Enlargement: Update & Priorities

Albania should be granted Candidate status to start the process towards becoming a member of the EU, and the Commission also hopes membership negotiations with Turkey will regain momentum, according to the Commission’s annual reports on the EU enlargement process published mid-week.

The enlargement reports also highlight the progress made by both Montenegro and Serbia. However, discussions with Iceland, Bosnia Herzegovina and FYROM (Former Yugoslav Republic of Macedonia) are all effectively frozen or at a standstill.

The Commission likes to present enlargement as the “success story” of the EU. Twenty years ago – while the war raged in the former Yugoslavia – the so-called Copenhagen criteria were established as benchmarks for assessing the progress made by candidate countries towards EU membership, in terms of both political and economic reforms. Twenty years later, Croatia became the 28th Member State, the first country from the Western Balkans acceding to the EU.

The path towards membership to the EU today is more rigorous than in the past, as the approach recently chosen by the Commission is to address “five fundamentals” early in accession talks, the rule of law, strengthening economic governance, support for democratic institutions, respect for fundamental rights and regional cooperation).

The Commission annual “Enlargement package 2013-2014” adopted on 16th October includes two set of documents:

The “Enlargement Strategy Paper” which confirms the “fundamentals first” approach through the lens of which the Commission reports on the progress made by the enlargement countries and illustrates the priorities for the coming year;

Eight country-specific “Progress Reports” in which the Commission assesses in detail the achievements in the last 12 months of:

Candidate countries:

Montenegro
Serbia
FYROM
Turkey
Iceland 

And Potential Candidate countries:

Albania
Bosnia and Herzegovina
Kosovo 

The Strategy Paper

The “Enlargement Strategy Paper” underlines the importance of the Commission’s “fundamentals first” approach in assessing enlargement countries’ readiness for EU membership. Despite stating that all enlargement countries have a clear European perspective, the Commission points out a number of key challenges facing the Western Balkans and Turkey.

Rule of Law

As a pillar of the Copenhagen political criteria, the rule of law is crucial for the accession process since it aims at securing the business environment and providing legal certainty for economic operators. The new approach introduced by the Strategy suggests that countries need to tackle issues such as judicial reform and the fight against organised crime and corruption as early as possible in the negotiations in order for countries to have more time to implement and make the reforms irreversible. This approach is being applied in the negotiations with Montenegro and integrated in the negotiations with Serbia in regards to the chapters on the judiciary, fundamental rights and justice, freedom and security.

Economic Governance

At a time when the EU faces major challenges and significant global uncertainty due to the persistent economic crisis, the Commission wants all countries to undertake substantial reform of economic governance. This is particularly true for Western Balkans countries, none of which is a functioning market economy, unlike Turkey. The new approach to meet the economic criteria suggested by the Commission consists of preparing coordinated national economic reform strategies comprising macroeconomic and fiscal programmes, structural reforms and a competitiveness programme. The Commission also promises to provide comprehensive technical assistance in close cooperation with other international organisations.

Institutions Guaranteeing Democracy

Another important political criterion is the good functioning of institutions guaranteeing democracy (national parliament, government, public administration). Since democratic institutions in most of the enlargement countries are still fragile, the Commission promises to work more intensively with international organisations such as the Council of Europe, OSCE and OECD to support electoral and parliamentary reform. Furthermore the Strategy suggests increasing the priority attached to public administration reform, in order to tackle issues such as lack of transparency, excessive politicisation and not-meritocratic recruitment processes.

Fundamental Rights

In regards to respect for fundamental rights freedom of expression remains a serious concern for the Commission in several enlargement countries, as along with the rights of minorities, including Roma. The Commission states that it will attach more importance to these issues in the accession process, through better targeted pre-accession funding and increased assistance to support Roma inclusion through a Roma “facility”.

The Commission highlights the new financial instrument IPA II (second Instrument for Pre-Accession Assistance) through which the Commission will support the enlargement countries in their way towards membership will be set up in 2014. It foresees €11.7 billion funding for the period 2014-2020. According to the priorities set by the Commission in its strategy, IPA II will focus notably on supporting reforms in the areas of the rule of law area, reinforcement of democratic institutions and good governance as well as socio-economic development.

Country-specific Progress Reports

Montenegro

This year has been marked by the protests in occasion of the presidential elections in April concerning the alleged fraud which led the President Filip Vujanović (Democratic Party of Socialists, DPS) to win a third presidential mandate. Despite the protests from both representatives of the opposition leader Miodrag Lekić and citizens, the parliamentary commission found no irregularities. The Organization for Security and Cooperation in Europe also said that the election “generally met OSCE requirements”. A national investigation into the alleged misuse of public funds for party political purposes could not find any evidence and ended in adopting a technical report in July.
 
