The EU's Enlargement and Mediterranean Strategies: A Comparative Analysis

The EU’s Enlargement and Mediterranean Strategies A Comparative Analysis

Edited by

Marc Maresceau and Erwan Lannon

The EU’s Enlargement and Mediterranean Strategies

Also by Marc Maresceau ENLARGING THE EUROPEAN UNION (editor)

The EU’s Enlargement and Mediterranean Strategies A Comparative Analysis Edited by

Marc Maresceau Professor of European Community Law European Institute University of Ghent Belgium

and

Erwan Lannon Researcher European Institute University of Ghent Belgium

Preface by Willy De Clercq

in association with

European Institute, University of Ghent

Editorial matter and selection © Marc Maresceau and Erwan Lannon 2001 Preface © Willy De Clercq 2001 Chapter 1 © Marc Maresceau 2001 Chapters 2–16 and Conclusion © Palgrave Publishers Ltd 2001 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 0LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2001 by PALGRAVE Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N. Y. 10010 Companies and representatives throughout the world PALGRAVE is the new global academic imprint of St. Martin’s Press LLC Scholarly and Reference Division and Palgrave Publishers Ltd (formerly Macmillan Press Ltd). ISBN 0–333–77281–4 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data The EU’s enlargement and Mediterranean strategies : a comparative analysis / edited by Marc Maresceau and Erwan Lannon ; preface by Willy De Clercq. p. cm. Includes bibliographical references and index. ISBN 0–333–77281–4 1. European Union—Mediterranean Region. 2. European Union. 3. European Union countries—Economic policy. I. Maresceau, Marc. II. Lannon, Erwan, 1968– HC240.25.M4 E94 2000 337.1'42—dc21 00–041513 10 10

9 09

8 08

7 07

6 06

5 05

4 04

3 03

2 02

1 01

Printed in Great Britain by Antony Rowe Ltd, Chippenham, Wiltshire

Contents Foreword Willy De Clercq

vii

Acknowledgements

ix

Notes on the Contributors

x

List of Abbreviations and Acronyms

xiv

Introduction: the Need for a Pan-Euro-Mediterranean Strategy – the Triangular Approach Marc Maresceau and Erwan Lannon Part I

xvii

The Political and Security Dimension

1 The EU Pre-Accession Strategies: a Political and Legal Analysis Marc Maresceau

3

2 Europe’s Mediterranean Strategy: the Security Dimension Álvaro de Vasconcelos

29

3 Towards a Pan-Euro-Mediterranean Association of Proximity Jean Raux

42

4 Differentiation and Association within the Pan-Euro-Mediterranean Area Catherine Flaesch-Mougin

63

5 The Many Faces of EU Conditionality in Pan-Euro-Mediterranean Relations Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

97

Part II

The Economic and Financial Dimension

6 Agenda 2000 and EU Budget Strategy: Funding Enlargement and Relations with Eastern and Southern Neighbours Geoffrey Denton

141

7 The Optimum Strategy for a Spoke: Linking with Other Spokes or Other Hubs? Alfred Tovias

153

8 Free Movement of Services and the Right of Establishment in a Pan-Euro-Mediterranean Economic Area: Between EU Membership and the GATS Lode Van Den Hende

169

v

vi Contents

9 Towards a Pan-Euro-Mediterranean Integration: a Survey of Issues in the Agricultural Sector Marianne Dony

193

10 Pan-European Rules of Origin and the Establishment of the Euro-Mediterranean Free Trade Zone Stefano Inama

199

11 The Financial Assistance of the European Union to Its Eastern and Southern Neighbours: a Comparative Analysis Alain Guggenb¨uhl and Margareta Theelen

217

Part III

The Socio-Economic and Human Dimension

12 EU Pre-Accession Strategy: the Social Dimension Andrei Popescu

257

13 The Economic, Social and Political Impact of the EuroMediterranean Partnership Bichara Khader

269

14 Company Law Harmonization and Reform as a Vehicle for Regional Integration Peter G. Xuereb

283

15 Towards Pan-Euro-Mediterranean Environmental Co-governance Kirstyn M. Inglis

303

16 The European Union and Migratory Pressure from the Mediterranean and Central and Eastern Europe Kris Pollet

335

General Conclusion: Towards a Pan-Euro-Mediterranean Regional Integration – Motivation and Objectives Péter Balázs

367

Appendix: the Network of Bilateral Agreements in the Pan-Euro-Mediterranean Area (1 January 2000)

379

Index

384

Foreword The publication of this book comes at an important moment in time. We are currently living through major changes in Europe. The third phase of Economic and Monetary Union and the enlargement strategy of the European Union are part of a historical process which will shape, in an irreversible way, the future of Europe. At the same time the Member States are aware that an ambitious policy to the southern periphery of the EU forms a counterpart to the policy of openness to the East and, as it was stressed at the 1995 Cannes European Council, ‘gives the European Union’s external action its geopolitical coherence’. Such a coherence is of crucial importance to the stability and security of the Pan-Euro-Mediterranean Area as a whole. This is precisely the focus of the research undertaken in this book. The challenges which Europe is facing are numerous. To keep a future Union of 25 to 30 members operational is indeed a real challenge for the EU, and as the Treaty of Amsterdam does not meet the requirements for preparing for such an enlarged Europe there is a need for intensive further reflection, not only on the institutional structure and the various specific policies to be developed but also, and perhaps even in the first place, on what role Europe will have in the new global environment and more in particular in its periphery. Agenda 2000 and the Commission’s opinions on the applications for membership of the various Central and Eastern European Countries (CEECs) have put in motion a process that first led towards accession negotiations with five CEECs together with Cyprus. Parallel with these negotiations pre-accession strategies were further developed with all the CEECs through Accession Partnerships. The 1999 Helsinki European Council has taken important decisions ‘marking a new stage in the enlargement process’. Turkey was recognized as a ‘candidate State’ while accession negotiations are now also opened with the remaining five CEECs and Malta. However, it is absolutely indispensable not to disregard in this enlargement process what will happen with the European periphery of this new Europe, in particular Russia. Of course, the same holds true for the Mediterranean Non-Member Countries. The strategic importance of the Mediterranean basin called for rebalancing the EU’s external relations. This was one of the main aims of the Barcelona Conference held in November 1995 that brought together the fifteen EU Member States and twelve Mediterranean Non-Member Countries in order to lay down the foundation for a Euro-Mediterranean Partnership. This conference was an event of major importance because it brought together some countries which are still in conflict with one vii

viii Foreword

another, and also because it has changed the nature of our relations with the southern periphery of the EU. The three baskets of the Barcelona Declaration are of equal importance and complementary to each other: a political and security partnership intended to define a common area of peace and stability based on democracy and respect for human rights; an economic and financial partnership aimed at constructing a zone of shared prosperity; a partnership in the social, cultural and human fields to promote understanding between cultures and exchanges between civil societies. As it looks today, no doubt, Europe will remain the most important actor in the field of trade and economics. But in order to fulfil its role in the international scene it has to play a constructive and active political role proportional to its economic strength. A necessary step in this direction is a coherent policy towards the Mediterranean and the Middle East. The new political, economic and social issues on both sides of the Mediterranean basin constitute common challenges calling for a coordinated overall strategy. The introduction of a new preferential policy towards the South on a par with the preferential policy towards the East constitutes a first but important step in this direction. It may reasonably be expected that the next Euro-Mediterranean ministerial meeting that will be held in 2000 under the French Presidency will be an opportunity to confirm these options and challenges. Obviously, there is still considerable work to be done. On the one hand, applicant countries for EU membership still have to do a lot towards the integration of the acquis communautaire. On the other hand, negotiations and implementation of the new Euro-Mediterranean Association Agreements will have to be accelerated. Another task for the future is indeed to define a much more consistent common approach to the southern and eastern peripheries of the EU. Globalization is an irreversible process. But without a firm political will it cannot succeed. In this regard it should also be noted that a strong emphasis will have to be put on the social and human factors. There is a compelling need for the Union to adapt itself to the new challenges and therefore to be the anchor of stability for the Pan-Euro-Mediterranean Area. No doubt, this book is one of the rare studies embracing, through a comparative and prospective approach, the emerging pan-Euro-Mediterranean regional integration. It will for policy-makers, scholars and practitioners constitute an indispensable tool of reference. Willy De Clercq Minister of State and Member of the European Parliament President Europees Instituut VZW Ghent, 5 January 2000

