Summary: May 28, 2004: Speech by Janez Potočnik, Member ot the European Commission, on 'Enlargement and the European Neighbourhood Policy' at the Plenary Assembly of Eurochambres (Brussels)
Ladies and Gentlemen,
Let me start by thanking Eurochambres for giving me the opportunity to address your plenary assembly and say a few words on enlargement and the EU neighbourhood policy.
On May 1st, ten new member states joined the European Union. Among them was the Republic of Slovenia that I represented during the negotiations. This enlargement was driven by moral force, and by political and strategic considerations. It was the Europe's response, long overdue, to the tragic events of the 20th century. It was a bid for peace through integration, for stability through understanding and co-operation. Never before have so many accessions taken place simultaneously; and never
before have preparations for accession involved such a sweeping transformation of the candidate countries' economies and societies. This enlargement was truly historic.
Only one crucial issue could not be resolved despite all efforts: the settlement of the Cyprus problem. The Annan Plan put forward by UN, with the support of the EU, was rejected in the referendum held in the southern part of the island, while the Turkish Cypriots voted in favour of the plan. The Commission highly deplores that a chance to reunify the island has been missed. In line with the recommendations of the General Affairs and External Relations Council, the Commission is currently
preparing a set of measures to put an end to the economic isolation of the Turkish Cypriots.
The political significance of this enlargement for Europe and its people is, without any doubt, momentous. The objective is nothing less than the creation of a Europe that is whole, free, democratic and peaceful.
Let me assure you that this is not just theoretical. I come from a country that went through the tremors of war not so long ago. The tragic events of the 1990s in the former Yugoslavia have shown what could have happened in other parts of the continent if the EU had not risen to the challenge of the end of communism by lending a helping hand to the new democracies of central Europe.
If the political dimension of this Enlargement is of course essential, let's not forget that this enlargement has also been "historic" because of its impact on the legal structures of the new Member States.
I am not talking here only about the acquis that the new Member States managed to incorporate into their legislation before becoming members. Gigantic though this task may have been, even more efforts were needed to put the rule of law into practice, to set up the right structures, and to train the right people to implement it.
There could be no other way however. EU membership entails not only rights, but also obligations. There are rules of the game, laws and regulations, principles to which all partners must adhere. The new Member States have therefore integrated the European legislation relating to competition, internal market, environmental protection, and all other areas of EU policy. They have setup food standard agencies, telecom regulation bodies, labour safety inspectors, insurance market supervisors and
many other bodies, which will have the responsibility of applying EU rules.
Reform in the acceding countries had to go even deeper, to the core structures of their society. The whole legal edifice in the wide sense of the word, ranging from the operation of the government to the civil service and the administration of justice, has therefore come under scrutiny.
The new Member States have organised free and fair elections, reviewed the training and working conditions of their judges and civil servants and the functioning of courts, adopted strategies against corruption and took measures to improve the situation of the Roma and other minorities.
Having negotiated the accession of Slovenia to the European Union, I can assure you that all these steps have required considerable work "back home", i.e. in the new Member States themselves. Because the process of accession has mainly meant a negotiating not with Brussels, but within the Government and with all political and economic players in the country - employers' associations, trade unions, civil society groups, everybody who was affected by the introduction of EU-compliant
legislation.
If the task has been enormous, results have exceeded expectations. The transformation of the countries of east-central Europe has been remarkable in a relatively small amount of time.
That being said, in a number of cases, efforts need to continue. The reform of the civil service and the judiciary, as well as the battle against corruption are not finished. Industrial restructuring needs to be completed. Of course, the Commission will ensure that all commitments taken in the negotiations are being fulfilled.
The Treaty of Accession has smoothed the introduction of the new members into the EU structures. It has provided for a phasing-in period in areas such as environment or energy, where the need for heavy investment made compliance with the EU acquis from day one an unrealistic proposition. It has also ensured that substantial and increasing funds would be transferred to the new members.
Bulgaria and Romania
Let me turn now to the prospects after this enlargement. Where do we go now? First, the present round of enlargement does not come to an end on 1 May. It does not comprise ten, but twelve countries, and with two of them, Bulgaria and Romania, negotiations are still ongoing. The European Union has the objective of both countries joining in 2007. This of course depends on whether Bulgaria and Romania are ready, meaning that they have completed the negotiations and all necessary internal reforms.
