Center for Social and Economic Research Marek Dąbrowski The Future of European Integration
Two dimensions of discussion: widening and deepening. This presentation mostly on widening
Plan of my presentation: completing the 2004 Eastern Enlargement (EMU, Schengen, termination of temporary restrictions) future enlargements and associated challenges (Bulgaria, Romania, Turkey, the Western Balkans, Ukraine) EU relations with outer ring of neighbors (CIS and Southern Mediterranean region) widening vs. deepening and other policy challenges
NMS remaining steps Transition arrangements related to the Single European Market (free movement of people the main remaining obstacle) Schengen (2007/2008?) EMU (2007-2012?)
ERM-2 membership Denmark Estonia, Lithuania and Slovenia (from June 2004) Cyprus, Latvia and Malta (May 2005) Slovakia (November 2005) Unclear prospects of the Czech Republic, Hungary and Poland (problem with fiscal consolidation)
Obstacles to EMU Enlargement Fiscal imbalances (in the context of diluted SGP) Conflict between exchange rate stability and inflation criteria Benchmark for inflation criterion Repeated arguments about real convergence and current account imbalances (Deutsche Bundesbank January 2006 Report) Underlying political reluctance to enlarge the inner club
Further Enlargement Steps Bulgaria and Romania (2007) Croatia (2010?) Turkey (2015-2020?) Macedonia (2012+) Other Western Balkan countries (2015?) Enlargement fatigue in the Western Europe and its possible consequences What is the European future of CIS and Southern Mediterranean region?
EU-CIS political and economic relations PCA agreements signed in 1990s; slow ratification and implementation WTO membership of Kyrgyzstan (1998), Georgia (2000), Moldova (2001) and Armenia (2003) Ongoing WTO accession negotiations of Ukraine, Russia, Kazakhstan, and Tajikistan; the remaining countries less advanced Market economy status for Russia and Ukraine WTO Plus: unequal treatment of CIS countries comparing to Central European, Baltic and Balkan countries Restriction on movement of people (visa regime but perspective of visa facilitation agreements for Russia and Ukraine) Potentially a pretty free movement of capital but little real flows because of poor investment climate in the CIS Limited political dialogue
The Euro - Mediterranean Partnership Partnership Agreements (1970s) replaced with Euro-Mediterranean Association Agreements in 1990s and 2000s (slow ratification and implementation): Tunisia (from 1998), Morocco (2000), Israel (2000), Jordan (2002) and Egypt (2004) + signed AA with Algeria (2002), Lebanon (2002), Syria (concluded negotiations) and Interim Agreement with the Palestinian Authority (1997)
ommon denominator of EUROMED AA Political dialogue Respect for human rights and democracy (authoritarian regimes in most of the countries, apart from Israel) Establishment of WTO-compatible free trade over a transitional period of up to 12 years (much slower and limited liberalization in an agriculture sector) Provisions relating to intellectual property, services, public procurement, competition rules, state aids and monopolies Economic cooperation in a wide range of sectors (the role of energy sector) Cooperation relating to social affairs and migration (including readmission of illegal immigrants) but with a restricted movement of people (visa regime apart from Israel) Cultural cooperation
The European Neighborhood Policy Southern Mediterranean countries + part of CIS (Central Asia excluded) General concept: It offers a far going cooperation (including participation in elements of the Single European Markets) but not a EU membership Different role of ENP for Southern Mediterranean and CIS Effort of Moldova and Ukraine to use the ENP as a vehicle for future EU accession Concretized in bilateral agreements (action plans) with individual countries The key question: does the ENP creates sufficiently strong incentives to speed up economic and political reforms in neighboring countries (without membership incentive)?
Special status of Russia the Common European Economic Space between the EU and Russia (declarations of 2001 and 2003) the road maps concerning four common spaces (declaration of May 10, 2005) Common Economic Space Common Space of Freedom, Security and Justice Common Space of External Security Common space on research, education and culture
Integration obstacles (neighbors side) Failure to meet Copenhagen criteria Deficit of democracy, human rights and rule of law Poor business climate, excessive protectionism, government interventionism and etatism Weak institutions Limited interest in advanced forms of European integration (due to historical and cultural differences) with some exceptions like Moldova and Ukraine
Integration obstacles (EU side) Enlargement fatigue Cultural differences/ prejudices Income differences Migration/ security fears Limited economic potential of many neighboring countries
Arguments in favor of closer integration of CIS and SM with EU Geopolitics and regional security Window of opportunity for economic, social and political modernization of neighbors Energy supply and transit Controlling migration flows Economic, cultural and historical interests of frontier EU member states
Widening vs. deepening Not necessarily contradictory (preferences and interests of NMS and OMS do not differ so much) but necessity to Improve decision-making process (less veto power, lower majority threshold, bigger competences of European Parliament) Reform CAP Reform EU budget priorities and redistribution rules Reform welfare state in EU members states and remove structural rigidities