Acknowledgements The publication of this book would not have been possible without a solid scientific backing from the University of Ghent. Through several research projects, in particular a university GOA Project and an ‘Interuniversity Pole of Attraction (IPA)’ Programme (Universities of Liège, Ghent and Brussels) together with a Tournesol Project, implemented within the framework of the bilateral scientific co-operation between Belgium and France linking the European Institute of the University of Ghent with the CEDRE of the University of Rennes I, it was possible to lay the foundations of this book. This project also benefited very much from the co-operation of the TransEuropean Policy Studies Association (TEPSA), which, among other things, provided an adequate network offering the required expertise on a number of subjects. Furthermore, a number of experts from other institutions and associations co-operated in this project. We have many debts of gratitude to all those who have been involved in this project. This book would never have been published if it had not had the generous financial support of the Europees Instituut VZW. Financial support was also provided by the IPA project, TEPSA and the University of Ghent, Department of International Relations. This allowed us, in preparation for this book, to organize a workshop at which the drafts of the various papers were discussed. The real editorial work, of course, came later. In this respect, special thanks go to all those who have been closely involved in providing assistance to the editors. In particular we would like to express our sincere thanks to Ms Kirstyn Inglis for her substantial editorial assistance, and for the translations of the contributions of Jean Raux and Catherine Flaesch-Mougin as well as for the linguistic revision of the manuscript. We are also very grateful to Mrs Anne Rafique for her invaluable help in the final editorial review of the manuscript of this book. Marc Maresceau Erwan Lannon Ghent, 1 January 2000

ix

Notes on the Contributors Péter Balázs is currently Ambassador of Hungary to Germany. He is a Professor of the Budapest School of Economics, lecturing on theories and praxis of European integration. He graduated at the Budapest School of Economics and joined the Hungarian Ministry of Foreign Trade. He was the representative of Hungary to the EC in Brussels (1982–87) and afterwards led negotiations with the OECD, EFTA and other regional economic organizations. He was a State Secretary at the Hungarian Ministry of Trade and Industry (1992–93) and Ambassador of Hungary to Denmark (1994–96). Willy De Clercq studied law at the University of Ghent and social science at Syracuse University, USA. He has been a Vice-Prime Minister, Minister of Finance of the Budget and of Foreign Trade in the Belgian government. He was Member of the Commission of the European Communities (Delors I) from 1985 until 1989, responsible for Economic External Relations and Foreign Trade. He is currently a Member of the European Parliament and the Chairman of the Committee on Legal Affairs and Citizens’ Rights of the European Parliament. He was Member of the Belgian Chamber of Representatives for 26 years and since 1989 Minister of State. He is President of the European Institute VZW. Geoffrey Denton was Professor and Head of the Economics Department at the College of Europe, Bruges, from 1973 to 1983. From 1983 to 1993 he was Director of the British Foreign Office’s Wilton Park Conferences. Since 1993 he has been a Senior Research Fellow at the Federal Trust, London, and has contributed to TEPSA, Brussels on EU Enlargement to Central and Eastern Europe, focusing on budgetary issues and reform of EU policies and institutions. Marianne Dony teaches European law at the Université Libre de Bruxelles and is in charge of the course on the Common Agricultural Policy. She is Director of the Legal Department of the Institut d’Etudes Européennes of the Université Libre de Bruxelles, a member of the Interuniversity Pole of Attraction (IPA) network (European Integration Law) of the Universities of Liège (IEJE), Ghent (EI) and Brussels (IEE). She is the editor of L’Union Européenne et le Monde après Amsterdam (Brussels: ULB, Etudes Européennes, 1999). Catherine Flaesch-Mougin is Professor at the University of Rennes I – Pˆole europ´een Jean Monnet and Director of the Centre de Recherches x

Notes on the Contributors xi

Européennes (CEDRE-CNRS-UPRESA-6050). She holds a Jean Monnet Chair and is specialized notably in the external relations of the EU and in the financial and institutional aspects of the EU. She is the co-editor of Le Partenariat entre l’UE et les Amériques: Le Libre Echange en Question (Rennes: Apogée, 1999). Alain Guggenbühl is Lecturer on European Governance at the European Institute of Public Administration in Maastricht. He also teaches European policies at the Catholic University of Mons. He is a member of Team Europe Brussels, a panel of visiting lecturers of the European Commission’s Press and Communication Service. His publications have notably dealt with eastern enlargement, the Amsterdam Treaty, Social Europe and EU openness and transparency. Tom Haenebalcke is a Researcher at the European Institute of the University of Ghent within the framework of a project (‘geconcerteerde onderzoeksactie’, GOA) financed by the Ministry of Education of the Flemish Community (Universiteit Gent, BOF). Stefano Inama is an UNCTAD project manager co-ordinating various technical assistance programmes helping developing countries in trade negotiations and intergovernmental disputes. He graduated from the University of Bologna (Italy) and from the College of Europe. He has worked extensively on the trade issues contained in various trade agreements and their relations and linkages with the multilateral trading system. He is currently engaged in studies and technical assistance projects on regional integration in the Mediterranean region, especially the AMU (Arab Maghreb Union) and the Pan-Arab Free Trade Area. Kirstyn M. Inglis qualified as a Scottish solicitor, having worked in English City law firms and Brussels-based legal consultancies. She has edited and contributed to trade law and EU environment law publications. She now works as a Research Assistant at the European Institute of the University of Ghent, in the framework of a project (‘geconcerteerde onderzoeksactie’, GOA) financed by the Ministry of Education of the Flemish Community (Universiteit Gent, BOF). Bichara Khader is Professor at the Université Catholique de Louvain and Director of the Centre d’Etudes et de Recherches sur le Monde Arabe Contemporain. He is the author of more than twenty publications on the Arab world and Euro-Mediterranean relations. His last publication is entitled L’Europe et la Palestine: Des Croisades à Nos Jours (Paris: l’Harmattan, 1999).

xii Notes on the Contributors

Erwan Lannon studied law at the University of Rennes I (CEDRE) and political science at the Université Libre de Bruxelles (CERIS). He has been a consultant to UNCTAD and has worked at the Delegation of the European Commission to Israel. He is currently working at the European Institute of the University of Ghent within the framework of the Interuniversity Pole of Attraction (IPA): European Integration Law, Universities of Liège (IEJE), Ghent (EI) and Brussels (IEE). He is the author of several studies and articles on Euro-Mediterranean relationships. Marc Maresceau studied at the University of Ghent, the Johns Hopkins University, Bologna and at the Institut Universitaire de Hautes Etudes Internationales, Geneva. He was Leverhulme Fellow at the University of Edinburgh and Visiting Professor at various universities. He teaches European law and institutions at the Universities of Ghent and Brussels, he is the Director of the European Institute at the University of Ghent and holds a Jean Monnet Chair. Many of his publications concentrate on the external relations of the European Union, in particular relations between the European Union and Central and Eastern Europe. Kris Pollet was a Researcher at the European Institute of the University of Ghent from 1994 until 1999 doing research on the immigration and asylum polices of the EU in the framework of an FKFO project financed by the Fund for Scientific Research (FWO). He is currently working at the Legal Department of the Overlegcentrum voor Integratie van Vluchtelingen (OCIV – Flemish Refugee Council). Andrei Popescu was awarded a PhD in law at the University of Bucharest in 1980. He was Director in the Ministry of Labour and Social Protection between 1990 and 1996. He was Romania’s governmental representative in the ILO governing body between 1994 and 1996. Currently, he is University Professor in the National School for Political Studies and Public Administration and Head of the Department of Approximation of Legislation with Community Regulations in the Legislative Council. He is the author of many publications and studies in the field of labour and social security law. The publication The International Labour Law (Bucharest: Holding Reporter Publishing House, 1998) was given an interdisciplinary research award. Jean Raux, is Professeur émérite at the University of Rennes I – Coordinator of the Pˆole europ´een Jean Monnet and former Professor at the College of Europe (Bruges-Natolin). His main areas of research are the external relations of the EU and the constitutionalization process of the EU. He is the co-editor of Le Partenariat Entre l’Union Européenne et la Fédération de Russie (Rennes: Apogée, 1998).

Notes on the Contributors xiii

Margareta Theelen is Researcher at the Trans-European Policy Studies Association (TEPSA). She is co-author of the publications From Europe Agreements to Accession. The Integration of the Central and Eastern European Countries into the European Union (Brussels: European Interuniversity Press, 1996) and L’Union européenne … Faisons la Route Ensemble (Brussels: Artis Historia, 1998). Alfred Tovias is Associate Professor at the Department of International Relations and Deputy Director of the Helmut Kohl Institute for European Studies of the Hebrew University in Jerusalem. He has been a consultant to UNCTAD and to the World Bank. He is the author of Tariff Preferences in Mediterranean Diplomacy (London: Macmillan, 1977) and Foreign Economic Relations of the European Community: The Impact of Spain and Portugal (Boulder, Co: Rienner, 1990), and co-author of The Economics of PeaceMaking: Focus on the Egyptian–Israeli Situation (London: Macmillan, 1983). Lode Van Den Hende holds a Law degree and LLM from the University of Ghent and is teaching assistant at the European Institute. He works as an attorney in various areas of Community and WTO law. He has been legal adviser to the Belgian Delegation to the 1996 Intergovernmental Conference. Álvaro de Vasconcelos is Director of the Institute for Strategic and International Studies (IEEI) of Lisbon and member of the Steering Committee of the Euro-Mediterranean Study Commission (EuroMeSCo). He specializes notably in the external relations of the EU and more particularly in Common Foreign and Security Policy and defence issues. He is the editor of La PESC, Ouvrir l’Europe au Monde (Paris: Presses de Science Po, 1998). Peter G. Xuereb LLD (Malta), LLM (London), PhD (Cambridge) is Professor of European and Comparative Law, Head of the Department of European and Comparative Law, and Chairman of the European Documentation and Research Centre at the University of Malta. Until 1993, he held academic posts at West London University, Exeter University and the University of London. He is a consultant in European Union law and transnational business law and is head of the EU law unit in the firm of Tonna, Camilleri and Vassallo.

