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III. Options for Reform: Between Deepening and Widening

The EU, and the policy of the Member States, and in particular Germany’s, can certainly not be held responsible for all of the above mentioned problems. Neither can they offer solutions to all of these problems. Many of the crises that have developed are the result of complex sets of interlinked causes and only a few of these can be addressed politically in the short term. Both so-called market globalisation and the end of the Soviet system are irreversible. Even in those areas where politics could have an influence, there are often powerful groups who are not interested in any change in the status quo. This is particularly the case in the applicant countries and other neighbouring states. In the end, development problems in these countries can only be solved through domestic reforms, which Germany and the EU can at best encourage, guide and support, but cannot force or implement.

Options for reform must be sought within this realistic framework. The most promising strategies pursue both deepening and widening simultaneously and seek package deals and timely agreements. In general, and according to the Copenhagen criterion on absorption, the nature and pace of the enlargement process depends on the ability of the EU to cope with expansion. To meet this task, political leadership is indispensable. Member States must form a reform coalition, that will serve as a precursor in the EU: The objective should be a ‘programming’ of the twin-track strategy on deepening and widening over a time scale of approximately ten years. The following options should be considered from a German viewpoint, with German interests and responsibility in mind.

1. Deepening

This section on ‘deepening’ presents two options for the further development of the EU. Whereas the first option develops elements of, and a step-by-step process towards, ‘deepening’ for all members, the second option underlines the possibility of political, functional and institutional differentiation to achieve a ‘closer Union’.

1.1 Comprehensive reform of procedures, institutions and policies

In general, deepening or ‘an ever closer Union of the people’ (Preamble, Art. 1 TEU) is defined in contrast to intergovernmental co-operation, as the extension and strengthening of the Community Method within the EC/EU institutional framework. Further deepening as an end in itself does not seem convincing. Steps towards this should be measured according to three criteria:

  • Improvement in procedural efficiency of preparing and making decisions;
  • Improvement of problem-solving effectiveness by extending or otherwise adapting the areas of activity and improving the regulatory and steering instruments;
  • Improving the level of legitimacy earned by the EU and its Member States, as well their increased acceptance through improvements to democratic procedures and increased problem-solving capacity.

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In particular, by proving its achievements, the EU can address the increasingly utilitarian attitude of the German population. In the multi-tier EU system, however, the ‘output’ to be expected depends on a process of national and European decision-making - the preparation, drawing up, implementation and monitoring of decisions - which is increasingly complex and lacks transparency.

With a view to deepening, there are five main thematic areas, more or less consistent with the policy objective of EU enlargement:

(i) Ratifying and implementing Amsterdam

If the above criteria are applied to the revision and amendment of the Amsterdam Treaty, the result is unsatisfactory (see especially criteria points 2 and 3). Nevertheless, the ratification of the treaty in all 15 EU Member States by the beginning of 1999 and its constructive implementation does establish a minimum condition for further integration. The history of the Treaty’s development has shown that the quality of EU policy cannot be assessed until the Treaty regulations are applied in practice.

With regard to deepening integration, the following reforms and provisions in the Amsterdam, EU and EC Treaties deserve attention, as they offer strategic starting points:

  • Establishing an area of freedom, security and justice within the framework of a European policy on justice and home affairs;
  • Improving the protection of basic rights (but still no catalogue of basic rights); non-discrimination against EU citizens beyond purely economic grounds;
  • The goal of promoting a high level of employment and co-ordinating employment strategies between Member States;
  • Environmental protection as a cross-sectoral goal and partial expansion of qualified majority voting through the co-decision procedure;
  • Strengthening the role of the parliament in the legislative process by extending the co-decision procedure;
  • Reform of CFSP institutions and procedures by introducing a High Commissioner/Secretary General of the Council, a special representative as well as a Policy Planning and Early Warning Unit;
  • Extension of the remit of the CFSP by incorporating the ‘Petersberg Tasks’ and co-operating on armaments policy.

(ii) Reform of the decision-making process and voting procedures

A reform of the decision-making process and voting procedures must take into consideration the three criteria mentioned above. The legitimacy criterion, in particular, targets a reduction of the democratic deficit within the EU. Central to the concept of ‘democratisation’ are two challenges:

  • The extension of QMV in the Council; coupled with
  • The establishing of the now streamlined co-decision procedure as the general rule, following
    Art. 251 EC Treaty.

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Decision-making process

There has been a trend towards reducing the decision-making process to three basic models: Co-decision, assent and consultation. By simplifying the overall process, this will improve both efficiency and transparency.

As a result of the Amsterdam Treaty, the co-operation procedure according to Art. 252 is now limited to only four areas of EMU (Art. 99 (5), 102 (2), 103 (2), 106(2) EC Treaty). In comparison, the co-decision procedure, which gives the EP equal status with the Council, has been extended to cover eight new and 15 old treaty areas, which makes 38 in total. For this reason, the EP is often heralded as the winner at Amsterdam. Any area which was previously still decided by consultation could now be brought under co-decision.

These areas include, amongst others:

  • Active and passive voting rights for Union citizens (Art. 19 (1) EC-Treaty);
  • Principles/reform of the CAP and Common Fisheries Policy (Art. 37 EC-Treaty);
  • Lifting of restrictions on the freedom to provide services in the field of transportation (Art. 52 EC-Treaty);
  • Directives and guidelines in competition policy (Art. 83 EC-Treaty);
  • Enactment of implementation directives on state aid (Art. 89 EC-Treaty);
  • Harmonisation of indirect taxation (Art. 93 EC-Treaty);
  • Approximation of laws relating to the Single Market (Art. 94 EC-Treaty);
  • Industry: EC initiatives for supporting competitiveness (Art. 157 (3) EC-Treaty);
  • Structural and Cohesion Funds: Actions not covered by the fund (Art. 159 EC-Treaty);
  • Environment (Art. 175 (2) EC-Treaty), with regard to town and country planning, land use, management of water resources and energy supply;
  • Own resources (Art. 269 EC-Treaty): A fixed system of Community own resources;
  • Budgetary planning (Art. 279 EC-Treaty);
  • New: Employment strategy (Art. 128 EC-Treaty);
  • New: Authorising flexibility in the EC-pillar (Art. 11 (2) EC-Treaty).

With a view to deepening, parliamentary co-decision is particularly desirable in the areas of

  • Tax harmonisation
  • Principles of the CAP
  • Own resources
  • Environment.

With regard to the budget, the EP is calling for the end of differentiation between obligatory (especially in CAP market intervention expenditure) and non-obligatory spending (e.g. structural actions and external policies). Only in non-obligatory spending (e.g. structural expenditure) does the final decision lie with the EP. The new financial framework for 2000-2006, the reform of the CAP and structural policy present key areas of policy reform, and more than one parliamentary term will be

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necessary to achieve them. An increased role for the EP would act as a supranational counterweight to the visible national tensions and incompatible interests which exist between Member States. On the other hand, however, longer negotiations and (still) larger package deals must be accepted as a possible consequence of increased EP participation.

