EU Enlargement Oral and Written Evidence

SELECT COMMITTEE ON THE EUROPEAN UNION EU Enlargement Oral and Written evidence

Contents Written Evidence from Graham Avery, St Antony’s College, University of Oxford, and European Policy Centre ...... 3 Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) ...... 8 Dr Diana Bozhilova, King’s College London – Oral evidence (QQ46-49) ...... 29 Dr George Christou, University of Warwick – Oral evidence (QQ 46-69) ...... 30 Written evidence from Dr Samantha Currie, University of Liverpool ...... 31 Written evidence from the Czech Republic, Ministry of Foreign Affairs ...... 37 Written evidence from His Excellency Mr Konstantin Dimitrov, Ambassador of the Embassy of the Republic of Bulgaria to the UK ...... 42 His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83) ...... 48 Written evidence from Andrew Duff MEP ...... 59 Andrew Duff MEP – Oral evidence (QQ 84-102) ...... 61 Written evidence from the Embassy of the Republic of Croatia ...... 76 Written evidence from the Embassy of the Republic of Serbia ...... 82 Written evidence from the Embassy of the Republic of Turkey ...... 89 Written evidence from the European Affairs Committee, French Senate ...... 96 Written evidence from the European Affairs Committee, Assembly of the Republic of Macedonia ...... 103 Written evidence from the European Integration Committee, Croatian Parliament ...... 106 Written evidence from the European Policy Centre ...... 110 Written evidence from the European Policy Institute (Skopje) ...... 117 Written evidence by the Foreign and Commonwealth Office ...... 119 Foreign and Commonwealth Office – Oral evidence (QQ 167-188) ...... 127 Memorandum by the Foreign and Commonwealth Office ...... 148 Written evidence from Commissioner Stefan Füle ...... 159 Commissioner Štefan Füle – Oral Evidence (QQ 134–148) ...... 162 Memorandum from Commissioner Stefan Füle ...... 175 Written evidence from Dr Andrew Glencross, University of Aberdeen ...... 177 Fadi Hakura, Chatham House – Oral evidence (QQ 1-45) ...... 180 Written Evidence from Graham Avery, St Antony’s College, University of Oxford, and European Policy Centre

Written evidence from Roger Helmer MEP ...... 181 Richard Howitt MEP – Oral Evidence (QQ 149-166) ...... 182 Written evidence from Dr Ana Juncos, University of Bristol ...... 198 Written evidence from Professor Dr Dimitry Kochenov, University of Groningen ...... 202 Written evidence from Assistant Professor Rinna Elina Kullaa, University of Jyvaskyla ...... 209 Written evidence from Dr. Adam Łazowski, University of Westminster ...... 215 Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) ...... 220 Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118) ...... 241 Written evidence from Benjamin Leruth, University of Edinburgh ...... 250 Written evidence from the Liberal Democrat European Parliament Party ...... 255 Kadri Liik, European Council on Foreign Relations – Oral evidence (QQ 1-45)...... 260 Written evidence from Professor Alan Mayhew, University of Sussex ...... 261 Written evidence from the National Farmers’ Union (NFU) ...... 268 Written evidence from Associate Professor Susan Senior Nello, University of Siena ...... 270 Written evidence from Baroness Nicholson of Winterbourne ...... 277 Written evidence from Professor Richard Rose, University of Strathclyde ...... 281 Written evidence from Dr Charles Tannock MEP ...... 287 Dr Charles Tannock MEP – Oral evidence (QQ 84-102) ...... 289 Written evidence from Professor Andrew Taylor, University of Sheffield ...... 290 Mr Mustafa Osman Turan, Deputy Permanent Delegate, Republic of Turkey Delegation to the EU – Oral evidence (QQ 119-133) ...... 296 Written evidence from the UK Delegation to the Committee of Regions ...... 305 Written evidence from Natasha Wunsch, German Council on Foreign Relations ...... 308

Written Evidence from Graham Avery, St Antony’s College, University of Oxford, and European Policy Centre

This submission addresses the following questions:

1. Does the EU have a strategy for enlargement? 2. What are the criteria for evaluating the success of enlargement? 3. How should we evaluate the last round of enlargement? 4. Are the Treaty provisions for enlargement, and the Copenhagen criteria, adequate? 5. What sense can be made of ‘absorption capacity’ as a parameter for enlargement? 6. What is the significance of ‘enlargement fatigue’? 7. What alternatives to EU membership can be offered to other European countries?

I am a Senior Member of St. Antony’s College, Oxford, Senior Adviser at the European Policy Centre, Brussels, and Honorary Director-General of the European Commission. My evidence is based on personal experience of 40 years as a senior adviser and administrator in Whitehall and Brussels, in the course of which I participated in every round of EU enlargement from 6 to 27 (see biographical note at end). This submission expresses my personal views, not those of my previous employers.

1. Does the EU have a strategy for enlargement?

Although the European Commission produces a Strategy Paper on enlargement every year, and the European Council mentions enlargement in the conclusions of most of its meetings, the EU does not have a strategy for enlargement in the sense of a deliberate plan for future expansion. The EU has never encouraged other countries to join, and has sometimes discouraged them from applying. The EU’s policy for enlargement is fundamentally reactive rather than pro-active. The main driver for expansion is pressure from neighbouring countries, not some kind of imperialist ambition on the part of the EU.

In this respect it is interesting to compare the experience of the United States of America. In the 19th century Americans considered that ‘our manifest destiny [is] to overspread and to possess the whole of the continent which Providence has given us for the development of the great experiment of liberty and federated self-government entrusted to us’ (J.L. O’Sullivan, 1845). By contrast, European ideologues, even those who envisage the development of a United States of Europe, have rarely considered enlargement as ‘manifest destiny’. On the contrary, commentators who view ‘widening’ as an obstacle to ‘deepening’ tend to see enlargement as a threat to the aim of ‘ever-closer union’.

2. What are the criteria for evaluating the success of enlargement?

What is a good enlargement? This question receives insufficient attention in analyses of enlargement policy.

Evidently it would be naive to evaluate success by reference to the number of countries joining, or the speed of their accession. In my view, the correct approach for evaluation of

Written Evidence from Graham Avery, St Antony’s College, University of Oxford, and European Policy Centre the policy is two-fold: a first group of criteria which apply for the period before enlargement and a second group for the period after accession: • For the pre-accession period, the criteria are similar to those that apply to foreign policy in general: enlargement policy may be considered successful if it enhances: o security, stability and prosperity both for the EU and for the neighbouring countries concerned.

• For the post-accession period, enlargement may be considered successful if it allows: o the harmonious integration of new members, without disrupting the situation of existing members; o the continued functioning of the EU’s institutions and policies, and the satisfactory development of the EU.

None of these criteria is simple to apply: the criteria for the period after accession are particularly difficult to evaluate, but they are also the most important test for enlargement policy. The fact that there is no consensus among member states on questions such as the long-term development of the EU helps to explain why member states have such differing views on the desirability of enlargement. It is commonly thought that supporters of expansion (typically, the United Kingdom) want to hinder integration and weaken the EU, while opponents of expansion (typically, France) want to safeguard acquired positions. Although these caricatures are false, they show how widely attitudes to enlargement policy can differ.

The distinction that I make between the two groups of criteria serves to explain why the common assertion that ‘enlargement is the EU’s most successful foreign policy’ is not correct. Enlargement is a ‘foreign policy’ for the EU only to a limited extent – that is, until the moment of accession. After that, it ceases to be a foreign policy. Since enlargement shapes the EU’s basic identity by modifying its membership, it would be more appropriate to describe it as an ‘existential’ policy.

3. How should we evaluate the last round of enlargement?

The last round of enlargement, which brought in 12 new members in 2004 and 2007, was the most important expansion ever in terms of the number of new member states – though we should remember that in relative terms the increase in the EU’s population and economy was less important than with the enlargement of 1973.

Judged by the criteria defined above, there is no doubt that the last enlargement was a considerable success. In the pre-accession period it assisted the peaceful transition in Central and Eastern Europe to democracy and a mixed economy. Post-accession experience with the new member states has been largely positive for the EU: they integrated rapidly into the system, the institutions have functioned as well (or as badly) as they did when there were 15 members, and the EU’s policies have continued to develop.

Expansion did not result in paralysis of the decision-making system; although the new partners have proved difficult on some issues, they have not been more obstreperous than old members. It was not the new members who killed the Constitutional Treaty and delayed the Lisbon Treaty, but France, the Netherlands and Ireland whose peoples said ‘no’ in referendums. Although dissatisfaction with EU enlargement is sometimes cited as a reason 4

Written Evidence from Graham Avery, St Antony’s College, University of Oxford, and European Policy Centre for the results of those referendums, it was certainly not a main reason, as was shown by opinion surveys conducted at the time.

The forecast, common in the 1990s, that the accession of the Central and East European countries would encourage the EU’s trend towards ‘differentiated integration’ or ‘variable geometry’ has not proved correct. Most new members have joined the Schengen area, some have already joined the euro, and most of the rest plan to do so when the present problems of the eurozone are resolved.

But the last round of enlargement was a failure on certain counts. The accession of Cyprus without the hoped-for reconciliation between its Greek and Turkish communities was a disappointment; it brought into the EU a divided island. The premature accession of Bulgaria and Romania, with poor governance in the fields of justice and corruption, has created problems not only for those countries but for the EU as a whole.

4. Are the Treaty provisions for enlargement, and the Copenhagen criteria, adequate?

Article 49 of the Treaty is procedural in nature, while Article 2 lists basic values applicable to all member states and in practical terms adds little to the conditions set out in the Copenhagen criteria. One criticism that may be made of Article 49 is that the phrase ‘Any European State... may apply to become a member’ gives no definition of what ‘European’ means in geographical terms. But it would be impractical and undesirable to attempt an official definition of the EU’s ultimate borders: impractical since there is no consensus on this question among member states, and undesirable because defining the borders now would demotivate those excluded, and diminish the leverage for those included.

The Copenhagen criteria, which were originally designed for the Central and East European countries, have become the template for all non-member countries entering the accession process. It is sometimes considered that the criteria are the manifestation of a ‘civilising mission’ to spread higher standards to neighbouring countries; in fact the EU introduced them not for reasons of altruism, but to avoid the risk of introducing new members who would disrupt the functioning of the EU.

Manifestly the Copenhagen criteria are aimed at countries with lower levels of political, economic and administrative development than the EU, and in this sense they are not so relevant for countries with generally higher levels. They were not in fact employed for the EFTA applicants Norway and Switzerland in 1993-94, but they have been applied to the EFTA applicant Iceland, mainly to ensure uniformity for the other countries now in the accession process.

Since the Copenhagen criteria were defined, their application has been the object of detailed interpretation by the EU institutions, and in this sense the criteria have been progressively refined. In some cases this has substantially extended the initial concept: for example, under the political criteria applicant states are expected to settle frontier disputes with neighbours (though this was not applied in the case of Cyprus); and to cooperate with the ICTY (International Criminal Tribunal for the former Yugoslavia). The emphasis on different aspects of the criteria has also changed: ‘good governance’ (effective public administration and judicial system, measures to combat corruption, etc.) is now increasingly emphasised.

Written Evidence from Graham Avery, St Antony’s College, University of Oxford, and European Policy Centre In my opinion the Treaty provisions and the Copenhagen criteria are largely satisfactory; they provide sufficient flexibility and scope for interpretation, so that the EU can adapt its enlargement policy to different situations and individual cases.

5. What sense can be made of ‘absorption capacity’ as a parameter for enlargement?

The European Council at Copenhagen in 1993 declared ‘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’. Attempts to interpret the meaning of this have not been entirely successful.

In a report in 2006 the Commission deconstructed this concept in the following way (COM (2006) 649, Annex I): ‘the capacity of the Union to maintain the momentum of European integration as it enlarges has three main components: institutions, common policies, and budget. The Union needs to ensure that its institutions continue to act effectively, that its policies meet their goals, and that its budget is commensurate with its objectives and with its financial resources’. It argued that all three elements will be satisfactorily handled for future enlargement. Although this was a reasonable attempt to provide a practical interpretation of the notion, it was not officially accepted by EU member states; the Council of Ministers neither approved nor disapproved it.

Personally I think that the expression ‘absorption capacity’ has a strange connotation: the object is not to ‘absorb’ (dissolve?) new member states, but to integrate them; it would surely have been better to adopt the expression ‘integration capacity’. Anyhow, I consider that absorption capacity remains a kind of ‘undefinable flying object’ circulating in debates on enlargement policy, which may be appealed to as an argument for delay if and when desired. But it would be impossible to obtain consensus on its definition, so it is hardly worth investing more time and effort in the attempt.

6. What is the significance of ‘enlargement fatigue’?

In the years following the enlargements of 2004 & 2007 the phrase ‘enlargement fatigue’ was often used for reluctance to proceed with further accessions. Since the EU’s numerical increase from 15 to 27 members was the largest that it ever experienced, this was hardly surprising. In my view, however, the significance of the phenomenon will be less in coming years, for a number of reasons:

• What was described as ‘enlargement fatigue’ was reinforced by ‘treaty fatigue’ resulting from the repeated delays and rejections of the Constitutional Treaty and the Lisbon Treaty. • The dimension of the next enlargement - Croatia in 2013 - will minimal; no other enlargement in the past, with the exception of Greece in 1981, has consisted of the accession of a single country. • There will never again be another enlargement of the dimension of EU-15 to 27; after Croatia, the number of European states remaining outside the EU will be (at most) 17, and for most of them the prospect of EU membership is very distant

Written Evidence from Graham Avery, St Antony’s College, University of Oxford, and European Policy Centre 7. What alternatives to EU membership can be offered to other European countries?

The EEA (European Economic Area) is the closest form of relationship that the EU has ever created with non-member countries. Under it, Norway, Iceland and Liechtenstein have full access to the Single Market and in return accept the direct applicability of EU laws. Under 'decision-shaping' procedures, they have access to committees preparing EU legislation, and the right to submit comments, but they have no access to the EU's decision-making process in the Council or the Parliament.

These countries enjoy a high degree of integration with the EU, but it falls short of membership, whose defining characteristic is a voice in the EU institutions. This type of relationship continues to be satisfactory for Norway (and for Switzerland, whose bilateral agreements with the EU have similar effect) but Iceland has taken the decision to seek EU membership. In effect, the EEA is a kind of waiting-room for countries that are qualified for EU membership, but do not yet wish to take it up.

For the countries of Eastern and South-Eastern Europe, the EEA is not a viable model, for it requires a high level of economic and administrative development. In any case, what they want is full EU membership. When the EEA was suggested informally to Poland and other applicant states as an alternative in the 1990s, they preferred membership. A similar logic underlies the attitude of countries such as Ukraine, which under the Neighbourhood Policy are offered the long-term prospect of a relationship analogous to the EEA.

One can devise many different formulas for a relationship with the EU that falls short of full membership; when I worked in the Commission, I was asked on a number of occasions to design such a product. The problem is that, in general, there is no real market for the product, since most European countries do not wish be satisfied with ‘second-class’ status.

30 November 2012

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45)

Evidence Session No. 1 Heard in Public Questions 1 - 45

TUESDAY 13 NOVEMBER 2012

Members present:

Lord Boswell of Aynho (Chairman) Lord Bowness Lord Dear Baroness Eccles of Moulton Lord Foulkes of Cumnock Lord Hannay of Chiswick Lord Harrison Lord Marlesford Baroness O’Cathain Lord Richard Baroness Scott of Needham Market Lord Teverson Baroness Young of Hornsey ______

Dr Steven Blockmans, Senior Research Fellow and Head of EU Foreign Policy Unit, Centre for European Policy Studies and Professor of EU External Relations Law and Governance, University of Amsterdam, Fadi Hakura, Associate Fellow, Chatham House, and Kadri Liik, Senior Policy Fellow, European Council on Foreign Relations

Q1 The Chairman: Good afternoon, witnesses. We are very pleased to see you here. I think at least two of you have given evidence on similar occasions—although possibly not Ms Liik—to these Committees. It would be helpful if you would introduce yourselves for the record, starting with Dr Blockmans.

Dr Blockmans: My name is Steven Blockmans. I am a Senior Research Fellow and Head of the EU Foreign Policy Unit at the Centre for European Policy Studies in Brussels. I am a Professor of EU External Relations Law and Governance at the University of Amsterdam. I have been in the post for four months and look forward to exchanging views with you on the issues today.

Fadi Hakura: My name is Fadi Hakura; I am the manager of the Turkey Project at Chatham House. I am also an Associate Fellow of the Europe Programme at Chatham House, and I am happy to answer all your questions today. Kadri Liik: My name is Kadri Liik. I am a Senior Policy Fellow and Programme Director for Wider Europe with the European Council on Foreign Relations in London. In terms of 8

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) specialisations my main focus is Russia, so I am very prepared to discuss enlargement to the east, if that should happen. I am a product of enlargement myself. I have lived through it, as I am from Estonia.

Q2 The Chairman: Thank you. Before we get into the meat of this, I just remind you as witnesses—I think the Committee is already aware—that the session is in public and will be televised. A transcript is being taken, and the normal form is that a copy of the transcript will be sent to you to give you a chance to make minor corrections to it, although it will be published online in an uncorrected version first. Obviously we are anxious to secure transparency and an accurate account of your wisdom.

We would like to begin with some questions about the geopolitical impact of enlargement. I will ask the first question generally but would like a volunteer in response. It is up to the three of you how to play this, but I think it will be clear in the context. You will have seen our call for evidence, where we asked about the geopolitical impact that further enlargement decisions might have. I would like to ask first about the geopolitical impact of the most recent enlargements: the 2004 enlargement, which dramatically narrowed the European Union’s shared neighbourhood with Russia; and the 2007 enlargement, which expanded the geographical borders of the EU towards Turkey. I wonder if our visitors could tell us what impact these shifts have had on the European Union’s relations with its neighbours to the east and with Turkey as a candidate country. Perhaps you would like to start, Mr Hakura, because of your speciality in that area.

Fadi Hakura: Turkey was very upset that negotiations did not open with the first wave of accession in the Union, nor was Turkey able to join with Bulgaria and Romania. It has been trying to join the European Union since 1963. Europe has been quite reluctant to admit Turkey for various reasons. The momentum in Turkey’s accession process really kicked in in 2004 and 2005, but since then it has pretty much come to a halt. It is the only candidate country that seems unlikely at the moment to join the European Union. It has not been able to open a negotiating chapter since June 2010.

Q3 The Chairman: Thank you. Ms Liik, would you like to follow on with the perspective to the east?

Kadri Liik: The enlargement in 2004 brought a significant amount of knowledge into the European Union of the countries to the east, not only Russia but also the countries that are now called Eastern Partnership countries. You can see that this policy has been driven by Sweden and Poland, so there is a strong impact from new member states behind it. Romania and—maybe less so—Bulgaria have also been very active in their corner of Europe. So we are better equipped to deal with our new neighbours to the east.

Q4 The Chairman: Thank you. Dr Blockmans?

Dr Blockmans: I would like to second that last statement. The EU has benefited from a new Ostpolitik thanks to the admission of countries in central and eastern Europe. At the same time, the EU has impinged on the shared neighbourhood with Russia. Russia has reacted in both negative and positive ways in order to cajole and lure back in those middle countries into its own zone of influence. It has done that negatively by using the instrument of energy policy by Gazprom and by forcibly assisting de facto states in Georgia, Abkhazia and South Ossetia, to separate. In a positive way it has tried to lure Russian speakers by handing out 9

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) passports in neighbouring countries and it has created new forms of integrated models, such as the customs union, the Single Economic Space and the forthcoming Eurasian Economic Union in order to strengthen ties with, inter alia, those countries in the middle.

Q5 The Chairman: May I come back to you on that issue? You are recording the fact that Russia has an interest in its own neighbours and its own neighbour policy, and has some means of manipulating or influencing the situation. You are not saying this has arisen out of the fact of accession, are you? Is it something that would have happened anyway under the administration in Russia, or do you think it is a statement or repositioning on account of EU enlargement in 2004 and 2007?

Dr Blockmans: It is perhaps speculative to say that it would not have happened in the absence of EU enlargement. However, it may have fuelled the reaction of the Kremlin when it saw the EU’s borders move eastwards into its own backyard.

Q6 Lord Foulkes of Cumnock: I would like to ask a supplementary of Ms Liik; I was not quite clear on one point. We know where the boundary of Europe is on the west, but I am not clear where you think it is on the east in terms of potential membership of the Union? Which eastern countries do you think are genuinely potential members?

Kadri Liik: By giving Turkey prospective membership and starting negotiations, the European Union has established that. All the Eastern Partnership countries are actually to the west of Turkey. So I do not think it unfair that they should be offered prospective EU membership as well, if and when they qualify, and if they are interested.

Lord Foulkes of Cumnock: Which do you think are likely to want to seek membership and could potentially qualify? Could you specify which countries they are?

Kadri Liik: The frontrunners change, but right now I think Moldova is the best. They are doing a really good job: their government has always been changed by elections, and they are very pragmatic when it comes to solving the frozen conflict of Transnistria.

Lord Foulkes of Cumnock: What about Ukraine?

Kadri Liik: Ukraine is having problems. I am not sure whether they know if they want to join the European Union or not. They are torn between short-term gains and longer-term public good. Russia is very clever in exploiting the instinct to have short-term political or economic gains to try to bring countries further from the EU. Russia has changed its views about the European Union. When Estonia applied for membership in 1995, Russia had no problem with that. They had a big problem with NATO enlargement. Later on, when they saw what EU enlargement actually meant for the countries and for Russia’s neighbourhood, they changed their mind. Now they are quite jealous.

Lord Foulkes of Cumnock: Which of the other former Soviet countries do you think might be interested?

Kadri Liik: Georgia is very interested. Their reform process is enthusiastic but, so far, bumpy. I also think that Belarus could become a very good candidate once the dictatorship is lifted. The society has all the good qualities required; they have just been suppressed for decades. 10

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45)

Lord Foulkes of Cumnock: That is fascinating, thank you.

Q7 Lord Teverson: I just wanted to follow up on the issue of the Russian Federation. In your opinion what is the view, not just from the top of the Russian political elite but the Russian political class more generally and right down to the bottom of society, of the European Union? Do they see it as a post-imperialist organisation that is moving towards them, or do they see it as just an incompetent organisation that cannot sort out its own currency?

Kadri Liik: They have a very hard time understanding what the EU is and how it operates. They are very state-centric and they find it much easier to have bilateral deals with member states. They are disappointed and sometimes genuinely puzzled when that does not work. They do not understand rule-based and value-based systems such as the European Union. KGB education in particular has a world view that the world is manipulated from a few strong power centres and everything else acts as puppets or proxies of the strong ones. The European Union does not fit in that scheme, and it is hard for them to find out who the strong ones are because America does not always fit in that role. I honestly think there are only a handful of people among Russian experts who actually know how the European Union operates.

Lord Teverson: What impact should that have on European policymaking in terms of enlargement, if any?

Kadri Liik: I think the European Union should carry on as it is. I do not think we should be affected by the fact that Russia does not know how we operate.

Q8 Lord Richard: I would like to follow this point a little further. In my own personal view, it seems quite absurd that a country like Ukraine could be a part of the European Union. I have said it before: the idea that Sevastopol is somehow within the European Union is an extreme concept that I find difficult to grasp. It seems to me that, however you look at enlargement, you cannot ignore the fact that, if the EU enlarges further east, it is bound to have some effect on the Russians. The Russians in those circumstances might be entitled to say that traditionally, historically and so on these areas are within their spheres of influence and ask why the European Union is coming along and doing this. Do you not think that some limits have to be drawn about where the EU actually goes to? We cannot define Europe, as far as I can see, except in a vague geographical way of going up to the Urals. I cannot believe that people would want to go that far with the EU. Where do we stop? It seems to me that once you are impinging into other major powers’ sphere of influence to the extent we are now doing, it is dangerous. Do you agree with that?

Kadri Liik: I am of the view that countries have the right to join organisations if they want to, if they qualify, and if they are from the region. Ukraine is as much in Europe as Turkey is. If Ukraine cannot join, it must be because it did not do its homework or it does not want to join, not because Russia does not want it to. Russia’s borders with the European Union are the best, richest, most stable and most problem-free borders Russia has. Its closest friends in the international scene are the European Union members, such as Germany and, some time ago, Italy. I do not see why that should be a problem.

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Lord Richard: You said that you did not think Georgia was a viable candidate. Why is that? Is there a geographical ground for that?

Kadri Liik: Georgia wants to join and I think, geographically, it is within the limits.

Lord Richard: Do you think they should be allowed to join if they qualify?

Kadri Liik: If they qualify, yes. However, qualifying will be hard work for Georgia.

Lord Richard: What about Armenia?

Kadri Liik: The same. These are all hard countries, but there is no easy enlargement to be done anymore. All the easy countries are in already.

Lord Richard: So, for you, the EU would take in the Caucasus if they qualify.

Kadri Liik: Yes. If we invite Turkey, then these countries, in terms of geopolitical location, are as eligible as Turkey. Qualification is another question, and there is a long way to go for each of them.

Q9 The Chairman: Can I ask Mr Hakura to respond to his colleague’s remark about Turkey and Ukraine? Is it your view that Turkey is as ready as Ukraine? Underlying that, how can the EU identify, quantify and justify that position? Then I would ask Dr Blockmans to clear up the points and take an overview between them. I am not trying to set you up against each other, but we have two slightly different perspectives here: how does it look from inside Turkey and between Turkey and other potential member countries?

Fadi Hakura: I think the European Union missed a big opportunity with Turkey when the accession process came to a halt in 2005. Turkey was very keen to join the European Union. It adopted many major economic, social and political reforms in the country. Its rankings in freedom of the media improved dramatically during that period. Since the accession process declined, Turkey’s rankings on freedom of the media, for example, have been plummeting. If we look at the index by Reporters Without Borders, Turkey was ranked 98 in the world in 2006 in freedom of the media. Today it is ranked 150. It has more journalists in prison than Russia and Iran. So Turkey is now far less ready for accession than it was in 2005. The momentum has been lost. The EU is barely mentioned in Turkish political narrative; it is pretty much ignored. The EU Commission’s annual progress reports on Turkey, condemning Turkey’s infractions on civil liberties and human rights, are barely mentioned in Turkey. So I think a big opportunity there was lost.

What were Turkey’s benefits to the European Union? Turkey had major strategic benefits, which were clearly enumerated by the United Kingdom. Namely, these were about stabilising the borders with some of the most unstable regions in the world: Iran, Iraq, Syria and the Caucasus. In addition it would bring some stability to the eastern Mediterranean, an area that is hotting up now because of the gas findings off the Cypriot coast. So had there been a robust accession process, the European Union would have had a far greater ability to impact on these very volatile and unstable regions. Unfortunately that opportunity has been lost since the accession process essentially came to a halt.

Q10 The Chairman: Dr Blockmans, would you like to give an overview? 12

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Dr Blockmans: I will clear up one point only: Article 49 of the EU Treaty imposes a constitutional obligation on the European Union to handle applications for membership by “any European state” that will fall in line with the other conditions spelled out later in the article.

Lord Richard: What is a European state?

Dr Blockmans: I would like to resonate the point that was made earlier: if the political decision has been taken to accept Turkey as an applicant country and grant it candidate country status, then we must assume that the geographical requirement has been fulfilled and we must apply the same logic to other European states that have part of their territory on the European continent.

Q11 Lord Hannay of Chiswick: Two of the countries you mentioned in the former Soviet Union have territorial disputes, not necessarily of their own making: Moldova in the case of Transnistria, and Georgia in the case of Abkhazia and South Ossetia. How are those issues to be handled given the fairly bitter experience over Cyprus? Of course there are other similar cases within the Balkans, but I would like to hear about those two because you mentioned those two countries. It seems to me that their problem is that control over the disputes is not entirely in the hands of the European Union and the applicant country.

Kadri Liik: No, that is true, but Russia has a big role to play there, and Russia’s role is not necessarily always constructive. I think Russia is trying to keep Georgia hostage by supporting the breakaway republics, because Georgia was a very likely NATO candidate for a while. When it comes to concrete conflicts we have some hope for Transnistria because the European Union and some of the important member states and leaders have started playing close attention, most notably Germany. Moldovans themselves are very pragmatic. They are trying to help reintegration. Probably the best way to reintegrate this is to give it time and to give Transnistrians time to see that Moldova’s rapprochement with the EU brings benefits to Moldova and to figure out what they then want to do. Then again, I think Moldova is prepared to try without Transnistria. They are not fanatic at all about reintegrating it. They do not necessarily see it as part of their country and identity.

Georgia is a different issue. For Georgians the breakaway regions are very important. The breakaway regions in Georgia are also very different. In Abkhazia you see some proper and sometimes even idealistic nationalism. South Ossetia is mostly just a proxy state of Russia. So I think these entities should develop under fairly different scenarios. Among the analytical community, some people claim that Abkhazia will be a new Kosovo. I do not know about that: for that you need the will of the international community to declare it another exceptional case. However, I think that South Ossetia as a separate state will probably not be viable.

Lord Hannay of Chiswick: However, they have both been comprehensively ethnically cleansed.

Kadri Liik: Yes.

Q12 The Chairman: Are there any other comments from our witnesses on this?

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Fadi Hakura: I have one comment. The EU should be very careful not to admit countries that have territorial disputes. That is the experience with Turkey. The accession process pushes countries to show flexibility, but once they become a member, that flexibility disappears. That is what happened with Cyprus, which used every occasion to veto Turkey’s progress towards joining the European Union. That policy should be more robustly applied to the Caucasus, Ukraine and other countries.

Dr Blockmans: I have one final point on the position of the EU in these negotiations. It acts as an observer, and in all circumstances—Transnistria, Abkhazia, South Ossetia and even for Nagorno-Karabakh—these negotiations are handled under the auspices of the OSCE. Some individual member states participate in the negotiation processes and the EU supports them. Perhaps the diplomatic service could also assume a stronger role in mediation between third parties to broker peace between them. You could see a heavier role for the EEAS and Baroness Ashton in this respect. That is still a long shot.

The Chairman: Thank you for that. We should move on, but we will come back to some of the conditionality issues a little later on. First, as it is a subject that has been implicit in comments already made, can we explore the question of enlargement fatigue?

Q13 Lord Dear: Thank you. We have already begun to touch on this issue, so it would be helpful to develop it. It would be helpful for us to know your assessment of the current state of progress in some countries, particularly in Serbia, Bosnia and Herzegovina, and Turkey. We know, as I am sure you do, that the Commission’s progress reports as late as last month were showing that there has been slow progress, which most of us knew anyway. It is slowing down in those three countries and in some of the other applicant countries. A general comment from you on fatigue would be helpful. Is it something that is happening within the EU constituent countries already and is leaching over into aspirant countries, or is it something that is growing outside the EU borders and coming back in? We are not too sure about that and it would be helpful to know your views.

Dr Blockmans: I can start on Serbia and Bosnia and Herzegovina and then pass over to Mr Hakura on the issue of Turkey. First I would like to make a semantic clarification: enlargement fatigue, to my mind, applies to the member states of the European Union.

The Chairman: The existing member states?

Dr Blockmans: Exactly, whereas I would call it pre-accession fatigue to apply to the candidate and potential candidate countries. As far as Serbia is concerned, I do not think there is much of that. There is a great desire, almost an inherent ambition, in Serbian society and authorities to make good on what was lost over the last two decades and to show again where the centre of power and the intelligentsia of the former Yugoslavia reside. There is quite a lot of ambition to make up for lost ground and overtake other candidate countries. As such, there is quite a bit of healthy competition in the region. The issue of Kosovo is holding Serbia back, and the election of a more conservative line of parties and politicians has highlighted that point again, with some antics that hark back to memories of darker days in the history of Serbia. The general public, I would argue, is starting to accept that this ex- province has been lost and that it is time to move on, modernise the country and reap the benefits of globalisation and modern life. Bosnia and Herzegovina is a totally different ballgame. For a number of years the progress reports of the European Commission read as “stagnation reports”. Progress has essentially 14

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) been held hostage by the country’s complex state structures and an unwillingness to compromise at the political top. EU conditionality means very little when self-determination is being denied by the international community, under the Dayton Agreement. The EU is now fully in view in monitoring the Dayton process.

Fadi Hakura: I would say that the turning point for Turkey’s accession process was the loss of Gerhard Schröder as the Chancellor of Germany in 2005. If it were not for Chancellor Gerhard Schröder and his Foreign Minister Joschka Fischer in Germany, who defied German public opinion to push Turkey’s accession, it would not have happened. When Chancellor Angel Merkel took over, she adopted a much more lukewarm approach, basically opposing Turkey’s accession process but respecting the previous commitments of the Schröder government. Essentially, the accession process nosedived from then in Turkey. What you see in Turkey now is not so much fatigue as apathy. The Turks realise that the Europeans do not want them in, so there is no incentive to carry out the reforms demanded by the European Union to join the club. What is quite amazing is that, despite what has happened, 40% of Turks still want to join the European Union. If the process were to be remobilised, I think that percentage would rocket back to the levels we saw in 2005, when around 70% wanted to join the European Union.

Q14 Lord Dear: Are you saying the apathy or lack of interest or momentum within Turkey is largely a reflection of what they see happening in Germany and elsewhere, or is it something that would have developed in Turkey anyway without that lukewarm approach?

Fadi Hakura: If the accession process was robust, I think the Turks would have continued to be excited. Some of the reforms were painful, but they could tolerate them for the sake of a better future. Since former President Sarkozy and Chancellor Merkel came to the scene and expressed repeatedly and publicly their opposition to Turkey’s accession to the European Union, and then hid behind Cyprus to stymie Turkey’s efforts, that apathy really began to creep into Turkey. There was a growing loss of interest in joining the European Union.

Q15 Baroness O'Cathain: Do you think that is capable of being turned around or has the door closed?

Fadi Hakura: You can never say never; nevertheless I think it is far more difficult today than it was in 2005. If you look at Turkey’s trade, for example, in 2005 around half of Turkey’s trade was with the European Union. Today less than 40% is with the European Union. Far more of Turkey’s economic engagement is now with Africa, Russia, Central Asia and especially the Middle East. I think Turkey’s reorientation has taken place. Nevertheless, the Turks realise that when it comes to economic and socioeconomic progress there is no substitute to the European Union. Its technology comes from Europe, modern corporate practices come from Europe and know-how comes from Europe. Those things do not come from Gulf Arab money; they come from European capital and European foreign investment. If Turkey wants to continue witnessing those high economic growth rates, it has to re- engage with Europe.

Q16 Lord Dear: It does beg the question of whether, if the lukewarm approach you described from within the EU continues to become cooler and cooler, Turkey will end up saying that they flirted with the idea of joining the EU but have had enough and are going to start looking east and south-east. Do you see that as a possibility? 15

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Fadi Hakura: I think it is already happening.

Lord Dear: Will it continue to happen?

Fadi Hakura: It will continue to happen. I do not think Turkey will pull the plug because, in effect, the process is in a stalemate. There has not been one negotiating chapter opened since June 2010. I would describe it as comatose. The Europeans do not want to pull the plug and neither does Turkey. Each side is pretending to want the process to continue but, in essence, there is an understanding that accession is unlikely to happen any time soon.

Q17 The Chairman: Ms Liik, do you have a perspective on this?

Kadri Liik: I think the applicant countries can be really frustrated when they have fulfilled their side of the promise and the European Union does not do its side. That is very bad. As other experts have said, there is a permanent blinking yellow light on the European side towards the applicants. The answer is always, “Yes, but.” That must be frustrating and that can lead to negative consequences. I think we will probably discuss more of that when we reach the topic of conditionality. My country’s experience was that even though we were, politically, a very complicated candidate at the time when we started, we fulfilled the criteria and did the things expected of us. We got what we wanted and the EU delivered its side of the promise as well. I have seen how that has affected the political culture in Estonia. Countries believe in strategies that have worked for them. For us, doing our homework and being good worked. Now we are of that belief, and that is a very good thing. We want people and countries to have that kind of thinking. So it is about political culture as well; it is much more wide-ranging.

Q18 Lord Marlesford: It is very interesting what you said about the changed attitude of Germany, and of course France has always been pretty hostile to the idea of Turkey joining. In which EU countries is there, in a domestic political sense, a desire for enlargement, and in which direction is that enlargement? Can you give us an example of which countries are actually driving the enlargement process forward within the EU and in which areas those particular countries want to see it happen?

Fadi Hakura: I think the foremost country is the United Kingdom. What is remarkable is that the three major political parties—the Conservative Party, the Liberal Democrats and the Labour Party—all champion Turkey’s accession to the European Union. It is not a political issue in the UK. I would also add Spain and Portugal to that list, but right now they are engulfed in the euro crisis. Also, potentially, there is Poland and perhaps Hungary but, because they are not so geographically close to Turkey, their key concern is Ukraine rather than Turkey. At the moment it is pretty much the UK on its own that is trying to press this when it comes to Turkey.

Q19 Lord Marlesford: Setting aside Turkey, which other countries are there? You mentioned Ukraine as well. For which other countries is there a pro-accession movement inside the EU?

Kadri Liik: I think the whole Nordic and Baltic corner of the European Union is very open and enlargement minded.

Lord Marlesford: In which direction do they seek enlargement? 16

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Kadri Liik: Everyone who qualifies, so Turkey as well.

Lord Marlesford: Is it mainly the Balkan states or eastern Europe in the Former Soviet Union?

Kadri Liik: All of them—everyone who has done their homework and is deemed acceptable.

Lord Marlesford: Russia obviously is not keen on any Former Soviet Union countries joining, to put it mildly. Are there any for which there is a real red line as far as Russia is concerned, where they would make a huge effort to prevent accession?

Kadri Liik: I do not know what a huge effort means. A war?

Lord Marlesford: Major political pressure.

Kadri Liik: They exercise pressure, but I do not think they have a consistent strategy. They can come up with new and different versions of the march to the Pristina airport, maybe using more economic means, but then what? What next?

Q20 The Chairman: Dr Blockmans, would you like to comment?

Dr Blockmans: I would just add something about the champions for EU enlargement. For the western Balkans, on the Scandinavian front, Sweden would be a champion. Carl Bildt is the Minister for Foreign Affairs; he has played a role in the region and is still advocating enlargement of the European Union towards the region. Obviously there is Greece as well, with the caveat towards the Former Yugoslav Republic of Macedonia, etc. Also there is Austria.

The Chairman: We have heard suggestions that Bulgaria and Romania are quite supportive of enlargement both in the western Balkans and Turkey.

Dr Blockmans: Also towards Moldova, obviously.

Q21 Lord Hannay of Chiswick: You have painted a slightly bleak picture of a lack of support for further enlargement. Is it not actually the case that the whole European Union supports enlargement to the western Balkans? I have not heard of any country in the 27 members of the European Union that is opposed, as a matter of principle, to the inclusion of the countries of the western Balkans. Is that not the case?

Dr Blockmans: I share that view, but it is also true that some of the individual member states have imposed bilateral conditionality on some of the western Balkan countries. The case of Greece versus Macedonia is the classic one. In principle the agenda for the western Balkan enlargement is still very much alive, but there also seems to be a general consensus that there is not an appetite for a speedy enlargement process with countries perceived to have weak economies, weak administrations and corrupt law enforcement authorities. The enlargement process would have to do its job; its transformative power would have to be exerted on those countries.

Q22 Baroness O'Cathain: Can I just ask a very simple question? Given the economic state of so many European Union countries at the moment, are they seriously considering 17

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) getting involved in enlargement with all that incurs? Surely there must be some sort of thought process that says that, “We would love to see them, but not now”?

Kadri Liik: I do not think it is likely. For all practical purposes, the Balkans are already part of Europe. They are doing badly because they are integrated with European economies that are doing badly. They have only to gain by acceding to the EU and actually having a say in the decisions, because the consequences of our decisions affect them anyway.

Q23 Lord Dear: I am a little confused, I have to admit. We talked about geopolitical enlargement and fatigue. If you ask the average man or woman on the street what they mean by Europe, they would come up with something like what they went to school with. It would include the Balkans; they have not thought through whether they are members or not. They would see a natural boundary around the Atlantic-facing coast and the western side of the Balkans. They would probably say yes to Greece, and then they would falter. They would start to say that the border was somewhere up there, where the Iron Curtain was. I am being very loose in this, but that is what the average man in the street would think about Europe. We are now talking about the possibility of going out to Turkey, and Ukraine has been mentioned as well. I wonder to what extent, in your view, the political classes see it the same way. I do not declare a view on this personally. One of the reasons we have chosen this as a subject to address is that we have had what could be seen as an incremental growth, with countries saying they would like to join and, after a process, they join. So where will it stop? There has been a question posed to you already about how far out east you see it going. One could equally ask how far south-east it will go. Could it come around eventually—say in 10 or 15 years’ time—so that Syria would be included in Europe if conditions were right? I wonder whether anyone, in your experience, has ever stopped to say, “Europe really stops at this point, for all sorts of socioeconomic, geographical, ethnic and religious reasons.” I do not know that, and I do not know whether anyone else does.

Kadri Liik: I am not prepared to say where it should stop.

Lord Dear: I am not asking where it should stop. I am asking whether anyone has applied their minds to it.

Kadri Liik: People have done it differently. It is obvious that there is some prejudice against Turkey and other Muslim countries because it is a different religion, and religion seems to matter more than in some other parts of Europe. When it comes to post-Soviet countries, I think many people think that, because they were in the Soviet Union, they cannot be in the European Union. That is wrong because some are already. It is up to these countries themselves to change their story, and have another successful story after the Soviet Union and be in the news for other things. If they want to, they can make it, but it is up to them.

Q24 Lord Foulkes of Cumnock: I wonder if we can move away from individual countries coming in and look at the whole thing in general. In your view, is there a growing feeling that perhaps we ought to be consolidating what we have in Europe rather than enlarging? In other words: should we be deepening rather than widening? We have the economic crisis facing us, which is very severe. Then we have the regional problems of Catalonia, Scotland and Belgium, which will have to be faced. There will be a referendum in Scotland, and Catalonia is pressing for one. Are these not things we need to address within the present boundaries, rather than spending time thinking about getting bigger and bigger?

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Fadi Hakura: I think the euro crisis may enhance prospects for accession in the future rather than reduce them. If the euro crisis results in much closer economic co-ordination between the 17 euro countries, such as a banking union, and then Britain renegotiates its relationship with the European Union, you may have a looser form of association with the EU, which is what the Europeans like to call concentric circles and other buzzwords. That may make it easier for a country like Turkey to join, which has a very deep sense of national sovereignty, as the UK does. In the future, but not immediately, it may make it easier for countries to join if Europe moves away from this one-size-fits-all model.

Q25 The Chairman: It is worth recording that there are obligations under the Lisbon treaty, for example accession to the euro, which appear to be in the way of that development. Dr Blockmans, do you have a view on whether you feel happy with this approach, or do you have a different perspective on it?

Dr Blockmans: Article 49 of the EU Treaty prescribes that candidate countries—to paraphrase—will accept all acquis and nothing but the acquis. That means that they will also strive to accede to the inner core of the European Union, as it may in the future have been developed according to a concentric circle model. Such a model may indeed be more amenable to absorbing countries like Turkey into the EU’s realm, but it poses all kinds of difficult institutional questions, which have to be resolved over time.

Kadri Liik: At the same time, it remains to be seen how we will resolve the euro crisis, and which new rules and arrangements there will be. There is some chance we may improve our framework of how we operate, and that will also make accession easier. If there is a clear set of rules that have proven workable, then it is better than the current agreement concerning the euro, which was tailored for good times.

Q26 Lord Foulkes of Cumnock: I do not want to make a game of chess into three- dimensional chess, which is even worse, but there is a big debate going on in Scotland and Catalonia. If Scotland were to become independent, would it be an existing member or would it have to apply for membership? If it did, would it then have to go through all the hoops that new countries do? There are different views on that, depending on whether you are a nationalist or not. I am not asking for your views; I am just saying that might complicate things when looking at enlargement.

Lord Richard: Only for Scotland.

The Chairman: Perhaps we can tempt our witnesses, if they have views on that, to submit them in writing in due course. It is an interesting speculation. We are faced more immediately with the questions about privileged partnerships.

Q27 Lord Bowness: In your opinion, are there any acceptable and viable permanent alternatives to full membership that could be offered to some of these countries? In particular, do you think the European Economic Area, the vehicle of the neighbourhood policy, or the idea of a privileged partnership offer a way forward to ease what has been referred to as the enlargement fatigue? Perhaps, Lord Chairman, I may also ask the supplementary question I would have asked had I not asked the main question. Could we have your opinions on the European Neighbourhood Policy and whether you think our efforts under that policy are too widely spread? Should we concentrate on our nearer

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) neighbours who have a more realistic view of a European future, in particular the Eastern European Partnership?

Kadri Liik: Privileged partnership or any European Economic Area type of arrangement cannot work for countries that want full membership. They just will not accept it as a substitute, and it would be even worse to take prospective membership away from the countries that have been given it and replace it with some sort of privileged partnership. So I think that could be a solution only for countries that think that status is a good thing for them, like Norway or Switzerland.

Q28 The Chairman: Are there any other comments on this?

Fadi Hakura: The term “privileged partnership” was actually invented to keep Turkey out. It was used by former President Sarkozy and Chancellor Merkel essentially to keep Turkey out. What does privileged partnership really mean? I tried to define it six years ago when I first joined Chatham House. Essentially it means that you are part of the common market, but there is no free movement of persons and no participation in EU institutions. At the same time, it also means the EU will lose the ability to influence reform in that country. If you look today, Turkey is a privileged partner. It has a customs union covering goods, it is a member of NATO and it is a member of the Council of Europe and the OCSE. The only more privileged thing Turkey can get from the EU would be to expand the customs union to include services and perhaps more liberal regimes in agriculture. Other than that, Turkey is a privileged partner and the Turks do not see it as a substitute to membership.

Q29 The Chairman: Thank you, that is very clear. Dr Blockmans is next.

Dr Blockmans: Privileged partnership is a bad label for second-class membership. It would infringe on one of the most basic general principles of EU law, which is non-discrimination on the grounds of nationality. For that reason, offering privileged partnerships is not a path that should be pursued. As far as the EEA is concerned, I do not think it is an alternative for applicant countries aspiring to full membership. It has been said to be the waiting room for membership; it allows applicant countries to play by the EU’s rules, but at the same time they do not have a stake in the decision-making process and thus remain outside the institutions of the EU, unable to wield political influence on the rules imposed upon them. For that reason alone I think it is not a viable alternative. I would also like to resonate the points made by Ms Liik.

As far as the European Neighbourhood Policy is concerned, it is perhaps too wide a net that has been cast over too heterogeneous a group of countries. What you see in practice, is the emergence of regional groupings such as the Eastern Partnership and the (southern) Union for the Mediterranean. In those groups, an own-merits approach is the main driving force for closer relations – enhanced bilateralism - with the European Union, but with the explicit absence of a promise of membership. While this might not be problematic for the countries in the southern Mediterranean, including Syria and the Middle Eastern countries—because they could not meet the geographical criterion in Article 49 of the EU Treaty—this would take away an important carrot for the Eastern Partnership countries that could, one day, meet all criteria mentioned in Article 49.

Q30 Lord Harrison: It was exactly that point that I wanted to come in on. Mr Hakura mentioned President Sarkozy’s pursuit of trying to avoid the Turkish question. That was 20

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) associated with his own leadership quest for the Mediterranean itself, through the earlier neighbourhood policy and then also with his concept of the Mediterranean supporting the French and other southern countries. Could you say a little bit about the Maghreb and perhaps the Mashriq, especially in light of the fact that Morocco has a privileged relationship with the European Union? To push it one step further, while clearly, territorially and geographically, the countries of the Maghreb do not sit in Europe, I have had my fingers burnt when I injudiciously asked some of our colleagues in those countries whether they would ever identify themselves as part of the European Union, meaning they would cut themselves away from Sub-Saharan Africa. I truly did get my fingers burnt: they were African is what they told me. I just wonder whether that kind of view could ever emerge, of which, in a sense, Morocco is a forerunner.

Fadi Hakura: If you look at the Maghreb countries like Morocco and Tunisia, their privileged relations are with individual EU member states such as France or Spain, not necessarily the EU as a collective.

Lord Harrison: What about Morocco?

Fadi Hakura: Morocco has a very close relationship with France. More than half its trade is with the European Union. It has signed an association that is essentially a free trade agreement with the European Union, but if you ask them, at least in terms of foreign policy and culture, their relationship is more with France and perhaps Belgium, but essentially it is with individual member states. I do not think Moroccans associate too much with Poland, Bulgaria or Romania. They associate much more closely with countries that are geographically close to them, such as France, Spain and Italy.

As for the European Neighbourhood Policy, this is where the EU tends to fall a little bit flat. You talk about the Mashriq and Maghreb countries. First we had the Euro-Mediterranean Partnership, the so-called Barcelona process, in the mid-1990s. That then became the European Neighbourhood Policy. Then we got further jargon: the Union of the Mediterranean. If you ask these individual countries, they have no idea what all this means. What does the Union of the Mediterranean actually mean in practical terms? Nobody has an idea. What is the European Neighbourhood Policy about? Again, nobody has an idea, not even a sentence. You just see an endless list of objectives, but you do not understand what is lying behind all this. Morocco understands that, if they borrow money from the World Bank, the IMF or the United States, they know exactly what is attached to that. When it comes to the European Union, they get all confused. I have seen that again and again over many years of dealing with this issue. They get really confused and have absolutely no clue what all this, in concrete terms, actually means.

Q31 Lord Hannay of Chiswick: Are you really saying that, given the considerations you have advanced and the rather major obstacle of including Israel in all this, the European Union was mistaken when it got away from a bilateral approach in its relationship to each of the countries of the southern Mediterranean, and it would do better to focus on a bilateral approach rather than invent ever more incomprehensible multilateral approaches?

Fadi Hakura: When you look at it today, it is essentially a bilateral approach. The only concrete agreements Europe has with those countries are the association agreements, more than three-quarters of which deal with trade. They also look at the rules of origin to allow goods and industrial products to pass without customs duties. So essentially it is a bilateral 21

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) process. The objectives need to be simplified to one or two key objectives that Europe wants to promote in the region and to work at it. It may take a long time to do so, but at least it will be a lot easier for those countries to understand than the endless lists of objectives, whether with individual countries or regionally.

Q32 Lord Teverson: The current enlargement strategy is based heavily on conditionality. We have already mentioned it to some degree. How is the conditionality principle currently being applied by the EU and is it being applied consistently across the applicant countries?

Dr Blockmans: EU enlargement conditionality has been gradually developed. The EU enlargement process is a gradual process, which sets conditions for applicant countries from the moment a feasibility study is conducted to see whether that state has the capacity to actually negotiate with the European Union. It then goes through a whole benchmarked process with several phases, all the way up to the application of post-accession conditionality in the case of Bulgaria and Romania. So it is a long drawn-out process defined by several stages of contractual relations, each with their specific conditions and benchmarks which have developed over time as the acquis has developed. The acquis is a perpetuum mobile and therefore it becomes increasingly hard for new applicant countries to adhere to the conditions and rules the EU has and the conditions it sets. There are also bilateral conditions that can be imposed by individual member states, for example on each chapter in the accession negotiations. So it has become a very heavily conditioned process.

Fadi Hakura: I would say that the big difference with accession today in comparison with the first and second waves of accession is that it is now a far more political process. When you look at Turkey, you cannot just concentrate on the technical requirements of accession. Even more important than the technical requirements are the political requirements. Because the political consensus was not there—especially after Gerhard Schröder and Joschka Fischer lost the election—the whole process came to a halt. So if the politics is not dealt with the accession process is likely to be stymied for other countries.

Q33 The Chairman: Is it your view that the bar is raised if there is a political objection? This may be masquerading as a piece of technical requirement but somehow it works to exclude; is that what you mean?

Fadi Hakura: That is exactly what I am saying. Croatia began accession negotiations with the European Union on the same day as Turkey: 3 October 2005. Croatia is expected to join in June 2013; Turkey is unlikely to join—if I were to hazard a guess—in my lifetime. Clearly there is differential treatment, especially if you compare Turkey with Croatia. One country has joined quite quickly while the other country will be unlikely to join any time soon.

Kadri Liik: At the same time there is a lot that applicant countries themselves can do. The Commission is fairly objective in their reports and assessments. When Estonia was going through the accession process not many countries wanted us in either, especially Germany because it was seen as potentially irritating Russia. We knew the enlargement was not going to happen without Poland. So Estonia’s strategy was very easy: we needed to be better than Poland in all the technical criteria and we needed to make everyone aware that we were better than Poland. That was a twofold task for Estonian diplomacy and it succeeded. When the Commission started discussing who to invite to negotiations there were quite a few people who said they could not possibly move forward with Poland if they did not take 22

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Estonia. So conditionality can actually be made to work in the favour of the applicant country.

Q34 Lord Teverson: Do you think conditionality as it is now, if it is objectively applied, is fit for purpose? Is it a better system than it was and does it mean we get the right result when accession takes place? We all know about raising the bar but have some conditions disappeared over the years? Are there some things that are now irrelevant and not there or is it just evermore difficult?

Dr Blockmans: I am not sure if any conditions have been left behind in the process. I just wanted to make two points. First, the pre-accession process is not a negotiation process; it is a one-way process whereby the EU and its member states define a checklist of conditions that have to be unconditionally accepted by the applicant countries. The second point is that there is a sense of creeping nationalisation in the benchmarking system. I referred to the accession negotiations themselves where individual countries can, in specific chapters, introduce bilateral conditions by themselves. In a way, those extra conditions may undermine the negotiation mandate given by the Council to the Commission. At the same time, bilateral conditionality has become part and parcel of the benchmark process, embraced by the European Commission in its ‘new approach’ of 2011. It does allow for a system whereby individual countries like Spain, to protect their shipping industries, are able to impose bilateral conditions on a country like Croatia to reform their shipyards.

The Chairman: We have seen recently—with Ljubljanska Banka—the resurgence of some efforts to resolve bilateral issues, very much in the context of negotiations, by putting in an objection at the last minute.

Dr Blockmans: Absolutely, that is another good example. Cyprus and Greece versus Turkey is another example and Greece versus Macedonia was mentioned. There is a tendency of nationalising and politicising the process.

Q35 Lord Richard: I wanted to follow up that point: I was thinking about Iceland and Britain and the Netherlands’ dispute over the banks. As I understand it that has now been raised by the British in the course of the enlargement negotiations with Iceland. If this sort of trend continues it is going to undermine the whole process, is it not?

Kadri Liik: I think we ought to give due credit to the European Commission who are trying to invent creative ways of continuing negotiations, such as high level accession dialogue with Macedonia, so the countries can do the work necessary even if there is a political block at one level.

Q36 Lord Hannay of Chiswick: The general thrust of all these questions has been to say that the process is getting a bit more haphazard and the bar is being raised. If you take a slightly wider angle to your lens and include the accession of this country, you will not be able to find a single accession negotiation that was even remotely as political as the British accession negotiation. Is that not true?

Dr Blockmans: That might be so, yes. I have one final point. Obviously the EU and the European Commission in particular have learnt from past practice. Referring back to the case of Bulgaria and Romania, where the cooperation and verification mechanism was put in place post-accession, there was a realisation that more attention should be paid to the issues 23

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) covered in Chapters 23 and 24 of the accession negotiation process, which deal with human rights, the rule of law, the judiciary and law enforcement institutions. The lesson learnt is now applied in the new negotiation process that has been opened with Montenegro, which has had to start with the more difficult chapters. As such, the European Commission is able to monitor progress and implementation throughout the entire pre-accession process. That is instead of waiting, as has happened with Croatia, until the very end for the two most difficult chapters.

Q37 Baroness Young of Hornsey: You covered some of the ground embedded in this further question about conditionality, but that also raised some other interesting issues. The question is: how effective is the strategy proving to be at supporting reforms that mirror the European mainstream in the applicant countries? I wonder if Dr Blockmans might like to comment on whether your feeling is that some of these bilateral conditions being imposed are becoming as important as, or maybe even superseding, some of the other issues around social and political reforms. Earlier you mentioned that you felt conditionality means very little when self-determination is denied. I would be interested to hear you expand on that a little bit. The basic question is on conditionality and whether it is more successful in some countries than others. I think most of you have addressed that already. If there is anything you would like to add to that, that would be useful.

Dr Blockmans: I am not entirely sure how to interpret your question as it was also posed to us in writing. There is no single model EU member state that could act as a model in order to impose conditions for reform on applicant countries. If your question is how effective EU conditionality has been on the implementation of reforms in certain countries then, yes, there is an obvious fragmentation to the picture. The impact depends partly on the absorption capacity within the applicant state itself to deal with the enormous body of rules and transpose it into national legislation. It is about whether the country has the administrative capacity to do that, whether people are trained to do that and whether the state has the financial means to set up the institutions needed in order to implement the body of rules and to enforce those rules. The judiciary also needs to be prepared for such enforcement. Apart from absorption capacity itself, you also need to see if there is a willingness on the political side of applicant countries to tighten belts for these necessary reforms or whether administrations engage in some kind of fake compliance by transposing laws on paper in order to score points for the next election round or progress report, which offer shorter cycles for political gain.

Fadi Hakura: I would like to comment on conditionality. In the case of Turkey, at the heart of the accession process between 1999 and 2004, when the process was seen from Turkey’s point of view as a very robust process, you saw a blizzard of reforms. For example, Turkey introduced a modern family law, based on the European model, even though it is a Muslim- majority country. It reformed one third of its constitution. It abolished the state security courts. It introduced market liberalisation reforms in the telecoms sector and the energy sector modelled on the EU. It widened the space for Kurdish self-expression. It also adopted a much more flexible approach to Cyprus, all in the space of four to five years when the accession process was seen as robust. That completely changed from 2005 onwards, when that process was seen as entering into a stalemate. Under the right conditions I think that conditionality can really work. What is remarkable about it is that it is a voluntary process. You are not forcing a country to do it; the country is doing it out of a desire to join an exclusive, secular, prosperous club.

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Q38 Baroness Young of Hornsey: You said earlier that things had slid back since the prospects of joining had diminished, which suggests that somehow these things are not entirely embedded in the countries concerned. People have mentioned other countries as well where that is the case. Do you think there is ever a way of ensuring those reforms are so thoroughly embedded they cannot be reneged on?

Fadi Hakura: The issue is not to block accession or fear accession but to enforce the conditions much more robustly. That was one of the lessons learnt from Bulgaria and Romania: to enforce conditionality much more robustly to make sure they have been internalised in the individual candidate countries. That does not mean that one should then retreat from accession or say it does not work. It does work. It has been quite transformational across Europe, for example for Spain and Portugal, who came out of their own dictatorships. It has been remarkable in Greece. It was remarkable in Turkey when it was robust. It has also been quite a success in eastern and central Europe, despite all the problems and challenges one might see today.

Q39 Baroness O'Cathain: There is an enormous amount of progress in the areas that Turkey decided were important. If the whole thing does not materialise—and it seems as though the attitude now is to look elsewhere—do you think they will be going back to the other systems, such as on family law?

Fadi Hakura: We are already seeing clear and visible signs of retreat in reforms in Turkey. If we look at freedom of the media, Turkey is plummeting, as I mentioned. Six years ago it was ranked 98 by Reporters Without Borders. Today it is 150 in the world. In terms of gender inequality and gender empowerment, there were quite visible improvements in the mid-2000s. Now it is either stagnant or retreating. There are issues of corruption, as identified by Transparency International. Even now the Prime Minister of Turkey is rehashing the old debate of bringing back the death penalty into Turkey. We are seeing increasingly religious content in the school curriculum, which was not the case. What was amazing about the reform process in Turkey was that, for the first time that I could observe, there was domestic political consensus in Turkey. From the left to the centre and right they all pretty much subscribed to the EU accession process. It brought that very rare consensus that is now pretty much lost in Turkish politics.

Q40 Baroness Scott of Needham Market: This is very much the same point made by Lady Young, but I am not sure we got to the answer. Let us say that rapid progress was made with Turkish accession and Turkey came in next year with Croatia: what would happen three or four years down the road? How would the EU prevent the sort of regression back to old ways? I would also extend that beyond Turkey: how does the EU manage these questions post-accession when it no longer has that lever?

Kadri Liik: It does not.

Dr Blockmans: It does through the very classic means at its disposal: the Court of Justice of the EU. There is a very well established system of infringement procedures that could lead the Commission to start a case for a breach of EU law against one of the member states. The Court may, in the first or second instance, wish to impose penalties in case the infringement is not removed. So there is a system of enforcement of European Union law built into the institutional and constitutional structures of the European Union.

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Q41 The Chairman: In our last 10 minutes we are going to turn to the potential costs and benefits of membership.

Baroness O'Cathain: Conditionality relies on the perceived benefits of EU membership as the driving force for reforms. Have the benefits of membership, as perceived by political leaders, changed in recent years?

Dr Blockmans: Do you mean political leaders of applicant countries?

Baroness O'Cathain: Yes.

Dr Blockmans: In some cases the perception of such political leaders has indeed changed. This was mentioned before. The image of the EU as a latter-day El Dorado has slowly faded due to the economic and financial crisis. Questions are asked about whether the ultimate political prize – EU membership - is worth fighting or worth waiting for. That is one element that needs to be taken into account. In some cases, early rewards in the pre-accession process are translated by political leaders as gains of having integrated with Europe. I worked in Albania for two years within the Ministry of European Integration when the visa-free regime came into force for Albania. It was hailed by the political leadership as if Albania were now in the European Union.

Baroness O'Cathain: How much of this change has been attributed to the economic and financial crisis, or is it just that the gloss has gone from the idea of joining the Union?

Kadri Liik: The financial crisis has not necessarily had as big an impact as people think. Many of these countries are economically integrated with Europe anyway so they have nothing to lose. It is now less romantic than it used to be. For many countries from eastern Europe it was very existential and seen as either a cultural return to Europe or a security issue. The Baltic states saw the EU as a backdoor to NATO, even as a necessary evil. We were sceptical of unions and all sorts of subsidies. We were so proud of our completely free economies. We did not quite want to join but felt we had to because it offered integration and hard security. Later on, all the other benefits became evident and now these countries are good Europeans and see Europe as an end in itself. The current applicants have a much more pragmatic attitude and that is actually good.

Q42 Baroness Eccles of Moulton: I am continuing with the same theme but focusing more on the need for political leaders, within the candidate and aspirant countries, always to be mindful that they want to be returned at the next election. Therefore, they will always be conscious of the extent to which they are carrying their electorate with them as they move through the process of accession. As an aside, if one looks at the countries that are hoping to become member states, it would seem they would all start by being recipient countries rather than contributing countries to the general EU budget. This must have some implication on the general attitude in the political persuasion or conviction that they are moving into something beneficial. On the theme of conditionality, it is really a question of carrots and sticks, is it not? You have to put a certain amount of pressure on the process to make sure they are crossing hurdles and meeting what is required of them within the chapters. Also you need inducements, which keep the thought alive that there is something to be gained. Fadi Hakura: In Turkey’s case the financial inducements were not that big. Far bigger were the intangible benefits that the EU accession process brings: rule of law, democracy, human 26

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) rights, environmental improvements etc. Those were the key drivers for the Turks. If you look at the money the EU would give to Turkey, it would be a tiny percentage of its gross domestic product.

Baroness Eccles of Moulton: I do not think that Turkey fits into my scheme of recipient countries. I was thinking of the smaller countries.

Fadi Hakura: Five or 10 years ago one of the concerns with Turkey, for example in France, was about absorption capacity. The idea was that Turkey would take all the moneys from the regional funds. However, five or 10 years later we can see that is completely not true. There were all these fears in 2004 and 2005 about millions of Turks streaming into the European borders. It has actually been the other way around. Now there are Greeks going to Turkey to find jobs. The Turkish economy has become the envy of Europe. Turkey has the second or third lowest debt levels in the European Union. What we have to fear is fear itself and that should not drive this whole approach to the accession process. Things can change and it is clear that the EU has to be tough on conditionality and robust. If necessary it should prolong the process. It does not have to take five or 10 years; it could take 15 or 20 years to make sure the reforms have been internalised, but it should engage in that process in a robust way.

Kadri Liik: If you look at the east and countries such as Moldova, I do not think they would bother to go through all the acquis communautaire just to get handouts from the European Union. They can get the same money from Russia under much easier conditions. However, they want market access, they want freedom of movement and they want to socialise in the European circles. It is not that mercantile.

Q43 The Chairman: In your judgment, is it still worth while for them? Obviously conditions such as the acquis come in, but do you see this as an enterprise that the countries that are applicants or candidates are rational in wanting to pursue?

Dr Blockmans: It is a way to modernise their own countries, their administrations, their legal systems and their economies.

Q44 The Chairman: Thank you. That may be a good note to close on. You have been very helpful with your evidence; it has given us a very good perspective. This is always a dangerous challenge with two minutes left, but are there any final points you want to share with the Committee?

Dr Blockmans: I have one final point, which is about the distinction that we should keep in mind between the traditional ‘member state’-building process for countries with established legal cultures and developed administrations, and the type of ‘state-building’ exercise that the European Union is engaged with in some of the countries in the western Balkans; countries which, for that reason, may not be as prepared for the EU’s pre-accession process as others have been in the past. None the less, state-building is an effort the European Union should engage with, in order to spread the zone of peace and prosperity to cover the whole European continent. That is why it got its Nobel Prize.

The Chairman: I am glad someone has mentioned that.

Dr Steven Blockmans, Centre for European Policy Studies and University of Amsterdam – Oral evidence (QQ1-45) Q45 Lord Hannay of Chiswick: Could I just ask whether I have correctly interpreted what you have been saying in the last few minutes: that, so far as future accessions are concerned, it is the direction and predictability of travel that matter rather than speed?

Dr Blockmans: That is correct.

The Chairman: May I now formally thank the three witnesses on behalf of the Committee? You have been most helpful to us and we have had a very good session. If you have any subsequent thoughts that you wish to share with the Committee and we can get them within the time prescribed for written evidence, please pass those on to us. It merely remains for us to express our sincere thanks for all the help that you have given us.

Dr Diana Bozhilova, King’s College London – Oral evidence (QQ46-49)

Dr Diana Bozhilova, King’s College London – Oral evidence (QQ46- 49)

Transcript can be found under Dr Adam Łazowski

Dr George Christou, University of Warwick – Oral evidence (QQ 46-69)

Dr George Christou, University of Warwick – Oral evidence (QQ 46- 69)

Transcript can be found under Dr Adam Łazowski

Written evidence from Dr Samantha Currie, University of Liverpool

1. Samantha Currie is a lecturer in law at the University of Liverpool. Her area of research expertise is migration in the context of European Union (EU) enlargement. Her PhD thesis (2007, Liverpool) examined the socio-legal status and experiences of Polish migrants in the UK and in 2008 she published a monograph entitled Migration, Work and Citizenship in the Enlarged European Union (Farnham: Ashgate) which further considered the legal framework shaping the experiences of migrants from ‘new’ Member States in light of the 2004 and 2007 enlargements.

2. This submission will focus most specifically on the issue of labour migration to and from new Member States. By drawing on insights gained in the context of the 2004 (‘EU8’) and 2007 (‘EU2’) enlargements it aims to provide perspectives on key free movement issues, particularly the impact of legal rules on citizens of the new Member States, relevant to future EU expansions. In order to examine labour migration fairly comprehensively it will first consider the framework of the free movement of workers before turning attention to relevant issues pertinent to the freedom to provide services, in particular the cross-border posting of workers.

The Free Movement of Workers

Transitional Free Movement Arrangements in the Old Member States

3. Prior to the 2004 and 2007 enlargements, attention had been paid in the literature and media to migration ‘push factors’ such as the significant ‘east-west’ wage differentials and high unemployment rates in (some of) the CEE accession states. The relevant accession treaties then contained transitional arrangements on the free movement of persons similar to those set out in earlier accession treaties (e.g. on Greece, Spain and Portugal in the 1980s). Thus, old Member States were entitled to derogate from the free movement of workers, specifically the provisions of Union law that grant EU citizens access to the labour markets of other Member States, in respect of nationals of the new Central and Eastern European (CEE) accession states during the transitional period.

4. EU migrant workers gain their entitlement from Article 45 of the Treaty on the Functioning of the European Union (TFEU) (previously Article 39 EC). In contrast, the free movement rights of self-employed persons, whose entitlement flows from Article 49 TFEU (previously Article 43 EC), were left unscathed. As such, the distinction between migrant ‘workers’ and the ‘self-employed’ has been pertinent during the operation of the transitional restrictions. In Case C-161/07 Commission v Austria [2008] ECR I-671 the Court of Justice of the European Union (CJEU) made clear, when interpreting national rules aimed at targeting “bogus self employment,” that old Member States are not entitled to extend the scope of transitional restrictions beyond the free movement of workers so as to stray unlawfully into the realm of establishment. The CJEU therefore confirmed that the transitional restrictions on free movement, as derogations from a fundamental freedom, should be interpreted narrowly.

Written evidence from Dr Samantha Currie, University of Liverpool

5. Following the 2004 enlargement, a variety of rules were implemented in the old Member States in light of the permitted derogations in the accession treaties. These ranged from the strict stance of Germany and Austria, where labour market access for EU8 nationals was extremely restricted, to the more open approaches of Sweden, Ireland and the UK, where the labour markets were considerably more accessible. In the remainder of the old Member States a variety of different transitional regimes were put in place, including work permit systems, bilateral agreements, seasonal permits and quotas. The Commission reported in 2006 (COM(2006) 48 final) that migration from the new to the old Member States had not been significant enough to have adversely affected the labour markets of the old Member States. Furthermore, the positive effect of EU8 migration was emphasised, with the point being made that such mobility had helped to alleviate skills bottlenecks across the old Member States whilst not impacting negatively on employment rates of nationals. Throughout the course of the transitional period applicable to EU8 nationals (which finally expired in 2011) several of the older Member States gradually relaxed their labour market rules, with only Germany and Austria maintaining restrictions until expiry of the permitted transitional rules.

6. Following the 2007 enlargement, the majority of the old Member States took advantage of the chance to impose transitional mobility restrictions on EU2 nationals (Sweden was the only old Member State to offer open labour market access initially). The UK and Ireland did not continue with the open labour market approach that had applied to the EU8 and instead implemented work permit systems. Clearly, the global economy was altering in 2007 and the then impending economic crisis can be seen as having directly influenced those Member States imposing transitional restrictions on EU2 citizens. Conversely, and unsurprisingly, most of the EU8 Member States did open their labour markets to EU2 citizens (only Hungary declined to do so).

A Closer Look at the UK Approach

7. In order to work lawfully in the UK from 2004 an EU8 citizen was required only to find work and register their employment on the Worker Registration Scheme (WRS). Because of the ‘open’ policy it adopted the UK is perceived as having been generous to nationals of the EU8. The requirement to register on the WRS was generally not considered to be a particularly onerous burden despite a compulsory £90 fee for registration (the registration system was out in the Accession (Immigration and Worker Registration) Regulations 2004 SI 1211). However, the ‘open’ labour market policy was accompanied by certain other bureaucratic rules, for example requiring re-registration in the event of a change in occupation. Restrictions were also placed on the residence entitlement of those EU8 migrants who, for whatever reason, ceased to be employed in the UK or otherwise did not comply fully with the WRS requirements. These registration and residence rules were linked to changes to the test determining entitlement to various welfare benefits (pursuant to the Social Security (Habitual Residence) Amendment Regulations 2004 SI 1232). Benefit claimants in the UK are required to be both habitually resident and ‘lawfully resident’ which, for EU8 nationals, meant they must either be in work and registered or have built up 12 months of continuous and registered work.

8. The UK WRS rules had a particularly harsh impact on individuals who had remained continuously in work but had not been registered throughout the whole employment period. This was the case in Zalewska v Department for Social Development [2008] UKHL 67 which involved a woman who had worked in Northern Ireland for over 12 months but, after 32

Written evidence from Dr Samantha Currie, University of Liverpool changing employer mid-way through the period, was unaware of the need to re-register. Consequently, when she later experienced difficulties she was denied access to income support on the basis that not all of her work had been registered on the WRS. This is significant because the principle of non-discrimination on grounds of nationality under Union free movement law is expansive. Those exercising free movement rights under the EU treaties are entitled to access a range of social and tax advantages under the same conditions as nationals of the host Member State (Regulation 492/2011 on freedom of movement for workers within the Union OJ [2011] L141/2). Furthermore, the principle of proportionality is central to the application of Union law and, consequently, national rules implementing EU law must be proportionate to their aim.

9. In Zalewska the Appellate Committee of the House of Lords, by 3:2 majority, upheld the decision of the Court of Appeal in Northern Ireland and were satisfied that the UK rules were compatible with EU law and the terms of the transitional arrangements. The majority were not convinced that any aspect of the UK’s “generous” and “wide open” policy could be understood as having a disproportionate impact. They utilised a limited application of proportionality that did not take into account the personal circumstances of the claimant, the actual aim of the WRS (i.e. to monitor EU8 migrants) or the legitimate scope of the transitional arrangements as set out in the accession treaties. Therefore, although EU8 citizens benefited from being able to access the UK labour market, the finer detail of the law can be seen to have left some in undesirable situations despite their continued employment. It would have been preferable to ensure that employers, who committed an offence by employing an unregistered EU8 worker, were suitably punished as opposed to the more vulnerable worker.

10. A considerable number of EU8 citizens took advantage of the WRS in the aftermath of enlargement, with numbers starting to reduce from 2008-9. For example, from March 2007- 2008 there were 215,000 WRS applications; whereas, from March 2008-2009 there were 141,000. Evidence suggests that the migrants were predominantly young and contributed to the economy by taking hard-to-fill jobs, whilst placing a few demands on the welfare system (Home Office UK Border Agency, Accession Monitoring Report May 2004-March 2009, 2009).

11. Despite the generally positive conclusions about the contribution of EU8 migration to the UK, it seems that there were certain localised infrastructure-related effects, such as: pressure on language schools, increased school admissions, and competition for privatised housing. These concerns, along with the altered economic circumstances, influenced the government in imposing limits on the movement entitlement of EU2 citizens.

12. EU2 citizens who wish to access the labour market are required to be granted a worker authorisation card. In essence, such cards can only be obtained by those who have been granted a work permit under the national immigration rules (Accession (Immigration and Worker Authorisation) Regulations 2006). EU2 citizens are ‘tied’ to the job for which the card has been granted and have no general access to the labour market. Between January 2007 and September 2007, there were 3820 applications for accession worker cards. Again, numbers reduced more recently with just 570 applications being received in the first quarter of 2009 (Home Office UK Border Agency, Bulgarian and Romanian Accession Statistics, 2009).

13. The current government has already announced that Croatian citizens will be subject to transitional free movement restrictions following accession in 2013. The current rules will continue to apply so, effectively, Croatian citizens will remain categorised as third-country 33

Written evidence from Dr Samantha Currie, University of Liverpool nationals as regards access to the UK labour market (Home Office, Statement of Intent: Accession of Croatia to the European Union: Transitional Restrictions on Labour Market Access, October 2012).

Free Movement of Workers: Conclusion

14. Citizens of the EU8 and EU2 faced a variety of different legal regimes on labour market access from the old Member States. Although the scope of the rules differed from Member State to Member State, all national rules sought to put in place a framework that would be of optimum benefit to the Member State’s labour market and economy. Across the old EU, the general trend has been that citizens of the new CEE states have filled gaps in the labour market that were otherwise unfilled by nationals. Interestingly, there is some evidence that those Member States imposing the strictest transitional restrictions have actually gained substantial numbers of CEE migrants with an irregular employment status (COM (2008) 765 final). In this regard, the unavailability of lawful migration routes for EU8 and EU2 citizens may have served to divert people into the shadow economy.

The Freedom to Provide Services: Posted Workers

The Status of Posted Workers

15. Whereas the standard transitional restrictions focussed on the free movement of workers, there is also scope for accession state citizens to move across borders as posted workers. Such workers are not true migrant workers exercising rights pursuant to Article 45 TFEU; instead, they are posted by a service provider exercising rights flowing from Article 56 TFEU. Importantly, the transnational provision of services is largely outside the scope of the transitional arrangements. Only Germany and Austria are permitted to impose certain limitations on posting from new Member States in this area under the terms of the accession treaties.

16. Posted workers are those who, for a limited period, carry out their work in the territory of a Member State other than the State in which they normally work. They do not exercise a personal right to move and their presence in a host Member State is for a temporary period only. They have no access to the labour market as a whole and are obliged to return on expiry of the posting. As such, they have significantly less opportunity to integrate into the host society than “true” migrant workers. The applicable legal framework is set out in Directive 96/71, the Posted Workers Directive ([1996] OJ L18/1). The Directive covers the situation where an undertaking established in one Member State wins a contract to carry out work in another Member State and posts its own workforce to the territory to carry out the work. 17. It is notoriously difficult to present accurate numbers of posted workers within the EU, however the Commission has estimated that around one million workers are posted each year by their employers from one Member State to another (SWD(2012) 64 final).

Particular Posting Concerns in the Context of Enlargement

18. Enlargement of the Union has brought specific concerns about posting, particularly in the old Member States, to the fore. Much of the unease surrounding the transnational provision of services in the enlarged and economically diverse EU relates to the notion of social dumping and the potential for service providers in new Member States to take advantage of 34

Written evidence from Dr Samantha Currie, University of Liverpool cheaper compliance costs to win contracts in the old Member States. As a consequence of lower wages in new Member States, labour cost differentials continue to persist. This issue, and the related matter of how far trades unions are entitled to take action to protect national workers, has received significant attention following the CJEU’s interpretation of the Posted Workers Directive in a line of cases beginning with Case C-341/05 Laval un Partneri Ltd [2007] ECR I-11767.

19. The CJEU limited the national rules that can be extended to posted workers to those laid out in accordance with the methods stipulated in the Directive and restricted the scope for host Member States to impose additional employment conditions beyond the minimum standards of the Directive (under Articles 3(1), 3(7) and 3(10) of the Directive). Furthermore, it subjected trades unions’ opportunities to undertake collective action in an attempt to protect national workers to an application of the proportionality principle. Consequently, the CJEU’s decisions have been heavily criticised by many actors in the old Member States. Trades unions have clearly been particularly critical, both at the national (especially old Member State) and European level.

20. Posted workers themselves are at risk of being placed in vulnerable situations and of their rights being undermined. Evidence suggests that workers from the EU8 and EU2 posted to old Member States, particularly in the construction sector, are susceptible to working long hours for the same level of wages that national workers receive for working much shorter hours. There are also frequent reports of poor living conditions right across the old Member States (Clark, Regulation and Enforcement of Posted Workers Employment Rights (May 2012) (European Commission Grant Agreement VS/2010/0630).

21. There are problems with enforcement of the current rules on posting. The increased relevance of flexible subcontracting chains involving companies established in different Member States can serve to undermine the posted workers’ rights and render enforcement difficult (Jorens, Peters and Houwerzijl, Study on the protection of workers’ rights in subcontracting processes in the European Union (June 2012) (Project DG EMPL/B2 – VC/2011/0015).

22. The Commission is currently very active in this area, having commissioned a number of reports into different aspects of posting and the legal framework since 2010. The Commission seems to have dismissed the idea of wide scale reform of the law and instead earlier this year it published a proposal for a Directive on the enforcement of Directive 96/71 (COM(2012) 131 final). This seeks to raise awareness of the law and implement harsher sanctions to aid its enforcement. Should this proposal enter into force posted workers in the construction sector will have an enhanced level of protection as a result of the mechanism of joint and several liability contained therein. Posted workers in other sectors, however, will not be afforded this extra protection.

23. The law remains unsettled and there is little consensus amongst business enterprises, trades unions and representatives of posted workers as to the most effective way to proceed. However, given that the CJEU’s interpretation of the Directive seems set on the course established in Laval, and that the Commission is avoiding any radical overhaul of the framework, it is unlikely that far-reaching change will be brought about. The posting of workers by its nature raises sensitive issues relating to social dumping and worker protection, and such concerns will inevitably be heightened in the context of EU enlargement whilst wage levels across the Member States remain so variable. 35

Written evidence from Dr Samantha Currie, University of Liverpool

Posted Workers: Conclusion

24. The situation as regards posting is unsatisfactory from a range of different perspectives. In particular, trades unions are unhappy about the restrictions placed on their ability to take action to protect national workers in the event of a “contentious” posting from an enterprise in a new Member State. The Commission’s proposal for a Regulation on the exercise of the right to take collective action (COM(2012) 130 final), which was withdrawn in any event due to opposition expressed by a number of national parliaments under the “yellow card” warning system, did little more than codify the case law of the CJEU in judgments such as Laval and Case C-438/05 Viking-Line [2007] ECR I-779. As such, it did little to placate the unions who continue to seek an actual social progress protocol to be incorporated into the treaties. Moreover, posted workers themselves remain vulnerable to experiencing poor working conditions and abuse without access to adequate remedies and sanctions against employers. The enforcement directive would take some steps forward in this regard, most notably in construction, but does not represent an especially radical development.

14 November 2012

Written evidence from the Czech Republic, Ministry of Foreign Affairs

Principles behind enlargement

Answers to both 1 and 2: Yes

The impact of EU membership on new member States

Point 3 – The Committee may wish to consider some of the following studies: Five Years After: European Union Membership and Macro-Financial Stability in the New Member States (IMF Working Paper WP/09/xx, Martin Čihák and Wim Fonteyne); Further Reforms are Needed to Reap the Benefits of the Enlarged Internal Market (paper at the Conference on EU Enlargement 5 Years After, Prague, 2 March 2009, Jens Arnold, Peter Höller, Margaret Morgan and Andreas Wörgötter); and Cyclical Dimensions of Labour Mobility after EU Enlargement (paper at the Conference on EU Enlargement 5 Years After, Prague, 2 March 2009, Alex Ahearne, Herbert Brücker, Zsolt Darvas, Jakob von Wiezsäcker).

Point 5 – The prevailing feeling in the Czech Republic about the EU membership is the general satisfaction. The membership has been perceived as a positive force behind changes in economic and foreign trade performance and economic and political governance. Obviously, the EU membership does not mean a goal in itself but continuous efforts to meet the standards and make a good use of it.

The impact of enlargement on the Union

Point 6 – The Committee may wish to consider some of the following studies: Five Years After: European Union Membership and Macro-Financial Stability in the New Member States (IMF Working Paper WP/09/xx, Martin Čihák and Wim Fonteyne); Further Reforms are Needed to Reap the Benefits of the Enlarged Internal Market (paper at the Conference on EU Enlargement 5 Years After, Prague, 2 March 2009, Jens Arnold, Peter Höller, Margaret Morgan and Andreas Wörgötter); and Cyclical Dimensions of Labour Mobility after EU Enlargement (paper at the Conference on EU Enlargement 5 Years After, Prague, 2 March 2009, Alex Ahearne, Herbert Brücker, Zsolt Darvas, Jakob von Wiezsäcker).

Point 9 – The EU enlargement, one of the most successful EU policies over the years, continues to contribute to peace, security and economic prosperity in Europe. The incentive of the EU membership proves to serve as a tranformative power in aspirant countries. The change in the overall enlargement strategy to the effect of closing the doors for aspirant countries may arguably lead to adverse and serious geopolitical and security setbacks in parts of Europe.

The appetite and capacity for further enlargement

Points 10, 11 and 13 (the following text is based on a recent discussion paper elaborated by Europeum, the Institute for European Policy in Prague, on the occasion of the Prague Enlargement Forum in October 2012) –

Written evidence from the Czech Republic, Ministry of Foreign Affairs

The process of the EU enlargement cannot be blamed for the ongoing economic and financial crisis. The reality of the European Union in 2012 is that the forward looking strategic thinking in the EU is driven mainly by the Union internal developments that have evolved in the past two years in the wake of the sovereign debt crisis, and to that end it tends to focus on the issues of the future of economic and monetary union. The brief overview of strategic papers from recent period underpin the waning importance of the enlargement for the EU, which is, to some extent, understandable. Unlike the grand European project that the enlargement was a decade ago, currently it is merely conferred to the “unfinished business” of the perspective accession of the countries of Western Balkans and the strongly contested issue of the accession negotiations with Turkey. This can be explained by several broader considerations. Firstly, the process lacks strong advocates at the EU level, both at the level of member states and personalities. The 2004 enlargement was seen much more in symbolic, even idealistic terms as a necessary step towards bridging the divisions that emerged across Europe as a result of the Cold War, as a historical duty or obligation and as such was often portrayed by the EU leaders. Perhaps this has enabled the politicians in the EU to sell this story to the public, although the public support remained significantly lukewarm in many Member States. This idealistic and symbolic rhetoric is, however, not present in the current political discourse. It is difficult to make this argument in relation to Turkey. But even where it could be convincingly made, such as in the case of Western Balkans, it is not happening at the rhetorical level to boost the process politically. Another possible explanation is a failure to accompany the inclusion of more countries with necessary structural changes in the EU. This trend is especially evident since the failed referenda on the Constitutional Treaty in France and the Netherlands in 2005. The grand project of EU Eastern enlargement was accompanied by not least as grand a project of drafting the European constitution. After the failure of the process, the abyss between the “deepening” and “widening” has increased even further. No matter how much disputed the link between the two processes could be by academics and think-tankers, it is still central to thinking of many policymakers across Europe. The failure of the EU to deliver on one side of the coin (in this case deepening) automatically results in a perceived need to slow down on the other side too (in this case on enlargement), with the fear that otherwise the Union as a whole risks strong paralysis. Many have hoped that the atmosphere will grow more favourable after the Lisbon Treaty has been finally adopted, by which the widening – deepening dilemma was supposed to be – at least for the time being – settled. But the outbreak of the debt crisis proved that the framework provided by the Lisbon Treaty by far does not represent a stable and durable solution for the internal EU issues.

The debate about „enlargement fatigue“ is legitimate, although it may seem a bit academic. What counts is progress on the ground. The process as such is given and supported by the Lisbon Treaty.

Why the enlargement process should continue – 4 principle arguments

1. The idealistic argument: Europe whole and free Despite the fact that the concept of “Europe whole and free1” comes mainly from the US strategic thinking, viewing this as a way of making Europe part of a solution, not a problem for US foreign policy, it was fully taken on board by the European decision-makers during and after the Cold War. But also the concept of “Europe whole and free” corresponds to the original raison d’être of the European Communities. Even though the European

1 The title of the speech of President George Bush in Mainz in May 1989. 38

Written evidence from the Czech Republic, Ministry of Foreign Affairs integration started as a West-European project, the founding treaties had a pan-European ethos. On paper, they allowed for the inclusion of any European country, which upholds democratic values. After the end of the Cold War, the supporters of the EU eastern enlargement pointed out to the original pan-European idea of the West-European integration project (EC/EU) and successfully promoted the idea that the winners of the Cold war (the West) have a political and moral duty to support the democratization and reintegration of the new democracies in the Central and Eastern Europe. Today, the EU needs to revive this moral dimension if it wants to accomplish its mission of bringing peace and security to Europe.