List of Abbreviations and Acronyms

AA ACP AMU APs ASEAN BD BP Bull. EU CA CAP CDE CEECs CEFTA CEN CFSP CIS CMLRev COMECON CSCE CTH CU EAs EC ECJ ECOS-OUVERTURE ECR EEA EFARev EFTA ELRev EMAAs EMP EMU ESCWA EUROFOR EUROMARFOR

Association Agreement African, Caribbean and Pacific States Arab Maghreb Union Accession Partnerships Association of South-East Asian Nations Barcelona Declaration Barcelona Process Bulletin of the European Union Co-operation Agreement Common Agricultural Policy Cahiers de Droit Européen Central and Eastern European Countries Central European Free Trade Agreement Comité Européen de Normalisation Common Foreign and Security Policy Commonwealth of Independent States Common Market Law Review Council for Mutual Economic Assistance Conference on Security and Co-operation in Europe Change in Tariff Heading Customs Union Europe Agreements European Community European Court of Justice Inter-regional co-operation with areas outside the European Union European Court of Justice Reports European Economic Area European Foreign Affairs Review European Free Trade Association European Law Review Euro-Mediterranean Association Agreements Euro-Mediterranean Partnership Economic and Monetary Union United Nations Economic and Social Commission for Western Asia Rapid Deployment Euroforce European Maritime Force xiv

List of Abbreviations and Acronyms xv

ERDF FDI FRY FTA FYROM GATS GATT GDP GSP IA IGC ILO IFOR IMF INTERREG

JCMS JHA JWT KFOR LIFE MAP m ecu MEDA

MENA MEPP METAP MERCOSUR M euro MNMCs MRAs MTNs NAFTA NATO NGO NIP NIS NPAA NTBs

European Regional Development Fund Foreign Direct Investment Federal Republic of Yugoslavia Free Trade Area Former Yugoslav Republic of Macedonia General Agreement on Trade in Services General Agreement on Tariffs and Trade Gross Domestic Product General System of Preferences Interim Agreement Intergovernmental Conference International Labour Organization Implementation Force International Monetary Fund Trans-European co-operation intended to encourage harmonious and balanced development of the European territory Journal of Common Market Studies Justice and Home Affairs Journal of World Trade Kosovo Force Financial instrument for the environment Mediterranean Action Plan Million ecu Financial and Technical Measures to Accompany the Reform of Economic and Social Structures in the Framework of the Euro-Mediterranean Partnership Middle East North Africa Middle East Peace Process Mediterranean Environmental Technical Assistance Programme Southern Common Market Million euro Mediterranean Non-Member Countries Mutual Recognition Agreements Multilateral trade negotiations North American Free Trade Agreement North Atlantic Treaty Organization Non-Governmental Organization National Indicative Programme New Independent States of the former Soviet Union National Plan for the Adoption of the Acquis Non-Tariff Barriers

xvi List of Abbreviations and Acronyms

OBNOVA

OECD OJ OSCE PA PCA PEMA PHARE PfP QRs RAE/LEA REC REMI RIAs RMCUE RTDE SEA SFOR SMAP STIMENA TACIS TCA TEU UCLAF UN UNCTAD USITC VCLT WEU WTO

Initiative for the rehabilitation and reconstruction of Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia and the Former Yugoslav Republic of Macedonia Organization for Economic Co-operation and Development Official Journal of the European Communities Organization for Security and Co-operation in Europe Palestinian Authority Partnership and Co-operation Agreement Pan-Euro-Mediterranean Area Poland–Hungary Aid for Economic Restructuring Partnership for Peace Quantitative Restrictions Revue des Affaires Européennes/Law and European Affairs Regional Environmental Centre for Central and Eastern Europe La Revue Europeenne ´ des Migrations Internationales Regional Integration Agreements Revue du Marché Commun et de l’Union Européenne Revue Trimestrielle de Droit Européen Single European Act Stabilization Force Short and Medium Term Priority Environmental Action Programme Swiss Trade Initiative for the Middle East and North Africa Programme for Technical Assistance to the Commonwealth of Independent States Trade and Co-operation Agreements Treaty on European Union Unité de Co-ordination de la Lutte AntiFraude – Unit on Co-ordination of Fraud Prevention United Nations United Nations Conference on Trade and Development United States International Trade Commission Vienna Convention on the Law of Treaties Western European Union World Trade Organization

Introduction: the Need for a Pan-Euro-Mediterranean Strategy – The Triangular Approach Marc Maresceau and Erwan Lannon

The purpose of this study is, in the first place, to analyse and compare the preferential relations between the EU and its eastern and southern peripheries, and then to stimulate further reflection on pan-Euro-Mediterranean regional integration. The respective frameworks for these relations share considerable similarities but also important differences (Péter Balázs).

Association and differentiation It is true that the legal basis of the bilateral frameworks with the CEECs remains a ‘classical’ one, that is to say that Europe Agreements are, after all, association agreements. Association agreements are also the bilateral legal framework for relations with the Mediterranean Non-Member Countries (MNMCs), regardless of whether they are candidates for accession or not. Since, at least from a legal point of view, association is a common denominator for the relationships with the ten eastern candidates and southern EU neighbours (the Agreement concluded between the EC and the PLO for the benefit of the Palestinian Authority being a special case), two contributions in this book unravel the many mysteries surrounding this basic notion. Indeed, association is far from being a monolithic concept and has many faces and forms of appearance. Therefore, when approaching this notion in the context of our study, differentiation provides the vantage point of reference (Catherine Flaesch-Mougin). Interestingly enough, thanks to the fact that it is multifaceted, it may serve to improve the quality of relationships for those still having a long way to go or who are simply excluded from the enlargement dynamic. It is in this context that the concept of association of proximity has been suggested and developed (Jean Raux). But, however important the legal basis for developing relationships between the EU and third countries may be, it is interesting to note that the enlargement-dimension phenomenon largely falls outside the formal framework of the association agreements. The role of the European Council has been predominant in providing the political impetus and in formulating the political conditions for EU membership. Of course, the role of the European Commission in the long accession process is also crucial. The joint efforts of these two institutions have produced the pre-accession stratxvii

xviii Marc Maresceau and Erwan Lannon

egy whereby candidate countries politically, legally and economically are gradually brought closer to the EU. As at the time of writing, the various stages of this pre-accession phase, which is not yet completed, are explained and analysed (Marc Maresceau).

The Mediterranean flavour of EU enlargement Enlargement is not exclusively a matter for the CEECs. Cyprus, Malta and Turkey are also part of the enlargement process and this unequivocally brings a Mediterranean dimension to the enlargement debate. An important and unavoidable question raised in connection with any reflection on enlargement is where to draw the borders of enlargement. Turkey, although a candidate since 1987, had been left aside by the Commission in Agenda 2000 and the 1997 Luxembourg European Council for various reasons. As a result of this, relations between the EU and Turkey went through a difficult and strained period. Turkey felt discriminated against and it was only at the 1999 Helsinki European Council that she was granted candidate status. However, accession negotiations with Turkey will only start once the Copenhagen political conditions can be satisfied. That is to say that Turkey is now facing a substantial political challenge and that its candidate status does not necessarily mean its admission. Indeed, the admission of Turkey has its opponents within the EU and in Turkey. One should also not forget that the integration of this regional power into the European Union would have tremendous (geo)political consequences. The EU will, in such a case, directly border Armenia, Georgia, Iran, Iraq and Syria – and via the Black Sea, countries such as Ukraine and the Russian Federation. In this particular case as well as at the regional level (i.e. in the Pan-Euro-Mediterranean Area), conditionality should be implemented in the framework of a more constructive and coherent approach and the export of the Community model should be tactfully implemented by the EU (Erwan Lannon, Kirstyn Inglis, Tom Haenebalcke). One of the main considerations in favour of the incorporation of Turkey in the enlargement process is that such a move constitutes a major factor in guaranteeing peace and stability in Europe. Indeed, the stability of the Mediterranean basin and of the Middle East is in the interests of the European continent as a whole. Therefore, Mediterranean Non-Member Countries should be treated as full partners in any security arrangements in which they are concerned (Álvaro de Vasconcelos).

The Russia factor Security is also one of the leading underlying driving forces for EU enlargement eastwards. However, in the long run this may prove to be true only if

Introduction xix an adequate relationship with Russia is established. For the moment, Russia is not an associate country or candidate for accession and is thus not included in the enlargement process. An enlargement that would leave Russia feeling pushed aside or an underdog in any way would not be advantageous. Therefore, it appears that opening up a dialogue with Russia is an urgent imperative in order to explore its perceptions of the possible positive but certainly also the adverse effects of EU enlargement. Several contributions have incorporated the impact of enlargement on Russia (Jean Raux, Catherine Flaesch-Mougin, Marc Maresceau).

Connecting the EU’s southern and eastern peripheries Connecting the EU’s southern and eastern peripheries is not an easy task. However, since the 1991 Intergovernmental Conference, the idea of equilibrium between the policies implemented by the EU towards its eastern and southern peripheries has emerged. The 1995 Cannes European Council, for example, endorsed this new approach by asserting that ‘an ambitious policy to the South forms a counterpart to the policy of openness to the East’. The concept of a ‘geopolitical coherence’ in the EU’s external actions is nevertheless still in its infancy, even if the 1999 Helsinki European Council stressed that there was a need ‘to ensure that optimum use is made of all the various means at the Union’s disposal for more effective and comprehensive external action by the Union’. But the EU–CEECs–MNMCs triangle remains an imperfect one. Interconnections between the two preferential zones are to be developed and the specificities of the strategies and interests of the EU’s partners are to be taken into account (Alfred Tovias). Interrelations and common interests are obvious. The transboundary nature of the environment (Kirstyn Inglis), migratory pressures (Kris Pollet) and terrorism (Álvaro de Vasconcelos) are clear, and such issues are particularly sensitive in the PanEuro-Mediterranean Area. No doubt such challenges cannot be resolved effectively without creating appropriate Pan-Euro-Mediterranean fora. Dialogue is the key, misperception the danger.