The assent procedure, which is intended for quasi-constitutional matters, such as the admission of new members for example, should be extended to cover the following areas:

  • Own resources (Art. 269 EC-Treaty) - until now: Consultation
  • General authorisation (Art. 308 EC-Treaty) - until now: Consultation
  • Treaty amendments (Art. 48 TEU) - until now: Consultation by calling for an inter-governmental conference.

The admission of new members (Art. 49 TEU) and treaty amendments would not necessarily require unanimity in the Council if the EP gave its assent. Instead, the qualified majority rule could be used (more than ten states - following the model for the implementation of common actions and positions in CFSP). It is particularly important to clarify whether a procedure for ratification in the Member States should be established. If ratification by Member States is to be retained, then a quorum is required to set out how they come into effect. This would circumvent any attempts to block enlargement and treaty amendments.

The EU/EC Treaty still lacks a consistent method for stipulating decision-making and voting procedures which would lead to their simplification. The deficit is linked, amongst others, to the lack of any hierarchy of norms.

Voting procedures: More QMV

There are, at present, approximately 20 (after Amsterdam as many as 30 or 40) different voting procedures which contribute considerably to the complexity and lack of transparency of the decision-making process. With a view to deepening, the first step should be a more frequent or more general application of QMV in the Council, in conjunction with the co-decision procedure. The rule of unanimity in the Council results in a considerable loss of efficiency and (e.g. non-action) effectiveness.

Unanimity is still used in approximately 50 areas. Establishing simple and qualified majority voting as the rule could produce psychological effects and have a lasting influence on the negotiating style and tactics of the delegations and bodies, benefiting more effective majority coalitions. Speeding up decision-making could also be beneficial. The Council would function less often as a consensus machine than is the case at the moment, and it could open the way for new constellations of reform coalitions between Member States.

CFSP: An exception

Until now QMV has operated almost exclusively within the EC-pillar. It can only be applied in CFSP in the case of common actions and positions, but as yet has never been used. Thus QMV does not

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cover security policy. However, the CFSP is equipped with a procedure of ‘constructive abstention’ which allows barriers to be circumvented (CFSP-type of flexibility). The obligation to reach consensus in CFSP often means that, in the case of disagreement, hardly any decision (demarche, statement, common strategy) is reached and the EU fails to act or speak - with one voice - in matters of foreign policy (e.g. on Iraq). Despite this, the introduction of majority voting in an area which is not primarily concerned with the making of laws remains an extremely delicate issue. The credibility of the collective foreign policy representation of the EU would also then suffer if large states, such as Germany, France, UK and Italy, or groups, such as post-neutral states, Scandinavia and southern countries were outvoted. In addition to this, the greatest barrier to building community will and taking collective action in CFSP is the inability of the larger states (France, Germany, UK) to agree. For the above reasons, it seems unlikely that introducing QMV into CFSP will solve all its problems. It is necessary, therefore, to ensure the implementation of other institutional precautions introduced by the Amsterdam Treaty, which aim to strengthen supranational-level decision preparation and planning capacity.

EC-pillar: General extension of majority decision-making

In principle, the extension of qualified majority voting is less problematic in the EC-pillar. For the time being, unanimity should be retained for constitutional decisions and anything which has major financial implications. QMV should have general application in all examples of co-decision in accordance with Art. 251 of the EC-Treaty. This is usually, but not always, the case. The extension of QMV in conjunction with the co-decision procedure in the following areas would be of strategic value in the further development of the EC: Objectives and organisation of the Structural and Cohesion Funds (Art. 161 EC-Treaty), environmental policy (Art. 175 (2) EC-Treaty), budgetary planning (Art. 279 EC-Treaty) and CAP (Art. 36 EC-Treaty).

Those areas of competence transferred by the Amsterdam Treaty from the third pillar to the EC-pillar - asylum, immigration and the free movement of people (Schengen) - can only be brought under co-decision plus QMV after a transitional period of five years. This would also require a vote by unanimity in the Council, which must also cover a list of those areas to which the new regulation will apply. The position taken by the Kohl government, at the conclusion of the Amsterdam Treaty, that there would be no automatic transition to QMV following the end of the transitional period, could obstruct integration, as the pressure to reach early compromises was considerably reduced. The need to include, in particular, a ‘European Policy on Asylum and Refugees’, would have considerable repercussions on the Federal Republic’s legal position.

Further extension of QMV to cover the areas remaining in the third pillar - police and judicial co-operation as well as measures to combat racism and xenophobia - could be brought into the EC-pillar gradually through a step-by-step process of integration.

Consideration should be given as to whether the extension of QMV to cost-intensive areas, such as structural policy, would in fact bring Germany more advantages or disadvantages. The advantages should, however, outweigh the disadvantages. It is more beneficial for a majority supporting disciplined budgetary management to be formed in a coalition with large states, those with the most votes and the net contributors, than it is to ‘pay-off’ a blocking state. The danger that the net

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contributors would frequently have to finance a policy against which they had voted in the Council is rather unlikely, as they could reach at least a qualified minority (23 to 26 votes) and thereby stop any such proposals.

An extension of QMV shifts the focus back onto the distribution of votes to Member States. Institutional reform also requires an assessment of the composition of the bodies.

(iii) Institutional reform

First of all, the Amsterdam ‘Protocol on the Institutions’ should be quickly implemented. There is no precise timetable for reform. The following descriptions and conditions are outlined:

  • ‘At the date of entry into force of the first enlargement of the Union, the Commission shall comprise...one national of each of the Member States, provided that, by that date, the weighting of the votes in the Council has been modified... in a manner acceptable to all Member States’.
  • ‘At least one year before the membership of the European Union exceeds twenty, a conference of representatives of the governments of the Member States shall be convened in order to carry out a comprehensive review of the provisions of the Treaties on the composition and functioning of the institutions’.

Simply on the basis of these provisions it is clear that 20 Member States represents the breaking point and the reform threshold. In an extreme case, if no consensus on the reform of the Commission and the Council can be reached, the current system could be maintained in its present form until that time. However, given the already obvious problems regarding efficiency, effectiveness and legitimacy, that worsen with the accession of each new member, this would be extremely dangerous and would result in dilution rather than deepening. There is no shortage of reform proposals and suggested models. In addition to seeking the views of independent experts, Member States themselves have already presented their observations quite extensively in the report of the Reflection Group. Consensus on the issue is so problematic because this is the first time since 1957 that a fundamentally new political power relationship is being established and, with it, the long-term formal powers of the Member States. Technically speaking, the reform proposals tend to be detrimental to the small states.

Presidency

As regards the consistency and transparency of the Union’s work, the current six-month rotation of the EU Council presidency is unsatisfactory, even before enlargement. This is particularly the case for CFSP. The troika, which consists of the acting, outgoing and incoming presidencies, will be abolished when the Amsterdam Treaty comes into force. In CFSP, the replacement will be a combination of the presidency, the relevant Commissioner and the General Secretary of the Council as the CFSP High Commissioner.