This is the second Progress Report on Montenegro since the country opened accession negotiations with the EU in June 2012. The European Commission concluded that the country has made further progress in establishing a functioning market economy, has improved its ability to take on the obligations of EU membership, and continues to sufficiently meet the political criteria. However, the Commission considers the political situation in the country raises some concerns.
 

On the economic side, the global financial crisis had a significant negative impact on the economy, due to the ongoing credit crunch, a decline in the real estate sector, and a fall in aluminium exports. In 2012, real GDP growth slipped to 0.2%, reflecting the general downturn in most of Europe. Furthermore, the largest industrial in Montenegro, KAP, has officially been declared bankrupt by court. The company will be offered for sale early in November in the hope of repaying at least some of its huge debts to creditors estimated at €360m-460m in liabilities. The Commission expresses its concerns over the bankruptcy procedure, which represents a risk to public finances.

Serbia

2013 was a historic year for relations between the EU and Serbia with the decision to open accession negotiations on 28 June and the entry into force of the Stabilisation and Association Agreement (SAA) on 1 September. This followed the important political agreement reached earlier in April by Serbia and Kosovo about the normalisations of their relations. According to the European Parliament's rapporteur on Serbia, ALDE MEP Jelko Kacin (LDS, Slovenia), formal talks should begin in December.

The Progress Report concludes that Serbia sufficiently fulfils the political criteria with comprehensive strategies and action plans having been adopted in the areas of judiciary, fight against corruption and anti-discrimination. However, the Commission notes the need for a more effective investigation, prosecution and conviction of perpetrators of corruption and organised crime. Also, a fundamental reform of the public administration is needed.

As far as the economic criteria are concerned, in 2012, Serbia went through another recession and the economy contracted by 1.7%. The economy slightly recovered in the first half of 2013. High exports growth has softened the effects of depressed domestic demand. A crucial issue for the Commission is the restructuring of Serbia’s economy so that it can cope in the medium-term with the competitive pressures and market forces within the EU. In fact, state presence in the economy is still significant and state-owned companies continued to accumulate big losses. Serbia needs to continue improving the business environment and should make strong efforts to develop a competitive private sector. Again, the fight against corruption hampering the market mechanisms is a priority in this area too.

The former Yugoslav Republic of Macedonia

FYROM was the first country to sign a Stabilisation and Association Agreement with the EU and has been a candidate country since 2005. In the Progress Report the Commission recommends (for the fifth consecutive year), that negotiations should be opened.

In the Commission’s view the country continues to sufficiently fulfil the political criteria for EU membership. However, a political crisis provoked by events triggered by a rancorous disagreement over the budget law in December 2012 - exposed deep divisions among political parties, affected the functioning of Parliament and demonstrated the need for more inclusive and constructive politics. After a political agreement was reached on 1 March, the recommendations now need to be fully implemented in practice. The priority for next year is the implementation of reforms aimed at strengthening the independence and competence of the judiciary, ensuring freedom of expression and relations with the media, electoral reforms, and an effective fight against corruption.

In 2012, the economic situation worsened slightly due to the influence of a challenging external economic environment. The country remains well advanced and, in some areas, has made further progress towards becoming a functioning market economy. For instance, the business environment has further improved through the simplification of business registration and operation, e.g. by the establishment of a one-stop-shop system for domestic and foreign investors. Nonetheless, corruption still hinders the development of a fully functioning market economy.

Albania

The Commission recommends granting candidate status for Albania on the understanding that the country continues to take action in the fight against organised crime and corruption, as it did in 2012-2013. The Commission’s conclusion was influenced by the June parliamentary elections, which according to the international election observation mission showed no irregularities. A decision on making Albania a candidate is expected to be made at the European Council in December 2013.

Albania has made further progress towards fulfilling the Copenhagen political criteria for membership of the EU. The Government and opposition cooperated to adopt a number of important legal acts in Parliament including laws on the judiciary and on freedom of expression (adoption of the Audio-Visual Media Law). However, additional efforts will be necessary to fully comply with the political criteria, notably in the fight against organised crime (narcotics, money laundering) which still represents a serious concern for Albania.

As for the economic criteria, the economy remains fragile and vulnerable to both domestic structural weaknesses and global economic volatility. The GDP has kept growing, mainly due to increasing positive net exports. Concerns remain however over the budget deficit, public debt and its short term bias, as well as the non-performing loans in the banking system.

