Working Group on European Integration The Enlarged EU Needs an Effective Neighbourhood Policy B y May 2004, the European Union(EU) will have extended to 25 Member States and thus assume greater international importance and responsibilities. Following this major phase enlargement the EU‘s priority will have to be to integrate its new Member States, instead of discussing the accession of further members. Another consequence of this is that the EU urgently needs to develop an effective, independent neighbourhood policy. In its Communication entitled"Wider Europe – Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours", the European Commission opened the debate on this issue. The Union's neighbouring countries are a mixed bunch, whose individual situations and relations with the EU vary considerably. Whereas the remaining EFTA countries – Switzerland, Liechtenstein, Norway and Iceland – are stable, prosperous and democratic, the EU's eastern and southern neighbours are faced with numerous difficulties which impact on the EU and can be attributed to poverty, delays in modernisation, defective democracies and internal and international conflicts. However, there are substantial differences within this group of countries. Bulgaria and Romania look set to join the EU before the end of the decade. A decision on the launch of negotiations with Turkey will be taken in December 2004, as the European Council in Thessaloniki stressed once again. The current version of Article 49 of the Treaty on European Union also gives the EU´s new eastern neighbours – Ukraine, Belarus and Moldova – the possibility of applying to join the EU. 1 By contrast the EU's southern Mediterranean neighbours have no prospect of acceding to the Union. 1 Article 49 of the version modified by the Treaty of Amsterdam states that:"Any European State which respects the principles set out in Article 6(1) may apply to become a member of the Union." Similarly, Article 57 of the draft Treaty on a European Constitution dating from 27 June 2003 states that:"The Union shall be open to all European States which respect the values referred to in Article I-2, and are committed to promoting them together." The principles or values invoked here include democracy und the rule of law, freedom, the protection The objective of the EU's neighbourhood policy must be to create an area of shared values, of peace, freedom and prosperity. In this respect, neighbourhood policy can convert the positive potential for cooperation within Europe into a practical foreign policy and make the most of the comparative strength of European policy. When this goal has been reached, a multilateral, cooperative model of global domestic policy will have been realised at regional level that can serve as an example for the world as a whole. It is here that the approach advocated by the EU of taking preventive measures to resolve international conflicts has its counterpart. 2 This policy comes at a price, but the costs involved are low compared with those with which the EU would be saddled if it neglected its neighbourly duties and found itself in an unstable environment, in a neighbourhood racked by crises and conflicts. On the other hand, closer cooperation between the EU and its neighbours throws up a great many opportunities for enhancing Europe's economic potential and increasing its global political clout. Finally, an effective neighbourhood policy will prevent the creation of fresh rifts on the borders of the enlarged EU, which is particularly important to the Union's new Member States. Differentiated action plans within overall regional concepts The architecture of this neighbourhood policy must take account of the heterogeneous nature of the subregions Southeastern Europe, Eastern Europe and the Mediterranean, because both their respective problems and the outlook regarding their relations with the EU (candidates for accession, association, trade or cooperation agreements) vary. Whereas the EU has already started developing and implementing a specific neighof human rights, human dignity and equality(the latter two values only appear in the newly drafted version). 2 See also the report by Javier Solana, High Representative for the Common Foreign and Security Policy of the EU, entitled "A secure Europe in a better world", European Council, Thessaloniki, 20 June 2003.