Maintaining the status quo would mean that in the EU of 15, a Member State would take up the presidency every seven and a half years. In an EU of 26 members, it would be once every 13 years. This would cause the presidency to lose out to the national governments in its role as a motivating force and a point of identification. A lengthening of the presidency to one year, which is generally desired, would make the cycle unmanageably long.

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In addition to this, enlargement will make it impossible to follow the manipulation of the alphabetic order of presidencies, agreed in 1994, which was designed to avoid more than three small states holding consecutive presidencies. Each reform must take into account the fact that the EU and WEU presidencies run in parallel. The following reform options should be considered:

The Team Presidency was inspired by the troika. A tripartite team would be formed on the basis of various criteria. This could be arranged according to population, GDP, length of membership, or even simpler, according to the classification of large, medium and small states. A system of rotation would also be decided on.

  • Advantages: The principle of representation is preserved. The states are involved more frequently, so that even a lengthening of the presidency to one year is possible.
  • Disadvantages: The ordering of countries according to the three criteria is a complex procedure. In the current system, for example, the Netherlands was classified as a large country. Each enlargement would require a redefinition. A system of rotation with three positions is less comprehensible. The presidency would lack an identity and a voice.

An Elected Presidency would involve the selection of a particular country and its government. The Council or the European Council would select the presidents for a term of one year. Decisions would be taken on the basis of a consensus vote in the European Council. The Council could employ QMV.

  • Advantages: The political position and transparency of the EU presidency would be strengthened. In principle, all have an equal chance of being selected. The internal political calendar (e.g. elections, constitutional court rulings, referenda) and the internal political situations of the Member States could be reconsidered, something that the current inflexibility of the system does not permit. Elections would lead to new Member State behaviour and increased politicisation of the presidency function.
  • Disadvantages: EU members would lose their claim to the presidency. Because the outcome of the elections is unknown, it would be impossible to co-ordinate an overarching presidency programme. The equal standing of the Member States would be undermined by the politicisation of the presidency and energy will be spent on personal decisions rather than on the programme.

After consideration, an Elected Presidency does seem a rational solution to the problem and would lead to increased personalisation which, on the whole, would benefit the EU.

Distribution of votes in the Council

Although the Council represents the Member States it is, at the same time, a supranational organ of the EC. The distribution of votes so far has not turned it into a simple Chamber of States, in the style of the US Senate with an equal number of votes for each federal state. It is, however, stronger than the Bundesrat (two to six votes), for example, in that the principle of proportionality must be applied and is achieved by a graduated distribution of votes (two to ten). German unification has already revealed that the proportionality deficit has increased in both the EP and the Council. Germany has since become by far the largest country (81 million inhabitants, France and UK are joint second with 58 million each), with the largest economy (27 percent of EU GDP) and is the greatest contributor to the EU budget (approx. 28 percent). This position is not reflected in the distribution of votes in the

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Council, where the four largest countries - Germany, UK, France and Italy - each have the same number of votes (currently ten). For reasons relating to integration, Germany should continue to refrain from pushing to extend its lead as far as possible. This would lead to a singling-out of Germany, which would be politically counter-productive. As enlargement takes place, the distribution of votes will shift disproportionately in favour of the smaller states. The original privileges given to small states, and the institutional precautions taken to avoid outvoting small and medium countries, must be reconsidered in view of the democracy principle, the extent of their efficiency and any foreseeable effects.

This context should be used to set the objective of a stronger proportionality and weighting of votes in favour of large states, with consideration for a balanced relationship between small, medium and large states. Any such formula would be responsible for setting majority coalitions (approx. 70 to 71 percent of the weighted votes) and blocking minorities . The following options should be considered:

  • Continuation of the status quo or double majority:Continuation of the status quo and thereby representing the majority of the population;
  • Linear proportionality: Weighting of votes directly proportional to the size of the population;
  • Graduated proportionality: Grading votes according to a certain proportion of the population. This would mean a country with a population of up to 18 million would receive one vote for every 1,5 million inhabitants; populations of between 18 and 45 million would qualify for one vote per three million inhabitants; populations of over 45 million would receive one vote per 5 million inhabitants. [Fn.2: From Josef Janning: Am Ende der Regierbarkeit? Gefährliche Folgen der Erweiterung der Europäischen Union, in: Europa-Archiv 22 (1993), pp. 645-652.]
  • Quadratic proportionality: Votes are based on the square root of the population, i.e. twice as many votes for four times the population size. [Fn.3: From Philippe C. Schmitter/José I. Torreblanca: Old 'Foun dations' and 'New Rules' for an Enlarged European Union, The Robert Schuman Centre: Policy Paper 97/1, European University Institute, Florence.]

This would produce the results shown in Table 8.

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Table 8

Distribution of Votes in the Council of the European Union

Member State

Population in Millions

Status quo

Linear
Proportionality

Graduated

Quadratic
Proportionality in an EU of 27

Germany

81.6

10

40

28

10

UK

58

10

29

24

8

France

58

10

29

24

8

Italy

57

10

29

24

8

Spain

39.6

8

20

19

7

Netherlands

15.5

5

8

10

4

Greece

10.5

5

6

7

3

Belgium

10.1

5

5

7

3

Portugal

9.8

5

6

7

3

Sweden

8.8

4

5

6

3

Austria

7.8

4

4

6

3

Denmark

5.2

3

3

4

2

Finland

5.1

3

3

4

2

Ireland

3.6

3

2

3

2

Luxembourg

0.4

2

1

1

1

EU-15

371.2

87

190

174

Poland

38.4

8

20

19

7

Romania

22.8

6

12

14

5

Czech Republic

10.3

5

6

7

3

Hungary

10.1

5

6

7

3

Bulgaria

8.8

4

5

6

3

Slovakia

5.4

3

3

4

2

Lithuania

3.7

3

2

3

2

Latvia

2.6

3

1–2

2

2

Slovenia

1.9

2

1

2

1

Estonia

1.5

2

1

1

1

Cyprus

0.7

2

1

1

1

Malta

0.4

2

1

1

1

Plus 12

106.6

45

60

68

EU 15 plus 12

477.8

132

250

242

198

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As the above arguments show, the first and second options are politically or practically dysfunctional. Proportionally graduating votes is a convincing alternative both politically and from a federal viewpoint, and offers a practical model for a step-by-step enlargement. This also applies to the formation of majority coalitions and blocking minorities. The fourth option is complicated and makes little difference to the allocation of votes. It could be applied in conjunction with a voting college system. This would mean that, for QMV in an EU of 27, a simple majority of the weighted votes in at least two colleges would be needed, in addition to the 71 percent overall. The voting college system [Fn.4: From Schmitter/Torreblanca, op.cit .] in an EU of 27, with the current distribution of votes, would resemble the results shown in Table 9.

Table 9

Voting College System for an EU of 27

College

Member State1)

Votes


I

Germany, France, Italy, UK
Spain, Poland
Romania

10 each
8 each
6

II

Belgium, Greece, Netherlands, Portugal, Czech Republic, Hungary
Austria, Sweden, Bulgaria

5 each
4 each

III

Denmark, Finland, Ireland, Latvia, Lithuania, Slovakia
Luxembourg, Estonia, Malta, Slovenia, Cyprus

3 each
2 each

1) EU Applicant countries in bold type.