2. The transformative argument: making most of the EU soft power There is a relatively strong consensus that out of the EU foreign policy toolbox, enlargement is the most effective tool at EU’s disposal. In other words, there is no better way for the EU to pursue democracy and human rights2 than through enlargement policy. Because unlike in other areas, in the process of preparation for membership the EU disposes with a very intricate set of tools to set the transformative agenda (determining the negotiating chapters of the acquis, setting up national action plans, screening), implement it (through the process of the adoption of acquis) but also to monitor it.

3. The geopolitical argument: nature does not like vacuum The 21st century has marked a new era of polycentric world with new rising powers and increased global competition for geopolitical and economic influence and resources. The benefits of the EU enlargement are clear. The enlarged EU is more dynamic and carries more weight when addressing issues of global importance. The geopolitical costs of non-enlargement are quite high. The disillusioned candidate countries may loose interest in the accession. Moreover, they may start look for alternative models that could provide economic growth and development without too much of EU flavour (in this respect, it has become fashionable to speak of Singapore model, or even Chinese model). The power vacuum caused by the lack of determination on the EU side opens ample opportunities for other rising actors to step in. They will compete with the EU by offering an alternative in terms of economic benefits, investments and the model of economic development with much less emphasis on democracy and rule of law. In case of Western Balkans, Europe should not take its influence for granted: other emerging players such as Russia, Turkey or even China are already stepping in and if the EU is not able to steer the process of integration forward, it might lose its clout even in its immediate vicinity. In case of Turkey, the EU risks loosing an ally in a fragile, but important region. Turkey, disappointed by the lack of European perspective, will develop a more assertive foreign policy which may not be in line with the EU priorities. The founders of modern Turkey have been inspired by European modernity, secularism and nationhood. Today, we risk that the disillusioned Turkey will cease to identify itself with Europe and its values.

4. Economic argument: benefits not only for the newcomers The EU enlargement has been considered a success also from an economic point of view. The impact of the upcoming enlargements on the EU is somewhat hard to assess because of the lack of clear-cut timeline for the accession, as well as the overall economic development in the EU. While the overall impact of the accession of Western Balkan countries or Iceland

2 According to the Article 21 of the Treaty Establishing the European Union, the EU supports the following principles and values in international relations: democracy, human rights, universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, principles of equality and solidarity

Written evidence from the Czech Republic, Ministry of Foreign Affairs is likely to be limited due to the small size of their economies (even compared to EU-10 accession), the accession of Turkey could potentially have a significant impact on the economy of EU-27+. Some guidance can be found in the impact assessment of the 2004 enlargement on both the EU-15 and the acceding countries. The positive effects on the acceding countries is beyond doubt: accelerated GDP growth, trade volumes increasing several fold, foreign investment influx, increasing employment, improvement of infrastructure thanks to access to structural funds have led to increasing living standards across EU-10. However, a positive impact on the “old” EU can also be observed. It is estimated that 2004 enlargement added some 0.5 – 1% additional GDP growth in EU-15. The extension of the EU single market thus enables the companies from the current EU states to exploit better economies of scale. The growing demand for goods and services in the accession countries as they grow richer increases the export potential of businesses in the former EU. For instance, the British exports to Poland have more than doubled since the Polish accession. The entry of the new businesses from the acceeding countries to the single market increases the overall competition that inversely leads to increased competitiveness of EU companies on a global scale. Foreign direct investment originating in the “old” EU in accession countries in a long run leads to increasing flow of interest profits and dividends, contributing to the improvement of current account balance of payments in the former EU members and increases their GNP. The influx of labour from the new members helps to tackle the labour shortages in the EU, especially in times of economic growth: many of the current candidate countries have young, dynamic population which can help sorting out a chronic problem of ageing population in Europe. The often articulated fear of “relocation” of business from “old” to “new” EU has also proven incorrect: on the contrary, the investments of companies in the new members helps to reach out to new markets.

Point 12 – There seems to be no real alternatives to full membership once a country embarks upon the process of accession to the EU. Politically and technically, it is a well defined process where clear and strict rules are adhered to. The full membership is the only viable and fair outcome of the accession negotiations between the EU and a candidate country. Suggestions given as possible alternatives (EEA, ENP, privileged partnership) should not be deemed as real and permanent ones to full membership. Although they may not be viewed as contrary to full membership (EEA and especially ENP as a kind of stepping stone), they are different paths compared to the enlargement process.

Point 14 – Yes. Strengthening the rule of law and democratic governance is essential to the process. The lessons learnt highlight the importance of an increased focus on these areas. The improvements in these areas help dealing with common challenges such as the fight against corruption and organised crime. By doing so, it simultaneously addresses issues of direct concern to citizens in the EU and aspirant countries. The agreement on the so called „new approach“, adopted by the General Affairs Council in December 2011, represents the lesson learnt.

Point 15 – Czech Republic has never held a positive view of the notion of „absorption capacity“, at least from a political perspective. Given the circumstances, we take on „absorption capacity“ strictly in terms of the European Council conclusions from December 2006, i.e. „that EU institutions function effectively and that EU policies are further developed and financed in a sustainable manner“.

Written evidence from the Czech Republic, Ministry of Foreign Affairs

14 December 2012

Written evidence from His Excellency Mr Konstantin Dimitrov, Ambassador of the Embassy of the Republic of Bulgaria to the UK Written evidence from His Excellency Mr Konstantin Dimitrov, Ambassador of the Embassy of the Republic of Bulgaria to the UK

1. What is the impact that joining the EU has had on Bulgaria economically, socially and politically?

Prior to its accession, Bulgaria had faced many difficulties with regards to the political and economic reforms needed in order to meet the EU membership criteria. The strong political will and the broad public support have both played significant role in the smooth overcoming of the challenges of Bulgaria’s accession to the EU (and NATO).

Bulgaria’s EU accession has been so far and still is a successful positive endeavour. It strengthened the democratic stability in political terms, and brought a greater significance and prestige in terms of the country’s international standing. Economically Bulgaria became part of the biggest market in the world, benefiting from the free movement of goods, capital, services, and people.

The membership has facilitated the spread of democratic values, improved the quality and efficiency of the public administration and the protection of citizens’ rights, led to increased possibilities for free movement and travel within the EU, increased weight in the decision- making at EU level.

Since becoming an EU Member-State, Bulgaria has actively participated in the decision-making process on EU level. During the first 5 years of membership up until January 2012 Bulgaria has participated in the discussion and adoption of over 500 directives, over 3 000 regulations and over 200 decisions. Actions have been taken to transpose over 2 200 EU directives into the Bulgarian legislation.

Bulgaria is among the countries with a very good level of implementation of EU directives into national legislation. As of its accession to the EU in 2007, a total amount of 260 procedures of infringement have been registered as regards of Bulgaria, 213 of which have been closed. Only 3 procedures are in trial phase.

In the 5 years of membership so far Bulgaria has achieved a level of much greater inter- institutional coordination in preparing its national positions. The pre-accession process and the EU membership have contributed for the enhancement of the various administrative units’ capacity to coordinate policies among each other.

1.1. Trade integration and the flow of foreign direct investment (FDI).

The development of trade, transfer of capital, technology and management methods, as main catalysts of economic integration, bring great potential to less developed countries to catch- up with the more developed ones. The economic integration has had a positive effect on the Bulgarian economy and capital its markets by abolishing trade barriers and restrictions on the free movement of workers.

Bulgarian enterprises had to minimise their spending costs and increase their production due to competitive pressure of market forces within the EU. The liberalisation of trade improved the international competitive position and investment rating of Bulgaria. It led to an increase 42

Written evidence from His Excellency Mr Konstantin Dimitrov, Ambassador of the Embassy of the Republic of Bulgaria to the UK of FDI to 9 bill euro in 2007 (corresponding to 30% of the GDP at that time), and had a positive impact on the labour market and the overall competitiveness of the country.

1.2. The benefits or pitfalls for small and medium-sized enterprises (SME).

Compared with the total number of EU enterprises, the SME sector in Bulgaria corresponds to its average value. However, the SME sector has created more jobs – 75.7% of the overall number (the average value for EU – 67.4%) and added value – 61.9% (EU – 58.1%). Within the SME sector there are fewer microenterprises in comparison to their overall number in the EU, which create fewer added values than microenterprises in the EU. However, their contribution to employment is similar, as they are bigger, which is part of the general characteristics of SME sector as a whole.

SMEs in Bulgaria very often operate in the trade sector (more often than the SMEs in the EU) where their share is 46% (the average value for EU – 30%). However, only 33% of jobs and 27% of added value belongs to the trade sector, which leads to the conclusion that this sector is characterised by small and relatively low-productive enterprises. SMEs in the industrial sector and construction have relatively higher share regarding employment and added value. The Bulgarian SMEs are less developed in high technology sectors and knowledge-intensive services compared to the SMEs in the EU. Their shares of the overall number enterprises are respectively 1% and 17%, and the average values for the EU are 2% and 28%.

1.3. The benefits for consumers.

The benefits for Bulgarian consumers after EU accession come from the harmonization of the legislation in the area of consumer protection and the opportunities of the Single market based on free movement of people, goods, services and capital. The impact of the advantages for consumers should be considered more in terms of quality and could be outlined as follows – higher level of protection of their economic interests; higher consumer and health standards and safety-related measures; better representation of their interests at individual and collective basis; larger choice of products, services and suppliers, as well through cross-border purchases. Bulgaria now participates in all existing consumer information networks at EU-level.

Networks such as – SOLVIT network; the European consumer centres network “ECC- Net”; the Consumer Protection Cooperation system in line with Regulation EC 2006/2004 on consumer protection cooperation between national enforcement authorities in the area of unfair commercial practices; RAPEX (rapid exchange of information on non-food products); FIN-NET (complaints about cross-border financial services); the rapid alert system in case of food risks; the network for the surveillance and control of communicable diseases; the European Centre for Disease Prevention and Control; the European judicial network.

1.4. Accession’s impact on wages and living standards in “new” Member States.

EU membership and the related positive changes helped to improve living standards. Purchasing power parity (GDP per capita) of the Bulgarian population, which determines the average wealth of the population in material terms, has increased in the period 2001-2011 from 30% up to 45% of the EU average (in real terms), according to Eurostat. Yet, 19.5% of

Written evidence from His Excellency Mr Konstantin Dimitrov, Ambassador of the Embassy of the Republic of Bulgaria to the UK the population are living on incomes below the poverty line, according to a survey of June 2012.

1.5. Macro-economic discipline.

Bulgaria maintains a high level of macroeconomic stability and budget discipline. Despite the unfavourable economic conditions as a result of the crisis, Bulgaria has managed to reduce its budget deficit, as required by the Excessive deficit procedure (EDP).

The national fiscal rules are now enshrined in the State Budget Law, passed by the Parliament in early 2012. They imply a reduction of government costs by 40% and budget deficit to 2% of GDP. In March this year Bulgaria also signed the Treaty on stability, coordination and governance.

Due to the conservative behaviour of Bulgarian banks, the financial sector remains stable and profitable during the crisis. The reduction in credit growth and the growing number of non- performing loans (loans which remain overdue for a period of more than 90 days) did not affect significantly the banking system.

1.6. Labour migration to and from new Member States.

All studies of the European Commission and of individual Member States have shown the positive effect of labour migration and in particular the movement of work force within the EU. Freedom of movement, as part of the Treaties, cannot be made conditional. The mobility in the EU as a whole has not brought any serious difficulties at the European labour market. Bulgarians have played a positive role in the economies of the host countries, by contributing with qualifications and by working in spheres where there was a necessity of filling the labour shortages.

Statistical data shows that the number of Bulgarian workers in UK has had low impact on the British labour market and they did not pose a threat for creation of imbalances. Bulgarians in the UK labour market have positive added value, do not replace British citizens and are mainly employed in sectors with labour shortages. Influx of workers from Bulgaria when restrictions are lifted is highly unlikely due to the current economic conditions and also given that those wishing to move abroad have done so already.

Bulgaria is implementing a balanced policy on labour migration and integration of immigrants, complying with the country's commitments as an EU Member State.

2. What geopolitical impact the EU’s decision on further enlargement might have, and how this might affect Bulgaria?

The Western Balkan region is central to the foreign policy of Bulgaria. In a meeting held in September this year with our ambassadors in the region, the work on an updated a short and medium-term vision for the Bulgarian contribution to European and Euro-Atlantic integration of the Western Balkan countries was initiated.

Bulgaria has working mechanisms for sharing its experience and expertise in the field of European and Euro-Atlantic integration.

Written evidence from His Excellency Mr Konstantin Dimitrov, Ambassador of the Embassy of the Republic of Bulgaria to the UK

Bulgaria has signed bilateral memorandums with all of the Western Balkan countries.

Overall remarks on the enlargement process:

In order to maintain the credibility and the transformation power of the accession process, the EU should keep its firm commitment to the European future of the region. The challenges in the Eurozone underline the importance of further consolidating economic and financial stability and supporting reforms and growth in the enlargement countries. The enlargement policy is a tool to this end and the current difficulties facing the EU should not weaken the dynamics of the enlargement policy. Addressing the risks of instability is a matter of joint interest. A stronger and enlarged Union is better placed to respond to the current challenges.

Strict compliance with membership criteria, including the development of good neighbourly relations and inclusive regional cooperation remain the cornerstones of the enlargement process. Support for the own-merits-principle. Particular attention should be paid to human contacts and networking cooperation. Isolation leads to nationalism, xenophobia and slow economic development. Good neighbourly relations are a key factor. Solving problems and unresolved conflicts should be based on the European values and the strict conditions for membership. Particular efforts should be made to overcome the accumulated prejudices.

The Western Balkan countries all face serious economic challenges. Support for economic and social development is clearly needed. In that respect the role of IPA and the regional networks should be strengthen. There is a need to “unlock” the economic potential of the region.

The economy of the region of 25 million people is just at 1.5% of the EU economy.

The absence of an infrastructure connecting the region is a major obstacle.

Greater attention should be paid towards the region due to the changes in the global geopolitics, the growing role of Turkey, energy corridors, debt crisis, the Arab Spring (immigrants from Syria).

On the individual Western Balkan countries:

We welcome the assessment of the EC on the progress made by Croatia and look forward to its accession to the EU in 2013. Croatia has to keep up the momentum of reforms in order to fully comply with all requirements by the date of accession.

Montenegro has registered significant progress in the last year which laid the ground for opening accession negotiations. In line with the new approach we look forward to the opening of chapters 23 and 24.

As regards Turkey, we have to keep up the pressure and support for EU-related reforms. The respect of fundamental rights is a source of concern. We support EC

Written evidence from His Excellency Mr Konstantin Dimitrov, Ambassador of the Embassy of the Republic of Bulgaria to the UK positive agenda, as well as the opening of new negotiation chapters as long as Turkey meets the established conditions. Continuing the on-going cooperation and dialogue on foreign policy issues is of common interest. The prospect of visa liberalization for Turkish citizens depends on the fulfillment of a number of criteria, among them the implementation of readmission obligations and effective border management, strengthening of bilateral cooperation. We expect Turkey to take steps for the establishment of a tripartite contact centre between Bulgaria, Greece and Turkey in relation to police, border and customs cooperation and joint border patrols.

We welcome the progress made by Serbia during the last year. Moving toward the next phase of the integration will depend entirely on the ability of the country to deliver and to implement the expected reforms, including the normalization of the relations with Kosovo. We expect results from the new political process that began with the meeting of Dacic – Taci on 19 November 2012. We welcome the end of the supervised independence Kosovo. Now Pristina should continue with the EU agenda reforms. We consider the SAP as the proper framework for the European path of the country. Bulgaria supports the decision for launching the visa dialogue with Kosovo. We believe that Member States that do not recognize Kosovo’s independence should have a constructive approach to the Commission’s proposal to enter into negotiations with Kosovo for a SSA (Stabilization and Association Agreement).

We support Albania’s efforts to achieve progress on the EU integration path and we are confident that the country is taking the necessary steps to accelerate the integration process. We would support granting Albania a candidate status if the fulfilment of the 12 priorities continues. The parliamentary elections in 2013 are essential in this respect.

We support the European perspective of the FYROM and believe that progress in the European integration process depends entirely on the fulfilment of necessary criteria, including good neighbourly relations. However, we are concerned with the growing nationalistic rhetoric and irredentist claims by institutions and media in Macedonia. Bulgaria expects that a new bilateral document be signed building on a 1999 Intergovernmental Declaration in which both the Republic of Bulgaria and the Republic of Macedonia committed themselves to non-intervention in internal affairs and limiting the negative propaganda.

The lack of progress in the European path of Bosnia and Herzegovina is disappointing. We hope that the political elites of Bosnia and Herzegovina will find mechanisms to overcome the current institutional crisis and to bring the state back on track of its European integration as a united country.

3. Whether the Government and the people of Bulgaria are satisfied or disappointed with the EU membership?

52.6% are satisfied with the country’s membership in the EU, but believe that Bulgaria is still far away from what has been expected. A tenth (10.5%) consider that life has become better as a whole since Bulgaria joined the EU. 46

Written evidence from His Excellency Mr Konstantin Dimitrov, Ambassador of the Embassy of the Republic of Bulgaria to the UK

The unsatisfied are about a third (28.9%) – according to them our country has been burdened by restrictions that hamper its development.

A small number of the interviewed (7.9%) do not find a difference between the current situation and the period before 2007.

According to a recent survey by Eurobarometer 55% of the Bulgarian nationals have confidence in the EU institutions.

4. How the Cooperation and Verification Mechanism (CVM) is functioning in practise, and whether and why it continues to be necessary?

After Bulgaria’s EU accession the CVM proved a useful instrument in support of the efforts of the Bulgarian authorities to carry out the needed reforms in the judicial system, the criminal justice as well as in the internal security and public order sectors. Now the reforms are irreversible.

The legal framework underwent profound reform. As a result of it, strong and independent institutions have emerged. The civil society, NGO sector, business organisations and media have played an increasingly positive role in applying strong pressure for effective implementation of the new legislation and constant focus on the results.

In the last 5 years since the launch of the CVM, focus has clearly shifted from the adoption of the legal framework to its practical implementation and, as a result, the achievement of tangible results. Convincing results have been achieved in all areas under verification that are highly appreciated by both the Bulgarian society and the European partners.

The Bulgarian authorities have always considered the recommendations of the European Commission under the CVM with an uppermost attention and have used them as a starting point for the development and the implementation of the respective policies.

5. Whether the right lessons have been learned from the 2004 and 2007 accessions in order to improve enlargement process on both sides?

As in other policy areas, in the area of the enlargement the EU has taken measures to face up the new challenges. One of the most recent examples is the adoption of the “new approach” in the area of Justice and Home Affairs, which aims to improve the quality of the preparatory work in these important fields by applying clearer benchmarking, linked to supportive and corrective measures.

Another example is the Instrument for pre-accession assistance (IPA), where the EU has committed to improve the link between the financial assistance, the policy priorities and the results achieved, as well as to simplify procedures.

27 November 2012

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83)

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70- 83)

Evidence Session No. 3. Heard in Public. Questions 70 - 83

WEDNESDAY 5 DECEMBER 2012

Members present

Lord Boswell of Aynho (Chairman) Baroness Eccles of Moulton Lord Foulkes of Cumnock Earl of Sandwich

______

His Excellency Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU

Q70 The Chairman: We express our thanks to you. This is a formal evidence session. Our colleague will make a transcript of the evidence, which we will send to you for any corrections. We will then have something on the record as evidence that we can refer to. Are you happy for us to proceed?

Vladimir Drobnjak: Please go ahead.

The Chairman: We are grateful for your time. As you will know better than anyone in the world, perhaps, Croatia has had a particularly long period of negotiation. There is also the question of innovation in the accession methodology. Was Croatia’s experience an improvement on those of the countries that went through the 2004 and 2007 accessions? Are there further improvements that can be made?

Vladimir Drobnjak: In a nutshell, yes, I think that it is an improvement. Some of the lessons learnt through Croatia’s process are already being applied to the case of the Montenegro. As you know, Croatia’s process was a lengthy one, although at the end it was not particularly longer than some others, but it was a completely different methodology. The first of the three main differences was not only the bigger number of chapters but the benchmarking system, which was formalised in the case of Croatia, and became a principal methodology of the enlargement process, and opening and closing benchmarks became a staple of the whole process.

Secondly, Chapter 23, on judicial and fundamental rights, became a principal political chapter, but also the key background against which you were constantly checking whether or not you were prepared. Chapter 23 is also a considerable improvement not only because of judicial and fundamental rights but it contains important elements in fighting corruption. Fighting

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83) corruption and organised crime is also a principal part of the chapter, although it is not contained in its title directly; it is part of the process. The third fundamental difference is that Croatia’s process was much more individualised or tailor-made than in the previous rounds of enlargement. Croatia was the first after Greece entering alone. Before Croatia, Greece was the only country that entered on its own, because prior to Greece and after Greece there were clusters: the United Kingdom, Denmark and Ireland, and so on. So we were the first after Greece to enter alone. But this is not the only reason why the process is so individualised. It is individualised due to the benchmarking, because every benchmark is tailor-made to fit the candidate country. So we had roughly 400 benchmarks of various kinds. Statistically the number was lower—128—but the benchmarks were composed of numerous sub-benchmarks. So one could say roughly 400 in total, but these 400 were tailor-made for Croatia, so benchmarks that Montenegro or one day Serbia will receive will be different.

In the case of Montenegro, you can already see an improvement. Montenegro started the screening process with Chapters 23 and 24, which was not the case in Croatia’s accession process. I do not want to say that this slowed us down but it made the work in Chapter 23 much more difficult. We were waiting for quite some time to open Chapter 23 and thus the period for implementation was considerably shorter.

Q71 The Chairman: I have heard comments from another country, which has also now joined, about the difficulty of establishing a track record in justice—you echo those, do you? Vladimir Drobnjak: Precisely. For the track record, the first necessary ingredient is time. You need time to establish a track record; you cannot establish a track record in one month, no matter how good you are, because those who are evaluating you would like to see a track record over a longer period of time. Tackling Chapter 23 early in the process provides more time for the establishment of a track record. Now, based on the lessons learnt with Croatia, Chapters 23 and 24 shall be the beginning and the end of the process.

The Chairman: So you have the full exposure of time.

Vladimir Drobnjak: Yes, that is a considerable improvement. We are happy to be the guinea pig, to contribute to that knowledge.

Q72 The Chairman: I will ask one other question and then my colleagues have some questions to ask you. It may not be a fair question to ask a diplomat, but did you sense during your accession negotiations that this was a fair process? It was clearly a long process, but you did not feel that—to use an English expression—the goalposts were being moved all the time and that you were being asked to do further things that were beyond the original requests? Did you have a clear path in which you had obligations that you then met or did not meet?

Vladimir Drobnjak: It is a very good question. The goalposts were moved at the very beginning. I do not want to say “moved”; they were just made bigger.

The Chairman: Or smaller.

Vladimir Drobnjak: Or smaller. When we started in October 2005, we did not know that benchmarking was coming. We were preparing ourselves, examining and studying the matrix of the fifth and sixth waves of enlargement. People toss Bulgaria and Romania into the fifth 49

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83) wave but formally speaking this should be the sixth wave because they signed a separate accession treaty from the countries in the fifth wave, so it was the sixth accession treaty signed; ours was the seventh. Legally, methodologically speaking, we are not the sixth wave but the seventh wave. However, colloquially, people put Bulgaria and Romania into the same basket, so when you are talking about the fifth wave, people think about Romania and Bulgaria as well. So we were studying their experience and preparing ourselves for basically the same methodology. Then we realised in the middle of 2006 that the benchmarking system was invented and applied. It took a while for us to adjust but it also took some time for the Commission and member states to adjust. It was a big difference in methodology for everyone. The Commission deserves a lot of credit for being able to adjust.

The Chairman: Perhaps Lord Foulkes would like to ask about the enlargement process itself.

Vladimir Drobnjak: I will just finish the answer to your previous question, if you do not mind. Once the benchmarking method was established and we all got used to it, the goalposts became fixed.

The Chairman: You said that the Commission was fair.

Vladimir Drobnjak: Yes, a number of member states were saying, “Okay, the process is strict but fair”. Our reply to that was, “We do not mind strictness, as long as it is fair”. Considering the end result, I would say it was fair, because our achievements were recognised and it was a mutual success. Just to wrap up about the goalposts, the key problem was that we were not prepared—mentally or organisationally—for the benchmarking method, which is rather demanding and puts a heavy toll on your administrative system and your negotiating team. You have to produce many more documents and much more paperwork. The paperwork mounted up because all the benchmarks have to be accompanied by a formal document. The number of formal action plans, documents, et cetera, that you had to formally adopt at the Government’s level was much bigger than in previous rounds of enlargement. This not only takes time but results in a heavy toll. Just to give you one example, you have to strengthen significantly your translating capabilities. Some benchmarks are very legal, of a legislative nature, and it boils down to writing a concrete law. You have to make a law and pass it in the Parliament. The Commission gives you a green light for that. You consult with the Commission from day one. Basically, in drafting the law, you have to be in constant contact with the Commission and the process has to be bilingual. That means that an early draft of a law, which has to be produced in the Croatian language, has also to be produced in English, and in top-quality English, because if it is not the Commission might get the wrong message. Basically, in the legislative procedure, before you send the law to the Parliament, while it is still in the Government’s hands, you have two copies, Croatian and English, and you proceed simultaneously on both. You have constant consultations with the Commission, which is not easy for the Commission and it is not easy for you. To do it once is demanding but to do it 50 times is extremely difficult.

Q73 Lord Foulkes of Cumnock: As you know, we are looking at further enlargement, and in particular at your fellow countries in the western Balkans. You said that the process and the benchmarks were fair. However, looking at the other countries, we seem to be requiring more of them and to be raising bilateral issues such as the name of Macedonia, the border disputes and the position of minorities. Do you think that these are fair requirements 50

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83) and that the other countries in the western Balkans will be able to get over those hurdles as well? The Chairman: Can I add a word to that? I am aware that, at a very late stage in your own application process, your neighbours raised the banking issue. We have had their account of that outside this meeting. There is, I think, some concern about how bilateral issues either block the process of enlargement or are used as weapons at the very last stage of enlargement to hold things up or to try to get last-minute concessions.

Vladimir Drobnjak: Well, in considering your question I have to correct myself a little in terms of evaluating the degree of fairness in the process. If there was one thing that was not fair, it was the bilateral issues. When I referred to the process being strict but fair, I was referring to the benchmarking system. Indeed, the benchmarks were really strict but fair, and they were extremely helpful. It is only now, participating as a permanent observer in the Council and basically performing as if we are a member state—we do not have the right to vote, but we can participate in all the considerations of the Council—that we can see how beneficial those benchmarks were. But when it comes to bilateral issues, that was one element which in my mind was not fair because I think that they should, as far as possible, be kept out of the process. On the other hand, due to the simple fact that under the rules of the enlargement process all decisions have to be made by consensus—qualified majority in enlargement matters does not count—any member state has ample opportunities to use this card, and sometimes some cannot resist doing it. You should know that Croatia will never deploy the card because we think that the enlargement should remain as it is, which is that enlargement should be based on the strict rules that are embedded in the acquis and bilateral issues should stand aside. Yes, we lost a year due to that, but it ended well. And yes, there is the issue of Nova Ljubljanska Banka, which I do not think was fairly put and we are still waiting for the ratification. However, I am confident that it will be solved. Croatia and Slovenia are both very aware of the importance of the issue and that Slovenia will deal with it responsibly. I think that we are not far away from a good result because we have one expert from the Croatian side and one expert from the Slovenian side. Both are the best we have in this particular matter. They meet on a regular basis; indeed, they met again yesterday. I think that we are inching towards a mutually acceptable solution. However, for the moment what Slovenia was requesting was never on the table during the accession period, and that was a significant shift of the goalposts; it was a big one. However, I do not think that bilateral issues should overshadow the broader picture and the overall result. You have made a good point. One of the lessons learnt is that ways should be found to prevent bilateral issues contaminating the process. When you have bilateral issues dominating the process, they consume the energy that could be better spent on much more—I do not want to say important—fundamental issues based on what enlargement is all about. You are not putting extra energy and effort into preparing yourselves for the internal market; instead you spend hours, days, weeks and then months on bilateral issues that are, of course, blocking your path but in substance are almost irrelevant to the nature of the enlargement exercise.

Q74 Lord Foulkes of Cumnock: Is it unfair to ask you, as a diplomat—although you know the area better than us—for your assessment of how easy it is going to be to overcome the bilateral issues in relation to Macedonia, Kosovo, Serbia and, in particular, Montenegro?

Vladimir Drobnjak: I do not think that Montenegro will have any problems in this domain. It does not have all the bilateral issues, but it does have some border issues. If you look at the 51

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83) detail, you will see that very few member states can claim that they have perfectly settled all their border issues. Recently, around a year ago, I think that in either Denmark, Germany or the Netherlands—perhaps Denmark and Germany—a wind farm is being built in disputed waters, and it seems that the area has been in dispute for centuries.

The Chairman: I think that we have this in the Channel Islands, too.

Vladimir Drobnjak: So to claim that you need a perfect record in terms of border demarcation is absurd because very few can claim to have it. I think that this should not be overemphasised. However, the issue of the right name is serious because Macedonia has already paid a very high price. The issue is one of how pragmatic you can be in this particular domain, and it is not necessarily border issues that harm relations. But when it comes to Montenegro, I think that it should be optimistic because I do not see any particular obstacles in its way.

Lord Foulkes of Cumnock: What about Serbia and Kosovo?

Vladimir Drobnjak: For Serbia and Kosovo, I think for them the border is a reasonable problem in terms of demarcation, but there is room for cautious optimism because both sides are now heavily investing in—how shall I put it?—finding mutual ground and looking at how far they can go. I think that Croatia’s success is already having a very positive impact and that the others want to catch up. We have said from day one that, once Croatia is in, that will motivate others to be more pragmatic in their approach. I think that that is gradually happening.

Q75 Baroness Eccles of Moulton: Who do you think should judge whether a bilateral is so trivial that it should not get in the way of the accession process and take up a lot of extra time? If a bilateral issue is so serious—there are issues with regard to Kosovo and Serbia which, if they are not resolved, will make it very difficult to take forward the accession of either country—does a judgment need to be made on whether it could be parked and settled between the countries, or that the process simply cannot continue satisfactorily until it is resolved?

Vladimir Drobnjak: You have made a valid point in your question, but I do not think that there is an easy answer. All enlargement decisions in the Council need to be made by consensus, which is brought about through a bridge-building process. The number of decisions you make can be quite significant. Basically, in the working group on enlargement in the Council, you have to endorse every single benchmark as and when they are met at the opening and the closing of each chapter. That provides you with dozens, if not hundreds, of opportunities to cast a vote. You can filibuster the whole thing, asking for an extra week here or an extra month there by saying that you are not sure whether the benchmarks have been met and that you need another week to examine them. You can slow down the whole process with that kind of filibuster without being caught or put into a position where you have to say, “I do not want to do this because of the bilateral issues.” It is a grey zone in which you can hide and no one can blame you on the record.

In my book, the main criteria are the adjustment criteria. You have the basic Copenhagen criteria if you need them, although you should be on the same side of the process. Then there are the benchmarks, and once you achieve the benchmarks, you are in. I think that member states recognise clearly and nicely where the issues are of a broad nature or are 52

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83) specific, small and rather picky points. The best way is to look at how other member states, not only the Commission, can facilitate between two sides to resolve an issue as fast as possible. Sometimes one of the member states will slow you down without putting it on the record that it is doing so because of a bilateral issue.

Q76 The Chairman: As I recall, in relation to Slovenia, you have had two bilateral issues. One has been the bank issue and the other was the frontier issue. I think, and I have not checked this, that the frontier issue went to arbitration.

Vladimir Drobnjak: We established ad hoc arbitration.

The Chairman: Is that in your experience more constructive? You have solved one by arbitration, but it sounds to me that, with the bank, you did it by bilateral negotiation. Is this what we could call choosing the right horse for the right course, or is there a general word of advice on that?

Vladimir Drobnjak: In the frontier or border dispute, we came with Slovenia to the final solution of an ad hoc arbitration court or tribunal. It should serve as a textbook example of how things could be solved in the end; it was not easy. This should serve as a model for future crises. The problem was that Slovenia did not want to move to the international tribunals that exist. It did not want to go to existing international fora. That was why we had to establish an ad hoc tribunal. But it was established. It was a very difficult and very meticulous exercise, but now it is fine and it is important that part of the deal is that an agreement on an arbitration tribunal has been ratified by both national Parliaments. Part of the deal is that both sides will take without complaint and implement whatever the final decision is, which is crucial. Ljubljanska Banka, ironically, is a much more complicated legal thing, because it involves more than just Slovenia and Croatia. It is part of the succession issue and involves all successor states, which are three more: there are also Bosnia and Herzegovina, Macedonia and Serbia. Montenegro is not a successor state because all succession rights were ceded to Serbia. So we have five successor states. Ljubljanska Banka is extremely complicated. When you are entangled in this situation, it represents also an operational problem, because it is one of those stories that you cannot explain or tell in five sentences. It is very difficult to communicate the problem and to sit with your colleagues from other member states because it takes hours to explain. No matter how skilfully you explain it, after five minutes they are lost. My theory from diplomacy is that if you need more than three sentences and a map to describe your problem, then you have a serious problem.

The Chairman: And then throw the dice.

Vladimir Drobnjak: That is exactly what we have in this particular case. In terms of the border dispute, we need a map in this one. My point would be that you have a number of international forums and international courts. Whenever possible, use them. That is why they exist; that is their purpose. The International Court of Justice: whenever possible, use it. Whatever the court establishes as a final ruling should be without question observed. I think that a lesson learnt with Croatia is that bilateral issues should be minimised in the enlargement process and, if unavoidable, they should be settled through legal, not political, means. Otherwise, they will drag on forever.

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83) Q77 Earl of Sandwich: I am going to try to put two questions in one, if I can, thinking about political consensus internally during the process of negotiation. I am a Cross-Bench Peer and we are experimenting with consensus politics in the UK; it goes this way and it goes that. How much trouble did Croatia take to ensure that there was consensus throughout the process? The second question is related to that. The prize is economic progress—we all recognise that—and Croatia is as good at business as anywhere. What in political terms do you see as the price of economic progress? It is Chapters 23 and 24, and it is war crimes which are going continually unpunished. There are things still to be done. Can you give us a glimpse of the internal process and how people are coming to terms with what the EU is doing?

Vladimir Drobnjak: First, internal political consensus is essential for the final success. If you do not have a broad political consensus, you cannot successfully negotiate your way through this process to a successful end. Croatia was fortunate to have a political consensus from day one; there was an alliance for Europe and the whole process was backed up by the mainstream political parties from the very beginning to the very end. It was embodied in an ad hoc body created in the Parliament especially for the purpose of the enlargement process; it was a national committee. The characteristic of this national committee was that it was chaired by the key opposition figure. It was deliberately set in this way to share the responsibility and to provide the opposition with co-ownership of the process, which I think worked well. Our negotiating team was composed largely of professionals belonging to no political parties, starting with me, which I think provided additional comfort to all political sides that it was a mutual, broad process owned not just by a single political party.

Q78 The Chairman: Just looking at that in retrospect, when you were in negotiation on a particular chapter, was there much evidence that the process of consensus which had gone into your negotiating position was then repudiated by one political party or another? I mean, they did not come back and then say, “We don’t like that bit”.

Vladimir Drobnjak: No, because we established precise internal rules on the process and had a very specific pattern and rules of procedure for each and every negotiating position that was going to be adopted. That included the national committee’s approval. Once the chapter was done, no one could say, “Well, we did not know about it; we were not asked about it; we were just sidelined; we were just bypassed”. All official paperwork went through the national committee and all our negotiating positions were adopted by consensus, which does not happen often in Parliaments. Every single position was adopted by consensus. On the one hand, the opposition felt co-ownership of the process; on the other, they were not in a position after this to say, “Well, we did not know,” or, “We were against it”. This provided strong cohesion within the process and made our work much easier, but it also served as a paramount ingredient for the referendum. The referendum went so well because all the political parties in the Parliament lobbied for it.

Our referendum took place against the background of a severe economic crisis in Europe. You had every night on the television those awful scenes from Athens and so on. Nevertheless, we scored 67% or something like that3—or two-thirds of voters that participated in this referendum which was partly due to the feeling that all the mainstream parties owned the process more or less equally and everybody was behind it, including the Croatian Catholic Church and the academic community, so it was good. That was because,

3 66.27% 54

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83) for us, entering the European Union was much more than a matter of economics; it was primarily a matter of equality. Once you are in the European Union, you take many things for granted and you are focused primarily on the internal market, the acquis and the legislative process et cetera. It is many things. The fact that your Prime Minister can sit at every European Council equal to the others, you take it for granted; it is automatic. However, if you are out, then this is the main concern for you. You cannot say that you are second-class country—every country should be regarded as a first-class country—but you are not equal. It is a matter of equality in decision-making. It is of paramount importance to be able to sit at the decision-making table on a daily basis. I cannot stress enough how important for us it is to be able to listen, observe and learn and just to take our part in this process. I think that the public recognised that from the very beginning. That is why it went that way. Could you remind me of your second question?

Q79 Earl of Sandwich: I would like to hear what you think about other countries following your example. You have a good story to tell, but which countries will find it a difficult parallel and will not be able to learn from you?

Vladimir Drobnjak: One of the key junctures in the process is the moment you acknowledge for yourself that politics alone will not take you far enough and that the process is only partly political; largely it is legal, technical, administrative and, above all, about the acquis communautaire. In parts of the Balkans, enlargement is still perceived primarily as a political process and people think if they balance all the political ingredients the rest will just go ahead. It will not, because the technical and legal demands of the process are more difficult than the political. The first important thing is to realise that it is not enough to say, “Okay, if I do politically what is required, I will be in”; you will not. On the other hand, you cannot substitute political shortcomings, especially in Chapter 23, with stellar performance in other chapters. The two things go hand in hand.

You mentioned war crimes. There are two elements here: one is the ICTY; the other is processing domestic war crimes. When it comes to the ICTY, Croatia’s approach was simple: “Okay, we take the ICTY, it is our legal, almost constitutional, obligation, because we have a constitutional law on co-operation with the ICTY and whatever comes from the court is final, we will take it”. It ended the way it ended for us, but even prior to that we were acknowledging the court and our position was that we should honour it. At the same time, it is equally important to process domestic war crimes, which should not be underestimated—on the contrary. However, and I am not trying to take anything away from the importance of this issue, you have to be future-oriented. No matter how important the processing of war crimes is for your future legacy, you look in your rear mirror and deal with the past. People in the region want to deal with the future.

It is very difficult when you have to simultaneously deal with such a plethora of issues, which are not necessarily interconnected. It is extremely difficult to find sufficient time and energy to have equal focus and equal priorities on all issues. The problem with Chapter 23 is that you cannot single out any one issue and say it is more important than the others—can you say that the backlog is less important than fighting corruption? Every one is important and the final problem with Chapter 23 is that the work never ends. Unlike the chapter on food safety, for example—once you reach the ultimate standards in food safety, you are done, you just have to maintain the standards—in fighting corruption, you can never say, “Okay, now we are done. We do not have to pay attention to it”. Basically, Chapter 23 is something

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83) you take with you into the European Union as a member state. You have to keep working on it even as a member state; it never ends.

The Chairman: I might come back to that before we finish.

Q80 Baroness Eccles of Moulton: Ambassador, I think that we are receiving more guidance as to the content of our report in talking to you this morning because of your experience and the fact that you are still in the thick of it, as it were, than we will get from the rest of our sessions. They are all informative but this one is absolutely key. Earlier, you were telling us of the huge weight of administrative work that falls on the shoulders of your Government and your Administration in meeting the benchmarks. If we look at the countries that are in the list for possible accession, in the west Balkans there is one relatively large country, Serbia. Bosnia-Herzegovina is also a large country but it has impenetrable problems that I do not even begin to understand. Albania is a considerable size. Then there are the little ones: Montenegro and Macedonia. Do you think that serious thought has to be given to the load that is put on a country that has a population of less than a million compared with that put on a country that has a population of several million, but which does not in any way weaken the hurdles it must clear in order to become an acceptable member of the European Union? As a corollary to that, I understood that for Croatia, an awful lot of work had to go into something really basic—translation—but that this will be considerable help to Montenegro, for instance.

The Chairman: Is there a read-across, can you borrow the experience?

Baroness Eccles of Moulton: This is happening. Is Montenegro not benefiting quite a lot from the translating that was done in Croatia? That is a very small example and it only partly fits with my main question, but it seems that there has to be quite a lot of flexibility in the different loads that are carried by different countries.

Vladimir Drobnjak: Precisely. As I said at the beginning, the process is much more tailor- made than before, due to the benchmarking. In the western Balkans the differences between the countries, in terms not only of their degree of preparedness for this game but of their specifics, are much bigger than it was in the fifth and sixth waves of enlargement. The basic differences between, say, Slovakia, the Czech Republic and Hungary were not that big. If you compare the differences between Serbia, Bosnia-Herzegovina and Montenegro, they are such different places. The days of convoys entering the EU harbour are gone for ever. The process for this individualised matrix will result in individual entries from now on. I do not see a big bang—one after the other—coming at any time.

Q81 The Chairman: Can I interrupt at this point? The logic, when looking at the absorption capacity of the Union, is that presumably it is more acceptable to do this one at a time because, as we all know, the Union has its own internal problems. It is a mutually beneficial exercise.

Vladimir Drobnjak: Absolutely. I shall come back to the original question in a moment. Now that we are sitting in the Council, as you know there was an extremely difficult debate on the multi-annual financial framework, where we were able to participate on an equal footing. It is extremely difficult because each point takes two or three hours. Whether you have 27 or 28 does not make that much difference, but if you have, let us say, 28 or 32, it does. The digestive capacity of the Union is big enough for one country at a time. We have 56

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83) already seen that situation with Iceland, if it can ever generate enough support—but that is Iceland. But also there are individual characteristics due to geography. For instance, half- jokingly I said to our Serbian colleagues, “I know that you do not feel fortunate because you are land-locked, but there is a good side to that. You don’t have to deal with shipyards and fisheries.” From the chief negotiator’s point of view that is no small thing because those two issues were among the most difficult for us. One of the last chapters we closed was on fisheries. We do not deal with freshwater fish in negotiations; we negotiate only on sea fish.

Q82 Baroness Eccles of Moulton: How many kilometres of coastline do you have?

Vladimir Drobnjak: More than 1,700 kilometres in terms of the coastline, but if you add in all our islands, it is around 6,000 kilometres. So you have very varied characteristics. Montenegro, for instance, in terms of competition policy, has only one steel mill and that is it. It is all tourism and it does not have any heavy industry. That is in contrast to Serbia, which has a tremendously large steel industry, mines and so on. The agriculture sector in Serbia is hugely greater than that in Montenegro. All of this contributes towards a tailor- made process. The differences are staggering; what is a headache for Serbia is child’s play for Montenegro and the other way round. That Montenegro is much smaller than Serbia does not necessarily mean that one lacks administrative capacity, although it goes without saying that for a country like Serbia the human resources are much bigger. We are assisting them all we can. We also have what we call a centre of excellence, which is our new project. Whoever wants advice on our strategic approach and whoever in the region wants us to assist, we assist them. If someone wants to see our document, we will give them a translation of our acquis. If someone wants us to come and give a lecture, we do that. We are extremely open because it is our strategic goal to see all of them entering the European Union once they are ready.

Another important thing is happening which I do not think is properly being taken into account. You cannot bring Bosnia and Herzegovina into the European Union for many years, but the European Union is coming to Bosnia and Herzegovina, which will have a 1,000- kilometre EU border. That will be a completely new experience for the Bosnian people. We have already had several rounds of trilateral talks in the Commission—Croatia, Bosnia and Herzegovina—on how to prepare them for that day. We will have another one in two weeks’ time. In contrast to Serbia, for instance, which has bordered the European Union domain for years, as well as Hungary, Bulgaria and Romania, Bosnia and Herzegovina does not border one inch of the European domain, so it will be a completely new experience that I think will be extremely beneficial. We can already see that administrative capacity in Bosnia and Herzegovina has risen. Now the Bosnian people have no choice but to upgrade and improve if they want to coexist with the EU domain. There is no other way. This is how Croatia’s entry is having a positively radiating impact on the other countries.

In terms of administrative capacity, yes, it is going to be very difficult, and the applicants have yet to discover the true degree of difficulty. Part of the problem in this game is that no matter how well you think you are prepared, it is like sailing across the ocean. You can read all the books about navigators and study all the ships in the world, but once you are alone in the water, there is no land in sight and a storm hits you, it is a completely different ball game. This is what will happen to each and every one that crosses the ocean towards the European Union, and even our best advice cannot be of much help. You have to learn to sail on your own. That is because the storm that someone else might experience is the one that never hit us. 57

His Excellency Mr Vladimir Drobnjak, Ambassador and Head of Mission of the Republic of Croatia to the EU – Oral evidence (QQ 70-83)

Q83 The Chairman: Thank you, Ambassador. We have taken up a lot of your time and we have heard a lot of your thoughts. You have been very frank with us. There are areas that we have not explored as much as we would have liked: continued monitoring after entry vis-à-vis the CVM in Romania and Bulgaria, and questions— Vladimir Drobnjak: Perhaps I may just add one final thought of my own about what I have learnt this year in this new position of ours. I think it would be very beneficial to involve the candidate countries a little more in the key debates and issues. I do not mean in terms of decision-making; I mean in order to inform them about what is happening in the European Union right now. That is not part of the acquis yet. The problem is that as a candidate country you negotiate the acquis because you have to adopt the acquis. However, you do not deal with anything that is not in the acquis yet. For instance, the candidate countries will not read or have to vote on the blueprint for enhanced integration of the economic and monetary union that has just been published.

The Chairman: They will read it in the New York Times.

Vladimir Drobnjak: Yes. One has to find a way to keep the candidate countries more informed about and involved in the strategic issues on the Council’s table which are being debated. That will prepare the countries in advance. A lot of people think that, when they enter the Union, it will not change, but we can see how much the Union we will enter differs from what it was in 2008. We can see how different it is now and the changes that are coming are profound, so we have to find ways of keeping the accession countries better informed. We also have to provide them with the perspectives and dimensions of the Union that you are unable to detect when you are a candidate country in the negotiating process because they are not part of the acquis and not officially part of the chapters for negotiation.

The Chairman: Thank you. I should like to end by saying that we are indebted to you. You have been extremely frank and helpful and you have given us some fascinating insights. There were one or two soundbites that I personally have retained and which may well reappear in our report. This session has been very useful and we will send you a transcript. If you have any further thoughts on issues that we have not touched on, please feel free to share them with us. Your evidence is extremely valuable to our inquiry.

Vladimir Drobnjak: I thank you for coming here and it has been my profound pleasure to speak to you. I am at your disposal for any future thoughts. Please send my kind regards to Lord Dundee. Whenever I come to your Parliament, I am always so generously received by him and his group.

Written evidence from Andrew Duff MEP

The Case for Associate Membership

1. As the Select Committee is aware, there is a timely new debate on the enlargement policy of the European Union, a debate that deserves to be as large as possible. The European Parliament will vote its own resolution on the matter (Koppa Report) in its forthcoming November plenary session. It will adopt fresh perspectives on enlargement in reaction to two important factors – namely, the financial and economic crisis of the Union itself and the difficulties in which the current round of enlargement finds itself immersed.

2. If the EU survives the present crisis it will emerge in a different and much more federal form. There will be a fiscal union run by a federal economic government. Such radical change is already envisaged and begins to take its shape in the form of the banking union. Other features, notably the appointment of an EU treasury secretary, will be sharpened in the run up to the next elections to the European Parliament in May 2014 and the subsequent election of the new European Commission. Under the ordinary treaty revision procedure (Article 48(2-5) TEU), a Convention is destined to take place in spring 2015 whose main task will be the installation of the federal political union. It is important that all candidate states are made aware of the likely changing nature of the Union which they aspire to join. The Treaty of Lisbon is no longer the benchmark.

3. One should not dissemble about the problematic nature of the current and probable future applications for EU membership. None of the countries of the Western Balkans have yet reached that quality of a modern democratic member state which is a prerequisite for membership of the Union. None are free of security problems with their neighbours. All will require a longer time for deeper preparation for EU accession than was available for Romania or Bulgaria – or, for that matter, Croatia. The accession process of Turkey has stopped because of the intractable problem of Cyprus. Neither the ruling party nor the opposition parties in Turkey appear to be truly dedicated to achieving full EU membership, and there is in any case no prospect of an agreement among the EU’s member states about accepting Turkey as a full member.

4. The path to future enlargement will not be smooth or rapid. While a stronger EU will be better equipped to cope with the entry of new members, the threshold for those joining goes up. That being said, it is in everyone’s interests that the European Union continues to deepen its own integration in order that it may provide for all Europe a pole of stability, liberty and prosperity. There is a similar imperative for the Mediterranean. A European voice in world affairs will never be heard unless the EU is allowed to succeed in its mission at home and abroad. So it is wise to exploit the increasingly federated nature of the Union to introduce more sophisticated multi-tier arrangements than it has enjoyed so far.

5. In the Treaty of Lisbon we inserted a new clause, Article 50 TEU, which allows for the secession of a member state. This was a natural refinement of the constitutional order of the Union at a moment when it decided to take a significant, if incomplete, step in the federal direction. Member states have the sovereign right to choose not 59

Written evidence from Andrew Duff MEP

to continue their membership as and when the Union as a whole takes on new forms and has new competences conferred upon it.

6. At the next general revision of the treaties, foreseen for 2015, I propose that the Convention adds a new clause which establishes a formal category of associate membership of the Union. This would logically appear between Article 49 TEU (accession) and Article 50 (secession). Article 49a could read as follows:-

1. Any Member State or any other European state which respects the values referred to in Article 2 and is committed to promoting them may notify the European Council of its intention to become an associate member of the Union. The negotiations shall be conducted by the Commission on the basis of a mandate agreed by the Council, after consulting the Parliament.

2. The conditions of associate membership and the adjustments to the Treaties on which the Union is founded shall be the subject of an agreement between the Member States and the Associate Member State. The agreement shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after consulting the Commission and after obtaining the consent of the European Parliament. The agreement will enter into force once it has been approved by the Member States and the Associate Member State in accordance with their respective constitutional requirements. 7. Such an associate membership requires fidelity to the values and principles of the Union (Article 2 TEU) but not adherence to all its political objectives as laid down in Article 3 TEU (which include the euro), nor, of course, the duty to engage in all its activities. Participation by the associate member state in the EU institutions would necessarily be limited.

8. Associate status would well suit four categories of European country:-

• states which aspire to full membership but which need time and stability to meet the Copenhagen criteria and to assimilate the acquis communautaire; • states which choose not to become full members but which require a secure and durable partnership with the EU; • Norway and Switzerland, dissatisfied at their current arrangements; • existing member states of the EU which prefer relegation.

9. For some, associate membership would be a spring board for full accession; for others, a long stay parking place; and for yet others a decent alternative to leaving the Union altogether.4 The form and conditions of the associate membership would need to be negotiated on a case by case basis, and would of course be determined by the dynamics of whether a state was coming or going. But the European Union has proved itself over the years capable of great constitutional ingenuity, and it is reasonable to assume that, given the political will to work together for the good of all Europe, satisfactory arrangements could be made to suit all circumstances.

5 November 2012

4 I have written about the potential of associate membership for the UK in On Governing Europe, Policy Network, 2012. 60

Andrew Duff MEP – Oral evidence (QQ 84-102)

Evidence Session No. 4. Heard in Public. Questions 84 - 102

WEDNESDAY 5 DECEMBER 2012

Members present

Lord Boswell of Aynho (Chairman) Baroness Eccles of Moulton Lord Foulkes of Cumnock Earl of Sandwich

______

Andrew Duff MEP (UK, ALDE) and Dr Charles Tannock MEP (UK, ECR), Members of the European Parliament Foreign Affairs Committee (AFET)

Q84 The Chairman: Dr Tannock, thank you very much for coming to talk to us. We have had a lot of written evidence from you, for which again many thanks. We are picking up voices in Brussels and trying to widen our background experience before we even move towards conclusions. The main focus is looking at the enlargement process, both technically and in terms of the political input or, indeed, interference with it. Perhaps I may kick off with the first question. Since 2007, and in parenthesis perhaps because of that experience, the accession process has been significantly modified, including a new system of benchmarking. What further improvements do you think the Commission can make to the process and what more could be done to support the candidate countries while ensuring that the existing member states have a clear and objective view of candidates’ progress? Perhaps the only other gloss that I shall put on that before you start is that obviously we are aware of the promotion of the Chapter 23 stuff—justice and home affairs—and the case of Montenegro as a starting process. I will add a little gloss myself. A lot of these justice and home affairs things, in contrast to, say, food safety, which is largely a technical issue in that either you do it or you do not, as we heard in earlier evidence, are about changes in culture just as much as they are changes in formal provision. How does that take you?

Dr Charles Tannock: Thank you very much. By way of general remarks to preface what I am going to say, I should say first that since I have been a Member of the European Parliament I have fully supported the enlargement process. Overall it has been a great success story. We are anticipating Croatia joining next year and the only other possible candidate country that could join in the foreseeable future would be Iceland if it was so minded. In my view, I really cannot see enlargement to any other state occurring in the next decade.

The Chairman: Does that include Montenegro?

Andrew Duff MEP – Oral evidence (QQ 84-102)

Dr Charles Tannock: Sadly, that does include Montenegro. I do not know whether I said in my written evidence that I am the standing rapporteur for Montenegro. I am not saying that it could not join, but I do not see it happening politically. At the moment there is something of a general understanding that there needs to be a period of rest, particularly given the eurozone crisis and all the problems attached to enlargement fatigue. So poor old Montenegro, which would not be a problem given its size and relative stability by Balkan standards, will be seen as part of the western Balkan package. I may be wrong, but that is a general comment.

Lord Foulkes of Cumnock: I am very interested in your comments. Why do you say that?

Dr Charles Tannock: It is not just my own view; it is also the result of what has been fed back to me off the record by a number of sources.

Q85 The Chairman: Just out of interest, is that also the view of the Montenegrins? Are they aware of this?

Dr Charles Tannock: I have said that recently in a speech before the Foreign Affairs Committee. My report on Montenegro came up for debate last week. It is now subject to amendments and will be voted on in January. I have put a draft proposal before the Foreign Affairs Committee, and in my remarks before the debate—I do not know if Andrew was present or not—I did say that sadly I do not see enlargement going anywhere beyond Croatia and possibly Iceland for a decade or so. It may be only seven years, but there is going to be quite a gap before we see any other country accede. Given the various unresolved and unanswered questions on the eurozone crisis and the whole architecture of the European Union, whether Britain wants to be in or out of the Union and what the Union will be like, I think that further enlargement beyond those two countries seems unlikely. That is a general overview.

The Chairman: Andrew, welcome. I think you know who we are. Just to clear the decks, as it were, we are taking this as a formal session that is on the record. If you need to go off the record to say anything in particular, we will try to accommodate you. We will send you a transcript so that you can deal with any substantial points that need to be corrected. I did not say to either of you that we have had to rejig our time a little. This may not be unwelcome to you, but we would like to draw stumps by 11.15 at the latest. Are you free until then?

Andrew Duff: Absolutely.

The Chairman: That is wonderful. I think that Elmar Brok has been seen on the horizon but has not yet landed. If he turns up, he will be very welcome, too. We simply started, apart from the formalities, with an exchange with Charles on the timing of the accession of other countries. I think it would be fair to summarise that by saying: Croatia, yes, and Iceland, yes, if the bilateral issues can be resolved and it wants to join. That is the long perspective.

Q86 Lord Foulkes of Cumnock: I wonder if you could elaborate on that, because the evidence that we have just had from the Croatian ambassador would seem to contradict what you say. He feels that some of the western Balkan countries could join, one by one, within the next 10 years. If we can overcome some of the bilateral problems, it should not be any problem so far as the other criteria are concerned. 62

Andrew Duff MEP – Oral evidence (QQ 84-102)

Dr Charles Tannock: I am not sure that we are in such contradiction. If he has said that they can join within the next 10 years, we are in the same ballpark, but it is not going to happen within the next two or three years. I am saying that I cannot see any move in the period up to the next 10 years. It may be seven years or it may be 11 years, but I am not sure exactly what timeframe he had in mind. However, I cannot see Serbia or Montenegro joining in the next two or three years. I think it will be between five and 10 years, and it is my guess that it will be closer to 10 years. Of course that is only a guess because these are all guesses at this stage. For countries such as Albania and Bosnia and Herzegovina, who knows? Likewise for Macedonia, who knows? It is a complicated situation. Obviously the Croatian ambassador would say that because it is his job to do so. It is his job to encourage other western Balkan countries to feel that they are moving rapidly towards the same objectives. I do not wish to be disrespectful to His Excellency, but I am giving you a political comment that after Croatia there will be quite a reasonable gap of up to 10 years.

Q87 The Chairman: I am going to bring in Andrew in a minute to give us his overall view, but can I just probe what Charles has said to us? It sounded when you said that as if there might be a relative gap for, let us say, a decade—we accept that as a term of art—and that you were almost assuming that there would thereafter be a western Balkans package, whereas, again, the ambassador, who will be on the record, was rather saying to us that he thought that it would be one by one as a more gradual process.

Dr Charles Tannock: In a way, I hope that he is right, because I would prefer a regatta. That is how it should be done: entirely on its own merit. That would obviously be the optimum solution. I suspect that they will seek to aggregate one or two of the countries together. I doubt very much that they would want to see little Montenegro coming on board without Serbia. There will be a school of thought that they should come in together. Bosnia- Herzegovina is slightly in a class of its own for all sorts of different reasons which you will understand. I think that there is so much resistance now to further enlargement given the uncertainties of the European Union. It has made a very firm commitment to Croatia. Iceland is a member of the EEA. Beyond that, I think that we are talking about up to a decade. That is my view, but if I am proven wrong I shall be delighted.

Baroness Eccles of Moulton: But there could be work continuing on it, because it takes a long time. Montenegro is going to do it.

Dr Charles Tannock: Sure. Poor old Macedonia has been a candidate for seven years already. It has not even opened negotiations yet.

Baroness Eccles of Moulton: So they could all be, as it were, in the queue, but with nothing conclusive happening.

Dr Charles Tannock: We have had a lot of countries—Turkey and Macedonia—in the queue for quite a few years.

Baroness Eccles of Moulton: So you are not saying that the queue will be halted, but that that would all continue.

Dr Charles Tannock: I do not think that there will be any halting at all. I just think that it will be painfully slow. That is my guess.

Andrew Duff MEP – Oral evidence (QQ 84-102)

Q88 The Chairman: Andrew, what is your overall take on future candidates and, as it were, the post-2007 experience and the benchmarks? Where is it going to lead?

Andrew Duff: First of all, can I say what a pleasure it is to be here? Secondly, on the issue of the Balkans, I think that the true problem is that these countries do not, as yet, enjoy the capacity of a modern state. One ought not to underestimate how essential a part of European integration it is that member states of the Union function properly. We probably underestimated the cynicism of the communist legacy. Corruption is so systemic and entrenched that it affects all aspects of public life—political parties, the judiciary, the police and the civil service, if it exists. One has a politicised apparat as opposed to a professional public service of the kind that would be recognised by us as being prerequisite for trustworthy, coherent and non-partisan public life. By that, I do not mean that party politics is not able to play its own part—of course, it does—but it is the aggressive, exaggerated political factionalism in these states which prevents them from being an entirely serious interlocutor of the EU at the moment. How long that problem will take to dispel, I do not know, but it will not be all at once all over the western Balkans. Clearly, some states will make greater progress than others. Serbia is a key player here, because it is the largest state and it has experience of the exercise of authority across the region. If Serbia is to be a viable partner for the EU, it has got to learn just how to liberalise and democratise the exercise of that authority in the region today. We have also learnt from our previous experiences of enlargement that all border questions and domestic sectarian issues ought really to be solved before countries can expect to cross the threshold. Cyprus is an example of where we blundered rather badly. There are still border questions between Croatia and Slovenia.

Dr Charles Tannock: And Montenegro as well.

Andrew Duff: Yes, indeed. It needs to be understood that we are drawing some lessons from our recent experience. I agree absolutely with Charles Tannock that we are not going to rush naively or glibly into accepting a clutch of new member states from the Balkans. The process of pacification, of reconciliation, has still an awfully long way to travel.

Dr Charles Tannock: Can I just take you up on your point about the post-communist legacy? What has happened even this year in Romania was a bit of a wake-up call to understand the dynamics of the constitutional crisis and the frustration in Brussels at seeing what was going on there between the President and the Prime Minister. That was a demonstration of the tensions and disregard for due process and the judiciary and so on. We see that in the western Balkans still. The Romania-Bulgaria rapid accession has left a lot of feeling that, next time around, we have to be very careful in all sorts of areas. We mentioned that Chapters 23 and 24, on fighting corruption and organised crime, depend on the judiciary. On the issue of administrative capacity, it would be very easy to absorb a country such as Montenegro, which is a small country, is fairly stable internally and does not have the ethnic conflict or divisions of a country such as Bosnia and Herzegovina, but a major problem that I have encountered is that it is so small that separation of powers between the judiciary, the Executive and the parliamentarians is almost impossible given that they all know each other. They walk down the street and bump into each other and they all frequent the same one or two cafés in the town.

Lord Foulkes of Cumnock: Like Luxembourg, you mean?

Andrew Duff MEP – Oral evidence (QQ 84-102)

Dr Charles Tannock: Like Luxembourg, but it does not have the tradition of a civil society. It does not have the democratic traditions that Luxembourg will have had for a very long time before that. This is the problem. It fights on different fronts. It has a post-communist legacy; it has an endemic system of corruption which it needs to try to eradicate. I agree that Croatia has done well in arresting the former Prime Minister, for instance, but how high up the chain will it go in Montenegro? It is so small that it is very hard to have a genuine separation of powers. It has just put in the former Prime Minister again because there is a very limited pool of talent to draw on for all the offices of state and the whole of the civil service.

Q89 The Chairman: Just following that, I suppose that at the techie level as well, in terms of qualified lawyers who understand the importance of drafting, getting the texts right and then complying with the acquis and so forth—as well as, I suspect, at some of the more technical levels such as food safety—there are simply not enough troops on the ground and there is not enough internal capacity.

Dr Charles Tannock: Administrative capacity is a big problem in a small country such as Montenegro, but it has one big advantage of course, which is that it has a mutually comprehensible language—namely, Serbo-Croatian—and, of course, Croatia has provided it with a translation of the entire acquis in Croatian, which it claims is a separate language. Language proliferation is going to be a big issue in the western Balkans post-enlargement. If separate booths for Serbian, Bosnian, Montenegrin and Croatian are insisted on, it is going to be hugely expensive. I upset people when I say this, but they should look at what happens in the international war crimes tribunal and at having some sort of booth for a synthetic, halfway language, because it will be vastly expensive to have simultaneous translation. Anyway, it has the acquis provided for them; it is getting mentoring from Slovenia, which is already in the European Union. In that respect, it does not have to reinvent the wheel because it can have a lot of experience from neighbouring countries which have gone through the process.

Q90 The Chairman: My last question is on euro compliance. Is it assumed to be sufficiently far away as not to be a major issue for applicant countries?

Andrew Duff: No. Article 3 of the Treaty on European Union says that membership of the euro is an objective of being a member state. The only country, alas, that does not have to abide by that objective is us, but it is certainly an integral part of the membership package.

Dr Charles Tannock: I am not sure how seriously it is enforced. Sweden has managed to disregard that obligation and the Czechs are having a referendum on it at the moment.

Andrew Duff: But the convergence criteria are clear in the treaty, so in all sorts of ways it is simpler to track progress to joining the single currency than it is on several other aspects of just what it means to be a member state of the EU where convergence criteria do not exist.

Dr Charles Tannock: Paradoxically, of course, in the western Balkans, Montenegro has adopted the euro already and uses it de facto. I raised it with its parliamentarians and Speaker last week who were in the Parliament here and asked whether there would be any advantage in leaving the eurozone and inventing their own currency. They were dead against the idea and seemed to be happy with the euro. It must be the only country that is relatively happy with the euro at the moment, because the weak euro has helped it develop its tourist 65

Andrew Duff MEP – Oral evidence (QQ 84-102) industry. Of course, Kosovo has a similar arrangement, which is going to be complicated in terms of the whole issue of EMU and the various targets that it has to meet. It is supposed to have its own currency fixed at a certain exchange rate before it can join the euro. We are going to have to invent a whole set of rules for countries that are de facto using the euro before actually officially joining the euro in future.

Q91 Baroness Eccles of Moulton: Could I go back for a minute to the standards required of—for ease of definition—Chapters 23 and 24? It has been clearly demonstrated in the case of Bulgaria and Romania that, as I understand it, they have not reached the standards required of those two chapters. How realistic is it to expect those countries present and future—but past from the point of view of meeting the needs of succession—to have our own sort of standards? Are we asking too much to think that there is not going to be any more corruption in the whole of that part of Europe once they have successfully acceded? OK, so we have to draw a line under Romania and Bulgaria and just hope that they eventually achieve the standards, but for the new countries that are coming in that are all on the accession list, should there be slightly less idealism and slightly more realism when it comes to imposing old established standards of anti-corruption and other aspects of what those chapters demand?

Dr Charles Tannock: It is a political question, because, if we were to have the highest standards in Europe—there is a whole corruption index, with Sweden at the top; the UK is not at the top but is sixth or seventh—we would probably never have admitted Italy to the European Union when it first joined. What if corruption was the same barrier to entry then as it is today? Italy still has a lot of corruption in the south and even at the highest level of government, sadly. So I agree that there is a danger of being over-officious in this, but, on the other hand, we have to carry Europe’s publics. There is a perception, rightly or wrongly, that there is a lot of organised crime and corruption in the western Balkans. Some of it, I am afraid, impacts even on our own judice system and some of the inmates of our prisons have their origins in that part of the world. Unless the public can be convinced that no stone has been left unturned and that every effort has been made to do our very best homework before they join, you are not going to carry public opinion that it is a good thing to enlarge the EU to the western Balkans. When I meet constituents, they say to me, “Why should we have these countries in? Surely they are just going to export crime to our country.” I try to convince them otherwise. There is a whole political dimension to this and it is right that, with us having learnt our lessons from Romania and Bulgaria, Chapters 23 and 24 are opened early and closed only after a minute inspection of every aspect of where they are supposed to be applied. Post-accession monitoring systems may have to be put in place to make sure that there is compliance with them after accession.

Andrew Duff: We have strengthened the instruments and tools at our disposal to monitor what happens following accession. The Commission has been far more forthright in its scrutiny and critique of what is happening inside member states than ever before. We have the Fundamental Rights Agency, which is beginning to flex its muscles and get more experience of just how it should work with respect to the internal policies of the EU. And we have the European Parliament. The efforts to which the Foreign Affairs Committee here goes to reflect in our reports the actual situation and the foreseeable improvements are quite impressive. They are worth a read. They are quite long. They are extremely thorough and are based on considerable inquiry, both from the delegations which we have on the ground in those countries but also from our own parliamentary diplomacy. As you know, we are extremely active in joint parliamentary committees with accession countries. That is an 66

Andrew Duff MEP – Oral evidence (QQ 84-102) extremely good tool to understand just what is going on. I think MEPs are increasingly critical, but also pragmatic. It is important to say that we are still committed, at least most of us, to the moral imperative of extending our prosperity and security to the east and to the south. It is a mission of the EU—of course, it is partly for self-interest, because we want stable, prosperous countries on our borders—but if we reduce discussion on enlargement policy simply to the technocratic, we are missing an awful lot of the picture.

Q92 Baroness Eccles of Moulton: I quite understand the political imperative. There can be a little smoke and mirrors when it comes to that. But it is just a question of weighing up the huge amount of effort that is going into this particular target and whether it is disproportionate with some of the other areas where a little more effort should be being made. It is all a question of balance and proportionality. Sometimes I wonder when we are trying to rub out and exterminate something that you have described as endemic. It probably was not endemic only as a result of being under a communist yoke; it has been endemic for ever and ever. Of course, we do not like any of it, but is it so important to prosperity and the rest of it that we really are not getting it slightly out of balance?

Dr Charles Tannock: Corruption will always be there and you must always fight it and every effort must be made to do so. Organised crime is perceived, rightly or wrongly, as more threatening to our own citizenry, and that is the main issue as far as I am concerned. When there was a spate of murders in Bulgaria two or three years ago, there were grave concerns about the rule of law in that country and impunity for common-law crimes. We cannot allow countries to be in the EU and regard that as a way of life. Of course, it did happen in the south of Italy for a long time under the Mafia. It is perceived, rightly or wrongly, as very threatening to our own citizens and that there will be more facilitation for movement of that sort of thing across Europe if they became full member states. It may not be true. I suspect that if you are a gangster in these countries you can come to Britain quite easily one way or another, so I suspect that it is more the perception than the reality, but that is just politics I am afraid.

Q93 The Chairman: Can I just come back on those exchanges for a moment? First of all on Charles’s point—this is not subversive of the EU and is not meant to be; it is a neutral comment—there are quite a lot of bilateral links that professionally I am aware of between the Met and Romania, for example, on trafficking. It is not necessarily that we should not do things at EU level, but we need to support these bilateral links as well. My question arises out of Andrew’s comment. He said, “We are still broadly sympathetic to the project”. I wanted to ask who “we” are. We have heard two British MEPs from slightly different groups and traditions who are both expressing their support and we know that has been the traditional position of British Governments. Yet, looking at the timing of enlargement, I think that you were both saying that this may be some way ahead. Is there really fatigue in other member states or a covert agenda which is really saying, “We can’t take any more of this”? Or is it something where they are taking an objective appraisal saying, “We need to slow down but later we may be relaxed if the process were extended”. From this discussion, we should perhaps, at least, accept or deal separately with Turkey, but look at the western Balkans in particular.

Andrew Duff: We have to understand, or try to understand, what is happening inside the EU. Clearly, there is a quickening of the federal process. The core, which will be a large core, is going to have to federate very fast if the project, by which I mean integration, can be salvaged. Here, our political parties divide, and I will let Charles speak for his own party. But 67

Andrew Duff MEP – Oral evidence (QQ 84-102) we have to understand that, for the third countries, the sight of the fiscal union being put in place, with all that that implies, which is federal economic government, means that the threshold will go up for accession. It is extraordinarily more challenging for a third country now to conceive of embarking on a protracted, problematic accession process, because of the transformation of the EU from something that it was—we do not have to define that here particularly—towards something that is clearly going to be a far more centralised, tighter federation of states and citizens. So, is there enlargement fatigue? I do not think so. If there was, I think that we have got over that, but we have become distracted, quite properly, by our internal domestic struggles. I do not think that the external question—the neighbourhood policy—will truly be clarified again before we have completed this federal process, which is now taking place.

Dr Charles Tannock: There is actually quite a lot of convergence in our views. I have always been of the view that the carrot that provides the glue to bind these countries in peace and stability is Euro-Atlantic integration—NATO and the EU. To take that away altogether would be very destabilising and would be against our national interests. I am broadly in favour of enlargement for the western Balkans, but as I said at the very beginning, I totally accept the fact that, given the eurozone crisis, the urge for integration, federation and so on, I can see that the greater minds in Berlin and Paris will take the view that to enlarge before that matter is sorted out successfully one way or the other would be somewhat reckless. It is the old Conservative view: can we have a wider, looser Europe? You could enlarge ad infinitum and therefore dilute the powers of Brussels. So far it has enlarged and deepened, but there is a limit to that process. Also, more federal-minded countries will want to preserve that deepening project. They would find it particularly important that the countries of the western Balkans were part of the inner core rather than at the periphery. We as Brits may take a different view. If we want to have a different, variable geometry for Europe, we may like to see allies who wish to have a semi-associated or semi-detached relationship. Maybe one or two of these countries could be in that category. But at the moment the thinking both in Brussels and the national capitals other than London is generally to go deeper first. That is the priority. Given all the centrifugal forces going on, to enlarge rapidly to the western Balkans would be hugely risky. One other problem, having seen the whole Greece scenario, is that there is not much of a tradition in these countries of paying taxes. To have a fiscal union and raise taxes where you do not even know who is earning what and how much tax they are paying would be quite difficult. You need to have a much more settled fiscal system in countries such as Serbia if they want to be safely embedded in the eurozone.

Q94 Earl of Sandwich: You started off putting a damper on any enthusiasm I might have had for enlargement, but what you have said since makes me think that you are in favour of the project.

Dr Charles Tannock: I am in favour of enlargement in principle, but I am extremely careful.

Earl of Sandwich: I cannot help thinking that the machinery of the EU just moves forward however you analyse the degrees of membership. There is a sense that the own-merits argument is winning. To begin with, I cannot see how Iceland could jump over anyone else without infuriating the whole principle of gradual entry. I know that it may happen, but I just think that we ought to start looking at other categories before we dismiss them. I feel that the EU will not accept anything except membership in the far distance, but can we just spend a minute or two on whether we should seriously propose other categories of membership, 68

Andrew Duff MEP – Oral evidence (QQ 84-102) because it seems from some of this evidence that you do not agree? You know all the alternatives already.

Dr Charles Tannock: Well, I think it really rather depends on what you mean by other categories because we already have other categories. We have the EEA. We already have an EEA concept, which is a sort of single market, but then you have no influence in making the legislation. Now we have the Boris Johnson category, according to his speech, where we can be in the EEA and still be voting on single market legislation. He has just basically rewritten the EU treaties. I do not know whether you saw the speech.

Earl of Sandwich: He used the term “variable geometry”, which is there but is not explicit.

Dr Charles Tannock: It is there but it is not explicit. On the euro, on the Schengen area and on various other derogations that individual countries negotiate for different reasons, there is obviously an element of that. However, I do not see any political will for a major acceptance by the European Union that you could have an associate membership, at this stage, and I am not quite sure what it would mean. Would it mean that they have MEP representation? Would they have a Commissioner? Would this just be the EEA that we are talking about, which is the Norwegian-Icelandic type of model? I just do not know what you mean by another category.

Baroness Eccles of Moulton: But we have Turkey to consider, which is a problem that is not going to go away.

Dr Charles Tannock: That is another problem altogether. We could have a long debate on Turkey.

Baroness Eccles of Moulton: But it is relevant.

The Chairman: Would the two of you—Charles and then Andrew—like at least to share some thoughts on answering that about Turkey?

Q95 Lord Foulkes of Cumnock: Before that, I agree with Dr Tannock but Mr Duff has put in a very strong submission in favour of associate membership, which is surprising coming from a Liberal, if I may say so.

Andrew Duff: Good. I always like to surprise.

Lord Foulkes of Cumnock: Forget about Liberal Democrat policy—I do not see how you can reconcile it, as Dr Tannock said, with the whole structure of the EU.

The Chairman: Perhaps the best way to handle this is if Andrew answers on the specific to George and then you both put your thinking caps on and we come back to Turkey in a minute.

Andrew Duff: I have considered this option for some time: the creation of a formal class of associate membership of the EU. In 2015, probably, there will be a Convention—followed by an IGC—to revise the treaties and install the fiscal union, which I was speaking of earlier, to rectify some of the mistakes of Lisbon and to do some other necessary things with competences and powers. I believe that the time has come to have something in the Treaties 69

Andrew Duff MEP – Oral evidence (QQ 84-102) between membership and being outside. I think that that associate membership would suit four classes of state.

First, there are those who choose not to apply for full membership, and I include Turkey in that category now. I can come back on that if you wish. Secondly, there are those who aspire to full membership but are not yet ready. Here, the western Balkans is obviously a good illustration of that class—countries that would profit from a stable, durable relationship, during which they could assimilate the acquis and prepare themselves administratively and politically for the leap into full membership.

Thirdly, there are Norway and Switzerland, which presently have these strangely unsatisfactory relations with the EU. They are not satisfactory from our point of view but they are not from theirs either. I think that we can seek to upgrade the character of their partnerships by allowing them a greater degree of influence in the decision-making procedure of the Union on those things that affect them, like the single market. But in exchange we should apply some of the supranational jurisdiction that we require of full member states. Then there is a fourth class, which is current member states that might choose not to make that federal leap that is required and desired by everyone else.

Lord Foulkes of Cumnock: That is the interesting one because the first three are obviously staging posts.

Andrew Duff: Well, they could be a sort of springboard for coming in or a safe parking place.

Q96 Lord Foulkes of Cumnock: The fourth one worries me. Is it envisaged that the United Kingdom might be one of those? That, again, is a strange thing coming from a Liberal Democrat.

Dr Charles Tannock: So you downgrade us to associate membership.

Andrew Duff: Well, I hope not and if there is ever a point where the UK has to decide this, I will be arguing for us to be in the core. But I am conscious the this coalition has entrenched a referendum in our creaky constitution, so the outcome of the Convention will have to be put to a referendum in the UK. I do not think that if you put the option of a federalist treaty to the Brits—at present, at least—they would agree to it. If they do not agree to it, they block the process for absolutely everyone else. I have always said that I do not think that Britain has either the moral authority or the political will to exercise its legal veto to block integration for everyone else.

Lord Foulkes of Cumnock: I have the advantage of not being part of the coalition, so I voted against all these ridiculous referenda.

Andrew Duff: Absolutely right—very good.

Q97 Baroness Eccles of Moulton: But why does it have such a disastrous effect if you voted against becoming part of a federal Europe?

Andrew Duff MEP – Oral evidence (QQ 84-102)

Andrew Duff: It all depends on what the question is. What we are going to have in, say, 2017 is a brand new EU treaty that has to be approved by the UK through a referendum. If you do not install a safety valve in that new European treaty—that is to say, the option of an associate membership—then I suspect the British answer is going to be no.

Lord Foulkes of Cumnock: I would have a new Government.

Dr Charles Tannock: I have to say that I do not like the term. It would be delegitimising the role of the United Kingdom as a major power in Europe to be an “associate member”. I would rather that we retained the term “full member” with massive derogations in all sorts of areas of our interest because it would be very hard for an associate member to have elected representation in this Parliament and very strange for one to have a Commissioner. In a way, it would be far better to stick with the variable geometry concept, where we stretch that much more in our favour by opting out of all sorts of areas—justice and home affairs, employment legislation, or whatever—but still retain our full membership, at least nominally, still have representation in this Parliament, still have a Commissioner and still turn up to the CFSP in terms of foreign policy.

Baroness Eccles of Moulton: And who would let us do that? We would never be allowed to do that.

Dr Charles Tannock: I do not know what we would be allowed to do because that remains to be seen. There is a very strong understanding in Berlin and Paris that Eurosceptic voices are very loud in Britain. I am sure that they do not want us out of the club altogether. I do not know whether they would settle for this associate membership concept, which I hope would include the EFTA and EEA countries, and maybe some of our overseas territories. One of the hats that I wear is that I am the nominated adviser for the overseas territories. A lot of British Overseas Territories are in a bit of a limbo as well, including the Channel Islands, the Isle of Man and Gibraltar. They are all in a grey area, although Gibraltar has representation. Then again, you might have the European Court of Human Rights kicking in and saying, “Hang on, you are subjected to all the legislation. You should be entitled to some representation”. It is very tricky, this whole area.

Q98 The Chairman: We may have to part in a minute, but I know that the Earl of Sandwich has a specific question. Just to be clear on Andrew’s concept, if you were offering associate membership for categories one to three, the inference is that you would have to repair some of their democratic deficit. Whereas the Norwegians notoriously take the instructions from Brussels in relation to single market issues, you are saying that they would have to have some kind of attenuated representation to form part of it.

Andrew Duff: Yes, that is absolutely right. They would probably require a judge at the Court for single market questions, but I think they would not have the right to choose a Commissioner or Members of the European Parliament. I suspect that, for Britian, the two pillars that would form the content of the associated membership are common market and foreign policy.

Dr Charles Tannock: What about voting in the Council? Would they have votes? They would have no legislative powers, just representation. Andrew Duff: Well, we can be ingenious in creating procedures for legislative processes, but it would primarily be an intergovernmental arrangement, so there would be Ministers. 71

Andrew Duff MEP – Oral evidence (QQ 84-102)

Dr Charles Tannock: But not voting as legislators in the Council.

Andrew Duff: One would have to segregate some of the areas of law-making very strictly.

The Chairman: That is fascinating, but I think that perhaps we should pass on. I am going to ask John to come in with his specific question, and perhaps we can have a quick round on Turkey and points east.

Q99 Earl of Sandwich: This is sort of in parentheses, but it draws out something. Can we share a few points on the EAS and how it is working with reference to Kosovo? My background is international development. Kosovo is an aid project; we can think of it in that way, even if it never attains membership. Do you think that the EAS puts too much emphasis on that great project?

The Chairman: Can I add to that also your take on the relationship between the EAS and Commission activity?

Dr Charles Tannock: On the External Action Service, it has broadly been a success story, relatively, given all the crises going on. I would not have designed it in the first place or been happy to join it if I had had a choice in the matter, but I engage pragmatically with it. Other than the fact that it is asking for too much money now, and there is a lot of fat that can be cut, because it did not take enough resources from the Commission with it at the start, I have had it confirmed by senior British diplomats that, by and large, British interests have been safeguarded and perhaps amplified through the EAS when it is in our national interest. The sanctions on Iran are one example where the EAS is doing a good job. But what it does not demonstrate is value added in terms of money and cost-effectiveness. That will be its next test. If it can show that it can be audited and show that there has been an economy of scale, particularly with the smaller member states being able to cut their bilateral embassies or diplomatic personnel, it can actually justify itself. At the moment, the jury is still out on that, but it has performed better than I anticipated, although there are still some question marks about the EAS. Kosovo has become a sort of international semi-client state, for want of a better word. Perhaps I should not use the word “state”, although we are a recognising power. Obviously, EULEX has tried very hard as a kind of civilian CSDP mission, on the rule of law. That is very important, as we know. There have been a number of arrests and releases of people for organised crime, war crimes and so on. It is a very complex situation.

Earl of Sandwich: A lot of money wasted.

Dr Charles Tannock: A lot of money is being wasted. I have written on this. I cannot speak for my party; I am speaking entirely personally. I have written an article on the Kosovo question. Personally—and this is my personal view, not the view of my party or my group—I think that ultimately partition will have to be looked at again. That is my personal view. I remain to be convinced. If you want to settle with Kosovo, you need to bring Serbia on board and bring the five non-recognisers in the EU, China and Russia in the Security Council, and half the UN. Unless you can do that, Kosovo is in a limbo situation; it is like a Taiwan situation, and it will not move on without some creative thinking. I do not see any creative thinking, unless you think of some form of what I call land-for-peace swaps. I do not mean literally giving a whole lot of territory back to Serbia—Serbia would have to concede a bit of its own territory in exchange—but redrawing the boundaries to make it consistent with Serbia’s objectives, at least in part. If we meet them halfway, that could be a solution. That is 72

Andrew Duff MEP – Oral evidence (QQ 84-102) my personal view. On the whole, Kosovo will remain a very expensive operation, and not just from the EULEX point of view. The UN is in there, the OSCE is in there, the Americans—everybody is in there.

Andrew Duff: I travelled quite recently from Belgrade to Pristina through Mitrovica. At the crossing and elsewhere I posed the question of what would happen if we pulled out of EULEX. KFOR and the Serbian and Kosovar Government all answered that it would be that it would be a catastrophe. There will certainly be an outbreak of violence if the West recedes. In what form we should be there is a different question, and it is not easy to answer. EULEX is not working, partly because it is not of a sufficient size to do its job. In fact, it has been depleted. But member states are not committing the kind of personnel that is required for this very difficult job. So there are no easy answers, but I think that the new Government in Belgrade have a greater chance of making progress on Kosovo than their predecessor. As we know, it is a more nationalistic Administration, but it is also quite clear that they have their objectives firmly set on accession to the EU. They have no other option; there is nowhere else for them to go. We have to keep the situation fluid. If it were to become frozen, like Cyprus, our generation would be blameworthy.

Q100 The Chairman: We have got about 10 minutes. To get the maximum value out of them, perhaps I may pose two questions to you both as a double-header. The first is whether Turkey would settle for anything less than full membership without feeling humiliated or turned away. The second question concerns the Eastern Partnership. We have been touching on that from the western Balkans and obviously there will be different categories. Moldova is different from Ukraine, for example. It would be very helpful to us to get a quick appraisal from you both on those two areas.

Andrew Duff: Turkey is my special subject. I have followed the twists and turns of Turkey’s relationship with us and with the EU for 20 years or more very closely. My feeling at present is that both the ruling party, AKP, and the opposition, CHP, are not serious in their intent to join the EU. They have had a lot of chances to prove themselves to be genuinely willing to do the things that have to be done. As we know, there are a lot of challenges and they are very difficult. They concern the Kurds, Cyprus, the law and judiciary, the military, religion and the economy. For some reason which has always puzzled me, the Turkish state finds it very hard to do more than a single thing at a time. It has a project and it preoccupies itself with that, while the other things it has to do fall by the wayside. Having spoken privately to Turks of all types and party affiliations, I think that there would be tremendous relief if there could be a respectable, credible, viable alternative to full EU membership. We have to be absolutely clear that this is not the so-called privileged partnership, in Christian Democrat parlance. I did not see an awful lot that was privileged in the kind of thing that was proposed for Turkey. Being quite properly a very proud nation, Turkey is not easily going to accept a thing that will appear to be inferior, or a position in which it is patronised. But a serious category of associate membership that would upgrade its present relationship, encourage the further assimilation of the acquis and secure its foreign policy to the West to supplement the NATO relationship would be an extraordinarily attractive proposition.

Dr Charles Tannock: I defer to Andrew on Turkey. The official position of my group and party is that we are in favour of Turkey’s membership of the European Union. I first heard the term “associate membership” in connection with Turkey a few years ago as an alternative category to “privileged partnership”. It came from German colleagues in the European Parliament. Andrew is far better informed on whether Ankara would accept such 73

Andrew Duff MEP – Oral evidence (QQ 84-102) status. As an observer on the foreign policy front, I will say that Turkey is engaged in some quite different strands of thinking. Until recently it was getting closer to Iran, but the whole Syria thing rather upset that and it decided that its priority was to back the opposition to the Damascus regime, which cut it off from Iran again. But it was moving more in the direction of Iran and radically away from its ally, Israel. It is in confrontation mode with Cyprus, particularly with the discovery of gas in the eastern Mediterranean. That is a strategic development that is causing a reorientation of foreign policy in that part of the world, with Greece and Cyprus getting close to Israel, and Israel divorcing itself from Turkey. There are alls sorts of shifts going on there. As one Israeli MP put it to me, the Turkish Government is catching up with the Turkish street on many issues to do with the Middle East. That is a bit of a wake-up call. I think that Turkey is looking at foreign policy from a different, more regional perspective rather than heading in a US/European direction. It is heading more towards its immediate neighbourhood, central Asia and the Islamic world. That was predictable if you had read the writings of the AK Party a few years ago—or at least of strands within it, because I am sure that there are divisions. There are divisions in Turkey at the highest level. I was very interested to hear what Andrew said about associate membership being a possible way of accommodating its position. If that is something that it would accept, I would certainly lobby my party to look favourably on it.