It is a significant political commitment and also a reassurance to both countries, that the accession of the ten will not negatively affect the momentum of their negotiations.
Both countries would indeed like to complete negotiations in 2004, which will allow for the signature of the Accession Treaty in 2005. The European Commission will do its best to help them reach this goal. One thing is clear, and the two countries are well aware of this: decisive progress in the reform process and the modernisation of the administrative, economic and social structures during the current year will be crucial for their chances to becoming members in 2007.
Turkey
Let me say a few words about Turkey, a subject which would in itself justify a full conference. Turkey is a candidate country. This was recognised by the European Council in Helsinki already more than 4 years ago. The European Council in Copenhagen in December 2002 established a time frame for the Turkish accession process. Noticeably, it stated in its conclusions that if the political criteria are fulfilled by the end of 2004 accession negotiations will begin without delay.
This political roadmap provides a chance for Turkey. It is the same chance as the one all the other candidate countries had and used. The sequence is clear, first the political criteria and then the negotiations. The other Copenhagen criteria will have to be fulfilled until the date of accession.
The progress made by Turkey under the current government is impressive. However, in addition to the reforms already accomplished and their ongoing implementation in daily life, efforts need to be continued concerning for instance freedom of association, freedom of speech, freedom of religion and the role of the military.
The Western Balkans
As regards the Western Balkan States, the EU will continue to pursue a policy of closer integration in the context of the stabilisation and association process, which would ultimately lead to EU membership. The Western Balkan States are clear potential candidates for the accession. The Thessaloniki European Council in June 2003 fully supported the European perspective of the Western Balkan States once they meet the conditions for accession: the so-called political and economic criteria, and
their ability to demonstrate that they are ready to assume the obligations of membership. There are of course considerable differences between the situation in Croatia, say, and Albania, but the European Union is ready to assist them.
The Stabilisation and Association process is the framework to achieve just that. It includes benchmarks for the countries concerned regarding the political criteria, the economic criteria and the harmonisation of national legislations with European law. The European Union is supporting this process through substantial financial funding.
Croatia has already made a formal application for accession. The Council has taken this application one step further by asking the Commission to prepare an Opinion on Croatia's bid for membership. The Commission issued last month its positive opinion in which it concludes that Croatia fulfils the political criteria for membership and recommends the opening of negotiations. The next European Council in June will most probably take a decision on the recommendation issued by the Commission.
Recently, another W. Balkan state, the Former Yugoslav Republic of Macedonia has also applied for membership.
I believe that Croatia's application has started a process of extending to the Balkans the benefits of European integration. The Balkans today resembles in many ways the Europe of the beginning of the 1950s. After the devastation of the war, there is a need to slowly start rebuilding links under a framework of co-operation based on economic development. This formula that worked so well for former enemies such as France and Germany, can be also successfully applied to the Western Balkan
countries.
Economic consequences of enlargement
I would now like to say a few words about the impact of Enlargement on businesses, foreign investment and trade and the expected benefits from enlargement.
The addition of more than 100 million people to the single market and the fact that the economies of the new members are to a large extent complementary to the economies of the old member states will increase the potential for higher production levels and for economies of scale.
The full implementation of single market rules and an improved market access for businesses are expected to lead to higher efficiencies stemming from increased competition, better allocation of resources and improved specialisation. This new wide area enjoying rising incomes, low inflation, fiscal discipline and sustained growth should provide strong investment incentives for business.
Expanding capital markets under European regulations and supervision rules are already attracting more foreign investment flows. The convergence of interest rates towards EU levels, the need to improve infrastructure and the recovery in the EU are also factors which should lift investment growth. In general economic activity will also be supported by the availability of EU funds (estimated at 3% of GDP over the period 2004-2006). Average growth in the new Member States should be around 4% in
2004 and 2005.Significant Foreign Direct Investment of EU-15 companies in acceding countries since 1993: from 1989 onwards, that is, since the beginning of the transformation process, the new Member States have attracted more than € 150 billion in FDI. Two thirds of net capital inflows to the new Member States originated from the EU-15.
The European Neighbourhood Policy
Let me turn now to the EU policy towards the neighbours of the new enlarged Europe.
It is no coincidence that one of the first Communications adopted by the Commission after enlargement came into effect on 1 May, was its strategy paper on the European Neighbourhood Policy. Indeed, this new policy is a response to the ongoing enlargement. We feel that this historic event must also benefit our neighbours. We need to avoid the emergence of new dividing lines in Europe.