Composition of the European Parliament

In the Treaty of Amsterdam, the maximum number of seats in the EP was set at 700. However, there is no indication as to what the distribution of seats will be after enlargement. The entry of Poland alone would bring the EP close to the 700 threshold, as it would increase the number of seats to 686 (626 plus 64). A continuation of the status quo is, therefore, impossible. The representation of the citizens requires a more rigorous application of the proportionality principle than in the Council. This would be particularly important if the objective were a bi-cameral system involving the EP and the Council, and if an increased emphasis were given to the Council as a Chamber of the States. Table 10 illustrates the available options.

In addition to the distribution of seats, a uniform electoral system should also be introduced for all Member States. The EP should be developed further into a ‘working parliament’ and should adhere closely to the 700 seat threshold.

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Table 10

Composition of the European Parliament

Member State

Population in Millions

Status quo (without upper limit)

Linear Proportionality

Graduated1)

Quadratic Proportionality in an EU of 27

Germany

81.6

99

119

97

67

UK

58

87

85

73

56

France

58

87

85

73

56

Italy

57

87

83

72

56

Spain

39.6

64

58

54

47

Netherlands

15.5

31

23

30

29

Greece

10.5

25

15

21

24

Belgium

10.1

25

15

20

23

Portugal

9.8

25

14

19

23

Sweden

8.8

22

13

17

22

Austria

7.8

21

11

15

21

Denmark

5.2

16

7

10

17

Finland

5.1

16

7

10

17

Ireland

3.6

15

5

7

14

Luxembourg

0.4

6

2

2

5

EU 15

371.2

626

542

520

-

Poland

38.4

64

56

53

46

Romania

22.8

42

33

37

35

Czech Republic

10.3

25

15

20

24

Hungary

10.1

25

15

20

23

Bulgaria

8.8

22

13

17

22

Slovakia

5.4

16

8

10

17

Lithuania

3.7

15

5

7

14

Latvia

2.6

15

4

5

12

Slovenia

1.9

15

3

4

10

Estonia

1.5

15

2

3

9

Cyprus

0.7

6

2

2

6

Malta

0.4

6

2

2

5

Plus 12

106.6

266

158

180

-

EU 15 plus 12

477.8

892

700

700

700

1) Graded: Up to 15 million inhabitants: 1 seat per 0,5 million inhabitants; thereafter 1 seat per million inhabitants. A minimum of two seats

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Composition of the Commission

The existing Commission, with its 20 members, is already criticised for its lack of efficiency and ‘overstaffing’. In the case of an enlargement, this would intensify. The revised procedures introduced by Amsterdam should allow every member to nominate only one Commissioner. In other words, a first enlargement of six countries would increase the number of Commissioners to 21 (15 old and six new). A smaller first wave of enlargement would only leave the number temporarily below 20.

The following reform options should be considered:

  • One Commissioner per country, each with equal status;
  • One Commissioner per country with graded status (‘junior Commissioners’), resulting in a smaller Commission and increased efficiency;
  • Election of a fixed number of Commissioners (e.g. 15) by the EP after recommendation by the European Council. This would include the President, and the selection would not be dependent on the nationality of the individuals. There would be a maximum of one Commissioner elected per Member State.

The first two options seek to secure the interests of each Member State representation in the Commission, whereas the third highlights the Commission as a Community institution and strengthens its legitimacy through election. Member States left without representatives could be compensated on other levels of the Commission hierarchy, for example, by a revaluation of the Director Generals. The Commission would thus set the principle of securing a measured and weighted representation for all Member States, which would apply across the board, to all bodies, institutions and other positions. The supranationality of the Commission will not, however, be jeopardised automatically if it, along with other bodies (Court of Justice, Court of Auditors), retains full Member State representation. What will suffer is the quality and efficiency of its work. For this reason, EP approval of the entire Commission and the election of the Commission president should be insisted upon, to ensure that those being chosen as members of the college are sufficiently qualified. More generally, other decisions regarding personnel (e.g. High Commissioner, ECB President) should be taken increasingly according to majority voting instead of pressured consensus in the Council followed by EP approval. Above all, this is fundamental to improving transparency and legitimacy.

Languages: Diversity and proximity to the citizens override cost arguments

With enlargement, the number of official languages will reach 11 plus x. Cutbacks are impossible because of the need to publish Community Law in each national language, particularly true in the direct application of directives.

The three working languages used in the EU - English, French and, less frequently, German - will continue to exist in an EU of '15 plus x' members. None of the 11 new national languages can take on the status of lingua franca for the CEE 10 and become a fourth working language. Whilst this causes no problem in the Commission, the European Parliament on the other hand, for reasons of principle, must provide interpretation from and into the languages of all Member States. Although there are technically efficient solutions to this problem, it would mean additional costs which are, however,

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justifiable in the name of transparency and openness. The wide diversity of languages in the EP underlines the heterogeneity of the enlarged EU and the ensuing problem of building political will for a space which stretches form the Barents to the Black Sea and the Mediterranean.

The Council is a multilingual organ. In principle, each participant has the right to speak in his/her own language, and translations of the interventions and texts are produced. In practice, a considerable degree of flexibility has emerged. Delegations which do not speak French, English or German often abandon translations into their mother tongue (e.g. Danes and the Dutch). An enlargement of the EU would mean, in principle, an increase in the language diversity in the Council, and a new arrangement would emerge. The machinery will, in any case, become much slower and, in particular, there would be at least a temporary increase in session formalities.

The Committee of Permanent Representatives (COREPER) works predominantly in English and French (seldom in German). In the course of enlargement, no significant alterations are expected. The need for translations in the Council’s technical working groups could, on the other hand, rise considerably, as they involve much fewer ‘Europeanised’ national civil servants.

The principle issues to note are that multilingual representatives working at and below the ministerial level and lower have a considerable negotiating advantage. Transition to a working language, as is the case with EFTA for example (English), or to a limited number of conference and official languages, following the model of other international organisations (e.g. OSCE), must be ruled out.

(iv) No increase of budgetary resources

Given the policy of convergence in the Member States and the principle of subsidiarity, the desire to increase EU resources requires solid argumentation. This could mean additional contributions or a more thorough observation of existing contributions, possibly accompanied by relief for national budgets. The EU could increase its receipts in three ways:

A majority of Member States, including Germany, are against the build up of receipts for the period 2000-2006. The total budget should grow in line with economic growth. In Agenda 2000, the Commission set the optimistic forecast for a rate of average growth of 2.5 percent. This would give a total volume of 745.5 billion ECU.