Q101 The Chairman: What about Ukraine?

Dr Charles Tannock: I am a specialist on the Eastern Partnership. I am on the Euronest Assembly and have been involved with these countries for many years. I am afraid that, with all that has being going on to the south with the Arab spring, the eurozone crisis within the Union and problems in the Mediterranean and so on, the Eastern Partnership has been rather forgotten about. We then had the election results and all the problems in Ukraine of the arrest of the opposition leaders and so on. We had some hope that Belarus might have accommodated and joined the eastern dimension of the European Parliamentary Assembly. It never did; it would not concede. The elections in Georgia are another issue now, with Georgian Dream winning. Lots of things are going on in these countries. They are not necessarily heading in the same direction as they were a few years ago, when they obviously aspired to NATO and the European Union. On paper they still do, but more problems have arisen in the past year. The situation is much more complex. Tiny Moldova is probably the beacon of hope in that respect. In principle I have always been in favour, as with the western Balkans, of offering EU candidature to all countries—certainly to Belarus, Ukraine and Moldova—if they have a democratic, stable Government. But that is a very big “if” and it has not happened yet.

Q102 Baroness Eccles of Moulton: Do you draw the line before you get to Armenia and Azerbaijan?

Dr Charles Tannock: Personally I do. I am not sure whether that is the position of my party. I think that EU accession for the southern Caucasus is more complicated, for geographical reasons if for no others. At this stage I would focus on the other three. I would look sympathetically on Georgia in future, but we are talking about a very long way away. I really do not think that there is much prospect of it happening at this stage. There was some hope at one stage, five or six years ago, of Ukraine being given that kind of EU candidate signal. Unfortunately we did not give it the signal and in many ways that resulted in it moving in a different direction. None of those countries is even a potential candidate. That is still over the horizon. 74

Andrew Duff MEP – Oral evidence (QQ 84-102)

The Chairman: Gentlemen, we need to move on, but not without expressing our sincere thanks to you. You have been very frank, nuanced and occasionally unpredictable, which has been refreshing, and you have given us a huge amount to think about. We are grateful for that.

Andrew Duff: Thank you very much indeed. It is very nice to be asked.

Written evidence from the Embassy of the Republic of Croatia

Question 3. For new Member States, what is the economic and social impact of EU membership on a) the country, b) regional areas, and c) its citizens? You may wish to comment on the following:

i. Trade integration and the flow of foreign direct investment; ii. The benefits or pitfalls for small and medium-sized enterprises (SMEs); iii. The benefits for consumers; iv. Accession’s impact on wages and living standards in ‘new’ Member States; v. Macro-economic discipline; and vi. Labour migration to and from new Member States.

1. Croatia expects to benefit economically from EU accession. Joining the Single market comprising approximately 500 million consumers will widen the area of economic cooperation and the scope of trade integration. Moreover, the increasing economic integration and the expected inclusion in the Single market have already, through accession negotiations and the resulting fulfillment of numerous obligations, significantly impacted and prompted systemic institutional reforms necessary for the creation of a stable domestic business and economic environment.

2. The EU has, as have some other large world economies, suffered from the effects of the economic and financial crisis. Some of the progress will hence by default be halted on its account, but the indicators show that it will still be more beneficial for a country like Croatia to be a part of the EU, rather than facing the challenges alone. The ESM and fiscal consolidation have ensured a robust EU response to the crisis and Croatia remains confident that its entry will come at a time of renewed strength.

3. It is expected that the freer movement of goods, services and capital will increase the overall level of economic activity and thus also positively influence employment rates. The implementation of institutional reforms undertaken for the sake of harmonisation with European standards is expected to increase economic growth rates. For example, the average additional growth rates in new member states amounted to 1.75% from 2000-2008. Also, the average GDP per capita in new member states grew from 40% of old member's average in 1999 to 52% in 2008, thus clearly showing a reduction in income disparity and improvement in standard of living. As far as price indices are concerned, EU accession is not expected to impact prices in any significant way – the estimated rise amounts to 1.4% per year. The reforms and the resulting stable and viable business enviroment are also expected to positively impact on the growth of foreign investment. The labour migration to and from other member states is expected to be relatively small in scale.

4. Croatia is aware that the competitiveness of its economy will depend on the fostering of entrepreneurial spirit, investment in technology and education, the ability to adjust to new business practices, overall efficiency and successful marketing. The country will thus continue to implement the necessary reforms, especially in order to increase efficiency of public services, further improve the judiciary, strengthen the rule of law and nurture a stimulating business environment and competitiveness. Croatia firmly believes that the Single market provides countries, especially smaller ones such as itself, with significant 76

Written evidence from the Embassy of the Republic of Croatia

opportunities and remains the best available instrument for fostering economic growth and stability.

5. The EU has traditionally been Croatia's most significant trading partner (the 2010 figures show that 61,1% of Croatia's total exports went to the EU, while 60,2% of total imports were from EU), which means that the economic forecasts for the EU are of utmost significance for Croatia. The current discussions inside the EU about the future course of the European project, particularly in the areas of finance and economics, will determine Croatia's development as well. Although the recovery of EU member states depends primarily on national fiscal and economic policies, it can be argued that EU membership has helped the new member states to experience quicker recoveries than non-EU members who faced similar problems.

6. Some difficulties are expected in the shape of financial expenses dictated by regulatory and institutional adjustments in certain areas, such as environment, higher education, state aids. For example, environmental protection and the achievement of necessary standards will require large-scale infrastructural investment. However, the costs of this nature are not to be considered as negative aspects of EU accession – they are investments which will ensure a safer and more stable living and business environments, creating the conditions for future development. Other challenges are expected in the sectors of economic activity which are less well prepared for the competitive nature of the European common market. Therefore, areas such as fisheries and agriculture will likely experience short-term costs that will be higher than benefits in the immediate post-accession period. However, the financial and other resources that will be available to these sectors after accession will help with achieving the necessary restructuring and better preparedness of economic subjects for withstanding the EU market forces and generating competitiveness.

7. The direct financial impact thus far indicates that Croatia would be a net recipient from the EU budget (the total payment appropriations for the second half of 2013, following Croatia's expected accession date of 1 July,2013 amount to €374,3 million, while Croatia's contribution should be €267,7 million). Of course, the dynamics of payments to Croatia from the EU budget and various structural funds also depends on the absorption capacity the country will demonstrate. This is an issue on which Croatia has made significant improvements through the use of pre-accession funds.

8. Concerning the possibility of joining the Eurozone, it is not yet possible to say when this may happen. Croatia first needs to, upon entering the EU, demonstrate its readiness by fulfilling the Maastricht criteria.

Question 5. Is Croatia satisfied with their accession process and the arrangements in place for them to join the Union?

1. Croatia has undergone a lengthy but thorough, and above all useful, process of accession. It began with the conclusion of the Stabilisation and Association Agreement with the EU in 2001, continued with the application for EU membership in February 2003 and the subsequent granting of candidate status in 2004. The accession negotiations were officially launched on 3 October 2005 and concluded on 30 June 2011. Croatia's Accession Treaty was signed on 9 December 2011 and ratified by the Croatian 77

Written evidence from the Embassy of the Republic of Croatia

parliament on 9 March 2011. Croatia is expected to become the 28th EU member state following the completion of the rafitication process in all MS (15 have currently done so, while additional 4 have completed parliamentary ratification and are due to deposit relevant legal instruments, bringing the effective total of MS ratifications to 19).

2. Croatia's negotiations were one of the longest in the Union's history (having lasted for nearly 6 years). But instead of looking at the duration of the process, Croatia views this as a useful tool for ensuring that systemic reforms were undertaken in all necessary areas. It was always the goal to conduct the necessary changes because of the well-being of Croatia's own citizens, not simply as a dictate from Brussels. EU accession and negotiations also provided a strong unifying platform across the political aisle, with the goal of EU membership having enjoyed the support of all major political parties and therefore having contributed to the maturing of Croatia's political system. Through this process, the europeanisation effect on political parties became clearly visible, by forcing all of those parties wanting to retain a role in the country's political life (including the right-wing ones) to support Croatia's EU path.

3. The process had taken longer than in previous enlargement waves partially because of the lessons learned on the EU side as to how detailed the examination of readiness, legal harmonisation and implementation of obligations needed to be in order for a new acceeding state to be considered as fully prepared. Croatia's negotiations were thus not only one of the lengthiest ones, but also had a significantly wider scope, as well as a much more detailed methodology. Croatia was thus set (and has fulfilled) a total of 127 benchmarks for opening and closing the negotiating chapters, as well as certain sub- benchmarks. The total number of benchmarks thus fulfilled is more than 400. What these numbers mean in practice is a series of adaptations, reforms and (legal and institutional) activities and changes undertaken. All of these required tangible, specific and consistent results and deliverables in the process of harmonisation with the acquis communautaire and its implementation. During negotiations Croatia has therefore adopted 370 laws and 1133 by-laws to align its legal system with that of the EU. Croatia has also amended the Constitution (in June 2010) for the same reason.

4. By having undergone a robust, detailed and strictly monitored process, Croatia has ensured that its political, legal and economic systems are fully in line with what is expected of an EU member state. The fulfillment of all the necessary obligations and reforms has made Croatia a viable and trustworthy partner in the EU family, through the achievement of irreversible progress in transforming the country into a stable democracy characterised by rule of law and encompassing a fully functioning market economy.

5. The ongoing pre-accession monitoring undertaken by the EU institutions and MS guarantees that the remaining tasks will be accomplished by the date of accession. Croatia has welcomed such monitoring as a valuable instrument which will help to eliminate any need for post-accession monitoring mechanisms, thus enabling Croatia to be on an equal footing with the other member states.

6. Croatia is satisfied with the preparatory participation in EU business through its status as an observant state and participant in the Information and Consultation Procedure. These mechanisms are of crucial importance for preparing Croatia's institutions and officials with regards to EU institutions, allowing them to familiarise themselves with the working

Written evidence from the Embassy of the Republic of Croatia

practices of EU institutions and participate in the decision-making process, thus enabling Croatia to efficiently function as a new member state from the very date of its accession.

7. Croatian representatives are therefore already taking part in Council meetings at all levels (with the exception of those dealing with candidates and potential candidates under SAAs, the EEA Agreement and in the context of the enlargement process). Conversely, twelve Croatian MEPs already benefit from observer status in the European Parliament. Participation in EU institutions and bodies has manifold benefits, with the main ones being: learning about EU work practices/establishing important contacts; being treated as equal partners; ability to provide inputs in areas of particular interest for Croatia.

Question 9. What might be the broader geopolitical impact of further enlargement, or of not admitting additional states who wish to join? How might the European neighbourhood be affected by the EU’s decisions on enlargement?

1. From Croatia's point of view, the policy of enlargement remains one of the best tools to widen the area of stability, security and prosperity in Europe. The historical track record of enlargement strongly supports this. It is our belief that the inclusion of additional states, based on clear and consistent criteria, can only be beneficial for the EU as a whole, as well as its individual member states. The notion that democracies do not fight each other remains increasingly relevant and has been proven by the successful expansion of european integration.

2. Croatia's own neighbourhood is certainly an area which has already benefitted from the effects of european integration, in political, legal and economic sense. Croatia strongly supports the expansion of the EU to all the countries in the region of South-East Europe, seeing it as an issue of strategic importance. We will continue to provide advice and assistance on these countries' path to closer EU integration. Croatia is already working closely with these countries on expert and technical levels, sharing its experiences from the accession and negotiation processes. Such support is proving invaluable, since Croatia's experience was markedly different than that of the countries in previous enlargement waves and will form the blueprint for the future. In this way, regional cooperation is also being strengthened, providing an additional reason for nurturing enlargement as a stabilising tool.

Question 11. Is ‘enlargement fatigue’ setting in for a) the Union as a whole, b) individual Member States, or c) candidate countries? How can such ‘fatigue’ be gauged, and should the EU be working to combat it?

1. From the perspective of Croatia as an acceeding state, due to become an EU member state on 1 July 2012, it can be said that enlargement fatigue is not present within the country. This can be supported by the fact that 66% of voters voted in favour of accession at the national referendum held in January 2012 (a constitutional obligation forming part of the accession process). Croatia for the most part still believes that enlargement is a positive policy of the EU, one that enables the spreading of security and prosperity to the potentially less stable parts of the continent and provides all with a

Written evidence from the Embassy of the Republic of Croatia

common stake in a stable (political and economic) future. Integration is thus not to be viewed as being achieved for its own sake, but as an instrument of positive change.

2. Of course, it is also a fact that public opinion regarding the EU and accession sometimes oscillates and responds to various outside factors. The falling percentage of support in comparison to the very beginning of negotiations was expected, as was the case in all other countries who had entered the EU before Croatia. The more citizens learn about the EU and are faced with the complexities of its inner workings, the more the numbers fall. It is important to note that, in Croatia's case, it was also clear that the steepest dips in support were directly linked to situations when Croatia's negotiating process was being used by individual member states to resolve bilateral issues at the expense of progress in EU accession.However, all this being said, the general trend is still one of optimism and overall support, because the citizens recognise the reforms being undertaken as a guarantee of a more ordered society, stable political system and resilient economy.

3. As for the enlargement fatigue being felt inside the EU and its current member states, it is undeniable that it is indeed visible in some. Differences persist among MS with regard to attitudes towards enlargement (some are more supportive of it than others, on principle). Additionally, the dominant topics in the Union today pertain more to the financial crisis and ways of dealing with it (and putting into place safeguards for the future, thus necessitating a disussion of the desired path to be taken) than enlargement as such. The discourse inside the EU has shifted somewhat away from enlargement and more towards new systemic issues such as deeper fiscal integration and a possible need for a deeper political union in order to deal with new financial and economic challenges.

4. However, it seems unlikely that enlargement will in any major way be scrapped as an important EU policy. It may be partially taking a back seat in the light of the financial and economic crisis, and it is probably also affected by the perceived slowness on the part of current and impending candidate countries (coming after Croatia) to manifest imminent readiness for membership. Enlargement fatigue is thus conditioned both by the existence of more pressing problems concerning the functioning and institutional set-up of the EU, as well as by objective circumstances. Nonetheless, the EU is unlikely to abandon enlargement as a useful instrument for spreading and entrenching a common set of values, rule of law, economic and political stability across the European continent.

Question 14. Have the lessons from previous enlargement rounds been learnt to improve the processes of enlargement?

1. Croatia is very well placed to confirm that lessons from previous rounds of enlargement have deeply impacted all subsequent rounds. As the large 2004-2007 wave has strongly influenced the changes introduced as part of Croatia's accession process, so will the lessons learned from Croatia's negotiations be applied to the current and future candidate countries for EU membership. 2. Croatia's own negotiating process has been very different from what previous candidate countries have experienced. The topical division among chapters was more detailed, as was the scope of each chapter. In order to ensure a more closer monitoring of obligations' fulfillment, as well as to ensure that their implementation begins earlier on in the process, the system of benchmarks was instituted. This ensured tight controls by the 80

Written evidence from the Embassy of the Republic of Croatia

European Commission and the member states over deciding when Croatia was ready to open and close chapters. Certain strategies and documents, other than the newly adopted laws, which Croatia had to produce were required to be much more detailed and were judged according to more detailed criteria than before. 3. Generally speaking, the scope and methodology of negotiations had undergone such significant changes following the 2004-2007 wave of enlargement that both Croatia and the European Commission had to learn by doing in many ways. It also meant that Croatia could not fully benefit from relying on experiences and advice of countries who had negotiated with the EU before it. 4. However, the fact that Croatia has taken the more difficult path now means that its experiences will be highly relevant for any current and future candidate/acceeding state. Croatia thus finds itself in the unique position of being able to share its expertise with these countries and is actively doing so. For example, in addition to daily cooperation on expert levels among civil servants, Croatia has provided its neighbours with the full translation of the acquis communautaire (around 180 000 pages of translated materials, worth approx. € 6 million, which Croatia financed entirely from its own national budget). 5. Not only does Croatia believe this is its obligation in order to help its neighbours and promote regional co-operation, but it also considers this a matter of national interest. By sharing its hard-won expertise, Croatia is helping to strengthen the stability and prosperity of the region and thus creating a more desirable and secure environment for itself. Moreover, given its own experiences in the accession process during which it was faced with the attempts by some member states to introduce bilateral issues as part of accession negotiations and thus unjustifiably stall EU accession, Croatia is determined to avoid such pitfalls. Croatia has thus adopted (in October 2011) a parliamentary Declaration on the promotion of european values in South-East Europe. The document reiterates Croatia's firm belief that open bilateral issues should not hinder the progress in EU accession and confirms that it will continue providing its support and assistance to its neighbours in the region on their EU paths.

12 November, 2012

Written evidence from the Embassy of the Republic of Serbia

“Enlargement of the European Union”

Resume

The EU is facing numerous challenges in this decade, and its development can be described as decisive for the future.

The assumption is that the current EU institutional crisis can mark a long-term economic and political stagnation, both from the perspective of the EU member states and its institutions, as well as the rest of Europe i.e., the countries of the region (the so-called Western Balkan countries).

It is also assessed that the Western Balkan region has been affected much worse than expected. At the same time, keeping the course of the European enlargement policy, in such complex times that we live in, as well as in the future, implies numerous challenges for countries of the Western Balkans. For some time now it has been openly spoken of the EU "enlargement fatigue", and this subsequently stresses the need for EU institutional and identity consolidation after the last two enlargement processes.

Economic realism is certainly in favor of EU enlargement, but obviously it is necessary to ensure timely harmonization of strategic targets of some of the individual member states, as well as the capacity of the EU for new enlargement. In any event, the EU, in addition to overcoming its problems, faces a period when it will have to demonstrate and implement more coherent common policies and co-ordinate most important priorities, at least for a new five-year mandate of the European Commission (2009-2014).

Although there are numerous possible outcomes for the EU, the general trends can be sustained and on the basis of these, the problems with which we are faced nowadays can be defined. The focus of this paper is to contribute some answers to the question in which direction could the abovementioned processes go, in order to ease and overcome the financial crisis and growing Euro-scepticism, as well as how the ongoing challenges are reflected on the EU's enlargement policy,

Key words: crisis, consolidation of the EU institutions, vision, Enlargement challenges, Balkans region, the Republic of Serbia

Principles behind the enlargement

1. Do Articles 2 and 49 of the Treaty of the EU provide the right principles for any further enlargement of the EU? 2. The Copenhagen criteria expand upon these principles to provide a more detailed framework for eligibility to join the EU. Do these criteria fully encapsulate the principles behind the EU enlargement?

Written evidence from the Embassy of the Republic of Serbia

The European Union's enlargement policy serves the strategic interests of the EU in terms of stability and peace, security and conflict prevention, and as the basic postulate of creating the EU in general. As it is known, the EU enlargement policy is one of the "most powerful" means of the EU, based on the principles of strengthening commitments, fair and strict conditionality and establishing better communication with the public, combined with the ability of the EU to integrate new members from the Western Balkans5.

However, the period of the nineties, during the negotiation process with the candidate countries and the accession of 12 new member states, was probably a moment of great enthusiasm for EU integration. Nowadays, the situation is considerably different. We are faced with those advocating the slowing down of the enlargement process and insisting on stricter conditions for EU membership. In our opinion, this approach may impede the integration processes and regional stability. One of the reasons, by far is the challenge posed by the global economic crisis, the scale and consequences of which are yet to be seen. The other one is that strict conditioning, on the basis of an individual fulfilling of the Copenhagen Treaty criteria and other requirements defined by the EU, may have counter effects and long-term implications on the citizens of the Western Balkans.

Such a challenge requires European and regional response. On the basis of common values and common interests, the EU and its neighbours can be more efficient in coping with current challenges. The Republic of Serbia is fully committed to the European integration processes, based on the fair partnership with the EU, as the best way of achieving security, prosperity and lasting peace in the region. We are of the view that acceleration of European integration and regional economic cooperation are the key mechanisms for the successful achievement of the political and economic priorities, and the only way to contribute to more prosperity and growth opportunities, as well as to increase connectivity of the transport and energy routes through joint efforts. The opening of negotiations on the EU membership process will intensify in the best way the cooperation and interconnections between Western Balkans region and EU member states and will have a strong impetus for overall growth, inflows of foreign direct investments, regulation of economic system and continuation of reforms and development of the region as a whole.

The impact of EU membership on new Member states

3. For new Member states, what are the economic and social implications of EU membership for a) Member states, b) regional areas, and c) citizens? Comments about trade integration and the flow of foreign direct investments

It is unlikely that the experience of the Central European countries can be replicated within the countries of the Western Balkans, when the process of their integration into the EU produced a large wave of investments. Although, there is also an obvious

5 Besides the well known “Copenhagen” criteria which were applied to the countries that are joining the process of integration with the EU (political, economic and acquis communautaire), a fourth criteria was introduced (Article No. 49) – necessary assessment of the EU's ability to accept new members, representing an external requirement for the countries in the process of pre-accession, depending on the conditions, position and the mood of the European Union, as a whole, at the time. 83

Written evidence from the Embassy of the Republic of Serbia

connection, looking at Western Balkans region, between strengthening relations with the EU, the European integration processes respectively, and the influx of investments. That is influenced by the fact that integration of a country into the EU, means adjusting its economy and society according to the regulations of the EU. Through harmonization of the laws and negotiations about different chapters of the EU acquis communautaire, there is a continuous improvement of the business environment and legal certainty, which then influences the increase of trust of foreign investors regarding the investments in a specific country.

In this respect, the European Commission (on 10 October 2012), has published the regular annual report on the progress of the candidate countries for EU membership, whereby pointing out that Serbia had achieved progress in 26 out of 33 chapters in the field of harmonizing its legal system with that of the EU.

Even though the obligation to harmonise the legislation of Republic of Serbia with the acquis communautaire was assumed only by the signature of SAA in 2008, the Government had initiated organised harmonisation by its annual action plans since 2003, which were transformed into the National Programme for Integration. Within the process of preparations for the implementation of the SAA, gaining of candidate status and the preparations for negotiations on EU membership, Serbia adopted its National Programme for Integration into the EU (NPI) in 2008 − a programme of activities of the Government of Serbia for 2012 that was designated as the year of Serbia's readiness to start the EU accession negotiations. The implementation of the NPI insofar observing legislation planned for adoption in the period from July 2008 to 30 September 2012, the NPI was fulfilled 80% (884/1103). Of the 225 planned laws, the National Assembly adopted 195 laws or 87%.

9. What might be the broader geopolitical impact of further enlargement, or of not admitting additional states who wish to join? How might the European neighbourhood be affected by the EU’s decision on enlargement?

Global action and internal challenges inside the EU itself, and EU member states, will be a priority for a long time to come, aiming to pre-set economic recovery of the Union. Before the EU lies a period in which it will have to demonstrate and enforce a more coherent common policy, and, at the same time, jointly determine and coordinate the most important priorities. Economic “realism”, of course, supports EU enlargement policy, but it is obvious that it is also necessary to time-align achieving the strategic goals of individual member states and the strategic goals of the EU, in order to enable new capacity expansion, while the priority of the citizens, in the long term, is going to be dealing with unemployment and maintaining their standard of living. In any case, in the next five to ten years, depending on the conjectures in the EU aimed at overcoming the economic and social situation, and in an atmosphere of a certain saturation with the EU's enlargement, the Balkans will be the focus of EU efforts to enhance the relations in the region, settle disputes over the borders and to pacify the relations between the states of concern to the extent that is acceptable by the EU.

The consequences of a possible delay of EU enlargement would be significant both for the Balkan countries and the EU. It is certain that the economic loss of the Union would be negligible, due to the fact that partial market integration with the countries of the Western Balkans already exists, apart from membership. The risks of the regional 84

Written evidence from the Embassy of the Republic of Serbia

expansion delay would be high. The small Balkan countries with limited markets and poorly organized economies, low living standards, and modest relations with the “newly emerging economies from Asia and Latin America –in the near future, do not provide sufficient assurance that they could maintain economic stability, their own, or regional. All of this is the reason for the EU to deeply consider whether these countries can be admitted to the membership as a group.

Leaving Western Balkans countries outside the EU for any unpredictable reason would be more risky and more expensive than its entering the Union. As a proof of that, the European Commission presented (on 10th October 2012) its annual Report - Strategy and Main Enlargement Challenges document 2012-2013, making the preliminary estimates that Serbia’s accession to the EU would have a limited overall impact on EU policies and would not affect the Union’s capacity to maintain and deepen its own development.

The appetite and capacity for further enlargement

10. What impact should the ongoing economic and financial crisis, particularly in the euro area, have on further enlargement?

Economic stagnation and adverse financial effects on the EU level, particularly due to poor economic parameters in a certain number of member states, can lead to a spiral of long-term public debt, budget deficit, a general softening of the overall performance of the EU, being dependent on programs to overcome the financial crisis. Future growth of unemployment looks high (with a tendency to increase further), showing that possibilities for job offers and preservation of the industrial potential will pose a challenge even to the economically strongest countries in the EU.

It is also estimated that the Western Balkans region has been affected by the economic and financial crisis far worse than expected. The Western Balkans has been for a long time faced with a number of economic and political issues that might affect security, stability and economic prosperity in the region. For most of the Western Balkans, the main priority is to perform much better economic environment, as well as to manage state administration on local and regional levels. Unemployment still remains high, and further reforms are needed in the areas of employment and social policy. A significant increase in the current account deficit, recorded throughout the region, increases the risk of future macro-economic problems and challenges multiplying under the influence of the financial crisis. Plus, there has been a decrease in the influx of foreign direct investment in Serbia in the last two (2) years owing to the economic crisis6.

So, it is quite so possible that political and economic situation within the Eurozone, could have the effects or repercussions on the EU enlargement policy, having in mind that the EU is the main trading partner of the Republic of Serbia (out of the total trade of Serbia with the world, 56% of trading is performed with the ЕU, 17% with the CEFTA Member States, 10% with Russia, and 4% with China). Owing to signing of CEFTA 2006,

6 Since 2001and onwards 17 billion euros of foreign direct investments arrived in Serbia. Out of the said amount, up to 60% of investments have come from the EU countries, further confirming the high degree of economic integration between Serbia and the EU.

Written evidence from the Embassy of the Republic of Serbia

Serbia has provided the access to the regional market. The EU and CEFTA present the most important markets for the goods originating from Serbia.

The other problem, determined by the financial and economic crisis, could be correlated with the EU budget challenges and costs level of enlargement/expansion in the future, i.e. projection of the next EU budget period, from 2014 to 2019. That period could be characterized by the changes, turbulence and possible adjustment of the financial system to new conditions. The focus is on the financial resources which the EU budget can handle, with direct implications on the future course of the expansion, in which the majority of the EU members could pursue their own interests.

In this period of economic uncertainty, one thing is sure – countries of the Western Balkans have witnessed progress in regional processes, consolidation of stability and cooperation in our region, whereas the most of the countries have achieved advances towards EU membership. This trend should be continued until all the countries of the region have joined the EU, in spite of all the economic and financial difficulties currently preoccupying the EU, and the European perspective of the Western Balkan countries’ accession should not be neglected or simply put aside. EU enlargement policy’s transformation power accompanied by open door approach should provide an additional impetus for serious structural reforms that need to be undertaken and provide for long term political, economic and social stability in Serbia and the rest of the Western Balkans.

11. Is “enlargement fatigue” setting in for a) the Union as a whole, b) individual Member states, or c) candidate countries? How can such fatigue be gauged, and should the EU be working to combat it?

For a long time, there was talk of "enlargement fatigue", which emphasized the necessity of consolidation of both the institutions and the identity of the EU after the last two largest enlargement "waves" (ten member countries in 2004 and 2007 when Romania and Bulgaria were officially admitted). To add to this “fatigue”, the growing bilateral territorial or minority rights disputes within the EU also posed a threat to the entire further course of the European integration process.

Actually, the entire political-economic situation with EU enlargement policy was disrupted by more then tree mentioned reasons: EU as a whole, the individual interests of the EU member states, and situation in EU candidate countries. Of equal importance is to underlying the new coming factors that could also have a far-reaching impact to the problem – citizens are feeling more and more distant from the process and the "EU project" itself. General dissatisfaction with the economic situation of citizens within the member states, massive strikes of trade unions and students, drastic budget cuts, curtailment of benefits and socio-economic allowances, have further burdened the functioning of the EU. The results of the elections of the European Parliament (in June 2009) showed in the best way that the proponents of Europe (Euro enthusiasts) are facing major challenges, which means fighting against the apathy or negative opinions about the EU, and EU enlargement as well. Also, the ratification process during the admission of new members in national parliaments of EU member states, which will be a large undertaking, and to ensure its success it will be necessary to significantly change the

Written evidence from the Embassy of the Republic of Serbia

voters' opinion and to create an environment that is more favourable than the one existing today.

A decline in the voters’ interest to vote is evident, primarily due to the growing economic crisis, an uncertain future, lack of understanding of the way the EU institutions are functioning and the impact on the nation's problems, partial political saturation, and the numerous affairs which have involved some political figures at different levels. In that regard, a sharp decline in the support for future enlargements has been noticed, among the EU member states and candidate countries (Western Balkan) as well.

So, it is therefore in our interest to find responses to the questions as to how, and in which direction could those processes go, in order to overcome the financial crisis and a growing Euro-scepticism over EU's enlargement policy. At the time of global changes in the 21st century, it is more important than ever to develop a positive vision of the EU's future. That implies defending the achievements of the past, and, at the same time, developing new European interests and responsibilities for the Enlargement policy. The issue of thinking over further expansion of the EU boundaries, the level of integration, and deepening of collaboration between the countries, must have been in the focus of EU's development for years, with all the risks and benefits of complex socio- political implications on EU enlargement.

The EU capacity to absorb new states should remain high. Realistic, sound and accountable communication activities towards EU member states citizens should try to explain all the benefits of common market as well as risks of disintegration and its consequences on economic and political sustainability of individual member states in ever more globalized and competitive world.

14. Have the lessons from previous enlargement rounds been learnt to improve the process of enlargement?

In order to prepare and adjust for EU membership, the Republic of Serbia, as an official candidate state for EU membership, acknowledges the lessons from the previous enlargement rounds (accession of 12 new member states). There are positive examples of the countries which managed to use the EU accession as a transformation tool in order to increase their own competitiveness and improve standard of living for their citizens by providing them with security based on strict respect for rule of law, better conditions for economic development and adoption of EU acquis and standards. However, there are other not so positive examples as well. Special attention, among other, was placed to the case of Bulgaria and Romania, having in mind that there is still a certain amount of caution inside the EU, as regards the possibility of repeating the case of Romania and Bulgaria, which, according to the prevailing opinion in the European circles, joined the EU without meeting all the necessary political and economic criteria. Besides, it is well known that the "slow down" or "conditioning" the process of European integration had occurred after each "wave" of enlargement. Plus, the reasons for the occasional restraining of some EU member states related to the speed of further enlargement and broadening of the region, are not limited only to the so-called Western Balkan countries, but also to Turkey.

Having that in mind, the Republic of Serbia has continued to work hard in an array of reform processes, placing special emphasis on the adoption of laws and by-laws, 87

Written evidence from the Embassy of the Republic of Serbia

as well as on the implementation of the already adopted norms and rules. The government of Serbia is fully prepared for the decision of the EU to open the negotiations for EU membership, and to accelerate European integration process, having in mind the capacity and capabilities of the state administration. Fight against organized crime and corruption, introducing the rule of law, protection of human and minority rights, regionalism and decentralization, dedication to further enhancement of market economy, free trade and business environment as within the EU single market, cooperation with the civil society were, and will continue to be, the focus of our endeavours. On the part of the EU, Serbian results on the reform agenda and the acceptance of the acquis of the Union, are clearly recognised. And, finally, it is not solely because these are entailed by the EU reform agenda, but rather due to the awareness of our society that these changes and improvements are necessary to move forward.

14 November 2012

Written evidence from the Embassy of the Republic of Turkey

The Desirability/Inevitability of Further Enlargement

• Transformative Power of Enlargement Long considered as the “most successful EU foreign policy,” enlargement is one of the most important tools of the European Union to bring peace and stability to the Continent, helping to spread the values and principles of democracy, human rights and the rule of law. Most recently, it has helped the EU earn the Nobel Peace Prize.

“Enlargement” is a very particular policy; while through “enlargement” a third country slowly transforms into a “member”, the EU itself also transforms by adding to its members, and benefiting from the total of its sum. This reciprocal transformation process is at the root of mutual empowerment, for the EU and for the new members alike.

In the case of Turkey, both Turkey and the Commission agree that the accession process has contributed to the overall improvement of democratic standards as well as to the present strength of the Turkish economy, providing, as in the case of other candidates, the momentum for and expediting political and economic reforms. The perspective of membership, while providing an added incentive to undertake comprehensive reforms in Turkey, has added to the country’s standing among international economic actors as a viable partner for trade and investments. The political pull-over effect of Turkey’s candidacy in its region is also a point that should not be overlooked.

• Enlargement, sine qua non for the Self-confidence of the Union The raison d’etre of the Union as a peace project through an economic union has served the needs of its founding members as a most viable remedy to the ills of the Post-World War II era. Now, more is needed. Enlargement is a way to further strengthen the Union.

It is possible to argue that following the Union’s enlargement to several central and eastern European countries under extraordinary political conditions after the end of the Cold War, recognized as a “political necessity and historic opportunity” at the 1995 Madrid European Council, a growing general scepticism about further expansion has slowly crept into the political and social fabric of the EU. While the reasons for and the degree of this scepticism vary from country to country and may depend on the policies of particular Government in power in a given EU member, the current economic crisis has fuelled this negative sentiment. Despite the increasing populist tendencies to stem further enlargement once Croatia joins in 2013, the official EU position favours continued enlargement.

In the words of the Commission7: “At a time when the EU faces major challenges and significant global uncertainty and gains new momentum for economic, financial and political integration, enlargement policy continues to contribute to peace, security and prosperity on our

7 Communication from the Commission to the European Parliament and the Council Enlargement Strategy and Main Challenges 2012-2013 (10.10.2012) 89

Written evidence from the Embassy of the Republic of Turkey

continent…At the same time, enlargement reinforces the Union’s political and economic strengths. By exercising leadership through its enlargement policy, the EU can reap the benefits of a stronger and more united continent, also demonstrating its continued capacity as a global actor.”

The EU, in order to have a decisive global reach must be well-equipped on all levels: political, economic, social, cultural resources will all be important determinants in an increasingly interdependent web of international relations.

While all present candidates will make certain contributions to one or more of these areas, Turkey is the one candidate able to bring considerable added-value to the Union on all these accounts. Turkey plays a key role in the achievement of the EU’s goal of a more powerful, secure and stable future.

Consider the following: o Turkey enjoys a unique strategic position in its region for geographical, cultural and historical reasons. It is an active player and a credible mediator/facilitator in critical areas such as the Middle East, South Caucasus, Central Asia, the Black sea basin, Mediterranean and the Balkans. Turkey’s EU accession will strengthen the influence of the EU as a global actor, increase its credibility within the Muslim world by confirming that it is not an exclusive “Christian Club” but rather a union of democratic values and send a powerful message to the world that a “clash of civilizations” can be avoided. o Turkey is not where East and West are divided but where East and West come together. Thus, Turkey’s accession will constitute a great opportunity for the EU to prove itself as a peace project.

The Credibility of the Accession Process:

• Sustainability The policy of enlargement must be pursued in a sustainable manner. This means that the accession process should not only be based on the obligations of the candidates in order to enter the Union, but that it must also be conducted by the EU in a principled and just way.

• Objectivity The question of “politicized” versus an “objective” accession process is today the one essential aspect of the enlargement policy’s credibility.

Celebrated as it is, enlargement policy has had its shortcomings which have put into question its credibility, even its legitimacy. Based on past experiences with some candidates’ less than desirable level of preparedness after entry, doubts about further expansion have led the Union to embark on modifications in enlargement methodology, whereby the overall end result has been an increase in the Member States’ control over the conduct of the policy. These adjustments, however, have largely translated into a means for the EU countries to slow down the pace of enlargement (like the introduction of “benchmarks” and a new emphasis on “absorption capacity”).

Written evidence from the Embassy of the Republic of Turkey

The Commission’s 2006 Enlargement Strategy brought new principles to enlargement policy, among them “rigorous and fair conditionality”. The European Council endorsing the Commission’s new approach agreed that “the enlargement strategy based on consolidation, conditionality and communication, combined with the EU”s capacity to integrate new members, forms the basis for a renewed consensus on enlargement.”

The “new consensus” on enlargement provided the EU with more opportunities to hold up, slow down or direct the negotiation process. Increased control by Member States has also led to unpredictability in the negotiations for the candidates, as the reasons for the member countries for holding up the negotiations do not always relate to lack of compliance with accession criteria by the candidates.

The use of accession negotiations, by EU member countries as leverage in bilateral disputes/issues is a way of “changing the rules of the game while playing”, with the serious end consequence of abuse of the enlargement process for domestic political gains. As such, benchmarking methodology creates an unpredictable process, which undermines the credibility of the enlargement policy and consequently its effectiveness.

The blockage by France of some 5 chapters in Turkey’s accession process – based on the argument that these chapters are too closely related to membership - is a case in point.

Again as regards the negotiations with Turkey, several screening reports have been blocked without any new criteria being suggested by some opposing member states. As a result, Turkey has remained uninformed as to what it is expected of her to open the chapters in question.

The relative vagueness with which the EU treats some key pre-accession criteria, notably in the area of political criteria, appears as another potential problem in the accession process. The economic pre-accession criteria fare much better in this respect. For instance, the definition of what constitutes a market economy is quite clear. This difference is particularly evident in the case of Turkey, where the EU is almost always more ready to give credit Turkey’s economic performance in comparison to the substantive reforms undertaken unabatedly during the past decade.

• “Absorption capacity” The idea that the Union must be able to welcome new members yet maintain the impetus of European integration is not entirely new; the idea that enlargement should not hamper the attainment of the objectives of integration has been in EU rhetoric even as far back as the first enlargement of the EEC, as a linkage that all candidates should commit to respecting the acquis. Yet today, it is more ambiguous than ever. “Absorption capacity”, also known as “integration capacity” is referred to by member states as a possible means to hold up or question the eventual accession of a candidate country, thereby creating an added environment of doubt as to the desirability of membership.

Written evidence from the Embassy of the Republic of Turkey

This leads to the artificial misconception that enlargement by definition is a process that holds back further integration. The notion of “absorption capacity” is at worst a determinant in the member states’ decision on whether or not to enlarge the Union or, at best, a safe haven for politicians to influence or direct public opinion regarding a candidate country.

“Too large” has long been a popular, populist and overused rhetoric in both political and public domain in Europe by Turkey-sceptics. After the 1993 Copenhagen European Conclusions some in the EU have attempted and to some extent, managed to codify this misguided argument within the context of “absorption capacity”, now redefined as the “integration capacity.” Such preconceived generalizations should not be allowed to discredit the true merit that is found in enlargement.

Consider the following in the case of Turkey: o Turkey’s accession will increase the size of the European internal market, as well as the competitiveness of the EU in the global market. o Currently, Turkey is the sixth largest economy in Europe and sixteenth in the world. Turkey, with industrial goods amounting to over 90% of its exports, is the seventh largest trade partner of the EU. o The Turkish economy is Europe’s fastest-growing sizable economy and will continue to be so. According to OECD forecasts, Turkey will be the second-largest economy in Europe by 2050 and it will become the “engine of growth” for the EU. o All the projections of the EUROSTAT imply that Turkey’s dynamic economic growth will continue in the short and medium term. Turkey’s economic performance, whose free market economy has proved to be well functioning, should be considered as an indicator that Turkey will take economic burden off of the EU, even sharing the potential costs of recovery that will be needed as a result of the Euro zone crisis. Strengthening of the EU through Enlargement • A Defining Enlargement Each enlargement inevitably and inexhaustibly redefines the Union in terms of international relations, security, geo-political reach, economic dynamism, issues related to justice and home affairs, last but not least, in institutional structure and budgetary demands/resources.

The need for a defining enlargement for the EU has never been more urgent than now. The accession process must go on and it must take on a new dimension with the entry of a large and strong country to address the many current challenges requiring enhanced multilateralism.

A country like Turkey with its unique geostrategic location, cultural richness and strong economic potential is a much needed asset to the Union. While it is true that the entry of Turkey into the EU will be unlike any other before it, it will also bring the most vital added-value to the Union today exactly because of this and render it a truly global actor. This membership will prove a “win-win” situation for both parties. This is evident in a variety of fields such as politics, security, foreign policy, economics and energy, not least in the social and cultural spheres.

Consider the following:

Written evidence from the Embassy of the Republic of Turkey

o Turkey represents the new centre of gravity in the geography stretching from the Balkans to North Africa. Her location at the centre of the “Eurasia” makes Turkey a key strategic ally of the EU. Her close historic ties and relations with the Balkans, the Caucasus, Central Asia, and the Middle East, provide her with the necessary prowess to contribute positively to the shaping of the EU policies towards these regions. o Turkey can provide Europe with an opportunity to strengthen its diplomatic clout. Turkey’s membership will strengthen the EU’s credibility and the legitimacy of the EU’s normative power not only in the neighbourhood but also beyond. o Turkey has significant potential to help the EU in the fight against international terrorism, illegal immigration, trafficking in drugs, arms, human beings and criminal activities of all kinds. o Over 70% of the crude oil and natural gas reserves of the world are located in the regions surrounding Turkey. The EU’s current energy dependency rate exceeds 50% and it is expected to reach 70% by 2030. As a part of big scale energy projects already operating and in progress in its region, Turkey will significantly strengthen EU’s energy security by helping to diversify its energy supplies. o Turkey is one of the richest countries of the world in renewable energy resources (5th in geothermal, 8th in hydroelectric). Turkey’s accession will considerably help the EU increase the share of renewable sources in its energy consumption. o With its active labour force of around 25 million people, Turkey is the 4th largest labour market in Europe. Possessing the youngest population in Europe, with a good level of education, while aging populations threaten the competitiveness of EU economies, Turkey will contribute to labour markets and social welfare systems in the EU members. o In recent years over 100 thousand young Turkish people returned to Turkey to take jobs.

• “Zero-prejudice” for Full Integration Effective global power can only be wielded through continued progressive dialogue between cultures, in a matrix of “zero-bias” and “zero-prejudice” towards all religions and communities. The EU must prove that the values of liberty, democracy, rule of law and respect for human rights are the principles it truly lives by; a clear proof of this will be an inclusive EU, one which not only tolerates but owns up to and cherishes all religions, all cultures.

Turkey with a predominantly Muslim population, a candidate country respecting and adhering to the core values of the EU that continues to see merit in joining the EU, will be an invaluable source of inspiration for the spread of these values to a larger geography.

This will also help strengthen the sense of belonging of Muslims living in the EU to the very societies that at times run the risk of alienating them on cultural grounds.

All these are important aspects of a larger integration process in and around the EU, the full and complete realization of which will be achieved with Turkey’s membership in the EU.

• New Perceptions on Enlargement as a “Game Changer” The current economic crisis coupled with the threat of financial collapse of some EU member states has triggered a debate about the economic, social and political 93

Written evidence from the Embassy of the Republic of Turkey

“finality” of the Union. Against this potentially unfavourable background for the case of enlargement in general and the case of Turkish membership in particular, it is necessary to reflect on possible “game changer” aspects of enlargement.

The change of perception now needed on the part of the EU is to take into account the current conditions, present in both the EU and in a given candidate, especially if the negotiations have been going on for a long time. In other words, while the accession rules remain as they are – and are applied in a fair manner to the candidate country – the new realities must be considered to allow for a just and viable accession process to continue.

Consider the following in the case of Turkey: o Since the start of the accession negotiations in 2005, the country has recorded tremendous economic success. Turkish economy has gone a long way to be a stable, efficient and competitive market economy and the degree of stability maintained over the last decade allows Turkey to introduce long term targets and planning of actions. o Turkish economy grew at a rate of 8.5% in 2011 whereas the EU economies recorded growth rates of 1.5%, and 0 or minus in the last 3 quarters. o According to OECD projections, between 2012-2017, with an average rate of 5.2%, Turkey will record the highest levels of annual growth rate among all OECD countries. o The rate of public deficit to GDP which was 4.5% in 2011 in the EU, was 1.17% in Turkey. o The total rate of public debt to GDP in the EU countries was 85.5% whereas in Turkey the figure was around 30%. o Despite the economic crisis in the EU, constituting 37% of Turkey’s trade, Turkey managed to bring its balance of payments deficit down to%7.5 from 10%. o Turkey, an aid-receiving country until 2004 provided “official development aid-ODA” in 2011 exceeding $1.3 billion. (In 2011 Turkey was the one OECD country which increased its ODA with the highest percentage – 38 percent increase over the year of 2010.)

• “Enlargement Fatigue” versus “Pre-accession Fatigue” The oft-used argument of “enlargement fatigue” may lead to “pre-accession fatigue”, causing a mutually destructive pattern to set in bilateral relations as well. Some in the EU already assume that following the accession of Croatia, “enlargement fatigue” will be there to stay within the EU.

Considering the relentless search for a new balance in global economy and in geopolitics, given the historical transitions taking place regionally, those EU countries perceiving enlargement as a potential drain on resources, need to shift their focus and find ways to reach out to the candidates still willing to join.

Turkey has an efficient and vibrant democratic political system, a dynamic and young society, a robust free market economy, and a social tradition apt at reconciling all aspects of modernity with cultural traditions. Such a candidate whose contractual relations with the EU foresee eventual membership going back half a century, but where the trust of the people in ever joining the Union has today dwindled to a record low of 17%, must not be alienated from the EU at this critical moment of truth for our collective welfare on the global arena. 94

Written evidence from the Embassy of the Republic of Turkey

• Soft Power Last but not least, the world is today a much more complex and interlinked place where the nature and reach of soft power of countries may well determine their global standing. The EU is no exception, may even be more dependent on soft power in achieving its larger political and economic goals given the limits of its decision-making structure.

Turkey’s membership is a case in point where enlargement will enrich and inject the EU with diversity and dynamism. Turkey is a member of the UN, NATO, OSCE, OECD, the Council of Europe, the OIC, BSEC and other regional and international organizations, has strategic partnerships with countries like the USA and is well poised to enhance the soft power of the EU at all levels.

• Ultimate Global Reach Enlargement has always been a success story. While the members tend to take for granted the achievements of the past decades, the candidates see the benefits and opportunities enlargement bestows upon a country. As the EU still lacks a full global dimension in the political field, an all encompassing enlargement would provide such an element. Nevertheless, we also feel that the Lisbon Treaty needs to be fine tuned to make the EU’s structures work in a speedy and practical manner in an EU that comprises around 30 members.

12 November 2012

Written evidence from the European Affairs Committee, French Senate

Principles behind enlargement

1. Do Articles 2 and 49 of the Treaty of the European Union provide the right principles for any further enlargement of the EU?

2. The Copenhagen criteria expand upon these principles to provide a more detailed framework for eligibility to join the Union. Do these criteria fully encapsulate the principles behind EU enlargement?

Submission No. 1

Submission to these two questions is based upon the report on “Europe’s frontiers” by the committee for European affairs of the French Senate, dated 8 June 2010 – (http://intranet.senat.fr/rap/r09-528/r09-5281.pdf)

This text covers several aspects of the enlargement process but will particularly address the two following questions:

• Are the current criteria for membership of the EU the correct ones?

• Is there a danger of enlargement fatigue? How will the tough economic climate in Europe impact on the prospects for further enlargement?

The question of Europe’s frontiers is a delicate one as it is often linked with two sensitive issues:

– The Turkish adhesion debate which tends to bring forward interrogations about the long term future of the Union: where do European frontiers end? Is there an European civilization or spirit?

– The institutional conceptions of the EU. Is enlargement a way to push for stronger, more integrated European governance or is it, on the contrary, a protection against a “federal” system for Europe?

These two interrogations should be integrated in a larger debate that takes into account the consequences of the ongoing economic and financial crisis. Primarily built around economic issues, the European construction now seems threatened by the current apprehensions about the economic and monetary future of Europe. In that context, the debate about the frontiers of the Union seems all the more pertinent- and vital: would enlargement further endanger the precarious economic state of affairs or would the inclusion of large and dynamic economies, such as Turkey, help boost European growth?

One cannot give a definite answer to these crucial interrogations but it is possible to shed light on the different aspects of the question so as to put in perspective the “Europe’s frontiers” problem with the broader issue of European enlargement and integration.

********** 96

Written evidence from the European Affairs Committee, French Senate

Membership of the European Union is open to any “European state which respects the values referred to in Article 2 and is committed to promoting them”, states Article 49 of the Treaty on European Union.

The criteria underlined by Article 49 frame the debate as follows: the candidate has to be a state, must be “European” (which excludes candidates such as Morocco in 1987), the eastern border of Europe seemingly being the Urals, and ought to respect the values highlighted in Article 2.

The “Copenhagen criteria” reiterate part of the previously highlighted criteria (the geographical criteria and the necessary respect of democracy and rule of law) but also add newer ones in order to clarify the enlargement process. An economic criterion stipulates the need for the existence of a viable market economy, capable of competing within the single market. This criterion appears to be of particular importance in the current context. Two other criteria demand that the candidate state accepts all the legal consequences of the European integration (the “acquis communautaire”) as well as the broader policy objectives. Last but not least, the ultimate criterion, and possibly the most controversial one, stipulates that the “integration capacity” of the Union must be taken into account, so as to not threaten the delicate balance.

The institutional problem seems to have been at least partly solved by the Treaty of Lisbon which provides an acceptable frame for further enlargement.

Yet the European Commission underlines that the economic and financial impact of new adhesions should also be taken into account in order to preserve the viability of the Union’s policies. Finally, the “integration capacity” also includes the readiness and information of public opinions in order to avoid repeating the insufficient debate that preceded previous enlargements (to central Europe in particular) and thus fostered a climate of European mistrust.

It is thus the opinion of the French Senate that the enlargement process is controlled by a very developed and demanding procedure and that the criteria in place reduce the risk that enlargement might threaten the Union’s future. Yet, the uneasiness and distrust remain leading to fears of an “enlargement fatigue”.

However, this report aims to show that these fears are not jusified and that enlargement should be seen as an opportunity, especially in the dire economic context.

******* Every state that belongs to the Council of Europe is a possible candidate for adhesion. The only European state missing to that list of 47 powers is Belarus, whose candidature has been refused, as it is still a dictatorship.

Yet, out of the 20 members of the Council that do not belong to the European Union, only 13 can be considered as “plausible” candidates (Andorra, Liechtenstein, Monaco, San Marino are too small, Norway and Switzerland have voted against and Russia does not appear to be a probable candidate). Currently, 6 states have the status of candidate: Croatia, who is to join the EU in 2013, Turkey, Macedonia, Montenegro, Serbia and Iceland.

Written evidence from the European Affairs Committee, French Senate

The remaining countries which belong to the Council of Europe and could in the future apply to join the EU are the three remaining Balkan states (Kosovo, Albania and Bosnia and Herzegovina, whose “vocation to integration” has been recognized) and the five remaining states in eastern Europe: Armenia, Azerbaijan, Georgia, Moldavia and Ukraine, whose status of “potential candidate” has not yet been approved.

This inventory intends to show that the enlargement process should not generate such an excessive apprehension. Of all these possible candidates, only Croatia will join in the short future. After Croatia, the likeliest members appear to be Iceland and some of the Balkan states. Yet all these countries represent only a very small fraction of the Union’s global population (the combined population of Croatia and Iceland amount to 1 % of the EU’s population) and economy. They do not thus seem to constitute a threat of any kind to the economical and demographic balance of the area. Even the broadest conceivable enlargement movement (all the Balkan states and Iceland) would not in any way be comparable to the scope and impact of the previous enlargements, as all these countries only amount to 4 % of the global population. As a reminder, the countries of 1973 enlargement (the United Kingdom, Denmark and Ireland) represented one third of the EU’s demography. The two countries whose integration would have a real impact on the economical and demographic balance are Ukraine and Turkey. Yet, it seems unlikely that they will join in the current decade.

Thus, enlargement does not seem to be an unlimited and uncontrollable process: the “frontiers” of Europe are well determined (only the Turkish case is controversial) and the criteria are demanding. Furthermore, the next integrations and the conceivable ones do not seem to be able to destabilize or threaten the balance of the Union, neither economically nor demographically.

There are of course difficulties linked to the integration process that must not be underestimated. The inferior levels of prosperity between the joining members and the main powers in Europe can create some distortions. Financing the common policies for the development of joining members might be difficult, especially in the case of Turkey. The institutional effect should not be overlooked either. Most candidates are “small” states: the EU must thus find a delicate balance between its core principle of equality between states and the necessities of policy-making.

Yet, this report wishes to underline the positive effects that can be expected of further enlargements. Stronger regional stability and increased prosperity are the goals of the Balkan enlargement. Moreover, it can not be denied that most European nation-states need the prism of the European Union in order to compete with the foreign powers. The place of Europe in itself is at stake, and the integration of dynamic and emerging economies should not be overlooked.

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The enlargement’s question calls for a broader debate about the European project, its realities and its limits.

There are indeed some misconceptions about the nature of the European project. The European construction does not seek to replace the fundamental role of the national state. Neither is it an attempt at federalism, in the German or American sense, because there is no 98

Written evidence from the European Affairs Committee, French Senate

“European people” that would serve as the basis to such an entity. The European Union is a very narrow association of states or a federation of states: it is not a federal state and there does not seem to be a shared wish that it should become one for now.

These remarks intend to show that the European construction does not follow a given model. Its structure, scope and nature are unique. Hence, the European construction can primarily be defined as a project. One should thus go past the traditional definition of frontiers and discuss the plurality of the concept of frontiers in the European construction. Some countries are “inside” the Union but do not take part in certain policies or projects whereas others, which are “outside”, do.

Perhaps the most striking example of such a phenomenon is the Swiss example. Switzerland is not a member of the Union, yet takes part in a considerable number of European projects, policies and programs to such an extent that the question of its membership does not appear to be of importance anymore.

The frontiers’ logic is therefore not a binary one. The Union is a project but all its members do not necessarily have the same will or capacity to advance at the same speed in every domain. The existence of several zones within the Union (Schengen area, Eurozone) embodies this phenomenon. The principle of “variable geometry” is already a reality in Europe, the United Kingdom being one of its main beneficiaries. The same idea can be applied to the enlargement’s debate, in order to resolve the seemingly inextricable Turkish situation. One country does not have to belong to the Union in order to pursue some of its policies, for the benefit of both sides.

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In conclusion, the debate regarding the Union’s enlargement should not be looked at with excessive anxiety.

The ongoing enlargement process is in reality a relatively limited process, which remains under the control of a developed procedure and of strict criteria. The possible new members do not threaten Europe’s cohesion. The beneficial effects of integration should also be more taken into account: the Union needs to reach a critical size in order to compete on the global market and so as to protect its common interests.

The answer to enlargement fatigue or scepticism lies in the pursuit and consolidation of the European project. This project does not follow the existing typology of regimes and structures. This project accepts the idea that all actors cannot advance at the same speed and thus fosters the idea that each country might participate in the European construction in its own way.

The impact of EU membership on new Member States: Irrelevant for France

The impact of enlargement on the Union

6. What is the economic and social impact of EU enlargement on the existing Member States?

Submission No. 2

Written evidence from the European Affairs Committee, French Senate

The social and economic impact of the most recent enlargements seems to have been quite limited in France, given the size and economic power of the newest members. Only immigration from Central and Eastern Europe appears to be a prominent issue for the public opinion.

7. What are the political and constitutional effects of enlargement? You may wish to comment on the following:

Submission No. 3

Contrary to what could be feared, the latest enlargements did not create an institutional chaos. Broader enlargement may even have helped to shorten some negotiations, according to some academic studies.

8. On what policy areas does enlargement have the greatest impact? How has enlargement previously impacted negotiations on contentious policy areas, such as the Common Agricultural Policy and migration and asylum? What impact is further enlargement likely to have on such areas?

Submission No. 4

The cohesion policy seems to be the most important area to keep in mind vis-à-vis enlargements, since joining countries usually have inferior levels of wealth. The integration of Turkey is thus thought by some to be, in that financial light, rather problematic.

Submission No. 5

This question is partly addressed by the report (see page 1): the impact of further enlargement, except in the Turkish case, would be relatively weak, since the countries whose integration seems likely are not demographic or economic powers.

It appears to some Senators, that if a country such as Turkey was to meet the Copenhagen criteria and still sees its candidature rejected, the implications for regional diplomacy and the global credibility of the Union would be vastly negative.

The appetite and capacity for further enlargement

10. What impact should the ongoing economic and financial crisis, particularly in the euro area, have on further enlargement?

Submission No. 6

In the euro area, the ongoing crisis has a negative impact on public opinion’s view of further enlargement, even though the two phenomenons should not be linked. The example of Greece, a “small” country whose finances threaten the whole area, is sometimes wrongly used in order to protest against further enlargement. Yet the newly admitted countries would not necessarily be members of the euro area. 100

Written evidence from the European Affairs Committee, French Senate

11. Is ‘enlargement fatigue’ setting in for a) the Union as a whole, b) individual Member States, or c) candidate countries? How can such ‘fatigue’ be gauged, and should the EU be working to combat it?

Submission No. 7

“Enlargement fatigue” seems to be setting in Turkey, which is trying to develop its own regional strategy. The rest of the candidate countries are still very willing to join the EU. Once again, the euro area’s crisis should not be confused with a loss of attractiveness for the Union. See the answer to questions 1 and 2 for additional detail.

12. Do a) the EEA, b) the European Neighbourhood Policy, or c) the possibility of a ‘privileged partnership’ offer viable alternatives to full membership? Could these circumvent ‘enlargement fatigue’, either as permanent alternatives or as stepping stones to full membership?

Submission No. 8

The existing alternatives to full membership might be the first step to a “two-speed” Europe. The definition of a new, extensive specific status may be needed in order to offer a much- needed flexibility to candidate states and existing member states. One must also underline that specific cooperation frames can be opened to states which do not have the full membership status (following the model of Switzerland and Norway). An important number of senators are in favour of a federal core gathering some member states.

13. Which current Member states have a) the most and b) the least positive views of recent rounds of enlargement? Is this true for both the political elites and the general population? What are the most significant factors affecting public views of enlargement?

Submission No. 9

Contrary to the political elites, the French public opinion appears rather unconcerned by the last rounds of enlargement. The immigration question, especially the migration from Romania, is however of particular importance to a part of the population. Certain economic phenomenons such as plants’ relocation also constitute an area of public and politic concern.

14. Have the lessons from previous enlargement rounds been learnt to improve the processes of enlargement?

Submission No. 10

There is a political consensus amongst senators that the Copenhagen criteria should be more thoroughly respected before integration. The need to better inform the public opinion also appears to be an important condition for the enlargement process’ success.

15. How should the term ‘absorption capacity’ be understood in the context of enlargement with regard to:

i. The legal basis in the EU treaties? ii. EU decision-making? iii. EU budgetary resources? 101

Written evidence from the European Affairs Committee, French Senate

iv. The capacity of the EU’s law-making and other institutions? v. A European social or cultural identity? vi. Perceived geographical borders of ‘Europe’?

Submission No. 11

See document on page 1. The conceivable rounds of enlargement to come do not seem to threaten the political or economic capacities of the Union. Furthermore, to many senators, the introduction of different levels of integration seems to be a promising path in order to pursue the enlargement process.

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Written evidence from the European Affairs Committee, Assembly of the Republic of Macedonia Written evidence from the European Affairs Committee, Assembly of the Republic of Macedonia

MATERIAL 1- Answers from the European Affairs Committee of Macedonia

1.Do Articles 2 and 49 of the Treaty of the European Union provide the right principles for any further enlargement of the EU?

Both articles do provide the right and sufficient principles for further enlargements since they both lay down the most important requirements that an applicant country must fulfill in order to become a member state of the EU. These requirements represent the core values upon which the Union is founded. The necessity of being a European country, limit the scope of enlargement only to the continent.

The Copenhagen criteria present a wide range of criteria that are obligatory for applicant countries and fully encapsulate the most important principles behind EU enlargement. These criteria fully refer to the most important democratic values such as the rule of law, respect of human rights and minority rights. It is self explanatory that all these democratic values can be effectively implemented and guarded by capable, stable and democratic institutions. The Copenhagen criteria stem from the democratic legacy of the European nations and also provide a certain geographical qualifier. The insistence on a functioning market economy only adds more substance to European integration and is another positive example of horizontal integration of European societies and states.

Enlargement policy is still one of the most successful policies of the EU. Bigger Europe is stronger Europe. An extensive study conducted by the European Commission published in 2008 on the economic impact two years after accession concludes that "the fifth enlargement has acted as a catalyst of economic dynamism and modernization for the European Union, helping the economies of old and new Member States to better face the challenges of globalization. At the same time, the economic changes induced by this enlargement have been absorbed quite smoothly, and there is no evidence of disruptive impacts on the product or labor markets.”

The Enlargement policy proved to be one of the most successful EU policies in the recent history contributing to the peace, stability and economic growth on the European continent.

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Written evidence from the European Affairs Committee, Assembly of the Republic of Macedonia EU enlargement with South East European candidate and potential candidate countries will provide benefits of mutual deeper trade integration, a larger internal market, more investments and jobs and finally-more stability and sustainable economic growth. EU membership prospect is a very powerful tool and incentive for the reform processes aimed at building stable institutions and democratic societies. Any delays or postponements in pursuing the undertaken EU enlargement commitments negatively affect these processes. Furthermore, they also affect the credibility of the EU enlargement policy and the credibility of the EU as a global actor.

The Enlargement of the European Union has always been one of its key features. After the fifth wave of the enlargement so called ‘fatigue’ set in, primarily at the level of individual Member States which have regarded the EU legal and institutional setup as inadequate for further enlargement of the Union. The enlargement was also viewed, by the public opinion in many countries, as one of the main reasons for rising unemployment, increased immigration and aggravated socio-economic situation. This only added to the fall in the enlargement enthusiasm at the level of Member States. This situation was certainly felt in the candidate countries and affected negatively the speed of the reforms necessary for EU accession. Lisbon Treaty, however, renders these fears as inappropriate as it provides solid and flexible legal framework for further successful integration of the candidate countries. This ‘fatigue’ is being successfully countered by the Commission by the means of increased communication on the benefits of previous enlargements, notably in terms of increased stability, improved human rights situation, rule of law and spread of democracy on the European continent. In economic terms enlargement is also a success, through increased market opportunities, rise in trade of goods and services, opening of new jobs, increased efficiencies and improved socio-economic conditions in general. These benefits have been successfully communicated by the Commission, and increasingly by some Member States. The partnerships forged with candidate countries in this regard could be a major step forward with an aim to improve the image of the enlargement in the eyes of the general public, not only abroad but also within national borders.

12. Do a) the EEA, b) the European neighborhood Policy, or c) the possibility of a ‘privileged partnership’ offer viable alternatives to full membership? Could these circumvent ‘enlargement fatigue’ either as permanent alternatives or as stepping stones to full membership?

The Republic of Macedonia is a candidate country for EU membership since 2005. This year, in 2012, the European Commission recommended for the fourth consecutive time to the Member States that accession negotiations should be opened with Macedonia. ЕЕА is not a political option for Macedonia, which has a Stabilization and Association Agreement with the EU and a bilateral free trade agreement with EFTA. The idea for “privileged partnership” with the EU does not reflect mutual political aspirations and commitments undertaken by Macedonia and by the EU. “European neighborhood policy” provides an adequate framework for pursuing the Union’s political, economic and security policy goals and interests towards the neighboring countries without an EU membership perspective. For Macedonia, as an EU candidate country, the only option is the membership of the European Union. First step in

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Written evidence from the European Affairs Committee, Assembly of the Republic of Macedonia this direction is the beginning of the accession negotiations. In this respect, traditionally, in the United Kingdom we have a staunch supporter.

14. Have the lessons from previous enlargement rounds been learnt to improve the process of enlargement?

There is no doubt that the process of enlargement has been improved and strengthened during the years and successive enlargements. The lessons from the fifth enlargement round, as well as the experience of Croatia led the Commission to develop a new structured approach towards negotiations, which puts rule of law at the heart of accession process. With the new approach, the emphasis is given to the chapters on judiciary and fundamental rights and to justice, freedom and security. This new approach will undoubtedly ensure that candidate countries accede to the European Union completely prepared. Recently, the Commission has explored new creative avenues for reviving the EU accession process of some candidate and potential candidate countries, with the initiatives such as the Positive Agenda with Turkey, High Level Dialogue for the Accession Process with Bosnia and Herzegovina, High Level Accession Dialogue with Macedonia. These initiatives were a result of a lesson learned – not to let the EU membership perspective and the accession reform process be diluted. Still, one aspect is not yet developed and that is how to overcome the blockades in the accession process of a candidate country imposed by a member country? Blocking the accession process because of open bilateral issues undermines the whole process of merit based accession, the credibility of the EU and the reliability of its commitments. There has to be a balance established between solidarity among member states, pursuing the common European interest and maintaining the credibility of the EU and its enlargement commitments. This is the next lesson to be learned.

14 November 2012

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Written evidence from the European Integration Committee, Croatian Parliament

INTRODUCTION

1. The European Integration Committee of the Croatian Parliament submits this memorandum as the evidence to the Select Committee on the European Union of the House of Lords in order to provide the perspective on enlargement policy from the point of view of an acceding country.

2. The Republic of Croatia signed the Accession and Stabilisation Agreement with the European Union in 2001. In 2003 Croatia submitted its Membership Application and was granted the status of the candidate country in 2004. Accession negotiations were opened in 2005 and closed in 2011. Accession Treaty was signed in December 2011 with the Croatian membership date set to be 1st July 2013.

3. During the Croatian pre-accession process twelve new Member States joined the European Union, but their accession process was notably different. Croatia is the first country on which the new system of negotiations that included benchmarks within the negotiation chapters was applied. Croatia is also going to be the first Western Balkans country to join the Union, which puts it into a unique position towards the entire Region.

PRINCIPLES BEHIND ENLARGEMENT

4. On the level of principles, Articles 2 and 49 of the Treaty of the European Union provide foundation for all the future enlargements. While it is true that these principles are further elaborated through the Copenhagen Criteria, they remain on a highly general level. Detailed principles behind the enlargement are contained in the negotiating framework set up for each candidate country. Negotiation chapters with their benchmarks, on the other hand, contain detailed guidelines for the accession.

5. Basic principles of enlargement are set very widely and might therefore be somewhat misleading. It is important for all the countries with aspirations to join the European Union to understand that the accession process is lengthy and demanding. Complete harmonisation of the national legislative system with the Acquis Communautaire is required before it can be determined that the country complies with the principles of the European Union.

6. The principles set in the Articles 2 and 49 of the Treaty of the European Union as well as the Copenhagen criteria should therefore be considered as minimum requirements for joining the European Union. Further conditions are negotiated with each of the interested countries individually in order to address their specific issues and areas where most efforts are needed. While negotiating frameworks may in principle be similar for all the candidate countries, individual approach is necessary to assure the quality and sustainability of the harmonisation process.

THE IMPACT OF EU MEMBERSHIP ON NEW MEMBER STATES

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7. Croatia is near the end of its accession process during which it has undergone fundamental reforms. The country changed significantly thanks to the reforms implemented as a part of the accession process. These reforms are the most valuable gain for Croatia because they are irreversible. This is particularly true when it comes to the judiciary system. Even though some work still remains to be done in that area, reforms of such volume and scope would not have been possible in such a short period of time had there not been for the incitements from the European Union. Courts have become truly independent and major improvements were made in the area of combating corruption. Implementation of the reforms, not only in judiciary, but in all the other areas as well, was not done having the goal of joining the European Union in mind, but for the benefit of Croatia and its citizens.

8. Communicating the European Union to the citizens has proven to be one of the most important but also the most difficult tasks. Recent survey shows that while the popular support of the European Union in Croatia is quite high, insufficient informdness remains a problem. In the midst of the current economic and political crisis of the European Union, raising support for the Union and promotion of its benefits presents a particularly challenging task. It is however a task that must not be avoided because only well informed citizens can assure the sustainability of the implemented reforms.

9. Joining the European Union is not a goal in itself to Croatia. On the day of the accession one part of the work will be finished but new work will only begin. The accession process also served as preparatory phase for the assumption of the new tasks. Implemented reforms must be sustained in order to guarantee a country will be able to function within the European Union and actively contribute to it.

10. Having all that in mind, there is no reason for Croatia not to be satisfied with its accession process. A problem has however occurred that should be addressed for the benefit of future enlargements. On several occasions bilateral issues emerged as a setback in the accession process. It is Croatia’s firm stance that bilateral issues should stay bilateral and not influence the dynamics of the accession process. Croatia has therefore obliged itself not to bargain with bilateral issues when it will be in position to decide on negotiations and accession of other countries to the European Union.

THE IMPACT OF ENLARGEMENT ON THE UNION

11. Enlargement is a challenge for the European Union, as it brings the element of uncertainty to the well-tuned system. However, the European Union does benefit from enlargement. The most important consequence of the united Europe is the overall stability of the continent. From the initial economic union of six countries the European Union turned into a major factor of political and economic stability, not only on its continent, but in the entire world. In terms of political influence and credibility, the European Union will only grow stronger as it welcomes new member states.

12. The European Union will enjoy specific benefits from the Croatian membership. This is most notably true when it comes to the new system of accession negotiations that was implemented in Croatia for the first time. With the conclusion of the negotiations, it can be stated that the system was successful and will in the future negotiations serve as a guarantee of the candidate countries’ preparedness to join the European Union. Future negotiations should therefore be somewhat easier and perhaps more predictable.

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Written evidence from the European Integration Committee, Croatian Parliament

13. Croatian experience showed that the areas of justice and basic citizens’ and human rights should be put in the centre of the negotiation process. The results of this finding are already visible, as Montenegro opened its accession negotiations with the Chapter 23 – Judiciary and Fundamental Rights. Keeping chapters opened for a longer period of time, particularly the demanding ones such as Chapter 23, contributes to the transparency of and the support to the enlargement policy.

THE APPETITE AND CAPACITY FOR FURTHER ENLARGEMENT

14. Aware of the certain “enlargement fatigue” striking not only Member States, but some of the candidate countries as well, Croatia encourages keeping the enlargement policy high on the European agenda. Provided that they meet the required criteria, all the interested countries should be allowed to join the European Union, otherwise the consistency of European Union principles stated in the Articles 2 and 49 of the ToEU will come in question. The European Economic Area, European Neighbourhood Policy and the “privileged partnership” may offer viable alternatives only to those countries that do not seek full membership, such as Norway or Switzerland. Countries that applied or show intention of applying for the full membership should be given the opportunity to become Member States.

15. Croatia is particularly interested in the region of the South East Europe, or the so called Western Balkans, where the perspective of the full membership is seen as the best guarantee of future stability. Mechanisms such as the EEA, Neighbourhood policy and privileged partnership could only be used as interim solutions in expectance of full membership in this region.

16. As a soon to be Member State, Croatia is determined to serve as a bridge between the European Union and the Western Balkans. We have already provided specific technical assistance to the countries of the region by ceding the Croatian translations of the Acquis Communautaire. A Centre of Excellence was recently founded in the Ministry of Foreign and European Affairs comprising of the former members of the Croatian negotiating team that will provide their expertise to all the interested sides. Croatia also offers Agreements on the European Partnership to any country that might be interested. Agreements have so far been signed with Montenegro and Moldova. All of the aforementioned mechanisms are in place to show that Croatia will not keep its accession experiences to itself. The potential of learning from Croatia should be used and hopefully all the countries of the region will accept this kind of partnership.

17. Croatia believes the on-going economic and financial crisis should not impact the willingness to further enlarge the European Union. Firmer fiscal discipline should be imposed to prevent future economic instabilities that might originate from the possible new Member States, but the benefits of the enlargement should not be overshadowed by the prospect of economic and financial pitfalls.

CONCLUSIONS

18. The Enlargement Policy is a particularly important instrument of the overall stability of the European continent. Strong political will must be displayed, both from the side of the European Union and the potential future Member States, in order to keep the momentum of the enlargement.

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19. Croatia hopes to be a “success story”, proving the difficult reforms are possible to implement when the European Union Membership is set as a national priority. Joining the European Union should however not be the ultimate goal of the reforms that are implemented as a crucial part of the accession process. The ultimate goal is the creation of a country capable of dealing with global challenges.

20. Upcoming Croatian membership in the European Union brought added value to Croatia, the region it belongs to and the European Union as a whole. The added value for Croatia is a truly reformed country that emerged from the accession process, Croatian membership in the European Union will bring a strong stability factor and reform incentive to the region of the Western Balkans, and the European Union profited from the implementation of the new negotiation system while gaining a completely prepared new Member State. With the consistent implementation of the membership criteria, there is no reason to believe that future enlargements will not bring additional benefits to the European Union.

12 November 2012

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Written evidence from the European Policy Centre

1. The dynamics of the EU enlargement dossier

1.1. Enlargement has always been part of the DNA of the European Union (EU), since its very first expansion to the United Kingdom, Ireland and Denmark in 1973. Having grown over the years from 6 to 27 member states via 6 different rounds of enlargement, the EU has now another set of countries wanting to join. The Union has made a political commitment to enlarge further to Turkey, to the countries in the Balkans, to Iceland8 and, on the basis of Article 49 of the Treaty on the European Union, any other ‘European’ country may apply for membership on the basis of the Copenhagen criteria9.

1.2. But since 2005 enlargement policy has been endlessly challenged to keep a high profile on the EU’s agenda and to reap successes. ‘Enlargement fatigue’ became a staple sentence to interpret the negative outcomes of the French and Dutch referenda on the Constitutional Treaty, despite the fact that opinion polls at the time showed that the ‘no’s were only marginally a reaction to the ‘big bang’ enlargement of 2004. The famous ‘Polish plumber’ had as much attention as little real impact in terms of numbers or opinion-shaping among European citizens.10

1.3. The largest EU expansion, which happened to Central and Eastern Europe (CEE), Malta and Cyprus, and saw no fewer than 10 new countries become members in 2004, followed by two more in 2007, did not hamper the overall efficiency of EU decision-making either, not even during the five years in which it functioned on the basis of the Nice Treaty; the Lisbon Treaty was managed to be negotiated subsequently; and the new diversity within the Union was accommodated. Nonetheless, ‘enlargement fatigue’ has become a scapegoat for a range of deeper problems and stumbling blocks in the EU, giving a new understanding to the ‘widening versus deepening’ dichotomy which characterised the debate prior to the 2004 enlargement round. The accession of Bulgaria and Romania in 2007 is widely perceived as having been carried out too quickly and not preceded by adequate preparation, especially with regard to justice reforms and anti-corruption policies. Five years into their membership, the two countries continue to be subject to the Cooperation and Verification Mechanism (CVM) – an

8 Turkey, which tabled its first application in 1987 to what was then the European Economic Community, was accepted as a candidate country in 1997 and started accession negotiations in 2005. The states of the Balkans were offered a prospect of accession at the Thessaloniki Summit in 2003. Of these, Croatia and the former Yugoslav Republic of Macedonia (fYROM) were granted candidate status in 2005; Croatia has since completed its accession negotiations in 2011 and is expected to join the EU on 1 July 2013, while fYROM has not yet started accession talks. Montenegro opened negotiations in June 2012, Serbia was recognised as a candidate country in 2012, Albania has applied for membership in 2009 and has received a qualified positive opinion from the Commission in 2012, and Bosnia-Herzegovina has a Stabilisation and Association Agreement with the EU but is still not in a position to apply for membership. Kosovo under United Nations Security Council Resolution 1244 is beginning to institutionalise relations with the EU but its membership prospects depend on its independence being recognised by all EU member states. In 2009, Iceland applied to join the EU, started accession talks in 2010, and is likely to terminate the accession process in a short period of time, after which the issue of membership will be subject to a referendum in the country. 9 Copenhagen criteria, first defined in 1993 and reinforced in 1995, require countries wishing to join to have: i) stable institutions guaranteeing democracy, the rule of law, human rights, and respect for and protection of minorities; ii) a functioning market economy and the capacity to cope with competition and market forces in the EU; and iii) the ability to take on and implement effectively the obligations of membership, including adherence to the aims of political, economic and monetary union. In addition, the EU’s capacity to absorb new members while maintaining the momentum of European integration is also an important consideration in the accession process. 10 Special Eurobarometer Survey (2005) on the future of the Constitutional Treaty found that for only 6 % of the Dutch and 3% of the French voters, enlargement was the reason to reject the new treaty. Moreover, in the case of France, people’s anxiety was related to the EU’s further expansion to Turkey rather than enlargement in general. See http://ec.europa.eu/public_opinion/archives/ebs/ebs_214_en.pdf, last accessed on 12/11/2012. 110

Written evidence from the European Policy Centre unprecedented instrument created as a means to ensure the post-accession sustainability of specific EU-driven reforms in both cases. To date, recurrent problems with corruption, organised crime and the functioning of democratic institutions in Bulgaria and Romania fuel EU’s “enlargement blues”11 but increasingly also mistrust among member states, as demonstrated, for instance, by the recent decision to link Bulgaria and Romania’s entry into the Schengen area to their progress on the CVM.12

1.4. Similarly, developments in other ‘new’ member states have been the cause of preoccupation regarding the health of European democracy. By 2007, countries like Poland, Slovakia, Hungary, and the Czech Republic appeared to take a ‘populist turn’13, suddenly calling into question the hitherto linear reading of democratisation: which presumed a cumulative and irreversible progression of the CEE democracies from transition to consolidation. Fast-forwarding to present day, against the backdrop of the crisis, the incidence of threats to EU’s democratic principles and values has increased, not only in the new, but also in the older member states. Indeed, these developments need not be interpreted as consequences of enlargement. Rather, they are a manifestation of a much broader set of dynamics which is having an impact on the enlargement process. This experience has led to refining the tools and policies the EU is pursuing in the Balkans, as the next section on lessons learned will explain.

1.5. Other issues which have been affecting the enlargement process are related to the ongoing economic crisis. On the EU side, with the future of the euro – and indeed of the Union – hanging in balance, expansion features way down the list of priorities. If anything, enlargement is now more easily politicised in the national arena of the member states, where parties with an overall populist, Eurosceptic and anti-immigration discourse can harness social discontent in the currently difficult economic context to strengthen European citizens’ uneasiness about the potential consequences of further EU widening.

1.6. In the Balkans, the story is analogous to the rest of Europe. Most Balkan countries were hard hit by the economic woes in the Union – the region’s main trading and investment partner. Before the crisis the Balkans growth rates stood at about 5-6%, while in 2012 they are closer to 1%.14 With high unemployment rates, decreasing European investment flows, declining remittances, and the exposure of the region to Greece’s travails and to a troubled banking sector (half the banks of the Balkans are controlled by Greek and Italian banks)15, the goal of EU membership has been losing lustre among people16 and seems to be breeding populist – rather than pro-European or reformist – politicians in the Balkans (as seen recently in Serbia).

11 Term coined by former European Commissioner for enlargement, Olli Rehn, in the speech for the launch of “Europe’s Blurred Boundaries” at the Centre for European Reform, Brussels, 11 October 2006, found at: http://europa.eu/rapid/press- release_SPEECH-06-603_en.htm?locale=en, last accessed on 9 November 2012. 12 Pascouau, Yves (2012), “Schengen and solidarity: the fragile balance between mutual trust and mistrust”, EPC Policy Paper, European Policy Centre, Brussels: July. 13 See, for instance, Rupnik, Jacques (2007), “Is East-Central Europe backsliding? From democracy to populist backlash”, Journal of Democracy, Volume 18, Number 4, pp.: 17-25; all contributions to this special issue of the journal are dedicated to this topic. 14 World Bank (2012), “South East Europe – Regular Economic Report”, released in June 2012. 15 Bechev, Dimitar (2012), “The periphery of the periphery: the Western Balkans and the euro-crisis”, European Council on Foreign Relations, London: June. 16 Gallup Balkan Monitor polls show that the popularity of the EU in the region has been declining but is still respectable, around the 50% mark at the low end. While the very rationale of joining the EU – when the Union appears economically weakened and politically fragmented -was brought into question in the accession referendum of Croatia in January 2012, the result was clearly in favour of membership even in this notoriously Eurosceptic Balkan country. 111

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1.7. In this sense, rather than undermining the convergence narrative between the EU and the Balkans, these developments test the model – not unequivocally exemplary – that the Union is exporting to the region.17 They also foster the Balkan’s image problem among member states, which was initially created by the particularities of the region, and was already playing a role in curbing the EU’s appetite for expansion before the crisis. Anxieties related to security, unresolved statehood issues and domestic ethnic, political and economic tensions in the Balkans are at least partly responsible for the member states’ ‘wait and see’ or ‘go slow’ approach to further enlargement. They have also exposed the limits of the Union’s transformative power. Unlike in the economic field, the EU had no predefined recipe on how to deal effectively with the war legacies of the Balkan region. Sticky internal/bilateral issues have earned the Balkan aspirants the label of ‘difficult cases’, and continue to push the European Commission to resort to much ingenuity in order to keep the process going18.

1.8. Overall, a combination of concerns related, on the one hand, to internal EU developments in an increasingly complex economic climate and, on the other hand, to regional and country-specific issues, has prompted the ‘creeping nationalisation’ of the (pre- )/accession process.19 The Council, rather than the Commission, is increasingly setting the benchmarks and conditions for progress. In 2009, for example, when Albania submitted its application to the EU, Germany indicated that it would wait for the approval of the Bundestag before asking the Commission to formulate an opinion on Albania’s application. In December 2011, when the Council needed to respond to Serbia’s application for membership, to which the Commission had already given a positive – if conditional – avis, the Council delayed the answer to March, requesting from Serbia to further fulfil the conditions set. Berlin’s decision arguably reflected preoccupation over the situation in Northern Kosovo. In February 2012, Serbia’s candidature was again put in jeopardy by Romania’s demand to add a new condition regarding the Vlach minority in Serbia – a request that did not meet support among the other members of the General Affairs Council.

1.9. These examples illustrate that the member states are using more entry points to control the accession process, which makes the whole initiative more unpredictable. In turn, in the region, this raises doubts over the EU’s commitment to enlargement, with consequences on the EU’s credibility and ability to exercise leverage to promote the reforms it deems necessary for the transformation of the region.

2. Lessons learned and not learned

2.1. In view of these recent experiences, the EU, and most specifically the Commission, has learned a number of lessons which have been incorporated into the EU’s renewed enlargement strategy. First, the (pre-)/accession process has a much stronger focus on good governance criteria – maintenance of the rule of law, independent judiciary, efficient public administration, the fight against corruption and organised crime, civil society development, and media freedom. While there still is scope for improving policies in these fields to ensure a

17 Stratulat, Corina (2012), “EU enlargement to the Balkans: the show must go on”, EPC Commentary, European Policy Centre, Brussels: October. 18 Balfour Rosa (2012), “Between the past and the future: unfinished business in the EU and the Balkans”, EPC Commentary, European Policy Centre, Brussels: June. 19 Hillion, Christophe (2010), “The creeping nationalisation of the enlargement process”, SIEPS Paper, Stockholm: November. 112

Written evidence from the European Policy Centre deep democratisation process, the shift in emphasis does represent a change in gear as a consequence of the 2004-7 enlargement rounds.20

2.2. Second, Croatia’s negotiation process has made it evident that all the above-mentioned are difficult areas of reform, which cannot be effectively addressed in just a few months’ time. For this reason, the EU now favours getting an early start on the toughest negotiation chapters – such as Chapter 23 on Judiciary and Fundamental Rights and Chapter 24 on Justice, Freedom and Security. In June 2012, Montenegro was the first country to start its EU accession talks precisely with these two chapters and, in their turn, the remaining Balkan aspirants will have to conform to the same course.

2.3. Third, in order to improve implementation, the method for applying the conditionality has become more exacting, by tying any steps forward more closely to actual results. New mechanisms were introduced, for instance: opening, intermediary and closing benchmarks; safeguard clauses to extend monitoring; more routine procedures to suspend negotiations; and the requirement for countries to demonstrate a solid record in the undertaken reforms. And the EU is now adamant about dealing with any pending issues prior to accession, when it had learnt that its leverage was most robust.

2.4. Last but not least, the EU has expanded its toolkit to include more ingenious tactics aimed at helping with internal/bilateral impasses in the region. The logic was to circumvent the big political elephants obstructing countries on their EU track by focusing short-term attention on technicalities that can instead move forward the reform agendas of such aspirants. Illustrative in this regard is the case of the former Yugoslav Republic of Macedonia (fYROM), which was recognised as a candidate in 2005, was considered fit to start negotiations in 2009, but since then saw its accession negotiations repeatedly blocked by the ‘name dispute’ with Greece. In March 2012, the Commission launched a High Level Accession Dialogue with fYROM, which allowed the country to make good progress on a number of priorities, thereby enabling the Commission, in October 2012, to make a stronger case to start accession negotiations with Skopje notwithstanding the name issue. In other words, the Commission is trying to help in solving any issue that can provide an alibi to continue blocking fYROM’s accession talks. The Structured Dialogue on Justice with Bosnia-Herzegovina, which kicked off in June last year, is a further example of this new approach.

2.5. Other ways in which the Commission is tightening its oversight and pressure on reforms and domestic changes is through the early screening process, for instance with Albania, towards which the Commission issued a 12-point plan to help the country overcome the two-year stalemate due to polarised government-opposition relations.21 These initiatives also reveal a degree of intrusiveness in the internal affairs of these states, albeit on the basis of an understanding with the receiving country.

2.6. These strategies have achieved: i) a strengthened focus on rule of law, governance and democracy-related issues which is meant to help the Balkan states not just consolidate their democratic achievements but also to become ‘good’ future member states and, equally important, ii) have kept the process of enlargement moving on a step-by-step basis rather

20 Balfour, Rosa and Stratulat, Corina (2011), “The democratic transformation of the Balkans”, EPC Issue Paper No. 66, European Policy Centre, Brussels: November. 21 Stratulat, Corina and Vurmo, Gjergji (2012), “Opportunity knocks: can the EU help Albania to help itself?”, EPC Policy Brief, European Policy Centre, Brussels: March. 113

Written evidence from the European Policy Centre than through grander initiatives. This has defused potential tensions within the Union over enlargement and has partially acted as a shield to some of the incursions and opposition on behalf of member states in the process.

2.7. However, the long-term sustainability of the Commission’s newfound tactics is questionable. The member states remain able to stall enlargement at numerous stages of the process, and the number of disputes within the Balkans and between countries in the region and existing or future EU members stays high. In the previous round, such clashes did occur, for instance, between Italy and Slovenia. Also, Croatia’s negotiations were blocked for a year because of a disagreement with Slovenia over the Gulf of Piran. The ground for these instances to multiply is fertile and the opportunities for them to hijack the accession process plenty. Slovenia is raising further bilateral issues with Croatia; fYROM’s relations with Greece are made acrimonious by the name issue, recognition of minorities and other issues; Bulgaria too has raised a number of matters with fYROM. The ethnic mosaic of the region, which does not match with its internal borders and other unsolved consequences of the dissolution of Yugoslavia, means that these disputes have the potential to disrupt the enlargement process.22 This could be compounded by the fact that the ‘regatta approach’ to the Balkans’ enlargement, whereby countries in the region can enter the EU at different points in time, can allow, at least in principle, every new member state to block the accession of one of its neighbours.