Towards a Pan-Euro-Mediterranean regional integration: challenges ahead In the process of linking the Central and Eastern European Countries with the Mediterranean Non-Member Countries key trade issues remain numerous. The agricultural sector is of crucial importance as Pan-EuroMediterranean regional integration will not be achieved without significant repercussions for the Common Agricultural Policy (Marianne Dony). One of the main objectives, in the first stage of integrating the Pan-EuroMediterranean region, is to create the conditions for the establishment of a

xx Marc Maresceau and Erwan Lannon

vast free trade zone. This presupposes notably a workable mechanism on rules of origin without which such an objective cannot be attained (Stefano Inama). Another aspect which is of considerable relevance in any modern approach to the concept of commercial policy is that of services. This is true in an intra-Community and enlarged Community context but services also constitute an area for further development in Euro-Mediterranean relations (Lode Van den Hende). Most of these strategic trade aspects must be considered in the light of the expected Millennium Round but also through the willingness of the EU to export the Community model. The financial dimension of this emerging regional integration is also fundamental. Connecting PHARE and MEDA financial programmes could be a first step in the right direction (Alain Guggenbühl and Margareta Theelen). Bringing together the economic operators is also of great importance and must be considered as an opportunity for further convergence (Peter G. Xuereb). On the other hand, one must be aware that enlargement has its price (Geoffrey Denton) and that enlargement cannot take place to the detriment of the EU’s Mediterranean partners. Furthermore, one should not forget the social dimension of enlargement (Andrei Popescu), nor can the social cost of the envisaged Euro-Mediterranean free trade zone be underestimated. The creation of the conditions for social harmony and political stability (Bichara Khader) are fundamental preconditions for the creation of a viable regional integration. While it is clear that there are initiatives and programmes taking into account the emerging Pan-Euro-Mediterranean regional integration, the EU, at the beginning of the year 2000, has no clear ‘triangular policy’ nor any ‘Pan-Euro-Mediterranean strategy’. The creation of Pan-EuroMediterranean regional integration and the development of triangular cooperation are essentially a matter of political will. We hope the present study may, for its part, contribute to an understanding of the increasing complexity and interconnections of the EU’s relations with its eastern and southern peripheries.

Part I The Political and Security Dimension

This page intentionally left blank

1 The EU Pre-Accession Strategies: a Political and Legal Analysis Marc Maresceau

Introduction In the EU enlargement procedure, one of the important steps is the Opinion of the European Commission on each application for EU membership. But the Commission’s role in the enlargement process as a whole is in reality much more important than Article 49 TEU (former Article O) at first glance suggests: the Commission has indeed a key position in the preparation of the formulation and implementation of the pre-accession strategies towards the applicant country as well as in the accession negotiations as such.1 Therefore, the request of the 1995 Madrid European Council to the Commission to embark on the drafting of a composite paper on enlargement,2 although unique in itself, was not so astonishing. Already the sheer number of all the applications from the Central and Eastern European Countries (CEECs) – no less than ten have applied for membership – together with the pending applications of Cyprus and Malta, 3 and not forgetting Turkey, made the prospect of further enlargement this time something very special and indeed very different from previous enlargements. The next enlargement(s), possibly involving so many different countries with such varying degrees of economic and social development, necessarily raised questions about the preparation of an adequate enlargement framework. Naturally, such considerations quickly have a political, economic and financial dimension. Of course, from the EU side, the Commission is not the only player in the enlargement process. The predominant political role, that is to say which countries are eligible for membership and the political preconditions and conditions attached to possible accession, is gradually but surely being played by the European Council. An interesting and unique interplay between not only the Commission, European Council and, somewhere in the middle, the EU Presidency but also some individually concerned Member States can be seen at work in the current enlargement debate. The dimension and degree of intensity of this interaction cannot be compared 3

4 Marc Maresceau

with previous enlargements, thus adding a very special touch to the present envisaged enlargement(s). In this paper the following structure is followed. In the first part some basic notions relating to Agenda 2000 and pre-accession strategies are addressed. Certainly, it is not easy to find one’s way in the EU’s terminological enlargement labyrinth. The prolific use of new concepts and expressions by the European Commission and other EU institutions has somehow reached the point where it seems that chaos dominates the enlargement cosmos.4 Just to take the year 1998: a European Conference was organized and nobody really knew what its purpose was; a very rare distinction was introduced between accession process and accession negotiations; Accession Partnerships were established, not to be confused with ‘partnerships’ as established through the Partnership Agreements; pre-accession and enhanced pre-accession strategies were formulated; national programmes for the adoption of the acquis, innumerable screening, evaluation and progress reports have been produced; and so on. But all this cannot conceal the fact that, at the beginning of the twenty-first century, it is easier to talk about enlargement than to achieve it. Yet, an attempt has been made to explain briefly and clarify the main choices on enlargement made by the EU, including those concerning the sensitive and delicate position of Turkey. The second part of this paper is more a case study concentrating on the analysis of some aspects of the political and legal dimension of the relations between the EU and Central and Eastern Europe in the light of the EU enlargement options as they have developed since the Commission published Agenda 2000 and its Opinions. In this part specific attention is also devoted to the impact of enlargement on relations with Russia.

Agenda 2000 and pre-accession follow-up: general overview On 15 July 1997 the Commission published within the framework of Agenda 20005 two distinct but nevertheless closely interrelated documents: For a Stronger and Wider Union and The Challenge of Enlargement. On the same day, in accordance with Article O TEU (now Article 49) the Commission also published its Opinions6 on the applications for EU membership of Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. 7 The result of these Opinions was that, according to the Commission, accession negotiations could only be opened with five applicant countries from Central and Eastern Europe – the Czech Republic, Estonia, Hungary, Poland and Slovenia. Furthermore, such negotiations could also be entered into with Cyprus. The reasons why a number of applicant countries of the CEECs could not be included in the first accession negotiations, again according to the Commission, were political and/or economic. Cyprus and Malta, 8 for their parts, had already received a favourable opinion in 1993 from the

The EU Pre-Accession Strategies 5

Commission on their application for membership in 1991 and no new opinion needed now therefore to be given. Of course, as regards Cyprus, the Commission could not ignore the continuing division of the island but noted that accession negotiations ‘could start before a political settlement is reached’.9 These negotiations, in the eyes of the Commission, ‘[had to] be seen as a positive development which could promote the search for a political settlement’.10 One of the underlying ideas here was that such a move could also create considerable political and economic advantages for the Turkish Cypriots. But the extreme virulence of the reactions on this matter on the Turkish Cypriot side, 11 and more importantly the Turkish government, shows that at the time the Commission had not made a particularly accurate evaluation of the situation. Turkey’s reaction was, moreover, very much inspired by the fact that the Commission in its Agenda 2000 had almost totally ignored that country. In this document, indeed, only a short and general summary of the bilateral relations had been provided, 12 while in the specific chapter on the effects of enlargement on those countries which were not included in the EU accession policy, Turkey was merely worth two lines. The Commission was kind enough to recall that ‘the EU has a particular close relationship with Turkey whose eligibility for EU membership [had] been recently reaffirmed’ 13 but nothing specific was said on the triangular aspect of the EU–CEECs–Turkey relations and, above all, not the slightest indication was given as to how the orientation of the possible future accession policy towards Turkey was to be addressed. True, it must be mentioned that on the same day of the publication of Agenda 2000, the Commission also published, but at the same time clearly distinct from it, another document called Communication on the Further Development of Relations with Turkey.14 This, once more, was a complete miscalculation. The Communication, while reiterating the principle of Turkey’s eligibility for EU membership and assuring that Turkey would be judged on the basis of the same criteria as all the other applicants, hardly did anything more than mention in passing the state of relations between the EU and Turkey, making only a few vague references to a deepening of some technical aspects of these relationships (trade, customs union, liberalization of services and proposals for co-operation in other areas). Again, nothing concrete was proposed regarding Turkey’s accession request and on the whole the result of this Communication was that it did nothing more than add an extra dose of EU fuel to the Turkish flames. These disappointments, together with the feeling of isolation, explain the bitterness and sharp irritation of Turkey, not only to the Commission’s Agenda 2000, but also to the Commission’s approach as a whole. Only in 1999 would concrete signals of a change in the Commission’s views on relations with Turkey become apparent (see below). The basic Commission options expressed in its Opinions concerning the choice of with whom, from the CEECs accession, negotiations could be