It is suggested that the budget, which until now has been allocated to the CAP (approx. 50 percent) and structural policy (approx. 33 percent), is reduced or redistributed, in order to liberate funds for other policy areas. EU enlargement increases the pressure to achieve higher concentration and efficiency in structural policy as well as a more market-oriented CAP. For Germany, redistribution - in particular, a reduction in CAP expenditure - would improve the balance between contributions and receipts. This expenditure-related starting point for the normalisation of Germany’s position as a net-contributor should be given priority over a reduction of contributions as, for example, the capping model suggests. Nevertheless, a correcting mechanism could establish more justice and credibility as regards receipts. In general, more account should be taken of GDP per head in the composition of receipts. Re-nationalisation of CAP expenditure should also be examined.

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At the moment, the need for ‘horizontal financial redistribution’ within EMU cannot be ignored. Most observers assume that financial redistribution is necessary between the rich and poor members in a monetary union, as in the Federal Republic of Germany, because the members have to compensate for the lack of financial, fiscal and exchange rate adjustment mechanisms. Were these claims to be proved irrefutable, the EU would require a considerable budgetary reserve.

(v) Economic policy initiatives

The forthcoming monetary union, which will not be dealt with in this study, is an important step towards economic integration. We will limit ourselves to the two central issues of regional and structural policy and the Common Agricultural Policy (CAP).

The current EU structural and regional policy stands out due to the diversity of its objectives and instruments which, although historically important, make it rather inefficient. In the meantime, over 50 percent of EU citizens are living in areas worthy ( in need?) of support. There are six to seven assisted areas which qualify for several Objectives. Ideas for reform stretch from neoliberal-inspired cuts to each regional and structural policy, to the introduction of regional financial redistribution, and finally to pragmatic improvement of the current policy. The model preferred by Wulf-Mathies and Samland still retains five Objectives, which would, however, be more narrowly defined (see Table 11).

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Table 11

Objective areas of the EU Structural and Regional Policy

(Wulf-Mathies/Samland Model)

Objective

Billion ECU1)

Percent

Share of Population

Poverty/Unemployment

96,2

65%

26% (until now 42%)

Rural areas

13,2

9%

8% (as until now)

Structural transformation

14,7

10%


Applicant countries

15,6

11%


Community Initiatives

7,3

5%


1) 1992 prices

Source: Heinz-Jürgen Axt, Strukturpolitik der Europäischen Union. Reformmodelle im Vorfeld der Osterweiterung, Duisburg 1997

In the event of an implementation of the Commission proposals on CAP reform and its gradual extension to cover the new Member States from 2002, CAP expenditure in real terms would increase further (see Table 12).

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Table 12

Development of agricultural expenditure according to Agenda 2000

(Billions of ECU at current prices)

1999

2000

2001

2002

2003

2004

2005

2006

Guideline

45.0

46.7

48.5

50.6

52.6

54.7

56.9

59.2

Agricultural Expenditure


44.0

45.9

49.7

52.1

53.2

53.9

54.5

EU-15

41.7

43.5

45.4

47.4

49.3

49.3

50.0

50.0

New Members


0

0

1.7

2.2

2.7

3.3

3.9

Pre-accession Aid


0.5

0.5

0.6

0.6

0.6

0.6

0.6

Margin


2.7

2.6

0.9

0.5

1.5

3.0

4.7

The percentage of the EU budget in 2006 lies at around 44 percent (1999 figure is approximately 48 percent). In 1996 Germany was by far the largest CAP net contributor (-10.2 billion DM net contribution). France was the largest net recipient in 1996 with +5.2 billion ECU. Every increase in agricultural expenditure means a greater burden for Germany because of its large share of the EU budget. The Commission has not yet set figures for the period from 2006 onwards, but it is assumed that payments to the new members will increase. Further regulation and production restrictions in a similar vein to the MacSharry reforms could have the same effect as in 1992 and result in a worsening of the German position as net contributor. Moreover, it is also necessary to calculate the different effects of reform on Eastern and Western Germany.

An emphatic reduction of the CAP share of the EU budget would require more draconian measures than those proposed by the Commission, particularly with regard to enlargement. Such alternatives lead, in principal, towards re-nationalisation and/or deregulation. Re-nationalisation may relieve the EU budget, but it would, in the process, place more of a burden on national budgets. Member States would then themselves decide to what extent they wished to pay socio-politically motivated subsidies to their farmers.

At an EU level, a comprehensive deregulation of agricultural policy could be pursued in connection with the WTO Round. This would have considerable social repercussions, at least in Germany and in the other more agriculturally structured Member States.

Table 13 outlines the possible scenarios.

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Table 13

Different scenarios for a reform of the CAP (for the years 2000 to 2010)

Scenario A1)

Scenario B2)

Scenario C3)

Billion ECU in 1992 prices

2000 / 2005 / 2010

2000 / 2005 / 2010

2000 / 2005 / 2010

EU (15)
Agricultural policy

40.1 / 44.3 / 48.9

40.1 / 44.3 / 48.9

40.1 / 23.7 / 7.3

Plus CEFTA (5)
Agricultural policy

6.7 / 7.3 / 7.9

1.0 / 1.1 / 1.2

1.0 / 1.1 / 1.2

Plus CEE (10)
Agricultural policy

14.5 / 15.9 / 17.0

2.2 / 2.4 / 2.6

2.2 / 2.4 / 2.6


1)Retaining CAP, full transfer to new members.
2)Retaining CAP, partial transfer to new members.
3)CAP reform (full but gradual renationalisation of redistribution payments). Full transfer to new members.

Source: Christian Weise et al. (Deutsches Institut für Wirtschaftsforschung), 'Ostmitteleuropa auf dem Weg in die EU – Transformation, Verflechtung, Reformbedarf, Beiträge zur Strukturforschung', Volume 167, 1997, p 276

As EMU develops, there will be considerable pressure for increased tax harmonisation, including direct taxation. Improved tax harmonisation, at least within the EU, could prevent harmful competition developing between Member States. The code of behaviour agreed on in Luxembourg still falls short of what is necessary.

The social welfare system, like taxation, will also be exposed to tough competition inside the Euro-zone. Until now, competence in these areas has remained clearly at the national level.

Recovering an acceptable ratio between net and gross wages by cutting taxes and contributions and by concentrating state benefits should be at the forefront of German policy. In this way, German wages would again become more competitive. Employment policy initiatives and strategies are also predominantly national concerns and should be the subject of closer co-ordination between Member States at the EU level.

1.2 Differentiation options

This alternative proposes a deepening of the EU in connection with differentiated participation by Member States and with differentiated structures of integration. This would represent the most important departure to date from the Community principle of uniformity. However, it should again be noted that, although EU enlargement strengthens the trend towards differentiation, it does not cause it.