2.8. Central and Eastern Europe after the Cold War had a similar mosaic. But in that case, the EU sponsored an initiative through which each and all countries signed bi- and multilateral agreements with their neighbours on mutual recognition of minorities, borders and good neighbourly relations prior to starting accession negotiations. Although the Stabilisation and Association Process launched after the war for Kosovo put regional cooperation as one of its requirements for the Balkans, the enlargement process in itself is bilateral and cannot include such conditions. Furthermore, the EU itself has no common definition of a ‘minority’, no legislation in the field and no acquis on border issues – thus it does not have the leverage to change the status quo through the current policy formats.

2.9. Alongside this ‘not learned lesson’, there is a further aspect that relates to the far broader process of EU integration. While the 2004-7 waves of enlargement did not bring what was expected or feared by some – a paralysis of the decision-making process – developments in some countries did put the spotlight on the state of democracy within the Union and the lack of tools available to monitor and influence internal developments once countries join the EU. Recent political events in Hungary and Romania have made it all too clear that democratic achievements are reversible and there is not much the EU can do when backlashes happen.

2.10. Democracy is forever work in progress. If the EU is to assimilate this lesson, it will have to get better equipped to defend its democratic construction. In the aspirant countries, the EU has yet to redress the ‘executive bias’ of the integration process, which still prevents crucial democratic actors, such as national parliaments and local authorities, civil society organisations and the media in the Balkans from being effectively socialised and involved in their country’s EU membership effort. As seen in the case of the CEE enlargement, whenever policy consensus occurs at the expense of politics, with little awareness or input from the grassroots

22 Balfour, Rosa and Basic, Dijana (2010), “A bridge over troubled borders: Europeanising the Balkans’, EPC Policy Brief, European Policy Centre, Brussels: November. 114

Written evidence from the European Policy Centre of society, national leaders get a free card to put any spin they want on Brussels-related issues (and be convincing at that): shifting blame or taking credit, as it suits them. The Union must therefore continue to interfere in the domestic functioning of democracy of its future potential members, beyond economic and judicial issues, as a kind of preventive medicine against any serious EU digestion problems once these countries step inside.

2.11. Internally, the EU-wide anti-corruption reporting mechanism that will produce the first reports in 2013 or the ´justice scoreboard’ proposal of Commissioner Viviane Reding to annually rank the rule of law in the member states are only the initial timid steps in building a proper strategy and capacity for action at European level. Making sure that the best democratic practices expected from the Balkan countries are also followed in the EU, including by its older as well as newer member states, will benefit the EU and its leverage on outsiders. In this regard, aside from specific issues such as corruption, the manner in which the member states learn to deal with their shared sovereignty and to manifest intra-EU cooperation and solidarity will go a long way to demonstrating what integration is about.

3. Beyond the Copenhagen criteria

3.1. The Copenhagen criteria are not the only source of EU standards for the accession of the Balkan countries; the conditions are in the acquis, in Council Conclusions setting higher standards and making additional requests and in the Treaty of Lisbon, which states that additional conditions for accession can be set by the EU, through the European Council. This sets the bar for accession higher than in the past (though the acquis is a consequence of further integration within the Union), and potentially makes it possible to raise standards further during the process. Indeed, there have been discussions in Brussels on the opportunity of changing the Copenhagen criteria. So far, such temptations have not been translated into political action: the argument proposed by Romania to add the treatment of the Vlach minority on the issues to be assessed before granting Serbia candidate status was rejected by the other EU members. It cannot be excluded, however, that such temptations may return in the future.

3.2. Changing the basic rules of the game as laid out in the Copenhagen criteria – which include the fundamental political and economic conditions relevant to each and all of the countries seeking to join the EU – is not advisable. Instead, as experience already shows, defining measurable benchmarks or concrete targets, sensitive to the specific regional or national context, can help to effectively meet the broad conditions defining at present the Union’s conditionality. Alternatively, changeable considerations are likely to undermine the EU’s credibility in the region, feeding speculation that conditionality is being used as an excuse to keep the door closed to new entrants after Croatia’s accession in 2013. They can also make the EU a moving and elusive target, thereby eroding aspirants’ commitment to the reform agenda. This was seen, for instance, in the case of Turkey, which has grown considerably less enthusiastic about joining the EU after some member states began to show cold feet on making the country’s promised prospective of membership real. Similarly, Romania (and to a lesser degree Bulgaria) saw a rise in frustration with the EU after the two were recently refused Schengen accession, despite the fact that both countries had fulfilled the technical criteria officially specified for entry.

3.3. Two other aspects are arguably more important than the discussion on revising the Copenhagen criteria. The first concerns the development of a more systematic and proactive approach to uphold democratic practices and values inside the Union. The EU’s 115

Written evidence from the European Policy Centre experience with enlargement can provide inspiration for devising such a post-accession-type of conditionality but, ultimately, whether this sort of instrument will have teeth or even be possible will depend on the political will of the member states.

3.4. The second issue regards the EU’s absorption capacity for further enlargement. Will an ever-growing EU be able to continue to function effectively? How will its current institutional and decision-making set-up have to change in order to accommodate more and more members? A potential re-opening of the treaties in the context of economic governance reform could offer the opportunity to reflect or even act on proposals about this problem. However, should the pace of enlargement slow down considerably after Croatia (and Iceland?) or breakdown (with Turkey?), or else should the crisis result into ‘inner’ and ‘outer’ circles of member states, the EU might have to envisage new forms of (peripheral-type of) association for countries wishing to join. What would these arrangements look like? And will anything short of full membership ensure the economic and social modernisation, as well as democratic consolidation, normally required of new entrants?

3.5. To answer these questions, a serious and rational debate about the pros and cons of enlargement will be necessary in the member states and at the EU level. This will not only help to arrive at a successful enlargement strategy in the years to come – regardless of the timeframe for new accessions – but will also help to define the EU’s future character and role as a global actor. From this perspective, the real question is not to ask how the current situation in the EU and beyond is affecting enlargement but rather what enlargement can do to shape and solve the present context to the EU’s advantage. This also means that sequencing is important and that it would be a political mistake to wait to sort out the crisis before thinking about the rest. Since 1970s EU enlargement has been a key source of dynamism – driving economic, political and institutional change – in the Union. This is still valid. Enlargement is also the best – if not the only – way to deal with any outstanding problems on the EU’s doorstep, and to deliver on the transformation of the aspiring countries. And it is also a policy field which can help maintain EU’s power of attraction in the wider region and credibility in the world.

13 November 2012

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Written evidence from the European Policy Institute (Skopje)

1.Do Articles 2 and 49 of the Treaty of the European Union provide the right principles for any further enlargement of the EU?

Principles behind Enlargement

The Treaties provide a rather flexible basis for further enlargement. The Copenhagen criteria have proved to be a source of meritocracy for the enlargement process. However, individual conditions that are imposed upon candidate countries solely on the basis of the unanimity of the European Council decision undermine the Copenhagen criteria. Beyond the Copenhagen criteria, Macedonia has been blocked to start accession negotiations, besides having received four recommendations by the EC.

No sustainable alternative

For the countries of the Balkans no viable alternative for EU membership has been developed. Parts of the acquis are “exported” through sector agreements (e.g. Energy Community Treaty). In this situation the legislative and institutional framework is becoming more and more complex, as one part of the acquis is being exported through multilateral regional agreements, and the other part – through the bilateral stabilization and association agreements. Until now, no sustainable alternative to EU membership has been developed for the Balkan countries. It is questionable how successful this effort would be, as the remaining Balkan countries, which are not members of the EU are like a continental island neighbouring the EU. In terms of the EU absorption capacity, the Balkan countries which are not members of the EU do not present a risk in economic and social terms. The main challenges are political and related still to the issues of dissolution of former Yugoslavia. Therefore, the tangible perspective, without vetoes, could serve as a stimulus for reforms of candidate countries, based on the Copenhagen criteria.

11. Is ‘enlargement fatigue’ setting in for a) the Union as a whole, b) individual Member States, or c) candidate countries? How can such ‘fatigue’ be gauged, and

Capacity for further enlargement “fatigue”

The economic and financial crisis does have a negative effect on further enlargement. However, “enlargement fatigue” had been present in the EU and candidate countries rhetorique much longer than the crisis itself. Therefore, the roots for this state of mind go beyond the current crisis.

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From a viewpoint of a candidate country such as Macedonia, which has long been “knocking on the door” of the EU, this is a discouraging message. While the Enlargement strategy does mention a communication strategy on enlargement, the fact is that this is the part of the enlargement Strategy getting the least focus. On the contrary, what primarily receives attention is the “rule of law”, “organised crime and corruption”, which portray the enlargement countries in a negative image.

Possible instruments to gauge the current “fatigue” are: a sustainable communication strategy and additional political impetus to prevent excessive externalization of national interests when admitting new states.

A sustainable communication strategy would also focus on the achievements made during the past twenty years of transition. For Macedonia, it is certainly exemplary how the country made its peaceful way through the conflicts in the region and is building a multi-ethnic society on the basis of the Ohrid Framework Agreement.

Reforms related to the rule of law are certainly of primary political importance both for the EU and the countries concerned. These reforms and all other reforms can only be pursued if the EU membership perspective is tangible. If a negative message is delivered, EU risks having no leverage on the rule of law – related reforms in the Balkans. Furthermore, the resurgence of nationalism is a viable risks. For the Republic of Macedonia EU integration has also served as a “glue”, a common vision for the different ethnic communities to build on and develop further.

14 November 2012

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Written evidence by the Foreign and Commonwealth Office

1. Enlargement is one of the EU’s greatest achievements and is firmly in the national interest of the UK. The accession of new Member States helps to promote security, stability and prosperity across Europe, based on a firm foundation of democracy, human and civil rights and respect for the law. The European Union, alongside NATO, has proved itself to be an instrument of peace and reconciliation that has helped spread and entrench democracy and the rule of law across our continent, and helped make armed conflict between EU members unthinkable. At the same time, an enlarged Single Market, another of the key success stories of the EU, has opened up prosperity and opportunity to hundreds of millions of people. An outward looking approach and a continuing commitment to enlargement should be seen by all EU Member States as signs of strength and vigour. Membership of the EU is and should remain open for any European country that wants to join and can meet the rigorous accession criteria. Croatia’s expected accession in July 2013 will further demonstrate the EU’s continued relevance and the transformational power of enlargement, despite the on-going economic crisis.

2. The EU Treaties are clear that any European state which respects the values of the Union and is committed to promoting them can apply for membership. The EU has made clear that all Western Balkans countries can join when they meet the criteria, a commitment that the Government strongly supports, together with membership for Iceland and Turkey, whose continuation on the EU track is profoundly in the EU’s collective strategic interest. Each country should make progress on the basis of its “own merits”. It is important too that we continue with the mission of enlargement by remaining open to all those European countries who share our values and interests. Moldova, Belarus and Ukraine - as the Foreign Secretary said in his 23 October speech in Berlin - are European nations whose future lies with Europe. The same is true of the three Caucasian republics, if that is the path they wish to take. The EU must ensure that it has a compelling offer: it is up to us to promote democracy and encourage them to embrace freedom fully.

Enlargement is in the UK interest

3. Enlargement serves as a key driver for political and economic reform, and moves forward at a pace which is largely determined by the (potential) candidate countries’ respect for the Copenhagen criteria and their proven capacity to take on the obligations of membership.

4. The benefits of enlargement for the UK and the EU can be described as a combination of three main factors:

• political, given the power of the accession process to drive reform; • economic, as the benefits of political reform help create a larger and more prosperous single market, the collective economic influence of which can help shape a rapidly changing world economic order; and 119

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• security, not only in terms of soft security, as better functioning states reduce the space for organised crime and corruption but also as regards hard security, and the potential costs we save as stability spreads to previously unstable parts of our continent.

5. Political reform. If we compare the history of Europe in the 20 years since the fall of the Berlin Wall with the 20 years following the treaty of Versailles, there is a contrast between, in the earlier period, a time when fragile new democracies collapsed under the strain of domestic political tension, dictatorship and invasion, and, in the 20 years just passed, a time when we have seen democracy, the rule of law and human rights taking root in ever more countries on our continent. In this difference we can see the advantage that European Union enlargement has brought, and we can be proud of the UK’s contribution to that process.

6. The perspective of EU membership, combined with the application of political conditionality in the accession process, has been the catalyst for the substantial changes in rule of law and related governance issues vital to the successful functioning of the EU that took place in the twelve countries of the fifth and sixth enlargement rounds. While that process is not yet complete in all countries, the accession process has proved itself to be the best incentive for a country to undertake wide-ranging reform.

7. For example, as Croatian Foreign Minister Dr Vesna Pusić has observed, the Croatia about to accede to the EU is very different from the one that applied more than ten years ago. The incentive of EU membership provided the impetus to push through the far-reaching reforms that have delivered the stable institutions of an EU state. In Montenegro, the incentive of accession negotiations ensured that the Montenegrin government met in the course of 2011 the seven key priorities set by the EU in December 2010, allowing them to move on to the next stage of the process in June 2012. And the EU-facilitated Belgrade/Pristina Dialogue has already had a significant positive impact on Serbia and Kosovo’s attitudes to the normalisation of relations.

8. The economic benefits of enlargement are significant. Structural economic reforms to meet EU standards result in greater prosperity which benefits both the candidate country and existing EU members, as well as being essential to the establishment of a functioning market economy and to allowing the country to cope with the challenges of the Single Market. The accession process, even before countries join the EU, requires reforms that improve the business environment, making investment easier and more profitable. The countries of the Western Balkans, for example, although a small market, have the potential for rapid GDP growth, albeit from low bases and with their development having recently slowed with the rest of Europe. Among them, Kosovo has the highest projected GDP growth rate for 2013, of 4.1 per cent, and Croatia and Bosnia Herzegovina have the lowest, both at 1.0 per cent. The European Union’s projected growth rate is 0.5 per cent.

9. Between 2004 and 2007, EU enlargement extended the European Single Market by an additional 104 million consumers, and it now represents a market of over 500 million people. By some estimates EU countries currently trade twice as 120

Written evidence by the Foreign and Commonwealth Office

much with each other as they would in the absence of the Single Market. Trade with Central and Eastern European countries continues to grow. UK exports to the “Emerging Europe” countries of Central and Eastern Europe have almost trebled over the last ten years, reaching around £14 billion in 2011 (compared to £5 billion of exports in 2001). Increased trade with Europe since the 1980s has added as much as £3,300 a year to the net income of the average British household.

10. In this context, the Government remains convinced of the strategic case for Turkish membership of the EU. At a time when the EU is facing economic problems and instability in it neighbourhood, it is crucial to maintain a constructive relationship with Europe’s only emerging power. Turkish membership would boost the European Single Market and would play a major part in Europe’s long term prosperity by adding significant clout to its common external trade policy. In 2011, Turkey was Europe’s 8th largest, and the world’s 18th largest economy, and has experienced rapid GDP growth in recent years: GDP growth in 2011 was estimated at 8.5%, the third fastest in the G20 behind China (9.2%) and Argentina (8.9%). Goldman Sachs predicts Turkey’s economy will be the world’s 9th largest by 2050. In 2010, 42% of Turkey’s trade transactions by volume were with the European Union and 76% of Turkey’s foreign direct investment was from the European Union. Full accession would resolve many of the current problems businesses are experiencing with the Customs Union Agreement and further increase our share of Turkey’s rapidly growing market. Turkey’s position as a key transit country for oil and gas makes it central to the energy security of the EU.

11. Enlargement allows the establishment of security and stability across Europe. The 2004 enlargement represented a strategic investment against the risk of returning to a divided Europe. The conflicts of the 1990s in the Western Balkans demonstrated the very high human and financial cost to the EU of a region of instability on our doorstep. In Bosnia and Herzegovina, the European Union Force (EUFOR) has acted as a successful deterrent against a return to violence since it took over from the NATO Stabilisation Force (SFOR) in 2004. The renewal of EUFOR’s mandate for a further year this November will ensure its continued role in ensuring security and stability in Bosnia and Herzegovina. From December 2012, as part of our continuing support for a military deterrent in a strained and divisive political and economic climate, the UK will commit 120 troops to the EUFOR Intermediate Reserve (IR).

12. Enlargement is also an effective tool for tackling soft security issues over the long term. Better functioning states will reduce the space for organised crime. Cross- border crime, terrorism, illegal immigration, energy security and environmental issues are all dealt with at EU as well as national level, and the enlargement agenda allows us to tackle such trans-national issues more effectively. In the Western Balkans, for example, organised crime groups continue to be active in trafficking drugs into the EU. We can help tackle this problem through rigorous conditionality during accession negotiations to make sure that crucial Justice and Home Affairs (JHA) reforms are carried out prior to accession, and as EU members, through our joint responsibility to uphold the standards of the EU e.g. border control and police cooperation. 121

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13. The balance between these three factors (political transformation, prosperity and security) varies between candidate countries. Iceland’s accession for example is for both sides primarily about prosperity; whereas for Kosovo the key driver in the short term is security and stability, though political and economic reform will become increasingly important as the accession process develops and the institutions necessary for an EU member state are developed. It is therefore important that the enlargement process remains flexible enough to deal with the differences in balance and focus between the enlargement countries.

Alternatives to enlargement

14. With some accession applications stalled, and others blocked by bilateral disputes, and in the face of “enlargement fatigue” in some member states, it is worth considering the alternatives, and the opportunity costs of not continuing enlargement. NATO membership is a key goal that delivers reforms related to security policy. But it does not provide the same framework and context for significant reform across the entire EU acquis as is demanded by the EU accession process. And only full membership offers a sufficiently strong incentive to encourage states to make the necessary deep reforms against the wishes of powerful vested interests. While the relationship offered through the European Neighbourhood Policy is valuable in itself, it is a compelling offer of full membership one day, subject always to the criteria for accession being met, which offers the most powerful leverage by which to promote democracy and human rights in countries of the Eastern Partnership.

Maintaining the momentum of reform

15. The European Council in December 2011 reaffirmed its support for the 2006 renewed consensus in support of enlargement, based on consolidation of commitments, fair and rigorous conditionality, better communication, combined with the EU’s capacity to integrate new members, with each country being assessed on its own merits. The European Council recognised that a “credible enlargement policy is key to maintaining the momentum of reform in the countries concerned and public support for enlargement in the Member States”.

16. The Commission rightly noted in its 2012 Enlargement Strategy that “in the context of economic stagnation, there are risks of a lurch towards populism and resistance to essential reforms” in the applicant countries. The EU needs to ensure that its pull factor is sufficient to counter this risk of “reform fatigue”. That requires the EU to demonstrate that it is part of the solution, and that when candidates deliver the necessary reforms, the EU responds and they move closer towards accession.

17. Some Member States are now reluctant to support further enlargement and argue that there is a limit to the capacity of the EU to absorb new members. The Government disagrees strongly with this attitude, believing that the risks to our collective security and prosperity will be greater if we slam the door on European countries that are prepared to commit themselves to the accession

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process. Rigorous conditions and a tough-minded approach to conditionality will remain essential both to prepare new member states for the obligations that membership entails and to reassure existing members that the essential elements of EU membership are not compromised.

18. Of course, further enlargement will change the EU, just as every previous round of enlargement has done. The already diverse EU will become even more so: by the time all the Western Balkan nations join there will be more than thirty countries in it, whose peoples do and will want different things from the EU. We should recognise and embrace that diversity.

19. There will be costs related to future enlargements. They are impossible to predict with any precision as they depend inter alia on timing, EU budget decisions and the level of economic development of an acceding state at the moment it joins. As with earlier enlargements, the budget costs need to be set against the benefits of increased trade within the Single Market, and the ability of a larger EU to project itself globally, whether economically or politically. The benefits enlargement brings in terms of freedom, stability and security cannot be counted in monetary units alone. However, visible direct expenditures on enlargement do provide some indicator of the monetary costs for the EU. These expenditures include pre- and post-accession assistance. For example, over the course of the 2007-2013 multi-annual financial framework, a total of €11.47bn is available to countries with an EU enlargement perspective through the Instrument for Pre-accession Assistance (IPA). Post-accession costs, in simple budgetary terms, are of course dependent on the final outcome of negotiations for each financial perspective. However, by way of example, Structural and Cohesion Fund commitments to Bulgaria for 2007 – 2013 were €6.9bn; and looking ahead, the Office for Budget Responsibility estimates that there will be some small cost increases within the EU budget for Croatia. As with every aspect of EU expenditure, the Government is committed to ensuring that spending is restrained and the maximum value obtained for every euro spent.

Evolution and Leverage

20. The enlargement process continues to evolve as lessons are learned from each accession round. In the early stages of Central and Eastern Europe’s accession process the political desirability of enlargement was prioritised by many over the need for technical readiness. In more recent years, there has been an increasing emphasis from both Member States and the Commission on strict conditionality and the need to meet technical benchmarks. In order to maintain the EU’s capacity to integrate new members, the process needs to be robust and credible, with tough conditionality from start to finish.

21. Croatia has therefore faced the most demanding negotiations yet. Strengthening the rule of law and democratic governance is central to the enlargement process. Following the sixth enlargement to Romania and Bulgaria in 2007, the accession process was improved with the introduction of Chapter 23 (judiciary and fundamental rights) to provide greater focus on the development of a strong track record on the rule of law; with opening benchmarks introduced and conditionality for key political criteria (e.g. rule of law, anti-corruption, judicial 123

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and administrative reform) strengthened, with the requirement for compliance ‘frontloaded’. The EU also stopped giving target accession dates to avoid creating political pressure for accession within a certain timeframe.

22. In December 2011, building further on the lessons of Croatia’s accession, the General Affairs Council endorsed the Commission’s proposal for a “new approach” to addressing rule of law reforms. This represents a further refinement to the enlargement process in order to enhance its credibility and effectiveness in meeting the challenges of each new accession. Chiefly, it involves early opening of Chapter 23 and Chapter 24 (Justice, Freedom and Security) along with a reinforced negotiating scheme to give the Commission and the Member States greater leverage. Tackling Chapters 23 and 24 early and on the basis of appropriate conditionality maximises the time available for candidates to address these fundamental issues and to build up a strong track record. Montenegro will be the first to benefit from the new approach, and following the opening of accession negotiations in June, we look forward to the early opening of chapters 23 and 24. This will help Montenegro to confront the challenges of organised crime and corruption and press forward with judicial reform. Successful reforms in these areas will also underpin success in other chapters of the acquis.

23. Effective leverage also requires the EU to deliver on its side of the bargain in order to maintain the credibility of the process for the candidate countries. For instance, while the accession process has helped change Turkey over the last decade, in recent years it has stalled and its influence has diminished. It is essential that we strengthen the EU’s ability to be a catalyst for reform by reinvigorating Turkey’s accession process.

24. A proactive approach, moving each country forward through incremental steps is increasingly important to maintain visible momentum. At a time when the EU faces major challenges, continued focus on enlargement remains an essential investment in the security and prosperity of Europe. In Macedonia, for instance, while accession negotiations have remained blocked, the Commission has this year engaged in a High Level Accession Dialogue, a process which has delivered further vital reforms which will enable Macedonia to progress more quickly once negotiations do begin, and which, by demonstrating continued EU commitment to Macedonia, has played a role in maintaining political stability since the signing of the Ohrid Framework Agreement eleven years ago. Similarly, in Bosnia and Herzegovina the EU has provided focus through a High Level Dialogue on the Accession Process, and a Structured Dialogue on the Rule of Law. The EU will also continue to work with the Bosnian government to implement the European Court of Human Rights judgement on the Sejdić Finci case and to establish an effective co-ordination mechanism in order for the Stabilisation and Association Agreement to enter into force and to pave the way for them to submit a credible membership bid. While progress has been disappointingly slow, the EU’s engagement and the perspective it has offered has led the Bosnian leaders to establish a clear road map that they now need to follow.

25. Regional cooperation and good neighbourly relations also remain central to the enlargement process. Bilateral disputes cannot be allowed to undermine these 124

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key principles or to interfere with the enlargement process, either by holding up accession or being made part of the accession process. Demonstrating the way in which the enlargement process can make a positive contribution on these issues, the Croatian parliament, “empowered by the completion of the accession negotiations”, in October 2011 adopted a Declaration on Promoting European Values in Southeast Europe expressing a firm commitment that bilateral issues such as border issues must not obstruct the accession of candidate countries to the EU, and committing Croatia to support the EU aspirations of others in the region.

Delivering Enlargement

26. In order to deliver enlargement, the UK works closely not only with the candidate countries but also with the Commission, European External Action Service and other Member States to maximise our influence and to encourage positive change. The Government also works closely with the US, who are key and influential supporters of further enlargement and of regional reform and stability. In Bosnia and Herzegovina, we support the work of the EU Special Representative (EUSR) in his efforts to facilitate progress on the key elements mentioned in paragraph 24 above. With Turkey, we have been active in promoting the Foreign Policy Dialogue with the EU, including through UK secondments to the institutions, close working with other Member States, and strongly supporting the invitation to Foreign Minister Davutoglu to a Foreign Affairs Council in 2012. We are also active in providing political support to processes crucial for enlargement, and helped secure agreement to the EU- facilitated Belgrade-Pristina Dialogue process.

27. Applicant countries are given financial support through the Instrument for Pre- accession Assistance to meet the EU accession criteria. These funds, with a total ceiling of €11.47 billion in the current 2007-13 financial perspective, are used to support initiatives related to institution-building and the rule of law, human rights, administrative and economic reforms, and regional and cross-border cooperation, with the aim of preparing countries to meet the tough membership criteria for the EU. Funding is currently allocated mainly through technical assistance, twinning (teams of seconded national experts into beneficiary countries) and projects, including grants to enable loans managed by the Western Balkans Investment Framework. A revised IPA II is currently being negotiated to support enlargement during the 2014 -2020 financial framework.

28. The UK Government has heavily engaged to ensure that the revised instrument provides a stronger strategic link between IPA funding and the delivery of enlargement priorities, with greater flexibility to meet each country’s needs, thereby also enhancing the efficiency and effectiveness of EU funding. The Government also continues to provide strategically targeted bilateral funding in support of key political reforms. Our ability to act swiftly and in a highly targeted way enables the UK to work closely with candidate countries to help ensure that the more substantial EU funds, when they come on line, are properly focused on our key priorities.

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29. As set out above, each country progresses towards accession on its “own merits”, now along a more complex and incremental path than was the case during the fifth and sixth enlargements. Incentives and reforms need to be managed and evaluated over longer timescales. The Commission’s Annual Enlargement Package, published each autumn, remains an essential element of this process, ensuring the regular evaluation, refreshment and reassertion of the EU’s wider enlargement strategy. Equally importantly, it provides an annual opportunity for Member States to hold the Commission and candidate countries to account on both the overarching strategy and on progress made by individual countries, with national Parliaments and the Council of Ministers able to scrutinise and reaffirm their own commitments and actions to maintain credible, conditions-based momentum towards further EU enlargement.

29 November 2012

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Evidence Session No. 9 Heard in Public. Questions 167 - 188

TUESDAY 15 JANUARY 2013

4.10 pm

Witnesses: Rt Hon David Lidington MP, Tim Hemmings and Owen Jenkins

Members present

Lord Boswell of Aynho (Chairman) Lord Bowness Lord Carter of Coles Lord Dear Baroness Eccles of Moulton Lord Foulkes of Cumnock Lord Harrison Lord Maclennan of Rogart Lord Marlesford Baroness O’Cathain Lord Richard Earl of Sandwich Lord Tomlinson Baroness Young of Hornsey ______

Rt Hon David Lidington MP, Minister for Europe, Tim Hemmings, Head of Future of Europe Department, and Owen Jenkins, Head of Western Balkans and Enlargement Department, Foreign and Commonwealth Office.

Q167 The Chairman: Minister, a very warm welcome to you at the beginning of a new year. You are very familiar with this Committee and its ways, and you are always welcome here. We look forward very much to what you are going to say. This session is slightly different from our normal exchanges about General Affairs Councils and so forth, because this is a public evidence session on our EU Select Committee’s—the main Committee’s— inquiry into enlargement. We will, if we may, blend that in with one or two matters of current interest—I am sure you could list a few of those—and we will do our level best, if we are all self-restrained, to provide some time for those at the end.

The context on this occasion is a public evidence session on the inquiry. In that context, I should say that Members of this Committee have already declared their interests in relation to the inquiry, and, for visitors and others, that those interests are listed in the information sheets at the side and on our website. As you know, we attach great importance to public transparency, equally so on this occasion. It might be helpful before we kick off with the first one if you just introduce your team for the record. They, too, are very welcome, as you are. 127

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David Lidington MP: Thank you, Lord Chairman. I will ask the two members of my team to introduce themselves for the record. Owen, do you want to kick off?

Owen Jenkins: Thank you. I am Owen Jenkins. I am the Head of the Western Balkans and Enlargement Department at the Foreign and Commonwealth Office.

Tim Hemmings: I am Tim Hemmings, Head of the Future of Europe Department at the Foreign and Commonwealth Office.

The Chairman: Thank you for that. We will note those marginal comments, and we will proceed with the questioning. I should perhaps say, in case this seems like a fast ball, that I am reserving my personal role for a little later on when there are a couple of questions and things have moved on a bit.

Q168 Lord Bowness: Minister, good afternoon. My question really is around the western Balkans and the General Affairs Council conclusions that contain these various paragraphs, described as “rendezvous paragraphs”, which suggest that things might happen with regard to the different states in the spring. You have written an article that was very positive about enlargement. Can you perhaps indicate to us how likely it is that progress will be made in the spring? What progress is the EU making in encouraging reform in all these countries? Perhaps I can link this to the following question. Are you concerned that, perhaps with the delay on some of the countries, they are looking back to some of their traditional relationships with Russia in case they do not get a favourable nod from the Council itself? Perhaps I will just add to that. We have talked for a long time about how important we in the European Union, and in particular the United Kingdom, view enlargement into the western Balkans. Can I ask you perhaps very directly what efforts we are making to keep it on the agenda to bring those countries towards membership?

David Lidington MP: Thank you. Let me try to answer in sequence the three questions that Lord Bowness posed. On the December Council conclusions and the chances of those targets of progress being met during the first half of 2013, I remain hopeful, but one cannot guarantee success because success does depend upon political will within the candidate countries themselves. Individually, paths are laid down for three in the December Council conclusions: Macedonia, Serbia and Kosovo. In the case of Kosovo, the question is whether it will abet the short-term conditionality required to open negotiations on an SAA—a stabilisation and association agreement.

With Serbia, I will be completely honest with the Committee; I have been very pleasantly surprised by the way in which the new government of Serbia who were elected last summer have committed themselves to the path of EU accession, and in particular to taking forward the dialogue with Kosovo, which the European Union had set as one of the key tests of Serbia’s progress in the negotiations. The new government came in with the reputation of representing very hard line nationalist elements, and I think that not just the British Government but a number of EU governments and Brussels institutions have found it remarkable how willing in practice they have proved to be to move forward. We have had meetings between the two Prime Ministers, Mr Dacic and Mr Thaci. There is work to be done still, and, as is the case with almost any such very sensitive post- conflict situation around the world, there is always the risk that an event will happen: that there will be something on the ground that tempts people to retreat to the wagons and take 128

Foreign and Commonwealth Office – Oral evidence (QQ 167-188) up positions defending their own core support. We see this in Northern Ireland. This is not unique to the Balkans. That risk is there, but so far the evidence is of a genuine commitment in Serbia to move forward.

I think it is true of Kosovo as well; Prime Minister Thaci and his ministerial team are very clear about their commitment to the path towards a stabilisation and association agreement. There are problems. There are challenges. We would like to see them go further and faster on anti-corruption and rule of law measures. I think that is the one of the big challenges for Kosovo, but Kosovo knows that it needs to have a clear European perspective, and we certainly encourage people on that path.

I wish it had been possible to get agreement for Macedonia to take the further step forward, because I think it has implemented significant domestic reforms. The conclusion is to ask Macedonia to demonstrate good will and significant steps in finding a solution to the name issue with Greece. We do not see the resolution of that as a condition of EU accession, but the political reality is that decisions about membership require unanimity around the table, and I think it is fair to expect both Macedonia and Greece to make every possible effort to find agreement on this point. My fear is that if we do not succeed in moving forward with Macedonia, we then get retreat. I do not think we will get so much some new bosom friendship with Russia, but I think the risk would be of the Albanian minority in Macedonia losing faith in the European progress that was part of the Ohrid agreement, and getting increased tension within Macedonia because of disappointed expectations.

On the risk that these western Balkans countries, in the absence of progress towards the EU, would revert to looking to Moscow—I would phrase the question in a more direct form than the one Lord Bowness posed it in, but I infer that from his question—

Q169 Lord Bowness: I suppose it is particularly so with Serbia.

David Lidington MP: Particularly so with Serbia, yes, and during the Kosovo war, of course. There was close agreement between Belgrade and Moscow, and Russia has to this day not recognised the independence of Kosovo. But I think that any clear-sighted Serbian politician would know that it makes no sense for Serbia to become a non-EU hole in the western Balkans. I think Croatia’s impending accession is sending a very powerful message around the western Balkans both about what is possible and about the risks of not making further progress themselves. Now Montenegro is commencing negotiations, I think that message to Serbia has been reinforced. The economic background is that Serbia in 2011 had nearly €13.5 billion of total trade with the European Union and only €2.3 billion of total trade with Russia. The EU is the largest donor in the Western Balkan region by far, and if you look at Western Balkan states as a whole—these are figures from 2010—the Western Balkans countries exported over 20 times as much to the EU 27 than to Russia and imported over 10 times as much. So the economic pressures, I think, would reinforce that European alignment.

In terms of what the United Kingdom does, we certainly are very active, both in Brussels and in other capitals, to try to ensure not only that enlargement remains a core priority for the European Union but that we get it on to the agenda and we work for outcomes at council meetings and in intervening negotiations that help move the accession process forward. We have consistently asserted that there should be no artificial pause after Croatia, that the principle remains true that if a country is European, wants to join and can meet the 129

Foreign and Commonwealth Office – Oral evidence (QQ 167-188) accession criteria, then it should be entitled to join the EU. I do not find it easy to see, scanning the treaties, that any other justification can be used when judging whether a country is fit for membership or not.

We continue to argue that at a European level the admission of those Western Balkans countries will reinforce their fragile political stability, that it will make it easier for those countries to deliver the prosperity on which in part that stability will rest, and that accession and the reforms that are required for accession will help to deal with the challenges of organised crime, corruption, people trafficking and drug trafficking that beset the Balkans and are a threat to the rest of Europe.

In our conversations with the Balkans countries, we are very clear in saying to them that we are committed, resolute supporters of their aspirations for joining, but that equally they need to deliver and that there are no shortcuts to meeting the accession criteria. In so far as we are able to do so—it is obviously a question of finite resources here—we do try to help in a targeted way by providing know-how and programme assistance to countries to implement reforms. One example I would cite is the very successful bilateral project with Albania to train its judiciary, and a number of retired judges, including retired Law Lords, have played an active part in that programme in Albania.

The Chairman: Thank you, Minister. That is very helpful. If, in supplementing the evidence you have given to us and written evidence, you felt disposed to give us any more details on the actual programmes that are being carried out, it would be helpful to us. Without extending this too far—I imagine that may well have a British perspective, and rightly so—it might be quite useful if you could remind the Committee of the overall figures of EU assistance through the IPA and so forth. If I may also suggest as a supplement, because I happen to have picked up something this morning about soliciting Swiss aid for Kosovo, it would be quite useful to have something on EEA and other European countries that are also assisting, because it would be useful to get a measure of the amount of resources that are already called on for that purpose.

I turn now, still on the western Balkans, to Lord Dear. Perhaps he might care to ask a bit more about what you might call the course of public opinion and the politics as opposed to merely the inter-government—

Q170 Lord Dear: Yes. Minister, good afternoon. I realise you have brushed against this topic already, but it would help us to know whether you think that some of the western Balkans countries might start moving away from the EU. You have already talked about them perhaps looking east towards Russia, but there are other directions in which they could look as well, particularly if they receive what they might deem to be unfavourable or unhelpful decisions from the Council. Is there fragility there? Is there possible fluidity there? It would help us to know.

David Lidington MP: I think the fragility is more in the internal systems of politics and the rule of law than it is in their external alignment. It is true, if I look at Serbia, which Lord Bowness mentioned, that historically President Nikolic’s party has had a particularly close relationship with Russia, and that Serbia, during and since the Kosovo conflict, has tended to look to Russia as a protector of Serbia’s interests at the United Nations and elsewhere, trying to discourage other countries from recognising Kosovo independence and so on.

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There was a considered, pretty bold and historic decision by former President Tadic and his government to go for EU membership and a deliberate decision by the incoming government, President Nikolic and Prime Minister Dacic, to reassert that that was Serbia’s ambition. I think that had they been tempted in the way that Lord Dear understandably fears, we would probably have seen signs of that in the early stages of that government because they had the opportunity, newly elected, to disavow their predecessors and instead went out of their way from the very first meetings we had with them to emphasise that they were absolutely committed to the EU path. I think they have made a considered decision that their long-term interests in political stability and prosperity lie through integration into the single market and the other arrangements of the European Union.

There is an inherent risk in all these countries that if there were to be a serious setback, you could get some populist movement that would say, “To hell with the European Union telling us what to do”. I think the politics in these countries is still a pretty rumbustious affair, and there is a risk. The democracies are new. They are fragile. Many of the political parties do not have long histories. Rule-of-law institutions historically have been weak, though their record is getting better, but there are plenty of miles still to travel there. There are risks, and that is why I think the application of know-how and targeted programme assistance at both EU and national level is important.

The Chairman: Thank you. Can we turn now to Turkey?

Q171 Lord Tomlinson: Minister, several witnesses have spoken to this Committee about the Commission’s innovations to tackle political blocks and to maintain momentum in the negotiations, such as the positive agenda with Turkey. Only two weeks ago we saw Turkey’s leaders stating in no uncertain terms their feeling that the EU is treating Turkey badly as a candidate. Indeed, one of them even referred to EU bigotry in relation to Turkey. What realistic possibilities do you believe exist for the EU accession agenda with Turkey picking up the momentum again over the next few months, and on which areas is progress most likely to be made?

David Lidington MP: It is true that Turkish leaders feel bruised by the way in which their accession process has moved desperately slowly, and I think that sense of frustration is increased by the fact that Turkey is making great strides in its economic development, growth and prosperity in the meantime and is also becoming a more significant player in regional and global politics.

Having said that, when Prime Minister Erdogan was in Germany last October, he reconfirmed Turkey’s strategic commitment to European Union membership. My opposite number, Egemen Bagıș, wrote an article in The Guardian on 22 December last year in which he argued that Turkey—and he singled out Istanbul as the biggest city and a city part of which he represents in Parliament—is quietly moving towards the EU: that adjustments to the EU way of operating, particularly in economic affairs, are happening. I think the enlargement conclusions that we secured in December are forward-looking and give the Irish Presidency and EU institutions a very strong mandate to make progress in 2013. I think Members of the Committee will recall that this time last year we were all quite fearful that the forthcoming Cypriot Presidency of the European Union might lead to a complete collapse in the EU/Turkey relationship. In the event, that was contained. Turkey refused to have anything to do with the Presidency while the Republic of Cyprus held that office, and no progress was made in opening further accession chapters, but Turkey continued talking 131

Foreign and Commonwealth Office – Oral evidence (QQ 167-188) to the Commission. It continued talking to the Council, to member states and to Baroness Ashton, so the relationship was maintained.

We are hoping that the Irish Presidency, with full support of the Commission, will make an effort to see some real forward progress in 2013. I think that does mean we need to try to get at least one more chapter of the acquis opened for negotiation. I do not want to count my chickens, but I am hopeful that the new French government are more open to that prospect than their predecessor had been. We also want to see closer foreign policy cooperation between the EU and Turkey, something that I think can be taken forward even with the continued difficulties over Cyprus, and scope for progress both on closer cooperation on justice and home affairs and in developing the Commission’s proposals that are now on the table to strengthen and improve the functioning of the customs union with Turkey. There are a number of areas of policy where that relationship can be developed further.

We come back to the fact that, at the end of the day, the thing that would make the biggest difference is if we could finally get progress in the Cyprus dispute. We shall have to await the outcome of the Cypriot elections and see what the prospects are after that. Clearly while an election campaign is taking place in Cyprus, one does not expect any move. We hope that whoever is elected as president will make a renewed effort to try to find a breakthrough.

Lord Tomlinson: I wonder if I could just follow that up very briefly, because Turkey over the last two decades—and I was historically an opponent of Turkish membership—has given substantial support to the European Union in some of its foreign policy objectives. I am thinking particularly of the way in which oil supplies flowed during the first Iraq war and, secondly, the way in which Turkey responded, as no other European country did, to the refugee crisis arising from the war in Syria. Is there any sense of feeling that Turkey is now a country that we owe it to its people to be more encouraging to?

David Lidington MP: There is certainly that feeling. One of the arguments that we use consistently is that Turkey has demonstrated in instances like that that she is an ally and a partner of enormous value to the European Union. I remain of the view that it would be an error of historic and potentially catastrophic dimensions for Europe to cold-shoulder Turkey just at the moment when she is emerging as a major player in both economic and diplomatic terms.

Much of the problem does take us back to the Cyprus issue. One also finds in some member state capitals questions raised about what we mean by “Europe”. I think that including Turkey will be a very powerful signal that Europe is inclusive, and it would be a good signal to Muslims within Europe and to Muslim countries outside Europe about how we see the world. I think it would be a powerful signal to other emerging economies that the European Union is not a group that is hostile to rising economic powers but one that is very keen to work in close partnership with them.

Q172 Baroness O’Cathain: One of the things that strikes me is that we had evidence that since 2005 there has been no progress at all on Turkey and that it is not necessarily looking elsewhere but seems to be not that interested. Is that true or not? If you were a betting man, what do you think the bets would be that they would be a member of the EU in three or four years’ time?

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David Lidington MP: I would think three or four years was extraordinarily ambitious.

Baroness O’Cathain: Okay, 10 years, then.

David Lidington MP: Let us just look at a country as small as Croatia. It has taken it a long time. Just the final stages of negotiations have taken quite a bit of time. While I would dearly love to see Turkey making rapid progress, I do not think that people in Ankara or Istanbul seriously expect a three or four-year timetable. I think it is reasonable to hope that within three or four years we will see some serious progress both on the accession chapters and on other aspects of the EU/Turkey relationship.

Baroness O’Cathain: Like Cyprus?

David Lidington MP: That does depend, at the end of the day, on the leaders of the communities within Cyprus themselves. Unless they have ownership of any settlement, it is not going to stick. While the UN or others could act as facilitators, at the end of the day a settlement is something that has to be endorsed by the leaders of both Greek and Turkish Cypriots in Cyprus. I think Turkey is aware that she has interests beyond the European Union: that she is a more active player in the Near East, in the caucus of Central Asia, in Africa where Turkey has opened nearly 20 embassies in the last few years. Having said all that, I think the events of the Arab Spring have also been a reminder that the neighbours to the south and east of Turkey are not guaranteed the political stability or the secure economic and investment prospects that the countries of the European Union offer.

Q173 Lord Maclennan of Rogart: Minister, you mentioned your hope that a new chapter might be opened in the next six months. Am I right that only three chapters out of something like 13 have been opened, and is it necessary to have unanimity about opening chapters? It seems to me that the substance of the discussion is what would require unanimity at the end point, rather than the starting point of these matters.

David Lidington MP: I will check whether it is just six that have been opened. Certainly a large number have been blocked. It does require unanimity.

Lord Maclennan of Rogart: To open a chapter?

David Lidington MP: To open a chapter, yes. Almost anything with regard to membership still requires unanimity, and there are a number of chapters that Cyprus has blocked. There are others that were blocked by the EU collectively because Turkey did not implement the Additional Ankara Protocol. As Lord Maclennan knows, that in turn was linked to issues concerning Cypriot ports. So there a number of strands to this. It is very disappointing, but I think we have to keep pushing forward, because the strategic goal of Turkish accession remains valid. It remains as much in the interests of Europe as a whole now as it ever did.

Q174 Lord Marlesford: Sticking still with Turkey, given that enlargement is by definition an organic process, there are two impacts that accession or enlargement has: first of all, the effect on the country joining; and, secondly, the effect on the EU of the country joining. Taking the first, given the obstacles and the problems there have been with making progress on Turkey, are we losing the capability of influencing Turkey in terms of the sort of internal reforms that have always been talked about? Secondly, given that one of the real obstacles is clearly—at the popular level at least—to Turkish membership, particularly as it applies to 133

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France and Germany, the prospect of the Turkish movement of people in large numbers into EU countries, do you think we are reaching a stage where, under the general principle of variable geometry for the future of Europe, we may be moving away from unrestricted freedom of movement, to which there are already some restrictions, as you know, and which are becoming axiomatic as part of enlargement?

David Lidington MP: I think on the first point there is still leverage. I was asked earlier about the level of EU funding. EU programme funding budgeted for in 2013 is going to be worth just over €860 million to Turkey23. That is spent on a number of different things that it is in Turkey’s interest to develop. I will give illustrations of that. The EU has contributed to the establishment of a national food reference laboratory to provide a higher-quality food safety system aligned with EU standards. That would make it possible for more trade in foodstuffs between Europe and Turkey.

Whenever I talk to my Turkish opposite numbers, I find that both Egemen Bagıș and Ahmet Davutoglu say to me again and again, “We are going to make these reforms in Turkey to comply with the EU acquis because we think it is in the interests of Turkey in the long run anyway to modernise our economy and to reform and improve our judicial and administrative systems”. On the latter point, sometimes Turkey does not move as far or fast as western European countries would wish or certainly not as far as some of the Turkish critics in the media would wish, but one has to acknowledge that there have been some very significant reforms to the Turkish judiciary, for example. I think that the process of EU accession is probably the most powerful single driver of those changes. Just before I come on to migration, I have been passed a note that gives a bit more information that may help Lord Maclennan. I am advised that 13 chapters have been opened in the Turkish accession process, but only one chapter has been closed with negotiations complete. We will write with a bit more information on which chapters have been opened and closed, which are blocked and by whom.

On migration, I think there is pretty universal agreement among existing member states now that we would look to have transitional controls on freedom of movement when a new member state comes in. Clearly, the nature and duration of those controls would have to be dealt with in respect of Turkey as part of the accession negotiations. We are not at that stage yet. If I look at this in the medium and long term, I would say that obviously the more prosperous Turkey gets the smaller the chance of very large numbers of people wanting to emigrate, but I completely accept that the reality at the moment is that there are still very large numbers of people who may see that there is a more prosperous way of life available if they move elsewhere. A country like Germany already has a very significant population of people from Turkey.

I do not find, in conversations with other European Ministers, a strong appetite to retreat from the principle of freedom of movement because that does provide advantages to citizens from every country. I think of the roughly 7,000 British people who are now resident in Bulgaria, or the 850,000, from memory, who are resident in Spain, or London, which is now the seventh largest French city in the world because of the number of French people who have come to work here. There are benefits in the freedom to travel and study and work.

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At the same time, there are justified concerns that the rules on freedom of movement may be capable of abuse by people who are not travelling in order to work but in order to find a way in which to claim welfare benefits. That is not a concern unique to the United Kingdom. If one talks to Ministers and senior officials from a number of other countries, particularly northern and western Europe, one finds that concern coming through strongly. It would not surprise me if we saw a discussion about how to curb the abuse of that freedom to travel in order to work. I do not, at the moment, observe a major challenge to the principle of freedom of movement, but clearly in many European countries there are real public concerns about migration and about integration and social cohesion.

The Chairman: Thank you, Minister. Before we move off Turkey, perhaps I might, motivated by your responses, invite you also to let us have a little note on the aid programmes to Turkey specifically, as I asked on the Western Balkans. The other point— and I realise this is perhaps neutral to the argument about enlargement—is that it might be useful to have for the record some indication of the integration of the Turkish economy with the EU economy. I suspect that has taken place pretty briskly, but I am not sure we have it on the record yet.

David Lidington MP: We can certainly do that. Also, if I may say, the House of Commons Foreign Affairs Committee did quite a long report on Turkey last year that may be of interest.

Q175 The Chairman: Indeed, yes. Thank you for reminding us of that. We will pass on probably briefly to Iceland and to the General Affairs Council conclusions, which noted that negotiations with Iceland are now entering a more decisive phase. If I wish to be flippant, I suppose I could say that, as it has now been suspended ahead of the parliamentary elections, that is a decision, but we understand that co-operation between the negotiating committee from Iceland and the Commission will continue. Could you indicate whether this is a sign that the membership trajectory for Iceland is now moving firmly backwards or not? If negotiations are resumed in the spring after the elections, what stumbling blocks remain apart from the as yet unopened fisheries chapter, and how do you think they might be overcome? What sort of perspective do you have on it?

David Lidington MP: Clearly, at the end of the day, it is for the government and the people of Iceland to decide whether they want to pursue the objective of membership or not. From a British point of view, I hope they do, because our experience of work with the Nordic countries is that, on many issues, they are like-minded on the single market, on the emphasis on growth and competitiveness and the like.

The Chairman: Just interposing, presumably there is understood to be no major problem on the Copenhagen criteria or the acquis?

David Lidington MP: No, absolutely not. There are not those worries at all. We will have to see what the outcome of Iceland’s election is and what the new government wish to do, once it is in place. For the sake of this session, if we assume that the government want to continue with the accession process, I think the remaining problems include capital controls, on which Iceland, understandably, imposed some controls after the 2008 crash. The EU rules also require the free movement of capital, and the agriculture and fisheries policy still needs new reform in terms of administrative, common market organisation, rural development and quality policy. 135

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On Icesave—which is not a bilateral issue; it is about a matter of compliance with the judgment of the EFTA Court—we still want to see irreversible progress, as I think the Committee knows. We are waiting for a further ruling from the EFTA Court within the next couple of weeks, and that, I hope, will then show the way for further progress. I will not be shocked if, with an Icelandic election in train, we again have to wait until after that before we see it perhaps moving forward.

It is important for fishing; the mackerel disputes are the key element between the EU, Norway, the Faroe Islands and Iceland. It needs to be resolved, but it is a separate issue from the accession negotiations. It has a bad impact on the climate within which accession negotiations take place but it is not part of the fisheries accession talks. It is a discrete issue.

The Chairman: Is that going to be handled through the North East Atlantic Fisheries Commission? I am not quite clear.

David Lidington MP: Either I or the Fisheries Minister will write with re-clarification of that. I think, from memory, that the unilateral imposition of increased mackerel quotas by Iceland and the Faroe Islands is at the heart of the difficulty.

The Chairman: That is really helpful.

Q176 Lord Tomlinson: I just have a brief supplementary on that, Minister. Following the financial debacle that was Iceland a few years ago, are we satisfied that the United Kingdom and the Netherlands are going to be repaid in full what they regard as their dues?

David Lidington MP: It is a matter of vital importance to us and to the Dutch government. Iceland has now repaid almost half of the guaranteed deposits, and negotiations are continuing over the terms of a loan agreement in respect of compensation paid to British depositors in Icesave. Those talks are suspended pending the outcome of the proceedings in the EFTA Court. We are expecting that judgment on 28 January, and we certainly expect that, as a duly constituted international court, its findings will be respected and acted upon. So far, while the negotiations were difficult at the early stages, there has been genuine commitment by Iceland’s political leaders to ensure that this is settled.

Lord Tomlinson: But not by the referendum?

David Lidington MP: The key element was the first judgment of the EFTA Court. I think Iceland’s leaders accepted, once the Court made its ruling, that this had become a matter of international rule of law, whereas I think they had been reluctant to act on the basis of the political representations from us and the Netherlands. I think they find it easier to handle the issue when it is a matter of judicial process.

The Chairman: If we may, let us go on to the enlargement process itself.

Q177 Lord Maclennan of Rogart: Minister, I think you have made it clear today, as the written evidence we have received has, that the Government do not take the view that we have reached the limit of the absorptive or integrative capacity of the Union, but we wonder if there are any further institutional difficulties for the Union itself in further enlargement, such as the size of the Commission, and decision-making processes generally. It would be 136

Foreign and Commonwealth Office – Oral evidence (QQ 167-188) most helpful if you could indicate the scale and nature of the obstacles and how they might be resolved.

David Lidington MP: I can only speak from my own experience. I have not found that the addition of new member states—having a larger number of people round the table—has made it more difficult. Clearly, for most EU decisions since Lisbon, we are looking at qualified majority voting in any case. For those matters that still require unanimity, particularly on common foreign security policy and common security and defence policy, the politics of this tends to work on the basis that the large member states that have the global diplomatic network with member states that have a particular interest in the foreign policy issue under discussion will put their heads together and propose a way forward.

In practice, I have often found that a lot of other member states will say, “Okay, if that is what you all think, we will go along with that. We do not have a dog in this particular fight”. When we look at Iran and Syria, it has not been the size of the EU that has been a problem. There have, in some Council discussions, been particular national interests at stake, but those have often been the national interests of some of the older members of the European Union.

There clearly are question marks. It is perfectly fair for Lord Maclennan to ask how long you can continue to add to the size of Commission and what you do with the European Parliament. The European Parliament has a ceiling on its numbers fitted into the treaty. That, of course, means that with a new accession the numbers have to be adjusted. With small populations, and this is the case with the Western Balkans, that is manageable. Clearly, if we were looking at Turkish accession, there would be a bigger question to resolve about EP size.

With the Commission, Lisbon provided a move away from one Commissioner per country towards a rotational basis, but the rotation would have to be agreed unanimously by all member states. There has been no chance whatever of that happening, so with the Bill that is now before Parliament we are now returning to one Commissioner per country. It certainly would be regarded, it seems to me, important for our interests that we have a UK Commissioner there in the college.

One of the ideas that is being kicked around in academic and think-tank circles is having Commissioners from some countries serving as the principals and some as junior Ministers. Whether and how that would become acceptable to everybody, I do not know. It is an interesting idea. Changes to the treaties, of course, require unanimity. It is not straightforward. I can see that there are problems of the sort Lord Maclennan describes. Against that in the balance, though, I think you have to set the strategic advantage of enlargement in terms of political stability, particularly in parts of this continent where that has been at risk—where at times, in our lifetimes, we have seen the most vicious civil wars—and the prize of political stability, economic growth, market integration, and rule-of- law institutions that mean that the Western Balkans, and perhaps one day even countries further east, do not become a haven for organised crime and people traffickers. That is a big prize indeed, and I think we need to focus upon that.

Q178 Baroness Eccles of Moulton: Minister, we are moving on to the question of nationalisation of the process and bilateral issues. You touched briefly on the main problem facing Macedonia. The other one that is current but that does not seem to be preventing the accession date being achieved is the problems between the Croatian depositors and the 137

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Slovenian bank. That is an example. It would appear that this is becoming an increasing problem. I do not know that it has been suggested where the next issues might appear from. It does seem to be contained within the Western Balkans, or perhaps it is something to do with the fact that that part of the world has been in such turmoil and so on. That could be a reason why it seems to be a new and emerging problem. Do you think there is a possibility that in the Council national issues are increasingly encroaching upon the enlargement process? If this is the case, can anything be done to avoid it?

David Lidington MP: That risk is always there. I would agree with Lady Eccles. I think the fact that we are talking about countries whose independence is recent, where there have been serious, sometimes bloody disputes over the borders and over questions of national identity, means that there is perhaps the greater risk than with some previous accessions of these bilateral issues coming up.

Our view is that it is important for the integrity of the enlargement process that bilateral issues do not distort accession negotiations. A positive example I would cite is that in 2011 Croatia and Slovenia signed a border arbitration agreement that declared that they were not going to allow their bilateral dispute over the maritime boundary to hold up accession. Then, again in 2011, the Presidents of Croatia, Serbia, Bosnia and Herzegovina and Montenegro all signed a partnership for the European future of the region that committed all four of them not to interfere in the EU accession processes of the other countries and to resolve any outstanding issues through open discussion and negotiations. That is very welcome.

On the name issue, our view is that sorting out the name is not one of the Commission’s criteria. It is not a condition for entry. The Greek view of this is well known, and we do have to have unanimity for membership, but I think it becomes easier to exert peer-group pressure in the case of a difficult bilateral dispute when an applicant country has gone methodically through the accession process. When the chapters have been closed it can say, “We have done everything you are asking of us”. Then, if you are looking at 25 to 26 other countries, you can look at one member and say, “Hang on, you cannot let this bilateral argument block something when the collective EU process is being completed now”. There is no guarantee at the end of the day—unanimity is unanimity—but that is the way I would want to try to take this forward.

Q179 The Earl of Sandwich: Can I pick up your strong point about political stability, and express the hope that the Prime Minister incorporates that in his speech, because we want to hear more about enlargement in the agenda, please? Returning to bilateral issues, do you not think that the Council is also seeing enlargement slipping down the agenda and that some of these bilateral issues are being hidden away in the language? If you read the latest conclusions, you do not get a feeling of any of these issues. Are they being disguised?

David Lidington MP: Everybody is aware of the bilateral issues, but our commitment is to respect the integrity of the accession process and find ways that avoid the bilateral issues blocking progress that is justified by objective criteria. There are sometimes certainly arguments in the Council where one is conscious that in the minds of one or other partner the bilateral issue is present. We always seek a decision that then allows progress to be made with accession. If it came to it, I would concede some reference in conclusions to an issue that I would regard as bilateral if I got some concrete progress with accession in the substance of the conclusions. The Commissioner, Štefan Füle, is absolutely committed to not letting bilateral issues get in the way. We try to craft conclusions that allow progress to be

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Q180 The Chairman: Very briefly, Minister, and rather arising out of the conversation that some of us had last week with the Montenegro Chief Negotiator but not put in terms like this by him, is there more mileage in using conditionality for the European Union’s regional programmes in advance of accession maybe for candidate countries and their neighbours both by getting some of the infrastructure in place in good time and some of the other administrative structures and, if not overtly, as a means of conditionality for trying to take some of these issues in good time?

David Lidington MP: I am always open to finding ways in which we can make the accession process more rigorous and, in making it more rigorous, getting it accomplished sooner. The reason for the new approach in bringing chapter 23 forward is precisely to avoid the situation we have had in the past where quite balanced judgments have had to be made at the end with people unsure as to whether certain reforms were irreversible or not. It is something I am very willing to look at.

Q181 Baroness O’Cathain: Minister, what impact has enlargement had on the UK’s ability to secure its policy priorities at EU level, particularly in areas such as internal market and migration jobs? Then I look at Lord Carter and think that he will probably want to ask you about energy, climate change and agriculture, too.

The Chairman: You might perhaps do it at the same time.

Lord Carter of Coles: Minister, I have a specific question on climate change relating to Poland. Poland, as we know, has a very coal-intensive energy industry, and, of course, it has consistently countered plans by the UK and others to move forward with the climate change policy that many of us support. Do you think the Polish position has been detrimental to the whole of the progress on that and to our policy objectives being obtained?

David Lidington MP: I will deal with Poland first. There is no doubt that we have a major difference with Poland about the level of ambition in carbon reductions. Even if Poland were fully on board with the more ambitious target that we would like to see, it would still be pretty hard pounding at a global level to get agreements. Yes, there are sometimes the arguments with Poland—and she is not completely alone. There are other countries that will take her part on this. It is more difficult to get a common EU position than we would wish in an ideal world, but it has not stopped the European Union playing a very active and constructive role in the international conferences on climate change, including Durban. I would say that, yes, it has made life more difficult for us, but it has not stopped us from making any progress at all.

On Lady O’Cathain’s points, I would say that in general terms there is the further enlargement of the single market and that, through market integration, there are now export and investment opportunities in eastern and central Europe. The countries of eastern and central Europe at the moment tend to be the fastest growing in Europe. Estonia is a very tiny economy, but this is the country that invented Skype.

Lady O’Cathain: I did not know that.

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David Lidington MP: We have the opportunities for exchange of experience over things like e-government. My colleague, Francis Maude, has been out to Estonia to find out why 97% of Estonians file their tax return online. There is a partnership there. If you go to Hungary or Slovakia you will find Tesco and other British retailers operating there.

Lady O’Cathain: They have been there for 20 years.

David Lidington MP: Because those countries are in the single market and because they have made reforms in the rule of law—the criteria governing investments and licences that make them more attractive locations for investment than used to be the case—British companies are interested and we are exporting to those countries, and there is a pattern of investment and trade that is both ways.

On decision-taking, I am generalising because, as with the example of Poland and climate change, there are sometimes differences as well and sometimes arguments over maintaining a financial framework with central and eastern European countries, but they are usually our allies on single-market matters and on smarter regulation. In particular, in respect of our objectives on the better regulation agenda, eight of the new EU member states—Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Poland, Slovakia and Slovenia—joined us in signing the November 2012 letters to the Council and Commission arguing for a 10-point plan for smarter regulation. New member states have been active alongside us in calling for rapid movement towards a single digital market in Europe.

In terms of the debate about growth, open markets and free trade, more often than not they are our allies.

Lady O’Cathain: Yes, but there are huge advantages in doing something like getting the rail packages sorted.

David Lidington MP: Yes.

Lady O’Cathain: We have still not concluded the first rail package and now, for a Christmas gift, we have had the fourth rail package. It does seem to me that, when you consider the whole of the EU, with its 500 million consumers, these are the areas that will make people very pro-EU if they can conclude these huge areas, but they seem to be fiddling around the edges.

David Lidington MP: I completely agree that if we could move forward towards a genuine single market in transport, a genuine internal single market in energy, a digital single market—I would add the further liberalisation of services, too—that would do a lot—

Lady O’Cathain: Universal broadband.

David Lidington MP: —not only for public support but for real prosperity for ordinary families. It is not necessarily the new member states that are the problem with these. It is usually the colleagues around the table who have a vested interest in doing things in a particular way already that are the blockage here. I find in general terms—and I am generalising—that the new accession countries are among those who are the keenest to see these further market developments.

Lady O’Cathain: They would help the rest of us to get on with it then, would they?

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David Lidington MP: I am generalising. Obviously one would need to look dossier by dossier at where each country’s position lies, but, in general terms, yes.

Q182 Lord Foulkes of Cumnock: I did not know that Skype was invented in Estonia. I can see now why you led your team to win “University Challenge”, albeit a year or two ago. An hour or two ago you said you were very active in Brussels and other capitals to make sure that enlargement is a priority in the European Union, and then you also said later, “Nordic countries are very like-minded”. Are we perceived as pushing enlargement because these countries are going to agree with us on a number of our policy areas? If so, what are the policy areas that they agree with us on? Maybe there are some that do not.

David Lidington MP: In general terms, as I said to Baroness O’Cathain, they are more likely than not to agree with us on deepening the single market, on free trade or on smarter regulation. Again, this is generalisation. In terms of the conduct of foreign policy, they will want to see a cohesive European approach on foreign policy and security, but they also want to see this firmly anchored in a transatlantic alliance and without weakening NATO at all, and that is very much in line with our own thinking. If one goes to the Baltic countries or to Poland, they keep coming back to Article 5, the importance of NATO. That is not to say they do not want to see a stronger EU foreign security policy as well, but it is very much an Atlanticist framework.

How do others see us? You need to get the Ministers from other countries. It is no secret, whether it has been Conservative or Labour or coalition governments, that some people in Brussels and one or two other capitals have suspected that we want to make Europe larger to dilute the influence of the original six. I think that is rather old thinking these days. When people look back over the last 20 years, they can see what enlargement has achieved. Go down the main streets in Warsaw or Prague and just see the transformation there has been. One can then contrast that experience with the 20 years after 1919 and look at the record of political and economic instability and turmoil in that part of Europe then. I know this is a point I do make often. I think the accession process and the ambition for EU membership has institutionalised rule of law, democratic values and human rights in a part of the continent where those things were crushed for most of the 20th century.

Lord Foulkes of Cumnock: I agree with you 100%. When you were going round the capitals of Europe advocating, as you have done so eloquently, enlargement, do you find the rug pulled from under your feet by the fact that back home you have some colleagues talking about the process towards British withdrawal?

David Lidington MP: I get questions about that from time to time, and I always counter that by giving a very clear exposition of where the Government are coming from. I point to what the Government’s record has been in practice. I am very happy for Lord Foulkes to accompany me the next time I speak to a Conservative association audience and deliver the message I have given to the Committee about what enlargement has achieved.

Lord Foulkes of Cumnock: Excellent. I look forward to that.

Q183 The Chairman: That is an offer he can hardly bear to refuse. Minister, you have, if I may say, risen to some moral high ground that is quite appealing to some of us—we will leave that for consideration—and you have widened our perspectives on the EU as well as answering our questions. I am conscious you did touch, albeit implicitly, on the impact of enlargement on the EU itself. We have two outstanding questions and, given that we have 141

Foreign and Commonwealth Office – Oral evidence (QQ 167-188) other topics to turn to, I wonder if I could ask my colleagues just to put them formally, if you are happy with this process, so that you know what is in our mind. You might perhaps wish to respond by letter rather than extending it now.

David Lidington MP: That is fine, yes.

The Chairman: I will ask Baroness Young to put her question, and immediately thereafter Lord Richard to put his, and then we will close that chapter of the discussion and your formal evidence to the enlargement inquiry and talk about other things.

Baroness Young of Hornsey: Minister, could you point to any other policy areas where you think the recent accessions in 2004 and 2007 have had a real impact on the direction of the EU’s policies, and which policy areas are most likely to be affected by future enlargements?

Lord Richard: Minister, as you are going to write to us on this issue, I would be obliged if you would deal with what seems to me to be one of the fundamental points on this: the priority with which enlargement is going to take place and the extent to which you see the existing countries of the eastern partnership countries being actual candidates for enlargement, and then what impact have the 2004 and 2007 enlargements had on the EU’s relationships with its neighbours to the East, and with Turkey as a candidate country?

David Lidington MP: I will be very happy to respond in detail to both of those.

The Chairman: Thank you, Minister. That concludes the formal evidence on the enlargement inquiry, but, as they always say, there are other matters that are current. We will probably in the time, and we are conscious of your time, group them into three areas, and I am going to ask Lord Harrison to start on the current, perhaps burning topic of economic and monetary union.

Q184 Lord Harrison: We have returned to the question of the euro area crisis on my Committee concerned with economic and financial affairs. We had Martin Wolf, Graham Bishop and Roger Bootle before us this morning who, when asked whether the euro area broke up or succeeded, in each case said that the implications for the United Kingdom were colossal. What work have you done on the Scylla of success and the Charybdis of failure in terms of the impact on the United Kingdom, were those two eventualities to take place?

David Lidington MP: We make contingency plans for all kinds of contingencies. It is a good habit of successive Governments not to talk in too much detail about those because most contingencies never happen. We have made no secret of our view that, although the UK has no intention of being part of the single currency area and that 17 of our closest allies and trading partners have taken a sovereign decision to commit themselves to this, it is in our interests that they succeed. It is in our interests that they are able to restore stability to the single-currency area and the economic growth and prosperity that flows from that.

If the eurozone were to continue to struggle with economic turbulence, let alone to suffer further severe shocks, I believe the consequences for our economy would be damaging. It would mean greater economic uncertainty within our own market. I think it would make third-country investors in Asia and America more wary of investing in Europe—anywhere in Europe—full stop. It would reduce the opportunities for us to export to those European

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If the euro succeeds, then the challenge for the UK and other countries outside the euro is how we are going to work out together, at 27 or 28, arrangements for doing business in Europe that make it possible for partners who are in the single currency to take forward the closer integration that they require to make the single currency work and, at the same time, provide adequate safeguards for those things that matter at 27, whether that is the single market or whether it is the duty of the institutions to act on behalf of all member states and not any particular subset of member states. Banking union is important because it was the first test of whether we could make such arrangements work: whether we could come to an agreement.

Q185 Lord Harrison: When we published our text on the European banking union, shortly before you and your colleagues went into the December Council, we were very grateful to the Financial Secretary to the Treasury, Greg Clark, for consulting our Committee and then reporting back afterwards. Is it not clear, as the banking union is emerging and the other parts of the recovery of the euro area crisis are themselves emerging, that increasingly we will stand outside of the room as decisions are made? Whilst we have the shibboleth, which is the acquired right, of the protection of the single market, increasingly not only the 17 members of the eurozone but others who wish to have the protection of the supervisory mechanism will also be joining our colleagues and we will be outside in the corridor. Is it then that we just hear the noisy neighbours on the inside, or do we hear, even worse, laughter in the next room?

David Lidington MP: That is not what has happened at the December ECOFIN. What happened there was that there was hard-headed negotiation but an amicable agreement on a deal that we certainly felt was fair to all sides. To some extent, the risk that Lord Harrison described has been implicit since the single currency was created and we chose not to be a part of it. The only way to be absolutely certain in all circumstances that we will take on every single decision affecting the single currency is to adopt the euro. We have taken a considered decision, as successive Governments have done, not to do that.

What there is not is any hint that the eurozone countries intend to act as a caucus across a range of European Union issues. You do not find the Dutch and the Greek Ministers walking arm in arm into the room together and sticking up their hands at the same time. It is quite the reverse. I find that when you get into discussions about trade, about foreign policy or about climate change, this cuts right across whether countries are in the euro or out of the euro. I think that is healthy because I think that shows that all countries accept that, when it comes to the currency, there are things that the eurozone have in common that they are going to want, understandably, to talk about together because it is their taxpayers’ money that is at risk there, but they are not then letting this or they do not desire this then to become a basis for the way the entire European Union operates.

The reason the banking union discussions were so important was precisely because this is the first test of whether such an arrangement is possible, and it dealt with an issue where there was a clear relationship between banking regulation that was clearly going to matter to the single currency members and be part of their arrangement in some way and a sector of the single market, namely financial services, that is of strategic importance to the United Kingdom. We received an explicit clause saying that no action by the European Central Bank

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We must not just be satisfied with a set of rules. We also have to be active in making sure that they work in such a way that there is a culture of mutual respect and understanding in how these decisions are taken. A lot can be achieved simply by a really good working relationship between the two big regulators, the ECB and the Bank of England, but there also needs to be the political will to make sure that we are in conversation with our colleagues the whole time.

Lord Harrison: Can I reinforce that? It will require the political will of this country to ensure that engagement steers away the danger that is real, ready and was made plain to us this morning by commentators: that we will indeed be left out as politicians, as politicians always will, and will begin to caucus? It will be a sad day indeed, Minister, if we in the future talk about these important issues and have to communicate with you by Skype when you are on another planet.

David Lidington MP: It is a perfectly fair point to make. I simply repeat that at the moment there is no evidence that others wish things to operate in that fashion, and I also think that, for as far ahead that I can see, some EU member states will be in the single currency and others, not just the UK, will be outside: some because they have chosen not to take part— their electorates will not wear it—and others because they are going to take quite a long time to meet the Maastricht criteria for accession to the euro. As the EU goes forward, arrangements are going to have to be found to deal with that reality.

Q186 The Chairman: Thank you, Minister. You will have appreciated that in Lord Harrison’s line of questioning we moved almost seamlessly from banking union questions to constitutional ones. My question focuses on that, because Van Rompuy’s own report towards a genuine economic and monetary union contained a cardinal section on democratic legitimacy and accountability, Section 4. Clearly there is a need for that. Also, I might just say—by a side wind, of course—it is an area that is arguably not within the competence or remit of national Ministers of Finance as such but obviously engages a wider political constituency. I am not asking you to comment on that. I am just going to refer to it. I notice also in the Council conclusions of mid-December a reference, following up Article 13 of Protocol 1, that the European Parliament and national Parliaments will determine together the organisation and promotion of a conference of their representatives to discuss EMU-related issues. I just pause to say that it is interesting because that is imperative and even possibly military, and people who come down to these Houses and try it on sometimes leave without their heads, but we will just record that.

My substantive question is this. I understand that this part 4 of Van Rompuy’s report is going to be discussed at a meeting of Ministers for Europe on 20 January, ie later this week. What do you think will be the focus of that discussion? What are the Government’s views on this question, which, I just re-emphasise, goes slightly wider than the mere mechanisms—not that those are unimportant—of the control of an economic and monetary union because it threatens or engages democratic legitimacy generally?

David Lidington MP: I will deal with the meeting first of all. This is an informal meeting of the General Affairs Council that the Irish have convened. It will not be a meeting that takes

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Foreign and Commonwealth Office – Oral evidence (QQ 167-188) decisions; it will be more an exchange of views and a bit of brainstorming particularly, and is due to take place on the Sunday evening in Dublin. That is the spirit in which we are approaching this.

There are two major related challenges here. One is primary for the eurozone, which is: if they are going to, over time and in a fashion they determine, become more closely integrated in both fiscal and economic policy, what are the implications for democratic accountability for fiscal and economic policy decisions? That touches on some important issues about sovereignty and accountability. If you are a German taxpayer, you will demand that a country that may benefit from German underwriting of their debt will have rules applied that they should not just be allowed to behave as free agents. If you are a Spanish voter, you might resent the idea that the people you elect at the ballot box do not have the final say over your country’s economic policy.

It is for our friends at the eurozone to work out how they resolve that. There are ideas kicking around like the joint committees of the national and European parliamentarians to try to resolve this. The German constitutional court has already said that the EP, in its current form, is not enough in terms of the present German basic law. They said, “Either you are going to have to change the treaties some day, or you are going to have to change German basic law to address this”.

There is another problem for all 27: the democratic deficit that has been talked about so many times, and public disaffection with the EU, not just in the UK but in other countries. Over a third of French voters voted for a presidential candidate who was campaigning against the European Union in its current form.

If we go down to, “What does this mean, and what could we take away from the Van Rompuy report?”, I think President Van Rompuy himself would acknowledge that that fourth section is a sketch. I think that for him, for the Commission, the priorities have been and remain trying to get stability back into the single currency area. I think they have always seen the political developments that may arise from that as subsequent to those key decisions about economic and fiscal policy.

It is at a very early stage, but I think we would say that parliamentary oversight needs to be at the level of all 27 national Parliaments and the European Parliament for all policy areas, because decisions taken about the EMU will affect the UK even if we are not participating directly, so I would be keen to see Parliament involved in any new system of parliamentary oversight.

I have long held the view that we need to find a way in the House of Commons to encourage departmental Select Committees to be more active at a much earlier stage of EU negotiations to call evidence, to comment upon how a particular initiative may be to our country’s advantage or disadvantage, to suggest ideas for amendment before it gets into the final stages of negotiation when it is very difficult to shift the text. I would like to see more of that upstream engagement from Parliament and, I accept, very much from Government as well.

I think that if we look at the longer-term future, we find that some of the instruments that were provided under Lisbon for the first time have not yet been tested in full. I do find the yellow-card system and the emergency brakes novel ideas. The Lords, I think, has used the reasoned opinion on subsidiarity five times now. 145

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The Chairman: Correct; twice in a month.

David Lidington MP: The Monti II proposals last year were the first occasion on which the threshold for yellow cards was reached. Of course the Commission in the end, for various reasons, decided to drop that particular measure. I think Parliament here and parliaments across the EU could be more active in using the Lisbon arrangements. Whenever a review of the treaties takes place—and I do not think there is a rush to do that—then it seems to me that parliamentary accountability, how one can get national parliaments more involved in the process, should be an important part of what we discuss.

The Chairman: Thank you, Minister. My strap line for the debate we had on the reasoned opinion last week was, “Use it or lose it”, and I think there is a point in that. If you can bear with us—

David Lidington MP: Please.

The Chairman: —I am conscious that sometimes there are matters that are urgent and immediate and that a lot of what we have been discussing today has had a longer perspective.

Q187 Baroness Young of Hornsey: A final complex question in a very short time. It is about the escalating crisis in Mali. I just wonder what your assessment of that is and what you think the realistic options are that are open to the EU when it comes to discuss this later this week.

David Lidington MP: As Baroness Young knows, an emergency Foreign Affairs Council is taking place on Thursday. Our assessment of what has happened is that the French intervention has managed to at least check the advance of the Islamist militias further south. The truth is that in Mali both the institutions of the state and its armed forces are pretty weak. I think we, as a Government, have publicly supported the French action, which we believe is authorised by the Security Council resolutions. We have responded to the request by France for logistical support in the loan of two aircraft, and France herself is responding to a direct request from the Malian Government.

There are three elements to this. There is that immediate French-led military response, together with the planned West African mission—

Baroness Young of Hornsey: I understand it is a Nigerian—

David Lidington MP: The idea is that the mission will be Nigerian-led, with participation from other West African countries. That has been planned for the autumn of this year. There is training and so on that would need to be put in place. I am hoping that the House of Commons tomorrow will approve the mandate for the EU training mission in Mali, which would then make it possible for the Foreign Affairs Council to formally approve that on Thursday.

Then clearly there needs to be a political strategy to try to strengthen the institutions of the Malian state. That is not something that can be done overnight. The Malians themselves have to be encouraged to find a way to make contact with people in the north of their country who are not all, by any means, signed up to the Islamist agenda. We must not forget that the people who are at the receiving end of the Wahhabist approach in the north are ordinary 146

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Muslim people in Mali who are finding their historic traditions and ways of practising their faith being stamped on.

The third element is humanitarian assistance. Something like 400,000 people in Mali have been displaced by the fighting or by the imposition of the extreme Sharia-based regime in the north and have fled. Clearly, there is a need for them to be helped.

Baroness Young of Hornsey: Do you feel that there is the will and the ability to bring together all the different elements that have an interest in the area? Obviously the French have their historic connection. We want to protect our interest. We have the EU. We have ECOWAS, which is not that strong but is trying to do something, and maybe the African Union; as you say, the Tuareg and the other elements there that do not support the Islamists. It is a real hotchpotch of people. How do you bring those together?

David Lidington MP: How to create a co-ordinated international approach is something that British Ministers have been discussing, and it is something that I would expect to feature in the discussion at the FAC also. These are early days still. The thrust south by the Islamist militias happened only a few days ago, and it is fair to say that there are a lot of close-contact telephone calls and diplomatic exchanges between not just European countries but the United States, with the international institutions from the United States to African countries. The Minister for Africa is in Addis Ababa this week, so he will be talking directly to African leaders, including to the African Union, about how they see the way forward here.

I do think it is very important that the countries of the region have a leading role in working this out. It is very hard to see how the imposition of western military and political power would transform the situation in a sustainable fashion. I think if it is African-led, it has much more chance of success.

Q188 The Chairman: Can we cut it at that, Minister? I am very grateful to you for your time and for answering that additional question, but, as ever, thanks to you and your team and for the fullness and frankness of your responses. For the record, as we are about to conclude formal recording, we will, of course, send you a transcript, and there will be an option to correct any factual mistakes or mis-hearings, but we will be publishing a record meanwhile. Your evidence has been invaluable to our inquiry and, as ever, very stimulating on the general questions that you have also handled. With that, thank you very much indeed. The evidence session is now closed.

David Lidington MP: Thank you.

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Dear Tim,

FOREIGN AND COMMONWEALTH OFFICE EVIDENCE TO HOUSE OF LORDS INQUIRY INTO EU ENLARGEMENT / UPDATE FOLLOWING DECEMBER EUROPEAN COUNCIL

Following my attendance at the evidence session on EU enlargement and the December European Council on 15 January, I am pleased to write with additional information on the points raised during the session and to provide written answers to those questions that we did not have time to cover, in further support of your Committee’s Inquiry into EU Enlargement.

On 18 October I submitted to your Committee an Explanatory Memorandum on the Commission’s Annual Enlargement Strategy and Country Progress Reports, and I subsequently wrote to you to update the Committee on developments ahead of the 11December General Affairs Council discussion of enlargement. On 30 November, I submitted written evidence from the Foreign and Commonwealth Office on EU enlargement that set out at a strategic level the Government’s policy and views on the wider questions of enlargement, including its scope, purpose, benefits and costs.

The Committee asked about EU assistance to Western Balkans countries and for details of EU assistance programmes, as well as details of other assistance from EEA and other countries. Further to my response below, detailed information on the range of assistance that the EU provides in the Western Balkans, including through IPA, can be found at: http://europa.eu/legislation_summaries/enlargement/western_balkans/e50028_en.htm and http://ec.europa.eu/regional_policy/thefunds/ipa/index_en.cfm.

EU programme assistance to the Western Balkans and Turkey is funded under the Instrument for Pre-Accession Assistance (IPA) – totalling €11.47 billion from 2007-2013 (see table at Annex A for breakdown). IPA funds are used to support candidate and potential candidate countries to move towards EU accession. IPA funding is allocated mainly through technical assistance (including peer to peer Twinning projects) and projects that support the development of the standards and systems necessary for their alignment with the EU acquis. Budget Support is only available in exceptional circumstances and has so far only been used for Serbia in July 2009 to help stabilise the economy during the economic crisis.

Twinning, a key component of IPA, enables member states to provide targeted assistance in building the institutional capacity of beneficiary countries to address specific domestic challenges relating to chapters of the acquis. The UK has carried out 22 Twinning projects since 2010 (see Annex B for a breakdown of this assistance by country). The Commission circulated 68 Twinning projects with submission deadlines in 2012, covering a wide range of chapters of the acquis.

The UK in 2012 successfully secured 7 Twinning projects totalling €7.2m worth of IPA funding and 19% of all Twinning projects circulated under IPA, an increase over 2011(18%) and 2010 (10%). Twinning has proved an important tool in strengthening our bilateral

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An example of technical assistance through Twinning is a project in Kosovo to aid their efforts to strengthen the rule of law in carrying out their Integrated Border Management strategy and the fight against drug trafficking (€2m). The project is run by Northern Ireland Cooperation Overseas, with British expertise drawn from across UK Government Departments, including UKBA and HMRC, delivering technical assistance through a long term Resident Twinning Advisor; workshops; study visits; on-the-job training; and Short- Term Expert Missions. The project covers a number of areas of EU law including drafting/amending appropriate legislation and combating human trafficking and illegal migration.

In 2012/13 the UK will be running and involved in a number of Twinning projects across the IPA region. This includes being selected to work with Montenegro on twinning projects to strengthen the fight against money laundering (€250,000) and on penitentiary reform. This follows the UK’s successful completion of a Twinning light project to enhance the capacity of the Undercover Investigations Unit to fight organised crime in 2012. Twinning projects were also secured in Bosnia and Serbia on Market Surveillance and state capacity for auditing respectively.

The UK Government has heavily engaged in Brussels to ensure that IPA 2, the revised instrument for the next financial framework , provides a stronger strategic link between IPA funding and the delivery of enlargement priorities, with greater flexibility to meet each country’s needs, thereby also enhancing the efficiency and effectiveness of EU funding.

The Government also continues to provide strategically targeted bilateral funding in support of key political reforms through the FCO’s Reuniting Europe programme (£3.7m). Our ability to act swiftly and in a highly targeted way enables the UK to work closely with candidate countries to help ensure that the more substantial EU funds, when they come on line, are properly focused on our key priorities.

Other countries also have bilateral assistance and regional programmes in support of their objectives in the Western Balkans. EFTA countries, for example, are currently contributing €125,000 to an EU IPA project on quality infrastructure under the IPA 2011 framework, scheduled to end in February 2014. Norway contributed approximately €1.25billion during the period 1991-2008.

The Western Balkan Investment Framework (WBIF), a joint initiative between the EU, International Financial Institutions, bilateral donors and governments of the region also provide financial assistance, providing €220 million of projects and grants since 2009 in support of socio-economic development and EU accession in the Western Balkans through coordination of finance for investment in infrastructure and energy efficiency. The UK is one of the founding partners of the WBIF. Due to the myriad of donors and project implementers in the region it is difficult to provide an accurate picture of total aid provision in the Western Balkans. However, the need for greater coherency and visibility of donor countries’ activities in the region has been recognised by the Western Balkans Investment Framework and one of their projects is to create a single platform for all donors, including the development of a database of projects. Their website includes a searchable database that can be used to identify a breakdown of aid by each donor: http://www.wbif.eu/projects. In 149

Memorandum by the Foreign and Commonwealth Office addition, the OECD track international aid to the Western Balkans region. Their website also contains a searchable database: http://stats.oecd.org/. I have included DFID figures for total ODA received by Western Balkans countries at Annex C.

The Committee asked for detail on Turkey’s current progress in its accession negotiations and for details of aid and assistance programmes in Turkey. The Committee also asked for further information on the integration of the Turkish economy with the EU economy. Turkey currently has thirteen chapters open, and 1 chapter provisionally closed. Eight chapters were blocked from opening by the European Council decision of December 2006 over Turkey’s non-implementation of the Additional Ankara Protocol. In addition, France and Cyprus have imposed chapter blocks. For full details of which chapters these are, I am attaching a table at Annex D.

Turkey’s overall EU funding allocation for 2012 was €855 million, and for 2013 will be €903 million. 94% of Turkey’s allocation was spent in 2008; 30% has been committed for 2009; and 10% for 2010. The projects contribute significantly to raising Turkey towards EU standards and cover a wide range of issues including, for example, €4.8m to set up a National Food Reference Laboratory, providing a higher quality food safety system aligned with EU Standards; €5.3m eradicating the worst forms of child labour in Turkey through education, rehabilitation and support services; €150k to establish a domestic violence hotline; and €2m to improve enforcement services in Prisons in Turkey, through establishing a system, and trained staff, equipped to deal with vulnerable prisoners. This is a new project, which will start in 2013, is being implemented by the UK Ministry of Justice. The UK Government currently supports over 40 projects, totalling over £1.9m on democracy and human rights, prosperity, migration, organised crime, climate change, and justice reform. The projects support key issues in our bilateral relationship and also contribute to helping Turkey meet EU standards.

The economies of the European Union and Turkey are deeply integrated through trade, investment and financial flows. The EU is Turkey’s largest import and export partner in value terms, accounting for approximately 40% of Turkey’s total trade. In 2011, Turkey’s goods and services imports from the EU were valued at €82 billion, while Turkey’s total exports to EU Member States were valued at €63 billion. In 2011, nearly half of all Turkish Foreign Direct Investment (€9.7 billion) was located in the EU, and around three-quarters of all Foreign Direct Investment in Turkey (€81 billion) was sourced from EU Member States. The latest available data suggest Turkish claims on EU banks are valued at nearly €13 billion, which is approximately 60% of Turkish banks’ total foreign exposure.

On Iceland, the Committee requested clarification on how the mackerel dispute is being handled. I can confirm that discussions are indeed taking place under the auspices of the North East Atlantic Fisheries Commission. The UK supports reaching a negotiated settlement, but progress in the talks has been slow. However, we are hopeful that new science on the state of the mackerel stock due later this year might help ease the path to an agreement. The Government will be working throughout the year to contribute to the relevant scientific studies to allow for constructive talks, later in 2013, which must succeed.

At the evidence session, we ran out of time to provide oral answers to Questions 10 and 11. Please find written answers below:

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Question 10: Are there any other policy areas where you think the 2004 and 2007 enlargements have had a real impact on the direction of the EU’s policies? Which policy areas are most likely to be affected by future enlargements?