6 Marc Maresceau

started were endorsed by the 1997 Luxembourg European Council. But at the same time the European Council had not been totally insensitive to the storm of criticism which had come on the one hand from those applicants from Central and Eastern Europe who had been set aside and on the other from Turkey. Therefore, the European Council – it must be said, in an intelligent way – introduced the new concept of accession process beside that of accession negotiations and proposed that the accession process be launched with all the applicants from Central and Eastern Europe and that, as far as Turkey was concerned, a strategy had to be drawn up ‘to prepare Turkey for accession by bringing it closer to the European Union in every field’. This more diplomatic approach of the European Council had managed to take away some or most of the frustrations expressed by many of the nonselected CEECs after the Commission’s Opinions of July 1997. However, one important black spot in the European Council’s proposals could not be erased: once again Turkey continued to be extremely dissatisfied with the whole procedure, feeling discriminated against, misunderstood and left out. This was clearly demonstrated by the reaction of Turkey towards the initiative to hold a European Conference. The 1997 Luxembourg European Council, stressing that a global and dynamic strategy had to be developed whereby enlargement was to be seen as a ‘comprehensive, inclusive and ongoing process’, had indeed also decided that a European Conference had to be organized. Such a conference was supposed to bring together the EU Member States ‘and the European States aspiring15 to accede to [the EU] and sharing its values and internal and external objectives’. On 12 February 1998 the London European Conference took place in which the fifteen EU Member States, the ten applicant countries from Central and Eastern Europe and Cyprus participated. The idea of such a meeting had been strongly supported by the Blair government since the UK held the EU Presidency during the first half of 1998. The Conference itself was composed of the Heads of State and Government and the President of the Commission. Although Turkey had also been invited to participate – and as a matter of fact the Turkish presence was one of the very reasons behind the conference16 – she had loudly declined the invitation for reasons mentioned previously. In the end, the Conference concentrated on transnational crime, security and regional co-operation – topics which are always welcome even if there is no real agenda – but its concrete results were particularly minimal since the meeting was lacking any clear structure or goal. While aimed at tackling issues on a ‘pan-European’ basis and giving the less advanced applicants for membership a forum together with the selected candidates, it was difficult to situate some European countries. Switzerland, for example,17 showed some interest but in the end did not participate and some other ‘European’ countries, such as Moldova or Ukraine, which from their point of view were also ‘aspiring’ to accede to the EU, while eager to participate were simply not welcome. And finally, it must be said that,

The EU Pre-Accession Strategies 7

probably, everybody was happy that Russia had not expressed the wish to participate. Unless fundamentally rethought, it would appear that there is little or no future role for the European Conference as it was originally conceived although it must be said that the Commission in its Composite Paper of 13 October 1999 (see below) is of another opinion. After having expressed the view that Turkey, as a candidate country, would become a full and active member of the European Conference, the Commission continues to see the Conference as a potentially important forum for political consultation for countries aspiring to accede to the EU. The European Council for its part also has no clear-cut opinion on the issue and the 1999 Helsinki Summit Conclusions only stipulate that ‘the future of the European Conference will be reviewed in the light of the evolving situation’. Nevertheless, the French Presidency seems to wish to ‘revitalize’ the idea and has convened two meetings of the European Conference (one of them at Ministerial level). Maybe in the future the European conference could evolve towards a more pan-European oriented framework, integrating most – if not all – of the countries of the European continent, where inter alia the effects of EU enlargement on European non-members could be addressed. Enlargement process and enlargement negotiations It was at the Brussels meeting on 30 March 1998 of the Ministers of Foreign Affairs of the fifteen EU Member States and the ten applicants from Central and Eastern Europe and Cyprus that the accession process was formally launched. For the CEECs an enhanced pre-accession strategy was set up based, on the one hand, on a new model called Accession Partnerships setting out the main political, legal, economic and financial priorities, and on the other the organization of ‘increased pre-accession financial assistance’. The legal act establishing such Accession Partnerships was Council Regulation 622/98 of 16 March 1998. 18 These Partnerships provided, inter alia, for a single framework covering the priorities in each applicant country on which the preparations for accession had to concentrate. The concept of Accession Partnership was further worked out in various Council Decisions of 30 March 1998 spelling out for each applicant from Central and Eastern Europe individually the principles, priorities, intermediate objectives and conditions.19 In response to the EU initiatives the ten applicants from Central and Eastern Europe presented their respective national policy programmes describing in detail the various measures and actions needed to attain the objectives set out in the Accession Partnerships. On 31 March 1998 the opening session of the accession negotiations between the EU and the selected CEECs and Cyprus took place. Consequently, this last event put into motion the first ‘real’ accession negotiations train. In April 1998 the applicants’ analytical screening of the state of implementation of the various facets of the acquis communautaire

8 Marc Maresceau

also took place with all the ten CEECs to determine each country’s position in the Accession Partnership strategy. A similar exercise occurred regarding Cyprus. For Cyprus, not being included in the Accession Partnerships, a specific pre-accession strategy had been suggested by the Luxembourg European Council, concentrating inter alia on the judicial and administrative capacity of the country to cope with the acquis communautaire and on certain forms of technical assistance. In accordance with the Conclusions of the 1997 Luxembourg European Council, the Commission presented its ‘Regular Reports’ for the first time on 17 December 1998, reviewing the progress made by each applicant, country by country. They were based on an intensive screening of each applicant country in the light of the famous Copenhagen criteria for accession and the conditions related to the integration and application of the acquis communautaire. As already mentioned previously it was the first time such a country report was also devoted to Turkey’s progress towards accession. These reports were followed by updated versions published on 13 October 1999 and have more or less a similar structure. The two reports first describe the bilateral relations as they result from the Europe Agreements and pre-accession strategies. Then the political criteria for membership are analysed. This implies a screening of the situation in each applicant country in the light of the conditions relating to democracy and the application of the rule of law. The examination covers the position of parliament, government and administration, and last but not least the judiciary. In the 1998 Reports, this part of the scrutiny also includes a specific section on measures taken by each applicant country to combat corruption, a concern of increasing significance, where ‘the efforts undertaken by the candidate countries are not always commensurate with the gravity of the problem’. According to the Commission ‘there is a certain lack of determination to confront the issue and to root out corruption in most of the candidate countries’.20 The 1999 Regular Reports demonstrate that, in this respect, little progress has been made. 21 Another important facet of the examination of the political conditions concerns the protection of human rights and the protection of minorities in each applicant country. In a second and third part of the chapter examining the criteria for membership, the economic criteria and the ability of the applicant countries to assume the obligations of membership relating to the acquis communautaire are addressed. Finally, a last part is devoted to an assessment of the administrative and judicial capacity of each candidate to implement and apply the acquis. After the publication of the first regular reports, the impression had been growing that the distance between countries of the first accession train and those of the second was narrowing and that an upgrade of the status of some applicant countries from ‘category two’ to ‘category one’ might be possible. For example, Latvia and Lithuania had been making important

The EU Pre-Accession Strategies 9

progress while in Slovakia the creation of a new government after the elections of September 1998 had considerably improved the political climate and the political atmosphere of the relations between Slovakia and the EU. In the light of the economic evaluation already made in 1997 it seemed that that country had only a small step to take to jump onto the first accession train. The Commission and Council acknowledged the progress made but were nevertheless reticent to propose a modification of Slovakia’s status while leaving Bulgaria and Romania behind. This may explain, at least in part, why the 1998 Vienna European Council limited itself to only welcoming the progress in the preparation for accession negotiations of all the CEECs22 which, for the moment, were excluded from the negotiation table. Thus, expectations were growing that the December 1999 Helsinki Summit would review the original ‘classification’ of candidate countries. This, at last, became the position of the European Commission when on 13 October 1999, Mr Prodi announced a fundamental shift in the Commission’s enlargement strategy by proposing to open accession negotiations with all the Central and Eastern European candidate countries (and Malta), even if most of the remaining applicant countries did not fully meet the economic criteria. 23 This change in accession ‘methodology’, based on the need for a new momentum in the enlargement process in particular after the Balkan crisis, goes together with a greater differentiation among the applicants. This implies that a detailed account of each candidate’s progress in the preparation for membership will be made while the conclusion of the accession negotiations will be done on a case-by-case basis. In other words parallelism between negotiations on the one hand and concrete implementation of EU law on the other will be an important guiding principle. At the 1999 Helsinki European Council the Commission’s new approach was endorsed, which implies that accession negotiations were opened in February 2000 with Bulgaria, Latvia, Lithuania, Romania, Slovakia and Malta. However, while the remaining applicant countries are getting closer to the Copenhagen political and economic criteria for EU membership, ‘new’ EU conditions may well give rise to serious concern. For example, a number of applicant countries have, over the years, developed nuclear energy programmes not always in alignment with the necessary safety standards. In this respect the 1999 Cologne European Council had already given a clear signal by stressing ‘the importance of this issue in the context of the Union’s enlargement’ and requested that the Commission examine this question thoroughly in the next regular progress reports.24 Also the Helsinki Conclusions make explicit reference to ‘the importance of high standards of nuclear safety’. As an illustration this means for Bulgaria, for example, that acceptable closing dates for unsafe units at the Kozloduy power station have to be set (see below K. Inglis). In addition, in the totally different field of childcare institutions, a ‘new’ condition was imposed on Romania, whereby the EU required that effective