Against the backdrop of existing diversity and heterogeneity and given the level of integration already reached after Amsterdam, each step towards deepening is potentially a step towards differentiation. The provisions in the Amsterdam Treaty on closer co-operation/flexibility set flexibility first and foremost as a decision-making process, and not as a structure for integration. In comparison, decisions resulting from transition to the third stage of EMU could lead to permanent institutional and therefore structural differentiation in the EU (the Euro-11-Council sets the precedent). Despite diverse

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pressures to differentiate, models and political agendas for differentiation/flexibility remain open. The following sub-options are possible:

(i) Closer co-operation

‘Closer co-operation’ would satisfy the provisions of the Amsterdam Treaty. They posit flexibility as a ‘last resort’ in situations where a majority of Member States (at least eight) wish to lay down amendments to the objectives set out in the TEU, which they temporarily or permanently can not or do not wish to follow. The authorisation is achieved by a decision in the Council by QMV, with the right of veto possible for important reasons of national interest. Strengthened co-operation follows, to a large extent, the concept of step-by-step integration. The single institutional and legal framework is central. The strength of the concept lies in the absolute inviolability of the Acquis (also important with regard to the risk of erosion during enlargement). The security precautions render the application of flexibility extremely complicated, if not impossible. In the EC-pillar, eight general and five specific criteria must be met before the Commission will translate an application by a Member State into an official proposal. Despite these restrictions, the Amsterdam rules on flexibility could be built upon by those Member States interested. The objective would be to provide more opportunities for a degree of flexibility to be built into the structure of the system, without endangering the overall EU framework. For this reason, the areas where this can be applied must be extended so that, for example, EU objectives can be completed or targeted and flexibility can also be applied to highly-integrated policy areas. Another starting point would be a reduction of the minimum number of participants required. This would also allow for a multi-track, multi-speed Europe to emerge with regard to enlargement.

(ii) Flexibility à-la-carte

This concept departs from the Acquis: The single institutional and legal framework will be reduced to a supranationally constituted core area, for example the Single Market. The chief maxim would be that the EU will do less and therefore be more efficient and thus should be improved. Areas of activity and resources would be drastically reduced. Alongside this, functional and sectoral groups would organise themselves according to the principle of intergovernmental co-operation (on the model of pre-Amsterdam Schengen). Enlargement may be possible more quickly and more cheaply, as the new members would not have to be integrated into cost-intensive areas such as CAP and structural policy. The strength of 'flexibility à-la-carte' could lie in the formation of optimally efficient and politically homogenous groups. A weakness of the 'robust EEA' would be the considerable cost of organising flexible co-operation, which could establish an expensive bilateralism. The expected loss of political magnetism and the effect of this in bringing about order in CEE are to be assessed negatively. In such a constellation, small and middle-sized countries in both this interim Europe and in the old Western Europe will be more obviously marginalised and potentially outvoted. They would be forced to find powers they could 'lean on' for protection.

(iii) Core Europe with a Franco-German motor

The constellation outlined in the Schäuble-Lamers paper of 1994, where the countries capable of and willing for integration would be identical with the core group of EMU (five plus x), will not occur in this way. The Euro-zone will encompass 11 countries, which cover the full political and economic

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range of the EU rather than a particularly homogenous avant-garde. To this extent, the motor function for the establishment of deepening and widening by this core group cannot be achieved without something further. Nevertheless the basic idea of deepening in the core can be realised via another constellation. At the centre of such a stable core would be the Franco-German axis. Its task would be to feed into the EU relevant initiatives for deepening and enlargement and 'organise' majorities to support them. These initiatives could, like the 'Münster Agreements', have a bilateral preliminary round. The co-operation would extend to matters from all three pillars. Strengths and weaknesses of this concept are closely linked. On the one hand, the extent of divergence in French and German interests allows for a corridor, acceptable to other Member States, where compromises can be reached. On the other hand, this divergence of traditions and interests frequently prevents the agreement of joint proposals. A joint project, for example a political union, would have to be defined for the Franco-German motor, which the heads of government of both countries could energetically commit themselves to. However, the potential extension of the axis to form a triangle for reform, with the inclusion of the UK, would have to be discussed. From a German point of view, the reform impulses of the British Labour government could be useful for the structuring of the Single Market or of employment policy. To be able to play a stronger role in integration policy, the UK should become a member of the Euro-zone at the earliest opportunity.

(iv) An External Affairs Directorate of the major players

A new (informal) Steering Committee, consisting of Germany, France and the UK, would be installed next to, or above, the European Council. Above all, the foreign policy objective of such a directorate would be to establish a European capacity to act in international politics. In the first instance, this co-operation would concern CFSP matters. Nothing else would be invested politically into the CFSP of the EU; rather, at best, the current situation would be frozen. The Three could, if the need arose, pursue activities outside the EU without affecting their duties of loyalty and solidarity in CFSP. From the German, and especially the British, point of view, this co-operation would be set in a trans-Atlantic framework. The Three would claim to speak and act for Europe.

However, this option holds numerous risks:

  • The dissolution of CFSP and of its politically important voting reflexes among the EU-15;
  • No conversion of the WEU into the European pillar of NATO;
  • Division of the EU as an economic and external affairs actor with clear losses of synergy and political clout;
  • Dissolution of the pillar structure.

Even if no strategy were pursued for the establishment of a directorate, the development in real political terms of such a forum (as in the case of Bosnia) could be imminent. Therefore, rules should be established within the EU which allow for this kind of transfer to activities outside the EU. However, in the case of the Contact Group, not just Italy but also the USA and Russia are included. How the two flanking countries would regard this less EU-dependent, and equally less multilaterally-oriented, German foreign policy is not yet clear.

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Amongst other things, the following must be clarified: How great is Germany's need for differentiation in order to pursue the goals of deepening and widening? Should Germany actively pursue one option for differentiation or should it hold several options open for development in the medium term?

At the core of today’s German policy should be the objective of optimising influence on the restructuring of the system and of optimising EU output through differentiation. Against this, the objective of reducing financial contributions, for example, should be of lesser importance. This means implicitly that any innovation in integration policy structures and areas of competence must also, for the moment, be financed.

2. Widening

EU enlargement leaves a variety of alternatives in three fields: The selection of new members, the date of their admission and the nature of their accession; in other words, the extent of transitional periods and temporary derogations. These arrangements, in particular, must have a stipulated duration and limit to the level of deepening of the EU or the extent of its differentiation. These three fields are interrelated. The more applicants that are admitted at an early date, the greater will be the need for differentiation. The less differentiation tolerated by the EU, the more difficult the selection will prove to be, or the longer the preparatory phase. The alternative strategies which follow are situated along a spectrum of decreasing preference for a rapid and complete enlargement.

2.1. Strategies for widening

(i) Enlargement at any cost

This strategy could become necessary in the event of a crisis in Eastern Europe which the EU wants to keep from spilling over into neighbouring countries. For example, if there were an implosion of the current, more or less democratic, national order in Russia, there would be incalculable internal risks as well as the risk of neo-imperialistic expansion towards the West. This would prompt Germany, above all, to call for the rapid accession of Poland.

A second possible context and scenario would be if democracy and orientation towards the West were visibly under threat in the applicant candidates and the EU wished to prevent this through accession. It is, however, unlikely that the EU would be prepared to take such a step and unclear as to what extent this would in fact offset such a threat. The example of Slovakia illustrates that the EU tends to treat the domestic problems of the applicant countries by taking more distance, rather than by accelerating integration, and expects stabilisation to be achieved before accession.