The Enlarged EU Needs an Effective Neighbourhood Policy Europäische Politik | AG Europäische Integration (09/2003) 2 bourhood policy, as part of the process of stabilisation with advanced countries being offered more than a and association in the western Balkans and within the stabilisation and association agreement, and other framework of the Barcelona Process in the Mediterracountries being dependent on'softer' forms of coopenean region, the development of its eastern dimension ration for a longer period, whereby less ambitious ex(including the Russian Federation) is still only in its inpectations regarding progress in necessary reforms are fancy. tied to conditional assistance. Any neighbourhood policy must be consistent with the European principle of reconciling interests. There are two respects in which it can do this: Eastern Europe • it must adopt a tailor-made approach to each neighbour; The EU must build up its functional cooperation with • the specific action plans it adopts must be incorpoits new eastern neighbours, not just Ukraine, Belarus rated into an overall regional concept for the and Moldova, but also the Russian Federation. This rerespective geopolitical area. gional approach is required to enable Ukraine to The EU's neighbourhood policy must be anchored in stretch itself in order to open up more to the West the values of the Union as set out in Article 2 of the whilst also maintaining its ties with Russia. Likewise, it European Convention's draft European Constitution. is essential for enabling Belarus to strike a balance Neighbourly relations can be intensified to keep pace between its ties to the Russian Federation and the with the application of EU values by the Union's new country's ultimately inevitable opening up to the West. neighbours within their own territory and with the Another conceivable approach would entail trying support shown for those same values in the internatioto build on the concept of the European Economic nal arena. At the same time, consideration must be Area(EEA) and ascertain whether a similar offer of ingiven to the respective economic preconditions as well tegration could be offered to the eastern neighbouras to any historical ties dating back to the 20th century hood of an enlarged Union and also whether such an (e.g. in Eastern Europe). offer might prove a successful alternative to the prospect of accession. Complementary offers geared towards closer integration could be developed within the Southeastern Europe context of the Union's CFSP and ESDP. To this end, the EU could design a system for monitoring its neighbourAfter enlargement in 2004, a relatively small number hood policy and then implement it together with its of countries in Southeastern Europe will remain outsineighbours. de the EU, and for the most part they will be surrounTechnical assistance provided by the EU could be ded by EU members. The objective here must be to more closely geared to that neighbourhood policy than promote regional cooperation(without sacrificing conit has been in the past, with appropriately neighbourly ditionality) and offer support that is linked to reforms conditions being attached to the provision of such as(without running the risk of growing disparities or even sistance. In line with the agenda of neighbourhood pothe scenario of individual countries losing touch altolicy, cross-border cooperation should be promoted and gether). support given to pilot projects involving practical cooFor Romania and Bulgaria attempts are already peration. As the present phase of enlargement reaches being made via a benchmarking approach and by offeits conclusion, and with further eastward enlargement ring financial incentives to prevent the accession procoming up, PHARE funding could be reallocated to cess from lasting longer than necessary. However, so support the EU's neighbours. far early representation in EU institutions and other For the time being Belarus needs to be treated as a more creative solutions have only been given superficispecial case. No specific functional projects are viable al consideration. there. Instead, the EU should engage in reasoned cooThe remaining group of countries in the western peration with the respective economic forces and poliBalkans is extremely heterogeneous, with Croatia altical agents of reform and also in a dialogue with civil ready fairly close to being eligible to apply for EU society and the opposition. membership, whilst Bosnia-Herzegovina and SerbiaBy contrast, the solution of transit-related issues Montenegro(including Kosovo) still face fundamental with the Kaliningrad region is opening up new vistas problems of political order. The(in principle) correct for constructive cooperation. Here, the aim must be to instrument of stabilisation and association agreements promote the region's infrastructure and economy and must be used in different ways to take account of this, bring about economic stability.