During the evidence session, I highlighted examples where recent enlargements have had positive impacts on EU policy, including on the single market, less burdensome regulation and on common foreign and security policy (CFSP) and common security and defence policy (CSDP). Five of the 12 signatories of the Prime Minister’s Growth letter last year, for example, were new Member States:Estonia, Latvia, Czech Republic, Slovakia and Poland. Many of the new member states have joined our calls for better regulation in the EU: for example, Slovenia, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Poland and Slovakia signed up to our recent '10 point plan' on smarter regulation (making 8 out of 13 member state signatories from the new members). The new Member States have thus helped the UK to meet its objectives, with the Commission's new Smart Regulation Strategy of 12 December 2012 meeting a number of UK demands as set out in the letter, notably for a new REFIT programme aimed at reducing EU regulatory burdens; two-page summaries to improve the accessibility of analysis in its Impact Assessments; and wider use of Common Commencement Dates for EU legislation. Similarly, New Member States have recently been signatories along with the UK on the letter on the Digital Single Market of 23 September 2011 and, at Heads of Government level, the Growth Letter of 20 February 2012.

Recent enlargements are therefore helping us better to achieve the completion of the single market, where the benefit to UK growth and commercial objectives, which has been a key driver for international competitiveness of UK companies, is clear. Businesses have benefited from the opportunities provided by a larger internal market, that now represents a market of over 500 million people with a combined GDP of around £11 trillion24 which enables the EU to be a decisive economic player in an increasingly globalised world, for the benefit of its citizens, with benefits of better connected and cheaper transport and communication networks, access to cheap and competitive manufacturing inputs, and reduction of the administrative burden on companies operating across borders in the EU. In addition, greater competition within the Single Market has fostered innovation, the key to success in the global economy.

An enlarged EU, not least through its increased collective weight, also helps the UK to meet its international policy objectives, whether dealing with issues of security, such as in Iran, Afghanistan or Libya, or negotiating as a block in international climate change or global trade negotiations. Sanctions negotiated and imposed at an EU level are more effective than bilateral measures which would be unlikely to be replicated to the same degree by all 27 member states. A good example is Iran, where the EU as a whole has passed a comprehensive package of measures aimed at constraining the ability of Iran to finance and procure materials and expertise to further its nuclear ambitions. This supports the EU’s political effort on Iran in the E3+3 process and provides the EU – collectively and individually – with the means to apply political pressure on Iran to engage in this process. Burma and Zimbabwe are further examples of where sanctions at EU level have effectively underpinned the EU’s political calls for reform. Many new Member States are also members of NATO, including Czech Republic, Hungary, Poland, Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, Slovenia, Albania, and Croatia, where many new Member States are also

24 2011 EU GDP converted using the Bank of England’s 2011 annual average exchange rate. 151

Memorandum by the Foreign and Commonwealth Office contributing to Afghanistan ISAF NATO missions, including Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia - as do future EU Member States Albania, Bosnia and Herzegovina, Croatia, Iceland, Montenegro, Macedonia, and Turkey. While EU enlargement and NATO enlargement are separate processes, at the EU level we have increasing numbers of allies in a range of CFSP and CDSP policy areas.

Enlargement also offers opportunities for the UK to pursue our policy objectives with the new Member States on issues that are more effectively dealt with at the EU level, for example, tackling cross-border crime, environmental issues, terrorism and illegal immigration. Enlargement has provided new opportunities to promote the energy and climate change agenda within the EU, strengthening the argument for diversification of the EU’s energy sources, driving investment in infrastructure and low carbon technologies and has provided opportunities for UK collaboration (e.g. with Hungary on Low Carbon investment, and with Poland on nuclear and shale gas).

Enlargement provides us with opportunities to strengthen our cooperation with new Member States on a wide range of these objectives. With Bulgaria, for example, we have recently signed a Memorandum of Cooperation on labour markets, and agreed eight priority areas for working with Bulgaria that include cooperation on growth and Counter Terrorism. In addition, the UK has been helping Bulgaria to improve their absorption of EU structural finds as a key engine of infrastructure development and economic growth, including through arranging meetings between UK and Bulgarian experts on infrastructure projects: an important part of our growth agenda in the newer EU states. On counter-terrorism, the UK has been helping Bulgaria In the aftermath of the Bourgas terrorist bombing in summer 2012 to improve their planning for, and response to, terrorist attacks.

Another positive impact is on the EU’s perception of enlargement and the need to continue with this endeavour to areas such as the Western Balkans. The newer Member States remain among the most supportive of the continuing enlargement project. They are also more alive than some to the security and other risks that would come from continued instability in the Western Balkans, not least given their geographical proximity to the region. New member States have been instrumental in some of the EU’s decision making on the Western Balkan region, such as the decision to renew the executive mandate for the EU peacekeeping force in Bosnia and Herzegovina – EUFOR Althea – last autumn. This positive trend is likely to continue. We expect Croatia, on its expected membership later this year, to be a valuable partner on the Western Balkans, bringing real expertise to EU decision- making in its Western Balkans policy.

However, as I noted in the evidence session, we have to recognise that Member States don’t act as a bloc in the EU, with each pursuing their own national interests and are a number of factors that will affect policy formation and direction at the EU level due – including external factors and events that require an EU response.

And of course, further enlargement will change the EU, just as every previous round of enlargement has done. The already diverse EU will become even more so: by the time all the Western Balkan nations join there will be more than thirty countries in it, whose peoples do and will want different things from the EU. Our view is that we should recognise and embrace that diversity. 152

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This is particularly evident if we look to Turkey’s eventual membership, where the accession process gives us the tools to ensure that future enlargements continue to benefit the UK, ensuring that candidates meet the rules of the acquis, by which the UK is also bound, before they join. Turkey, as Europe’s 8th largest and the world’s 18th largest economy, would significantly benefit the UK and the EU, contributing to our collective prosperity and security by boosting the Single Market and by playing a major part in Europe’s long term prosperity by adding significant clout to its common external trade policy. In addition, Turkey’s position as a key transit country for oil and gas makes it central to the energy security of the EU and Turkey is also a vital foreign policy partner, crucial in building international security, for example in Afghanistan and the Western Balkans and in the Middle East. Likewise, Iceland, as world-leaders in geothermal energy, offers significant opportunities for the EU in its energy policy (one of the reasons why the UK signed a Memorandum of Understanding on energy with Iceland in May 2012).

Question 11: The 2004 enlargement dramatically narrowed the EU’s ‘shared neighbourhood’ with Russia, and the 2007 enlargement expanded the geographical borders of the EU towards Turkey. What impact have these shifts had on the EU’s relationships with its neighbours to the East, and with Turkey as a candidate country?

Following the 2004 enlargement of the EU, the EU established a European Neighbourhood Policy (ENP) to help cushion the shock of enlargement for its new neighbours. The ENP was intended to establish a zone of stability, security and prosperity around the new, larger EU. The ENP offers a privileged relationship to 16 of the EU’s neighbours in two regions; the Eastern Neighbourhood and the Southern Neighbourhood. It is primarily an EU bilateral policy tool, offering closer political and economic integration.

In the Eastern Neighbourhood, the ENP primarily operates through a mechanism called the Eastern Partnership. Under the Eastern Partnership, the EU is offering deeper economic integration as an incentive for political reforms, including a formal association agreement and deep and comprehensive free trade agreements.

The countries that border both Russia and the EU, or that are within close proximity will likely wish to pursue a balanced approach to their relations with both, given their geographical position and historical ties. We welcome, for example, recent moves to re- establish dialogue between Georgia and Russia. But we believe that all of these countries should have the opportunity freely to choose the direction of their political and economic development and we hope they can achieve a positive and productive relationship with both Russia and the EU.

Due to the nature of a shared neighbourhood, the EU and Russia occasionally have competing policies within this region. For example, Russia has offered its neighbouring countries membership of the new Eurasian Customs Union (presently comprising Russia, Belarus and Kazakhstan) which, given the different technical standards, would probably be incompatible with a Deep and Comprehensive Free Trade Agreement with the EU.

There is considerable mutual interdependence between the EU and Russia and we seek within the framework of that relationship to set out a positive approach to the Eastern Partnership Countries which respects their right freely to pursue their chosen paths to political, economic and social development. 153

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Turkey remains a vital foreign policy partner for the EU and the 2007 enlargement round emphasised the significance of Turkey as a regional player and a candidate country. Many of those states have become strong supporters of Turkish accession. For example, in June last year the Foreign Ministers of Bulgaria, Estonia, Finland, Germany, Hungary, Italy, Latvia, Lithuania, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK co- authored a joint article making the case for Turkish accession. Cyprus, of course, has its own particular relationship with Turkey. The ongoing division of the island and Turkey’s failure to fulfil its obligations under the Ankara Protocol to open its ports and airports to Cypriot ships and aircraft has created obstacles. In this context, we will continue to support efforts to reach a Cyprus settlement, hoping for progress after the February elections.

During the evidence session, the Committee also asked for an assessment of each of the Eastern Partnership countries in terms of potential future EU membership. The Foreign Secretary, in his 23 October speech in Berlin, reasserted our view that countries such as Moldova, Belarus and Ukraine are European nations whose future lies with Europe. The same is true of the three Caucasian republics, if that is the path they wish to take. The EU Treaties are clear that any European state which respects the values of the Union and is committed to promoting them can apply for membership. The EU must therefore ensure that it continues to have a compelling offer: it is up to us to promote democracy and encourage them to embrace freedom fully. It should be noted that not all the Eastern Partnership countries have EU membership aspirations but through the European Neighbourhood Policy we work closely together with all six countries offering closer political and economic integration. The UK supports an EU perspective for Eastern Partnership countries, provided they meet the necessary political and economic criteria for EU membership. Taking each in turn:

The EU and Ukraine completed negotiations on an Association Agreement (AA) with Deep and Comprehensive Free Trade Area (DCFTA) at the end of 2011; the texts were initialled in 2012. In December 2012 the Foreign Affairs Council of the EU agreed Conclusions that set out the benchmarks for progress towards signature and ratification. We support Ukraine’s EU aspirations as long as they meet the criteria set by the EU by addressing selective justice, improving the conduct of elections and carrying out real reform. Ukraine would like signature at the Vilnius Eastern Partnership Summit in November 2013. The EU will need to decide several months before then whether they have made sufficient progress.

The EU and Moldova are on track to complete negotiations on an AA/DCFTA in 2013. Moldova would also like signature at the Vilnius Eastern Partnership Summit. Formal signature will be technically difficult to achieve by then, but initialling is a realistic prospect. Moldova will need to demonstrate commitment to genuine reform for the AA/DCFTA to progress. We will continue to support their EU aspirations.

Georgia and the EU have a developing relationship and we welcome the new Government’s commitment to their Euro-Atlantic aspirations. Georgia is currently negotiating an Association Agreement (AA) and Deep and Comprehensive Trade Agreement (DCFTA) with the EU, which it hopes to have agreed before the Eastern Partnership Summit in Vilnius. The EU Monitoring Mission is the only international monitoring mission in Georgia, observing the Administrative Boundary Line between Tbilisi Administered Territory and the breakaway regions of Abkhazia and South Ossetia. It plays an invaluable role in preventing further conflict. 154

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We welcome the strengthening of the partnership between Armenia and the EU. Armenia and the EU have opened negotiations on a DCFTA while significant progress has made towards an AA. We hope Armenia and the EU will have an AA in place before the Eastern Partnership Summit in Vilnius.

Azerbaijan and the EU are currently in negations on an AA with and are open to further cooperation leading towards a possible DCFTA. We hope the EU and Azerbaijan will continue to work together and encourage the necessary political and economic reforms to take this partnership to the next level.

Now that Belarus is a neighbour, opinion polls show a rise in interest in Belarus in the EU and migration. Despite a variety of approaches by the EU, the regime in Belarus remains a major obstacle to progress. The Belarus government currently only participates in the multi-lateral platform of the Eastern Partnership. We continue to call on the Belarus government to address our human rights concerns, and to release and rehabilitate all political prisoners.

I am copying this letter to William Cash MP, Chair of the European Scrutiny Committee, the Clerks of both Committees, Sophie Middlemiss and Magdalena Williams, FCO Departmental Scrutiny Co-ordinators and Una Ryan, FCO Select Committee Liaison Officer.

THE RT HON DAVID LIDINGTON MP

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Annex A: Total allocations to each country eligible for funding under IPA Country 2007 2008 2009 2010 2011 2012 2013 Albania €61m €73.8m €81.2m €94.2m €94.4m €94.6m €95.3m Bosnia €62.1m €74.8m €89.1m €105.4m €107.4m €107.9m €108.8m Kosovo €68.3m €184.7m €106.1m €67.3m €68.7m €68.8m €71.5m Macedonia €58.5m €70.2m €81.8m €91.7m €98m €101.5m €113m Montenegro €31.4m €32.6m €34.5m €33.5m €34.1m €34.9m €34.6m Serbia €189.7m €190.9m €194.8m €197.9m €201.9m €202.1m €208.3m Turkey €497.2m €538.7m €566.4m €653.7m €779.9m €856.3m €902.9m Iceland - - - - €12m €12m €5.8m Croatia €141.2m €146m €151.2m €153.4m €156.5m €155.6m €93.5m

Annex B: The number of IPA funded Twinning projects in the Western Balkans and Turkey, which the UK has successfully bid for since 2010: Country 2010 2011 2012 Albania 1 0 0 Bosnia 0 0 1 Kosovo 0 0 3 Macedonia 0 2 0 Montenegro 0 2 1 Serbia 0 2 1 (1 as junior partner) Turkey 2 (1 as a junior 1 0 partner) Iceland 0 0 0 Croatia 3 2 (1 as a junior 1 partner)

Annex C: Total net ODA receipts (USD million) in the enlargement countries are:

2007 2008 2009 2010 2011 Albania 307 363 357 341 307 Bosnia and Herzegovina 599 467 414 510 425 Croatia 163 242 169 151 - Kosovo - - 781 620 657 Macedonia, FYR 201 205 192 187 165 Montenegro 106 105 75 80 74 Serbia 840 973 624 660 596 Turkey 792 1 116 1 362 1 047 839 States Ex-Yugoslavia (regional projects) 55 51 17 18 17

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Annex D: Turkey EU Acquis Chapters: State of Play

• 13 Chapters opened. • 1 Chapter provisionally closed. • 3 Chapters still possible to open. • 8 Chapters blocked by EU Council decision over Turkey’s non-implementation of the Additional Ankara protocol, December 2006. • 5 Chapters blocked by France, June 2007. • 6 Chapters blocked by Cyprus, December 2009.

Chapter State of Play 1. Free Movement of Goods Blocked by EU Council decision over Turkey’s non- implementation of the Additional Ankara protocol, December 2006. 2. Freedom of Movement For Blocked by Cyprus, December 2009. Workers 3. Right of Establishment For Blocked by EU Council decision over Turkey’s non- Companies & Freedom To Provide Services implementation of the Additional Ankara protocol, December 2006. 4. Free Movement of Capital Opened December 2008. 5. Public Procurement Not yet open. 6. Company Law Opened June 2008. 7. Intellectual Property Law Opened June 2008. 8. Competition Policy Not yet open. 9. Financial Services Blocked by EU Council decision over Turkey’s non- implementation of the Additional Ankara protocol, December 2006. 10. Information Society & Media Opened June 2010. 11. Agriculture & Rural Development Blocked by EU Council decision over Turkey’s non- implementation of the Additional Ankara protocol, December 2006.

Blocked by France, June 2007. 12. Food Safety, Veterinary & Opened June 2010. Phytosanitary Policy 13. Fisheries Blocked by EU Council decision over Turkey’s non- implementation of the Additional Ankara protocol, December 2006. 14. Transport Policy Blocked by EU Council decision over Turkey’s non- implementation of the Additional Ankara protocol, December 2006. 15. Energy Blocked by Cyprus, December 2009. 157

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16. Taxation Opened June 2009. 17. Economic & Monetary Policy Blocked by France, June 2007. 18. Statistics Opened June 2007. 19. Social Policy & Employment Not yet open. 20. Enterprise & Industrial Policy Opened March 2007. 21. Trans-European Networks Opened December 2007. 22. Regional Policy & Coordination of Blocked by France, June 2007. Structural Instruments 23. Judiciary & Fundamental Rights Blocked by Cyprus, December 2009. 24. Justice, Freedom & Security Blocked by Cyprus, December 2009. 25. Science & Research Opened and provisionally closed June 2006. 26. Education & Culture Blocked by Cyprus, December 2009. 27. Environment Opened December 2009. 28. Consumer & Health Protection Opened December 2007. 29. Customs Union Blocked by EU Council decision over Turkey’s non- implementation of the Additional Ankara protocol, December 2006. 30. External Relations Blocked by EU Council decision over Turkey’s non- implementation of the Additional Ankara protocol, December 2006. 31. Foreign, Security & Defence Policy Blocked by Cyprus, December 2009. 32. Financial Control Opened July 2007. 33. Financial & Budgetary Provisions Blocked by France, June 2007. 34. Institutions Blocked by France, June 2007. 35. Other Issues Opened at the end of the accession process.

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Replies to the questions

Methodology and monitoring of countries

1. The improvements to the accession negotiation method brought in the negotiations with Croatia, including the systematic use of closing benchmarks and the introduction of opening benchmarks, contributed crucially to the better preparation of Croatia for EU Membership. Hence, there is no need to put in place for Croatia any post-accession monitoring mechanism like the Cooperation and Verification Mechanism introduced in the previous enlargement round. Further improvements, in particular the new approach with respect to the negotiation chapters 23 – Judiciary and fundamental rights & 24 Justice, freedom and security were introduced for the accession negotiations with Montenegro. These chapters will be tackled early in the negotiations to allow maximum time to establish the necessary legislation, institutions, and solid track records of implementation before the negotiations are closed. They will be opened on the basis of action plans to be adopted by the national authorities. The Commission will provide substantial guidance in its screening reports to support the elaboration of these action plans by the candidate country. An innovation is the introduction of interim benchmarks which will be set when negotiations are opened. Only once these are met the Council lay down closing benchmarks. This gives us greater leverage to promote the standards in these areas, allowing to firmly anchor reforms and ensuring close monitoring of their implementation in the course of the negotiations. It is difficult to speculate on what would have happened in the past, had all these measures been in place, but we are focusing on the future and our objective is to ensure that in future accessions any shortcomings of the past will not be repeated.

2. Member State compliance with the principles of the Union as reflected in the Treaties is ensured through well-functioning mechanisms provided for in these same Treaties. The Commission has a specific and key role in this context as guardian of the Treaties. Further development of these or similar mechanisms through amendments of the Treaties is the prerogative of the Member States and the European Parliament. I will not speculate on the likelihood of this happening, but it is clear that currently there is a lot of movement with respect to EU governance and the EU of tomorrow will not look the same as the EU of today. 3. Member States have an obligation to comply with the Treaties and EU legislation. The Copenhagen criteria apply to candidate countries. As for the mechanisms at the disposal of the EU for ensuring Member States compliance, I refer to my answer to question 2. 4/5. Enlargement is an inter-governmental process, led by the Member States, with the Commission having a key supportive role. All decisions are taken by unanimity of the Member States. Hence, there can be no issue about Member States being excessively involved in the enlargement policy. What we have repeatedly stressed, however, notably with respect to bilateral issues involving enlargement countries and individual Member States, is that all should take into account the broader EU interest in their actions. For it is true that the credibility of the accession conditionality, unanimously agreed by the Member States, can be negatively affected if bilateral issues are allowed to hold up the accession process. 159

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6. I do not see any tension between promoting reform in the enlargement countries and reporting objectively on their progress. On the contrary, an objective monitoring and reporting of the situation and the state of reforms is a valuable tool for assisting these countries to focus on further necessary reforms in their path towards the EU.

The EU’s regional goals and ‘wider Europe’

7. The Commission avoids comparisons between the enlargement countries. It is nevertheless true that such comparisons are made by governments and public opinions who can judge on the basis of our reporting on individual countries. In my view, there is no harm to it. On the contrary, the example of performing countries should have a 'pull effect' on those lagging behind, by demonstrating that reforms bring tangible results in the accession process. For example, Croatia's imminent accession to the EU is a powerful proof of the credibility of the enlargement process and a source of encouragement for its Western Balkan neighbours. 8. The European Neighbourhood Policy encompasses both our Eastern and our Southern neighbours, and it is not the Commission's intention to change the geographical coverage of the policy. Our Southern neighbours are also very near the EU – Morocco is only a few miles of water away! Last year, the Southern neighbourhood experienced momentous historic change with the Arab Spring. The people rose against autocrats and, in many countries, are establishing new democracies. We have an interest in supporting these democracies and ensure that they succeed. If they do, they will not only create economic growth, diffuse prosperity and trade opportunities also for the EU, but they will also strengthen the EU's security and the momentum towards greater respect of human rights and fundamental freedoms. But if they fail, they will create a zone of instability right at the doorstep of the EU, with poverty, mass migration and a possible breeding ground for religious radicalisation, which would be a threat for us all. Now is not the time to disengage. 9. Some of our Eastern partners wish to go further in their relations with the EU. The EU has already acknowledged their European aspiration. In the May 2011 Communication on the European Neighbourhood Policy, we have pointed out that the values upon which the European Union is built – namely freedom, democracy, respect for human rights and fundamental freedoms, and the rule of law – are also at the heart of the process of political association and economic integration as put forward by the Eastern Partnership. These are the same values that are enshrined in article 2 of the EU Treaty and on which articles 8 and 49 are based. The Eastern Partnership does not prejudge the future development of bilateral relations between the EU and partners. However, if implemented, the reform measures envisaged by the Eastern Partnership certainly bring partners closer to EU core values and to EU governance standards. 10. The EU enlargement policy is driven by Article 49 of the Treaty on European Union, which stipulates that any democratic European State may apply to become a member of the EU. There are indeed both geopolitical considerations and potential economic and policy benefits for the EU that support this policy and I would not venture an overall assessment of their relative weight which anyway depends on each case. While it is difficult to assess precisely the impact of the fifth enlargement on each specific EU policy, our overall judgement is that the EU and its policies have substantially benefited from it, including in the core areas of the internal market and environment.

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Court of Auditors’ EULEX report

11. The Commission has welcomed the report of the Court of Auditors on EU assistance to Kosovo. We share the Court's assessment that establishing the rule of law in Kosovo is a challenging and lengthy process. The Court found that our assistance was generally well managed and that progress had been made in a number of areas, such as customs and the judiciary. The Court clearly highlighted the obstacles the EU has to face in Kosovo, including Kosovo's history, the relatively low priority that Kosovo politicians seem to attach to the rule of law and the differences among Member States on Kosovo's status. We have worked very closely with the Court on this report and agree with its recommendations. You will have noted that our replies to the Court's findings have been included in the report. In fact, we are already implementing some of the Court's recommendations. For example, the Court recommended we increase our use of policy dialogue and we started a visa liberalisation dialogue with Kosovo in January and a Structured Dialogue on the Rule of Law last May. Similarly, the Court's recommendation to use conditionality and benchmarking to better focus our assistance is foreseen in our proposals to update the current IPA regulation, which we hope will be agreed by Council and Parliament soon. Concerning more general improvements to the work on rule of law with the enlargement countries, I refer to the new approach applied to the areas of judiciary and fundamental rights, as well as justice, freedom and security, already implemented in the accession negotiations with Montenegro. 12. At the service level, enlargement policy is the competence of the Commission, while neighbourhood policy is under the remit of the EEAS. In the enlargement countries, there are indeed areas where Commission and EEAS work closely together, given the latter's role in CFSP-related matters and in the EU Delegations. Cooperation and coordination between the two services, under the supervision of HR/VP Ashton and myself, is today excellent, such as in the context of the Serbia/Kosovo dialogue. In the European Neighbourhood Policy (ENP) field, we have for example issued a number of joint communications, most notably the main policy review of May 2012. All Communication services of the Commission and the EEAS have had the opportunity to participate in the preparation of such joint communications. I have also regular joint meetings with the senior management of the EEAS, as well as DEVCO, with which the cooperation is equally excellent. We are of course constantly improving this cooperation, but I do not think that any major change is needed at this stage. Framework for accession

13. The present institutional framework is in our view adequate for further enlargement to take place in the medium-term on the basis of the current enlargement agenda.

5 December 2012

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Evidence Session No. 7. Heard in Public. Questions 134 - 148

WEDNESDAY 5 DECEMBER 2012

Members present

Lord Boswell of Aynho (Chairman) Baroness Eccles of Moulton Lord Foulkes of Cumnock Earl of Sandwich

Commissioner Štefan Füle, Commissioner for Enlargement

Q134 The Chairman: Commissioner, we begin, first, by thanking you very much for your readiness to join us in what I hope is a common enterprise, which is considering and, in many ways, promoting, or at least not obstructing, the enlargement of the European Union. Some of us have discussed this before informally back in London and you will have known from the questions we submitted what was in our mind. I gather that you have some answers that you would like to table, and I think that that is a very constructive use of our time. Might I suggest, if you are happy to put those around, that we just have a look at them? Sometimes it is difficult because people only read the brief instead of having an exchange. What we might do is take two or three minutes looking at the brief, then we might have some questions arising specifically from what you said, and then we can perhaps have a more free exchange.

In terms of what we are doing, and if it is all right by you, we will make this an open evidence session. We will record it and send you a transcript of what we have said. In that sense, it is an open evidence session and that is helpful. If you wanted to go off the record on any point, we would respect that, and we would in any case send you a transcript to check. Are you happy with that? I re-emphasise that we are delighted to have this opportunity, as I know you are because it is dear to your heart. I think that you have met everyone informally, so are you happy if we dispense with further formalities? May we then spend two minutes with what we would call wet towels around our heads looking at this?

Commissioner Štefan Füle: Take all your time.

Q135 The Chairman: If we may start, I will not claim that we have read, as a diplomat would, the precise nuance of every comment but we will do that on the train going home. I have one question in relation to question 1 to start with. Croatia, one assumes—although, as you know, there are one or two what I would call bilateral late runs taking place at the moment, which we have discussed with H.E. Vladimir Drobnjak—is approaching membership. We know that. That process is nearly over. You say in your answer that there is no need to put in place for Croatia any post-accession monitoring mechanisms. David Lidington himself pointed out, when he came to visit our Committee, that a potential embarrassment, if I can put it that way, is that Romania and Bulgaria, which are already 162

Commissioner Štefan Füle – Oral Evidence (QQ 134–148) member countries, remain under CVM—and indeed there are some critical notes in the reporting on that—whereas Croatia is apparently free from that. I have two questions. First, does that give you any unease? Diplomatically how will that be handled? Secondly, do you feel that any of the issues about post-accession monitoring might be better handled, as some people have suggested, with a consolidated compliance mechanism for existing member states, rather than, as it were, ex ante with the conditioning, the benchmarks and the accession processes? What is your feeling on that? So there is a specific question and a more general question.

Commissioner Štefan Füle: I do not feel any unease about that. On the contrary, I would feel very uneasy if, despite taking the lessons learnt very seriously and making sure that Croatia had not necessarily played according to different rules but had played on a different playground—and I could explain that later—we imposed a CVM, a co-operation and verification mechanism. What we are aiming at is to erase any need for that mechanism to be in place.

I visited Bulgaria and Romania not long ago. I think that all efforts—by the authorities of those two countries but also, I imagine, with strengthened assistance from us—need to be made for them to deliver on the couple of remaining benchmarks. I am uneasy seeing a CVM for six years in the case of those two countries. In that time, we have been able to work with Croatia through the whole accession process. I still do not see these two countries being in a position to meet those benchmarks in the near future.

Back to Croatia, there were some lessons learnt, as I referred to. The first is the opening and closing benchmarks, which reflect the renewed commitment to enlargement in 2006. They produce a Croatia which is better focused on what needs to be done to open and close the chapter in a more measurable way. But they also provide the member states with better control and comfort in relation to the accession process. If you look at how the opening and closing benchmarks have been agreed, it is through consensus. You are providing the member states not with just a couple of possibilities eventually to veto the process if they do not feel comfortable about the direction in which it is going, but they have the ability to steer the process through with the possibility of more than 100 vetoes throughout the process.

Of course, there is also a certain responsibility with the interaction between us and the member states. I have to say that that has improved transparency and predictability, and quite rightly so. Enlargement is a political process, and it is right that the member states should be in the steering group.

The second point concerns the track record. Before that, I admit that on even some important issues we had a box-ticking exercise, ignoring or not fully appreciating the fact that the countries had a difficult and totalitarian past—they were countries in transition— and that they would need to focus not only on adopting certain legislation and creating certain institutions but on implementing them. However, here we are talking about not only the lack of certain legislative measures but the lack of a culture. On the track record, we are looking at how this works and whether it brings the foreseen benefits. This has become one of the most important features of the last stage of the accession process for Croatia. A third element is that for the first time we have adopted and applied quite a rigorous monitoring system, starting with the signing of an accession treaty. We have planned to terminate that mechanism by Croatia becoming the 28th member state on 1 July 2013 and 163

Commissioner Štefan Füle – Oral Evidence (QQ 134–148) each and every six months, through the vigorous monitoring system, informing, first, Croatia but also member states about the status of them delivering on the obligations they have undertaken throughout the accession process. In our last report, we implanted some kind of wake-up call for Croatia, listing 10 concrete issues on which the Government was expected to make specific progress. We did not really mean to have that as a wake-up call for the Bundestag or the French Senate or anywhere else; it was just to mobilise Croatia’s authorities.

Particularly after my last trip to Croatia—and there were a number of discussions and also exchange of letters—I did not have any doubts about their political willingness or capacity to deliver on those 10 issues. I know that they will deliver on most of them by the end of this year, and almost all of them by the end of January. So I am pretty confident that our last report—which will come out in the second half of March and which will focus very much on the three most important chapters: competition in Chapter 8, fundamental rights and judiciary in Chapter 23, and justice, freedom and security in Chapter 24—will paint a positive picture of Croatia’s preparedness to assume all the obligations of membership.

So those are the elements which made me quite relaxed not to see CVM; to tell the truth, I would take it very badly personally if member states felt the need to see CVM. The credibility of the enlargement process is something on which I worked very hard with my colleagues from the moment I joined the Commission. For me, the credibility of the process is how to regain the confidence of the people on enlargement.

Q136 The Chairman: That is very helpful. One point that I would single out in your response as worth noting is the point about giving assurance to the present member states about, to borrow an English phrase, not incorporating a cuckoo in the nest or another problem. We will be able to find examples where this has not happened in the past. I have raised two issues with you, and one is touched on in your written answer to question 2. In terms of moving forward, once a state has joined, with the careful attention that you have described in relation to Croatia as an example, its future compliance is likely to be assured by both the governance and any improvements that we make, including anything that happens under the eurozone area—although, of course, as it happens that does not apply to either of our native countries—and then, secondly, by the European Court of Justice. In other words, once you have joined, you have accepted the acquis, you meet the criteria and you have gone through the monitoring process on entry, you are then in—but, like everyone else, including my own country, you are expected to keep to the rules, and there are mechanisms for compliance and censure if you do not.

The second question looks forward to enlargement. It is self-evident that there are a number of problems in the western Balkans; it is not so much about population size or their relative importance, but they have horrendous bilateral issues or internal issues. I am not suggesting or arguing that this makes it impossible for them to join, but if you have a process that starts with Chapters 23 and 24, which you are doing with Montenegro, which is a rather simpler country than the other countries in that area, some of them may take a considerable time to come forward to admission. That would not necessarily be a bad thing because they have so much historic acquis to eliminate in order to make them suitable for membership. Is that a fair description? Commissioner Štefan Füle: I think that it is a fair description to say that we try to avoid creating two sorts of members, those without a CVM and those with a need for a CVM. It does not feel good if there is then the tendency to turn the temporary mechanism into a 164

Commissioner Štefan Füle – Oral Evidence (QQ 134–148) permanent one. Secondly, what we are trying to do with the new approach to Chapters 23 and 24 is to give both the candidate country and the member states a lot of space for the transformation to be done not only on paper but also on the ground in such a way that both the member states and the candidate country feel comfortable about that. We made a link between the progress on those chapters with the rest of those chapters and, vice versa, we made a link with progress on other chapters, making the point that if we feel that there is progress in the remaining chapters at the expense of attention to those two key chapters for transformation, we then have the corrective measures to put it back on track, including slowing down the accession process and eventually halting it, unless we are satisfied. Let us say that after four or five years the country does not fully deliver on Chapters 23 and 24; I do not see in the process any kind of timeline for us still to admit it to the EU but with some kind of monitoring mechanism. No, based on my experience in the Czech Republic and based on the experience of Bulgaria and Romania and having a certain understanding of how much credibility matters here, I am ready to do whatever it takes to ensure that member states are fully ready before they join. If it takes four years of extra negotiations, that is fine—or indeed if it takes an extra seven years. The pace of their reforms will define whether we take a shorter period of time or a longer one. It is important that we are there to help define the strategy that is going to steer the progress throughout those two chapters. What matters is that we and all member states feel comfortable not only about the opening and closing benchmarks but about the determining benchmarks—that is, that we are able to see the progress on the ground and have the ability to steer further progress on the ground. Those benchmarks are not just for us to monitor something; they help to guide further efforts to deliver Chapters 23 and 24.

Q137 The Chairman: If I could respond to that, it seems to me, and I would like your confirmation, that the phrase is that there is a critical path to the negotiations—you need to start with Chapters 23 and 24 and there will then be feedback and modifications on those and other chapters as you proceed in relation to benchmarks before you get to the objective. I shall add one other comment for your response: it seems that Chapters 23 and 24 are, in a sense, key transmission systems for the other policies. If you do not have a straight justice system—if, say, Roma are being discriminated against, or if you have a readiness to bend the rules on the single market and competition policy—you have not really signed up to anything at all. Is that the way you view it?

Commissioner Štefan Füle: You are absolutely right. We are trying to come out with a new narrative of enlargement. Each year the progress report has a special motor and I hope that within five years you will see a positive story behind each of those motors. The first one, two years ago, was credibility. A year ago it was the transformative power of enlargement. Croatia is a good example of that; look at the differences in that country between 2003 and 2013. Look at how effective and transformative the weapon is that we have at our disposal. It is the most powerful instrument in the world—and, by the way, I like the awarding of the Nobel Peace Prize to the EU; someone finally got it. This year, when we fully embraced this new approach to Chapters 23 and 24, the main motor is the rule of law.

Q138 Lord Foulkes of Cumnock: I just want to clarify something. I do not want to misinterpret you. Are you saying that, in retrospect, Bulgaria and Romania may have been admitted rather too early and that, for the importance of the credibility of the process, we are now dealing with all the requirements and benchmarks rather more rigorously with subsequent applicants?

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Commissioner Štefan Füle: Can I agree with the second part of your statement and rephrase the first? Those countries were admitted, obviously, but without ensuring that they had fully delivered on all of the commitments that they had made.

The Chairman: That is pretty explicit, thank you. It is very helpful.

Lord Foulkes of Cumnock: It was very diplomatic that you did not agree with my words.

Q139 Lord Foulkes of Cumnock: What has become clear to us, however, is that for some of the countries seeking membership, bilateral issues seem to be more important than whether or not they satisfy all the requirements of membership and it is thought that they can be used as excuses for not giving them membership. How are you dealing with that and are you concerned about it?

Commissioner Štefan Füle: Very much so. We can see it in the case of Croatia and Slovenia—those with maritime borders and access to the open sea. We can see that also in the case of Ljubljanska Banka. I could give you plenty of other issues. For a couple of months negotiation has been stopped. I have two issues, first, and then I will go into detail. First, on open bilateral issues, we probably more than before consider it as part of good neighbourly relations and this is indeed a very important Copenhagen criterion for a country to become a European Union member state. There is a determination and there are a number of issues but this is something different. This is a part of the process. Forget about the second issue; this is important.

Now, we are telling the candidate and aspirant countries the following: first, it is also part of the lessons learnt that we will try to avoid as much as possible importing open bilateral issues into the European Union. We are telling them that we are quite serious about the good neighbourly relations. We are not interested in anything referring to this principle; when you are in or are in the final stages, we are not interested in discovering that there is an issue which prevents you functioning effectively and at 100% vis-à-vis the requirements. So that is one thing that we say. The second thing that we say is that we do not want the open bilateral issues to delay or derail the accession process. The bilateral issues cannot explode in the framework of the accession process like mines and not destroy but delay the accession process. In the case of Croatia, it was nine or 10 months because of these bilateral issues.

That is A and B and that requires us also to say C: what we are going to offer to those countries. What we are going to offer them is a parallel process, where the bilateral issues will be addressed parallel to accession negotiations, taking care of the advantage of the momentum created by the accession process and not turning the accession process into a hostage situation on bilateral issues.

We have already made the first step. We have already made our own inventory of the open bilateral issues in the western Balkans. There is a long list. I made that point earlier today when I addressed a seminar of the Friends of Europe. This is going to be a priority for next year, 2013. The second step is to consult the candidate and aspirant countries and to determine the importance and seriousness of those issues. Many are being neglected. We want to understand whether they are neglected because they are not that important or serious and do not pose a risk, or whether they are neglected because they are sensitive and there is no willingness and no appetite to address them and to give them the time. 166

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After that, the third phase will come and we will determine a couple of the groupings of those issues and find the best way to address and to solve those issues. Sometimes it is just encouragement for the two countries to work these issues through and sometimes it is for us to bring in the External Action Service, some ideas and initiatives and so on. By the way, on Pristina, Baroness Ashton is in charge of those negotiations. It could be some inspiration. I am not saying each and every one of the bilateral issues that I am referring to is of the size and magnitude of Serbia and Kosovo, but that is what I am talking about, and I saw the interest on your face when I mentioned the External Action Service. Another point could be the arbitration mechanism which we helped to establish in the case of Slovenia and Croatia. The ultimate is The Hague, where that could be promoted again. It could be the case for setting the border between Croatia and Montenegro. Those countries could draft a kind of joint tasking, or a request, that the court in The Hague would address.

The Chairman: With an understanding that they would accept?

Commissioner Štefan Füle: Yes, absolutely. This is the ultimate goal and the horizontal priority for the next year: addressing the bilateral issues in this way. Now, I am not saying that these bilateral issues need to be resolved before we open the next negotiations. They need to be resolved ideally by the time of the signing of the accession treaty. I want the member states to be aware of what they are signing up to. I want them to know that this is what is on the table and that there are not some continuing parallel efforts to find a solution to the bilateral issues. If I could push my luck, I would like to avoid the bad surprises, as I have when I hear statements from Slovenia concerning the ratification of the Croatian accession treaty because of Ljubljanska Banka, and then I hear some statements on the Croatian side. It would be beneficial to avoid that.

The Chairman: Thank you. It might be sensible if we move on to the Union’s regional goals in the wider Europe. In a sense, that embraces a whole series of perspectives, including what is going on within the existing European Union, and whether we need to move towards improved architecture for that.

Q140 Baroness Eccles of Moulton: I have one brief question that I want to ask you about Chapter 23 or 24—the chapter that covers corruption. It has been pointed out to us, and I suppose it is something we already knew because it is partly instinctive, that you can never do away with corruption altogether. It is endemic pretty well everywhere to a lesser or greater extent. Therefore, to expect an acceding country absolutely to stamp out corruption in totality before it is allowed to accede perhaps is unrealistic. I doubt if this has been the case as regards Croatia but obviously a watchful eye has to be kept over that after accession. I know that that has been one of the problems with probably Bulgaria more than Romania. Is it the case that 100% success is not expected for accession?

Commissioner Štefan Füle: We cannot expect the candidate countries to deliver more than the member states.

Baroness Eccles of Moulton: Yes, that is a fair measurement.

Commissioner Štefan Füle: It is important that candidate countries establish a credible track record which is beyond any doubts. It should include the ability to pursue corruption at all levels and to deliver throughout the whole process—starting with the investigation,

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Commissioner Štefan Füle – Oral Evidence (QQ 134–148) through to the court verdicts and prison sentences if the court decides that way. A credible and sound track record on those two issues is what we are after.

Baroness Eccles of Moulton: This presumably is one of the reasons why it is so important that Chapters 23 and 24 are taken at the beginning and closed at the end. It gives time for a track record to be established.

Commissioner Štefan Füle: Exactly.

Q141 Baroness Eccles of Moulton: Shall I move on to the wider Europe? I suppose this question cannot really be answered, but we have been thinking about it. What exactly is Europe? How far east is it considered sensible at this stage—perhaps looking forward 20 years or some time like that—to consider that a country could qualify as a member of Europe to apply for accession? That would be the first part of the question.

Commissioner Štefan Füle: The borders of the European Union are where the interpretation of Article 49 meets the consensus of member states. You cannot get a better definition.

Baroness Eccles of Moulton: But what if we were to be pragmatic about it?

Commissioner Štefan Füle: That is my answer number 1. Secondly, in that interpretation of Article 49, I hope that the member states will take into account what we already said as regards it being the most powerful, transformative instrument. If we are serious about our European neighbourhood, we should have the political courage to use this instrument when its implementation would match the expectation of the people of that respective country or region.

Baroness Eccles of Moulton: Would that also need to reach the expectations and approval of the people of the other member states?

Commissioner Štefan Füle: Beyond any doubt. I think that they have a number of opportunities to make the point clear before the country applies for membership. The member states have a possibility to signal whether they would consider such applications credible or not. Based on applications, member states need to achieve consensus to ask the Commission to prepare an opinion on that country. That is a precondition before eventually starting any accession negotiations based on the Commission’s opinion. Again, we need a consensus of member states to start accession negotiations and for negotiating a framework for accession negotiations. You need the consensus of member states more than 100 times throughout the negotiations process. At the end of that process, in addition to the consensus of the member states on the level of preparedness of a candidate to join the European Union, you need also to have a consensus of member states on the absorption capacity of the European Union vis-à-vis that particular member state.

Q142 Baroness Eccles of Moulton: Would you consider that the definition of a wider Europe would exclude any country that already is an aspirant candidate or would we have, in a wider Europe, to include both candidate and aspirant countries? How would one define a wider Europe? Commissioner Štefan Füle: To tell you the truth, I do not know how to define a wider Europe. I could offer you my own interpretation and dream. If I look at enlargement, each 168

Commissioner Štefan Füle – Oral Evidence (QQ 134–148) and every stage was a reflection of a certain challenge or certain tasks. By the way, interestingly, both policies—deepening integration and enlargement—were always interacting with each other. Sometimes deepening integration was a consequence of enlargement and vice versa.

Baroness Eccles of Moulton: It was not always thought to be so.

Commissioner Štefan Füle: The effort to balance those two policies was always there. I believe that after the last wave of enlargement, which was about uniting Europe, we will face another challenge; that is, to what extent will we be able to secure the interests of the European Union’s 500 million people with a demographic record that is rather sad while the neighbourhood is going in an opposite direction? How do we defend those interests at a time when size again matters? In a powerful shift in global politics, it matters whether you have a fellowship, companion, organisation, federation or political union—at this point I am not that keen on labelling it—of 500 or 700 million. It matters even more if you have this powerful instrument of Article 49, where you can extend the membership and make it stronger without making it at the expense of your values and principles, and the strengths of the European Union. In that sense, my understanding of a wider Europe is the full interpretation of Article 49, which talks about any European country promoting the values and principles on which the European Union was founded having the possibility to become a European member state. At the moment, we have nine candidate and aspirant countries, and six eastern partners. It does not mean that when the time comes—it has to come on the side of the partners and, as you quite rightly said, on the side of the member states—those countries should not be given the European perspective. For me, a wider Europe means definitely a Europe beyond the current lists of the candidate and aspirant countries. But it also involves the list of partners who have the right to refer to Article 49 when the right time comes.

Baroness Eccles of Moulton: But that would not be possible for any country on the other side of the Mediterranean.

Commissioner Štefan Füle: That would require a change of the treaty.

Q143 The Chairman: They are definitely not in Europe in the sense that countries within the Eastern Partnership may or may not be, just to make a distinction. I do not think that we are trying to hint that there is any lack of importance in the southern range but, clearly, there is a slightly different category.

Commissioner Štefan Füle: Not at all. You are actually uncovering a very important feature of our neighbourhood policy. We have started with Baroness Ashton a review of our neighbourhood policy. We thought at the beginning that we would look at how it works, A. B we would try to adapt it to a new post-Lisbon instrument. We have delayed the review process because we wanted to reflect on the historic changes in the southern neighbourhood. We want to turn the new neighbourhood policy into a real instrument for helping those countries, and maybe even a more effective instrument for the countries of the south and eastern neighbourhood. Then we realised, as we were looking at a number of the issues, that the previous neighbourhood policy did not really define the endgame of the partnership. It referred in general terms to the creation of peace, security and prosperity, but it did not go beyond, so the neighbourhood policy was a settled instrument rather than a goal and how to achieve that goal. The new neighbourhood policy that we tried to define 169

Commissioner Štefan Füle – Oral Evidence (QQ 134–148) was exactly that. It was not easy. We succeeded and got the Eastern Partnership to include a reference to Article 49. So we have effectively erased from an academic perspective the dividing line between the Eastern Partnership and the European perspective, making it clear that those countries that would be ready to deliver on developing peace and partnership are delivering on the very same principle that Article 49 refers to.

Baroness Eccles of Moulton: Budgets.

Commissioner Štefan Füle: On the south, we could not offer them a European perspective, so we offered them an extension of the internal market, rather like the European Economic Area. Through instruments like the deep and comprehensive free trade area, we have made an offer that they could be economically integrated in a gradual way into our internal market. As you can see, we are working on that Europe-wide. You said, “Budgets”, I think.

Q144 Baroness Eccles of Moulton: Budgets. It seemed to me that there would be quite a cost in extending the influence and assistance of the EU to these countries on the edge, and perhaps they would not be able to be beneficiaries.

Commissioner Štefan Füle: Can I be now a little bit undiplomatic? Have you found so far, or proved, that enlargement by the Czech Republic, Slovakia and Poland was actually too expensive, and that the cost has exceeded the benefits of enlargement? If so, I want to see and hear it. For me, the benefits of enlargement are clearly with the positive figures, not negative ones.

Lord Foulkes of Cumnock: And Bulgaria and Romania?

Commissioner Štefan Füle: The same: plus.

Q145 The Chairman: The short answer is that we will obviously eventually publish evidence and you can draw your own conclusions. I have been struck personally by the way in which comparatively little of what we have considered has been economically driven. Given that we are having a separate consideration of the MFF and so forth, and we know that budgets are extremely tight—they are in member states as well—there has not really been much of a public debate about it being too expensive to enlarge Europe. This makes one of the points that you have made: that it may have positive consequences, not least if it improves the growth rate of the acceding countries. It is an interesting point and perhaps we may consider how we put it.

Commissioner Štefan Füle: Can this particular part be off the record?

The Chairman: Yes, absolutely.

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The Chairman: We should resume on the record now, but thank you for that.

Q146 Earl of Sandwich: Can we spend a few minutes on Kosovo? I hope that you have some good news.

Commissioner Štefan Füle: I beg your pardon. May I say one more thing before I address that question? I do not want to create the impression that this wider Europe—this idea that we have been talking about—is possible without the European Union changing itself. If you want to return to that later, I would then—

Baroness Eccles of Moulton: Shall we do Kosovo and then come back to this?

Earl of Sandwich: I am still reflecting on your phrase “transformative power” and trying to apply it to Kosovo and Serbia. We have had obviously the dialogue today and you may have something to tell us from there, but it does not seem that a lot is happening. I do not want to say that the brakes are on but the transformative power in the way you have described it seems a constant process. Even if the perception is that the brakes are there, you are still engaged, and so there is no end to engagement. I just set that as a background. The big project of EULEX has come under fire from the Court of Auditors. It is a joint project between you and EAS, which makes it unique in a way. You have explained again that the transformative power is working because you have actually worked with the Court of Auditors to produce that result, so you are engaged in the entirety of that process. But if you go back to the streets of Pristina, they are not seeing any change. What has happened to the Martti Ahtisaari principles? How is it that Serbia can still write evidence to us which does not even mention that Kosovo exists? So where are we?

Commissioner Štefan Füle: We are in the situation where we have five members of the European Union who are not ready, at least at this point in time, to recognise Kosovo. We are in these months and days bringing Kosovo into the mainstream of enlargement policies—hence the feasibility study on the stabilisation and association agreement. This is a

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Commissioner Štefan Füle – Oral Evidence (QQ 134–148) country where we do not have a stabilisation and association agreement, which is a powerful tool of the early stage of the transformation. We hope to start the negotiations sometime next year, after other member states hopefully agree with the mandate. That would happen only after Kosovo delivers some kind of short-term priorities that are well defined by us before we could engage with them on this. EULEX is an intergovernmental mission; the Commission is not directly involved in it. We are involved in those issues. This is an interesting process because you could see it in Bosnia-Herzegovina and you could see it in Kosovo. The more you bring these countries into the enlargement policies and this European framework, the more instruments you can use to move the transformation process in that country forward. We are almost powerless if we do not have the stabilisation and association agreement treaty. We have, in the case of Kosovo, created a so- called stabilisation and association process dialogue. So despite the fact that we do not have a treaty, we have some kind of structure with a sub-committee somewhere and all of that. We are creative people, and it is about momentum, particularly at this time with the financial crisis. If you lose momentum in enlargement, I do not see how anyone or anything can get it back on track in the foreseeable future. That would be to the detriment of all of us in the European Union. But how EULEX works is interesting because there is already a decision to phase it out in the next four and a half years, but we have established a so-called structured dialogue with Eurofor. We have agreed—and from the very beginning it has been assigned like that—that it is compatible with the tasks of EULEX. So as EULEX is gradually phased out, our instrument and engagement through the structured dialogue of the rule of law would be phased in, with more and more power going to the local authorities, but with more and more effective control of those issues and turning it into a part of the enlargement agenda. So this is how it works. With Serbia and Kosovo, it is a very delicate issue. What we have seen, and yesterday was another good meeting—

The Chairman: Good because it happened?

Commissioner Štefan Füle: No, not only that. It was very concrete. Just before meeting you, I met a leader of the Georgian opposition, but before that I had a discussion with the Serbian Prime Minister. He is bravely pushing through things like integrated border management despite the resistance of all the Serbs in the north.

The Chairman: So that is going to happen?

Commissioner Štefan Füle: Yes, I have six concrete things out of that dialogue. On 10 December, two gates will be operational and on 31 December two more gates will be operational. They have agreed to appoint two liaison officers. They have agreed to protect the religious and cultural heritage. They have agreed to a transparent flow of money. They have agreed that they will continue to work on energy and telecoms and they will intensify co-operation between the respective commissioners for missing persons. The next meeting is on 17 January.

The Chairman: That is a wonderful example of transformative power. Commissioner, I am conscious of your time.

Q147 Lord Foulkes of Cumnock: That is very impressive, by the way, so you are the right man to answer my tiny question. In the albeit unlikely event that a part of an existing member state seceded and sought to become a new member state, would that be your responsibility? How would you deal with it? 172

Commissioner Štefan Füle – Oral Evidence (QQ 134–148)

Commissioner Štefan Füle: May I say something off the record?25

Q148 The Chairman: Commissioner, I think that we have one final loose end untied. You have dangled it before us. If there is anything you want to say on the record, we would appreciate it. As you said, we need to realise that it will not necessarily be the European Union as it is today. That raises a variety of issues about different geometry and different poles of axis, cores and relationships within a continuing European family. Do you want to say anything to us in conclusion on how that might be evolving?

Commissioner Štefan Füle: I was talking about the balance between deepening integration and expanding the membership. I was talking about us in this more globalised world only benefiting from extending the membership on the basis of the rules and values. I, of course, need to say that, as we extend, we need also to challenge the way in which the European Union works. I am not a big fan of a two-speed Europe or associate membership. I would rather talk about a multi-layered Europe where those members that would like to go to deeper integration would feel comfortable that they were allowed to do that and were not delayed by others who for some reasons were not ready to do that, at least at that point in time. I would like to see the European Union provide the same comfort for those countries that would like to join it because they are committed to the same values and the principle of the internal market, but that, at a particular time, for a number of reasons, may not be ready to join the pioneer group. I would like to see an open-ended Europe between those various layers with no firewalls and no discrimination.

I think that that is probably the shortest version of what I am talking about. In the current discussion about the structure of economic governance and about economic, fiscal and political union, whatever the shape or label, Europe needs to be enlargement-friendly, not only in the sense of absorbing new member states but for those who have already been subject to the transformative power of Article 49. It needs to be multi-layered and flexible enough to provide the same level of comfort for all members, not only for a few.

The Chairman: Can we conclude on that note? Let me express our very sincere thanks to you for your time and for the frankness with which you have approached this. It has been very helpful to our Committee. I hope that our report, when it is produced, will be interesting to you. We are always at your disposal for mutual exchange of information or discussion.

Baroness Eccles of Moulton: It would be helpful to learn a bit more about the beneficiaries on one side and the recipients on the other.

The Chairman: We will take that up. That is really helpful. We appreciate this conversation.

Commissioner Štefan Füle: I appreciate your interest in that particular field. The quality of the reports of the House of Lords is becoming the point of reference for many member

25 Note by the Witness: Vice-President Šefčovič is in charge of this in the Commission. The Commission’s position is on the record. 173

Commissioner Štefan Füle – Oral Evidence (QQ 134–148) states and European institutions, and I do not expect anything less as far as this Committee is concerned.

The Chairman: We will do our best. Thank you very much.

174

Memorandum from Commissioner Stefan Füle

BENEFITS OF EU ENLARGEMENT Arguments

Four strategic benefits

• Enlargement (1) makes us more prosperous. A bigger Europe is a stronger Europe. Accession benefits both those countries joining the EU and the established member states. As the EU expands so do the opportunities for our enterprises, financial investors, consumers, tourists and property owners. [see Economic benefits below]

• Enlargement (2) helps improving the quality of people's lives through integration and cooperation with aspirant countries in strategic areas like energy, transport, fight against crime and illegal migration, food safety, environmental protection and climate change. For example, enlargement helps us ensuring that high environmental standards are applied beyond our borders and reduces the risks that people in the EU would be affected by imported pollution or energy shortages.

• Enlargement (3) makes Europe a safer place. Through the accession process, the EU promotes democracy and fundamental freedoms and consolidates the rule of law across the aspirant countries. The current phase in particular reinforces peace and stability in South East Europe and promotes recovery from the recent wars.

• Enlargement (4) gives more clout to our say in today's multi-polar world. In relation with third countries project our values and interests beyond our borders. An enlarged Union enhances the soft power needed to shape the world around us.

Economic benefits

• Enlargement extends the internal market. It opens trade and financial flows thus giving opportunities to firms in the EU and in the incoming countries.

• Trade between the old and new member states grew almost threefold in less than 10 years preceding the 2004 and 2007 enlargements. Even more illustrative is the fivefold increase in trade among the new members themselves.

• More trade translates into more growth and jobs. Central and Eastern Europe grew on average by 4% annually in the period 1994-2008. It is estimated that the accession process itself contributed almost half to this growth e.g. 1.75 percentage points per year over the period 2000-2008. The economic dynamism of these countries generated three million new jobs in just six years from 2002 to 2008.

• Growth in the acceding countries contributed to growth in the old member states through increased investment opportunities and demand for final products. It contributed 0.5 percentage point to the cumulative growth of EU-15 in the period 2000- 2008.

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Memorandum from Commissioner Stefan Füle

• As the internal market was expanding, the EU further advanced in becoming the most interesting place to invest in the world. EU-15 firms were investing towards Central and Eastern Europe, but they were receiving even more investment from other parts of the world.

• Financial flows that accompanied the enlargement process showed textbook behaviour. They flew from richer to poorer countries and helped the firm restructuring and raised people's living standards. They did not contribute to excessive public and private debt.

• Following the outbreak of the crisis in 2008, the foreign financial investors remained in the region. This would most probably not be the case if the countries had not been firmly integrated in the EU or had European perspective.

• In the current enlargement, covering the Western Balkans, Turkey and Iceland, similar patterns are taking place. They are less pronounced as countries, with the exception of Turkey, are smaller. Today, most benefits can be observed in the bordering countries and regions of the EU, which are the biggest investors in the Western Balkans. The recent visa liberalisation further contributed to this dynamism.

*** • We tend to forget all these benefits as we observe our economies through the bleak indicators of the current crisis. But this crisis has nothing to do with EU enlargement. On the contrary, the economic reforms and benefits achieved thanks to the enlargement will help bring Europe back on track again.

6 December 2012

176

Written evidence from Dr Andrew Glencross, University of Aberdeen

Submission regarding issue 12:

“Do a) the EEA, b) the European Neighbourhood Policy, or c) the possibility of a ‘privileged partnership’ offer viable alternatives to full membership? Could these circumvent ‘enlargement fatigue’, either as permanent alternatives or as stepping stones to full membership?”

1. This submission will explore the viability of a ‘privileged partnership’ arrangement for circumventing enlargement fatigue in the case of settling Turkey’s future relationship with the EU. As well as examining the precedents for such an arrangement, the submissions probes its pros and cons, how such a decision could be taken, and what democratic legitimacy it would have.

2. Today’s European Union already operates as an internally differentiated political system. This reflects the use of various national ‘opt-outs’ (concerning the Euro, Schengen, and the European Security and Defence Policy from common policies. Additionally, there are certain legal exemptions inserted into the treaties to protect national autonomy in particularly sensitive matters. This includes the Maastricht Treaty amendment that protects Ireland’s right to legislate against abortion, the Danish accession treaty’s provision prohibiting non-Danish residents from purchasing second homes, and Sweden’s retention of a state-run monopoly for selling alcohol. Moreover, Bulgaria and Romania are subject to a tailormade Cooepration and Verification Mechanism to monitor Bulgaria and Romania’s efforts to implement judicial reform, and fight corruption and organised crime. All these differences in member states’ legal obligations or participation in common policies have developed in a piecemeal fashion.

3. Recently, the possibility of creating differentiated membership status has been proposed as a solution to the quandary of further EU enlargement, particularly regarding Turkish accession. Leaders such as former French President Nicolas Sarkozy and German Chancellor Angela Merkel have proposed offering some form of associate membership to Turkey rather than full EU membership. This not only goes against previous enlargement negotiations, which have focused on acceding to full EU membership; it also contradicts the current official accession negotiations with Turkey, which are premised on its becoming a full member state. However, there negotiations are currently at an impasse owing largely to Turkish intransigence over recognising the Republic of Cyprus.

4. ‘Privileged partnership’ or associate membership is designed to limit the possible destabilising impact of Turkish accession on the EU. Two principal areas of concern are decision-making (Turkey is on course to have a larger population than Germany, giving it a large voting weight in the Council of the EU and at least as many MEPs as Germany) and domestic politics in various member states. Governments in both France and Austria have in the past indicated their intention to hold a referendum on Turkish accession, which could scupper the current Commission-led negotiations. A separate concern about Turkish emigration to wealthier member states could be addressed without the need for a formally differentiated membership status. Rather,

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Written evidence from Dr Andrew Glencross, University of Aberdeen

this could be achieved through temporary restrictions on labour migration, as used by many countries in the wake of the 2004 enlargement as well as for Bulgarian and Romanian accession in 2007.

5. Associate status would, therefore, avoid making Turkey a key decision-making actor for EU single market legislation and foreign policy. Moreover, it would be in keeping with citizens’ preferences as only 34% of EU citizens support accepting Turkey as a full EU member state (Gerhards and Hans 2011). An analogous status is already held by countries closely associated with the EU, namely Switzerland and Norway. These two countries are in effect quasi-members of the EU. The free movement of goods, services, capital and trade extends to both Switzerland and Norway whilst their citizens and firms have the same reciprocal privileges throughout the EU. However, the compromise of quasi-membership has been adopted because a majority of citizens in both countries were unconvinced about the need to integrate fully into the EU. These countries are essentially at liberty to integrate the EU fully should their citizens acquiesce.

6. Consequently, the withdrawal of the offer of full EU membership would be highly controversial. Enlargement has hitherto been based on equal membership rights – a promise that helps incentivise candidate countries to implement far-reaching policy change. Formally differentiating types of EU membership would thus constitute crossing a Rubicon at the risk of alienating elites and ordinary citizens in Turkey. At worst, this could lead to an unravelling of existing progress made by Turkey to meet the EU’s accession criteria in the field of economic reform as well as social and political rights. There is also the potential for a disgruntled Turkish government to work against EU foreign policy in the Middle East.

7. Although the suggestion of re-calibrating EU-Turkish relations on the basis of less than full EU membership has been mooted at the national level, no formal political procedure has been attempted to accomplish this policy change. The Commission is negotiating on behalf of the member states but does not have the prerogative to change what is on offer. That would be the responsibility of the European Council, which could face resistance from the Commission and the European Parliament. As the body representing heads of states and government the European Council rests on national legitimacy yet obtaining a specific democratic mandate for this decision would seem essential for rendering it legitimate.

8. A democratic mandate could be obtained by various means. The European Parliament could pass a motion calling on the European Council to change the terms of the negotiations or else one in support of a decision to offer a privileged partnership. The new “citizens’ initiative” procedure could be used to indicate popular displeasure with the ongoing negotiations. This would involve a petition requiring the signatures of 1 million EU citizens from at least a quarter of member states but would not create any legal obligation to change course. In addition, individual member states could organise referendums on the question of whether to offer Turkey full or associate membership.

9. Under the EU treaties, of course, any member state is in a position to veto unilaterally a candidate country’s accession to the EU even after the Commission has successfully verified the candidate’s readiness for membership. The precedent here is from the 1960s, when then French President Charles de Gaulle’s twice refused UK entry into 178

Written evidence from Dr Andrew Glencross, University of Aberdeen

the European Economic Community. However, this use of the veto predates the devising of formal criteria for candidacy and the Commission-led procedure for scrutinising applicants’ readiness. As a result, any national veto (including one based on a national referendum) would be explosive both within Turkey and across the EU. For Turkey, a unilateral national veto would imply that the EU had negotiated in bad faith, whilst member states would be in the uncomfortable position of having to put pressure on a government to reverse its decision – one that might in fact be very popular domestically.

10. In these circumstances, it would appear that the best way forward is to propose a privileged partnership before the conclusion – or, more likely, exhaustion – of the existing negotiations and a possible veto. Indeed, the timing appears propitious as the Commission has sought to re-launch the blocked negotiation process with a new ‘Positive EU-Turkey Agenda’ (May 2012). Unfortunately, this agenda elides the problem of what the exact status of EU-Turkey relations will be. Hence this move is fully in keeping with the current status quo of a lengthy and convoluted negotiation process that chafes with the current Turkish government.

11. Presented as an intermediary status – pending periodic review from both parties – a privileged partnership could thus allow both sides to save face and create a more realistic framework for cooperation than the current one. Here the better model is the Swiss arrangement, which relies on a series of bilateral treaties rather than the European Economic Area, which includes Norway and Iceland. In a time of major economic upheaval in Europe, the emphasis of the privileged partnership ought to be on the economic aspects of integration. Notable areas for bilateral deal-making would be the free movement of capital and goods, intellectual property law, competition, and public procurement.

12. Overall, offering Turkey a privileged partnership is a difficult strategy to implement, especially in a democratic fashion. This does not make it impossible and certainly does not make it a worse option than the current etiolated Commission-led negotiations. It is a viable alternative to full membership and in keeping with the existing differentiated levels of integration within the EU and amongst its quasi-member states. Perhaps the biggest remaining hurdle is that of finding a political arrangement for legitimising this decision ex ante or ex post.

31 October 2012

179

Fadi Hakura, Chatham House – Oral evidence (QQ 1-45)

Transcript to be found under Dr Steven Blockmans

180

Written evidence from Roger Helmer MEP

I should be delighted to see new countries joining the EU, but only on the condition that the UK should first leave the EU to make room for the newcomers.

11 October 2012

181

Richard Howitt MEP – Oral Evidence (QQ 149-166)

Evidence Session No. 8 Heard in Public Questions 149 - 166

TUESDAY 8 JANUARY 2013

Members present

Lord Boswell of Aynho (Chairman) Lord Bowness Lord Cameron of Dillington Lord Dear Baroness Eccles of Moulton Lord Foulkes of Cumnock Lord Hannay of Chiswick Lord Harrison Lord Maclennan of Rogart Lord Marlesford Baroness O’Cathain Lord Richard Earl of Sandwich Baroness Scott of Needham Market Lord Tomlinson Lord Trimble Baroness Young of Hornsey ______

Mr Richard Howitt MEP

Q149 The Chairman: I would like to welcome you very much, Richard Howitt, MEP for the East of England and, for our purposes, a member of the AFET Committee with special responsibility as a rapporteur for the Former Yugoslav Republic of Macedonia, although I realise both the responsibilities of that committee and your own interests go somewhat wider. We met some of your colleagues in Brussels, when we took evidence over there, and we are extremely grateful to you for taking the time to come and see us here and complement their evidence.

Before we start formally, for the record, I would like to remind you that this session is in public and will be televised from now on. A transcript is being taken and a copy of that transcript will be sent to you. You will have a chance to correct any minor errors, although it will be published online in an uncorrected form first.

To begin—and you will appreciate that some of us were over in Brussels recently taking evidence there from your colleagues as well—I would like your personal take on what you see is the likely course of the enlargement process over the next decade, beyond Croatia and perhaps Iceland. Do you foresee other countries joining in that period or what state will we be in, say, by 2020 or shortly afterwards? 182

Richard Howitt MEP – Oral Evidence (QQ 149-166)

Mr Howitt: First, good afternoon from me. I am extremely grateful that you have put on this special meeting. I apologise that I was not available in Brussels when you were there. I have spent much of the last few years first as shadow rapporteur helping Turkey towards its membership of the European Union and now, for a little over two years, helping—what I can call today—Macedonia to move forward. I believe very strongly in the EU enlargement process. I believe Britain has done extremely well as a champion of EU enlargement in the past. One of the reasons for my enthusiasm to meet you and to contribute to this inquiry is that I want Britain to stay as a champion for EU enlargement in the future, and that is the case I want to put to you.

In terms of the next 10 years, you have heard the talk about enlargement fatigue and I do not hide from you a tempering of enthusiasm towards enlargement from some countries. I would name France and Germany in relation to that. However, I caution you from thinking that the whole process has slowed down, or is slowing down, and inevitably we are only going to have a period of consolidation. Firstly, in my view we have an extremely active and able Enlargement Commissioner, Stefan Füle—I know you have met him—and I have the deepest respect for him. He has brought forward the developments in relation to both Serbia and Montenegro, which we have agreed. I think that both of those show that there is still a momentum for an enlargement policy. As I hope my colleagues from the European Parliament said to you, although there are tough debates about these issues, there are strong majorities in the European Parliament for enlargement, including for the accession of Turkey, so I caution you not to be too pessimistic.

I was at the European Council in 2004 when, very dramatically, the chief prosecutor of the International Criminal Tribunal for the Former Yugoslavia came in. There was a new view about co-operation between the tribunal from Croatia, and that paved the way for Turkey to join. That was not anticipated even a short while before. People have told me that in a former time when Turkey joined NATO—an unreformed, undemocratic Turkey I should add—the real trigger for that was developments in the Cold War and a new impetus among the then western nations to bring Turkey into their military fold. I make these points because political developments can change things. They can change things dramatically, and they are not always foreseeable within countries, between countries and external to countries.

Those people who might say to you—or at least some of them—that there is an inevitable slowdown in EU enlargement are not always neutral analysts of the process. Quite often they themselves are either opponents or sceptics about the process, so I just want to put that more positive attitude to you.

Q150 The Chairman: It is very helpful to have that perspective. Can I follow that with a simple question? Bearing in mind that the Commissioner—whom you have mentioned and who did impress us—very much emphasises the importance of conditionality, in terms of driving both the process of enlargement and the process of change within applicant or potential applicant countries, would it be fair to say your view is that conditionality normally does work?

Mr Howitt: I think it is necessary. I think it is tougher now than it was prior to the eastern European enlargement in 2004 and in relation to UDMR in Romania and Bulgaria. Since that time there has been a switch in emphasis to not simply have legislation that is consistent with the acquis but to have implementation of that legislation, which I strongly support. That 183

Richard Howitt MEP – Oral Evidence (QQ 149-166) is a higher bar. I strongly support Stefan Füle in ensuring that chapters 23 and 24, on justice, freedoms and civil liberties, are the ones that are opened first so that we really concentrate on fundamental rights, including the fight against corruption. I strongly support and agree with all of those conditionalities, but I do so from the point of view not of putting up hurdles that countries can fail to meet but of putting up stepping stones that they can achieve better for their countries and better for Europe as a whole.

Q151 Lord Foulkes of Cumnock: Richard, I share your enthusiasm. It is not we that are pessimistic, but nearly everyone who gave us evidence in Brussels said that after Croatia, and perhaps Iceland, they did not see any countries coming in in the next decade, and that included the two MEPs from the United Kingdom. You are a champion, an enthusiast, for enlargement. Do you think you are getting carried away with your enthusiasm?

Mr Howitt: I read some of that evidence, including from my colleague who is the rapporteur for Montenegro. First of all, I have talked to you about uncertainties in this, and I do not think that is enthusiasm—I think that is sober judgment—but also I think things happen if you want to make them happen. People wanted to make the eastern European enlargement happen. It was difficult and it was flawed but it did happen and, as the rapporteur for Macedonia, I want accession to happen for that country. It is the easiest thing to sit back— either in the European Parliament or here—and say, “There are innumerable problems and it is going to take time”. That is a very easy thing to do. To make the changes and to work with these countries to make the changes is hard, but it is possible, and, in my view, it is our duty to do so.

Lord Foulkes of Cumnock: As you know, I have been in Macedonia two or three times to encourage them to move towards accession. Therefore, I was rather depressed by how negative people were in Brussels about the possibility of Macedonia—just to take one example—acceding in the next 10 years. Why do you think they were so negative?

Mr Howitt: I think we are going to come back to bilateral issues so I will reserve my comment on that, but I will refer to Macedonia. This is a country that has made progress and, in terms of reforms, in many ways is at the same level of development as Montenegro, where the start of talks has been agreed and where essentially it is the bilateral problems that have obstructed it. I am not saying that there are not many issues there in relation to the strength of the Parliament, for example, or freedom of the media, but those issues will only change when there is a realistic prospect that the enlargement process is on course. As I hope I might be able to share with you in more detail later, I am disappointed by the blockages that are there, and I am working very hard—and I want your support—to lift those blockages.

Q152 Lord Maclennan of Rogart: Mr Howitt, I have been wondering whether the criticisms that have been made of some of the east European countries, particularly Hungary, since the enlargement will give rise to a greater reluctance to accept new countries, because the underpinning of the values of the European Union—democratic values, rule of law and so forth—seems not to have been quite sufficient in respect of some of those countries. Do you think that could influence the approach to the new applicant countries?

Mr Howitt: Yes, it could. Many people say that the continuing problems, for example, in combating corruption in Romania and Bulgaria, are also very influential in causing greater 184

Richard Howitt MEP – Oral Evidence (QQ 149-166) caution with regard to enlargement. In relation to Hungary itself, I share the concerns—and I suspect you would—in relation to the constitutional changes that took place there, the new media law and the dismissal of judges. I do not underestimate or gloss over those concerns in any way, but I would put it in a wider context. Problems about respect of fundamental rights, human rights and civil liberties are not confined to eastern Europe. With a degree of humility to this Parliament, I know you will agree that our own country can have hard questions put against it under governments of different colours. I think we should have a degree of humility in relation to that.

Secondly, what is the alternative? There is not an alternative which is that there will be status quo on our borders. Look at what has happened in Russia since the Berlin Wall came down and the Cold War finished: a rise in extremism, a rise in organised crime and mafias, and a return of some of the extremists that we thought perhaps had gone for good. We cannot be complacent and believe that other countries are going to stay the same forever. That is why there are many concerns about the eastern European countries that have joined, but in my view it is far better that they have joined. They have definitely moved. They will continue to move and, to some extent, we will all continue to move. It is much better to be part of that process than to be outside it.

Q153 Lord Hannay of Chiswick: Could I say how much I welcome your opening statement, with which I agree wholeheartedly? The record of many of the people in Brussels in predicting the last 10 years is not brilliant, so the probability is they are not going to get the next 10 years right either. Would you agree that the most important thing for these Balkan countries, and for Turkey, is really the steady direction of travel rather than the speed at which you travel?

Mr Howitt: I would not because, working on Turkey in particular, I have heard that said, not by you and many other people who represent good faith in relation to the issues we are discussing today, but by people who say that because what they want from Turkey is reforms that make Turkey more like us in colloquial terms but still no accession at the end of the process. So, yes, the pace and direction of reform is very important, but the end goal is important for those countries, because enlargement is a huge success story for Europe, for Britain. Let us be clear about this: this is not about us being charitable and altruistic to countries. This is about something where we and Europe as a whole have benefited and will continue to benefit enormously. We should make sure that the end goal of actual membership—and perhaps we will come back to this—is there. It is not sufficient just to have the right direction of travel.

Lord Hannay of Chiswick: Sorry, I have not properly explained myself. By “direction of travel” I mean the same destination, which is accession, but the speed of getting there is less important than the destination remaining absolutely firm. I think you and I agree on that. Mr Howitt: I give you my wholehearted support for that.

Q154 Baroness O'Cathain: I do not think many people worry about a lot of the implications of enlargement––and certainly enlargement up to 2004 was fine––but the reality is that since 2007 and 2008 we have been hit with the most appalling economic problems. The eurozone is in disarray with problems of a huge nature. Would you not think it was better to pause at this stage and sort that lot out before we even think about enlarging beyond Croatia and Iceland?

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Mr Howitt: I think it is a key question, but can I meld into my answer some of the issues around the integration capacity that you wrote to me about?

The Chairman: Yes, that is fine.

Mr Howitt: I do not agree with the evidence that has been given to this Committee that there is somehow a necessity for there to be a pause, for the reasons that you suggest. I do not agree that there is a choice between widening and deepening the European Union. I know some people suggest that, but I do not agree with that. When this concept of integration capacity is raised—I know you did not put this to me but I think it is consistent with your question—I am not a Eurosceptic, but I am very sceptical that the people who raise that are doing so because they are. Intellectually, I can see the idea that Europe needs to sort itself out first and then we can go back to enlargement, but I do not really understand it when it comes to practice. For example, with each accession treaty, yes, there has to be a reshuffling of some of the institutional arrangements for all; yes, everyone is going to be mindful of the budgetary consequences for their own country. Of course that is completely understandable, but I remember listening to debates before the eastern enlargement where it was said that the common agricultural policy in its existing form could not exist after the eastern European countries had come in. Well, perhaps sadly—I would say “sadly”—here we are, and there it is.

If we look at the problems of the eurozone, the number of countries from eastern and southern Europe that joined that are now on an inevitable path to join the euro has not stopped countries dealing with the eurozone problems and will not stop them doing so. It might in fact increase the sense of urgency in relation to it. I do accept that there is a danger and a reality of European politicians being distracted by these issues and therefore not giving the same priority and emphasis on enlargement, but I do repeat that I do not see a choice between widening and deepening and I hope neither will your Committee.

Q155 Lord Harrison: Richard, could I follow up on Lady O’Cathain’s question about the eurozone to ask you what you think are or might be the consequences? For instance, does the diminishing budget, which has always been an attraction for those coming in from outside, have an effect, and might the obligation to join the euro in good time dissuade some applicant countries? Have you seen any evidence that that is the case? It would be very useful to clear up that matter in the aftermath of the question you have just answered.

Mr Howitt: I think they are very relevant points. Firstly on the budget, it has been roughly 1% of GDP for quite a long time now through a series of different enlargements, despite the points that you quite properly put to me. On the policy areas where I work, and where I have been a rapporteur, people have often said to me pre-enlargement, “How is it going to change when these new countries join?” It does change but it has not changed fundamentally. The European Parliament has not fundamentally changed from the time you and I served together. I do not detract from the problems that the EU suffers, and I do not detract from the seriousness of the challenges that face the eurozone at the moment, but the European Union and the political will behind the European Union has remained very robust indeed. As far as the appetite of applicants is concerned, I have to say I find it deeply ironic, given the current debate in the EU, to be in Greece and talk with our Greek colleagues and find the level of support there is for the European Union. If you look at the applicant countries, in most part—there are some exceptions—you see very high levels of support for joining the

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European Union. When countries join the European Union support for the EU goes up, not down, compared with the accession period.

I know we may discuss the eastern neighbourhood later, but when I went to Georgia— perhaps understandably, because of the Russian invasion and you are looking at the Russian tanks on the hills opposite you—I have never been to a country with more EU flags and more enthusiasts for membership of the European Union, although it is not going to happen tomorrow. I do find ironic the level of support that there is for the EU around Europe and I sometimes feel a little sad that that is not as fully shared here as it might be.

Q156 Lord Tomlinson: Richard, if we can move on to a different question, the accession negotiations in the western Balkan countries are currently being conducted, let us say, as a regatta, as a flotilla, with each country progressing entirely on its own merits. Is there a risk that comparisons between the countries could demotivate some of the countries that are progressing more slowly? Linked with that, what are the prospects of the Commission linking the accession of two or more countries in the future?

Mr Howitt: They are very important questions. The first point I would like to make, as a matter of principle to you and the Committee, is that the western Balkans—I prefer to call it south-east Europe, and I think it is more helpful to call it that, by the way—must not be allowed to be a missing part of the jigsaw of the European Union, nor must any of the countries who are part of that region. I have talked to you already about there being no viable alternative in terms of accession in general. For those countries, I do not believe there is a viable alternative. You hear talk about Turkey or Serbia looking towards Russia. Economically, I do not believe that that is a serious alternative for those countries and their economies. If there is no accession, the real alternative for these countries is stagnation, economic underdevelopment and the problems I discussed earlier of crime and even a return to conflict. One idea I did want to put to you in this hearing, which I have also put to the European Parliament, is that when the Commission write their progress reports they should also be mandated to analyse the costs of non-enlargement for the countries that are being written about. I would like you to reflect on that idea.

Directly in response to your point about linkages in the Balkans, I will take this opportunity to say a word more about Macedonia. I would like to put on record my support for the position of successive UK Governments, including the current Government, in support of the accession of Macedonia. I would also like to place on record my support and deep respect for the UK ambassador in Skopje, who is a very able actor in relation to this issue. But I do appeal to you to support an intensification of diplomatic efforts from the UK for the accession of Macedonia, not simply because I share the deep frustration of many of its peoples, having been the country that is the longest standing as a candidate to be an EU member but having to wait longer than anyone else, but also precisely because I believe that failure to make progress for Macedonia, or for any of the other countries, does impact upon the others and on the region as a whole and does undermine the whole credibility of the enlargement process itself.

My answer to your question is that I do share the view of those that have met your Committee and said that the regatta approach is necessary, linkages are unfair and each country must have the right to be dealt with on its own merits. I do share that view, but my problem is that the current position that we have is precisely the opposite. Countries are

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Richard Howitt MEP – Oral Evidence (QQ 149-166) not being dealt with on their merits under the current approach, so I am asking you to reinforce that approach and not depart from it.

Q157 Lord Tomlinson: Could I come back slightly on that? Is that your feeling, or the feeling of the whole of the Foreign Affairs Committee, or even the feeling of the Parliament as a whole, that these countries are not being dealt with on their merits? If that feeling is widespread, what has the Parliament done to communicate that view clearly to the Commission?

Mr Howitt: I think there would be different views in the European Parliament in relation to that issue of merit. I am not going to claim that every MEP, or even the vast majority of MEPs, would think that. Clearly there are differences of view in relation to Turkey in particular, and I want to emphasise that the opponents of Turkey are very loud in volume but they are not a majority. They are a minority. In relation to Macedonia, I deeply respect the concerns raised by Greece and Bulgaria, and in part it is my duty to represent them. They are members of the European Parliament who, as a rapporteur, it is also my duty to represent. Having said that, on Macedonia I think we got over 600 of the 750 MEPs voting for the report that I prepared last year in favour of accession, so I think we are sending a very, very strong signal to the European Commission.

Q158 Lord Hannay of Chiswick: On this point about Macedonia, do you not feel—it sounds as if you do feel—that it is completely wrong to suggest that a necessary condition for Macedonia to open its accession negotiations should be that it has solved the name problem with Greece but that, of course, it is a fact of life that it cannot join without solving the name problem with Greece? If only that view could be given greater currency it would seem to me that that is the best way to try to move out of the impasse. It is not realistic, surely, to suppose that the Greeks will accept Macedonia with a name they do not accept any more than would have been the case in the situation of Ireland joining and us joining at the same time when we disagreed about names, but we then signed a treaty that we all agreed about. The blockage on the opening of negotiations is what is so inimical to a proper process.

Mr Howitt: Again, I agree with that wholeheartedly. Irrespective of the differences that do exist in the European Parliament on this issue across the political spectrum, that frustration, that inability to understand why the name dispute can prevent the opening of talks, is widely shared. My problem is that I want Macedonia to come to a fair and just solution with Greece. I do not want to be in a position where I am backing one side or the other. Clearly in any compromise, in any conflict resolution, there has to be a bit of pain on all sides, a bit of movement on all sides, and there has to be a feeling of justice afterwards. In everything I say and everything I do I try to reflect that, and so I am reluctant to say to my Macedonian friends and colleagues, “You can just leave this until later”, because I want pressure on them as I want pressure on Athens and I want a solution. That is in everyone’s interests.

But it is absolutely fair to say that it is absurd how long this issue has delayed the opening of talks. I do not believe that is justified. Commissioner Füle came up in the autumn with what I regarded as a very bold move—you will understand in this room the code that I use in saying that—in order to say, “Yes, the name dispute can be resolved in the early part of the accession talks rather than before”. That was a big shift from the European Commission. He deserves our support for taking that move. The December Council and the process leading up to it was very bruising in relation to the country, but there will be a further report in the 188

Richard Howitt MEP – Oral Evidence (QQ 149-166) first six months of this year and in the Council conclusions—unanimously agreed conclusions, by the way—there was a commitment that a quick decision could be taken in response to that report. I hope that we will continue, as I ask, intensive diplomatic pressure to enable that to happen.

Q159 Earl of Sandwich: Mr Howitt, I want to thank you again for your earlier remarks. You are a British champion of the south-eastern Europeans, and it is terribly important that we keep that in focus. I think we are going to come back to Macedonia but, just on Kosovo and Serbia, the Foreign Office uses the phrase “The objective of shared accession”. How do you interpret that phrase? You could argue that, because they are in dialogue, these two countries have to proceed together towards accession, and yet there are many reasons why Serbia would want to piggyback or go beyond and go further than Kosovo. How do you see that concept?

Mr Howitt: I think that also referred to Lord Tomlinson’s question. It might be that in relation to Serbia, Kosovo is a special case, for historical reasons that we all understand. In responding to your question, what I would say is that many people would not have predicted that the Pristina-Belgrade dialogue would have got as far as it has. I think it has been an immense achievement when one is looking at the new External Action Service of the European Union that that has been done, and I praise High Representative Ashton in relation to that. I think that has opened up possibilities. I sat in the room in Skopje where the Deputy Prime Minister of Macedonia invited fellow Ministers for European integration from the different countries and has brokered between Pristina and Belgrade. I have seen that process happening at first hand. I have seen the difficulties about what nameplates there can be, which flags can be in the room, but in the end these things have been made to happen.

It may well be that some years down the line they might have to discuss the linkage specifically in relation to Kosovo and Serbia. I hope, and I suspect you hope, that the conditions and the relations will have improved between them, and also with neighbouring countries, and that perhaps at that time it may not be necessary for it to happen.

I will say one more thing in relation to that at this stage. There has been a lot of discussion about whether, given the concerns about countries that join and then may pull up the ladder on others, some form of policy change might be exercised in relation to that, and I suspect that will be part of your deliberations. A lot of discussion has been in relation to Croatia but action has always been rejected because it has been felt that equality between member states, new and old, was the more important function. Also in relation to Cyprus and its relationship to Turkish accession, I think it is an area worthy of your consideration whether new accession treaties could include clauses that either prohibit or make it more difficult— for example, through reinforced majorities of different kinds—for countries pulling up the ladder on their neighbours. I do ask you to reflect on that when you come to your conclusions.

Q160 Lord Richard: Earlier on you used a rather striking phrase, I thought, in relation to the Balkans or south-east Europe. You said we should recognise that they are part of the jigsaw of the European Union. I think that is a striking and really rather good phrase, if I may say so. What I would be interested in is how big you think the jigsaw should be. Particularly what I am interested in is the eastern European partnership countries. Can you see any of those advancing any further than they are at the moment? For example, do you think that

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Mr Howitt: I do not claim to be an expert on all of the countries—I refer you to what I said about Georgia—but I do think there are some important considerations. If I have read the evidence correctly, when Stefan Füle met this Committee he talked about there needing to be a consensus about the geographical nature of where Europe is. With the greatest respect, I do not agree with that. Geographers determine geographical considerations as far as I can see, and I think those countries in the eastern neighbourhood are fully eligible to join the European Union at some future date, if and when changes occur in those countries to enable it to happen. I am not suggesting that it is going to happen in the very near future as there are considerable democratic and other political problems in those countries that are not going to make that imminent, but to me the fact that they are eligible is beyond doubt.

One thing I would say for your deliberations on this point is that Britain was always known as being a champion of eastern European enlargement. That was good for the eastern European countries, and it was good for the EU, but brutally it was good for diplomatic interests in the EU as well. As regards the eastern neighbourhood countries, if my premise is right that some of these countries will become members sooner or later, in my view it would be in British interests to have a greater activism in relation to them. I understand that in the European Council countries cannot lead on every foreign policy debate, and so I do understand that Britain has chosen to lead on some others and perhaps left the eastern neighbourhood to other countries. On the frozen conflicts, for example, I do not think we are playing a very active diplomatic role. But I want to put to you that it is in Britain’s long- term interest to play a more active role in relation to the eastern neighbourhood, and I hope that will be one of the conclusions of your Committee.

The Chairman: I will check the record of what the Commissioner said, but in fairness I think he was making the point—which may be a statement of the obvious—that, however you define the eastern frontier or tide-line, it will depend on the consensus of the members rather than actually setting a particular remit at any one time, so it can be read both ways. But we will reflect on that and your helpful evidence on it.

Q161 Lord Dear: Mr Howitt, there is a point of view, which we have heard and sometimes read about, which is not altogether dissimilar to the analogy of a lifeboat going out and picking up survivors and, in the end, the lifeboat has to stop because you have too many on board. It is an unfortunate analogy because, as it is currently constituted, the European Union is hardly a lifeboat and neither are those emerging countries survivors, but it goes to illustrate my point. Putting your answer in another way, which is what I am really driving at, do you think there is any validity in the argument that says sooner or later Europe, as it is currently constituted, just has to stop taking on more and more emerging countries—I use the word “emerging” in a way that you will understand as well as I do— because they make unnecessarily robust demands on what is already there, or do you think that as a Union we can continue mopping up countries, so long as they come up to certain requirements of conditionality, almost infinitely?