Were extraordinary circumstances to impose the selection of this strategy, its main benefit would be the symbolism of the accession, which should prompt a more considered behaviour on the part of the remaining actors.

This strength would, however, be undermined by the political cost to further integration - by accepting numerous exceptions and transitional agreements, the inviolability of the Acquis is damaged and EU

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integration is weakened. Incumbent members and future applicants could draw on this precedent. At best, the EU can avoid some specific costs by releasing the applicant country experiencing difficulty from certain commitments and, as a countermeasure, by cutting back on certain rights, particularly as regards transfers.

(ii) Criteria-led enlargement

The current strategy of the EU is based on the ability of the candidate countries and the EU to meet criteria that will facilitate enlargement. At the Copenhagen Summit in 1993, the Council decided that all associated countries in Central and Eastern Europe could become members if they so desired, and if they met the necessary conditions. As a prerequisite for membership, it set out five criteria:

  • Democracy and the rule of law;
  • Functioning market economy;
  • Ability to compete in the single market;
  • Adoption of the Acquis Communautaire and agreement with the objectives of political union and EMU;
  • Ability of the EU to absorb new members.

There are a further three factors which could and indeed should be included to make this set of criteria more demanding:

  • An applicant country must ensure its own house is in order in matters of foreign policy and that it is not pursuing interests which contradict those of the EU. What this actually means, is that disputes over boundaries or with neighbouring states over minority issues, for example, should not spill over into the EU with enlargement. Nor should there be any antagonism with EU partners or alliances with enemies of EU Member States. Had this applied to the case of Greece, its failure to resolve its disagreements with Turkey would have precluded its membership. Cyprus would thus only be admitted once all disputes with Turkey were resolved.
  • In social affairs, more precisely in matters such as income distribution, unemployment and poverty, applicant countries should not rank too far below the EU average, or should, at least, not fall below the lowest-ranking Member State. It is true that basic social rights are included in the Acquis through the Social Charter, but this leaves considerable scope for action in social reality. The EU should make more demands in this respect, not least in an attempt to avoid considerable pressures from migration.
  • The European vocation of the applicant country should not only be reflected in attitudes of the elite. A majority of the population should also show clear support for integration and for the basic objectives and values of the EU. This should be put to the test in an appropriate referendum which should include minimum quotas for turnout and support.

The problem with imposing relatively exacting criteria is that it is possible that not all of the incumbent members would meet them. The optimal scenario for the EU is if all new members are net contributors with above average per capita income, and no considerable structural problems, as was the case with the EFTA enlargement. With Eastern enlargement, however, the criteria of per capita income in line with the poorest member state would already rule out almost all of the candidates currently involved in the accession process.

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In 1997, the Commission selected five of the ten associated candidates in Central and Eastern Europe to begin formal accession negotiations. The selection was based on a comprehensive analysis of the ability of the applicants to become members. The Copenhagen criteria were taken as the benchmark for analysis. Of the five first applicants to be rejected, most failed to meet the criteria on competitiveness and the Acquis Communautaire. Only in the case of Slovakia, did the Commission observe problems in the fields of democracy, the rule of law and the protection of minorities. The ability of the EU itself to absorb new members, the fifth criterion, was considered by the Commission to have been satisfied by the rather optimistic financial and institutional assumptions made in its Agenda 2000.

Rigorous criteria should also be applied to assess the ability of the EU to enlarge. Setting a maximum level of additional expenditure would be one means of clarifying financial matters. A level has already been given in the shape of the 1.27 percent of EU GDP, although not all Member States are in agreement with this. This does, however, depend on the level of growth. It is more complicated to set political and institutional criteria, particularly as it is proving ever more difficult to reach a consensus.

Finally, the ability to enlarge is inextricably linked to the ability to function. Several factors determine this:

  • Procedures and Institutions:The different institutions (Council, Parliament, Commission) formulate EU policy by means of formal and already well-established procedures (weighted voting, sometimes qualified majority, sometimes the right of veto, national proportional representation, ‘package deals’ etc.). The more members involved, the more difficult it will be to reach a consensus. This results in either the lowest common denominator being accepted, or some states giving in, to avoid a more detrimental outcome.
  • Resources: The ability to function is also contingent on available resources, principally financial means. Among other things, this allows members to be compensated for accepting decisions which are not in their particular interest. Externally, Europe can also attempt to gain influence by offering financial support. The willingness of members to pay into the EU budget and their desire to ensure that returns flow back again is, however, a clear indicator of the nature of their relationship with the EU.
  • Interests: Procedures and resources both ultimately reflect interests. If interests converge, then unanimity and procedures established to protect minorities bring results, and participants are prepared to provide resources to fund common interests.

The EU functions more efficiently if there is a greater level of agreement amongst its members. The chances of achieving this drop as the number of members rises. Agreement does not only depend on the number of members, but equally on their structural similarities. The interests of Austria and Germany, for instance, differ less than those of Estonia and Spain. In this way, the question of how able the EU is to function returns to the issue of criteria. Criteria serve, amongst other things, to shut out those countries whose structures are too different. Such differences endanger the efficient functioning of the EU and the satisfaction of the interests of the Member States and the citizens who depend on it.

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Observers in the field of cultural history see the borders of Europe at a line reaching from Estonia, through Poland to Croatia. South-East of this line lie countries with weak traditions of autonomous civil society, with prevailing orthodox or Islamic (Ottoman) influences. Everything West of the line, however, was shaped in the Roman Latin tradition. By accepting Greece as a member and Bulgaria and Romania as associates with membership prospects, the EU has already transcended this boundary.

The conclusion must bring both sides together: The EU can, and must, remain efficient. It must provide that new members are fully compatible and that, through self reform, the EU itself is fit to function as an enlarged Union. Criteria-led enlargement will facilitate this in principle.

  • The advantages of this approach lie in the strict orientation towards output and efficiency and the increased security offered by firmer EU control. It would lead naturally to an enlargement in stages, as and when criteria are met. The interests and reservations of the EU Member States can be voiced during the accession process.
  • There are also disadvantages in that the EU is left with considerable freedom in such an approach. The EU can easily postpone enlargement to put off or avoid adjustments, even those which were in their own, long-term interest. This reduces the pressure to reform, despite a more pressing need for it.

(iii) Widening after deepening

This strategy seeks to postpone enlargement until the current reform and deepening of the EU has been completed. At the very least, this refers to the implementation of Maastricht and Amsterdam, as well as EMU. It would also very likely cover the outstanding reforms of the CAP, Structural Fund and the institutions. This states implicitly that enlargement will not take place before 2003 at the very earliest, if not much later.

It could be rather difficult to outline the stage that the EU must reach prior to enlargement. Would this mean, for example, that it would be necessary for all current EU Member States to converge at a similar level of deepening, in particular those participating in EMU? The same question can be applied to other areas of deepening (e.g. Schengen). If the answer is yes, then a very considerable delay can be expected.