10 Marc Maresceau

reforms be introduced. Of course the EU is in a comfortable position here. The longer the duration of the pre-accession phase, the more, potentially at least, new requirements for EU membership can be added to the list or existing ones further refined. There is not much candidates can do about this. Between the beginning of the accession negotiations with Poland, Hungary, the Czech Republic, Estonia, Slovenia and Cyprus (the ‘Luxembourg group’) on 31 March 1998 and June 2000, 29 of the 30 identified chapters of the acquis communautaire have been opened for negotiation, the only one left out being ‘institutions’ (and ‘Others’). Negotiations with all the countries of the Luxembourg group on a number of domains are ‘provisionally’ 25 completed and cover the following nine areas: education and training, science and research, statistics, industrial policy, small and medium-sized enterprises, consumer and health protection, telecommunications, CFSP and EMU. Negotiations on the remaining chapters have further to be completed with one or more of these candidates. For example, negotiations on fisheries have been completed with five candidates but not with Poland, while social and employment policy as well as audio-visual policy have been concluded only with Cyprus. This is also the case as far as free movement of goods and customs union with the Czech Republic are concerned. Other areas such as company law and financial control have been completed with a few candidates. However, there are still some hard nuts to crack. For the ‘sensitive’ chapters progress in the negotiations is slow and some have only just started. The difficult chapters include free movement of persons, free movement of services, competition policy, CAP, regional policy, transport, taxation policy, energy (including nuclear energy), environment, budget, and justice and home affairs. Without going into the details of the negotiations, it may be worth while to say a word about one of the most difficult chapters, that of free movement of persons, in particular of workers. In May 2000 this chapter was opened for negotiation with the six candidates of the Luxembourg group but the EU common position on this issue remains very vague. While not yet raising in so many words a request for transitional periods allowing restrictions on labour market access it is very likely that during the negotiations this may become the EU position. Austria, for example, has already made clear her specific position on the issue, stressing inter alia the fact that she shares a common border with the CEECs of 1256 km, that there is already a high proportion of CEEC workers (10 per cent) in the country, and that enormous wage differences with the CEECs exist (CEECs generally have not more than 25 per cent of Austrian wage level). Moreover, also Germany and possibly other Member States may well ask for transitional periods on this matter. However, candidates are of the opinion that reciprocal free movement of persons, including workers, should be established from the day of accession. They do not understand why the general EU insistence on full application of the acquis communautaire in general

The EU Pre-Accession Strategies 11

imposed upon them should not apply regarding movement of persons. Another question linked with this topic is that of the application of the Schengen Agreement and the EU visa rules. To date the candidate countries have visa requirements which differ from those applied by the EU Member States. The result of the EU requirement to have full alignment with the EU list of third countries whose citizens need a visa before entering EU territory is more easily said than done. That means, for example, that Poland has to impose visa requirements for citizens of fifteen countries with which today she has no visa obligation, including direct neighbours such as Ukraine and also other Eastern European countries. Also Hungary will have to review her agreements with her neighbours, as least with those which will not be in the EU at the time of Hungary’s joining. For the moment Hungary has signed such agreements with Romania, the Republic of Yugoslavia, Ukraine, Croatia, Slovenia and Slovakia. Moreover, in most of these countries live Hungarian minorities, which adds a special dimension of sensitivity to the EU request of visa alignment. Clearly, the rigidity of the EU position results in the re-establishment of particularly tough borders and border controls among the countries of Central and Eastern Europe. Obviously, the negotiation picture for the Helsinki group countries, that is to say Romania, Bulgaria, Slovakia, Latvia, Lithuania and Malta, is different from that of the Luxembourg group since negotiations only started in February 2000. For the six countries concerned negotiations have been completed on small and medium-sized enterprises, science and research, education and training. They have been opened with some countries on certain topics such as competition policy, culture and audio-visual policy but negotiations on most of the difficult chapters still have to be opened. It is difficult to foresee how the negotiations will further evolve. A road map aiming at defining the way and means for the completion of the negotiations may well be formally approved at the 2000 Nice European Council. But there is little or no prospect of a firm EU commitment towards a negotiation scenario with target dates being offered in the short term. This may be frustrating for the front-runner candidate countries, in particular Poland and Hungary, but it is a realistic attitude. The results of the Intergovernmental Conference on the institutions will provide an indication of how an enlarged EU can continue to function ‘while maintaining the momentum of European integration’. And even in the hypothesis of a clear EU vision in this respect some of the substantive matters of the various sensitive negotiation chapters will need an inventive approach by the EU as well as by the candidates. Such an approach may well imply a stronger emphasis on political rather than technical considerations. However, this is not without risk: on certain concrete issues the distance between the respective positions of the candidates and the EU could prove to be so considerable and maybe insurmountable that the technique of transition periods is inadequate to bridge the gap.

12 Marc Maresceau

Turkey: the unavoidable partner In the aftermath of the Luxembourg European Council with regard to Turkey’s specific position in the EU enlargement policy, there were, at least in some EU Member States, a growing number of signals showing a greater understanding or openness towards the Turkish position. Turkey is indeed an important partner of the EU and its Member States both politically and economically. At the instigation of Member States, which were becoming increasingly irritated by the total inflexibility of Greece, signs were given that there could be scope for an improvement in relations with Turkey. In 1998, the Commission again, recalling that Turkey was ‘also a member of the Euro-Mediterranean Partnership’,26 presented proposals demonstrating ‘the European Union’s commitment to developing a strategy to prepare Turkey for accession’.27 Perhaps, more importantly, for the first time a progress report on Turkey was published on 17 December 1998 28 together with those on the Central and Eastern European applicants which the Commission prepared within the framework of an enhanced pre-accession strategy. While all this, at least from a procedural and perhaps even more so from a psychological point of view, might create the impression of a more equal treatment of the Turkish application for EU membership, originally only little concrete progress had been made. At the 19 July 1999 meeting organized within the framework of the European Conference, Turkey, although again invited, refused to participate. 29 Indeed the attempts by the German Presidency to include Turkey in the ‘accession process’ had failed as the Conclusions of the 1999 Cologne Summit clearly demonstrated.30 At this point it is interesting to note that it is perhaps not so much the political negotiations as the human catastrophe resulting from the terrible earthquake in Turkey in 1999 and the reactions, particularly from Greece, to this calamity which may have helped to create a momentum for change. EU financial aid to Turkey related to the natural disaster was approved by Greece, although so far Greece has always opposed the implementation of the Financial Protocol which is an essential part of the bilateral framework between the EU and Turkey 31 as well as the special financial assistance related to the establishment of the Customs Union. On 13 October 1999 the President of the European Commission, Mr Romano Prodi, in his speech on EU enlargement before the European Parliament, expressed the view, on behalf of the European Commission, that Turkey should be granted the status of ‘candidate country’ and the same was suggested in the Regular Reports from the Commission on Progress towards Accession published on the same date. However, Greek authorities were also quick to make clear that this gesture could not yet be interpreted as granting Turkey the status of ‘candidate country’ on a par with other applicants for EU accession,32 and significantly the Commission also indicated that in any case the granting of the qualification ‘candidate country’ would not imply that ‘accession negotiations’ would necessarily be opened

The EU Pre-Accession Strategies 13

immediately. Turkey, for her part, while accepting that the Copenhagen criteria must be met, continued to reject the idea of making political concessions prior to the granting of status of candidate country. In any event, as a result of the application by the Commission of the Copenhagen test criteria to the domestic political and economic situation in Turkey, there is still a long way to go before EU membership of that country can be seriously envisaged. The Commission expects that Turkey should be capable of acquiring a viable market economy able to cope with the pressures of the market in the medium term. But the main problems remain on the political side: human rights violations, the unacceptable treatment of minorities, the role of the army in politics and the continuing occupation of northern Cyprus.33 All this explains why, until the very last minute before the 1999 Helsinki European Council, suspense remained extremely high on the question of whether the conclusions of the meeting would satisfy Turkey. Even on the first day of the Summit exceptional diplomatic activity was developed to ‘explain’ to Turkey the meaning of the envisaged Helsinki ‘conclusions’ and to avoid any misunderstanding. An anecdote worth mentioning is that on the Friday afternoon Mr Solana, the High Representative for the Common Foreign and Security Policy, Mr Verheugen, the Commissioner for Enlargement, and a representative of the Finnish Presidency flew to Ankara to explain the Conclusions of the Summit, while on Saturday, 11 December, Mr Bülent Ecevit, the Turkish Prime Minister, in his turn flew to Helsinki to participate at the dinner of the Heads of State and Government of the EU Member States and the other twelve candidate countries.34 The wording of the Helsinki Conclusions is a masterpiece in diplomatic formulation. Turkey is qualified as ‘a candidate State destined to join the Union on the basis of the same criteria as applied to other candidate States’. This means that Turkey will benefit from the pre-accession strategy in the preparation for accession and thus an Accession Partnership will be set up (see below). Emphasis will be laid on progress towards fulfilling the political criteria for accession. Special importance will be attached to the issue of human rights and the respect of the principle of peaceful settlement of disputes in accordance with the UN Charter. Turkey – as any other EU candidate – is urged to make every effort possible to resolve the outstanding border dispute(s) and other related issues. If this proves to be impossible, it should bring the dispute(s) before the International Court of Justice within a reasonable time. The European Council will make an evaluation of the outstanding dispute(s) ‘in order to promote their settlement through the International Court of Justice, at the latest by the end of 2004’. But again it should be noted that these political conditions to which Turkey’s candidate status is directly being linked are presented as conditions applicable to all candidate countries. Seen in this context Turkey is, at least formally, not being discriminated against vis-à-vis other candidate countries. However, the ‘Helsinki condi-

14 Marc Maresceau

tions’ cannot be disconnected from the particularities of Turkey’s candidate status, and, as already mentioned, receiving candidate status does not mean that accession negotiations will start immediately. In the first place, a prerequisite for the opening of accession negotiations remains compliance with the Copenhagen political criteria. Turkey is still far away from this target but, as already mentioned, this will not preclude Turkey from participating in the Community programmes, agencies and accession process along with the other candidate countries. Finally, in EU–Turkey relations, the Cyprus issue is never far away of course. Here, the European Council notes that a political settlement will facilitate the accession of Cyprus to the European Union but that if no settlement has been reached once the accession negotiations are completed, ‘the Council decision on accession will be made without the above being a precondition’. However, at the same time it is added that ‘the Council will take account of all relevant factors’. All the pertinent parts of the conclusions on or affecting Turkey have necessarily to be read together and even then the diplomatic intervention of the US at the highest level was necessary to convince Turkey to accept the EU offer. Indeed one can understand the initial Turkish hesitation: while the EU went a long way to meeting Turkey’s demands, particularly in terms of being treated on equal terms with other candidates, there is no commitment to actually opening accession negotiations and accession itself today still appears somewhat enigmatic.