Mr Howitt: I do think that we should carry on having an outward looking enlargement policy and that that is perfectly consistent with the EU being efficient and effective in its policies. I am not suggesting that you are saying this, but I am very cautious about those people who want to say, “Let us put a limit now”, because what they are really saying is, 190

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“We have certain privileges as countries that we are more anxious to hold on to, and we are going to try to deny them to those outside”. Firstly, I think that is a self-defeating notion. I do not think that is a viable or effective argument, but also coming from Britain we are a trading nation, we look out and we have global interests. I completely reject the idea that our model of the European Union can be a fortress Europe model, where we somehow preserve some privileges at the expense of disadvantage elsewhere. I completely reject that. I repeat that I did not say that that was your notion, but I put it on the table because it is talked about. For the founding members of the European Union, the idea that those six countries would see the European Union encompassing the eastern European countries would have been beyond belief for them.

Lord Dear: Forgive me for interrupting. I obviously have not made myself altogether clear. It is not a question of the ethics of the thing, that fortress Europe is against those who are clamouring to come in. I am not suggesting that at all. The argument that I was trying to put to you and seek a view on is the argument that, sooner or later, there just comes a point where you are on overload and you cannot take any more, at least for the foreseeable future, because of the demands made by the incoming countries on the established European Union. It is an overload, and in that sense the analogy of the lifeboat picking up survivors is illustrative. There comes a point where you just have to say, “We cannot take any more on, at least for the time being”. That was the point I was seeking a view on.

The Chairman: While you are reflecting on your answer, it seems to me there are two levels of that, and clearly Lord Dear agrees. One is the resources that are required and the other is the institutional structure that might require modification; to put it in a pointed way, whether you can continue to have one commissioner for each member state, for example.

Lord Dear: Exactly. Thank you, Chairman.

Mr Howitt: I do understand the point but, as I have already tried to say, the successive accessions to the European Union have not prevented a very robust operation of many EU activities. I think it would be difficult for us to say, sitting here today, that the current problems of the EU have been created because the EU is at 27 rather than at six or 13 or 15. I just do not see that. I hear the analogy of the lifeboat. It is a good one. I sometimes say to colleagues in Macedonia that perhaps they will be climbing on to the ship just as we are climbing off it, so let me respond to that analogy in that way. I hope that will not be the case. In terms of the points clarified by the Chair, I have already said how robust the budget of the EU has been despite the fact that people said that there would be different demands on it. On the institutional issues, it was said that the European Commission would be unworkable with one commissioner per country, and then our friends from Ireland intervened and we have ended up with one commissioner per country. I have many criticisms of the European Commission and of individual commissioners—as is quite proper in my role in the European Parliament—but the idea that one commissioner per country is the cause of that, again, it is just not related. Of course institutional questions must be looked at and some difficult questions have to be answered, but I do not see those as being insuperable for further enlargements. I want very strongly to put evidence to you to the contrary.

Lord Dear: You do not think it would lead to an imbalance, existing resources against competing resources?

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Mr Howitt: On my point about eastern Europe, I am someone who supports the regional development policies of the European Union and supports the continuation of structural funds in Britain. That is not always politically agreed across the political spectrum. But, again, I remember people saying that regional aid in Britain would end with eastern European countries joining. But here we are going through the next round of structural funds regulations and countries will fight to keep their regional aid. So I would suggest that these structures and activities are more robust than people would sometimes say.

Q162 Lord Tomlinson: If I can follow up the same point but in a slightly cruder way— Mr Howitt: So unlike you, John.

Lord Tomlinson: During our period of membership we had the enlargement that brought in Sweden, Finland and Austria, and that was all very easy and very welcome because we were joined by three net contributor countries. Then we had an enlargement that has brought in—I think I am right—eight recipient members. Can you see among any further wider enlargement the prospect of a single net contributor to the European budget?

Mr Howitt: I have a couple of points. That is a great question. Sorry, do you want to finish?

Lord Tomlinson: I cannot readily see the net contributor countries. At a time when the European budget is being questioned by an increasing number of member state Governments, how do you think we can develop a consensus to get a budget that can manage the enlarged community that you and I both want to see?

Mr Howitt: I have always deferred to you on issues of the EU budget, and I am tempted to do so again today, but I will give you two answers. One is that between those two enlargements that you referred to was the enlargement that involved Spain and Portugal as well as Greece. I do not underestimate the problems and challenges facing Greece, but if you look at Spain certainly, and if you look at Ireland certainly and the enlargement where we came in, and I think to some extent Portugal, you are seeing countries that have been economically transformed by being members of the European Union. You can see countries where there was deep poverty and underdevelopment and it is realistic for them to talk about being net contributors at some point.

I make this point about Turkey: Europe needs Turkey, Europe needs Turkey’s young labour, and Europe needs Turkey’s economic dynamism. I am absolutely convinced of those points. As Europe, if we make the mistake of closing the door on Turkey I do not know how many years it will be—20 to 30—before Europe will be desperate for Turkey to join, because it is becoming a regional superpower. I do not underestimate the challenges in Turkey, but I have no hesitation in saying that we should remain a foremost advocate of Turkey’s accession.

The Chairman: We will need to move on fairly quickly, because you have been giving us some very generous, thoughtful answers.

Q163 Baroness Scott of Needham Market: I want to return to the question of bilateral issues. I wonder whether you would agree that the current political environment across Europe is tending to a rise in nationalism, a more strident form of national politics and a tendency, therefore, for some of these issues to be played out. They are good on the domestic stage and therefore they impact and disrupt the enlargement process. You have referred to the notion of new countries not being allowed to veto others. Are there any 192

Richard Howitt MEP – Oral Evidence (QQ 149-166) other practical measures that can be taken in order to make sure that the right enlargement is not blocked by domestic playing to the gallery?

Mr Howitt: It is probably the question that is the most important one that I wanted this Committee to ask me because of my experience not just of Macedonia in relation to Greece but, I am sad to say, increasingly Bulgaria and also Turkey in relation to Cyprus. I place on record again my deep respect for my colleagues in the Parliaments from those countries and those countries’ views, and I do not deny the fact that their views are deeply held and in many and most cases put in good faith. Coming from Britain as well, I think we do need to have humility about the different role of history in the politics of that region, about the fact that conflict has been so recent for them and the consequences of that, and about the fact that there are huge ethnic and religious sensitivities there, so we should not be over- simplistic. But I agree with you that those bilateral issues have enmeshed and obstructed the EU enlargement process in a way that I find intolerable. I invite your Committee to address that and I know that you will.

In addition to the point about new accession treaties, I have three other ideas I would like directly to share with you. The first one is essentially to criticise a failure of political will in the European Council itself. It seems to me that member states of the European Council allow obstructers to hide because they have a situation where they have consensus wording and where they are so reluctant to criticise each other publicly, because they are worried that at some later stage they will have their own bilateral issue and hence they prefer to be complicit in the obstruction taking place. It means that there are no real consequences for a country that is seeking to obstruct. I am sad to say this, and it is in hindsight, but I do not believe it is right that Tony Blair nodded through the accession of Cyprus while Cyprus was still a divided island. I say that not particularly on behalf of Turkey but because this was the major opportunity, first and foremost, in the interests of the people of the island of Cyprus, to end the dispute and to bring about reconciliation.

As far as Greece is concerned, I repeat I do not underestimate the challenges, but this is a position where Greece is very dependent on support from the European Union and where one might think about introducing a conditionality that puts pressure on it too for a just and fair resolution of the name dispute. Yet perversely there is less support for that in the European Council than before because of concerns about public opinion and sensitivities in Athens. At the moment, all of the consequences of a delay in enlargement fall on the aspirant country, not on the European Union, and all of the accountability to keep promises also falls exclusively on the aspirant countries. As a Committee, I hope you will support introducing the notion of reciprocity whereby the promises that are made collectively by the European Union for enlargement are held to and countries are held accountable for supporting them and for demonstrating their own good faith.

I know Commissioner Füle would disagree with my second point. I have discussed it with him and I do repeat that I strongly support his efforts. I hope to support him to get a date for Macedonian accession within the first half of this year. I do wonder whether at some point an open vote should be forced so that we can see vetoes where countries are choosing to be the obstructers rather than accepting compromise wording, which sometimes I would call a fudge. Extra pressure might then be put on those countries through that. I accept that can work both ways. It could entrench the division rather than overcome it. There are finely balanced arguments but it is something I would like you to reflect on in your conclusions. 193

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My third and final point is in relation to arbitration. In successive years I have put a proposal in my report that has the support of the European Parliament—and I hope may have your support—for the European Union to set up its own arbitration mechanism for disputes in relation to EU enlargement. I know you have received evidence about Slovenia and Croatia, and they were able to find a good outcome. Again if I have read it correctly, I know that the Commissioner talked to you about relying on external, international legal mechanisms. I have to say Macedonia did go to the International Court of Justice and it did win its case, but that has not led to a solution to the problem. I think that at the moment the Commission is careful to be a facilitator rather than an arbitrator, and I understand why that can only be their position. But as a European Union we have appointed an ombudsman, we have appointed a court of auditors and, of course, we have the High Representative herself. I would like to put to you the idea of the European Union appointing its own mediator, or arbitrator or arbitration mechanism, to enable these bilateral disputes in relation to EU enlargement to be solved.

Q164 Lord Cameron of Dillington: As a whole, the south-east Europe—to use your terminology—countries pose a significant political challenge for the enlargement process with obviously great benefits for all parties if it could be successful. Do you feel we have any lessons learnt as to how we promote reform within those countries, with particular reference to good neighbour policies?

Mr Howitt: I said a lot in my answer to Baroness Scott on good neighbour relations, so I do not have too much to add. I will say that Britain’s own record of looking at the debt in relation to the Icesave issue but refusing to allow that bilateral issue with Iceland to be introduced to the accession process is something that should be highly commended here in Britain—again Governments of both and all colours—but it also puts us on the high moral ground then to push others to do so. It is something where we have done and are doing the right thing. The point about good neighbour relations is there are always two; just as you have to have two good neighbours, you have to have two to tango, and both have to want to achieve it.

Let me concentrate on the earlier part of your question in relation to the engines for reform within accession countries, because I think it is a very important point. If I can be very honest with you, there is the pretence that reforms are supported largely for domestic reasons rather than for reasons of the EU accession. I understand why that is often said. It is certainly said in relation to Turkey. People will always prefer changes that they have produced themselves and will resent those that are forced from outside and a locally rooted change is obviously more likely to be a successful one. Therefore the pretence, even if it is a pretence, can be a very useful one to politicians, so I do not criticise it for those reasons. But if I am totally honest with you, what I observe is that there is a very direct relationship between the pace of reform, and in particular the pace and introduction of some of the most difficult reforms that need to take place, and genuine prospects for progress towards EU membership.

In relation to Croatia—we did not discuss this earlier, but I chaired the human rights sub- committee’s delegation to Croatia, in advance of its accession, and so I have some direct experience to share with you there—there were two very difficult areas. One was cooperation with the War Crimes Tribunal and co-operation in relation to the indictees and the other was a track record of high-level cases of corruption being prosecuted in their courts. Those things were painful. They were willing to endure that pain only when real 194

Richard Howitt MEP – Oral Evidence (QQ 149-166) progress was being made towards membership. I think we should understand that relationship.

In relation to Turkey and Macedonia, I would be the first to say that the positive agenda with Turkey and the high-level accession dialogue with Macedonia have injected a new impetus, but I am very worried that it will be a temporary one if genuine progress for both countries in their own right is not made. Being honest with you, what I have observed over some years is a waning of support for reforms by the governments and within those countries, which is pretty proportionate, I repeat, with the apparent slowdown in progress towards accession looking possible, probable or certain. On behalf of those countries, I certainly feel that if we do not see progress this year then we could return to that former trend or worse.

There is one other point I will share with you on that. It might surprise some of you, but I do share the view of those people who say that enlargement has been too much of an elite process. Too much of it has been about European Commission officials talking to governments and their officials. I would agree that one of the ways that we can make the EU enlargement process a more popular one, in a good and necessary way, is by trying to break through that. I would argue that if we do so it will make the reforms rooted locally. I will name four things. The current public relations of the EU in the accession countries are pretty meagre and superficial. I would like to see a very serious extra effort for promotion of enlargement if it is in Europe’s interest, as I believe it to be. I would like to see us making that case much more strongly among the populations of accession countries. In terms of civil society participation––I think you have received some evidence on this––in the countries with which I have worked some of that is lip service. I do not blame the European Commission for that, because, in these fragile democracies, it is quite often the government of the country that is timid about letting different voices and plural voices get involved in all of this. I believe that we should insist upon a quantum leap in civil society exchanges. I think people-to-people contacts work.

I would like to share an idea with you, although it is late in the trialogue on the instrument for pre-accession. Why do we not do what we do with development assistance, which is to have a percentage of perhaps 15% of the IPA reserved for non-state actors, so this money is not simply spent by governments. I would like to say a word about opposition parties. Reforms seem to me to be much more likely when opposition parties are holding their governments to account in accession countries for not progressing fast enough, but sometimes opposition parties are themselves the resistance that prevent it happening. I regard party-to-party contacts from EU political parties—including with the support of political foundations like the Westminster Foundation—as being extremely important so that we can deal not simply with governments in accession countries but with the whole political spectrum. It is done at the moment, but I think we can do more of it.

The Chairman: Lord Marlesford, anything more you would like to add on integration?

Q165 Lord Marlesford: Mr Howitt, I have been very struck by your positive, indeed optimistic attitude towards enlargement but, as I think you recognise, the barriers still exist, particularly perhaps one could say the integration barrier. You referred particularly to Turkey and you made two points. One is the point that I think we are aware of, which is the pretty strong opposition on the part of both France and Germany to the entry of Turkey. Secondly, I think you said that Europe needs Turkey’s young labour. Can I suggest to you 195

Richard Howitt MEP – Oral Evidence (QQ 149-166) that perhaps one of the real barriers to enlargement could be the continuation of the free movement of people? If we are going to move towards a more variable geometry for Europe, do you think that it may be necessary to compromise in order to achieve enlargement or would that be beyond any price worth paying?

Mr Howitt: First of all, on Turkey and the French and German position, where I think it is yet to be fully understood how the change in government in France might affect things, I have said for a long time to friends and colleagues from Turkey that President Sarkozy would not be there at the time when the referendum was held in France, and I am pretty confident that that has already been proved to be true. I have heard that Chancellor Merkel has said in private that she would support Turkish accession and that it will happen. So there are different views about how deep the opposition is from those two countries. I want to repeat the very strong support there is in the majority of the European Parliament for Turkey.

In terms of freedom of movement, I do not disagree, and I do not underestimate that the extra intra-EU migration that followed the eastern European enlargement had a political response––and not just in Britain but in different European Union countries. I accept that and I accept that the political consequences of that are one of the barriers that we need to examine in relation to EU enlargement. But what I do say is that there is a difference here between politics and economics and that all of the evidence, as I think has been shared with you, is that enlargement, including free movement, has economically been hugely beneficial both ways in existing EU countries as well as the new countries. It is not a popular thing to say in Britain at the moment, I understand, but you will recall that the European Commission produced an economic study which showed that Britain and the other two countries that introduced freedom of movement directly in 2004 benefited strongly economically by doing so. So I would invite you at least to see that there is a difference here between politics and economics.

Perhaps I may say one further thing in relation to the question of integration capacity. I know that you have received evidence about the possibility of associate membership of the European Union. Some of that is perhaps part of a different debate which is not within the remit of this inquiry so I will not venture into that. But specifically in relation to EU enlargement, I think the question of an associate membership status is deeply dangerous and I invite you to consider very carefully before adopting it. We already have a plethora of different statuses. We have countries with customs unions with the European Union, with deep and comprehensive free-trade agreements, with association agreements who are partners in the neighbourhood policy. There is no shortage of different titles that we use for countries around our borders, but I do not think the idea of having an associate member status is a helpful one at all. I have spent a lot of the last years supporting Turkey’s position against what has been called a privileged partnership for Turkey with the European Union because, rightly in my view, it has seen a privileged partnership as being asked to adopt all the obligations of the European Union but having some of its key benefits being denied to it. So I do ask the Committee to think carefully before supporting the idea of an alternative associate member status.

Q166 The Chairman: I am conscious that Lord Hannay would have liked to ask a question on Turkey, which I think I will ask him to pursue by correspondence if you are happy with that.

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Richard Howitt MEP – Oral Evidence (QQ 149-166)

Mr Howitt: Yes.

The Chairman: Thank you very much for your frankness and occasionally your bluntness, which has been helpful and refreshing to our inquiry. We much appreciate it. We would very much like to stay in touch with you and we will reflect on those challenges you have imposed on us. It has been an index of the absorbing nature of this debate that we have taken a full hour and we have not run out of ideas for questions. Thank you very much, and we will close the formal evidence session at this point.

197

Written evidence from Dr Ana Juncos, University of Bristol

1. This submission relates primarily to the principles and process of enlargement and how both might be improved to make them more effective and transparent, as well as offers some insights into the impact of enlargement on the Western Balkan countries. 2. Dr Ana E. Juncos is Lecturer in European Politics at the School of Sociology, Politics and International Studies, University of Bristol, a position she has held for three years. In previous research, she has focused on EU foreign and security policy in Bosnia, EU enlargement and the Europeanisation of the Western Balkans.

Principles behind enlargement and the enlargement process

3. Articles 2 and 49 of the Treaty on the European Union, as well as the 1993 Copenhagen criteria, provide the principles for any further enlargement of the EU. While these principles proved on the whole adequate during the 2004 enlargement, new ad hoc criteria have been added in subsequent enlargements. 4. For example, the Stabilisation and Association Process refers to further specific criteria for the Western Balkan countries: full cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY), respect for minority rights, the creation of real opportunities for refugees and internally displaced persons to return and a visible commitment to regional cooperation. The EU needs to make sure that these and other additional criteria are clearly justified and communicated to new potential candidate countries in order to ensure that the process remains a fair and credible one. 5. The lessons learned from the 2004 enlargement and, in particular, problems with the adoption of the acquis communautaire in the cases of Bulgaria and Romania, have also led to a stricter application of conditionality by the EU. In general, compliance with rule of law criteria has become more important when assessing the eligibility of countries to join the Union. The ‘new approach’ to enlargement unveiled by the Commission in 2011 means that more attention will be paid to these issues during accession negotiations. While this does not mean the introduction of new eligibility criteria (as they are part of the Copenhagen criteria already), this development points to a prioritisation of some principles over others, especially when opening and closing accession negotiations26. 6. The process through which a country becomes an EU member has also become more complex over time. The use of political conditionality and the subsequent establishment of a complex monitoring procedure were introduced with the Eastern enlargement round in the early 1990s. This monitoring mechanism is managed by the Commission’s Enlargement Directorate-General, which acts as a ‘gatekeeper’. Benchmarks are set by the Commission in different documents – in the case of the Western Balkans, the Stabilisation and Association Agreements and the European Partnerships. Compliance is also monitored in the regular annual reports produced by the Commission.

26 From now on, the first chapters to be opened during accession negotiations will be those dealing with the judiciary, justice and home affairs and fundamental rights. See European Commission (2011) ‘Communication from the Commission to the European Parliament and the Council “Enlargement Strategy and Main Challenges 2011-2012”,COM(2011)666 final, Brussels, 12 October. 198

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7. This monitoring system seeks to ensure the meritocratic nature of the process. In other words, a country’s progress should be based on individual merits and compliance with EU conditionality. Yet, political considerations have also played a part in the process, in particular, regarding the opening and closing of accession negotiations (e.g. the opening of accession negotiations with Turkey or Serbia). The politicisation of enlargement sends the wrong message to the applicant countries and weakens the Commission’s emphasis on a transparent and a merit-based process and the power of EU conditionality. 8. The issue of politicisation has run parallel to an increasing nationalisation of the process. This refers to the strengthening of Member States’ influence over the EU’s enlargement policy as they seek to keep tighter control during the intergovernmental stages of the process, insisting on the use of benchmarks before the opening of negotiating chapters and the inclusion of new conditions in every step of the process. The rising number of bilateral disputes holding up the enlargement process also indicates a stronger role for the Member States in the enlargement process (e.g. the name dispute between Greece and the Former Yugoslav Republic of Macedonia (FYROM) or the border dispute between Slovenia and Croatia). Whereas a stronger role for the Member States in the process might help increase the credibility of EU enlargement from the viewpoint of the Member States, from the perspective of the candidate countries, EU enlargement policy is increasingly being perceived as a politicised process, where the ‘rules of the game’ change to suit the interests of the existing Member States. This might undermine the credibility and effectiveness of EU conditionality.

The impact of enlargement on the Western Balkan countries

9. Enlargement has made a significant contribution to economic development and promoted political and socio-economic reforms in the countries of the Western Balkans. However, despite the progress achieved, the EU still faces enormous challenges in the region. This is due to three main factors: high adoption costs, the legacies of the conflicts and long-standing bilateral issues. 10. European integration imposes high ‘adoption costs’ for politicians in the candidate countries. In some cases, EU integration not only threatens the power base of local elites, but also their private economic interests as many of them profit from weak legal and regulatory frameworks and are involved in organised crime. Many of the problems encountered by the EU are also linked to the legacies of the conflicts that affected the Western Balkan region in the 1990s and 2000s. The effectiveness of EU conditionality remains low in countries where the legacies of ethnic conflict make compliance with EU criteria very costly, especially in Serbia and Bosnia and Herzegovina. Political, economic and social reforms have fallen hostage to recalcitrant nationalist politicians in Bosnia and threaten the European perspective of Serbia, Kosovo and FYROM. Bilateral disputes, and in particular the Kosovo issue, remain a significant obstacle to regional co-operation. 11. The EU has made an important contribution to peace-building and conflict resolution in the region. Yet, this impact has been undermined by several flaws in the EU’s strategy in the region. 12. The EU’s strategy in the Western Balkans has largely neglected the political impact of EU conditionality on the conflict parties. The reforms promoted by the EU are not just technical reforms, but they promote specific models of political and economic re- organisation. Moreover, EU conditionality also has an impact on the balance of power 199

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among domestic parties. In other words, EU reforms usually play in favour of one of the conflict parties by supporting their political agenda. A case in point is the EU- backed police reform in Bosnia and Herzegovina: by promoting a centralised police force, the EU supported the claims of the Bosniak majority which has traditionally championed a strong state. 13. Despite the rhetoric embedded in the Stabilisation and Association Process, in practice, the EU has neglected the ‘stabilisation’ dimension, focusing instead on the ‘association’ element of the equation. The European Commission has focused on harmonisation, benchmarking and monitoring mechanisms, while issues of reconciliation and peace-building have barely figured in Commission’s strategy documents. 14. Finally, the EU has largely focused on institution-building, but has neglected the bottom-up side of the reform process: the strengthening of civil society and social movements, including support to post-conflict rehabilitation, democratisation and local governance, the media, education and social cohesion. 15. The financial and economic crisis has also had significant impact on the Western Balkan countries, worsening the economic problems that some of these countries face, although it has affected some countries more than others (especially Bosnia and Herzegovina and Serbia). The economic crisis has resulted in an increase of unemployment, which was already very high in the Western Balkans and has worsened the fiscal position of many of these countries. 16. Although the enlargement policy does not constitute a significant financial burden for the EU,27 in the current economic climate, EU Member States will be more cautious about taking more members on board especially if that means increasing economic competition and budgetary disbursements. The euro area crisis has drawn attention to the lack of convergence between European economies, in particular between the North and the South, and the risks associated to it. This will weight in any decision to enlarge the EU as it will require more transfers to the poorer economies of the Western Balkans. 17. ‘Enlargement fatigue’ has also increased in recent years, not just within the EU,28 but also among the citizens of candidate and potential candidate countries.29 In the most recent referendum on membership, held by Croatia in January 2012, 66 per cent of the voters supported EU membership and only 33 per cent voted against. However, as was the case with the referenda held by the Central and Eastern European countries, the turnout was very low at 44 per cent. This provides further evidence of disillusionment with European accession among the Croatian public and the citizens of the Western Balkans more generally.

Recommendations

18. Drawing on the previous evidence, this report recommends the following changes to the EU enlargement policy:

27 In the new Multiannual Financial Framework (2014-2020) presented by the Commission in June 2011, the proposed budget for the Instrument Pre-Accession (IPA) stands at €14.1 billion, which according to the Commission represents a stable budget, at the same level as the current funding programme running from 2007-2013. 28 Within the EU, support for enlargement is also at a low at 42 per cent, while opposition to further enlargement is up at 47 per cent. See Eurobarometer (2011) ‘Public Opinion in the European Union’. Eurobarometer 75. Available at: «http://ec.europa.eu/public_opinion/archives/eb_arch_en.htm» 29 See Eurobarometer (2011). 200

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i. The EU should clearly communicate to potential candidate countries the principles that guide its enlargement policy, not only those contained in the Treaties, but also other ad hoc criteria and benchmarks that have been adopted over time in order to ensure the transparency and effectiveness of the process. ii. The EU should ensure that the meritocratic nature of the process of accession is preserved, while taking due account of existing Member States’ interests. The increasing politicisation and nationalisation of the process of accession undermines the effectiveness of conditionality and thus the potential for the EU to foster reforms in candidate and potential candidate countries. iii. The EU’s enlargement strategy needs to clearly recognise that conditionality has a political impact on the candidate countries to avoid unintended consequences. In particular, the EU’s strategy in the Western Balkans needs to pay more attention to issues of peacebuilding and reconciliation, as well as strengthening civil society and other ‘bottom up’ initiatives. iv. The effects of the economic and financial crisis on the Western Balkan countries need to be addressed if the EU’s attraction power in the region is to be preserved and to prevent a deterioration of the political and socio-economic situation in these countries. v. The economic crisis also risks increasing the ‘enlargement fatigue’ among EU policymakers and the public. The EU and the Member States should be working to combat the ‘enlargement fatigue’ by communicating the benefits of previous enlargement rounds, but also the potential for growth that will result from further enlargement in the candidate countries and the EU as a whole.

November 2012

201

Written evidence from Professor Dr Dimitry Kochenov, University of Groningen

Written evidence from Professor Dr Dimitry Kochenov, University of Groningen 1. Enlargement is an overwhelmingly important process shaping the essence of the European Union. Given its fundamental influence on the functioning of the Union of the future, organization of enlargements requires all possible care. Hasty decisions can harm the development of European integration and, crucially, the well‐being of all the Member States. While analyzing enlargements it is essential to look beyond the optimistic assertions of the European Commission, which has a vested interest in presenting the process as a great success no matter what, due to the influence of the enlargement process on the inter‐institutional balance within the Union and the vagueness of the Treaties on this matter as worded and as applied.

2. My comments concern the legal-procedural questions of the organization of enlargements and relate to three questions in the call for evidence, namely:

No. 1 (“Do Articles 2 and 49 of the Treaty of the European Union provide the right principles for any further enlargement of the EU?”); No. 2 (“Do [the Copenhagen criteria] fully encapsulate the principles behind enlargement?”) and No. 14 (“Have the lessons from the previous enlargement rounds been learnt to improve the process of enlargement?”).

3. My remarks focus on the principles of enlargements and EU enlargement law as applied, as well as the lessons learnt from the latest rounds of enlargement. I largely base my comments on the outcome of several years of research leading to the publication of a monograph entitled EU Enlargement and the Failure of Conditionality: Pre- Accession Conditionality in the Fields of Democracy and the Rule of Law (Kluwer Law International, 2008), as well as a number of articles on this issue, which appeared in legal and political science periodicals in Europe and the US.

4. Articles 2 and 49 of the Treaty on the European Union (TEU) are notoriously silent on the main principles of enlargement, which affect the day-to-day regulation of this process. So the Articles are not unequivocal concerning the principle of the acceptance of the acquis communautaire (now unionaire) in full, do not reflect with accuracy the involvement of the institutions of the European Union and the Member States in the process of the preparation of enlargement and, crucially, never even mention the principle of conditionality, which has played the fundamental role in the course of the preparation of all the recent enlargement rounds. As a result, the process of enlargement, as observed in reality, overlaps very little with what the provisions of the Treaties actually describe. I called the actual legal rules operational in the context of the preparation of enlargements ‘customary enlargement law of the EU’. It is not rooted directly in the texts of Articles 2 and 49 TEU. The origins of such customary law can be traced back to the effects of the now long obsolete Article 98 of the European Coal and Steel Community Treaty on the legal regulation of the first enlargements of the (then) Communities – including the accession of the UK. This is

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when the key principles of EU enlargement law had been formed, which are still not reflected in the texts of the Treaties.30

5. As such, having enlargements regulated by a custom rather than by the Treaty text directly is not a problem, especially given that the key conditions, which the acceding states need to meet in order to become full members of the EU (including Statehood, Europeanness and respecting the values of Article 2 TEU) are outlined in the Treaty quite clearly (only the membership of the Council of Europe, which has clearly emerged as a condition in practice is not reflected in Article 49 TEU). Problems emerge, however, when the operation of the procedure deployed in the context of the assessment of meeting such conditions is reviewed.

6. Article 49 TEU does not even mention the most important procedural principle of enlargement preparation, which is conditionality and which essentially consists of the imposition of the necessary conditions on the candidate countries, which, when met, lead to progress towards accession. In this context, it is the clear articulation of such conditions (which Article 2 TEU obviously does not provide), as well as the assessment of the extent to which they have been actually met that plays the essential role. Progress towards accession de facto fully depends on these two factors.

7. Article 49 TEU does not shape clarity as to which of the actors participating in the process has to take the lead on this. In practice, it has been the Commission (on the request of the European Council) that took up the difficult task of establishing clear conditions (based on the Copenhagen criteria and Art. 2 TEU values) and monitoring compliance by the candidate countries. In other words, notwithstanding the text of the Treaties regarding the institutional involvement in the preparation of the process, the Commission took unquestionable lead through implementing the key procedural enlargement principle, which, in turn, is not mentioned in the text of the relevant provision either.

8. This development signified a serious enlargement in the powers of the Commission not directly envisaged by the drafters of the Treaties. The Commission came to play an unquestionably dominant role in the process of the preparation of enlargements, thus replacing the Member States of the Union, mentioned in Article 49 TEU as the key actors in the process. Consequently, the Commission received a vested interest in the process: its own documents never doubt that what it is doing and how is for the better and deserves praise.

9. INTERIM CONCLUSION No. 1: Articles 2 and 49 TEU do not actually contain key principles of enlargement, which are applied in practice and, in particular, absolutely fail to capture the precise involvement of EU institutions and the Member States in the management of the enlargement process. In particular these provisions are inadequate in failing to reflect the principle of conditionality and the leading role which is played by the European Commission in the process of the pre-accession.

10. Silence of the Treaty provisions regarding the actual state of affairs in the field of enlargements, coupled with a successful publicity by the Commission of its efforts to

30 Dimitry Kochenov, ‘EU Enlargement Law: History and Recent Developments – Treaty-Custom Concubinage?’ 9 EIoP, 2006: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=704381. 203

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ensure that enlargements are a success and that the Copenhagen criteria are complied with resulted in a situation where the Commission de facto received a carte blanche in assessing the preparedness of the candidate countries to accession in a situation where its own vested interest in reporting successes is largely unnoticed.

11. The scholarly literature is generally positive about the Commission’s efforts, a handful of dissenting voices notwithstanding. These include, besides myself, Dr. Eline De Ridder, Prof. Daniel Smilov and the experts of the Open Society Institute (New York /Budapest) who ran an alternative programme scrutinising the candidate countries’ progress in complying with the Copenhagen criteria. The group of critics came to most worrisome conclusions, which are proving to be far from unfounded, given the recent developments inter alia in Hungary and Romania, which were both subjected to the pre-accession scrutiny in full.

12. There is thus a discrepancy between – on the one side – the Commission’s self- assessment supported by a number of scholars writing on the legal technicalities of EU enlargement, including Dr. Andrea Ott, Dr. Kirsten Inglis, Prof. Frank Schimmelfenig and others and – on the other side – more cautious scholars and OSI experts, who are hesitant to conclude that the Commission has been particularly successful in its pre- accession activities. The reasons behind this discrepancy are easily explainable. They relate to the scope of the principle of conditionality on which the Treaties are silent. This principle covers both the matters which fall within the competence of EU and those which remain within the sovereign realm of the candidate countries and the Member States, leading to some confusion. In other words, conditionality empowered the Commission to check the candidate countries’ compliance both with the technicalities of the Internal Market acquis and, crucially, with the matters which, while falling within the scope of the Copenhagen political criteria, remain a full responsibility of the Member States after accession.

13. A largely contradictory situation arose. The Commission could rightly book a success in the promotion of the Internal Market acquis in the candidate countries – which was relatively easy to do, given the abundance of detailed rules, clear benchmarks and a vision of what was to be achieved. The same could not be said about the fields falling outside the scope of the acquis, but covered by the Copenhagen political criteria. Crucially, the second category of fields included the issues which were absolutely fundamental for the lasting democratic transformation of the candidate countries, since, rather than the technicalities of the Internal Market, these dealt with the core of democracy, the Rule of Law, human rights protection, the protection of minorities and the like. In other words, these were exactly the areas of crucial importance in the light of Article 2 TEU, fundamental in the countries emerging from the Communist rule. Confusing the two areas of application of conditionality is thus most unhelpful.

14. INTERIM CONCLUSION No. 2: The Commission’s optimistic assessment of the pre- accession progress achieved by the candidate countries is the least reliable in the most crucial areas of the preparation of the candidate countries’ for membership, which concern the values of the Union reflected in Article 2 TEU and the Copenhagen criteria situated outside the scope of the acquis.

15. When scrutinizing the conduct of the pre-accession policy of the European Union, it is fundamental to make a clear distinction between the application of the principle of 204

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conditionality in the context of the export of the acquis and all the other issues, namely those pertaining to the sphere of Article 2 TEU. Systemic analysis of all the documents released by the Commission in the context of the preparation of the latest rounds of enlargements (thousands of pages of Composite Papers, Regular Reports, Monitoring Reports etc.) demonstrates that this is something that the Commission has never done at the level of principle. This led to making a number of far-reaching mistakes undermining the credibility of the application of conditionality and the effectiveness of the principle in the most crucial areas related to the promotion of the values of the Union. Combined with other negative factors, it seriously undermined the regulation of enlargements.

16. The application of conditionality by the Commission, which monopolised the process – relieving the Member States of the need to conduct assessments themselves, but also making them entirely dependent on the information that the Commission provides – reveals that in the most crucial areas related to the promotion of the Rule of Law, Democracy, Human Rights etc. conditionality suffered from seven fundamental drawbacks undermining the process and removing the procedure described in the Treaties even further from reality.

17. The first fundamental mistake of the Commission concerned the establishment of surprisingly low thresholds for finding that the Copenhagen criteria have been met, thus admitting, on behalf of the Member States and the Union alike, that the countries concerned have successfully embraced the values of Article 2 TEU. Given the heterogeneity of the candidates and the divergent levels of their legal-democractic development, this made the statement that a given country meets the Copenhagen political criteria largely meaningless.

18. The second fundamental mistake of the Commission concerned its failure to publicise any clear and in any way coherent standards of analysis which it employed in the context of the formulation of its findings of pre-accession compliance with Article 2 TEU values. The fact that there is virtually no acquis corresponding to such values complicated the task of the Commission to a great degree, which is further exacerbated by the diverging views on the meaning of the values enshrined in Article 2 TEU embraced by different Member States of the Union, making the assessment of the candidate countries’ progress particularly difficult and unreliable.

19. The third fundamental mistake of the Commission concerned extremely poor quality of analysis, which the Commission provided. This included random choice of issues of concern, provision of unreliable or incorrect information, numerous internal conditions in the reports both horizontally – in assessment of the same issues between countries – and dynamically through time – in assessing the candidate coutnries’ progress from one year to another. In other words, no serious assessment of outstanding issues related to democracy, human rights protection and the Rule of Law has ever been provided by the Commission, undermining the reliability and predictability of the enlargement process, as well as its results.

20. The fourth fundamental mistake of the Commission is related to the vagueness of clear and reliable benchmarking to assess the actual compliance of the candidate countries with the EU’s demands presented by the Commission as rooted in the Copenhagen criteria and Article 2 TEU. This led to a situation where no distinctions were made by 205

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the Commission between genuine reforms and legislative window-dressing. In the context where acquis-related benchmarks were clear and values-benchmarks virtually non-existent, the assessment of the compliance of the candidate countries with the demands related to the establishment of the Internal Market by far overshadowed the markedly more important democracy, the Rule of Law and human rights protection area. Even if the candidate countries were deemed by the Commission to have “complied” with the standards, it was impossible to be certain about it.

21. The fifth mistake of the Commission is chiefly related to the persistent unjustified differentiated treatment of the candidate countries at all stages of the pre-accession process, resulting in often opposing demands being made in the context of the assessment of different countries’ compliance with the Copenhagen criteria. This could not come unnoticed and resulted in undermining the image of the whole pre-accession and enlargement process as predictable, just, and Rule of Law-based, infusing it with unmasked arbitrariness, which contradicts the very idea of conditionality as formulated by the European Council.

22. The sixth mistake of the Commission consisted in disconnecting its findings from the actual progress of the candidate countries towards accession. In other words, conditionality in the fields of democracy, human rights, and the Rule of Law as such was almost entirely divorced from the actual process towards accession.

23. The last, seventh fundamental drawback of the enlargement process as applied is connected to the de facto domestication of the enlargement issues by some Member States, undermining the whole rationale of conditionality and predictability, however imperfect. Some Member States play the enlargement card within the context of internal politics, harming the common endeavour and undermining the Commission’s engagement, however imperfect. The best illustration to this is the position taken by Greece vis-à-vis the Republic of Macedonia. The “name dispute” leads to the disregard of the Commission’s recommendations and the weakening of the positions of the individual Member States and of the Union as a whole. This is particularly problematic in the context of the fact that Greece has already been found in breach of International Law on this issue by the International Court of Justice.

24. INTERIM CONCLUSION No. 3: The careful analysis of the actual conduct of the recent enlargement rounds abundantly demonstrates that the Commission failed to capitalize on the opportunities offered by the principle of conditionality and that its self-reported successes related to the promotion of democracy, the Rule of Law and other key values of the Union reflected in the Copenhagen criteria and Article 2 TEU in the candidate countries should not be taken at face value. The Commission’s performance in the context of the promotion of the political component of the Copenhagen criteria during the preparation of the recent enlargements has been of profoundly questionable quality. Seven mistakes outlined above illustrate this point well (please consult the monograph cited above for a myriad of detailed examples covering all the candidate countries, which joined during the two last enlargement rounds and a whole array of fundamental issues of relevance for Article 2 TEU).

25. Given the looming drawbacks in the regulation of enlargements related to the application of the conditionality principle in the context of the assessment of the progress made by the candidate countries in the areas not falling directly within the 206

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scope of the acquis, it is fundamental to adjust the process in order to learn from the past mistakes. This has not been done, however. Moreover, very similar structures dedicated to the application of the principle of conditionality have been transplanted, inter alia, also into the field of the European Neighbourhood Policy. Without any independent serious assessment, the Commission has been successful in instilling in other institutions and some Member States the presumption of success of its own actions, while the evidence to the contrary has been mounting. In other words, instead of seriously thinking about introducing possible changes into the way how enlargements are regulated, the approaches of questionable quality are being replicated in the context of other policies.31 A serious independent review of the way how pre- accession conditionality is conducted is absolutely indispensable in order to infuse enlargement regulation with transparency, predictability and common sense, making it more reliable and effective – even if this would entail establishing some forms of parallel monitoring of the candidate countries or limiting the Commission’s monopoly in the area of progress-assessment in some other way.

26. TO CONCLUDE In reply to Question 1: No, Articles 2 and 49 TEU as they stand do not fully reflect the principles of EU enlargement law. Completely left out from these provisions is the procedure, which is usually applied in preparation of enlargements, or the actual level of involvement of the Union institutions in this process and a number of principles of fundamental importance shaping each accession, including conditionality and the requirement to accept the acquis in full. In particular, given that the actual application of conditionality by the Commission specifies the exact meaning of Art. 2 TEU and the Copenhagen criteria, it would be a mistake to view this principle as purely procedural. It clearly goes to the substance of the pre-accession conditions.

In reply to Question 2: No, the Copenhagen criteria do not fully encapsulate the principles for further enlargements, since they have been de facto hijacked by the European Commission and remolded in the course of the regular assessment of the progress made by the candidate countries. The analysis of the Commission’s performance in this field mandates a conclusion that a large number of fundamental drawbacks plagues the process of the pre-accession promotion and monitoring of the candidate countries’ adherence to the Copenhagen criteria and the requirements of Article 2 TEU. Enlargement preparation in the most fundamental areas suffers from numerous internal contradictions, lack of coherence and has an overall inconsequential, if not an illogical nature, boasting at best ad hoc follow up on a number of some particularly politicized randomly selected issues, rather than representing a clear, coherent and effective process of the promotion of the Union’s values among the countries about to join.

In reply to Question 14: It is impossible to state that the lessons from the previous enlargement rounds have been learnt. Indeed, the contrary seems to be true: the fundamentally problematic pre-accession conditionality in the areas of democracy, the Rule of Law and other

31 For a detailed analysis see Dimitry Kochenov, ‘The ENP Conditionality: Pre-Accession Mistakes Repeated’, in Laure Delcour and Elsa Toulmets (eds.), Pioneer Europe? Testing EU Foreign Policy in the Neighbourhood (Baden-Baden: Nomos, 2008). 207

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fundamental issues now within the scope of Article 2 TEU, has been replicated in other policies. The Commission has never demonstrated that the conditionality in these fields, as applied, has been a success. Instead, there seems to be a presumption that the Commission’s engagement with Article 2 TEU issues in the context of the preparation of the recent enlargements has been a success, notwithstanding the mounting problems in exactly the fields related to the issues where pre-accession success has been reported in a growing number of the Member States, Hungary providing a particularly telling example. It is regrettable that no serious critical independent assessment of the promotion of democracy and the Rule of Law, among other issues, has been conducted following the big-bang enlargement. The self- reported presumed successes by the European Commission are thus, regrettably, questionable.

14 November 2012

208

Written evidence from Assistant Professor Rinna Elina Kullaa, University of Jyvaskyla

1. In my reply to the “House of Lords Select Committee on the European Union Enlargement of the European Union Call for Evidence” I address six of the questions posed under issues listed in the call for evidence: The impact of EU membership on new Member States; The impact of enlargement on the Union; The appetite and capacity for further enlargement. I include in total 22 paragraphs.

2. Concerning the motivations and prospects for further enlargement, and its potential consequences my key points are:

1) EU enlargement is not only relevant for the European Union’s internal relations, but also for transatlantic relations. The United States’ foreign policy has supported with a particular focus EU enlargement in the Western Balkans since 2009. The purpose of this focus is the future stability, democracy and prosperity of the Western Balkan states. In recent years US foreign policy has acquired increasingly a more of a Pacific and varied global focus. EU enlargement is a meeting point of interest, agreement and action for Europe and the United States. Therefore enlargement’s strategic value is not only internal or community based. It reaches beyond to transatlantic relations as well and is one area through which the United States continues to be keenly engaged with European allies. EU enlargement from this point of view engages an important strategic ally and can be argued to therefore also benefit UK-US relations.

2) Money politics matter more today than they have in the past in global politics and for the EU. Questions that condition EU enlargement will become in the near future more closely related to problems of economic and financial stability setting aside increasingly those related to political power and overcoming problematic recent pasts. The current circumstances of the Euro crises and global economic downturn provide an altered background for democratization in states that are current candidates and possible future candidates for EU membership. This environment does not change the contribution enlargement policy can make to the security and prosperity in the Western Balkans and the Mediterranean region. Current significant global economic challenges make the enlargement policy a more important tool for political stability, expanded employment, administrative reform and overall democratization.

The impact of EU membership on new Member States

3 (vi.) Labour migration to and from new Member States

3. Croatia is set to join the EU 1 July 2013. Having completed a long and rigorous enlargement negotiations process Croatia can expect to draw full and wide benefits from labour migration to and from EU Member States. As with the previous enlargements in 2004 and 2007 a transitional arrangement on free movement of workers will apply from 209

Written evidence from Assistant Professor Rinna Elina Kullaa, University of Jyvaskyla

Croatia's accession. A Member State may restrict access of Croatian nationals to their labour markets up to at the most seven years after accession. The transitional arrangement will apply automatically in all Member States for the first two years after accession, and should in principle come to an end after five years. The transitional agreement may be prolonged for a further two years in those member states where there would be serious disturbances of the labour market. Member States are able to make their choice until Croatian accession. Member States must however, give preference to Croatian nationals over labour outside EU Member States. Labour markets also cannot become more restricted than they were at the time of the signature of the Accession Treaty in December 2011. Austria and Germany have the right to apply flanking national measures to address threat of serious disturbances, in service sectors that are sensitive in labour markets. As a reciprocal measure Croatia can apply restrictions equivalent to the national measures by individual Member States.

4. After a Croatian worker has obtained access to the labour market in an EU Member State, they will have rights that are equal to those of the national workers including health insurance, unemployment insurance and a retirement. It is important to note that Labour markets are not blocked at any time even in the transition period and Croatian citizens can always enter the labour market as any third country national can do and in fact member states must also give preference to Croatian nationals over non-EU labour.

4. (i)The dynamics of decision-making

5. Becoming an EU Member State underlines the parliamentary decision-making process and its role. When a state becomes an EU Member State its’ sitting Prime Minister and his or her Cabinet ministers acquire a new important set of duties representing the member state in EU institutions making decision therein most importantly in the European Council. Decision-making in the EU arena affects all spheres of the Member State’s domestic policy and some spheres of its’ foreign and security policy. Membership provides a new and influential role to the elected government. It moderates the role of the President with relation to European states. Whereas the President as the head of state often carries a key importance during EU candidacy by providing political leadership towards gaining membership and by guaranteeing the political future of a prospective Member State, the President’s role diminishes to functions mostly outside of the EU once a state becomes and EU member. EU relations thus are governed after membership by the parliamentary process, although often a key role is played by the President in gaining membership. This should be bore in mind if and when considering shifting the focus of EU membership negotiations to the highest political levels.

6. During negotiations for EU membership, consensus between the opposition and the sitting government on political will towards EU membership and efforts in negotiations are of key importance. Consensus on this singular goal tends to form in successful enlargement negotiations. Moreover, the EU actors in Brussels representing Member States collectively are obliged to communicate with all actors in a candidate state elevating both the awareness and knowledge base of the opposition in addition to carrying out political negotiations with the sitting government. As it is often noted, negotiations for EU membership can be a significant time and a process where transparency in politics among all political parties increases in a candidate state along with the harmonization of the candidate state’s laws with the EU and where expediency in political processes is gained. Political consensus and demands of the negotiations gravitate the process to these ends. Such results could be 210

Written evidence from Assistant Professor Rinna Elina Kullaa, University of Jyvaskyla expected to be realistic goals if negotiations for EU membership were deemed appropriate to be opened for Macedonia, Serbia and Kosovo for example. However, there is a shift from consensus building during the negotiations to governing in EU membership. The moment of collusion between the opposition and the sitting government is often lost once in membership.

5. Is Croatia satisfied with their accession process and the arrangements in place for them to join the Union?

7. Croatia held its referendum on EU membership on 22 January 2012. Voters voted 66.21% in favor of EU membership. Croatian citizens have expressed consistently positive views towards EU membership and its benefits in recent years. Outside the general population, some Croatian non-governmental advocacy groups expressed reservations in spring 2011 against closing negotiations for EU membership. In some cases the groups contacted directly key EU actors in Brussels by mail. The concern was that the state had not reached the required administrative capacity or implementation and standards of law enforcement for example to warrant the closing of the negotiations. Their concern among others was that betterment in justice, freedom and security would be more difficult to achieve after the negotiations were closed. After finishing negotiations representatives of the Croatian government have at times challenged strict provisions for closing the negotiations which included for example not being allowed to take part as observers in committees working on regional questions of EU enlargement before Croatia’s entry into membership.

8. In the period after finishing negotiations for EU membership Croatia has faced new general elections and formed a new government. Overall the political processes have gravitated towards patterns of becoming a typical EU country that looks in economic terms to become more alike to Slovenia or Spain than any special case. The government holds three ministers that are representatives of an ethnic minority. The new Croatian government in 2012 has focused on balancing the budget and better collection of revenue that are current focuses of political leaderships across Europe.

The impact of enlargement on the Union

9. What might be the broader geopolitical impact of further enlargement, or of not admitting additional states who wish to join? How might the European neighborhood be affected by the EU’s decisions on enlargement? 9. The prospective EU membership is very popular in some of the potential candidate states. In August 2012 when asked about joining the EU tomorrow, 72 % of Kosovo citizens responded they would say "Yes" in a referendum. Support for membership is not however, uniform across the region. A standstill or a failure of the EU enlargement process that has up until now been seen a valid goal would lead to political apathy and disappointment where support for membership has remained high. In states like Kosovo which require still significant steps towards democracy political apathy and instability caused by the potential suspension of the enlargement process could also compromise growth of transparency and any future foreign investments amongst other political and economic consequences. 10. The enlargement process as a whole carried significant geopolitical impact and benefits in areas for the environment. For example, through EU membership negotiations Croatia has systematically made a commitment to support sustainable economic growth and meet EU 2020 climate targets. In terms of the Natura 2000 network Croatia has for example made a 211

Written evidence from Assistant Professor Rinna Elina Kullaa, University of Jyvaskyla designation of 2,2, million hectares towards favorable conservation status. Outside of the EU membership negotiations process such gains in terms of future protection of the environment would have significantly less incentives to receive pledges.

11. Extending the EU’s external border away from a Member State’s own border is a geopolitical prerogative. Freezing the enlargement process would put this goal on hold and would change the strategic geopolitical thinking within the region. This could change the pattern of sought after alliances by smaller states with global and European powers.

The appetite and capacity for further enlargement 10. What impact should the ongoing economic and financial crisis, particularly in the euro area, have on further enlargement?

12. Money politics matters more today than it has in the past in and for the EU. This background is important for the future of enlargement as well. In the last year growth has been slow uniformly in the Eurozone. In all European economies interest rates have fluctuated to a great degree between states although the policy interest rate set by the ECB has been set low. This has meant that money politics has translated in different states in divergent degrees.

13. Along with the recommendations of the Report of the European Commission’s High- level Expert Group on Bank Structural Reform the ECB has announced it will carry out tasks work to keep cost levels stable within the EFSF ESM. The European program of loans are not in the future to be made by one country or a group of countries against others but maintain cohesion and short term state loans, terms and deals are made public concerning specific countries purchases every month so that the public sector can in the future follow the lending process. These reforms promise possible improvement in unity within the Eurozone.

14. A state’s government is the actor responsible for collecting the revenue. The government decides what its expenses will be and it has to also decide about how to finance them. Government bond interest rates in Ireland and Portugal have sharply declined in 2012 as these governments have completed the measures they had committed to in order to receive EU rescue. Markets have responded and rewarded them. More significant problems arise in states where the state’s expenses exceed revenues that the state cannot effectively serve its loans. EU institutions including the ECB and the Commission have been relatively able to further recovery and aid in rescue but it is the first responsibility of the individual governments to oversee their spending.

15. The Euro crises has carried global precautions and have occupied a concern and focus in US-European transatlantic relations. Simultaneously measures used in the United States to combat financial crises including TARP and to a larger extent the FDIC mechanism have been considered as possible models in Europe bringing transatlantic thinking closer together.

16. The economies in the Western Balkans are closely tied to the economies in the United States and Europe. In the Western Balkans growth in the past decade was driven by heavy external borrowing. Account deficits in Serbia for example had grown as high as 20 percent of the GDP by 2009. Highly-indebted countries are particularly exposed to the current crises, because creditors are re-evaluating regional risks and countries’ credit ratings are declining. Most of the banks in the Western Balkans are subsidiaries of West European 212

Written evidence from Assistant Professor Rinna Elina Kullaa, University of Jyvaskyla parent banks that are now less willing to offer domestic loans. For example in Croatia the foreign claims in the banking sector are 44,0% by Austria,40,4% by Italy, 7,5% by France, 4,2% by Italy and 3,9% by others. Foreign direct investment has slowed as well.

17. Challenges to Western Balkan economies have been heavy but varied from country to country. Inflation in Serbia for example in has been heavy in 2012 gaining on 12% by October. There are also over 67,000 unemployed persons who receive approximately 14 million euro per month (206 euro per month per person) whose benefits have been paid by interim measures since July 2012. Comparatively the Croatian government has projected in August 2012 modest 0,8% to zero growth with desired recovery to 1,7% growth in 2013 In September 2012 inflation in Croatia reached 5%.

18. Recent EU member states overall have only been able to access 20-30% of the EU funds available to them. Croatia’s cohesion and structural funds will exceed 1,5 billion euros a year and Croatia obliged to contribute 680 million Euros to the EU budget. Croatia needs to make sure in the future it is a net gainer and not contributor. A good example to follow which the Croatian Foreign and EU Integration Ministry has acknowledged is that of Poland that has been more successful in terms of reaching EU funds than most other states.

19. Capitalism is cyclical and the upswing in global economy will also arrive in time. The recession in Croatia as an example has been unnecessarily deep, but far from for example some of the worse current scenario's. Major policy errors were made in former times much before closing the EU membership negotiations. These were related to for example the national currency's exchange rate policy. The Croatian financial sector is capable of supporting the economic upswing when it arrives if it maintains a balanced budget and gets investment to increase. In these relative terms EU integration process has been beneficial for Croatia on its road to membership.

20. Once Croatia joins the EU it will contribute to the Europe 2020 Strategy for Smart, Sustainable and Inclusive Growth which asks member states to set national targets in employment, innovation, education, social inclusion, climate and energy among others. The necessary structural reforms therefore are required. The Europe 2020 Strategy which is the is focused on growth, jobs, and social cohesion therefore should help the Croatian government to protect and achieve stability and improve competitiveness in the longer term.

21. Enlargement fatigue as such is not a necessary a future trend or a fact among the individual member states, candidate countries or the Union as a whole; it is not a necessary evil. The EU has a Commissioner for enlargement and a mechanism. Enlargement is one of the process by which the EU continuously defines and redefines itself and therefore its position and importance within the EU's community governing mechanism is relatively strong.

22. Maintaining the big picture -- a vision and a larger set of goals matters for effectiveness in terms of EU enlargement. If the EU enlargement process as a whole, lacks a 'big picture' of goals it will cause unnecessary nervousness among European citizens in member and candidate states. In times of large challenges in employment, productivity, financial stability, 213

Written evidence from Assistant Professor Rinna Elina Kullaa, University of Jyvaskyla environmental protection and other areas piecemeal changes and reforms without a clearly defined idea or concept will cause unnecessary tensions. Instead of a strong program and a platform with a clearly stated guiding idea would likely be able to inspire all members’ to accept delays or increased demands for becoming an EU member state. If the political and economic goals of enlargement would be explained or communicated clearly the publics in candidate states would be likely to accept more rigorous terms for membership as well. Political feeling of the left and right walls to find away in the darkness can be costly. The best way to combat enlargement fatigue is to define and state its ambitious goals clearly to the public and to candidate and possible candidate states. Political uncertainty is costly in terms of political and economic capital. Enlargement promotes growth in Europe but also serves as European currency in Euroatlantic relations. Therefore making the case for enlargement is an important part of protecting Europe's future.

14 November 2012

214

Written evidence from Dr. Adam Łazowski, University of Westminster

1. Absorption capacity and EU law 1.1. According to the European Commission:

“The institutions and organs of the present Community cannot ensure that the progress of integration will continue in an enlarged Community: on the contrary, there is a reason to fear that the Community decision making procedures will deteriorate. If this happened, it would be difficult or even impossible to create a Community based on the rule of law, which is the foundation of the Community and the sole means of recognizing in law that to equal rights correspond equal obligations. The institutions and organs of the enlarged Community must accordingly be decisively strengthened.”32

One may be surprised to learn that this argument was made by the Commission as far back as 1978, that is, five years after the first enlargement. This has become a standard argument, used as a mantra by policy makers and politicians alike. The ability of the European Union to operate with an ever-growing number of Member States has turned into a discourse on the absorption capacity of the club and became the fourth criterion in the set developed by the European Council in Copenhagen in 1993. In the case of the last enlargements, the centre of gravity of the pre-accession debate was on the ability of the candidates and newcomers to comply with the first three Copenhagen criteria. However, an interesting question was whether the European Union itself complied with the fourth accession criterion in the last two waves of enlargement. It is striking to note that the first version of the Preamble to the Reform Treaty (later rebranded into the Treaty of Lisbon) contained the following words: “Desiring to complete the process started by the Treaty of Amsterdam and by the Treaty of Nice of adapting the institutions of the European Union to function in an enlarged Union”.33 This, of course, was later dropped and replaced with a vaguer and less self- incriminating clause. In this submission I shall focus on one particular aspect of absorption capacity which has received little attention of the policy makers, partly as a consequence of which the effectiveness of the EU legal order has been affected in the past years. Before I go into details, it is fitting to make an attempt to define absorption capacity.

1.2. In one of its reports, the European Commission claims that absorption capacity is:

“The capacity of the Union to maintain the momentum of European integration as it enlarges has three main components: institutions, common policies, and budget. The Union needs to ensure that its institutions continue to act effectively, that its policies meet their goals, and that its budget is commensurate with its objectives and with its financial resources.”34

One should add one more component to this set - the ability of national authorities (both administrative and courts) to apply EU law. Alas, it is not always appreciated in political discourse that the EU is not one of many international organisations of an intergovernmental

32 Communication sent by the Commission to the Council on 20 April 1978. General considerations on the problems of enlargement, COM (78) 120 final, p. 15. 33 Draft Treaty amending the Treaty on European Union and the Treaty establishing the European Community. Draft Preamble, Brussels 24 July 2007, CIG 4/07. 34 European Commission. Enlargement Strategy and Main Challenges 2006 – 2007. Including annexed special report on the EU's capacity to integrate new members, COM (2006) 649 final. 215

Written evidence from Dr. Adam Łazowski, University of Westminster character, but rather a supranational entity underpinned by a unique legal order.35 In this legal order, a special role is played by the Court of Justice of the European Union and by national courts, which are to ensure that EU law is effective at the national level. Furthermore, as of the entry into force of the Treaty of Lisbon, Article 19 TEU imposes an obligation on the Member States to “provide remedies sufficient to ensure effective legal protection in the fields covered by Union law”. The ability to comply with this obligation should be part of pre-accession discourse and scrutiny during all stages of rapprochement. It is important to bear in mind that the accession of new countries that will be delaying the transposition/implementation of EU law and whose courts will not be willing and able to apply EU law will in the end undermine and weaken the European Union. The experience of enlargements to date, particularly the 2004 and 2007 accessions, shows that in each and every case the application of EU law posed a great challenge for the public administration and national courts.36

2. Impact of the fifth and sixth enlargements on EU law and the Court of Justice 2.1. Impact on EU Law

The application of EU law requires tremendous investment both in terms of legal knowledge and skills. It also demands a major change to the mindset of national judges, particularly in countries where case-law remains an alien concept. It is notable that the state of the judiciary in general still remains a problem for some of the newcomers,37 and the most recent case-law proves that it also applies to one of the pioneers of democratic reforms in the early 1990s.38 Empirical research proves that in countries that joined in the last two waves of enlargement, case-law based on EU law is quite voluminous, demonstrating the ever growing importance of EU law in national litigation. However, the overall picture is mixed. Some courts are very confident in the application of EU legislation, while some are still undergoing the painful process of accepting and learning the new reality. Despite the training the judges have received, some are still not au courant with EU law and, what is even more worrying, some have no desire to be so.39 This would not have been a problem of major proportions if it were not for the scale of the previous enlargement rounds. If the judiciary of one Member State underperforms, this is worrying; however, if the judiciaries of almost half of the Member States have problems with the application of EU law, this is a major concern. The responsibility is on the shoulders of both sides; it is all about compliance with the Copenhagen criteria, including absorption capacity.

There are a number of objective factors that have undermined the effectiveness of EU law in the legal orders of the most recent newcomers. To start with, there was a considerable delay with the publication of the pre-accession acquis in the Special Edition of the Official Journal of the European Union in the languages of the new Member States.40 In the second Official Journal published after the enlargement, the European Commission published a

35 As proclaimed by the Court of Justice in case 26/62 NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v. Netherlands Inland Revenue Administration, [1963] ECR 1. 36 For an analysis of all Member States that joined in 2004 and 2007, see A. Łazowski (ed.), Brave New World: The Application of EU Law in the New Member States, The Hague, 2010. 37 See Cooperation and Verification Mechanism for Bulgaria and Romania. 38 Case C-286/12 Commission v. Hungary, ECR [2012] nyr. 39 See U. Jaremba, Polish Civil Judges as European Union Judges: Knowledge, Experiences and Attitudes, Rotterdam 2012. 40 Furthermore, due to the lack of available translations, dozens of Official Journals were published in the languages of the existing Member States during the last week before the big bang enlargement on 1 May 2004. 216

Written evidence from Dr. Adam Łazowski, University of Westminster notice claiming that the publication of special editions in the new languages of the European Union should be complete by the end of 2004.41 Moreover, the Commission claimed:

“Pending publication, the electronic version of the texts is available on EUR-Lex and will in the meantime constitute publication in the Official Journal of the European Union for the purposes of Article 58 of the 2003 Act of Accession.”

This was not exactly correct. To start with, the last volumes were published only in 2006 and the Court of Justice held in the Skoma-Lux case that such non-published legislation was not enforceable vis-à-vis individuals.42 Thus, the effectiveness of EU law was undermined from the start. In particular, the EU regulations which are directly applicable (Article 288 TFEU) could not be properly applied in almost half of the Member States. The situation was even more worrying when Romania and Bulgaria joined the European Union. The number of translated legal acts on the date of their accession was 51% and 46% (respectively). Moreover, the quality of translation was also a matter of serious concern and in some cases versions in the new languages of newcomers contained meaningless provisions and quite fundamental mistakes.

This “lost in translation” syndrome also extended to the pre-accession case-law of the Court of Justice. The special edition of the European Court Reports has never materialised and the few selected pre-accession judgments available on the website of the Court of Justice can hardly be called satisfactory. Certainly, this was a paradox demonstrating one of the limits to EU absorption capacity. The judges of the new Member States were supposed to transform themselves into EU judges in a very short time. However, some basic tools were scarce, and one does not have to be a rocket scientist to appreciate the importance of primary sources. Several comprehensive textbooks available commercially may, but should not, replace access to the fundamental tools - legal acts and case law. One should also note the relatively limited language skills of judges, reducing by definition access to foreign legal literature and case-law. On top of this, the Court of Justice proved to be not very helpful with its controversial Ynos line of case law.43 It declared inadmissible references in cases where all facts had taken place before accession to the European Union (at the same time allowing references in purely domestic cases, for instance in the Dzodzi case44). This decision, as well as those that followed, were very counterproductive. Paradoxically, the Court that is supposed to make sure that EU law is observed contributed to the limited effectiveness and lack of uniformity of interpretation of EU law in the newcomers. One should bear in mind that the objective factors discussed above now belong largely to the past (with the exception of the publication of the pre-accession case-law of the Court of Justice). However, the experience gained should serve as a good lesson for future enlargements.

There are a number of subjective factors, too, and they are not of a temporal character. As proven by empirical research, judges of the new Member States frequently have a very limited EU law background and sometimes have no desire to engage in the difficult exercise of the application of EU law. Although generalisations can be quite harmful and do not reflect reality, it is rather clear that this is the case here. One should not forget that some of the

41 OJ 2004 L 169/e1. 42 Case C-161/06 Skoma-Lux sro v Celní ředitelství Olomouc, ECR [2007] I-10841. For a comprehensive commentary, see Lasiński-Sulecki and Morawski, “Late publication of EC law in languages of new Member States and its effects: Obligations on individuals following the Court’s judgment in Skoma-Lux”, 45 Common Market Law Review (2008) 705-725. 43 Case C-302/04, Ynos kft v. Jànos Varga, [2006] ECR I-371. 44 Joined Cases C-297/88 and C-197/89 Massam Dzodzi v. Belgian State, [1990] ECR I-3763. 217

Written evidence from Dr. Adam Łazowski, University of Westminster judges who sit in Central and Eastern European courts were trained under Communist rule. In some cases, this was the environment of Ismail Kadare’s Palace of Dreams,45 not the Palais de Justice. In that reality, not only was respect for the rule of law not a spécialité de la maison, but the process of adjudication was a very textual, technical and unsophisticated exercise. Thus, accession to the European Union required a major change of mindset and large-scale training. In some of the smaller Member States, it was possible to organise comprehensive training programmes covering large parts of the judiciary (for instance, a two-year PHARE programme in Estonia), but in the bigger Member States, particularly in Poland, this proved to be a major challenge.

Another aspect which one should have in mind is the limits of the EU’s enforcement mechanisms. Safeguard clauses included in the Accession Treaties, which allow suspension of certain membership rights, have a very short lifespan and are hardly ever used. Traditionally, they expire after three years of membership. The post-accession monitoring of Bulgaria and Romania has not been a spectacular success. What is surprising, however, is that the infraction procedures (Articles 258-260 TFEU) are hardly ever used to penalise the states whose courts do not apply EU law. As much as one should appreciate the political sensitivity of such cases, this might be the right way ahead. Arguably, the current approach should change in the years to come if the EU legal order is to maintain its effectiveness. This applies to all Member States, not only the most recent entrants.

2.2. Impact on the Court of Justice Initially the Court of Justice of the European Union benefited from the fifth and sixth enlargements of the European Union. New judges joined the General Court and the Court of Justice shortly after the enlargements, although the workload was not initially affected that much by the new entrants. However, in the past few years the number of references for preliminary ruling from the domestic courts in Central and Eastern European countries has increased and so has the number of infraction cases. By the end of 2011,46 the number of references from these countries looked as follows:

Member State Number of references

Bulgaria 40

Czech Republic 20

Estonia 7

Cyprus 2

Latvia 20

Lithuania 11

Hungary 46

Malta 1

45 I. Kadare, Palace of Dreams, Vintage Books, London. 46 Annual Report of the Court of Justice, available at: http://curia.europa.eu/jcms/jcms/Jo2_7000/ 218

Written evidence from Dr. Adam Łazowski, University of Westminster

Member State Number of references

Poland 43

Romania 33

Slovenia 4

Slovakia 11

It is notable that some of these references were not admissible, but some, however, touched upon crucial issues of EU law and thus reached the Grand Chamber.47 It is quite likely that the number of references from Central and Eastern European courts will increase in the coming years. The expiry of the transitional period for jurisdiction in ex-third pillar matters (former Article 35 TEU) may trigger references in criminal matters, some of which will qualify for the Urgent Preliminary Ruling Procedure (PPU). This may have an impact on the future work of the Court of Justice.

3. Will the EU legal order survive the next enlargements? Lessons from the past should certainly be taken on board in the current pre-accession policy employed vis-à-vis the Western Balkans and Turkey. Iceland, in this respect, should not constitute a major challenge from the legal angle of the EU’s absorption capacity. For the time being, the centre of gravity of the pre-accession effort is on Chapters 23-24 (broadly speaking, Justice and Home Affairs). The leitmotifs are the independence of the judiciary, the fight against corruption and the enhanced efficiency of the courts in all candidate and potential candidate countries. However, considerable investments are necessary in a robust preparation exercise which will allow the judges of these countries to apply EU law. The challenges discussed in this submission prove that the EU legal order has been affected by the previous accession rounds and, by the same token, the legal absorption capacity of the European Union has also suffered. Arguably, the ability of the administrative authorities and courts of the candidate countries to apply EU law requires far more attention of the policy makers involved in the enlargement than before.

14 November 2012.

47 For instance, Case C-210/06 CARTESIO Oktató és Szolgáltató Bt [2008] ECR I-9641; Case C-173/09 Georgi Ivanov Elchinov v. National Health Insurance Fund, ECR [2010] I-8889; C-375/09 Prezes Urzędu Ochrony Konkurencji i Konsumentów v Tele2 Polska sp. z o.o., now Netia SA [2011] nyr. 219

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69)

Evidence Session No. 2. Heard in Public. Questions 46 - 69

TUESDAY 27 NOVEMBER 2012

Members present

Lord Teverson (Chairman) Lord Cameron of Dillington Lord Carter of Coles Baroness Eccles of Moulton Lord Foulkes of Cumnock Lord Hannay of Chiswick Lord Harrison Lord Maclennan of Rogart Lord Marlesford Baroness O’Cathain Lord Richard Earl of Sandwich Baroness Scott of Needham Market Lord Tomlinson Lord Trimble Baroness Young of Hornsey ______

Dr Adam Lazowski, Reader in Law, University of Westminster, Dr Diana Bozhilova, Research Fellow, King’s College London, and Dr George Christou, Associate Professor, University of Warwick

Q46 The Chairman: Doctors, I welcome you to this Select Committee. Let me just say for those listening in, and this is a public session that is being broadcast, that this is the second of our formal evidence sessions on our inquiry into EU enlargement. The session is being broadcast. There is also a transcript being taken. That will be circulated to you, and you will be able to change it if we have, in error, made mistakes on it. You will be very welcome to tell us that. As I mentioned to you, we are not necessarily expecting all of you to answer all the questions, and I will leave it very much to you as to who wants to lead on which of those. I would add that, as this is a legislative Chamber, it is possible that there might be a Division during the session. If that happens, I will bring it to a halt, and we will restart. Perhaps, first of all, I could ask you to very briefly introduce yourselves and then we will start with the questions and answers. Perhaps, Dr Christou, we could start with you.

220

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69)

Dr Christou: Yes. I am Dr George Christou from the University of Warwick. I am an Associate Professor in European Politics with main interests in Cyprus, Turkey and some interest in the eastern partnership in terms of expertise.

The Chairman: I do not know how the PA is working in here, but let me ask you to make sure you speak up, as I am furthest away and I probably have the worst hearing in the room. I would appreciate that.

Dr Lazowski: I am Adam Lazowski. I am a Reader in Law at the University of Westminster at the Law School. My main areas are internal market, enlargements, external relations and criminal law of the European Union.

The Chairman: Thank you.

Dr Bozhilova: My name is Diana Bozhilova. I am a visiting Research Fellow at the Centre for Hellenic Studies at King’s College London. My main research interests are in energy policy in south-east Europe, industrial policy reform and public procurement policy, with again the main focus being south-east Europe.

Q47 The Chairman: Thank you very much indeed. Would you just for a minute let us pause to make sure we have the system working well enough? Let us hope we are okay from there. Let us continue. If it is a problem, then we will have to sort it out.

One of the areas that we have looked at particularly is conditionality in terms of enlargements. The current strategy for enlargement is based heavily on conditionality, but is conditionality being applied robustly enough to ensure irreversible reforms are made in the candidate and aspirant countries? I think this is something that we had been particularly concerned about following the history of Bulgaria and Romania to some degree on certain issues following their accession. I do not know who would like to start on that.

Dr Bozhilova: In my personal opinion, a lesson has been learnt out of the accession of Bulgaria and Romania about the need for a verification mechanism. I believe that the important areas such as justice and home affairs are being dealt with first now. There is a much greater emphasis on putting in place the right structures and ensuring that there is sufficient absorption capacity for the transfer of this acquis and the adoption and implementation of the acquis. I think implementation of the acquis is the key issue not only in the case of Romania and Bulgaria but in all the current candidate states. I am personally satisfied that that point has been taken, so the cart is no longer before the horse but in its right place. Once we are satisfied that the rule of law is in place, that we have a good standard of justice system, then we can look towards other areas pertaining towards economic activity and so on.

The Chairman: Any other comments?

Dr Lazowski: I have the misfortune to disagree. I do not think conditionality at the moment is applied robustly enough. There is definitely space for improvement. My worry is that at this stage, for instance, for countries like Montenegro, Albania, Bosnia and Herzegovina and so on, we need to do a very careful balancing act: on the one hand, enforce the conditionality; on the other hand, try to keep the momentum of the process. But what worries me is what happens when those countries get closer when we start the accession 221

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) negotiations. Of course, we have certain instruments. My colleague has mentioned instruments used vis-à-vis Bulgaria and Romania. There is a slightly different instrument used now vis-à-vis Croatia, but the trouble starts when those countries join the European Union, because then we are losing some of those instruments. To my knowledge there is no plan at the moment to carry on with monitoring of Croatia so thoroughly as in the case of Bulgaria and Romania in 2012—so, five years after the enlargement.

The problem is that we have some instruments in the accession treaties, traditionally safeguard clauses, but they are not used. There is only one safeguard clause that was used vis-à-vis Bulgaria, and this was transport, which is, with due respect, a relatively minor issue. The JHA safeguard clause has never been used, and anyhow the safeguard clauses have a very short lifespan. It is three years. This was the case of the 2004-07 accession treaties. It is the same with the Croatian accession treaty. But once they expire and things go off the track, as they may go, as we witnessed in Hungary and Romania this year and in the past two years, then we do not have that many instruments to monitor what is going on because some of that conditionality is par excellence political conditionality, not legal. The Commission cannot use the traditional enforcement mechanisms. The recent case against Hungary was basically a lucky escape, simply because the Commission found a very strong legal angle, a directive on discrimination, that Hungary was in breach of.

Then I think we may have to reconsider using Article 7 of the Lisbon Treaty allowing freezing of some of the membership rights, but this is something that happens when countries join the European Union, and I am not sure, to wrap up my comment, that the current pre-accession strategy is strong enough to make sure that when the countries join the European Union they respect all the principles that are written down in Article 6, rule of law included.

Q48 The Chairman: For the purposes of our inquiry, has Article 7 been used previously?

Dr Lazowski: No. It was drafted, to my knowledge, on the initiative of Austria when the member states were negotiating the Treaty of Amsterdam and it was tailored more or less for central and eastern European countries, which at that time were negotiating their membership. Paradoxically, the first opportunity to use Article 7 was when Jörg Haider was elected in Austria a few years later, but Article 7 has never been formally used. There were political sanctions imposed on Austria, but only political.

Q49 Lord Tomlinson: Can I just be clear, Dr Lazowski, exactly what you are saying? Are you saying that we precipitately admitted Romania and Bulgaria to the European Union without an adequate mechanism of making sure that they could fulfil the obligations that they had entered into, and are you warning us against making the same mistake in the current rounds of enlargement? Is that what you are saying?

Dr Lazowski: I would not be that strong in approach, but I think when it comes to Bulgaria and Romania, both countries, with due respect, were admitted too early. This was reflected even in the accession treaty itself, which contained an unprecedented membership postponement safeguard clause, but the trouble with it was that it was for one year only and this was more or less a political tool with a legal touch. It was never used, and I believe the school of thought followed at the time was simply, “Let the countries in and just see what happens”. At the same time, the Commission was preparing the Cooperation and Verification mechanism, which I believe it strongly believed in at the beginning, but five years 222

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) later when we look at the reports we see the tasks that both countries still have on their lists. I have my doubts.

Q50 Lord Maclennan of Rogart: Dr Lazowski, you mentioned the possibility of suspension of rights. Would you see that as being sequential to a judgment in the European Court of Justice that the accession agreement had not been adhered to and, if so, how would you want to strengthen the accession agreements to make sure that this is not just a passing phase?

Dr Lazowski: It is a very interesting point. I never thought of bridging the two because of course Article 7 applies to all member states, including the founders of the European Community and the Union now. Yes, it could be a way of seeing it, but if it is invoked by the Council, then clearly that is a clear sign to a new member state saying, “You are not complying with the terms of accession”. When it comes to strengthening the accession treaties themselves, I do not think there is much we can do with this, but there is a bit more we can do with the pre-accession phase.

I believe what is happening at the moment in negotiations with Montenegro is a good start. Chapters 23 and 24, justice and home affairs, are the first ones to be opened and will be the last ones to be closed. But when it comes to implementation of acquis, as my colleague has mentioned, there is a new phenomenon that is not well known: the Energy Community, which is a separate international organisation that was set up for the western Balkans and now also other countries, where those countries have the obligation to apply EU acquis, which is listed in the annexes, and there is a monitoring and verification mechanism. It is a bit far-fetched, but it is modelled on the enforcement system in the European Union. You can clearly see similarities with the Commission and the Court. There is no court, of course, but there is a similar mechanism. There is proper, strong enforcement. Maybe a model based on the European Economic Area could be an option where you have surveillance authority and you have a court. Maybe that could be an option, to use some elements of it in the pre- accession points.

Q51 Lord Hannay of Chiswick: It does seem from your answers that you clearly recognise there is a completely clear distinction between pre-accession conditionality and post-accession conditionality. From what you say and from what we have heard, it does rather look as if most people in the European Union have learnt the lesson about the inadequacies of pre-accession conditionality as a result of Bulgaria and Romania and they are now, through benchmarking and lots of other techniques, applying a much tougher approach and getting the rule of law criteria up front. I think I deduce from what you said that you do not think a whole lot more can be done there, but where you must be right is that post- accession conditionality is virtually non-existent. I wonder if any of you would venture how that might be handled in a way that is more effective than in the past but is not totally unrealistic. Is it, for example, totally unrealistic to say that the accession treaty should envisage a probationary period after accession during which certain surveillance mechanisms would continue to exist without new decisions by the institutions?

The Chairman: Dr Christou, I think you were trying to come in. Perhaps you might like to respond to that and to something previously. Dr Christou: Yes. My point was going to be on Turkey, which is more my area of expertise in a sense, and conditionality and the way it has been looked at there. There I think it is 223

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) differentiated. At the moment we are talking about pre-accession conditionality without any nuance. It depends on how that pre-accession conditionality is applied and what sort of leverage that gives the European Union and how they deal with it. From my perspective, from looking at the way in which the issue of Cyprus and Turkey has been handled, some might argue that that could have been handled in a much more robust way, in the sense that there was no leverage after Cyprus entered in 2004. Once a solution was not a precondition for their entry, then most of the leverage was lost on Cyprus, so there were a few lessons to be learnt there. It is not a judgment on whether that particular practice in terms of Cyprus was wrong or right—in essence, there is a debate about that—but I think we have to look at how the pre-accession conditionality is applied.

In Turkey, clearly there is no robust application of conditionality, and there cannot be because of the context that exists within Turkey and more broadly in Europe. I do not wish to spend a long time on this, but clearly Turkey has regressed with regard to its democratic reform. It is very strong in terms of its economic reform and more recently Ali Babacan, the—

The Chairman: We will come on to Turkey in a little bit, I think.

Dr Christou: Okay. Yes, to sum up, I think we have to have some nuance to how we talk about conditionality and what type of conditionality we wish to see applied.

Lord Hannay of Chiswick: Can I have an answer to my question, Lord Chairman?

The Chairman: I am going to ask Professor Lazowski perhaps to come back to Lord Hannay’s question, and then we are going to need to move on, if you do not mind.

Dr Lazowski: Yes, of course. I think there are a number of things that potentially can be done and a number of things that cannot be done. In more general terms, when countries become member states and when they are member states, what usually works in terms of enforcement of law is the combination of the Commission and the Court of Justice. That disciplines the member states to comply with EU legislation. To prove that argument, we can look at the criminal legislation in the period between Amsterdam and Lisbon, when the Court had no jurisdiction to impose penalties and most framework decisions were either not transposed at all to national laws or transposed partly. If you interview practitioners, they will openly say, “We do not feel the breath of the Court behind our backs, so we are not worried”.

That also is the weakness of the pre-accession and post-accession enforcement, because, as I have mentioned, most of the pre-accession conditionality is based on very general concepts like rule of law and independence of judiciary, which are not regulated in acquis proper. They are not regulated in secondary legislation, which limits the jurisdiction of the Court, and I think that is one of the reasons why the monitoring mechanisms, as mentioned for Bulgaria and Romania, are not a spectacular success, because publishing negative reports every six months is as much as the Commission can do. Maybe safeguard clauses, which are an inherent feature of the accession treaties, should be finally used and should have a longer lifespan—not for three years, as it has been so far, but maybe something safer, seven years, although not indefinitely. Dr Bozhilova: If I may make one point, I think conditionality should not be too excessive and if conditionality is to be applied in a more excessive manner, then it should be 224

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) universally applied, so not only pertaining to the new member states but also pertaining to the old member states.

The Chairman: I apologise; we seem to have a problem. It is unfair of me and I apologise for this, Dr Bozhilova, but do you think you could just speak up more for us?

Dr Bozhilova: Yes, of course.

The Chairman: I apologise that we are asking you to do that.

Dr Bozhilova: Of course. I will just repeat what I said. I do not believe that conditionality should be applied too excessively. If we go for a more excessive application of conditionality, then we must ensure that it is universally applied and so be applied with the same measure to new member states or aspiring member states as you would to all member states. We very well know that with the Maastricht treaty, for instance, old member states are in transgression but they have not been penalised in very many instances. I think that for the enlargement strategy to work and for the process to be sufficiently incentivised, we must strike a very careful balance between excessive conditionality and what those states can reasonably achieve in a not too long and drawn-out process, because then they fall into the trap of enlargement depression, apathy, Euroscepticism and so on and for all purposes you lose them. You cannot drive reform in societies that do not have the same enthusiasm for enlargement and for accession to the European Union that they might have had a decade ago.

The Chairman: Thank you. I think we need to move on.

Q52 Lord Tomlinson: Inevitably the progress of countries will be compared each to the other, even though each is supposed to progress on its own merits. Can this and will it possibly negatively impact on countries such as Bosnia-Herzegovina, which the Commission’s progress report suggests is not progressing as quickly as its neighbours? It strikes me, and this is what I am asking you to comment on, that there is a real risk that this could undermine, on the one hand, the EU’s broader regional goal or possibly, on the other hand, replicate some of the criticisms that have been made in the last enlargement. Can you give me your views on that?

Dr Christou: I cannot comment on Bosnia. I could comment in the context of Turkey. Yes, there is always going to be a comparison and I think we have seen that with Turkey. They were not very happy when countries like Romania and Bulgaria, with due respect to them, and other central and eastern European countries were put ahead of them in the queue in 1997. It has reinforced, from a Turkish perspective, what they see as an unfair process, additional conditionality being applied to them as an accession country. There is also the broader issue of the criteria when it comes to Turkey and the perception of the Turkish elite.

In terms of your question, the Commission progress reports need to be fair and need to be balanced, and generally are but there is a politics around these that does have a negative effect if there is no balance, especially with a country like Turkey, which does look at these progress reports in such a way, in a sense justifiably. Turkey perceives that as a candidate country it is not getting the support or the benefit perhaps that even European neighbourhood countries are getting. Visa liberalisation, for instance, is something that 225

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Turkey has wanted for a long time, and now it sees Moldova and it sees Ukraine being offered visa liberalisation action plans. From a Turkish perspective, it is being criticised on the one hand, but it is not being incentivised on the other. I think there is a potential and very real negative impact from this that then also has implications for the region, in particular with regard to Turkey—towards the Middle East or towards Africa, with the Arab spring, so I think it is a very real issue.

Dr Lazowski: I absolutely agree, but at the same time I think this merit-based approach that is being pursued leads ultimately to differentiation of those countries, but at the same time does not allow those who underperform to hide behind the backs of those who are performing very well. But it can be detrimental, I absolutely take that point. It can be very discouraging, and I would like to draw attention to the careful balancing act that the Commission has been doing in the western Balkans basically for the last three or four years, but even back to 2002. If we compare the progress and conditions imposed on Montenegro, Albania and Bosnia and Herzegovina, we see how slowly they are moving from potential candidate to candidate, then to candidate without recommendation to open the negotiations, then to candidate with recommendation to open the negotiations. The Commission is definitely fully aware of this, that is my impression, and they just proceed with very slow steps, but very firm politically symbolic steps.

There is one more thing. As long as such volatile countries, with due respect, as Bosnia and Herzegovina are outside the European Union, we simply have more tools, because we not only have tools of the pre-accession policy but we also have common foreign and security policy tools to assist them. That is not to mention Kosovo and the EULEX mission that is there at the moment. The closer these countries get to the European Union, the more we lose those instruments. I am afraid that certain fundamental issues, as with Kosovo and Bosnia and Herzegovina, have to be sorted in the very early stages of rapprochement, because then we are taking a big risk. I agree with this argument, but unfortunately that is the reality we are faced with.

Dr Bozhilova: I think that the weaknesses that we see in Bosnia and Herzegovina in terms of the enlargement process are quite dangerous for the region of south-east Europe. I do not think that any state that is left behind in the western Balkans is conducive towards furthering development in the region. That is the poorest region of Europe but at the same time one of the most strategically important regions of the continent. Certainly when we think about and we talk about energy security and energy diversification, I think it is critical that Bosnia and Herzegovina does not fall behind, but it is not a simple question of enlargement policy there. It has to do also with self-determination. It has to do with wider structural reforms. I think that enlargement policy again has to be tailor-made, because Bosnia and Herzegovina is not like other western Balkan states.

Something that was, for instance, overlooked in the instance of Bulgaria’s accession was the role that a currency board plays for structural reforms in the state. Bosnia and Herzegovina shares that similarity with Bulgaria, and I do not think it should be overlooked in that instance. Beyond wider structures and structural change, we must look to what other international organisations are doing in that state and how that comes into play with the EU enlargement strategy.

Q53 Baroness Scott of Needham Market: This question follows on from that and the point about self-determination. I would be interested to hear where you think the balance 226

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) lies between a process that is very much driven by the Commission and is essentially one of compliance, and a deeper, more meaningful reform that is driven by the nation itself. You are not the first witness to have mentioned regression in Turkey. Now, in my simple mind it suggests to me that if enthusiasm for the EU and for some of these other reforms is waning, they were not very deep to start with and that would then have given problems later on. I am just interested in where this national-versus-EU balance lies.

Dr Christou: In terms of Turkey, it is more complicated than simple compliance. I think if we look at the time period 2002 to 2005, quite a lot of those reforms were genuinely transposed, in a sense. Unfortunately, the negative climate since then—the broader debates, the negative attitude coming from France, for instance, the Cyprus issue, with Cyprus becoming a member, and the additional protocol issue and the like—has acted as a strong disincentive for following through with a lot of the democratic reforms. We did get an opening. There were additional rights for Kurds, for instance, and additional laws transposed for freedom of expression.

Unfortunately, right now progress reports from the Commission are not very credible and do not play a great part in the debate with regard to Turkey and its future. There is a lot of talk now of Turkey as potentially an independent regional power with or without EU laws. There is a lot of rhetoric around Turkey now wanting a definite timeframe for accession. I think one of the weaknesses from a Turkish perspective has been the question, “How long are you going to keep us waiting here?” In terms of turning things around for Turkey, I think some of these issues need to be looked at, because without them Turkey will pick and choose. From my perspective, at the moment, there is no incentive for Turkey to transpose and then implement these so that they become embedded in national law.

Dr Bozhilova: In terms of the Balkan countries, I could only add that I do not believe that enthusiasm has waned altogether. If there is any dissatisfaction, it is in large part with the national political classes much more than it is with the European Union as such, but there is also a practical issue here, and it is that these reforms also require significant financial resources to be dedicated to them. We are talking of states that are small but also very poor. Essentially this is a process that will take time, but it also takes resources, and the enlargement process must also ask what sort of burden it is placing on these states and how they are going to be able to match the resources required to drive the process through.