  • The advantage of this strategy would be the consolidated and more efficient EU which would emerge at the end of the deepening process. This would also be in the interests of the applicant countries. After all, the European Union of 15 itself remains far more important to the Member States than Central and Eastern Europe. Preserving its stability first of all, would protect substantial economic and political interests. Such reforms would enable subsequent enlargement to take place without posing any problems for the EU. Additional costs, in particular, could also be kept to a minimum.
  • The principle disadvantage of this strategy would be a loss of political credibility, as it implies considerable deviation from the current course of action, which has already been agreed with the Central and Eastern European partners and publicly discussed. Over and above this, the goal of reforming and stabilising the EU could not be achieved in this way. Without enlargement on the agenda, the pressure for EU reform is substantially reduced, and those EU Member States, such as

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  • Germany and Austria, who have the closest links with Central and Eastern European countries, would have to rely on their own initiatives to maintain the relationships.

In Central and Eastern Europe itself, the forces working for reform and closer links with the West would be massively disappointed. This could result in attempts to find new orientations and socio-political experiments with a ‘Third Way’. The real alternatives to EU membership for Central and Eastern Europe are, however, rather limited. They would certainly not accept being dominated again by Russia. The most preferable alternative would be another attempt at regional integration, which could in reality prove a positive move.

(iv) Blocks and delays to enlargement/‘Fortress Europe’

This is less of a possible strategy than it is a possible scenario which could become imminent, particularly in the event of a serious economic and social crisis within the EU. Individual EU Member States could themselves follow a strategy of blocking and delaying enlargement issues under normal circumstances if they felt their interests were not being given adequate consideration. This applies to Spain in particular, but also to Portugal, Ireland and France. These countries do not support a complete rejection of enlargement, but would probably prefer to follow a more pragmatic strategy which uses the negotiating process to make greater demands on the applicant countries and which takes the possibility of failure into account.

A crisis in the EU with an economic recession and a resurgence in unemployment would be a more serious problem, and a politically more populist public would attribute it to external factors, such as competition from cheaper suppliers. The result would be calls for more protectionism, which an EU of 15 members, relatively independent from the outside, would find it easier to establish. This would probably also apply to Central and Eastern Europe, given that the geographical proximity of cheap labour costs and cheap immigrant workers is regarded as a particular threat.

The advantage offered by this option is that of the ‘Widening after Deepening’ strategy, where an increased protectionism is paralleled by a process of deepening and internal reforms. It would be particularly beneficial if the EU and the Member States were to use such a crisis as an impetus for the restructuring of the economy and the reform of the employment market and employment policy. Experience has shown, however, that periods of crisis and recession are not conducive to deepening and reform. Until now, they have always produced periods of increased national egocentrism and corresponding redistribution disagreements, with no inclination shown towards finding co-operative solutions.

There are, however, considerable disadvantages. In addition to those already mentioned under ‘Widening after Deepening’, there would be an additional process of disintegration. Xenophobia and populist tendencies, fuelled by the isolationist policies, would also poison relations within the community. A fortress Europe can provide limited protection, but in so doing will damage competitiveness and foreign policy standing. This would be caused by increased prices of imports from third countries, countermeasures imposed by affected trading partners and the inability to maintain protectionism in export markets.

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2.2 Complementary strategies for applicant countries

Each strategy requires a preparatory phase for the applicant countries to cover the period leading up to admission. This is especially necessary for those who are not considered immediately ready but have, in principle, been accepted. Agenda 2000 provides for a revision of the Commission’s choice of first wave applicants by a system of annual checks. Moreover, the negotiating stage should be guided towards membership through accession partnerships, membership of a ‘European Conference’ and special aid.

These measures should ease subsequent membership, as the candidates will already be tied into close co-operation with the EU and will have support in their domestic reforms. Help with preparation should, however, be geared more towards those aspects of transition which pose the greatest threat to the EU. Unfortunately, there have hardly been any measures aimed at the social problems of the applicants, as this sector has been widely neglected in favour of market integration, even in the EU itself. The aid should be focused more on those areas, such as agriculture, which will represent the greatest financial burdens for the EU after enlargement.

2.3 Strategy for neighbours with no prospect of early membership

Even after the next round of enlargement, the EU will remain surrounded by a ring of poor neighbours, still linked to it through desire for membership and by Association, Customs, Trade and Co-operation Agreements. There are many reasons, on both sides, why membership is out of the question for some time yet. Despite this, however, the EU cannot ignore the fate of these countries, as Europe’s freedom, security and prosperity depend, to a large extent, on developments in these neighbouring states.

In the end, national efforts will decide the success of developments. The successful policy-mix of exports, economising, higher investment rates, a relatively just distribution of income and development-oriented governance, falls foul when confronted with the interests of anti-reform elites in most poor countries.

Brussels trade policy does not offer its neighbours optimal conditions for export-led development. Its ineffective pyramid of preferences and the hub-and-spoke system of different trade agreements benefit the centre. Unlike NAFTA, there is a lack of precise rules, providing exporters and investors with security. Extension of the European Economic Area, including agriculture, would best accommodate the neighbouring states. Trade policy is, however, only one factor in stimulating trade flows and it is fast losing its importance in the wake of global liberalisation (WTO).

Growth and exchange rates of the participating national economies are more important for trade volume. A faster growth rate in the EU itself would be the best way to support the neighbouring states. Economic development in these countries sometimes collapses after having achieved first successes (e.g. Mexico, Czech Republic, Thailand) due to pressure from balance of payments crises, because the financial markets respond too late or over-react to economic policy mistakes. Above all, EMU could provide the opportunity to prevent such crises by closer co-operation in economic policy and could facilitate a continuous access to foreign capital for its neighbours. The principle objective

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must be to stabilise investor expectations through increased information, transparency and joint policies. This would also reduce widespread capital flight. Additional public credit to neighbours should be considered with care, given problematic side-effects (debt, revaluation).

Trade liberalisation, secure demand and currency stability have little effect if there is no competitive export supply. This offers a starting point for an aid strategy which aims at improving the systemic competitiveness of the neighbours. Socio-political co-operation should be used to strengthen those forces opposing anti-reform elites and to establish the social conditions for a development-oriented policy. This type of export-oriented development policy would be the best means of preventing migratory trends which will have no clear positive effects on countries of origin, nor on target countries.

A preventative policy (market opening, monetary co-operation, appropriate assistance) may well engender additional costs. It would not, however, necessarily prove more expensive than muddling through in the guise of reactive crisis management. The best basis on which to build would be a basic understanding of responsible neighbourhood and the principle of the EU being open to all neighbours. This is currently being undermined by ethnic and cultural prejudices, particularly in the Mediterranean, where new, historically unfounded dividing lines are emerging.

This principle would also ease relations with Turkey, which are marred, in particular, by the unfortunate Luxembourg decision of 1997. Relations could be improved if a clear statement were made against geographical, religious and cultural criteria for admission and coupled with equally clear economic and political conditions, applicable to all candidates. From this it can be concluded that even Turkey, like Eastern Central Europe, ultimately has no alternative way to turn, but towards the EU.


© Friedrich Ebert Stiftung | technical support | net edition fes-library | August 1999

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