EU enlargement practice since 15 July 1997: an evaluation The publication of Agenda 2000 together with the various Commission Opinions on the CEECs’ application for accession had a fundamental impact on the pre-accession strategy as such. Of course, before 15 July 1997, there were already numerous initiatives developing a pre-accession atmosphere. As a matter of fact, after the 1993 Copenhagen European Council or, perhaps better, after the 1994 Essen European Council, the preaccession strategy became formally and firmly established. This resulted in various actions, forms of dialogue and projects. Probably one of the most interesting initiatives in this respect was the 1995 Commission White Paper on the Preparation of the Associated Countries of Central and Eastern Europe for Integration into the Internal Market of the Union aimed at laying down a detailed programme of approximation of laws for the CEECs. In this document, legal integration of the acquis communautaire related to the Internal Market was presented as a fundamental objective for a successful accession policy.35 But with the publication of Agenda 2000 together with its Opinions, the Commission made a strict differentiation between the applicant countries: there were those with whom negotiations could be started and those with whom this was not yet possible. Obviously, pre-accession

The EU Pre-Accession Strategies 15

policies applied to those selected necessarily had a different impact compared to that of the accession policies applied to those of the second train. The Copenhagen political criteria applied The ten Opinions of 1997 provided a detailed analysis of why, in the eyes of the Commission, an applicant had to belong to the first or second category. In this examination, the political and economic criteria were predominant. Four applicant countries, for example, failed the test exclusively or mainly for economic reasons (Bulgaria, Romania, Lithuania and Latvia). More important in the light of the topic of this paper is why applicants satisfied or failed the political test undertaken by the Commission. Such an examination is of particular relevance since meeting the political criteria after the entry into force of the Treaty of Amsterdam on 1 May 1999 also becomes a legal requirement for membership. The new Article 49 TEU explicitly stipulates that any applicant for EU membership has to respect the principles of liberty, democracy, human rights, fundamental freedoms and the rule of law. In all the Commission Opinions, a specific chapter is dedicated to the ‘Political Criteria [for Membership]’. This chapter has an identical structure: first, the place of democracy and rule of law in the country concerned is evaluated; second, an assessment is given on the application of the protection of human rights and rights of minorities; finally, a global and general evaluation is made. The section ‘Democracy and the rule of law’ contains a brief description of the constitutional and institutional structure of the country, how parliament and the executive function and what the position of the judiciary is in the constitutional framework. On the whole the picture presented by the Commission in all the Opinions is a remarkably positive one: since the political changes, all applicants have been able to organize free elections, through the classical game of coalitions political majorities have been formed, governments are accountable to a parliament, etc. While there were still some hesitations about Romania at the time the Opinion was delivered, the only real problem which the Commission was facing in this respect was Slovakia. The Commission remarked ‘that the [Slovak] government [paid] insufficient respect to the powers devolved by the Constitution to other bodies and too frequently [disregarded] the rights of the Opposition’. 36 These, together with the treatment of minorities, were also the main reasons behind the exclusion of Slovakia from the first group, while otherwise she presented a good economic record. Another aspect briefly considered in all the Opinions but certainly deserving closer attention is that of the place and functioning of the judiciary. Undoubtedly, in many if not all CEECs, transformation encounters serious difficulties at the level of the judiciary. It is not so easy to train or retrain judges and, in any case, this needs thorough preparation. As later evaluations such as the Regular Reports of 17

16 Marc Maresceau

December 1998 demonstrate, the ‘inherent weakness’ 37 of the judiciary in a large majority of the CEECs continues to cause a significant problem, particularly since accession to the EU implies the application of EC law by national courts to such a large degree. Seen in this context, familiarizing judges in the potential new Member States with fundamental notions of EC law such as ‘primacy’ and ‘direct effect’ is still an enormous task and this explains why important training programmes in EU law for judges in candidate countries have been or are being organized. Moreover, applicants must be aware of the fact that the final Opinions given by the Commission and addressed to the Council once accession negotiations are completed 38 explicitly refer to the specific legal implications of enlargement. No reservations in the application of the principles of direct applicability and primacy can be accepted and uniform application of Community law must also be ensured in the new Member States. All CEECs have made an effort to become more familiar with EU law and changes to the law curriculum in most of the universities reflect this. But, understandably, it will take time before the repercussions of this policy will be felt at the various levels of the judiciary. The examination of the applicant countries’ records in the field of human rights and protection of minorities – the second part under the chapter ‘Political Criteria’ – follows a similar pattern in all the Opinions. First the civil, political, economic, social and cultural rights are examined. There are, of course, nuances in the quality of protection offered by the various applicants but on the whole these aspects cause no serious concern. Undoubtedly, the most sensitive issue is that of minority rights and the protection of minorities in most of the CEECs. Here, virtually no applicant from Central and Eastern Europe has a totally clean record and the question therefore is more one of where the limits have to be drawn. If strictly applied, this point of reference in the scrutiny of the political criteria, together with the need to improve drastically the quality of the judiciary, could well constitute one of the main obstacles for a considerable number of applicants. On this issue, perhaps Hungary is an exception, although here also improvement in the treatment of the Roma has been requested by the Commission. Poland and Slovenia have only a small minority presence and the protection of minorities does not really constitute a special problem. In Romania the large Hungarian minority (7–8 per cent of the population) has been subject to discriminatory treatment but the situation has considerably improved as result of the measures taken by the government formed after the elections of November 1996. But the discrimination of the large Roma community (5–7 per cent of the population) continues to cause problems in that country.39 In Bulgaria, the Turkish minority had in the past suffered serious discrimination but since 1989 the situation has improved very considerably. Now, the biggest minority problem there is also that of the Roma.40

The EU Pre-Accession Strategies 17

As far as the Baltic states are concerned the situation is different. While in Lithuania, with a considerable minority amounting to 20 per cent of the population composed largely of Poles and Russians, a number of examples of discrimination do exist, on the whole problems remain limited. In its Opinion of 15 July 1997, the Commission mentioned, for example, the quotas for pupils of minorities going to higher education. But the global conclusion as far as Lithuania is concerned is that fundamental rights and the protection of minorities are guaranteed.41 The situation is different in Latvia and Estonia. In Latvia there are large categories of people intriguingly called ‘non-citizens’. They consist of citizens of the former USSR whose expired passports are not recognized abroad and who therefore do not have any citizenship at all. They constitute the biggest group within the minorities in Latvia. Minorities, including these non-citizens, account for more than 40 per cent of the total population. The Latvian Nationality Act of 1994 made the granting of Latvian nationality particularly difficult. A large number of discriminations were enumerated in the Commission’s Opinion which nevertheless came to the conclusion that ‘there were no major problems over respect for fundamental rights’. Latvia ‘needed to take measures to accelerate naturalisation procedures to enable the Russian-speaking non-citizens to become better integrated into Latvian society’ and ‘[had] also to pursue its efforts to ensure general equality of treatment for non-citizens and minorities, in particular for access to professions and participation in the democratic process’. The global conclusion by the Commission that ‘with the reservation that steps need[ed] to be taken to enable the Russian-speaking minority to become better integrated into society, Latvia [demonstrated] the characteristic of a democracy, with stable institutions guaranteeing the rule of law and human rights’42 was therefore somewhat astounding. However, since Latvia, according to the Commission, still had to make considerable progress towards the creation of a market economy, it was, in any case, not yet possible to open negotiations for accession with that country. In April 1998 notable improvements took place in Latvia speeding up the citizenship as well as the naturalization procedures. Nevertheless, a very high percentage of the population still keep their ‘non-citizen’ status,43 although an encouraging signal was the outcome of the 3 October 1998 referendum granting automatically Latvian nationality to children of stateless persons born in Latvia after the country’s independence. Moreover, amendments made to the Citizenship Law, which entered into force in November 1998, facilitate considerably the application for Latvian citizenship. But problems remain, particularly as a result of the tightening of the Language Law adopted by the Parliament in July 1999. This law was not promulgated by the President following reactions from the OSCE, Council of Europe and European Commission, the latter arguing its incompatibility with Community standards as enshrined in the EC–Latvia Europe Agreement. It