Dr Lazowski: There is also the question of sustainability of those reforms that are conducted as part of the pre-accession process. The worrying thing might be that if the accession process goes on and on and on, the incentive will slowly fade away in the political elite, and that is where conditionality comes in. That is the thing that we started with: how to keep the strong conditionality and the momentum of the process, but making sure that the conditionality is robust enough.

Q54 Lord Hannay of Chiswick: We have talked quite a lot about conditionality in Turkey without mentioning that the European Union is blocking all new chapters. You cannot possibly exercise conditionality if you do not have anything in your hand. Surely either the European Union is going to have to take a deep breath and find a way of opening a few chapters if it wishes to restore effective conditionality on the Turks or it has to stop bleating. It is responsible for this situation largely. Dr Christou: I do not disagree. I think that is part of the broader problem in relation to Turkey. It is what makes it a more complex issue than simply just talking about conditionality 227

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) in an objective way, as if we can say “Make it better” as an instrument. At the moment it is the politics behind the accession process in Turkey that is stopping robust conditionality.

The Chairman: We were going to do geopolitical aspects towards the end of the session, but I am going to bring those forward and ask Lord Hannay to start for us.

Q55 Lord Hannay of Chiswick: Let us look at this issue of the geopolitical impact of enlargement, which was very much to the fore during the last two enlargements—that is the big one and the Romanian and Bulgarian—and which has led to the European Union being credited with one of the most effective tools in international diplomacy over the years. Does that geopolitical toolbox still apply with the countries that are applicants or wish to be applicants to the same extent, and what will be the likely consequences for some of those countries if enlargement fatigue became terminal, as it were, and they lose all possibility of becoming a member in a foreseeable time period?

Dr Bozhilova: I think that the geopolitical concern is very much there. As I mentioned at the start, south-east Europe is strategically possibly one of the most important regions that Europe has at the moment. That is, in my opinion, very much to do with on the one hand the policy of financial security and energy diversification and on the other hand with conflict in the Middle East. So both Turkey and the countries of the western Balkans are intrinsic to that geopolitical importance that the region carries. You cannot possibly imagine a secure south-east Europe that is at the same time at the service, as it were, of the European Union by excluding either Turkey or the western Balkan countries.

Lord Hannay of Chiswick: And the countries of the former Soviet Union?

Dr Bozhilova: That depends on our assessment of the bilateral relationship with Russia and to what extent that bilateral relationship with Russia is better served through an EU-Russia bilateral forum or through an individual members and Russia bilateral forum.

Q56 Lord Foulkes of Cumnock: I wanted to follow on from what has just been said. Rather than giving general answers, could you spell out for us which countries, apart from those that are currently in the process, you think are serious potential candidates for membership?

Dr Bozhilova: Beyond the western Balkans that we discussed?

Lord Foulkes of Cumnock: Yes, beyond those that are currently in the process.

Dr Bozhilova: I do not know in what timeframe, but I imagine Georgia, Moldova and maybe eventually Armenia are perhaps potential EU membership candidates.

Lord Foulkes of Cumnock: What are the others, then?

Dr Bozhilova: I am not entirely sure about Ukraine. It is a very large country and policy and attitudes towards the European Union seem to shift and change depending on who is in government.

Dr Christou: Moldova has made the most progress, I would say, thus far with regard to showing willing in terms of change, especially since 2009 when they had a more pro- 228

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European party in charge. So I think there is promise there, but obviously there is the problem of Transnistria as well, and that is a complicating factor. I would say yes, Ukraine hangs in the balance at the moment, given the events of the last two weeks with the elections there and what that says about their pace of reform. So they are still saying the same things with regard to wanting to work towards the European Union, but clearly on the ground there is a long way to go, even though economically again I think they have progressed.

I think Georgia is further behind. It has done quite well in certain areas with regard to laws on, for example, combating organised crime and various other aspects, but I think it falls behind politically. As to the others, I do not think Armenia would really be on the cards in the sense that it has shown little will to reform politically. It has shown great enthusiasm to reform economically and to liberalise, but I am not sure about the political aspects there.

Q57 Lord Richard: I am concerned about what I would call almost capricious enlargement. At some stage, somebody somewhere, somehow, is going to have to decide what Europe is, how far it goes, and what the limits of enlargement are, and I very much welcome some of your views on that. Just look at the ENP, for example, and the list of countries there now: Algeria, presumably that is out because it is the other side of the Mediterranean, although it is a jolly sight nearer most of Europe than Azerbaijan; Belarus out; Egypt out; Georgia possible; Israel, Jordan, Palestinian occupied territories, Moldova, Morocco, Syria, Tunisia, Ukraine—these are all part of the European Neighbourhood Policy. To my mind, I find the idea that some of those countries, Armenia or Georgia or even the Ukraine and Azerbaijan, are part of Europe and therefore should be in the European Union a very difficult concept. I would be very grateful to know where you would draw the line as far as Europe is concerned, because somewhere, somehow we are going to have to do it, otherwise we will end up with a European Union not of 27 but of 35 or 37. How governing that will be in present structures, I again find that very difficult to understand.

Dr Lazowski: The starting point of course is Article 49 of the Treaty on European Union that says that any European country can apply for membership.

Lord Richard: What is a European country?

Dr Lazowski: That is question number 2: where do we draw the line? But let me start, if that is permitted, with the first question. First of all, the most realistic scenario comes from the north, I think, although it may sound a bit of a heresy at the moment. But if Iceland joins the European Union, then Norway may wish to reconsider staying in the European Economic Area together with Liechtenstein. It might be simply too expensive to keep the byzantine institutional structure for literally two countries, one of which, with due respect, is a micro-state.

Lord Richard: But, with respect, Iceland is quite clearly a European country.

Dr Lazowski: There is no doubt about that, but then there is the question of Switzerland, which still has European integration as its long-term objective. Of course so far it has followed “box of chocolates” integration, if I may say so, but we know that that really from a legal point of view does not work very well. There was a very strongly worded Council conclusion in December 2010 saying simply, “From the legal point of view, this does not work”. 229

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Then we move on to the east. There is the question of Ukraine, which was mentioned already, which has some European aspirations, though they vary depending on who is in power at that stage. But politically speaking, they make it quite loud, some of the politicians there at least. Belarus of course for the time being, for political reasons, is out of the question. But it is a perspective of 30 or 40 years, I believe, if we look at the pace of the pre- accession process. Then what we might consider is creating, maybe on the basis of ENP even, a new formula to have this ring of friends around us where we have common policies, which, by the way—this appears in ENP papers every now and then—is something modelled on the European Economic Area, so to have elements of internal market, free movement of goods going beyond just a free trade area, and elements of economic integration in the areas that are to the benefit of the European Union and its member states. We see elements of that in the aviation policy at the moment, for instance.

Q58 Lord Tomlinson: At the moment, the European Union is bogged down with budgetary negotiations. They are bogged down essentially between net contributors and net recipients, the net contributors all saying something along the lines of budgetary constraint. As to the list of countries, we can get worked up about what defines a European country, as long as it is not singing in the Eurovision Song Contest, but we do have 47 countries in the Parliamentary Assembly at the Council of Europe. If you go through some of those you have mentioned—the western Balkans, Moldova, Ukraine—can you visualise any one of the potential applicants to join the European Union being a net contributor country? In those circumstances, do you see it helping the resolution of the budgetary crisis or exacerbating it, particularly when you see where the division is between net contributors and net recipients?

Dr Christou: If we take the here and now then, no, they are all going to be net recipients, clearly. I think realistically speaking, if you look at Turkish growth in the last five, six years and its current growth at 5.1% of GDP—

Lord Tomlinson: Yes, it is very impressive, but I am worried about the here and now. In the long run, we are all dead.

Dr Christou: The issue is whether we are talking about accession of these countries in the here and now and we are not. Even with Turkey, it is a candidate country, but we are looking at least 10 years ahead. So in the here and now I would say, no, we would have to rethink the way in which the budget was divided, as we did with the countries of central and eastern Europe with regard to structural funds and the common agricultural policy. It was a very real issue. So in the here and now, I would say, yes, you are right, the candidates will be net recipients.

Dr Bozhilova: I just wanted to say that there is a curious fact that the lack of implementation of absorption capacities in some of these states in fact means that some of them do become contributors, which is extremely odd; it is not healthy for those states either. I can come back to you with some figures on this, but I believe that in the period after 2007 there were instances where Bulgaria was in fact a net contributor, simply because it was not able to absorb the funds that were there on offer. So I guess the relative poverty of those states and the fact that they have not been able to implement the acquis, as it were, unwillingly turns them into net contributors.

Lord Tomlinson: But if they cannot implement the acquis, should they be there?

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Dr Bozhilova: That is a question that should have been asked before they were admitted.

Dr Lazowski: Just two points: in the short term I do not see that as a major problem because, with the exception of Turkey, the countries that are queueing for membership are relatively small. That should not be a huge burden for the EU budget. It will be a burden, but not a massive burden—for instance, in relation to the common agricultural policy. But the problem will start when we are dealing with countries of the size of Turkey and the Ukraine—which was already mentioned—hypothetically in years to come. I strongly believe that this discussion should be part of the EU’s absorption capacity discourse, the fourth Copenhagen criterion: can we have more member states and remain a fairly coherent unit, also from the financial point of view?

Q59 Lord Trimble: The question I have is: how heavily do geopolitical concerns influence the EU’s enlargement policy? I suspect we have touched to some extent on this already. If I could be a bit more precise, what interests me in this is basically, if you are thinking about Turkey, which we have talked about quite a bit, or the Ukraine, and thinking about the Ukraine and almost turn it around to the other end, it seems to me that the fundamental policy of the Russian state at the moment is to draw the near-abroad—Belarus, Ukraine, the Caucasus, possibly Kazakhstan—back into a close relationship with Russia. Then the question is: what should the EU be thinking of in relation to that policy? We should have in mind not just what one treaty describes as a definition of Europe, because on any definition Russia is European, more so than Turkey, but we should be thinking about the politics of this with regard particularly to the Ukraine, because if we stop short of the Ukraine, then we are facilitating the ambitions of the Russian state, or if we move towards the Ukraine, then we are directly challenging the ambitions of the Russian state, and that might be an even more dangerous course to take.

Dr Lazowski: I think we need to offer something concrete. Of course we cannot offer membership but, for instance, we can offer free trade-plus, as the agreement is being negotiated with Ukraine, and then lead on with a much stronger European Neighbourhood Policy leading to this partial economic integration, because that potentially could be an incentive for a country like Ukraine to basically—

Lord Trimble: Would you do that for Russia as well?

Dr Lazowski: Russia is a unique case, of course. I do not think so. Russia requires a tailor- made EU policy, a very sophisticated one.

Lord Trimble: But if we do it for the Ukraine but not Russia, then Russia will redouble its efforts to recapture Ukraine, will it not?

The Chairman: I think we should let our witnesses perhaps answer your question.

Dr Christou: You have to ask what the ambitions of Russia would be with regard to the EU. One of the reasons why Russia rejected the European Neighbourhood Policy was that it wanted an equal relationship with the European Union, a strategic partnership with the European Union, which is why we have a different model and relationship with Russia now. In terms of how well that is working, it is debatable. But we have different considerations for Russia than we do with Ukraine. You are right. In a sense there are two centres of power

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Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) here: there is the European Union, and there is Russia, when we are talking about the eastern neighbourhood.

What is important in that is to try to balance interests. Clearly the European Union has fallen short. Its aim has been to stabilise these countries. Clearly there is a geopolitical interest, there is an energy interest and there is a security interest. This policy was born because we had to do something after enlargement in 2004, because of enlargement fatigue. So there are clear geopolitical implications. If the EU really does want to stabilise and secure that neighbourhood in terms of organised crime, good governance and other issues, then it has to offer something credible to those states that they want. Russia can do that very easily, and it has done that: it can hand out passports, it can liberalise in terms of visas, or it can give money. In a way for Russia, it is easier if they are willing to take it because there is less conditionality. Should we adhere to that as a European Union? Probably not, but we have to find more creative ways of pulling these countries in if that is our objective.

Q60 Lord Harrison: Could I ask the three of you about the intriguing proposition of the European Economic Area as a model? Would that be a runner for those countries that find themselves in the conundrum of waiting outside, given that it has the institutions, albeit that Norway in time may leave? Would that be a potential, especially as it does not necessarily imply a future relationship of joining the European Union?

The Chairman: Perhaps we could just have a quick response from each of you on that.

Dr Lazowski: That would be quite a lot of work, definitely. As long as Norway, Iceland and Liechtenstein are in the European Economic Area, they would be the first to be asked, “Do you mind if this is offered to, let us say, broader Europe?” But as a model I believe it could be used. It is the way we present it to such neighbouring countries that is crucial. It was presented in the 1990s when EEA was being developed to the central and eastern European countries, but unfortunately it was presented as playing in the second division and those countries wanted to play in the Premiership. It is a question of simply explaining that this is a tool to develop economic integration that may lead to membership eventually at a later stage. For the European Union, that solves a lot of problems; it solves the financial problem, the biggest one, because there is no common agricultural policy to start with. It solves the justice and home affairs problem, because that is not part of the package—that is, on the side of the EEA agreement, the Schengen co-operation with Iceland and Norway, for instance. It solves the institutional problem for the European Union, but at the same time there are benefits for both sides, the economic benefits of elements of the internal market. Then, based on benchmarking and conditionality, a bigger chunk of internal market can be offered.

Lord Harrison: And you rename it the Championship rather than the second division.

Dr Lazowski: That is a question of labelling, which we will have to work on.

Lord Tomlinson: It does not resolve any of the problems; it only leaves the existing problems without them being exacerbated.

Dr Lazowski: I agree, but at the same time it gives more time for compliance in those countries with internal market acquis, and it keeps the momentum.

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The Chairman: I think we need to move on, but, Dr Christou or Dr Bozhilova, is there anything you particularly wanted to say on that? You are very welcome to. If not, we go to Baroness O’Cathain.

Q61 Baroness O'Cathain: The Commission’s recent enlargement strategy communication was very clear that the EU’s enlargement policy is crucial, both for the Union and for the countries that wish to join. However, are there signs of any current member states suffering from enlargement fatigue or any candidate and aspiring countries suffering from pre-accession fatigue? We have had some evidence that would indicate that was so.

Dr Christou: In short, yes. I think fatigue, no, frustration, yes, in Turkey. This is frustration that could lead to fatigue; some argue that this has already happened. As I said, the process is stalling, there is an indifference in Turkey to implementing the acquis now, and we need something to kickstart that. Turkey is quite happy to play the game because of how it sees itself now—its own self-perception is of a regional power that can help, whether that is in the Arab spring or whether that is with regard to the Middle East, even though it has its own problems there. I think that frustration, as I said, has been born of specific problems related to Turkey, but also broader issues. We have to make a start somewhere with regard to Turkey. The positive agenda, obviously, is that start, but whether it is an answer in the long term I am not quite sure for Turkey. In answer to the question whether there are aspiring countries or candidate countries that are suffering from that fatigue, I would say that it is frustration in Turkey, but it is not something that cannot be turned around with definite action from the EU and certain member states48.

Baroness O'Cathain: Is there the will to turn it around?

Dr Christou: I would say yes, in general. As long as they are given the right incentives and there is a credible process ahead and a credible timeframe for Turkey, I think they are still willing to progress with the accession process. The EU is not completely off the agenda, but at the moment they need some positive incentive and signals for them to rebuild trust.

The Chairman: The bell will continue to go, so we will adjourn now and come back and start again within 10 minutes.

The Committee suspended for 10 minutes for a Division in the House.

Q62 The Chairman: Just so we do not waste time, perhaps we could just ask our witnesses to conclude on Baroness O’Cathain’s question.

Baroness O'Cathain: About enlargement fatigue or pre-accession fatigue.

Dr Bozhilova: On current member states, I think that in the older member states we can speak of enlargement fatigue, but I think that in some of the new member states such Bulgaria and Romania we can even speak of enlargement depression. That is not born out of a lack of will within society for further reforms or a general dissatisfaction or disillusionment with the European Union and what it stands for; I think it is a result of the general economic weakness that the European Union is going through, which compounds the poverty of these

48 Note by witness: and from Turkey itself. 233

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) states and therefore makes that Holy Grail that they thought they would attain—for instance, better standards of living and better institutional structures—look all the more distant. Therefore that is, in my opinion, the case with the newer member states. I think it is also misleading to brand them Eurosceptic, even though there is that tendency in the literature because, for instance, voter turnout in the European Parliament elections is really low. I do not think that they are Eurosceptic; I think they are simply disillusioned. The expectations that they had, that they harboured, did not match the outcome.

Dr Lazowski: I agree, though I honestly think the issue is more the enlargement fatigue among the member states than the potential candidates and candidate countries. The only country that I would think of to suffer from the pre-accession fatigue would be Turkey because it has been quite a long pre-accession process, spanning through decades. For the other western Balkan countries, I do not think so.

The Chairman: So their expectations, you would say, are not realistic in terms of—

Dr Lazowski: I think they are very pro-European. They see membership in the European Union as the only opportunity that is on their way.

Q63 Baroness Eccles of Moulton: I think that we have covered the pre-accession fatigue and the positive agenda that the Commission has worked on with Turkey, but, generally speaking, how much more do you think the Commission is able to do to counteract pre- accession fatigue? One example would be the high-level dialogue with Macedonia. Are there other examples or is there more that any of you can talk of that the Commission could do try to counteract it?

Dr Christou: I think there is more in terms of what they can do for Turkey. The positive agenda was launched simply because of the Cypriot presidency and the political impasse there. It is still reliant to a certain degree on member states making critical decisions on issues like visa liberalisation. There are working groups that are going to be discussing issues of low political salience where they might make some progress, but there are going to be issues there with regard to security, justice, freedom that are also going to be discussed, and I guess how that works and how successful that is will be reliant on how member states receive it. It could add nuance to the process, I think, in the sense of understanding what the Turkish elites will accept—do they want full visa liberalisation or will they take partial liberalisation? Will that be an adequate enough carrot potentially in the short term for them to say, “Okay, we have seen some movement on this, even if we cannot get agreement on full liberalisation”? So that sort of model might work, and there is a political dialogue built into that. The second aspect is potentially a discussion of a more flexible accession model. We have this model of concentric circles anyway. In a sense, we can see a core Europe building up with regard to the eurozone and others that want to—not least the UK—opt in or opt out of those sorts of things. Turkey has a sovereign logic, you might say, and it might find federal fiscal integration too much to swallow—it is not what it signed up to in 2004/2005—so should we expect that it signs up to that? Potentially that sort of a flexible model of integration might well also provide a way out to a more comfortable platform for discussion with regard to what Turkey needs to do.

Q64 Baroness Eccles of Moulton: Of course, Turkey is a very different example from a country like Montenegro or Macedonia, or even Serbia and Bosnia and Herzegovina, so one 234

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) can see that in the case of Turkey there could be a certain flexibility, but what about the smaller countries that could possibly be needing a bit of carrot in order to counteract fatigue? Can you see any move forward there that the Commission could make?

Dr Lazowski: Allow me to start with the new concept with Macedonia, the dialogue. The Commission is in a very difficult position at the moment, because it has recommended four times already opening of the accession negotiations, but due to the well known name dispute the opening is being blocked, basically, within the Council. So the Commission is doing a balancing act—if I may use this phrase again—not to lose the momentum, but basically to keep the finger on the button so that the reforms in Macedonia do not slow down. I think this high-level dialogue, whatever it is called, serves that purpose, though I do not think in the long term it will be a very strong, powerful tool.

Definitely the benchmarking that has been used so far has served its purpose; for instance, visa liberalisation, which was the waiving of visas for the Schengen countries, was really well received in Macedonia, Albania and a few other countries. Those are small incentives which are very useful, and they are also appealing to the public very much indeed. If there are any early symptoms of the pre-accession fatigue—although I do not think there are—they can be cured, at least for the time being.

Baroness Eccles of Moulton: But of course the politicians want to keep their electorate on their side, do they not?

Dr Lazowski: Absolutely.

Dr Bozhilova: I think it contributed in making the process and so what we talked about— not having a one model fit all, but adding a nuance in the process depending on the state. So the fact that we have these additional channels to communicate, as it were, the enlargement requirements of states such as Macedonia and Turkey I think helps in the process in some respects. I also think that it allows channels for member states that have additional issues arising out of the membership of either Macedonia or Turkey to communicate those so that it does not come to a veto, as in the case of Greece vis-à-vis the Former Yugoslav Republic of Macedonia.

The Chairman: Thank you. I think we have covered a fair bit of ground but, Lord Sandwich, was there anything else you wanted to raise on this particular issue?

Q65 Earl of Sandwich: It is difficult to say it in new words. Dr Lazowski particularly has been very positive about the alternatives, and we have been over the various issues of the neighbourhood policy, associated status and so on. Some of us are going to see the Commissioner next week, and we want to put the question to him: are these becoming viable alternatives? Are we going to see a sea change in the Commission in its attitude to enlargement, or are we just going to seize up a policy of the acquis and so forth of relying on membership and then letting everyone else drift away? I would like to see it in a more positive light. I am sure you all would, from what you say. Turkey, for instance, has gained enormously just by having proximity to the EU. Can we not make a virtue of that?

Dr Lazowski: Definitely, yes. I think we have to distinguish between groups of countries here. The first is the ones that are already part of the pre-accession process. Then there is the question of Turkey and the strategic partnership concept that was pursued at some 235

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) point, and then the countries of the near neighbourhood. I think the key question is now how we are going to develop the European Neighbourhood Policy. It seems to be a fairly reasonable concept—and it looked like this from the beginning in 2003, the first paper, to 2004, the second—but the trouble is that it is not strong enough; it is not an incentive that is strong enough. I think it was a mistake to put together under one umbrella two groups of countries that have not much to do with each other. Some have theoretically membership prospective and some do not. For the Euromed countries in particular—those with which the Euromed agreements have been signed and are being implemented—there is little added value of the European Neighbourhood Policy.

There is a still a lot that can be offered to countries like Ukraine, for instance, in the long, probably distant future, but there are free-trade agreements, which is what is being negotiated with Ukraine as we speak. There are a lot of problems, of course. I think it is a question of remodelling the ENP for the time being, and the ENP of course—as the Commission always puts in its papers—does not exclude future accession.

Q66 Earl of Sandwich: Do you think the Commission is going to do that, though? Dr Lazowski: This I do not know. I am hopeful that we will. Dr Christou: In a way, the EU has already started to address that. The European Neighbourhood Policy is systematically reviewed, more recently because of events with the Arab spring, whereby there was some clear reflection. The narrative that has now come from the Commission with regard certainly to the south is that it must do more to try to influence progress in terms of deep democracy and not procedural democracy—not just focusing on elections and not just focusing, for instance, on stability, which inevitably always meant shoring up authoritarian regimes for various reasons, including geopolitical reasons. I think there has been some reflection.

The question is: does that new framework offer anything new? Certainly some new mechanisms have been created such as the Civil Society Faculty and the new democracy endowment fund. Does that get to the crux of the problem? I fear not, in a sense, because the approach is underpinned by the three “M”s—money, markets and mobility—which is no different from what was done before. There are some signs that the EU is talking more in terms of partnership now. It is not just trying to impose things, but is talking to the right people on the ground, which it previously did not. I think in terms of an answer you would say the EU is looking at this. There is new documentation suggesting a new way forward. I think the problem is the difference between what they are saying and what is still happening on the ground. Is that being implemented on the ground? The EEAS and its delegations on the ground are still very formative, so to try to implement these new policies is proving quite difficult. What is the role of the new representative for the Mediterranean region, for instance? Nobody quite knows what the role is apart from a symbolic significance, but what does that person do? How are they moving this agenda forward? Nobody quite has the answer to that.

Q67 Lord Richard: Can I just ask one question? Would it be fair to summarise your position as this? First of all, you do not see any geographical clarity in what is Europe and what is not Europe and therefore which countries should be in the EU and which countries should not be in the European Union. Secondly, you think on the whole that is a good thing and not a bad thing—in other words, not a good thing to draw the lines clearly now, but to have a degree of flexibility in construing geographical clarity to see what happens way down 236

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) the picture. Nevertheless, you would agree, I suppose, that, of the east European countries that are now being talked of in terms of membership of the EU, none of them is ready.

Dr Christou: I think it is a geopolitical issue. We need to take that into account first and foremost. Then there is drawing the lines: who is in Europe and who is not? That is not the geopolitical approach that I think we should take. If we did take that approach, then Turkey of course is not in Europe, only a small part of Turkey is. Strategically, of course, Turkey needs the EU and we need Turkey. It is as simple as that.

Lord Richard: So you have been keeping doors open. It is a better policy in fact than closing doors now.

Dr Lazowski: Ajar.

Lord Richard: A chink.

Dr Lazowski: Depending on the wind.

Dr Christou: I think drawing geographical lines would be quite dangerous with regard to Turkey. It would have more negative effects than it would positive. If we think about the events of the Arab spring and how we want to influence potentially that region, if you think about what is going on in Syria, if you think about Iran and also if you think about the broader issue of Islam and Muslims in Europe and the EU’s common values—it reminds us every day of diversity in Europe—then I think it would be dangerous to then draw the line and say for Turkey in particular, given its own aspirations; “We are drawing this line. You can go your own way, we will go ours”. I think that, geopolitically and more broadly in terms of what it says about Europe and European culture, that would be extremely negative. Further than that, I do not think we would ever see a solution to the Cyprus problem if we do not have some way of drawing Turkey in and having some leverage over them.

Dr Bozhilova: I can only add that it was decided some 50 years ago, with the decision that Turkey could become a candidate and a member state of the European Community, and the European Union now, to take the political geography approach, so to now revert to a geographic approach would simply not be feasible. Carrying on with this political geography approach, then yes, of course we keep the doors open, because we are compelled to.

Lord Richard: I do not think you can totally ignore the geography of the thing. The idea that we should have a door that had a chink open to most of the Caucasus would seem to be an extraordinary notion. Dr Bozhilova: Many of these countries lie westwards of Turkey, if you look at the political geography of Turkey.

Lord Richard: I think Turkey is in a slightly separate category because of the history of the thing, the way in which the EU has treated Turkey over the last 20-odd years. To me, at any rate, that does not answer the difficult, anomalous proposition that a country like Georgia on the other side of the Black Sea should in fact be considered a potential member of the European Union. It seems to me that you cannot ignore the geography of it and you cannot ignore the geopolitical side of it. By all means, for all sorts of strategic and other reasons, keep doors slightly open, but for heaven’s sake—

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The Chairman: I think we need to move on to the last question.

Q68 Lord Maclennan of Rogart This Committee has received written evidence from a British Member of the European Parliament suggesting that because of the greater uncertainty about the constitutional structure of the European Union and perhaps a greater fiscal union for the eurozone members, we should look at associate member status. That would seem like a good waiting room for those who are not ready for complete integration or are not in a position to do what the other members states would want them to do. Have you given any thought to the possibility of that intermediate status being made constitutional?

The Chairman: I think we need a pretty brief reaction on that.

Dr Bozhilova: Very briefly—I hope that Dr Lazowski can put this in more legal speak—my opinion would be that it would be, as you say, a waiting room. It would be a stepping stone towards EU membership for those states that have already set their sights on EU membership. For states that have not, that would be a perfectly satisfactory solution, but for those that are looking forward to eventually attaining full EU membership, then this would be simply a stepping stone. A similar proposal was put forward in the early 1990s, to my knowledge, with regard to the central and eastern European countries, when again the European Union was not sure how to proceed with them—whether to offer them the promise of eventual EU membership. Then the association agreements were put in place to allow the European Union that breathing room to think on its own strategy in the first instance and then what it can offer to those maybe potential member states. But for all of them, the perception was that this is only a stepping stone towards becoming full members of the European Union.

Dr Christou: I agree. Not only have the European Union thought about it, but it is in place. The European Neighbourhood Policy offers that. It is a waiting room and it is, in my opinion, deliberately ambiguous on membership for several reasons, not least because there is no agreement within the Council as to where we should go next, but also I think it offers basically an association agreement that gives you a stake. It gives you a flavour and if you choose to follow a certain path and take the different parts of the acquis, then you will be reassessed somewhere down the line. The EU is quite happy not to give a timeframe for that in the current context. I think that is the waiting room. In terms of lines, the lines have been drawn. Morocco applied in 1987. Clearly, none of those states in the south will be offered membership so it is a permanent waiting room for them, in a sense, and not many of them aspire. There has been talk of Tunisia being offered a privileged partnership, for instance. There are different models out there. Dr Bozhilova: Egypt has no interest, to my knowledge.

The Chairman: One of the questions that has come up is what the existing 27 might think of the waiting room, but perhaps, Dr Lazowski, you could just make a quick final comment to sum that up, and then I need to move on.

Dr Lazowski: We have the legal framework for association of third countries in the treaty. The SAAs, the agreements with the western Balkans, are association agreements. So are the agreements with the Euromed countries. We do not have, however, association agreements with the former Soviet Union countries. That is where we have partnership and cooperation agreements, which are a bit lower in status than association agreements, but this 238

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69) is where we are headed definitely with the Ukraine at the moment. The key question is: how much can we offer and achieve with association agreements?

My colleague mentioned a stake in the internal markets—yes, that is true, but that creates another problem. A stake in the internal markets frequently means regulatory convergence, which is where we are heading to in the case of Norway, Iceland, Liechtenstein and Switzerland, where in several areas of EU acquis they have the obligation to apply EU law without participation in the decision-making. To sell this to such a country might be difficult, saying, “Yes, you are more than welcome to have this upgraded association agreement, but then you have to comply with whatever legislation we adopt without participation proper in the decision-making—yes in the decision-shaping but not in the decision-making proper”.

The Chairman: Lord Marlesford, perhaps you can ask your question, and then I am going to ask for just a quick, one-sentence answer to each of those, but then we would be very keen to get any further written evidence from you on the subject.

Q69 Lord Marlesford: During our previous enlargements, the policy that has always been, as it were, in question is the common agricultural policy, because it is the biggest resource user and still is. Can you think of any other ongoing policies of the EU that could be affected either positively or negatively—either imperilled or enhanced—by further acquisitions? Are there any vulnerable policies?

The Chairman: One sentence.

Dr Lazowski: Justice and home affairs, with police and judicial co-operation in criminal matters—it is largely based on mutual recognition, which is based on mutual trust, and usually our judges do not have trust in countries that are suffering from rule-of-law problems. That principle underpins European arrest warrants, European evidence warrants and so on—all of the mutual recognition instruments, also in civil matters.

Dr Christou: In terms of the negative effects, I would say potentially the structural funds. In terms of Turkey, I would say also security if we extend that to NATO and some of the missions—also the development of a CSDP and the links there with NATO. The formal relationship between NATO and the EU could certainly be enhanced if we could find the way round which would pass over Turkey.49

The Chairman: Thank you. Finally, Dr Bozhilova.

Dr Bozhilova: I think either positively or negatively, industrial policy, and positively, to my mind, energy and environmental policy. I say “positively or negatively, industrial policy” simply because it can go either way depending on what pre-accession reforms are implemented within a candidate state and that would then have an effect on the other member states once that state accedes into the European Union. We have seen it, for example, in the central and eastern European countries, so the approach was not to reform existing structures but to put in place new structures. That was a flawed approach, because those countries were in fact industrialised; they were not agrarian economies. So now we see the negative impact of very weak industrial states that have come into the European

49 Note by the witness: That is to say if we could resolve problems between the EU and Turkey, in particular in relation to Cyprus. 239

Dr Adam Łazowski, University of Westminster – Oral evidence (QQ 46-69)

Union. That approach is revised with respect to prospective member states. You could then see a positive impact on the industrial policy.

The Chairman: Thank you very much indeed. Again, I apologise; we had a vote that interrupted the flow. That is how we work. But I thank you very much for your evidence today. If there is anything additionally that you would like to submit to us that we have not gone through, then please feel free to write to our clerks and that will be included as well, but thank you very much indeed for your evidence.

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Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118) Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118)

Evidence Session No. 5. Heard in Public. Questions 103 - 118

WEDNESDAY 5 DECEMBER 2012

Members present

Lord Boswell of Aynho (Chairman) Baroness Eccles of Moulton Lord Foulkes of Cumnock Earl of Sandwich

______

Sir Michael Leigh, Senior Adviser, German Marshall Fund of the USA, and former Director-General, DG Enlargement

Q103 The Chairman: We are very grateful to you for coming, Sir Michael. Since 2007, and reflecting the experience up to 2007, the enlargement process has had a number of innovations. Should there be more?

Sir Michael Leigh: The main innovations in the process itself are to try to ensure that the political criteria for membership—particularly the rule of law, respect for human rights and democracy—are more tightly bound in with the negotiating process. This can be done through Chapters 23 and 24 of the process. In the past, there has been a tendency to see these as somewhat extraneous, although the mere fact of having negotiating chapters was real progress. The attitude taken during negotiations with Croatia, for example, was that Chapter 24 would probably be the last to be closed. It was opened only at a moment when the country seemed to be relatively well advanced with those criteria. There was also great reluctance to open this chapter with Turkey, whereas a new approach would have these chapters opened early on and the political criteria much more tightly woven in to the negotiating process.

The Chairman: Chapters 23 and 24 are as much about culture as formal compliance.

Sir Michael Leigh: In a sense they are about culture; particularly when it comes to the fight against corruption and organised crime, you need an administrative and political culture in which these issues are taken seriously. The thought is that by addressing these questions earlier on one can help to inculcate this culture throughout the negotiating process.

The Chairman: Thank you. That is helpful. We have not formally structured our questions, so who would like to come in next?

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Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118) Q104 Lord Foulkes of Cumnock: I wanted to ask a question that arose from something that we heard a little while ago. After Croatia, which countries do you expect to come in and when?

Sir Michael Leigh: This is off the record.

The Chairman: Yes, of course.

Q105 Earl of Sandwich: That leads on naturally to whether there are any alternatives in view. Will the Commission not insist on one solid method of entry for membership?

The Chairman: Are there waiting rooms?

Sir Michael Leigh: We require a great deal of creativity and imagination to think of waiting rooms or incentives for the interim period that would make these countries continue to engage in the necessary reforms. It is extremely difficult. The main incentive has already been given: the abolition of visa requirements. To create a feeling that the accession process is real is extremely difficult when you have to wait for six, seven or eight years before accession. In some cases, where a country is relatively well advanced but there are specific obstacles, as in the case of the Former Yugoslav Republic of Macedonia, ideas such as starting the screening process of the acquis, perhaps before all member states have agreed to begin the negotiations proper, could be considered. There are other such steps as well, which with some creativity could give some feeling of forward motion even in the period before we are ready to start formal negotiations.

Q106 Baroness Eccles of Moulton: Do you see a limit to the number of European countries that could eventually become part of the EU? Would you draw a line before you reached Azerbaijan and Armenia in the east, which are legitimately seen to be European

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Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118) countries and therefore come under the treaty definition, or is this looking so far into the future that it is hardly worth commenting on it?

Sir Michael Leigh: In the short run—for the next decade—it is only the countries that have already been given what in Brussels is called the “perspective of membership” that one could consider to be on a membership track. They are the countries we have been discussing plus Turkey. You are right to say that, under the treaty, any European country that shares the EU’s values may apply for membership; that would include, for example, Ukraine and Georgia. Azerbaijan would need some further consideration perhaps, depending on definitions. But it is perfectly clear that you would never find a consensus among member states to give an additional membership perspective to further countries during this time period.

A lot of consideration is being given now to the future architecture of the European Union. There are endless conferences about the future of Europe: two-speed, two-tier, multi-speed, multi-tier, layers, clusters and what have you. If the result of all this, including perhaps the partial redefinition of aspects of British membership, was that you had a tightly knit group of countries that were part of the eurozone and other countries not part of the eurozone participating in the single market and other flanking policies, it is conceivable that this could create an atmosphere in the future in which the idea of further countries joining might not seem so challenging as it does today. As you say, this is far in the future and really only the subject of speculation.

Q107 Lord Foulkes of Cumnock: Let us suppose that Iceland joined in 2015. Would that leave Norway rather isolated in the EEA with Liechtenstein? Would there be a move within Norway to seek membership?

Sir Michael Leigh: People sometimes overlook the fact that even though there are only three non-member states that are members of the European Economic Area, the member states are members of the European Economic Area and the EU is, too. In a sense, they are less isolated than they look. It is not as if they were all alone out there. There has not been any sign yet, as far as I am aware, of any serious reconsideration being given in Norway to the question of membership. If and when Iceland accedes, that could change the balance of opinion in Norway.

Q108 The Chairman: Presumably that would depend on the basis of the fishing deal that was done with Iceland and whether or not it might read across to satisfy some of the Norwegian interests there.

Sir Michael Leigh: I am not following the negotiations with Iceland in great detail but one of the effects of the negotiations—if they are successful, and I am sure they will be—will be a kind of rapprochement between the fisheries policy of Iceland and that of the European Union. Already the common fisheries policy is being reformed in a direction that makes it more similar to the Icelandic fisheries policy—for example, with vessel quotas and so on. If these negotiations are successful, the whole question of fisheries will be demystified to some extent. The principle of relative stability in these negotiations guarantees that there will not be any fundamental change after membership concerning vessels from other member states that have a right to fish in the waters of the new member state. On the whole, that will be reassuring to Norway. This is again in the area of speculation to some degree, but I would

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Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118) not expect fisheries to be a major obstacle if at some time in the future Norway decided to apply for membership.

Q109 Lord Foulkes of Cumnock: If you will excuse my gestalt theory of European integration, has Switzerland given any indication of seeking to eventually become a member?

Sir Michael Leigh: No. As you know, Switzerland is not even part of the European Economic Area. A referendum in Switzerland decided against that. Switzerland is linked to the European Union by a series of bilateral agreements. The economies are very tightly interwoven and Switzerland is one of the main trading partners of the European Union. There could be many economic arguments for Switzerland’s accession but there is no sign of any interest in that in Switzerland for the time being.

Q110 Earl of Sandwich: I would ask only whether you are one of those who think we should be monitoring under the Copenhagen principles and whether there is compliance among both new and old members. Are there any mechanisms we could use?

The Chairman: And indeed would they be helpful in—perhaps I should not use the word “camouflaging”—but at least attenuating some of the implications for, for example, Romania and Bulgaria and the CVM mechanism?

Sir Michael Leigh: I am expressing my personal view. I think that it is most useful to toughen up the monitoring of these criteria in the course of the accession negotiations. Whatever the treaty provisions concerning human rights for member states as such, there will always be a reluctance on the part of member states, whatever mechanisms may be in place, to impose strong measures on a member state if there is backsliding in terms, for example, of human rights. Experience shows that there is such reluctance based, I suppose, on underlying concerns about reciprocity and questions about where the spotlight might shine next. Personally, I doubt whether creating mechanisms of this sort are particularly helpful. Moreover, they exacerbate a sense of second-class membership on the part of the newly acceding country. I would be rather realistic about the opportunities to bring pressure to bear on a backsliding member state. If it is in default with respect to a crystal-clear obligation of membership, especially if it is expressed in secondary legislation, there are opportunities.

The Chairman: This is the ECJ, to be frank.

Sir Michael Leigh: Yes, that is an example. In other areas such as the independence of the central bank, we have seen the Commission taking steps vis-à-vis Hungary when it looked as though the independent central bank was in question. When a very specific issue is expressed not just in broad treaty principles but in secondary legislation, there are opportunities to use the mechanisms under the treaty to bring pressure to bear on a member state, but in practice it is rather difficult. It is therefore much better to put the emphasis on tough conditionality, possibly at the price of postponing the moment of accession, so as to be sure that a new member state is in a position to honour its obligations.

Q111 The Chairman: Can I ask you about something on which there is current evidence in relation to Croatia? By how much is it possible to contain the enthusiasm or readiness of member states to resort to resolving bilateral arguments with what I might term as late 244

Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118) runs—that is, trying to defer accession by hanging on and suddenly playing a joker at the end?

Sir Michael Leigh: Only moral suasion can be used for that. Accession comes in— [Interruption.] Could you remind me of the question, please?

The Chairman: That is a good question. It was really about the bilateral issues which can be introduced. You just said that it has to be through moral suasion.

Sir Michael Leigh: The case of FYROM, as it is called, shows that when a member state has a bilateral issue to which it attaches enormous importance, it is very difficult to overcome such a problem by any mechanism. The Commission regularly recalls to member states that the accession process is based on the acquis and that bilateral issues should not intrude, but the reality is that every member state is sovereign.

Q112 Baroness Eccles of Moulton: Since the eurozone crisis hit, the landscape within the EU has changed, and we in the UK have played quite a big part in that. If you look at it now in very crude divisions, there is the eurozone, then there are the countries that are outside the eurozone, and then there is us. You could say therefore that there are three divisions. Some of the evidence we have had has implied that some of the 10 countries that are outside the eurozone are actually going to be knocking on the door in the wish to become part of the core. This will increase a tendency which we are not hugely enthusiastic about because it will have an effect on how we make our own decisions and so on. My problem is that we are writing a report on enlargement, but from what you have told us and what we have heard from other people, enlargement per se is some way down the road, so we are going to have to find other things to say in our report. What do you think will happen in the near future within the existing membership plus Croatia?

Sir Michael Leigh: Let us take this off the record.

The Chairman: Of course.

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Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118)

Q113 The Chairman: Thank you. Can we go back on the record now? That has been a tremendously helpful exchange. We have touched on the question of Turkey and Ukraine and these are fairly long-term issues, although in the case of Turkey the history of application goes a long way back. Given the present economic difficulties and the focus of existing member states on trying to resolve them, and given either the alleged fatigue of existing member states or, as has been put to us, the pre-accession fatigue possibly in the case of Turkey, what kind of process is the most fruitful in terms of developing them towards a closer association? I suppose that that is partly the bilateral issue vis-à-vis Turkey, but it is also the eastern neighbourhoods and partnership and so forth. What is your take on those two?

Sir Michael Leigh: At the risk of crystal ball gazing, I think that there may be a certain revival of the accession process as such with Turkey in 2013, for a number of reasons. I also think that there is no political will in Turkey or in the European Union to give serious consideration to an alternative form of association other than accession at this stage. On the clear understanding that accession is a medium to long-term process under the best of circumstances, the Turkish Foreign Minister himself has set the target of 2023, 100 years after the Atatürk revolution. We know that nothing is agreed until everything is agreed, so, in any event, this process is a medium to long-term one. That being said, there have been a number of changes in the European Union and the international climate that make a modest revival of the accession process likely. First, there has been change in the French Government. The very restrictive view taken by President Sarkozy is not being followed by his successor and it is at least possible that, next year, the French Government would agree to the opening of a number of chapters where the previous French Government were opposed. President Gül recently made a speech in which he clearly asserted the importance of the accession process to Turkey. It is important within Turkey for a number of reasons: maintaining the balance within the AK Party and maintaining pressure for reform within Turkey, which is still seen as important by parts of the ruling party. In addition to that, we have to look indirectly at developments in the Arab world, as Turkey has focused a lot of its attention since 2009 on its role in its own region. Although this was never presented as an 246

Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118) alternative to the accession process, there was a certain subtext that if the European Union was reluctant to proceed with accession Turkey had other options. Turkey has now found that some of these other options have not yielded the results that it expected. It is not calling the shots in Gaza; Egypt brokered the ceasefire recently, not Turkey. Turkey has lost out enormously in Libya on a number of contracts that were running previously, while the Syrian situation speaks for itself and has led to reflection in Turkey that, after all, its security depends ultimately on NATO and on the West, as with the request for Patriot missiles. Not wanting to build too much on this, I think that the pendulum within Turkey is swinging slightly back in the direction of emphasising the NATO and EU links as important.

Q114 Baroness Eccles of Moulton: What about its relationship with Russia?

Sir Michael Leigh: The relationship with Russia has deteriorated, mainly because of Syria and because Russia’s position on Syria is diametrically opposed to that of Turkey and could be seen in Turkey as the cause of a number of the problems that Turkey is facing. Turkey is also extremely dependent on Russia for gas. It has a voracious demand for gas and is looking for alternative sources of supply such as Azerbaijan. It is also casting a distant eye on developments in the eastern Mediterranean and wondering whether it could somehow be part of that. Also, Russia has recently developed particularly close links with Israel, Cyprus and Greece, which Turkey, rightly or wrongly, views as adversaries. So there are number of reasons why what only a few years some in the ruling party in Turkey were describing as a strategic partnership with Russia does not look so sure.

Q115 The Chairman: May we cross the Black Sea, looking at the eastern part? I suppose that there are two levels to this. One is the domestic demand within countries such as Ukraine or, on a smaller compass, Moldova for joining; the other is the question about the geopolitical influence of Russia in this, and whether that is tearing them away and how this game is likely to play out in the context of enlargement.

Sir Michael Leigh: The EU has put on the table for Ukraine a model, through the deep and comprehensive free trade agreement which is embedded in an association agreement, that, if it was ready to grasp it, would give it a work programme for the next half-decade at least and a real opportunity to modernise and demonstrate that it is interested in EU-oriented reforms. But, on the one side, it is not clear that there is a political will in Ukraine to accept the kind of transparency, openness and accountability that come with that sort of agreement, and, within the EU, to proceed with the agreement as long as the Tymoshenko question has not been resolved and as long as the last elections were not fully up to western standards. There has been an offer from Russia to bring Ukraine within the Eurasian customs union and to link that with the incentive of cheaper gas prices. But all this can change over the next five years. Russia’s bargaining position will weaken as new sources of gas become available. Already today, Ukraine has begun to import gas from Germany with reverse pipelines, albeit gas that was originally imported from Russia. As LNG builds up from Qatar and Algeria—

The Chairman: And fracking.

Sir Michael Leigh: And eventually the eastern Mediterranean—Ukraine itself has a huge potential for fracking—I think that the balance will shift. So it is conceivable that, in the next five years, Ukraine will tilt in the direction of the EU agreement rather than customs union,

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Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118) but there is many a slip between here and there and, for us, there is the fundamental political conditionality that still needs to be satisfied.

Q116 The Chairman: I presume, just to make a general point that is not specific to Ukraine, that the ability of the European Union to sort out its domestic euro area and other economic problems, including its competitiveness problem, is also part of this. The sort of beacon of prosperity that was on offer until 2007 is clearly rather guttering at the moment.

Sir Michael Leigh: That is true. However, let us take those countries that already have a membership perspective, such as Serbia. Even though Serbia is going through problems at home and there has been a certain drift towards nationalism—we have seen the results of the recent judgment of the International Criminal Tribunal in The Hague and so on—there is no doubt whatever that the preponderant opinion within Serbia is that they wish to become members of the European Union. The basic fact for these countries is that an economic crisis, however discouraging, is nothing compared with the wars that they went through a decade or more ago and they have not been unduly discouraged by that.

Q117 The Chairman: I think that we are probably coming to the end of our time. Could I just ask you a more numinous question? It is not prepared and you may not be able to help us. It would seem to me that you could plot two major achievements, looking back to the Nobel Peace Prize and milestones along the way of European integration. One was obviously the Franco-German rapprochement, reversing Verdun and all that, and the coming of peace to traditional combatants. The second one was the new wave triggered by the accession of the former Warsaw Pact countries primarily. It is difficult to see a third, what one might call moral summit coming along. Does that trouble you, or have we misconceived that sort of problem in terms of enlargement? There is not going to be another historic opportunity which we then take, or is there?

Sir Michael Leigh: Since I left the Commission, if anything I have become a little bit more of an optimist and have tried to take a long-term perspective. If we were to take the perspective, for example, of 2020—the Commission has its 2020 scheme—I think that there is no doubt whatever that, by 2020, the euro crisis and everything related to it will be behind us. We do not know the full outcome, but it will be resolved one way or the other. The peripheral countries will be back on a path to growth with lower consumption levels. There will be a new atmosphere in Europe. The question of Britain’s membership will have been resolved one way or the other; there may be a referendum. We will be living in a different world at that point. And then, all the major challenges which were on the table before the crisis will be back on it. These constitute the kind of historic challenge that you are talking about; that is, how Europe can maintain its global competitiveness, how it can tackle demographic issues and ageing population, and how it can formulate a policy on immigration that meets economic needs while taking into account questions about the integration of immigrants and so on. I think that we will be back to the major challenges which were set out in 2003 in the famous Sapir report and which will be really crucial to Europe’s role in the world. With the crisis behind us, those challenges will create this kind of perspective. In that context, the new member states and potential further member states will be seen as a main source of growth for the future. That will transform the attitude towards enlargement, which will bring it back on to the agenda at that stage.

Q118 Baroness Eccles of Moulton: That is all absolutely fine, but, by 2020, there will be one fundamental change that will have arisen out of the eurozone and all the rules and regs 248

Sir Michael Leigh, Senior Adviser to the German Marshall Fund of the USA, and former Director-General, DG Enlargement – Oral evidence (QQ 103-118) that are going to emanate from the Commission: it will have much tighter control over the countries that belong to Europe as we know it today. Will that not make rather a big difference to where the emphasis is going to lie? Originally, Europe was constructed for two reasons: one to help the politics so that it did not have another war and the other was to create a really strong trading area. That basis will have been very much built upon, to put it politely, by 2020.

Sir Michael Leigh: The situation will certainly have changed, but I think that the United Kingdom will find allies in its desire to maintain the single market at 27 or 28, or 29 if Iceland joins. With the EU institutions, the Commission and the European Parliament, quite a number of other member states will continue to see that as important. If there is constructive engagement on the side of the European Union, I believe that it can build alliances to maintain the single market and flanking policies at 27, 28 or 29, albeit at a time when the eurozone will be integrating more tightly. Let me go off the record.

The Chairman: Thank you very much. Those insights have been invaluable to us. Your wisdom is much appreciated and we are grateful to you for accommodating us on this visit.

Baroness Eccles of Moulton: You have made our spirits rise a bit.

Sir Michael Leigh: I genuinely believe this. The newspapers have every interest always in playing up, but I do think that there is a way out of all this.

The Chairman: There is an old European phrase about being “condemned to succeed”.

Sir Michael Leigh: Exactly.

The Chairman: That is really helpful. Thank you.

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Written evidence from Benjamin Leruth, University of Edinburgh

Enlargement of the European Union

1. The first issue that I would like to deal with is the principles behind enlargement. The committee has posed questions about those principles, materialised under Articles 2 and 49 of the Treaty on European Union. Those principles are expanded through the Copenhagen Criteria, set up in 1993 in order to overcome ‘opposition from several member states to eastward enlargement’50.

2. Article 49 of the Treaty of the European Union states that “any European State which respects the values referred to in Article 2 and is committed to promoting them may apply to become a member of the Union”. We can identify three principles in this article: Europeanness; Statehood; and values referred to in Article 2.

3. The notion of Europeanness is still debated nowadays, as the Rome Treaty and subsequent treaties avoided defining what is meant by “European”. Even though there is no legal definition of this expression, the European Commission, in a report of 1992, stressed the fact that it “combines geographical, historical and cultural elements which all contribute to the European identity. The shared experience of proximity, ideas, values, and historical interaction cannot be condensed into a simple formula, and is subject to review by each succeeding generation”51. A few clues on what constitutes the European borders were given by the European Council by the recognition of the fact that Turkey is a “European State” in the Ankara Agreement and by the rejection of Morocco’s application for EC membership in 1987 on the grounds that it is not a European country52. In a nutshell, there is no strict legal meaning of the term “European”, but this notion shall be understood in a broad sense.

4. The second criterion mentioned in Article 49 is the notion of statehood. While this criterion does not represent much of a problem for the majority of European States, some difficulties might be encountered in the case of non-recognised States. This is particularly the case for the Republic of Kosovo, which proclaimed its independence in 2008 and expressed its desire to join the European Union in the future. As Kosovo is still not recognised by all member states of the European Union, such an application would probably not be considered by the European Council. As far as the micro States of Europe are concerned, these are fully recognised by the international community and are part of various European public policies (such as the Economic and Monetary Union for Monaco, San Marino and Vatican City, or the EEA agreement for Liechtenstein).

5. Finally, a clear reference to the values referred to in Article 2 of the Treaty is mentioned. Those values are“[r]espect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons

50 Grabbe, Heather (2002): ‘European Union Conditionality and the Acquis Communautaire’, International Political Science Review 23:3, p. 250. 51 European Commission (1992): ‘Commission Report: Europe and the Challenge of Enlargement (24 June 1992)’, EC Bulletin, Supplement 3/92. 52 Some academics interpreted this rejection as the fact that the Mediterranean Sea is “a clear border line to the south”. See Hoffmeister, Frank (2002): “Changing requirements for membership”, in: Ott, Andrea and Inglis, Kirstyn (eds.), Handbook on European Enlargement: a Commentary on the Enlargement Process, The Hague: T.M.C. Asser Press, pp. 90-103. 250

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belonging to minorities”. Within the meaning of the Treaty, the principles of democracy and the rule of law have been understood as “an organic combination, so that the ‘checklist’ consists of ‘parliamentary democracy’ and the ‘separation of powers’, rather than ‘democracy’ and the ‘rule of law’ proper”53. These values have been progressively anchored to the European integration process from the very beginning, for as Robert Schuman stated in 1952, the Community would be open for all ‘free’ European States. Furthermore, this requirement for democracy was emphasised during the second enlargement process of the 1970s when Greece, Spain and Portugal applied for EC membership. Consequently, the European Council declared that “respect for maintenance of representative democracy and human rights in each Member State are essential elements of membership in the European Communities”54. Finally, reference to human rights appeared for the first time in the Copenhagen Criteria, as a sine qua non condition to join the European Union.

6. The three criteria discussed in paragraphs 3, 4 and 5 constitute political conditionality. A fourth criterion, standing outside of the wording of the Treaty, has been emphasised in the literature55: membership in the Council of Europe. The main reason for this condition is that applicant countries are expected to ratify the European Convention of Human Rights (ECHR) in order respect the values referred to in Article 2 TEU. Indeed, those values are essentially based on the accession criteria for the Council of Europe, under the third paragraph of the Preamble56 and Article 357 of the Statute. Furthermore, the Council of Europe was founded in 1949 (Council of Europe 2011) and was the first institution created in order to promote European integration, becoming “an inevitable condition for EU membership (even though it is not a written condition for accession to the EU)”58.

7. This notion of political conditionality is also present in the Copenhagen criteria. Set up in 1993, those criteria were supposed to encapsulate and consolidate the principles behind EU enlargement. These are divided into three criteria: political, economic and institutional. The political criteria state that “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”. This refers to the concept of political conditionality as mentioned in paragraph 6, and is seen as the most fundamental condition for EU membership. Its importance shall not be undermined, and criticism among older member states regarding accession of Bulgaria and Romania to the EU stated that those countries “had been allowed to join – in January 2007 – before they had sufficient progress in areas such as organised crime and corruption”59.

53 Ibid. The notion of ‘parliamentary democracy’ is defined as the requirement for “fair and free multiparty elections […] on a regular basis for the creation of a free Parliament so that the people take part in the exercise of public power” (p. 94), and ‘separation of powers’ as the requirement for the division of legislative, executive and judicial functions in different institutions. 54 European Council (1978): ‘Declaration on Democracy’, EC Bulletin, No. 3, p. 6. 55 See Kochenov, Dimitry (2005): ‘EU Enlargement Law: History and Recent Developments: Treaty – Custom Concubinage?’, in: European Integration online Papers, 9:6. 56 “Reaffirming their devotion to the spiritual and moral values which are the common heritage of their peoples and the true source of individual freedom, political liberty and the rule of law, principles which form the basis of all genuine democracy”. 57 “Every member of the Council of Europe must accept the principles of the rule of law and of the enjoyment by all persons within its jurisdiction of human rights and fundamental freedoms, and collaborate sincerely and effectively in the realisation of the aim of the Council as specified in Chapter I.” 58 Rantala, M. (2002): ‘The Council of Europe’, in: Ott, Andrea and Inglis, Kirstyn (eds.), Handbook on European Enlargement: a Commentary on the Enlargement Process, The Hague: T.M.C. Asser Press, pp. 67-74 59 Buckley, Neil (2012): ‘Membership: Currency crisis exacerbates enlargement fatigue’, in: Financial Times [online], Available at: http://www.ft.com/intl/cms/s/0/c727f85c-92c8-11e1-b6e2-00144feab49a.html#axzz2C19tuRIp [Retrieved on 10.11.2012] 251

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In 2012, reforms regarding democracy and the rule of law were still considered as insufficient by the European Commission60. In that sense, it is important to take political conditionality seriously, and encourage reforms before EU accession can be taken for granted.

8. The economic criteria require “the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union”. The legal status of the economic criteria remains doubtful (even though their necessity is proven), and they must be interpreted “with due regard to the economic dynamic of each candidate country and its ability to participate in the Internal Market”61. These criteria used to be of a lesser importance, but the recent economic crisis and unrest within the Eurozone might change the situation for future enlargement. This has already been the case for Iceland’s application for EU membership, as discussions on the economic and monetary policy are expected to encounter major difficulties.

9. The institutional criteria refer to the notion of acquis communautaire, stating that “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 notion of “ability” refers to the administrative capacity to ensure the application of EU law. By “obligations of membership”, the third Copenhagen criteria relate to the negotiation chapters between the EU and the candidate countries. Finally, “adherence to the aims of political, economic and monetary union” demonstrates the importance of these policy areas within the European integration scheme. Once again, the cases of Bulgaria and Romania show that it is important to assess correctly the states’ ability prior to EU membership, especially regarding political issues.

10. A fourth condition is also mentioned in the conclusions of the 1993 Copenhagen summit: “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”. This idea is connected to the existing institutional structure of the European Union, and in order to absorb more States, reconsideration of this structure had to be discussed between Member States. This constituted a major debate in the process related to the fifth enlargement, as ten countries were going to join the European Union at the same time and thus have an impact on the voting system within its institutions. Moreover, the notion of ‘enlargement fatigue’ (even though this notion is vague) has been increasingly used since the fifth enlargement, leading to strong divisions between Member States over the future of a wider Union.

11. In a nutshell, the Copenhagen criteria reflected the situation as it stood in 1993, and were designed to tackle the issue of the fifth enlargement. It also seems that political conditionality was underestimated in the cases of Bulgaria and Romania’s accession to the EU. Almost twenty years later, the context changed, especially from an economic point of view. The European Union is facing a strong economic and financial crisis, and questions can be raised regarding the appetite and Union’s capacity for further

60 See, for instance, European Commission (2012): Commission publishes Cooperation and Verification Mechanism (CVM) Reports on Bulgaria and Romania [online], available at: http://ec.europa.eu/commission_2010- 2014/president/news/archives/2012/07/20120718_1_en.htm [Retrieved on 10.11.2012]. 61 Hoffmeister, 2002, p. 97. 252

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enlargement. Accordingly, the committee has posed questions on the so-called ‘enlargement fatigue’ and alternatives to full membership. These are important issues due to the current economic and political situation.

12. First of all, it seems that the economic and financial crisis did not stop non-members’ eagerness to join the European Union, especially in the Balkans: in January 2012, 66 per cent of the Croatian population voted in favour of EU membership; one month later, Serbia gained the status of official candidate; and Montenegro’s application is on the right track, as the screening process started in September 2012. In Iceland, however, it seems that both the population and political elites are getting more sceptical, as a recent opinion poll showed in October 2012 that 57.6 per cent of the population opposed EU membership. Furthermore, the Left-Green Movement, second party of the government’s coalition with the pro-European Social-Democratic Alliance, shows increasing signs of reluctance regarding the accession process.

13. It should be noted that the enlargement process has slowed down sharply. For instance, former EU Enlargement Commissioner Olli Rehn mentioned, in 2009, that both Iceland and Croatia would be able to join the European Union in 2011. This is far to be the case. It shall be interpreted as a sign of the on-going ‘enlargement fatigue’. This fatigue seems to originate from the Union as a whole, as candidate countries (especially in the Balkans) are still enthusiastic about the prospect of joining the EU. The crisis plays an important role in fuelling the fatigue, but it is also due to the fact that the Union has difficulties to ‘assimilate’ Bulgaria and Romania, as stated earlier. This resulted in slowing down the process for further candidates such as Croatia, Montenegro and Iceland.

14. The notion of ‘enlargement fatigue’ is directly linked to the fourth Copenhagen criteria, developed in paragraph 10. It is thus indispensable that, in order to join the EU, the Union itself is able to assimilate candidates. In that sense, quality (“deepening”) should overcome quantity (“widening”).

15. While several non-member States are still eager to join the European Union and the Union suffers from an ‘enlargement fatigue’, what could be done in order to accommodate both parties? The notion of ‘differentiated integration’ covers a variety of arrangements that do not necessarily require EU membership. For instance, Norway’s agreements with the European Union cover about 75 per cent of EU legislation, mostly through the EEA agreement. Furthermore, Norway may be “even more sectorally penetrated or harmonised”62 than EU members as far as policy harmonisation is concerned, meaning that non-membership can still involve a great deal of integration. In that sense, some agreements (especially the EEA) offer a good alternative to EU membership. In Norway, which is considered as one of the ‘reluctant Europeans’, the EEA agreement has been commonly accepted by political elites and the population63. The main inconvenient raised by pro-European movements and parties is the fact that EEA members do not have a say in the European decision-making system.

62 Egeberg, Morten and Trondal, Jarle (1999) ‘Differentiated Integration in Europe: The Case of EEA Country, Norway’, Journal of Common Market Studies, 37(1), 133-142. 63 Some political parties, however, might call for a reform of the EEA agreement during the upcoming election campaign on 2013. The outcome of Iceland’s application for EU membership might also have repercussions on the nature of the EEA. 253

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16. Enlarging (and reforming) the EEA could be a step in the right direction. Indeed, the EEA was established in 1994 and designed as a good alternative for countries not seeking EU membership to enjoy the Single Market, as long as they fulfil some economic criteria that would be stated in clearer terms than the Copenhagen criteria. Today, the EEA counts three members (Iceland, Liechtenstein and Norway), but could accommodate potential EU members to benefit from European legislation until the ‘enlargement fatigue’ fades away. In that sense, the EEA could become a ‘waiting room’ before full membership for some candidates. Furthermore, as the future of the Economic and Monetary Union remains uncertain, it is likely to notice an increase in heterogeneity among state preferences, as well as their capabilities to adopt EU policies (especially regarding economic measures).

Concluding remarks

17. One shall not underestimate the absorption capacity of the European Union, before accepting new members. Enlargement should be beneficial for both parties: the applicant state on the one hand, and the European Union on the other hand. The main danger of accepting new members without strengthening accession criteria would be to slow down vertical integration in areas where reforms are desperately needed, i.e. regarding the economic and monetary union.

18. Furthermore, the Copenhagen criteria, even though commonly accepted, showed their limits following Bulgaria and Romania’s accession to the EU, especially regarding political conditionality. This conditionality should remain an incentive for candidate countries to join the EU, and no exception (even by setting transitional measures) should be made, as this contradicts Articles 2 and 49 of the Treaty on European Union. The legal aspect of the criteria regarding economic matters should also be reformed, to make sure that applicant states have “the capacity to cope with competitive pressure and market forces within the Union” (as stated in paragraph 8).

13 November 2012

254

Written evidence from the Liberal Democrat European Parliament Party

1. We welcome your important enquiry, and hope it can produce some clear-sighted commentary on further EU enlargement.

2. As Liberal Democrat Members of the European Parliament we are committed to making a success of British membership of the EU and, in particular, to advancing the role, efficiency and legitimacy of the European Parliament in the governance of the Union and in British politics. We sit within the group of the Alliance of Liberals and Democrats for Europe (ALDE).

3. To set a context for our responses to your particular questions, we have some general points to make. First, we remain fully committed to the prospect of enlargement and we are convinced that with the Lisbon Treaty, the European Union can both pursue its enlargement agenda and continue to deepen its integration.

4. Second despite the economic crisis that has shaken the European continent over the past years, we strongly believe that the EU can gain great strategic benefits through its enlargement policy. The road taken in this respect over the past decade has shown that enlargement benefits the EU as a whole and allows it to be better positioned to address global challenges. EU enlargement policy remains one of the most successful foreign policy initiatives the European Union has undertaken to export its values. We firmly believe that enlargement remains a long-term strategic interest of the EU and cannot be analysed only in a context of short-term difficulties.

5. Third, the prospect of accession has a significant impact on the political and socio- economic landscape of the candidate countries that should not be neglected; it acts as a real incentive for pursuing serious structural reforms and the strengthening of peace, stability, reconciliation and regional cooperation. EU enlargement has helped reunite and reconcile the continent, however Europe was still at war 12 years ago and there is still much to be done to contribute to healing the wounds left by the wars in the Western Balkans.

6. Fourth, as Liberal Democrats we have long supported expansion of the Union, which we believe is beneficial for candidate countries, for the Union and for the UK itself. However we are convinced that to remain beneficial for all, conclusions and lessons from the last phases of enlargement should be drawn and the enlargement process should be improved, not only for a more successful enlargement policy but also for a better functioning Europe.

Enlargement agenda

7. Iceland, Norway and Switzerland could join the EU on a fast track system with relative ease given their adaptation to EU law. Other European countries are at various levels of readiness.

8. As Liberal Democrats, we have clearly stated that the future of the Western Balkans

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Written evidence from the Liberal Democrat European Parliament Party

lies within the European Union. However, unresolved issues such as territorial disputes, prosecution of war crimes, protection of minorities, return of refugees and displaced persons, and property rights must be addressed as early as possible and preferably before the opening of accession negotiations and resolved prior to accession. We welcome the recent developments in the Belgrade-Pristina Dialogue, that are important not only for the two involved Governments but also for the whole region ;we also encourage the government and the parliament of the Republic of Serbia to make the most of this positive momentum created by the granting of candidate status.

9. We firmly support Turkey’s candidacy but this support is not unconditional. Turkey must continue down the path of reform, particularly in respect to freedom of the press and Kurdish rights, in order to fully meet the Copenhagen criteria and must reach a peace settlement with the Republic of Cyprus. Future failure by Member states to accept a fully compliant Turkey could have a number of damaging consequences.

10. A range of other neighbouring countries to the east and south have either no wish to join the EU or no early prospect of doing so, but are nonetheless of real importance for the Union. Any European country with an aspiration to join the EU should not be permanently excluded from the accession process. The EU should provide for enlargement for countries willing and able to meet the requirements of membership, and provide support to those neighbouring states not on a trajectory to join the EU.

11. We would also call for an in depth investigation into the issues that would be raised in the event that a Region of a Member State were to secede and to seek to negotiate membership of the EU for that Region. The EU should be in a position to provide legal clarity, certainty and transparency on the complex issues of accession criteria and the basis for negotiation which would apply in such circumstances.

The Copenhagen criteria

12. The Copenhagen criteria have stood the test of time and remain at the centre of EU enlargement policy. However, we believe that the procedures related to the Copenhagen criteria and to the enlargement process as a whole should be re-evaluated without prejudice to the ongoing negotiations, in order to set transparent benchmarks throughout the process and concrete steps towards accession. These benchmarks should serve to avoid fixing an accession date if negotiations have not yet been finalised as well as to prevent risks of backsliding.

13. We welcome the new focus on justice and home affairs, rule of law and respect for fundamental rights in the negotiations to accession and believe it should be treated as a priority and be an early benchmark in the accession process.

14. Furthermore, the economic crisis showed the interdependence between European states, and we are convinced that economic convergence should take a more important role in the accession process in order to facilitate alignment, to reduce risks of asymmetric shocks, and for a successful European integration.

15. We also believe that EU funded policies and notably the Instrument of Pre-accession (IPA) should be better linked to the Copenhagen criteria through specific and measurable objectives. 256

Written evidence from the Liberal Democrat European Parliament Party

The impact of enlargement on new and old Member states

16. Overall, the impact of enlargement has been beneficial to both new and old member states. Furthermore, evaluating the impact of membership in EU countries should take into account the clear impact of the economic climate as well as domestic policies, mismanagement of EU funds, and problems not stemming from EU membership but being the result of undisciplined domestic economic policy.

17. The EU is the economic anchor of all new member states, but is often blamed unjustly for bad domestic policy decisions. Trade developments have become the main success of enlargement and an increase of Foreign Direct investments has been seen in the new member states post-accession. Despite the Eurozone crisis, the introduction of the Euro in some of the new member states is largely seen as favourable for the business sector. In most countries, transnational companies and their subcontracting networks have been the main winners of accession while SMEs have been less successful at exploiting the opening up of the single market.

18. Tough restrictions imposed by the EU15 on Romania and Bulgaria are making them feel « second rank EU citizens », which risks having a negative impact on the public perception of the EU. In the case of Bulgaria, the safeguards clauses, and the possibility to suspend full membership rights in specific policy areas, unfortunately remain on the European agenda. Bulgaria's EU accession started with uncompleted reforms, particularly in justice and home affairs, and on top of that seems to be suffering from «reform fatigue ». Romania and Bulgaria still have a major difficulty in absorbing and managing EU funds, and obvious difficulties in the areas or rule of law and the fight against corruption.

19. The enlargement process has a significant impact also on the EU institutions themselves serving as an opportunity to better define its identity, goals, values and policies. With regard to European foreign policy, we have perceived a shift of priorities to the East, with a growing interest in EU-Ukraine and EU- Russia relations. In terms of decision- making, the impact on the European Parliament has been limited, mainly because of parliamentarians voting more by political affiliations than by nationalities. Parliamentarians coming from new member states have however taken the opportunity to raise specific issues that were maybe more marginalised before, and are clearly bringing new perspectives into the political debate.

20. The enlargement opened new markets for the old member states but did not bring a massive impact in terms of GDP. The impact of labour migration from the new member states on the old member states has been highly variable. In some cases, e.g UK, there have been clear economic benefits, but a degree of social resentment. The economies of the old member states have been shaken by the economic crisis and have had to take major austerity measures. Many still need ambitious structural reforms to regain competitiveness. We firmly believe that the positive impact of enlargement will not be recognised without further structural reforms to deliver a more competitive Europe and that the economic crisis has masked the economic benefits of enlargement. Another impact of enlargement is that the old member states that have traditionally benefited most from the cohesion policy or the CAP will lose EU funding through transfers to new member states. 257

Written evidence from the Liberal Democrat European Parliament Party

The road towards an improved enlargement policy 21. The EU enlargement policy needs to remain credible and supported by the public both in the EU and in the candidate and potential candidate countries.

22. The EU and the countries wishing to join have to fulfil all obligations, and respect all commitments. The monitoring of progress in the accession process should therefore be maintained and even further intensified, along with a more efficient assistance programme better linked to the criteria. We are also convinced that we need to make it clearer that the enlargement process is not only about the simple transposition of the acquis communautaire but its effective implementation and respect in the long term. Given the difficulties encountered with Hungary and Romania over the year in this respect, we ask the European Commission to work out a detailed proposal for a monitoring mechanism; aware that the older member states are not perfect and that backsliding from EU core values is a constant threat, and to prevent the creation of any double standards, such a mechanism should also be in place for older member states.

23. As Liberal and Democrats, we believe that much more needs to be done to engage the public in the enlargement policy. During the last enlargement, public opinion in the EU 15 was much less positive than the positions of governments. The EU enlargement policy should be associated with a more effective communication policy, in order to trigger an open debate on the consequences of enlargement. Public and democratic support of EU integration is key to the success of European enlargement both in member states and candidate countries.

24. The European Commission should give a bigger priority and adopt a new approach to the fight against corruption, trafficking and organised crime, as enlargement gives new opportunities in this respect ; however Member states opting out of important and useful JHA measures will drastically reduce the potential for tackling these issues.

25. Furthermore, the credibility of the enlargement process goes hand in hand with an evaluation of the EU's integration capacity that comprises the impact of further accession, on a case by case basis, on the capacity of the Union to fulfil its political objectives, the impact on the institutional framework of the Union and its ability to deliver efficient and effective governance, and the impact on financial resources of the Union.

26. The wish of our European neighbours to join the EU shows that despite the economic crisis, the EU remains attractive to its neighbours. However this does not mean that there is no danger of enlargement fatigue and that we should stop working for a better functioning and more competitive Europe. From the beginning of the enlargement process in 1973, the enlargement policy was always combined or preceded by ongoing deepening: the common trade policy in the 70s and the creation of a European regional Fund; the improvement of the CAP through direct payments and the Single market act in the mid 80s, a more important cohesion policy and the EMU project before the 1995 enlargement. Despite the inherent difficulties, the widening and deepening process of the EU should go hand in hand. The EU has to keep reforming itself to be able to welcome new members and to guarantee a secure, democratic and prosperous future which is the aspiration of candidates to membership.

258

Written evidence from the Liberal Democrat European Parliament Party

27. The phenomenon that was expected from the last enlargement waves, the development of an EU with a « variable geometry » or with « inner and outer circles » has not yet taken place, in particular as the Eurozone and the Schengen area have progressively been extended and most of the new member states aspire to join them at some point. The risk of development of this "variable geometry" is however still there as the Eurozone is now taking major decisions to deepen their Union. The Treaties of accession for the new Member states made the accession to the Eurozone, when they meet the criteria, a condition to joining the EU. However for member states not meeting the criteria yet, or for those, such as the UK, that do not have such a clause and do not wish to join either Schengen or the Eurozone, this development of "inner and outer circles" of the EU might be a challenge we have to face in the near future.

14 November 2012

259

Kadri Liik, European Council on Foreign Relations – Oral evidence (QQ 1-45)

Transcript to be found under Dr Steven Blockmans

260

Written evidence from Professor Alan Mayhew, University of Sussex

Written evidence from Professor Alan Mayhew, University of Sussex Note of caution: my remarks are based on direct experience of a narrow selection of countries/organisations (EU Commission, Poland, Lithuania, Croatia and Ukraine) as well as my academic work. My remarks are therefore perhaps not to be generalized.

Principles behind enlargement

1. Do Articles 2 and 49 of the Treaty of the European Union provide the right principles for any further enlargement of the EU?

Articles 2 and 49 of the Treaty form of an adequate basis for decisions on enlargement. To some extent in the past the problem has been the political interpretation of these articles. Article 49 states that any European state which respects the values referred to in article 2 and is committed to promoting them may apply to become a member of the Union. Certain countries which joined the Union in 2004 or 2007 declared a respect for the values of the Union but lacked a commitment to promoting these values. It is extremely difficult to deal with a member state which does not respect these values once that member state has joined the Union and it is therefore essential that a much deeper analysis is made of the real commitment to the EU’s values before a country is allowed to join. However as the cases of certain old member states show, in democracies you can never guarantee the good behaviour of governments over a long period.

The Copenhagen criteria have the advantage of being so vague that the EU can interpret them as it wishes. This has obviously been seen in acceding countries as a political trick because they need clarity and certainty in their preparation for accession. Of course the Copenhagen criteria have been added to over the years in various European Councils (Madrid in 1995 added administrative capacity).

However more detailed conditions have been laid down in the accession partnerships, the results of which however were not always thoroughly evaluated. Conditionality has also been tightened in the most recent negotiations and the negotiation phase of accession has therefore become far more complex for Croatia and Turkey, with the addition of criteria which had to be met for the opening and closing of chapters.

Nevertheless far more attention needs to be paid by the EU to the level of corruption and the quality of the administration in countries preparing for accession. Corruption exists in all member states of the Union (BAE and Siemens!) but it rarely reaches a level which significantly affects government policy or the quality of life of individual citizens. A high level of corruption usually goes alongside an inadequate state administration, including the judiciary, matters which also need to be considered more seriously. These issues were probably played down in certain of the 2004/7 accession countries but really need to be given high priority in future accessions (in the Eastern neighbourhood for instance). There is no doubt that in many countries of Central and Eastern Europe the preparation for accession to the EU acted as an anchor for economic and administrative reform and for the development of functioning democracies respecting the rule of law. This anchor could only be really effective if full accession to the Union was a realistic goal. The real challenge 261

Written evidence from Professor Alan Mayhew, University of Sussex in a period of enlargement fatigue, both in elites and the population in general, is to find an alternative goal to accession which will nevertheless provide a firm anchor for reform. The search for an effective alternative has so far been without success (see below).

There is a real dilemma then for the EU, a dilemma which was clearly seen in political statements around the fifth enlargement. The promise of accession is a firm anchor for European countries in urgent need of reform but reform takes time and may not be complete by the end of the negotiations. Yet when these countries have acceded there is no anchor for further reform and no incentive to do it. Should the Union take the risk for the benefit of the citizens of the acceding countries or should it refuse accession until it is sure that key reforms have been completed? Perhaps it should be easier for the European Court to take measures against member states which appear to violate the terms of article 2, or indeed other articles, of the Treaty.

The impact of EU membership on new Member States

3. For new Member States, what is the economic and social impact of EU membership on a) the country, b) regional areas, and c) its citizens? You may wish to comment on the following:

The dynamics of trade flows obviously change when a country accedes to the EU. This can be established for all the countries which joined the EU in 2004/2007. It would be astonishing if complete integration with the internal market of the EU did not lead to changes in trade flows in both directions. Perhaps more interesting in the case of the fifth enlargement is that trade flows changed radically well before accession, but this is not surprising as most of these countries had previously had centrally planned economies.

An interesting element of the Copenhagen criteria was the phrase ‘the capacity to cope with competitive pressures and market forces within the Union’. The worry that economies coming out of central planning would not be able to compete against efficient economies of Western Europe was a fear held by many people in the acceding countries in the early period of preparation for membership. In the specific case of countries undertaking a transition from central planning to the market economy, there would obviously be whole sectors and groups of workers who would suffer, not really from EU competition, but because they were producing things extremely inefficiently or things which nobody wanted. However in most cases, and thanks to generally responsible macroeconomic policy and growing FDI, the transition to a market economy involved only very short periods of high unemployment and falling living standards for certain parts of the population. By the time of accession most of the economies were growing reasonably healthily.

The signing of Association Agreements in the 1990s was an extremely important turning point for FDI. However the level of foreign direct investment depends partly on the size of the local economy and proximity to major markets. Poland attracted a great deal of FDI 262

Written evidence from Professor Alan Mayhew, University of Sussex thanks to its large local market and its proximity to Germany. Hungary, the Czech and Slovak Republics also did well, especially because of the proximity to Germany and Austria. However this cannot be relied upon for very small economies distant from the main markets of western Europe, which may also have business environments which are not attractive for FDI. These economies may indeed suffer as they can be more easily supplied from larger member states once they became EU members.

SMEs found their development in the early stages of transition prior to accession frustrated by the inadequacies of the banking system, but as EU banks bought into the sector the situation improved. FDI helps SMEs improve productivity and quality because foreign companies impose international quality standards. They frequently begin by procuring imports from their home country but then as local suppliers grow they gradually change to local procurement.

There is little doubt that in the medium term consumers gain from the preparation for accession and from accession itself. Market opening allows them a wider choice of goods while increased competition usually replaces a rather less competitive environment. However over a transitional period, higher levels of unemployment and stagnant nominal incomes together with significant rates of inflation, frequently led to certain groups in society suffering reductions in the level of welfare. Usually after a period of adjustment this effect became less serious, although for the elderly living standards today may be no better than they were prior to the fifth enlargement.

It is extremely difficult to generalise about the impact which preparation for accession and accession itself had on the quality of macroeconomic policy-making. In Poland, prudent macroeconomic policy has served the country well and allowed it to continue growing through the global financial crisis. In the Baltic states however booming real estate and financial markets led to a financial meltdown in 2008-9.

5 . Are new Member States (i.e. from the 2004 and 2007 enlargement rounds) satisfied with EU membership, or are they disappointed? Why? Is this true for both the political elites and the general population? Is Croatia satisfied with their accession process and the arrangements in place for them to join the Union?

If one compares GDP per head of the population in purchasing power parities as a percentage of EU - 27 GDP in 2004 and 2011 one gets a mixed picture. Some countries have not closed the gap very significantly, Czech Republic, Hungary, Slovenia, Cyprus, while others have made great strides forward, Poland, Slovakia, the Baltic countries (in spite of the 2009 downturn), Bulgaria and Romania. None of the new member states have gone backwards on this measure.

This suggests that on average the new member states should be positive about accession. However the average numbers do not tell us anything about the distribution of income or the way in which the public perceives well-being. If one believes Eurobarometer, it suggests that with the exception of Hungary (which has the reputation of being collectively miserable), Romania and Bulgaria, people in the new member states are generally satisfied with their lives. It is of course impossible to separate out the impact of EU accession and the global financial crisis and indeed other significant factors in the Eurobarometer results

263

Written evidence from Professor Alan Mayhew, University of Sussex

Elites in these countries who are directly involved in EU affairs are generally speaking relatively content to be at the table in all EU negotiations. However one of the great fears of elites in the new member states which have the ambition to be at the heart of EU policy- making is that, as non-members of the Eurozone, they will effectively be totally marginalised as the Eurozone becomes the only significant policy-making institution in the EU and those in the EU but outside the Eurozone will effectively be left without a voice and will be progressively isolated. Having fought their way ‘back into Europe’ they do not want to be cut off again from the mainstream.

The impact of enlargement on the Union

6. What is the economic and social impact of EU enlargement on the existing Member States? You may wish to comment on the following:

i. Trade integration and the flow of foreign direct investment; ii. The benefits or pitfalls for small and medium-sized enterprises (SMEs); iii. The benefits for consumers; iv. Accession’s impact on wages and living standards; v. Macro-economic discipline; and vi. Labour migration to and from new Member States;

Trade and FDI obviously depend partially on geography. So whereas enlargement has been extremely important for Germany, Austria and to some extent the Nordic EU countries, it has been rather unimportant in trade and FDI terms for southern Europe.

Germany has undoubtedly benefited considerably from enlargement. Rapidly developing countries like the new member states require investment goods, infrastructure services as well as consumer products. Germany was well-placed to supply these demands. However Germany gained just as much from the cost reduction possibilities which opened up with accession. German companies, both large and small, invested heavily in shifting certain parts of their production chain to lower-cost locations in Poland. Productive investment in Germany over the last decade was relatively low as a proportion of GDP but to this should be added the considerable investment which went into production in Poland.

In some countries, and notably in France, the question of ‘delocalisation’ was raised, as some companies closed production sites in the old EU only to relocate in the new member states. It is statistically extremely difficult to show that any longer term negative impacts arose from ‘delocalisations’, though there was obviously considerable local disturbance and pain. Many of the companies would have closed plant even if there had been no enlargement. As the decade went on, the outcry about competition from the new member states tended to be reduced. There were however significant questions raised about posted workers undercutting local or national wage agreements (Laval in Sweden).

It is quite difficult to prove that labour moving from the new member states to the old member states had a significant effect on levels of employment or wages in the latter. Normally one would expect some restraining impact on wage hikes but in a country with a general minimum wage, this effect is unlikely to have been more significant than other factors in the economy tending to hold down wages of unskilled and semiskilled workers.

264

Written evidence from Professor Alan Mayhew, University of Sussex

What is clear is that the migration of labour from the new member states to those member states which allowed free movement from the first day of accession reached proportions well above what had been estimated prior to accession. For the United Kingdom, with a relatively large group of poorly educated and trained workers, this migration of young and motivated workers was of undoubted economic benefit. The scale of the migration however lead to high profile anti-immigrant and anti-foreigner agitation in certain parts of the press and in the extreme anti-immigrant UK political parties. Obviously as the global economic crisis hit the UK this negative feeling intensified.

Like the old member states, the new member states have been interested in those policies which have a direct impact on their economies. Poland has therefore been very keen on the development of the Common Agricultural Policy, although this position has been questioned both within the Polish government and amongst economists in Poland. Far more important has been the Structural Funds which are considered by the new member states to be almost of existential importance to them. Interestingly Poland has always rejected the British view that the structural funds should be concentrated on the poorest countries, even though this would seem to be sensible for them. But Poland’s argument goes that if Spain, East Germany, parts of France, Belgium and the UK do not receive anything from cohesion policy, these countries will cease to support the whole policy and Poland will lose out eventually. I understand the argument but disagree fundamentally with it. I argued this in a paper for the Polish Foreign Ministry prior to the MFF negotiations on how to use the EU budget to stimulate growth - but with no apparent impact on Polish policy!

Obviously the whole question of visas, the facilitation of free movement, membership of Schengen and labour migration have all been major issues for the new member states. While free movement exists within the enlarged EU, it is worth remembering that these issues are of the highest importance for countries waiting to join the EU (Western Balkans) and also for countries like Ukraine which are (sometimes) keen on integrating with the EU.

The EU has always been slow to realise that any accession has significant impacts on neighbouring countries. This was the case with the fifth enlargement and, with the accession of Croatia, the question is worthy of considerable attention in the Western Balkans. (See answer to question 10.1.2)

The appetite and capacity for further enlargement 10. What impact should the ongoing economic and financial crisis, particularly in the euro area, have on further enlargement?

Obviously the Euro crisis is dominating every agenda in the EU and most national political agendas in the serious member states. In this climate it is hardly likely that much progress 265

Written evidence from Professor Alan Mayhew, University of Sussex will be made on further enlargement, in spite of the efforts of the European institutions. This is extremely frustrating and destabilising for countries which have been preparing for accession for several years – Macedonia is the prime example if one leaves Turkey aside.

1 2. Do a) the EEA, b) the European Neighbourhood Policy, or c) the possibility of a ‘privileged partnership’ offer viable alternatives to full membership? Could these circumvent ‘enlargement fatigue’, either as permanent alternatives or as stepping stones to full membership?

This is a key question for the EU’s European foreign policy. If the EU is going to politically close down the accession option in spite of article 49, are any of the other options for integration sufficiently convincing for European third countries to reform their economies and institutions to converge with the values and policies of the EU?

European Neighbourhood Policy has been used to underline to the EU’s neighbours that accession is not really an option except perhaps in the very long term. Instead Association Agreements have been offered with a deep and comprehensive free trade area agreement which could lead eventually to EEA status. While the EEA might be acceptable to a small developed country which does not wish to join the EU, it is most unlikely to be acceptable to a medium-size country such as Ukraine (or the UK!). Given the state of regulation and quality of the administration in neighbouring countries to the East and South, the achievement of the EEA status would anyway be decades away.

I think it is wrong for politicians in the member states for domestic political reasons to rule out accession even in the long term for countries to which article 49 applies - and this both for legal and policy reasons. Article 49 is clear and it is unwise for an organisation not to respect its own legal constitution. However ruling out accession in political statements eliminates one of the principal elements of an external anchor for reform. It is quite clear that none of the countries in the EU’s neighbourhood (with the exception of Norway and Switzerland if they ever wanted to join) would be able to meet the conditions for accession for several decades, but keeping open the possibility of accession is an important element of any integration package offered to European third countries.

The Association Agreements being negotiated with East European neighbours are unconvincing because key elements of the EU’s integration offer remain extremely vague. It has to be clear that the EU binds itself to open specific parts of the internal market once the acquis in that area, together with the competition policy and state aids acquis, has been implemented satisfactorily. At present, in the case of Ukraine for instance, the Association Agreement is relatively clear on what Ukraine has to do, but is not at all clear on the rewards which the EU will give to Ukraine once it has implemented parts of the acquis.