Bosnia and Herzegovina

Unlike the other enlargement countries, Bosnia and Herzegovina’s path towards accession is blocked because the country's political representatives could not agree on a solution to implement the European Court of Human Rights judgement in the Sejdić-Finci case, which involved discrimination against citizens on the grounds of ethnicity. The implementation of this judgement is essential for the entry into force of the Stabilisation and Association Agreement and credible EU membership.

Due to this standstill, the progress made by the country in adopting EU-related legislation are very limited. The crucial problem is the lack of a shared vision by the political forces on the overall direction and future of the country and its functioning.

Kosovo

As for Serbia, 2013 has been a historic year for Kosovo on its path to joining the EU. First, the country has made substantial efforts towards normalisation of its relations with Serbia; second, in June the Council decided the opening of negotiations for a Stabilisation and Association Agreement (SAA) which the Commission hopes to complete in April 2014.

From the point of view of the political criteria, the main issue for Kosovo is the rule of law(a cornerstone of the Stabilisation and Association Process), notably in the areas of the fight against organised crime and corruption, and reform of the judiciary and public administration.

EULEX, the deployment of EU police and civilian resources to support Kosovo’s efforts in the integration into the area of the rule of law, will expire in 2014.  The report says that it could be included in the Structured Dialogue on the Rule of Law led by Brussels to help the country to address the challenges in this field.

MEP Marije Cornelissen, speaking on behalf of the EP Rapporteur for Kosovo, MEP Ulrike Lunacek, said the Greens/EFA Group was “…afraid about the expiration of the EULEX mandate next year”. “We don't have faith all its tasks have been taken on board,” she added, and wondered if there would be “…any consequences for the success or failure of the elections in Northern Kosovo” expected to take this winter.

Turkey

Turkey has been a Candidate country since 1999 and a strategic partner of the EU. The attitude of its political representatives has, however, changed during the years. When Turkey’s Prime Minister Erdoğan came to power more than ten years ago, the accession to the EU was a priority and the best way to reform the country. During the election night in June 2013 however, there was no reference to the EU or the accession in the Prime Ministers Erdoğan’s speech.

The Prime Minister is now in an ambiguous position, commentators say. On one hand, his desire for Turkey to be a leader in the Middle East has not fully convinced its neighbours, partly because the influence of Turkey is attributed at least partially to its strong Western backing. On the other hand, after a clear shift eastwards in Turkey's orientation, it is difficult for Erdoğan to now push EU membership.

The Progress Report for Turkey presents mixed results. Important progress has been made on the political criteria, such as the adoption of the judicial reform package, the creation of the ombudsman and the opening of talks with the PKK on the Kurdish issue. Nevertheless, the report is heavily influenced by the Government suppression of the Gezi park protests in May and June 2013 and the absence of dialogue with civil society. The Commission stresses the urgent need for further reforms and the promotion of dialogue across the political spectrum and in society more broadly, as well as for respect of fundamental rights in practice.

Unlike other Western Balkan countries, Turkey is considered a functioning market economy. In 2012, the Turkish GDP grew of 2.2% falling from an unsustainable level of around 9% in the preceding two years. The slowdown was partly due by a tightening of monetary policy and was accompanied by a rebalancing of growth from domestic demand to foreign trade, a narrowing of the current account deficit and falling inflation. However, developments in international monetary conditions, domestic political unrest and the civil war in Syria have also highlighted the economic vulnerability of the country which could put at risk the return to growth in the short term.

Iceland

Despite being the most promising Candidate Country to have reached an advanced stage of accession negotiations, the situation of Iceland has radically changed in 2013. The new centre-right euro-sceptic government elected last May decided to put negotiations on hold and indicated that the negotiations would not continue unless approved through a referendum. In view of this development, the Commission decided to produce a simplified factual report concluding that Iceland continues to fully meet the political criteria for EU membership and can be considered a functioning market economy.

With the results of last parliamentary election, Icelandic voters have thus returned the parties that led Iceland to its economic meltdown when the banking system collapsed in 2008. Further to harsh reforms aimed at stabilising the economy, the island emerged from recession in late 2011. Now that the crisis is over, opinion polls suggest that most Icelanders are against joining the EU but a majority of those polled are in favour of continuing accession talks. Their main fears towards the EU concern granting EU fishing vessels access to Icelandic waters.

Next Steps

The Enlargement Package has been transmitted to the Parliament and the Council which will examine the Commission’s proposals and may decide to formally respond.

Negotiations with Serbia are expected to start by January 2014 at the very latest, once the Council has adopted the negotiating framework.

A formal decision on the Candidate status of Albania is expected to be made by the European Council in December 2013.