The European Neighbourhood Policy is a response to enlargement, but it is not about enlargement. This is a policy distinct from the issue of further accessions, and it is addressed to countries which do not currently have the prospect of accession. Enlargements beyond those to which the Union has already committed itself are not on the agenda.
Our new policy proposes to our eastern and southern neighbours the deepening of our relations over a broad spectrum: political dialogue, economic co-operation and integration, including trade, legislative approximation, infrastructure networks, and research, co-operation in the area of Justice and Home affairs, enhanced people-to-people contacts, cross-border and regional co-operation. As a long term objective, partner countries are offered a stake in the Internal Market.
This privileged relationship will be based on common values and common interests. I am referring here to values such as democracy, human rights, market economy and sustainable development, but also to commitments to meet threats such as terrorism, the proliferation of weapons of mass destruction, to contribute to the resolution of regional conflicts, and to abide by international law.
The main vehicle for taking the policy forward will be Action Plans. In a first stage, we intend to conclude Action Plans with those countries with which Agreements are in force: Ukraine and Moldova to the East, and Morocco, Tunisia, Jordan, Israel and the Palestinian Authority in the Mediterranean.
The European Union does not wish to impose policies or values on neighbours. This is not our way of doing things.
Moreover, experience has shown that ownership is a sine qua non condition for effective implementation of political and economic reform. Hence, joint ownership is a central element of our neighbourhood policy. The Action Plans will be agreed and jointly adopted with partner countries.
Our neighbours are very different one from the other. They are in different situations, they have different historical relationships with the EU, and varying degrees of will and capacity to implement reforms needed for drawing closer to the Union. Action Plans will therefore be tailor-made. How far and how fast we can go together will depend on how much we share: political values, economic systems etc.
The Neighbourhood policy will build on the existing framework of Association and Partnership and Co-operation Agreements. At a later stage, and after sufficient progress under the Action Plans, we could envisage a new, more advanced, contractual framework in the form of European Neighbourhood Agreements.
Successful implementation of the ENP will imply major economic and political reform for most of our partners. This will be very important in its own right. Nonetheless, we need to support these efforts with appropriate policies and measures. Opening of markets, financial and technical assistance, opening of Community programmes will underpin our work with partners.
In our proposal for the next financial perspectives of last February, we propose a substantial increase of support towards our neighbours from 2007. Fostering cross-border co-operation at the Union's borders with the neighbouring countries will be of particular importance in reaching the objectives of the ENP.
The European Neighbourhood Policy will be conducive to trade and other business relations between operators in the EU and neighbouring countries. Further market opening and approximation to EU standards and norms as a first step towards participation in the EU internal market will evidently have a direct impact on trade. Maybe more importantly, progress in economic and political reform and the gradual extension of a zone of stability and increasing prosperity to the Union's neighbourhood, will
contribute substantially to the establishment of a business-friendly environment. But also inversely, a dense network of business contacts, as well as relations between professional organisations, including chambers of commerce, is part of the tissue of people-to-people contacts, which, in our view should form the strength of our neighbourhood policy.
Ladies and Gentlemen,
I believe that enlargement is a great chance to create a Europe that is politically and economically strong. It will offer European citizens an environment of peaceful development and co-operation, personal freedom and individual opportunity. It will make us better equipped for the demands of the 21st century. It should offer European companies more opportunities in an extended and stable market.
However, this enlargement will not fully dissolve all challenges to peace and stability on the European continent. We must bring to a positive conclusion the negotiations on the Constitution without further delay and ensure its effective implementation once it enters into force.
We are confronted with another challenge as we need growth, prosperity and democracy in our neighbourhood, both in the east and in the nearby Mediterranean region. Our experience is that we can only prosper if our neighbours prosper also, on the basis of stability and established common values. It is for this reason that we developed the European neighbourhood policy. We are prepared to go a long way in offering our neighbours substantial benefits.
At the same time, we strongly hold that our neighbourhood needs more democracy, more rule of law, more respect for human and minority rights, failing which no society can be genuinely stable.
These principles lie at the heart of our project. They aim at the creation of a better and safer world. This is particularly important today when we face a common enemy in the shape of terrorism that takes advantage of our open and tolerant societies and puts at stake the security of our citizens. I am convinced that strengthening European integration through Enlargement and neighbourhood policies will greatly serve that purpose.
Thank you.
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