Internationale Politikanalyse International Policy Analysis Unit The Mediterranean The Mediterranean riparian states of northern Africa and the Middle East have to receive better offers in order to stimulate economic prospects, amongst other things – indeed specifically – with a view to stabilising the crisis in the Middle East. The prospect of this could help to deflate the sense of hopelessness among the younger generation and thereby decrease its susceptibility to terrorist activities. Moreover, securing people's prospects for living in their own country would give them less of a reason to try and emigrate to Europe. In this connection, the financial support provided by the EU needs to be hitched to reforms by the countries in the southern Mediterranean. The parallel nature of political, economic and sociocultural transformation processes must be emphasised. The southern Mediterranean countries must be urged very strongly to step up their regional cooperation(in a manner that complements, rather than undermines or substitutes for the Barcelona process). Finally, the Barcelona Process needs to be changed to ensure that it can develop largely independently of the progress made in the Middle East peace process. Where relations with Turkey are concerned, the EU is following the road map set out in Copenhagen, which provides for regular monitoring of the headway made. shaping and implementing planned reforms. Achieving the following in all countries should be a priority: • a functioning democracy(multiparty systems, division of powers, freedom of the press, freedom of organisation, accountability of the executive to the legislative branch, and a transparent national budget); • an independent, efficient justice system; • the safeguarding of public order(fighting organised crime, corruption, smuggling, border checks); • a functioning market economy(elimination of staterun monopolies, privatisation, competition rules, the dismantling of subsidies); • a transparent, effective tax system; • an education system that delivers. Financial support should only be given to those neighbouring countries that agree and then go on to implement a medium-term reform programme with the EU in the aforementioned(or similar) areas. Payments should be made in proportion to the headway made in reforms. The EU should have progress reports drawn up annually for each neighbouring country that wishes to undertake reforms with the Union's help, just as it did with the accession countries. This would guarantee the transparency of the reform process and enable the Union to highlight any shortcomings or any advances made. Helping the neighbours find the path towards reform: Key instruments Making trade policy serve reforms Over the last 20 years the EU has systematically atThe EU has an array of instruments at its disposal for tempted to establish free trade relations with its neighattaining the goals of its neighbourhood policy, the bours. This approach was based on the assumption main ones being trade policy and financial and technithat eliminating trade barriers would promote trade cal cooperation. In that context, in its political dialogue with the Union's neighbours and almost automatically it can bring its economic clout to bear as the most iminduce further economic and regulatory policy reforms portant trading partner and investor for most of the (in areas such as customs and fiscal administration, neighbouring countries. competition, subsidising state-owned companies, etc.). At the same time, the political promotion of procesThese expectations turned out to be ill-founded, for ses of reform is just as important as the provision of free trade alone is not a sufficient guarantor of goodfinancial backing, for ultimately change depends on neighbourly relations. Indeed, unless it is accompanied the rise to power of reform-minded forces in the by far-reaching political and economic reforms, free respective neighbouring countries. The possibility of trade leads nowhere. Furthermore, some neighbouring appealing to the EU can markedly boost their ability in countries which primarily export raw materials such as this respect. oil and gas do not profit much from free trade. Consequently, in future the aim should be to aspire towards free trade only insofar as it will complement or foster Concentrate on key reforms attempts at reform. Free trade by itself is not a decisive factor for determining the quality of neighbourly relaWhen dealing with both its eastern and southern tions. neighbours, the EU should focus its limited funds on 3

The Enlarged EU Needs an Effective Neighbourhood Policy Europäische Politik | AG Europäische Integration (09/2003) 4 Making use of investment support to foster neighbourhood policy The more use the EU's neighbours can make of private direct investment and long-term loans, the sooner they will close the economic gap between themselves and the Union. More foreign direct investment will flood in once lasting improvements have been made to the political situation(predictability of legal rulings, corruption, jurisdiction, transparency of administration, clear laws, protection of ownership rights, privatisation, competition, absence of trade barriers, and so forth). The implementation of political and economic reforms will also make the EU's neighbours more attractive to foreign direct investment, as the accession countries in central Europe have shown to an impressive extent. The European Investment Bank(EIB), which awards more long-term loans to public-sector borrowers than any other credit institution in the world, should focus more on the EU's neighbours. In the past it has not made a sufficient effort to do this, primarily because of the respective countries' inadequate creditworthiness and the lack of plans worth funding. For this reason the EIB should be fully involved in the EU's future neighbourhood policy, especially where the modernisation of transport, energy and water supplies are concerned. Intensifying the political dialogue The EU's political dialogue with its neighbours must be conducted at both the state and social levels, and the EU's interests in connection with reforms should be openly touched on in that context. The starting point must be a common definition of the respective objectives and values. Action plans should oblige both sides to adopt hard-and-fast measures designed to achieve these objectives. Steps down the road to integration and the provision of assistance should be made conditional on verifiable progress made in domestic reforms designed to boost democracy, increase willingness to resolve conflicts and produce a more efficient economic policy.