It should be remembered that the EEA was an EU attempt to invent an alternative to full accession and this was rejected by the majority of the states which initially formed the EEA. Many other proposals have been made for Europe-wide institutions which could combine the EU with non-EU European states but with the objective of preventing these third states applying for accession to the EU, but these have also failed. Offering Association Agreements with clear and binding steps towards integration with the EU and offering more financial help to cover the costs of this integration and greater participation in EU affairs, while keeping open the long term possibility of article 49 accession could possibly be attractive to certain neighbours. However governments in the EU are clearly not going to consider relations with the neighbours seriously in the near future, would probably not be prepared to offer binding 266

Written evidence from Professor Alan Mayhew, University of Sussex steps towards opening the internal market and would certainly not be prepared to offer more finance. Further developments in this area may well have to wait until enhanced integration within the Eurozone, together with a separate Eurozone budget, becomes a reality.

Conclusion

The enlargements of the EU have in general strengthened the organisation and enhanced its international reputation. It is worth remembering that the main existential crisis of the EU, the Euro crisis, has nothing to do with the new member states but with the profound weaknesses in economic management in the old member states.

However, too little attention may have been given in the past to inadequacies in the administrative system and to levels of corruption in acceding states. In future these areas in particular need to be more thoroughly monitored and the possibilities for ensuring that countries which join the Union adhere to the terms of article 2 of the Treaty also when they are full members need to be enlarged.

The majority of the new member states have gained politically and economically from accession, while the same is true for the old member states, even though this is disputed in the popular press and by some political parties. The power of the accession promise has been seen in the reform of economies in central and eastern Europe and also in the relative pacification of the Western Balkans. In the Western Balkans the danger is that while the countries in the region prepare for membership of the EU, they find it difficult to meet the enhanced conditionality for accession. In the rest of the neighbourhood the fact that leading EU politicians appear to rule out accession even in the long term, makes the creation of a credible longer term integration package for these countries more difficult.

27 November 2012

267

Written evidence from the National Farmers’ Union (NFU)

The NFU welcomes the opportunity to submit written evidence to the House of Lords EU committee inquiry into the impact of EU enlargement. The committee has asked the NFU to comment on two specific questions from the inquiry, which are laid out below. The responses have come from the NFU British Agriculture Bureau (BAB) in Brussels.

The NFU represents more than 55,000 farming members in England and Wales. In addition we have 41,000 countryside members with an interest in farming and the country.

7. What are the political and constitutional effects of enlargement? You may wish to comment on the following: i. The dynamics of decision-making in the EU.

Enlargement - impact on decision making • As a general statement decision making in Europe has become much more difficult and cumbersome with enlargement. As the number of people around the table grows and the views represented become wider, the ability to come to meaningful and satisfactory conclusions on all dossiers is more difficult. Given limited speaking times and full agendas it is also more difficult for ‘real’ and meaningful discussion to take place at the formal meetings. These discussions therefore inevitably happen in a more informal way which can lead to less transparency. • Although the NFU British Agriculture Bureau (BAB) in Brussels has no formal statistics on this it is the view of our staff in the BAB office that the form the EU legislation itself has changed in favour of EU Directives rather than EU Regulations. Regulations are the most direct form of EU law and are directly applicable in every member state similar to national law. Directives however normally leave member states with a certain amount of leeway and allow more flexibility on how to achieve the goals of the directive. They take account of national law already in place and of differing national situations. As Europe grows and aims to legislate for so many different countries with differing circumstances, it seems that Directives are more common and a more effective way of legislating at an EU level. • The larger the EU the more difficult it may be to get agreement on issues such as the EU budget which require unanimity. Decision making and compromise is made more difficult if every member state has the power to veto an agreement. • Enlargement also means that the number of MEPs increases. Depending on the politics of the new states some of the parties in the European parliament may be strengthened. • Rotating presidency – the larger the EU the less opportunity each Member states gets to be at the helm and drive its policy priorities. The presidency chairs the Council meetings, determines agendas and sets the programme. When Europe was smaller it was easier for each presidency to add its own ‘flavour’ to proceedings. However now the presidency works in ‘trios’ which means that 3 member states work together for an 18 month period each taking 6 months at the helm. Therefore, compared to previously, there is also a question mark over genuinely how much each presidency can really drive its own policy in comparison to when the EU was smaller as compromise is needed from the start on the 6 month programme. This can be a positive or a negative thing.

268

Written evidence from the National Farmers’ Union (NFU)

Enlargement - impact on agriculture

• Enlargement can be a positive thing for UK famers in terms of access to new markets but it is up to the UK industry to exploit this opportunity properly. • Most of the 12 member states that most recently joined the EU have large agricultural sectors. Despite this there was no increase in the CAP budget when they entered the EU. It is incredibly unlikely that the CAP budget would increase to accommodate any further enlargement which obviously means fewer resources for farmers in existing EU member states. • With the 2004 enlargement a number of the member states that joined the EU had a farming structure very different to the UK that was more fragmented and inefficient. This situation is likely to be repeated with future enlargement. This can result in the CAP and other policy being driven in the opposite direction to that preferred by the UK. For example where the UK and others might want to see a movement of the CAP towards more modern, productive farming that is more focused on the market, many of the new member states want to maintain the traditional support. • Experience has shown that the ability of some new member states to implement policy is much weaker. This can lead to distortions. Most recently issues have arisen on animal welfare legislation where extensive and expensive measures have been taken in the UK to comply with EU legislation. Some new members states struggled to implement this legislation and did not incur the costs of UK producers. However they continue to compete on the same market despite having lower costs and standards of production e.g. the welfare of laying hens directive and the Directive on the protection of pigs. • In terms of other policies that impact on agriculture previous enlargements have meant that some policies needed to be reviewed. This has not only resulted in the polices being opened up to accommodate the entry of the new member states but has resulted in the complete review of a number of policies. For example, although not the only motivation, enlargement was one of the reasons cited for the need to review the regulation on the registration of pesticides in the EU. This legislation changed considerably with resulting negative impacts on agriculture.

30 November 2012

269

Written evidence from Associate Professor Susan Senior Nello, University of Siena

Written evidence from Associate Professor Susan Senior Nello, University of Siena In replying to these questions I have used extracts from my book: Susan Senior Nello, (2012) The European Union: Economics, Policies and History, McGraw Hill, Maidenhead

Principles behind enlargement 1. Do Articles 2 and 49 of the Treaty of the European Union provide the right principles for any further enlargement of the EU? 2. The Copenhagen criteria expand upon these principles to provide a more detailed framework for eligibility to join the Union. Do these criteria fully encapsulate the principles behind EU enlargement?

In 1993 the Copenhagen European Council agreed that ‘accession will take place as soon as the applicant country is able to assume the obligations of membership by satisfying the economic and political conditions required’. The conditions were first drawn up for the CEEC (Central and Eastern European countries) countries, but were subsequently extended to apply to all candidate countries and entail that:

• The applicant state must have a functioning market economy with the capacity to cope with competitive pressures and market forces within the EU; • The applicant state must have achieved stability of institutions, guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities; • The applicant state must be able to take on the obligations of membership, including adherence to the aims of political, and economic and monetary union.

At the Copenhagen Summit it was also stipulated that enlargement is subject to the condition that the EU is able to absorb new members and maintain the momentum of integration. The 1995 Madrid European Council also required the candidate countries to adopt adequate administrative and judicial capacity to put EU rules and procedures into effect.

The accession criteria are presumably intended to provide some kind of objective basis for selecting countries ready to join the EU, as well as indicating to the applicant countries the tasks they are expected to perform. The introduction of the Copenhagen criteria would therefore seem aimed at replicating the experience of the Maastricht criteria but in a different field, that of enlargement.

However, although there is a certain flexibility and political leeway in deciding whether the Maastricht criteria have been met, this is far more the case for the accession criteria. This arises from the number of criteria and, in some cases, from the vague and imprecise nature of the concepts involved. This is the case, for instance, in deciding whether a country has a ‘a functioning market economy’ or the ‘capacity to cope with competitive pressures’. There are different models of market economies, and no indication is given as to which model is appropriate, or how to assess when an economy has ‘arrived’. In deciding whether a country is ready to cope with competitive pressures in an enlarged EU, a detailed analysis 270

Written evidence from Associate Professor Susan Senior Nello, University of Siena of its economy is necessary, together with predictions about which sectors will be able to cope in the internal EU market.

For other criteria, such as the obligation to take on the aim of political union, or the requirement that the momentum of integration can be maintained (which presumably requires some form of enhanced co-operation or flexibility) the objectives in question are far from being clearly defined.

The simple rule ‘when a country meets the accession criteria, it can join the EU’ is misleading given the degree of discretion in deciding whether the accession criteria have been met. In the end choice of who joins when becomes a political issue.

Though at the time of the Copenhagen European Council no indication was given with regard to the weights of the different criteria, subsequently the European Commission indicated that predominance was to be given to the political criteria, so a country must fulfil these before joining and must be making substantial progress towards meeting the economic criteria. The European Commission publication of 1997, Agenda 2000, stresses that ‘the effective functioning of democracy is a primordial question in assessing the application of a country for membership of the Union’.

Political criteria were introduced into the Amsterdam Treaty and taken up as Article 2 (TEU) of the Lisbon Treaty, which states: ‘the Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities…’. According to Article 49 (TEU), any country that respects these values and is committed to promoting them may apply to become a member of the Union. It is mainly on the basis of the political criteria (including treatment of minorities) that the European Commission continues to express misgivings about Turkey.

The EU has repeatedly emphasized the need for regional co-operation and good neighbourly relations before accession, (though this was unhappily forgotten in the case of Cyprus), and has stressed that this is also a condition for the former Yugoslav Republics of South-Eastern Europe.

Partly as a result of the experience of the 2007 enlargement, greater emphasis is now placed on the need to combat crime and corruption in the candidate countries. A Special Co-operation and Verification Mechanism had to be set up in Bulgaria and Romania to assist in reform of the judiciary and the fight against crime and corruption after accession.

The impact of EU membership on new Member States 3. For new Member States, what is the economic and social impact of EU membership on a) the country, b) regional areas, and c) its citizens? You may wish to comment on the following: i. Trade integration and the flow of foreign direct investment; 6. What is the economic and social impact of EU enlargement on the existing Member States? You may wish to comment on the following: i. Trade integration and the flow of foreign direct investment

Between 1991 and 1996 the EU signed ‘Europe Agreements’ with 10 CEECs deemed to have 271

Written evidence from Associate Professor Susan Senior Nello, University of Siena made sufficient progress in economic and political transition (these were the same 10 that were subsequently the first to start accession negotiations). The Europe Agreements were the basic legal instruments covering the relationship between the EU and the CEEC(10). The Agreements covered trade-related issues, political dialogue, legal approximation, ‘phased introduction’ of the four freedoms (though the EU failed to grant any access to workers beyond what was guaranteed by its member state) and co-operation in other areas, including industry, environment, transport and customs.

The Europe Agreements created a free trade area between the EU and associated CEECs. Because the CEEC partners needed more time to become competitive, the tariff cuts were asymmetric, with the EU proceeding more rapidly. The removal of tariffs on certain sensitive sectors such as steel, and textiles and clothing was to be phased over several years, but by 1998 most restrictions on industrial products had been removed. The concessions granted on agricultural trade were less favourable than in other sectors, and it was only in 2003 that agricultural trade with the new member states was liberalized for products meeting EU standards.

As a result of the provisions of the Europe Agreements, a free trade area was in place before enlargement and what is significant about the level of trade between the EU and CEECs is the speed of its reorientation from Eastern to Western markets, also thanks to the Europe Agreements. According to Eurostat data, by 2004 the EU accounted for 73 per cent of the trade of the new member states (rising to 76 per cent in 2007), a share similar to the old member states. Trade between the EU(15) and new member states tripled from around €150 billion to €450 billion in the decade leading to 2008.

EU tariffs towards the rest of the world were also generally lower than those of the acceding countries, so it was widely believed that there would be little trade diversion. After enlargement trade of the new member states with the rest of the world continued to expand confirming the view that trade diversion was limited.

For many years the most dynamic part of FDI flows within the EU was between the EU(15) and the new member states (NMS). The NMS were able to attract FDI due to their geographical location and cost advantages, but also for reasons of market access. However, as a result of the economic crisis FDI to the NMS halved in 2009, shrinking back to the 2005 level. FDI outflows from the NMS proved more resilient to the crisis than the inflows to these countries (also because of capital repatriation), falling by only a quarter in 2009.

Many studies emphasize the overall positive impact of FDI and outward processing trade (or the international fragmentation of the production process) in the enlargement process Benefits include the stimulation of investment, exports and employment, as well as knowledge spill-overs, better organization, competition, and improved quality and variety of products. FDI was also considered to offer opportunities to the EU (15) to increase global competitiveness by exploiting complementarities.

With regards to the costs to the EU (15) because of relocation of industry, the literature finds that results differ according to sector. For example, European Commission (2009)64 finds that employment in the old member states is negatively correlated with the rise in

64 European Commission (2009) ‘Five years of an enlarged EU’, European Economy, No 1, Brussels.

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Written evidence from Associate Professor Susan Senior Nello, University of Siena employment as a result of FDI in some sectors (food, clothing, publishing, communication equipment, office machinery and vehicles), while the reverse is true for other sectors (machinery, furniture, medical instruments, chemicals and tobacco). With the economic crisis fears of negative correlation have grown in the EU (15), while certain new member states have expressed concern at vulnerability because some sectors such as banking are so extensively foreign owned.

4. For new Member States, what are the political and constitutional effects of EU membership for a) Member States, b) regional areas, and c) citizens? You may wish to comment on the following: i. The dynamics of decision-making;

The dynamics of decision-making depends also on constellations of bargaining power and formal decision-making rules over time. These may enable a net loser at the time of enlargement to ensure a guarantee of compensation at a later stage from the winners. What then becomes more important in the accession negotiations is the voting power of the country in the Council and EP (though the Council is decisive as the simple majority threshold in the EP on most questions is lower than that of the Council.

5. Are new Member States (i.e. from the 2004 and 2007 enlargement rounds) satisfied with EU membership, or are they disappointed? Why? Is this true for both the political elites and the general population? Is Croatia satisfied with their accession process and the arrangements in place for them to join the Union?

Croatia formally applied for EU membership in February 2003, and following a favourable Opinion by the European Commission, Croatia was granted candidate status by the European Council in June 2004. The EU interpreted Croatia’s failure to deliver General Ante Gotovina to the International Criminal Tribunal on the former Yugoslavia as lack of respect for the Copenhagen political criteria, and the European Council of March 2005 decided to postpone the start of accession negotiations. Screening only began in October 2005 after General Gotovina had been handed over to the ICTY, and during the course of 2005 support for EU membership as measured in opinion polls of the Croatian population fell substantially. Settlement of a border dispute with Slovenia in 2009 helped to open the path towards accession. Croatia is due to join in July 2013.

3. For new Member States, what is the economic and social impact of EU membership on a) the country, b) regional areas, and c) its citizens? You may wish to comment on the following: iv. Accession’s impact on wages and living standards in ‘new’ Member vi. Labour migration to and from new Member States.

6. What is the economic and social impact of EU enlargement on the existing Member States? You may wish to comment on the following: iv. Accession’s impact on wages and living standards; vi.Labour migration to and from new Member States.

Analysing the EU labour market after enlargement, Boeri and Brücker (2005),65 updated as

65 Boeri, T. and H. Brücker (2005) Migration, Co-ordination Failures and EU Enlargement, Discussion paper 481, DIW (Deutsches Institut für Wirtschafts forschung, Berlin, www.diw.de/deutsch/produkte/publikationen/discussionpapiere/docs/papers/dp481.pdf accessed 22 December 2010. 273

Written evidence from Associate Professor Susan Senior Nello, University of Siena

European Integration Consortium (2009) both find that wages will decline slightly in receiving countries and increase in the sending countries in the short run, while the overall impact on the aggregate wage level is neutral in the long run. The aggregate unemployment is found to increase slightly in receiving countries and fall slightly in the sending countries in the short run. European Integration Consortium (2009)66 finds the overall level of unemployment to shrink slightly in the enlarged EU.

Kahanec and Zimmerman (2010)67 confirm that the effects of the 2004 and 2007 enlargements on wages and employment are small and hard to detect, and also argue that the issue of whether immigrants are high-skilled or low-skilled labour is crucial to the analysis of the impact of immigration on the economy of the recipient country.

After 1989 some experts predicted large migration flows from CEECs to Western Europe as a result of lower levels of income in those countries, and the newfound freedom of citizens of those countries to travel abroad. These fears grew as the prospect of EU enlargement drew closer.

According to European Integration Consortium (2009),68 in 2001 there were about 900 000 from the CEEC(8) that joined the EU in 2004 residing in the EU(15), most of whom were concentrated in Germany, Italy and Austria. This rose to about 1.9 million in 2007. In the UK there was an estimated 609,415 from the CEEC(8) and 40,023 from Bulgaria and Romania in 2007. During the 2001-2007 period the number of foreign residents from Bulgaria and Romania increased from 700 000 to almost 1.9 million.

Various studies attempted to estimate the long-run effect of migration from these new member states. Many of these studies estimated the long-run migration potential from the CEECs to the EU(15) as being between 3 and 4 per cent of the CEEC population and, therefore, manageable.

European Integration Consortium (2009)69 estimated that the stock of migrants from the CEEC(8) would increase from 1.9 million in 2007 to 3.8 million in 2020 under existing institutional arrangements, and to 4.4 million when freedom of labour movement is introduced by all member states. The stock of migrants from Romania and Bulgaria was estimated to rise from 1.9 million in 2007 to 3.9 million in 2020 under existing immigration arrangements and slightly more than 4.0 million with free movement of workers.

Agriculture frequently threatened to prove a stumbling block in the enlargement process.

66 European Integration Consortium (2009) Labour mobility within the EU in the context of enlargement and the functioning of the transitional arrangements, Study carried out on behalf of the Employment, Social Affairs and Equal Opportunities Directorate General of the European Commission, http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=497 accessed 8 July 2010. 67 Kahanec, M and K.F. Zimmermann (2010) ‘Migration in an enlarged EU: A challenging solution’, in Keereman, F. and I.P. Székely eds. Five Years of an enlarged EU - A positive-sum game, Springer, Berlin, pp.63-94. 68 op.cit 69 op. cit 274

Written evidence from Associate Professor Susan Senior Nello, University of Siena

Agriculture continues to play an important role in many of the new member states. With the 2004 enlargement the numbers employed in agriculture in the EU increased from about 7 to 11 million. At the same time the share of agriculture in employment rose from 4 per cent to 5.5 per cent, becoming 7.5 per cent with Bulgaria and Romania in 2007.

The new member states had the complex task of adapting to EU policies and standards,while the EU wanted to ensure that enlargement did not result in excessive transfers from the EU budget.

There was considerable debate about extending the direct income payments of the CAP to farmers in countries joining the EU. At least initially, such payments were introduced as compensation for the reductions in price support. At first the Commission argued that farmers in applicant countries would not generally experience price cuts and so should not benefit from direct payments.

According to the European Commission, prices for most agricultural products were below EU levels, and it was argued that farmers in the Central and Eastern European countries would receive the benefit of higher prices when they joined the EU, so compensation in the form of direct payments was superfluous. However, this argument was somewhat undermined by rapid price increases for agricultural products in the CEECs. The proposed differential treatment between ‘rich’ Western farmers and their poorer counterparts in the CEECs was subject to fierce criticism in those countries.

In March 2002 the Commission published an extensive study of the impact of enlargement on agricultural markets and incomes,70 confirming the view that immediate payment of 100 per cent direct payments on accession of the CEECs would lead to social distortions and inequalities. Moreover there would be non-rural beneficiaries who had generally become landowners as a result of the privatization process that included restitution in most CEECs. The report took into account four different policy scenarios: no enlargement; application of the 1999 CAP without direct payments; introduction of the CAP with full, immediate direct payments; and acceptance of the candidate countries’ negotiating positions.

The working assumption of the analysis was accession of eight CEEC candidates from 2007 (Bulgaria and Romania were assumed to join later). According to the Commission report, even without direct payments the CEEC farmers would benefit on average from a 30 per cent increase in income as a result of EU market support. With the scenario of full application of direct payments in the new member states, the average expected income gain tripled reaching a level of 89 per cent, while assuming that the applicant countries’ negotiating positions were accepted, the predicted gain quadrupled to reach an estimated 123 per cent.

At the Copenhagen European Council of December 2002 it was agreed that direct aids for the new member states would be phased in gradually over 10 years. These countries would receive direct payments equivalent to 25 per cent of the existing system in 2004, 30 per cent in 2005 and 35 per cent in 2006, rising to 100 per cent only in 2013. The new

70 European Commission (2002) SEC(2002)95 Enlargement and Agriculture: Successfully Integrating the New Member States into the CAP, Issues Paper, Brussels, January.

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Written evidence from Associate Professor Susan Senior Nello, University of Siena member states were offered the possibility of topping up direct payments through national funds and their rural development funds to 55 per cent in 2004, 60 per cent in 2005 and 65 per cent in 2006.

In order to meet problems of administrative costs and fraud, the new member states could opt for a simplified single payments scheme for three years, renewable for up to two more years. This would entail area payments per hectare on the whole of the agricultural area of the new member states. There would be no obligation for farmers to produce in order to receive these payments. The possibility of continuing this system was subsequently extended until 2013 for the CEECs that joined the EU in 2004, and 2019 for Bulgaria and Romania.

Difficulties also arose in deciding on production quotas for milk and sugar for the new member states. The Commission proposed taking 1995–99 as the reference period, but this was contested by some of the CEECs as not being representative. For instance, since milk production fell during these years due to the process of restructuring. The Copenhagen European Council agreed on production quotas on the basis of ‘the most recent historical reference periods for which data is available’, though in fact some concessions were granted.

A further sensitive issue was whether the CEECs would be allowed a derogation on land ownership. Land prices were much lower in the CEECs, and though a general derogation of seven years, with the option of extending the derogation for a further three years, was eventually agreed (12 years for Poland), the initial requests were higher (18 years in the case of Poland).

23 October 2012

276

Written evidence from Baroness Nicholson of Winterbourne

1. On 1 July 2013 Croatia will become the 28th member of the European Union with many predicting that it will be the last such entry for quite some time with early optimism surrounding Iceland fading and the Stabilisation and Association framework in the Western Balkans continuing ever more slowly.

2. At a time of general economic crisis across Europe to hold off on enlargement would be a great mistake for the EU itself, particularly its foreign policy ambitions, for the Member States, and as importantly for the countries seeking accession. The enlargement process should and must continue in an open and transparent framework as set out in the Treaty of the European Union, the Copenhagen Criteria and the acquis communitaire. Any other approach opens the EU up to recrimination, reproach and accusations of double standards, which is almost an impossible position by which to promote the rule of law, justice and human rights.

3. The question is also not as simple as when and where to stop EU enlargement. For argument’s sake, to say that all accession should end with Croatia in order to stop the EU importing the problems of states not yet ready for membership ignores that those countries that have already started the process of gaining entry are already well on the way to being assimilated. To stop now, or at an unknown point in the future, will not insulate the EU or its Member States from any perceived dysfunction, any more than those states can insulate themselves from the economic problems Member States themselves are currently experiencing.

4. Much of the allure of EU enlargement to this point has been that it has been open, in theory, to all. This perception has come under savage pressure due to the short-term national interests of Member States, particularly over Turkey. This lost perception is a huge blow to the EU’s soft power projection and thus to the reach, power and influence of the EU and its Member States including the UK.

5. For many Turkey is the crux on which enlargement will either falter or continue. It is a struggle that we must win. For reasons of trade, transatlantic security through NATO, energy, migration, terrorism cooperation, the Arab Spring and perhaps most importantly to demonstrate that the EU is not a religious club and that we can, and we want to, build bridges and partnerships with Muslims.

6. Enlargement is a technical process with significant political ramifications for those states involved. Member State national political interests have though increasingly subverted the process. The enlargement process is in many ways a form of statebuilding, or at least state re-moulding, which is a highly sensitive issue that is not aided by Member State meddling. If a country meets the accession criteria they should be admitted to the EU, no buts.

7. The UK has traditionally been a leading proponent of EU enlargement for a variety of reasons, such as trade, but also as part of a realpolitik struggle between other Member States, namely France, who wish to have, as the phrase goes, ever closer union, whilst the UK has aimed for ever wider union. The UK’s support thus was partly a ploy to stave off further integration.

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Written evidence from Baroness Nicholson of Winterbourne

8. With the eurozone crisis the UK looks to have lost, or at least be on the verge of losing, this game. Integration is now taking place in the EU with banking and fiscal unions on the cards without the UK, which has been something that UK EU policy has aimed to prevent for roughly two decades. Is there a way back into the game?

9. Further enlargement would have many benefits for the UK, and the EU, it would though also provide the UK with more partners within the EU that would necessarily be outside, and unlikely to be admitted anytime soon to the eurozone. In a realpolitik sense alone therefore the accession of the countries of the Western Balkans and Turkey would be of great support to the UK within the balance of power of the EU.

10. Of course, enlargement should not only be considered in such terms. In a globalised world the language of ‘limited absorption capacity’ is erroneous and damaging to the UK’s and other Member States’ domestic and foreign policy interests. ‘Limited absorption capacity’ suggests the EU is a closed club – something that is contrary to our legal obligations in the Treaty of the European Union - and that we are unwilling to engage and interact with others outside the EU at a time when we need all the partners and friends, particularly commercial, that we can lay our hands on.

11. Once accession of a new Member State has taken place the supervision post-accession has up to now been inadequate. In its report of July 2012 on Romania under the Cooperation and Verification Mechanism, established in the run-up to accession to address shortcomings in judicial reform and anti-corruption, the European Commission raised serious concerns about Romania’s respect for these fundamental principles and acknowledged serious doubts about Romania’s commitment to the respect of the rule of law and its understanding of the meaning of the rule of law.

12. The Cooperation and Verification Mechanisms in Romania and Bulgaria have been useful tools in monitoring progress in their appointed areas. In future, however, the European Commission should institutionalise such measures as part of the enlargement and accession process so that there is a long period of accession not just pre- but also post-accession during which Member States can not only be monitored but penalised if reforms are not introduced such as through the loss of funding (which the Commission has done in the respect to Romania’s future structural funding since late October 2012), the loss of voting rights, and as a final position loss of membership. That would be a policy of conditionality with strength.

13. A discussion of conditionality and the tools the EU can bring to bear on and in countries highlights a major defect with the EU’s current enlargement, neighbourhood and external action infrastructure. Namely, how they work together. If you say X is where enlargement stops then you need to identify what is the EU position to countries in the neighbourhood who are not (currently) possible accession country candidates. At present, there is no clear dividing line. The EU cannot, however, rely solely on the potency of its membership and/or soft power (largely trade) as its only policy tool to engage with its neighbourhood and candidate countries. These need to see and experience concrete actions with concrete results to understand the value of the EU. For example, the EU and its Member States heavily undermine themselves with their neighbours through their restrictive visa policies.

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Written evidence from Baroness Nicholson of Winterbourne

14. The EU’s architecture to deliver such results is confused. The High Representative is responsible for the External Action Service and EU foreign policy but there is a separate Enlargement and Neighbourhood Policy Commissioner as well as a separate Commissioner for Development Policy, which overlaps in many accession and neighbourhood countries. Whilst the Commissioners for Energy, Climate Action and Trade have vital roles to play in external relations as well and have independent powers to act as they see fit. Furthermore, the European Investment Bank and the European Bank for Reconstruction and Development add another layer of actors even before Member States themselves are considered or the International Financial Institutions.

15. A common transparent posture for current accession and non-accession countries should be developed with according portfolios of activities and policies to engage with countries in those categories. The current architecture and policies do not provide this. For example, within the European Neighbourhood Policy there are certain countries that some, such as William Hague in his recent speech in Berlin who highlighted Turkey, Moldova, Belarus and Ukraine s countries that should be in the EU or that are European, clearly believe deserve to be Members. But that same policy includes countries within the Southern Mediterranean that no one has realistically ever considered for membership and who have never indicated a willingness to join. So why have they been lumped together in one policy?

16. By acknowledging and working in accordance with the differences between and within its southern and eastern regions the EU can become a far more agile and receptive foreign policy actor. A clear policy of enlargement is vital but it runs in tandem to a clear policy with the near neighbourhood and the wider world. They are all interlinked and each requires clarity and purpose.

17. For example, the Arab Spring has highlighted that the consolidation of democratic reform in the Middle East and North Africa is of vast interest for the EU and its Member States in terms of tackling migration, radicalisation, and to build our influence and relationships in the region. In a sense, such work is enlargement-lite as the EU is aiming to transform governance and the rule of law, however, it is not enlargement itself involving the acquis communitaire. A different policy is thus required that accepts the synergies with the EU’s enlargement work but which stands alone from it and is as attractive to those countries the EU wishes to engage in such a manner.

18. The European Neighbourhood Policy thus needs to be re-thought. Those countries that the EU and its Member States believe could one day be possible members (largely those in the east) should have a different focus and a different policy that in the long- term aims for EU membership if so desired by the country concerned.

19. Those countries that are, at present, not considered as possible members and who have never indicated a willingness to join (those in the south) need to be redefined and recalibrated in the EU’s thinking so that it focuses on policies relevant in those countries. Eventual EU membership is highly unlikely to be one and thus the technocratic approach of the enlargement process used in the European Neighbourhood Policy, in the form of action plans, should be replaced by a focus on greater issues such as how to influence the political and democratic development of these countries and bind them in a strong cooperation with the EU. 279

Written evidence from Baroness Nicholson of Winterbourne

20. A redefined and differentiated policy across its neighbourhood with much greater focus on local conditions would necessarily require the EU to bolster the political analysis capability in its delegations and to bring to bear Member States’ collective weight. A coordinated EU front in this area would pay significant dividends for both the EU and the UK.

21. In conclusion, in order to clarify the future path of the enlargement process it is necessary to also clarify the competences of the EU’s and the European Commission’s architecture and policies in enlargement, neighbourhood and external action policy. It is also vital to clarify the goals the EU is pursuing in each country on its periphery and to tailor those goals and the activities they are predicated on local conditions so that the EU delivers the greatest impact.

2 November 2012

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Written evidence from Professor Richard Rose, University of Strathclyde

I SUMMARY 1.1 When the European Economic Community was founded, the Treaty of Rome declared, “Any European state may apply to become a member of the Community”. However, the boundaries of Europe were not defined. Its six members did not claim to include the whole of democratic Western Europe, let alone the whole of historic Europe. The increase in the number of EU member states since the fall of the Berlin Wall and increased interdependence across Europe and globally has radically altered the context for the future enlargement of a Union of 28 member states.

a) The 2004-7 addition of 12 countries has greatly increased the EU’s political and economic diversity.

b) The Copenhagen criteria for admission to the EU are consensual statements of values but unless they are rigorously applied then enlargement will be at the expense of these values.

c) Most of the countries that are seeking membership will need substantial domestic changes and time to meet Copenhagen standards.

d) The EU has not been able to enforce Copenhagen criteria on backsliding member states and absorbing all eight candidates risks imposing costs on existing member states

e) Expanding the number and functions of EU member states without the capacity without the capacity to act effectively will lead to ‘Brussels overstretch’. It also ignores the many other institutions to which European and extra-European countries belong to deal with specific functional problems.

f) The UK government should take the initiative in demanding the strengthening of the application of the Copenhagen criteria to potential member states and the development of more effective procedures for preventing backsliding from these standards by member states.

g) The UK government should promote alternative forms of relationship with the EU besides a single-track path leading from potential candidate country to ready-or-not membership.

1.2 This submission draws on my field research across post-Communist and Balkan countries as well as old EU member states over the past two decades. Immediately, it reflects research supported by the ESRC (RES 000-03-0193) and as a Visiting Professor of the Robert Schuman Centre of the European U. Institute, Florence. See www.cspp.strath.ac.uk and my forthcoming book REPRESENTING EUROPEANS: A PRAGMATIC APPROACH. The views are solely those of the author.

II THE 2004-7 ENLARGEMENT=S IMPACT ON THE EU

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2.1 The virtual doubling in the number of EU member states has had a big impact on proceedings, since every member has an equal right to be represented in all its committees. Since EU decisionmaking favours consensus, bargains and compromises must incorporate far more interests and points of view.

2.2 The diversity of the EU has increased greatly. The number of official languages has more than doubled from 11 to 23. New member states have brought with them different political legacies than old member states. The median Gross Domestic Product of the new member states is one-third that of old member states. The median rating of new member states on indexes of the Rule of Law is also much lower (see Table 1).

III PRINCIPLES BEHIND ENLARGEMENT 3.1 The political values that applicants for membership are expected to endorse-- freedom, democracy, rule of law, etc.--are uncontroversial but also unclear (Articles 2 and 49 of the Treaty of the European Union). Everything depends on how they are applied by the Council to candidates for EU membership.

3.2 The EU’s Copenhagen criteria specify five relatively specific criteria that a candidate country should meet to become an EU member. It should be democratic, adhere to the rule of law, respect minority rights, have a functioning market economy, and have the administrative capacity to administer EU policies.

IV EVALUATING CANDIDATES AND POTENTIAL CANDIDATES 4.1 Currently there are five candidate countries – Iceland, Macedonia, Montenegro, Serbia and Turkey – and three potential candidates – Albania, Bosnia & Herzegovina, and Kosovo. They are here referred to as potential member states.

4.2 The functioning of the economies of six potential members suffered greatly from being non-market planned economies. The GDP per capita of the median country is now only €4,000, barely one-third that of the 2004-7 entrants. Only one candidate has GDP per capita at the level of old EU member states, and one is at the lower range of new member states (Table 1).

4.3 The strength and durability of the democratic commitment of potential candidates has yet to be confirmed. Freedom House, an international NGO, rates five potential members as only partly free. Two countries have gained a free rating only in the past few years, and only one country is a long-established democracy. Moreover, most of the potential members were recently war torn and in some armies remain significant.

4.4 The Rule of Law is weak in most potential member states. On the Transparency International Corruption Perceptions Index, three countries rank below the most corrupt member state currently in the EU, and all but one is below the median rating of the 2004 group of EU entrants.

V DEFICITS IN THE EU’S CAPACITY

282

Written evidence from Professor Richard Rose, University of Strathclyde

5.1 The EU today has significant capacity to act, but its capacity cannot be infinite. Its influence on potential members depends on their capacity and political will to meet Copenhagen criteria and the EU’s capacity and willingness to enforce these standards.

5.2 The EU has shown limited capacity to call to account new member states that: a) Undermine democracy through the manipulation and/or violation of constitutional rules. b) Undermine the rule of law through increased corruption, fraud and tolerance of organized crime.

5.3 The eurozone crisis has shown the EU has limited capacity to deal with economies that have not accepted the constraints of fully functioning market economies.

Problems and non-problems of further enlargement 5.4 An increase in the number of member states from 28 to 36 would increase the extent to which the EU was an assembly of diverse states rather than a Union of similar states.

5.5 Adding half a dozen or more cultures could create a Balkan group that would have more members and different experiences than other EU groups. It could create pressures to abandon the inefficiencies of dozens of official languages and confirm English as the lingua franca of the EU.

5.6 The population of potential members would entitle them to up to one-fifth of the 751 seats in the European Parliament. This claim could only be met by redistributing seats from large countries such as the UK and less large countries.

5.7 The economic conditions of seven of the eight potential members would entitle them to substantial payments from the Structural Fund and Social Cohesion Funds. This would require either significantly redistributing funds away from some middle-income as well as better off EU member states or a major increase in the EU’s budget.

5.8 Further enlargement would diminish the relevance of the eurozone for EU member states, since most new members would be a decade or more distant from meeting rigorously enforced criteria for eurozone membership.

5.9 Consolidating a democracy takes more than a decadeBand some potential candidates are only part way to achieving democratic status. This can only be achieved through the commitment of domestic political groups. External democracy assistance and elections observed by foreign missions are secondary.

5.10 Institutionalizing the rule of law in a state requires much more than new laws and institutions. In countries where there is a tradition of the state tolerating bending or breaking laws, external incentives and pressures are of limited effect, as some experiences of recent enlargement have shown.

VI IMPLICATIONS: DIVERSITY IN INSTITUTIONS 6.1 Interdependence between countries creates the need for institutions to maintain a minimum of rules regulating their relationship. As a member of more than 100 283

Written evidence from Professor Richard Rose, University of Strathclyde intergovernmental organizations, the UK government accepts this principleBand the implications of interdependence increasingly have effects on Britain’s public policies.

6.2 The norm for intergovernmental organizations is that form follows function: a postal union will have a global membership while a Nordic union can have only half a dozen member states. The EU is unusual in being a multi-functional organization with much broader powers than the great majority of normal intergovernmental organizations.

6.3 While the EU belongs to Europe, Europe does not belong to the EU. Many institutions that affect Europeans are separate from the EU. These include NATO and Interpol, the European Bank for Reconstruction & Development, and, on the political front, the Council of Europe and the Organization for Security Co-operation in Europe. (Table 2).

6.4 European countries combine their membership in the EU with that in other institutions focussing on European concerns. The expansion of the boundaries of Europe to meet functional needs (e.g. the EBRD and OSCE) can make EU members a minority of those belonging to these institutions and the EU may not be a full member. The one institution that is exclusively European, the European Central Bank, does not include one-third of the EU’s members.

6.5 From a global perspective, Europe is a significant region but not the only one. European states are usually a minority of the members of political and economic organisations with a global reach. Equally important, the EU is a member of only one of these institutions, the World Trade Organization. In New York, Washington and other places where international organizations meet, individual countries, especially big states such as the UK, directly represent themselves.

6.6 The current policy of the British government is to limit the EU’s functions while that of the President of the European Commission is to expand them. Each policy has inherent obstacles. In addition, each is an obstacle to the other, for the EU’s Qualified Majority Voting rules can isolate the UK on many issues while the 2011 UK Referendum Act can result in the UK electorate vetoing an EU treaty.

6.7 Neither the EU nor the UK has an interest in weakening the EU through territorial overstretch by admitting countries that have a lower commitment to democracy, a functioning market economy, and the rule of law. Moreover, there is a common interest in protecting the free movement of goods, services and persons from contagion due to the admission of new member states where corruption, fraud, smuggling, false certificates of origin and other forms of flouting the law flourish.

6.8 The European Union has stretched the concept of diversity by accepting inconsistency in the application of Copenhagen criteria in assessing candidates for membership. The UK government should promote stronger application of the Copenhagen criteria to potential member states and the development of more effective procedures to prevent backsliding by existing member states.

6.9 The EU makes uniformity the norm in applying policies to member states. In doing so it ignores the extent to which this norm has not been adhered to in its practice. It also ignores member states following a horses-for-courses strategy of joining organizations with different sets of members appropriate to the function at hand. The UK government 284

Written evidence from Professor Richard Rose, University of Strathclyde should promote a review of the ecology of institutions to which member states belong and a ‘form follows function’ assessment of what the EU has the capacity and comparative advantage to undertake and what is better handled by other institutions.

Table 1 POTENTIAL EU MEMBER STATES EVALUATED Freedom House GDP/cap Corruption € Candidate countries Iceland Free 31,700 8.5 Montenegro Free 5,114 3.7 Serbia Free 4,143 3.5 Turkey Partly free 7,500 4.4 Macedonia Partly free 3,300 4.1

Potential candidates Bosnia & Herzegovina Partly free 3,467 3.2 Albania Partly free 2,891 3.3 Kosovo Partly free 2,405 2.8

Median EU states Old EU 15 All free 33,500 7.8 2004-7 entrants All free 11,000 5.2

Sources: Freedom House rating, 2012, www.freedomhouse.org. Corruption: Transparency International 2011, www.transparency.org; least corrupt: 10; most corrupt: 1. GDP per capita in euros: Eurostat 2011 and World Bank 2010.

Table2 INTERDEPENDENCE OF EUROPEAN STATES Number of members EU countries Non -EU EU as % total ORGANIZATIONS STRETCHING EUROPE'S BOUNDARIES North Atlantic Treaty Organization 21 6 78 European Central Bank 17 (10) (63) Council of Europe 27 20 57 OSCE 27 29 48 EBRD 27 36 43 INTERNATIONAL ORGANIZATIONS World Trade Organisation 27 129 17 International Monetary Fund 27 161 14 World Bank 27 161 14 Interpol 27 163 14 United Nations 27 166 14

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Written evidence from Professor Richard Rose, University of Strathclyde

Note: European Central Bank: percentage of EU members in ECB.

13 November 2012

286

Written evidence from Dr Charles Tannock MEP

Are the current criteria for membership of the EU the correct ones?

The criteria which involve observing the terms of Art 49 TFEU and applying the Copenhagen criteria are broadly correct. The issue of absorption capacity remains controversial and has been cited in the case of the Turkey's accession as a very large country by EU standards by Germany in terms of affordability of the financing required for its integration into the EU.

What is the economic, social and political impact of EU membership on the new Member States?

Generally positive as it has driven economic reforms, improved governance, democracy and human rights and all within a framework of observance of the rule of law and access to considerable EU funds particularly the CAP and EU structural funds.

How does EU membership impact on wages and living standards in new Member States and what is the effect on small and medium sized enterprises?

All new EU member states have had positive economic growth in the last decade since joining the EU and a considerable rise in wages and living standards for their populations which is probably explained in part by their EU membership which has encouraged FDI and their access to the single market.

How does EU enlargement impact on existing Member States and what is the impact on the UK?

It has opened up new markets for trading purposes and has to some extent resulted in relocation of businesses to the new EU states where costs of labour are cheaper. It has resulted in the UK's case in the arrival of large numbers of mainly eastern european migrants who are most often skilled and have integrated well into UK society.

Is there a danger of enlargement fatigue? How will the tough economic climate in Europe impact on the prospects for further enlargement of the EU?

Enlargement fatigue is very common throughout the older member states particularly after the 2007 admission of Romania and Bulgaria which had considerable problems in areas of governance and fighting organised crime and corruption and may in the view of some experts have been allowed in prematurely. The large numbers of Central and Eastern European migrants arriving in the UK has fuelled anti EU feelings and a rise of support for the secessionist party UKIP in areas where the local population perceives that jobs have been lost to the new migrants.

Croatia is the only country which will join the EU in the foreseeable future and the other candidates Macedonia, Montenegro, Serbia and Turkey will probably have to wait a long time, i.e. around a decade with the sole exception of Iceland 287

Written evidence from Dr Charles Tannock MEP which could join very quickly as an EEA country if its people consent in a referendum.

24 October 2012

288

Dr Charles Tannock MEP – Oral evidence (QQ 84-102)

Transcript to be found under Andrew Duff MEP

289

Written evidence from Professor Andrew Taylor, University of Sheffield

1. Enlargement now covers very broad range of cases when compared to that of 2004 and 2007, which were primarily concerned with the post-communist sates of Central and Eastern Europe. The current category contains Iceland (a long-established liberal democracy but whose recent economic history poses complex problems for the EU), Turkey (a country with a very long history of engagement with the EU and its predecessors), Albania (a post-communist state); a group of political entities formed by Yugoslavia’s break-up that includes sovereign states (Macedonia, Montenegro, and Serbia), Kosovo ( a formally independent state whose independence is not recognised by five EU members) and Bosnia and Herzegovina, effectively an international protectorate. Included in this category is (just) Croatia, the latest state to navigate successfully enlargement.

2. This diversity prompts the obvious question: can a single process manage successfully the cases now covered by the enlargement process? The answer depends on whether or not this can plausibly be presented as a single, unified process. In my view, and that of the Commission, it cannot be so conceived. This inevitably results in a slower and possibly incoherent process, which is why the Commission’s 2011 and 2012 enlargement strategies have been amended in a significant direction.

3. Enlargement has always had to balance the EU’s commitment to states joining the EU by providing sufficient incentives and a realistic prospect of membership within a (undefined) period with an understandable anxiety that new members will be able to satisfy the demands and obligations of membership. This must also take into account the suspicions and doubts of existing Member States about the impact of enlargement on the coherence and stability of the EU. The solution has been the progressive development and enhancement of conditionality, which requires state seeking membership to undertake extensive internal reforms in order to meet the EU’s requirements. Conditionality, in its various guises, has been concerned with long-term change and the sustainability of domestic reform. It is, by definition, a gradual process of change, with monitoring and evaluation (as well as aid) covering the transposition and implementation of the thirty-five chapters of the acquis communautaire, but it is not a technical process. Enlargement is, always has been, and always will be intensely political. It is not unusual to hear the question in enlargement states, ‘how many existing Member States would satisfy the conditionality to which we are subject?’

4. The fundamental principles behind enlargement have remained unchanged for many years and as such represent the bedrock of values that underpin the EU’s approach to enlargement certainly since the ‘reunification’ of Europe after the end of the Cold War. These principles, enshrined in Articles 2 and 49 of the TEU and expressed by the Copenhagen Criteria, are exactly that: principles. They offer little if anything in the way of detailed guidance on how enlargement is to be conducted either generally or in specific cases. Determining the detailed process and content of enlargement is, therefore, the task of the Commission and other European institutions and, of course, of the individual Member States. Nevertheless, a backwards look over some 20 years of enlargement experience suggests strongly that these principles have, and continue to

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retain, validity and do encapsulate principles appropriate to enlargement. The devil, however, is in the detail and not the general principles.

5. This tension is reflected in the principles’ stability in relation to the considerable evolution of the EU’s approach to enlargement as a process. In broad terms we have seen the progressive tightening of the policing of the enlargement process by European institutions, a move away from target dates and multi-state (or, ‘big bang’) enlargements to enlargement on a case-by-case basis. This tightening has come as a result of the Commission’s assessment of its experience with implementation of the enlargement mechanisms and a result of the changing political and economic environment in which enlargement has been located. This changing environment includes ‘enlargement fatigue’ in existing Member States, that the countries seeking membership pose (albeit for different reasons) considerable difficulties and problems that in retrospect make the ‘big bang’ enlargement of 2004 (for example) look relatively easy, and, of course, as the conflict over the next EU budget shows, the cost (and benefits) of enlargement. These considerations are additional to complex problems of governance – political and economic -- posed by enlargement’s impact on the EU’s institutions and operations. The Euro-zone crisis has stimulated a further round of institutional and, most likely, constitutional change whose final contours cannot be discerned yet but which will affect the enlargement states in terms of, for example, government spending, debt and competitiveness and Commission oversight of core state economic activities of taxing and spending.

6. The general attitude of the countries that joined the EU in 2004 and 2007 remains, irrespective of specific complaints and grumbles, one of ‘better in than out’. This was, for example, noticeable in Croatia’s less than smooth accession process. This general attitude also applies to states currently seeking membership (with the possible exception of Turkey and Serbia where resentment of EU ‘interference’ is considerable) where domestic and foreign policy is often subordinated to the goal of EU membership. In these states there is a recognition that the enlargement process imposes great strains on the domestic polity and economy; the EU, in line with the general provisions governing enlargement, uses conditionality, monitoring, and rule transfer to influence the evolution of these polities towards ‘the European model’ of market-oriented, liberal- democratic states. The EU and Commission is careful to stress this is not a coercive process; states are not obliged to undertake these reforms but if they are not undertaken to the satisfaction of the Commission then membership will not be forthcoming.

7. Of course, many of the reforms sought would have to have been undertaken as part of a broader modernisation process in, for example, the transition from communism or in the aftermath of Yugoslavia’s break-up. Given that there is a broad consensus in these states that the EU is ‘the only game in town’, that the prosperity represented by the EU (even in current circumstances) contrasts markedly with their own economic weaknesses means membership offers real economic gains, and that there is no viable alternative to the political-economic model represented by the EU for these states, then one can readily understand why such a high priority is placed on membership. Even though the economic and social costs of adaptation are high, enlargement is a long process, seeking membership requires often newly established (or re-established) states and/or states who see themselves as having a long and proud history of independence

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Written evidence from Professor Andrew Taylor, University of Sheffield

(or fighting for independence) surrendering (or pooling) sovereignty, membership is nonetheless worthwhile and in the long-term national interest.

8. The experience of enlargement has not proved smooth either for the EU or states proceeding through the process. This can be seen in the Commission’s approach to Bulgaria and Romania and, latterly, Croatia. What makes Romania and Bulgaria significant is both were subject to a new process, the Cooperation and Verification Mechanism (CVM) intended to address serious problems in justice and home affairs, and corruption. In Bulgaria CVM established six benchmarks (judicial independence, accountability, transparency and efficiency; high-level and public sector corruption; and combating organised crime) on which the Commission was to report regularly. Publicly the Commissions holds that CVM has made a major contribution to reform but a closer reading suggests CVM has not delivered what was expected either by the Commission or the Member States.

9. Important progress has been made in passing legislation but strategic gaps remain and the political will to deliver the reforms has varied. The Commission identifies a lack of direction and variable levels of domestic commitment over the five years of the process, concluding external pressure remains essential but its continuity raises questions about the irreversibility and sustainability of change. In Romania’s case four benchmarks (judicial reform, judicial integrity, high-level, and public sector corruption) were identified. The Commission’s quinquennial review was scathing. A lack of progress was combined with events that raised serious concerns about the political elites’ commitment to, or even understanding of, the rule of law. Romania, the Commission argued, was not being asked to achieved standards higher than those in other Member States but to implement what was already in place and to which it had agreed. As in Bulgaria, passing legislation was not the problem; the real problem was implementation and the lack of a clear and consistent developmental trajectory. This, the Commission concluded, undermined sustainability and raised the possibility of reforms already in place being reversed; hence the need for continued external pressure.

10. This raises interesting questions about enlargement: first, CVM was instituted because of perceived shortcomings in the process that governed the 2004 enlargement. There was certainly a perception that the historical significance of ‘the return to Europe’ could not be permitted to fail, which gave grounds for the argument that states had been allowed to join the EU that were not ready. The same process was at work in the creation of the Euro. Second, CVM represented a type of ‘post-accession’ conditionality whereby the Commission could continue to monitor and police states who were now formally part of the Union. The experience in Bulgaria and Romania shows clear limits to the Commission’s power to drive through change in the face of domestic inertia or failure to cooperate. Third, it illustrates a problem familiar to students of enlargement: adaptation is largely a ‘centre-led’ process involving passing legislation, drawing up strategy documents, securing funds and spending them. The process, irrespective of rhetoric, focuses primarily on the creation and development of central capacity to, for example, transpose the acquis communautaire, and this tends to limit wider change and penetration. Where change occurs it is driven by the centre and by the need to secure Commission agreement that the polity in question is on the correct evolutionary trajectory that will culminate in membership. This focus on central capacity is, in effect, a centralising process and can reinforce establish beliefs and behaviours concerning the centre’s primacy. Paradoxically, whilst enlargement and the Commission’s role is 292

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sometimes presented as substantial and transformative, what strikes one is the inability of external pressure to bring about the changes sought by the Commission and the Member States. Once membership is secured, there is a further decline in Commission influence.

11. Significantly CVM is not being applied to Croatia, which will join the EU in July 2013. Instead the Commission is preparing six-monthly progress reports covering judiciary, fundamental rights, war crimes, corruption, shipyards and steel privatisation. The failure of CVM in Bulgaria and Romania prompted the Commission to re-think ‘post-accession’ conditionality and the dangers of premature accession. It is worth pointing out that absorbing Croatia will not be massively expensive, being about 1.5% of EU spending between 2014 and 2020. Croatia’s accession has, as happened after previous enlargements, stimulated thinking on reforming enlargement, and the process undergone by Croatia was the most rigorous thus far. This re-think has taken the form of requiring an accession state demonstrate a clear track-record of achievement to the Commission and Member States to reduce the possibility of premature accession.

12. What is noticeable about the pattern of enlargement is the obvious: that satisfying the Copenhagen Criteria on creating a functioning liberal democracy and establishing a functioning market economy have never been sufficient in themselves to sanction accession. This is because what is meant by ‘satisfying’ varies not only over time but also with the political and economic context in which enlargement was located. The effects of this can be seen in the much greater visibility accorded to justice, combating organised crime and corruption, security, and the promotion (and defence of) fundamental rights in recent years. This is particularly clear in the June 2012 negotiating framework for Montenegro and is a direct consequence of the problems experienced with Bulgaria, Romania, and Croatia and which are anticipated with the remaining enlargement states, including Turkey. Essentially, the rule of law has been singled out as the basis of enlargement; this was always significant but its pre-eminence has now been explicitly recognised and enshrined in enlargement.

13. Recent decisions – Croatia’s accession, granting candidate status to Serbia, opening negotiations with Montenegro – are presented by the Commission as confirming the reality of the membership perspective of all Southeast European states, as well as demonstrating the EU’s transformative power to existing Member States, and thereby provide a clear incentive to further and deeper reform efforts. This led to the High Accession Dialogue (HLAD) with Macedonia, which is designed to circumvent the veto imposed by Greece (the Commission has signalled on four occasions that negotiations should begin) by focussing on core concerns related to, for instance, the reform of the judiciary, combating corruption, and so on. It is nevertheless significant that the Commission identified a slowing of reform in Macedonia (and elsewhere) as indicative of a lack of domestic political will and a need to revivify the active political consensus and engagement of society that a successful enlargement requires. The growth of ‘enlargement weariness’ amongst domestic populations is not unknown (support for EU membership in Croatia, for example, declined in the years preceding the closing of negotiations) and recent suggestions from Member States that visa-free travel for Southeast European citizens should be withdrawn or modified has led to some disquiet in the region. Visa-free travel is highly prized and is seen as an interim reward for progress made. Its withdrawal could have serious consequences for attitudes towards the EU in the region. There is also evidence of ‘back-sliding’ in public sector reform in 293

Written evidence from Professor Andrew Taylor, University of Sheffield

the 2004 membership states; a SIGMA/OECD report of 2009 found the process of public administration reform slowed after membership and that in some cases there had been a regression to previous patterns of behaviour.

14. Placing the rule of law at the centre of enlargement policy raises important and interesting questions about the process. This was made explicit for the first time in the 2011 enlargement strategy that was endorsed by the European Council. This was presented as a clear opportunity for states seeking membership to signal their commitment to the Union’s fundamental values from the earliest days of the process (as such this indicates the lack of specificity, for example, the Copenhagen Criteria) by, for instance, improving the operation of the judicial system. As well as emphasising broad issues of justice and security these decisions emphasised the importance of the reform of public administration as central to both democratic governance and the promotion of the rule of law; reform was also central, of course, to the development of an effective, modern, ‘European’ State. Public administration reform was not just a matter of institutional reform – this was relatively straightforward – but on transmitting and institutionalising values and norms such as openness, accountability, and transparency.

15. However, patterns of behaviour and attitudes are deeply rooted and therefore difficult to change. This explains, at least in part, the new focus in acquis transposition on Chapter 23 (judiciary, fundamental rights) and Chapter 23 (justice, freedom and security) and why these chapters have become ‘the acquis of the acquis’. Progress satisfactory to the Commission, the Council and Member States requires the demonstration of changes in institutions and attitudes and these will now come first in enlargement on the grounds that so much else flows from the rule of law. Progress must now be demonstrated by a track record of implementation and negotiations will be grounded on action plans developed by governments with Commission guidance. A significant innovation is the introduction of interim benchmarks set when negotiations are opened to demonstrate progress, and only when these are met will the Council set closing benchmarks. This is a much more structured framework than in the past and offers a clearer set of objectives to both the enlargement states and the EU. As the reform objectives will be clearer, action to achieve them should be more focussed and more easily monitored, so reforms should be more sustainable. The aim is to bring states closer to the EU-model and assure Member States that candidates can assume the obligations of membership.

16. A major puzzle is how, in the current climate, can the EU maintain both enlargement and internal reform? The pool of enlargement states is being reduced to those with the most intractable problems (for example, Bosnia and Herzegovina, Kosovo), or which divide the EU’s members (notably Turkey), even Iceland poses major difficulties. It should be recalled that the absence of a realistic prospect of membership means the pressure to undertake often painful reforms is reduced; equally, if the EU commits prematurely to membership, the pressure to reform is reduced. Once a country is a member of the EU the incentives to conform to EU demands (for example, Bulgaria, Romania, Cyprus) declines markedly. Enlargement is based on specific country programmes combined with general principles that represent a substantial reform programme such as the ‘positive agenda’ with Turkey, the HLAD with Macedonia, and so on. Realising these objectives will depend in part on resources: the Instrument for Pre-Accession (2007-2013) is €11.6bn, that for 2014 onwards is projected at €14.1bn but, as recent events have shown, determining a budget is not going to be easy. In other 294

Written evidence from Professor Andrew Taylor, University of Sheffield

words, the EU treads a very fine line in ensuring continued reform whilst avoiding stimulating domestic disaffection. The most powerful counter is the conviction that life inside the EU is better than life outside.

17. Enlargement in SEE is of great importance to the future of the EU, posing a major challenge to the EU’s transformative power. The history of enlargement has led to a more rigorous and heavily policed process, including post-accession surveillance that necessarily entails an enhanced Commission role in monitoring domestic politics. As so often in the past SEE is having a crucial effect on European politics, and vice-versa.

12 November, 2012

295

Mr Mustafa Osman Turan, Deputy Permanent Delegate, Republic of Turkey Delegation to the EU – Oral evidence (QQ 119-133)

Evidence Session No. 6. Heard in Public. Questions 119 - 133

WEDNESDAY 5 DECEMBER 2012

Members present

Lord Boswell of Aynho (Chairman) Baroness Eccles of Moulton Lord Foulkes of Cumnock Earl of Sandwich

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Mustafa Osman Turan, Deputy Permanent Delegate, Republic of Turkey Delegation to the EU

Q119 The Chairman: Thank you very much for your time and the assistance from your embassy. Our Committee has no preconceptions about enlargement—what the possibilities are and what the difficulties or issues are. The opportunity to know your mind on this is greatly valued. At the moment, this has perhaps a lower profile across Europe than it would have had earlier, which is understandable given the difficulties that the euro area in particular feels. However, just because things are less immediate does not mean that they are not important. We will take a record of this session and be in touch with you. I think that you have had some indication of the areas that we are interested in. This is on the record but we will do it quite informally. We are all aware of the long history of the issue of Turkey’s accession. We now have the Commission’s positive agenda and the working groups, which have been meeting since May this year, so they have now had six months of work. Do you expect this new mechanism to provide an impetus for formal negotiations to move forward again in the near future?

Mustafa Osman Turan: Thank you very much. My name is Mustafa Osman Turan. I am the deputy of Turkey’s permanent delegation to the EU. I will try to be helpful to your inquiry to the best of my ability. As your initial remarks indicate, we are going through difficult times in our accession process, partly because of the difficulties in Europe but also because of some problems that are unique to Turkey, such as Cyprus. Unfortunately we have not been able to move in this process for some years now. That is creating a stalemate, which unfortunately is also spilling over the other aspects of our relationship with the EU.

As you said, we have a long history with the European Union, which has created a multifaceted relationship and involves many different fields, not only the accession. We signed the association agreement almost 50 years ago, which has created a very interesting relationship. Some may call it a special relationship, because it is already special. We do not want to be content with where we are. As you know, we would like to go forward with full

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Mr Mustafa Osman Turan, Deputy Permanent Delegate, Republic of Turkey Delegation to the EU – Oral evidence (QQ 119-133) membership. To put the situation we are in now in context, we requested membership 25 years ago. Customs union came about 17 years ago. We have been a candidate for the past 13 years. For the past seven years we have been negotiating for accession.

As I said, we have come to a difficult moment. The Commission came up with this idea of the positive agenda, which essentially tries to complement our accession process. Due to political obstacles that are not only blocking our negotiations but having a negative impact on other fields, the Commission has come up with this idea not to wait until the political obstacles are removed but to do the work at a technical level, such as setting out certain benchmarks—even if the Council has not approved them formally, we could still work towards them and align the reform process that is already going on with them—so that when political obstacles are removed, we do not lose much time. That started in May this year. Commissioner Füle and our Minister for EU Affairs officially launched it. Working groups are already working on eight different chapters. It has proven to be useful but it is not sufficient and unfortunately will not create the necessary impetus for the future. It is just a kind of transition from where we are to the normal, formal negotiations.

Q120 The Chairman: Thank you. Perhaps we will come back to this and explore some aspects of domestic opinion in Turkey in a minute. Sticking with the Commission for the moment, it seems to me—but please tell me if you have any reservations about this—that with the Füle Cabinet and the interest in taking this forward, these are good indications but are not sufficient in the absence of a political consensus or a drive towards it. Are you optimistic that with one or two changes in various other European Union states, which I will be unspecific about, you might have a stronger political interest in reopening negotiations next year?

Mustafa Osman Turan: Yes.

The Chairman: That is encouraging.

Mustafa Osman Turan: We are optimistic but that is not because of anything we have received already as a tangible commitment, especially from those who have blocked our negotiations on political grounds. We do not expect a sudden change in the situation in Cyprus. If there are elections in the island in the south, that may lead to a new Government who may or may not be more receptive to a final settlement in the island, which we were close to about eight years ago. The main protagonist in these elections will be a person who supported the Annan plan. We do not know yet exactly what position he will take but we hope that—if he wins—he will be a constructive leader for peace in the island.

Cyprus is a difficult question but, as you know, the Council has blocked eight chapters. Greek Cypriots have blocked unilaterally six chapters. France has blocked four chapters— actually, it is five, but one overlaps with the one on agriculture that the Council has already blocked. If France changes its position, four chapters will be unblocked. One is something that would not be important to be unblocked because it will have to be negotiated at the very last stage. Effectively, there are three chapters to be unblocked by France, which may create momentum next year. We had some positive indications immediately after the change of presidency in France and we responded with some positive steps towards the new Government. However, even if they express their willingness to change policy and move forward, we have not seen anything tangible yet. So it is a cautious optimism.

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Mr Mustafa Osman Turan, Deputy Permanent Delegate, Republic of Turkey Delegation to the EU – Oral evidence (QQ 119-133) The Chairman: Thank you. Perhaps we might talk about your domestic progress and whether that has been affected by this period of quiet. Lord Foulkes, would you like to come in on this?

Q121 Lord Foulkes of Cumnock: We have had contradictory evidence. Some people say that enthusiasm has waned in Turkey because you have started to look elsewhere and have seen opportunities elsewhere. Others have said, even more recently, that Turkey is beginning to get back to being enthusiastic about EU membership. What is the position on all parties’ sides in Turkey at the moment? Is there a renewed enthusiasm?

Mustafa Osman Turan: I am aware of these comments about Turkey’s willingness to go forward with the accession process. The sceptical comments are due to the fact that Turkey has been engaging more than ever with different parts of the world, especially our immediate neighbourhood. Beyond that, we have quite a number of embassies in Africa and a number of new embassies in South America and Asia as well. The driving force for this kind of active foreign policy is not just politics; it has also been trade. Some academics refer to the new Turkey as Turkey Inc.

The Chairman: You have been very successful as an economy. Europe can learn from that, I hope.

Mustafa Osman Turan: Yes, we have done quite well recently and the results are obvious. Per capita GDP has tripled in the past 10 years or so. Our trade is booming, despite the global economic problems. Turkey’s foreign policy is active for different reasons. The new Government—they are not new, of course; they have been in power for the past 10 years— are also exploring possibilities of new ways to co-operate. The Arab spring has also created that opportunity. The Government have some very close ties with some of the emerging political powers in the Middle East and north Africa, so that creates a very cordial atmosphere. When you compare that kind of dynamism with the lack of progress in our European accession process, it creates the immediate impression that there is a shift towards other areas. It is not a choice by Turkey; it is just the way things developed.

Our choice is clear. Our orientation has always been towards Europe. It is not something that the Turkish Republic started; it started long before. The current Government have not changed that at all and they reconfirm this whenever they are asked. That explains their fundamental policy and EU accession as the overarching goal of Turkish foreign policy. If you are referring to the recent remarks of our Prime Minister, I think that because we are approaching a new year with new hopes—the Greek Cypriot presidency is going to be over soon; France may change its position; there may be a new Government in the south of Cyprus who may push a little bit more for peace in the island—there are all kinds of indications that it may be more conducive for Turkey to get more engaged with Europe next year.

Q122 Lord Foulkes of Cumnock: We had a very interesting comment from one of our witnesses this morning, who said that the potential accession countries could provide some of the growth that Europe needs, which could be a positive argument for you to make to countries that might be a bit negative about your membership.

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Mr Mustafa Osman Turan, Deputy Permanent Delegate, Republic of Turkey Delegation to the EU – Oral evidence (QQ 119-133) Mustafa Osman Turan: Indeed, we are following very closely what is going on in Europe and the whole economic crisis—what are the issues, what are the problems—not only in individual countries but Europe-wide. As you said, growth is one of the biggest challenges for Europe now. Yes, there is a single market but Turkey’s inclusion in it will bring 75 million new customers for any producer. It is an important market and Turkey has so many links with so many different parts of the world—not only political but trade, economic and cultural links—that may also facilitate, if Turkey is in, Europe’s outreach towards different regions, such as central Asia or the Middle East.

Q123 Lord Foulkes of Cumnock: One last related question: you mentioned the population. That means that when you come in you will be bigger than Germany in population. Is that right?

Mustafa Osman Turan: It depends on the demographics.

Lord Foulkes of Cumnock: If you become such a dominant power, that could tip the balance in some of the issues that are being discussed. Do you think that is a reason why one or two of the bigger countries such as France might be reluctant to encourage your membership?

Mustafa Osman Turan: I think that was the main problem. A previous President of one of the bigger countries talked about cultural differences, but the main problem is the power sharing. It is more about who is going to take decisions. The rest could be a pretext. But now we have an interesting opportunity not only for Turkey but for the European Union, because when Europe deals with the shortcomings of the economic and monetary union in the next year or so, there will be discussion about the political union, the shape of the European Union and the kind of decision-making—what kind of Europe in general: two- speed, multi-speed, concentric circles. There is now a dual-core Europe idea—you are probably familiar with it; Timothy Garton Ash wrote about it in the Guardian—which is quite interesting because the arguments for two-speed and multi-speed Europe contain a condescending view about the countries that are in the second, third or fourth tiers. During this discussion, if there is political will to at least explore the possibilities of Turkey’s future accession, the future of the European Union and its decision-making structures may be designed according to a bigger country coming in, but everybody—or the majority, at least— should be convinced about the added value of our membership first.

Q124 The Chairman: It is self-evident to us, without knowing any more than you do what is going to happen within the European Union, that the United Kingdom will not be joining the euro area in the foreseeable future and, with a significant number of other states in different situations taking different approaches, creating a sensible dialogue is going to require some very constructive thinking. Not wanting to put words in your mouth, you might want to join in this debate anyway.

Mustafa Osman Turan: That is exactly what I meant. We need to get involved. Today, on paper, Turkey is destined to join the European Union. That gives us the inherent right to speak about the future of Europe.

The Chairman: You are a stakeholder, as we would say.

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Mr Mustafa Osman Turan, Deputy Permanent Delegate, Republic of Turkey Delegation to the EU – Oral evidence (QQ 119-133) Mustafa Osman Turan: Exactly. Unless we are denied membership one day, I think we can be involved in this debate.

Q125 Baroness Eccles of Moulton: Perhaps I might go back to the blocked chapters, which are particularly relevant to our report because clearly they are a feature in the process of enlargement. If external forces are able to block chapters that aspiring countries are wanting to get on with, this seems to be a significant factor. Did you say that the Council itself had blocked eight chapters? That seems like rather a lot. Are they related or are they quite random?

Mustafa Osman Turan: They are quite random. They are the chapters which the Council determined as related to the Additional Protocol. The five chapters that are blocked by France, including the one on agriculture, are more consistent. France said that these chapters are related to full membership. The Sarkozy Administration did not see us becoming a full member. They said these five chapters are related to full membership, so they are related to each other. The rest are rather randomly selected by the Greek Cypriots.

Baroness Eccles of Moulton: You would think that all chapters are related to full membership.

Mustafa Osman Turan: Yes, they are.

Baroness Eccles of Moulton: It is quite difficult to pick out X number of chapters and say, “We will block these”, because that is inhibiting full membership. Presumably the Council has had to produce sound reasons for blocking chapters, or has it been fairly arbitrary in the way it has done it?

Mustafa Osman Turan: I could not tell you exactly the reasoning behind the Council’s decision. Perhaps the member states would be able to tell you more about it.

The Chairman: Have they not given you an explicit account?

Mustafa Osman Turan: As far as I know, there were no consistent, logical explanations on why those chapters have been selected. The other six chapters blocked by the Greek Cypriots include the one on energy, for example. Blocking the energy chapter is rather difficult to explain because there are no benchmarks and there is a huge possibility of cooperation with Turkey in that field.

Baroness Eccles of Moulton: I suppose that when it comes to chapters blocked by the Council, the blocking is instigated by a member state. The Council itself cannot block a chapter on its own decision; it has to be a member state that says, “This chapter will be blocked”. It is a pretty confusing way of running an enlargement process.

Mustafa Osman Turan: Indeed. The way we perceive the accession process is rather technical. We have a negotiating framework, which actually does not allow for political vetoes in principle. It is rather contradictory to have chapters blocked because of political reasons.

Baroness Eccles of Moulton: This has all come as rather as surprise, has it? 300

Mr Mustafa Osman Turan, Deputy Permanent Delegate, Republic of Turkey Delegation to the EU – Oral evidence (QQ 119-133) Mustafa Osman Turan: Exactly. The Commission is not very happy about this either but it has to live with this political reality.

Q126 Baroness Eccles of Moulton: That is very clear because it is so unclear, if you see what I mean. The two cores seem to be rather a good way forward because there is not any suggestion that one core is the inner core and anything else is outside; it is a good concept. Of course, with the eurozone being one core and the sense that other countries that are not part of the eurozone at the moment might be magnetised into it, the two cores would never be of equal size, so they would not exactly be in balance. If this is a concept worth pursuing, that is something that would need to be worked on.

Mustafa Osman Turan: Indeed, it is an interesting concept. It deals with a specific problem but it does not solve all the problems. It needs to be worked out carefully within the European Union as well. As far as I understand it, the second core, which is outside the eurozone, would be more active in leading the CFSP and defence policy, for example, in which the bigger countries in the eurozone such as Germany are not really willing to take the lead.

The Chairman: We have criticised them in our Committee for not getting involved in defence procurement, for example.

Mustafa Osman Turan: Exactly. Yes, Germany blocked one of the biggest mergers in Europe and did not participate fully in the operation in Libya, for example. But, of course, these ideas have to be worked out.

Baroness Eccles of Moulton: But it is good to have ideas because this has to move forward in a way that can absorb as many interested parties as possible.

Mustafa Osman Turan: Indeed. It is rather difficult for a country like Sweden—or the UK, for that matter—to accept being a second-class member within the European Union. There needs to be a different way to look at it. That would be true for Turkey as well, if we joined. I do not think we will join for a second-class membership.

Q127 Earl of Sandwich: I am fascinated by this geopolitical discussion. Thank you so much for what you are saying, because it makes sense to us at the other end of Europe. Historically, you have been very close to the Balkans. You retain quite close ties with all those states, but do you see them as domino states? Are they all going to comply in the end? Do you think that the European Union is taking too much time over this and should be paying attention to the wider issues? How do you view the prospects for these smaller countries? Do you have a close eye on them?

Mustafa Osman Turan: In the Balkans? Yes, we have a close eye on them. Turkey is very active and closely following the situation. We also support the Balkan states’ EU membership process, because we all know that the EU enlargement is bringing stability and prosperity. I will say just a little more off the record, if I may.

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Mr Mustafa Osman Turan, Deputy Permanent Delegate, Republic of Turkey Delegation to the EU – Oral evidence (QQ 119-133) Q128 Earl of Sandwich: If you are doing all this, why is it so slow? Why are we not getting more results? In a sense, you are doing the same amount of diplomacy as the EU, encouraging them in that direction. So why are we not getting results in Kosovo, for example? It is so important that Serbia understands that it has to redraw this line. Why can they not get to grips with it? They met yesterday; nothing happened. People have been saying to us that it might take ten years before some of the Western Balkans are able to join.

Mustafa Osman Turan: Can I please give my answer to this question off the record.

Q129 The Chairman: Could I ask you to go back a bit to the question of reform within your own country? We are getting evidence that when things were looking more positive, before the economic storm hit Europe and the rest of the world, there was rather rapid progress in your country, which reflected a robust accession process. There was a sense that the whole thing was positive: you knew where you were going and were getting on with the task. It has been suggested in evidence that reforms have become more halting since then. I do not say this in any spirit of reproof, but one of the concepts that was mentioned in relation to Turkey is the so-called “pre-accession fatigue”, mirroring this alleged “enlargement fatigue” in Brussels. I am interested in the dynamics of this. We discussed this and you said that your Government’s prior objective was to secure membership, but it is clear that that is taking longer than might have appeared, say eight to 10 years ago. Does that make it more difficult for Governments, even when they wish to, to put through processes of reform? There are obviously some extremely sensitive areas—I will just record that—in relation to human rights and home affairs; these are all the complex issues that the Montenegrins will now have to deal with under the new structure. I am interested in your assessment of the dynamics of that process. Have we lost the way? Can it be picked up with a change of spirit and would you respond to those signals?

Mustafa Osman Turan: Accession and eventual full membership are important motivations for any candidate country. We cannot deny that—it is evident that our reform process has accelerated since we received candidate status and started the negotiations. Some political remarks have been made by relatively significant leaders in Europe, giving different signals regarding the end of the accession process. That also jeopardises the impetus given by the accession process. Despite these contradictory signals from Europe and the fact that our accession process was rather slow at first and has now almost come to a standstill—despite all these negative factors—I do not think the reform process in Turkey has slowed down. It is going on at the technical level although there are no political, grand things. For example, with the new constitutional process, one of the very important objectives for the Government is to have a new and completely civilian constitution. That is extremely important for Turkey, a country that has gone through various stages of military rule in the past. Related to that, we have come a long way in terms of civilian-military relations in Turkey. These things are not easily noticed in Europe but the progress report, for example, which is not very positive this year, still emphasises the importance of reforms in the area of the civilian-military relationship in Turkey. There are other issues. For example, in recent years 302

Mr Mustafa Osman Turan, Deputy Permanent Delegate, Republic of Turkey Delegation to the EU – Oral evidence (QQ 119-133) our Ministry of Justice especially has been working hard to pass some very important reforms. Recently, we appointed the first ombudsman in Turkey and have created a national human rights institution. They have devised a new human rights strategy and prepared four different packages of legislation that will have a direct impact on the criticisms about freedom of expression and freedom of the media. I could give you a long list of examples of how the Government are continuing the reforms. There is a reform monitoring group, which is convened every few months at the ministerial level and is monitoring the reform process. We have a new EU ministry, which is pushing forward reforms and co-ordinating different kinds of reforms in line with our objective of alignment with the European Union.

Q130 Baroness Eccles of Moulton: Could I pursue that theme for a bit? I do not know whether, in landmass terms, Turkey would be the largest member of the European Union, but it probably has a larger landmass than any current member. You go a long way east. Population-wise—we have already talked about that—you would be, if not the largest, one of the largest. The next question is how varied the country is, both geographically and from the point of view ethnic origin, religion and culture generally. Obviously, if you are a single member state joining up with other member states, how diverse your country is in all those regards, and therefore how governable it is, is quite relevant. How is that seen through the eyes of the Government?

Mustafa Osman Turan: One of the characteristics of the Turkish state is that it is a strong state. That was one of the reasons why we had some problems in pushing for reform—the state was so strong that it was very capable of governing a big country like Turkey but individual rights have been, relatively speaking, ignored. So I do not think that there is any problem with the Turkish state’s capacity to govern a diverse country. Turkey is a diverse country, with people from different ethnic backgrounds and different levels of socioeconomic living standards. However, over time, these differences are being addressed, both economically and politically. The country has economic means right now, something that will probably continue in the foreseeable future, and those disparities are being addressed. There is a lot of investment in different parts of the country that have traditionally been relatively underdeveloped. In terms of its population, Turkey is as diverse as Europe, so I do not think it would create a huge problem.

Q131 Baroness Eccles of Moulton: Economically, has it been possible to help the poorest members of society? Are there government policies to help the people with the smallest incomes?

Mustafa Osman Turan: Yes, indeed. When you have economic growth, everyone benefits; for example, a lot of people came out of poverty; there are lots of social benefits; and a lot of housing for the poor has been built. There have been quite positive developments.

Baroness Eccles of Moulton: What about health?

Mustafa Osman Turan: Turkey has one of the best health systems in Europe, if I may claim that. Some people from Europe come to Turkey for health treatment, which has a good price/quality ratio. There is no problem with that. One more indicator is that in recent years, because of our economic growth, a lot of Turkish people in Europe have been coming back to Turkey. That shows the dynamism of the economy, which creates jobs and addresses disparities.

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Q132 Baroness Eccles of Moulton: You talked about the law being changed and mentioned freedom of expression and freedom of the media. Some of the adverse publicity that has come out of Turkey—which of course the media enjoy; they always hit on anything that is bad news—is that there has not been complete freedom of expression and freedom of the media. Is this now really being addressed?

Mustafa Osman Turan: The Government acknowledge that there is a problem not just with our legislation but with the way in which the courts interpret that legislation. They are trying to address this. They had four different packages; the fourth one, which is coming very soon, is specifically designed to address freedom of expression issues. Of course, one of the reasons why this situation has come out—and it relates particularly to the interpretation of the judiciary—is that the Government acknowledge that the problem with our terrorism legislation, for example, is the fact that we have been doing all these reforms to pass legislation that would provide individual rights in times of the fight against terrorism, which is intensifying. It is a challenge for any sovereign state to protect its sovereignty against terrorist acts and at the same time protect the rights of its citizens. Europe has gone through similar challenges.

Q133 Lord Foulkes of Cumnock: How much of a problem will it be when Cyprus announces the licences for oil and gas drilling in the disputed waters? Is that going to create tremendous new problems?

Mustafa Osman Turan: I would prefer to answer this question off the record.

Earl of Sandwich: I just wanted to place on record that the international community should be grateful to Turkey for what it is doing for the Syrians who are fleeing. The standard of care that has gone into the refugee camps is not usual in international relations. I just wanted to make that point.

Mustafa Osman Turan: Thank you.

The Chairman: If I may say, that would be the view of all of us. We are very grateful to have you as responsible neighbours. Some of us might like to have a much closer association with you. It is certainly not an issue on the whole in Britain. You will have noticed that we are on the whole enthusiastic. You have been very frank in presenting some of the difficulties but your own perspectives have also been very interesting. We are very grateful. You have been most helpful to our inquiry. Thank you very much.

Mustafa Osman Turan: Thank you for coming.

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Written evidence from the UK Delegation to the Committee of Regions

1. This submission responds to Paragraph 7 of the call for evidence and is made by the Leader of the UK Delegation to the Committee of the Regions on behalf of the full UK Delegation.

ISSUE

2. Enlargement has now reached a point where a decision must be made about national representations in the Committee of the Regions (CoR). Assuming that the Treaty limit of 350 seats is not increased, some national delegations must be reduced in size to accommodate the next accession(s).

3. This presents an opportunity to reconfigure the national composition of the CoR to one that is closer to that of the European Parliament, ie to restore the voting strength of the larger countries to more closely reflect their population size and budgetary contributions, whilst continuing a degree of protection for the smallest states, which includes two Commonwealth countries.

BACKGROUND

4. The CoR is an EU body, established by the Maastricht Treaty and comprising local government and regional politicians from across the EU with a remit to scrutinise draft EU legislation, much of which is implemented at local level. Although a consultative body, its opinion must be sought by the European Commission on matters affecting local councils and regional bodies, and its recommendations are increasingly influential within the European Parliament. Additionally, it has recently been given the role of “guardian of subsidiarity”.

5. When the CoR was established in 1994, its composition mirrored the template in the European Parliament, ie a positive discrimination towards smaller Member States (“degressive proportionality”). However, as a result of successive waves of enlargement, the CoR has nearly doubled in size without a change in the size of the 12 original delegations, with the result that smaller countries are now overrepresented and as a bloc are able to outvote the larger countries, including the largest net contributors to the EU budget.

6. The impact on the UK has been significant: in 1994, with a total membership of 12 Member States, our 24 seats (out of 189) constituted 12.7% of the total, at a time when the UK’s population equated to 16.7% of the EU total. Today our 24 seats (out of 344) constitute only 6.9%, barely more than half our representation by population. The situation is the same for the three other largest countries – Germany, France, Italy – and to a lesser extent countries such as Spain, Poland, The Netherlands etc.

Croatian accession

7. With Croatia likely to be assigned nine seats on accession in 2013 (based on a population of 4.4million), the total CoR membership will rise to 353, based on the current system of attributing seats. According to the Croatian treaty chapter, by 2015, a new system of representation must be agreed which will bring the total number back down to a maximum of 350, although this issue would again be reopened in the event that Iceland accedes to the EU,

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Written evidence from the UK Delegation to the Committee of Regions

and yet again in the event of any subsequent enlargement. This argues for a more flexible, dynamic solution.

8. Article 300 TFEU states that the number of seats in the CoR cannot exceed 350. Moreover, ‘(…) the nature of the composition of the Committees shall be reviewed at regular intervals by the Council to take account of economic, social and demographic developments within the Union’. Article 305 also specifies that ‘the Council, acting unanimously on a proposal from the Commission shall adopt a decision determining the Committee’s composition’.

Timing

9. In October 2010, the CoR adopted a resolution which concluded that the status quo should remain; the UK and other larger countries voted against the text - as amended by the smaller states – however the vote was carried by the combined voting weights of delegations from the smaller Member States.

10. The Commission has not yet indicated when it will make a proposal, but it needs to be implemented by the start of the next mandate (26 January 2015) if not earlier, following unanimous agreement in Council. Since the proposal requires unanimity, it would be beneficial to set out the key principles we would like to be considered by the Commission in its proposal and by UK Ministers.

TOWARDS A PROPOSAL BASED ON PRINCIPLES

11. The UK Delegation supports the various principles that have historically underpinned the allocation of places to national delegations.

• proportionality: delegations should be generally proportionate to population; • solidarity: the very smallest countries should benefit from a minimum threshold that enables them to function effectively in the CoR; • degressivity: allocations should vary from absolute proportionality in order to favour the smaller member states who would otherwise consistently be outvoted by the larger states. This is an element of solidarity; • fairness and burden-sharing: in the application of the above principles, the resulting allocations should avoid extremes of benefit and sacrifice; • universality: every CoR full member should have the right to participate in two commissions.

12. To these principles we would add another that could be described as “future-proofing”. Whatever solution is found for the application of the Lisbon Treaty in the context of the next accession should be dynamic, ie capable of being applied to future accessions in order to avoided repeated institutional wrangling.

13. Accordingly, we would propose that the composition of the CoR should be based on the same template as the European Parliament, the precise numbers adjusted to reflect the smaller size of the CoR. This would imply a UK Delegation of a little over 30 members, compared to the existing 24. The suggestion here is that each time the EP template is adjusted for future enlargements, the CoR is adjusted pro rata.

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Written evidence from the UK Delegation to the Committee of Regions

FINANCIAL CONSIDERATIONS

14. In calling for a rebalancing in the composition of the CoR, we do not advocate an increase in its overall size, therefore the cost implications are neutral for the EU budget (and therefore neutral towards net contributing countries such as the UK). Indeed there could be savings as UK members live relatively close to the CoR’s Brussels place of work, whereas those countries most likely to have reduced participation as a result of rebalancing are more distant and therefore incur greater costs in attending meetings, costs borne wholly by the EU budget.

RECOMMENDATION

15. The UK Delegation of the CoR recommends that this enquiry concludes in favour of a fairer and more sustainable balance to the composition of the delegations in order to make them more representative of the EU population.

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Written evidence from Natasha Wunsch, German Council on Foreign Relations

Principles behind enlargement

1. Do Articles 2 and 49 of the Treaty of the European Union provide the right principles for any further enlargement of the EU?

The current legal basis for enlargement provides an adequate background for any further enlargement, as it addresses the minimal requirements to be met by any applicant state and at the same time retains a sufficient margin of political appreciation for any future candidate for accession.

For the Western Balkan states, the three Copenhagen criteria (functioning democracy, competitive market economy, adoption of the acquis) have been completed by the requirement of regional cooperation between the accession countries that reflects their problematic past and should prepare the mindset for future cooperation within the Union. While it seems advisable to retain the possibility of adding criteria according to the state of advancement and specific problems in future enlargement candidates, these principles must be made transparent from the start in order to avoid disillusionment and frustration on the side of the candidate state (e.g. as currently witnessed in Serbia over the status of Kosovo).

5. Is Croatia satisfied with their accession process and the arrangements in place for them to join the Union?

While the elites and particularly the driving political actors are satisfied with having obtained a date for accession, in the wider population a sense of disappointment dominates as the changes in the country, particularly regarding economic prosperity and the integrity of political actors (cf. corruption) are not felt to be as significant as might have been hoped at the outset of accession negotiations. This explains the low approval rates for EU accession and the lack of participation in the referendum on this issue.

The impact of enlargement on the Union

As EU enlargement progresses, ever new potential accession candidates are created, namely those states newly located on the fringes of the EU that sense the chance of changing sides once their neighbours have become full-fledged members. In order to maintain both the credibility of the process and the reform dynamic in the respective countries, it is crucial to maintain accession promises once made (i.e. currently for the Western Balkans and Turkey) and to support domestic transformations both financially and politically. Given the recurrent debate on the borders of Europe, only clear, transparent accession criteria can represent an

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Written evidence from Natasha Wunsch, German Council on Foreign Relations appropriate answer to potential candidates that would avoid diminishing the EU’s influence in those countries that are still far away from fulfilling the necessary requirements for integration. A prima facie rejection of certain countries on other grounds is detrimental to both the EU’s credibility as a foreign policy actor and to the stability in the respective region or country.

The appetite and capacity for further enlargement

10. What impact should the ongoing economic and financial crisis, particularly in the euro area, have on further enlargement?

The EU’s reduced resources and the need to support states within the Union makes the need for a careful assessment of future members’ preparedness for accession all the more relevant, in order to avoid admitting a country who later will require large amounts of aid to meet what was originally set as accession criterion. Yet, the current crisis should not hinder enlargement towards countries which do meet all predefined accession requirements.

Alternatives to full membership can only function as a stepping stone, and only when it is clear that they are intermediate steps on the way to full integration. As the initial standards in candidate countries have been steadily decreasing while at the same time EU integration has been progressing and the number and depth of common policies increasing, the accession process has become very strung out and even in the case of countries with a clear integration perspective can be source of frustration. It is therefore necessary that the eventual goal of accession not be called into question in order to maintain a reform dynamic and encourage honest and deep transformations in accession candidates.

14. Have the lessons from previous enlargement rounds been learnt to improve the processes of enlargement?

The enlargement policy is one of the policies that has evolved most over the course of its existence, and it is becoming ever more refined with each new accession round. While standards are now extremely high and much attention is given to implementation over the mere adoption of legislation, the degree of sophistication in enlargement policy is overall very satisfactory. Moreover, the process of lesson-learning is ongoing, as for instance the early opening of more complicated negotiation chapters for Montenegro, following the Croatian experience, shows.

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