in this area, but we do direct attention to the potential of transforming and fine-tuning support under the PHARE programme. One might also grant specific pre-accession subsidies as happened in the case of Portugal. In both cases it is important that subsidies be linked directly to projects and measures that facilitate taking on the acquis. It would be logical if such subsidies formed part of the direct financial basis of the individually tailored pre-accession strategies.
When matters reach the stage where support from the structural funds becomes relevant, one might consider using the model of the Cohesion Fund rather than the Structural and Regional Funds which presuppose co-financing by the recipient state.
The enlargement process will put great burdens on the peoples of the Central and Eastern European states. In conclusion, therefore, this report emphasizes that the EU and its existing members will also need to bear important burdens. In the next few years, the EU will need to create the preconditions for enlargement, such that applicant states, when the time comes, will enjoy as far as possible the same advantages of membership that have hitherto accrued to existing members. The EU and its member states therefore have a great responsibility to ensure that the IGC and the subsequent, necessary reforms are carried forward to a positive conclusion.
Notes
*: The main report with ISBN 87-601-1507-6 is available in Danish under the title Europæisk stabilitet. EU's udvidelse med den central- og østeuropæiske lande. Price DKK 110,- Back.
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