18 Marc Maresceau

must also be noted that non-citizens are not allowed to enter some professions such as those of lawyer, armed security guard or private detective on the grounds of state security.44 For Estonia, the conclusion in the Commission’s Opinion was different since this country, astonishingly, was selected for the first train accession negotiations. The true and complete story of this unexpected choice by the Commission will probably never be fully known.45 Was it a necessary compensation for the failure of the Baltic states to integrate into NATO? Was it the result of a geopolitical attempt to include not only three geographically central countries (Poland, the Czech Republic and Hungary) but also a country to the North, in this scenario being Estonia?46 Was it a provocative test to measure Russian reaction to a possible ‘extreme’ enlargement scenario whereby large Russian minorities are included in the EU and in which Russia herself in the long run is completely encircled by the EU? Knowing that a border treaty between Estonia and Russia has not yet been ratified, is the 1994 Essen European Council condition on ‘good neighbourly relations’ sufficiently satisfied? 47 While everybody knew that there had been many problems in Estonia with regard to the treatment of the large Russian minority, constituting something between 25 and 30 per cent of the population, the Commission produced in its Opinion nevertheless an extremely favourable and particularly soft picture of the situation. For the Commission ‘on the whole, the rights of the Russian-speaking minority (both with Estonian nationality and without) [were] observed and safeguarded’. The main suggestion by the Commission was that ‘Estonia [needed] to take measures to accelerate naturalisation procedures to enable the Russian speaking non-citizens to become better integrated into Estonian Society’. 48 Apparently, one of the main concerns of the Commission was the fact that there were insufficient resources available to Russian speakers to learn Estonian and since good knowledge of Estonian was required to pass the Estonian nationality exam, the Commission has been granting financial support through the PHARE Programme for the financing of these language courses.49 This, besides the fact that it is a strange way of using EU funds, also raises the question of whether it is the task of the EU to support policies of applicant countries imposing complex language tests on their minorities to obtain citizenship rights or to have a decent place in society. Therefore, it is not clear why the EU has to stimulate policies for the assimilation of national minorities and the giving up of the original identities of these minorities in applicant countries. It is very unfortunate that the 1998 and 1999 Regular Reports of the Commission on the progress made by the applicant countries do not elucidate this issue. On the whole, the examination by the European Commission of the question of the Russian minorities in the Baltic States remains very superficial, although the 1999 Regular Reports are a little more detailed

The EU Pre-Accession Strategies 19

than those of 1998. The 1998 Progress Report on Latvia welcomed the Latvian referendum on the citizenship law facilitating the naturalization of non-citizens. For Estonia, the Commission expressed regrets that the Estonian Parliament had not yet adopted the necessary amendments to the Citizenship Law to allow stateless children to become citizens.50 The 1998 Estonia Regular Report, for example, gave more details and stated that noncitizens ‘are still subject to some restrictions such as the right to sit on the boards of state-owned companies, to belong to a political party and to be employed in certain areas of the public administration’. 51 It must be mentioned that almost simultaneously with the publication of the 1998 Commission’s Reports, Estonia’s Citizenship Law was amended to allow ‘any minor under the age of fifteen, who has been born in Estonia after February 26, 1992’ to receive citizenship through naturalization if a number of specific conditions were met.52 With these amendments some of the most extreme consequences of the Estonian Citizenship Law are taken away: children from parents who are ‘non-citizens’ can obtain Estonian citizenship. Of course, this legislative measure, as such, is not sufficient to eliminate the discriminatory treatment towards the national minorities but it helps at least to reduce the number of non-citizens. On the other hand, opposite signals are provided by the Election Act (December 1998) and Language Act (February 1999) concerning the knowledge and use of Estonian in official matters, where the linguistic requirements were further tightened for non-Estonian speakers.53 The Commission, therefore, in the 1999 Regular Report observes that the Language Law ‘restricts access of non-Estonian speakers in political and economic life’. Consequently, this move ‘constitutes a step backwards’ and, according to the Commission, the law in question should be amended. 54 It must be said that at the time of finishing the manuscript a new draft language law was under consideration by the Estonian Parliament which once accepted would constitute a considerable improvement of the situation. It is obvious that in many of the applicant countries a very serious effort in the field of minority protection will still be needed. The 1998 Composite Paper refers to it as a problem which ‘continues to raise concerns in the perspective of enlargement’55 and the general conclusion of the 1999 Composite Paper on this point is not very different.56 In particular the issue of the position of the Russian minorities in the Baltic states mentioned above deserves much closer and more exhaustive attention and analysis. On the whole, the EU institutions, particularly the Commission but also the European Parliament,57 have been very complacent towards Estonia and Latvia as regards the treatment of minorities. Where some improvements in the treatment of minorities have taken place this is generally seen as the result of EU efforts. These improvements then receive great attention but the continuing discrimination against ‘non-citizens’ and Russian speakers is only briefly mentioned and has by no means been seriously examined or addressed to date.58

20 Marc Maresceau

The limits of enlargement: Russia, the ignored factor One of the main criticisms of EU enlargement policy is that enlargement was presented almost as something which could more or less happen in a vacuum. The fact that Turkey was largely ignored in the enlargement strategy until the 1999 Helsinki Summit has already been dealt with at length above. Also the effect of enlargement on the other Mediterranean NonMember Countries has been completely or almost completely disregarded. Besides a general statement to the Barcelona Euro-Mediterranean Conference, the Commission acknowledged that care ‘[would] be needed to avoid adverse effects on the EU relations with Mediterranean countries, for example in the area of agriculture, textiles and energy exports’, 59 but it failed to indicate how such effects could be avoided. An interesting development in EU thinking on enlargement in relation to European non-candidates is the Commission’s new regional approach to the countries of South Eastern Europe, that is to say Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia, the Former Yugoslav Republic of Macedonia and Albania. On 26 May 1999 the Commission proposed a plan for Stabilization and Association. 60 This includes the gradual development of bilateral agreements establishing a new form of contractual relations ‘with a perspective of EU membership on the basis of the Amsterdam Treaty and once the Copenhagen criteria have been met’. 61 It is not the place here to comment in detail on this new EU strategy plan towards the Balkans. Of course, it may astonish and shock many in the EU that a number of countries addressed in this plan were only recently or a few years ago involved in the most brutal ethnic cleansing and are now offered here, to use the Commission’s terminology, ‘a perspective of EU membership’. However important all these various aspects of the EU enlargement policy may be, one of the most uncertain remains the complete or almost complete lack of a policy towards the former USSR, Russia in particular. While it cannot be denied that a lot of what has happened in Central and Eastern Europe after 1985 has been the result of the new Soviet policy, internally but above all externally the European Community, observing what was unfolding in the COMECON world of that time, first took a ‘waitand-see’ attitude towards the USSR. For example, even in early 1988 – three years after Gorbachev had come to power – the European Commission was still of the opinion that only a simple bilateral trade agreement with the USSR could be envisaged, while the USSR had been pleading strongly for a much more ambitious framework. No doubt solid links with the EC were perceived as something which could be very precious for the modernization of the economy and the ongoing political transformation process. The Community, for its part, only gradually became aware of the need to conclude a ‘co-operation agreement’ with the USSR and such an agreement was finally signed in December 1989, that is to say in a period of time where the momentum of Gorbachev’s perestroika and glasnost had more or less

The EU Pre-Accession Strategies 21

faded away. Simultaneously, the Community started to apply its policy of differentiation whereby the USSR received treatment which was different from that applied to other COMECON countries.62 The culmination of this new policy was a proposal of the EC to conclude Europe Agreements as a special form of association agreement, a proposal which was extended to all former COMECON countries except the USSR. In the 1990 Communication of the Commission on the conclusion of such association agreements, 63 it was explained why such agreements could not be envisaged with the USSR: this latter country raised specific questions concerning domestic reform, relations with the Community and integration into the international economic order. The magnitude of all these and other questions was such that the USSR could not be incorporated into the policies as applied to other countries in Central and Eastern Europe. The roots of this ‘differentiation’ would gradually but surely also contribute, at least in part, to explaining the origins of the isolation of Russia. The alternative EC/EU policies and legal instruments worked out for that country, such as, for example, the Partnership Agreement64 and TACIS, would prove to be dramatically inadequate. In the end, the result of the EU Partnership policy is that it even accentuates and contributes to the very thing that it aims to avoid, namely to further isolate Russia from the EU. Indeed, besides its very nice title there is little substance in this Agreement. Certainly for Russia and former USSR countries Partnership Agreements cannot constitute a valid alternative to EU enlargement towards Central and Eastern Europe. The whole problem here is one of geopolitics and, whether we like it or not, of geography. The next enlargement wave, if it is to take place, brings the EU necessarily closer to, and most likely even to the doorstep, of Russia. 65 Apart from the political implications which are considerable, it is obvious that enlargement – just to mention one or two examples – will in the first place seriously affect trade relations with Russia.66 The application of the EC external tariff will probably not be a major problem but the EC non-tariff restrictions and norms and standards in the new Member States will necessarily have a negative effect on trade with Russia and trade diversion seems unavoidable. Even more important are the particularly tough and restrictive Schengen rules, already mentioned, which will be applicable to Russian citizens in the new Member States.67 The current application of these rules to the present Schengen group countries is already creating a situation where, for example, from a legal and administrative point of view, inviting a Russian academic now is becoming more complicated than in the 1980s! Consequently, the application of the Schengen rules to the neighbouring countries of Russia will further isolate Russia in Western Europe. Another almost completely forgotten, but nevertheless exotic, aspect of EU enlargement is the special position of Kaliningrad in the event of an enlargement to take in Poland and Lithuania. It appears that consultations over this issue would be better held before, rather than after, enlargement.

22 Marc Maresceau

One would have expected that these and other grave implications of enlargement would have been properly treated by the EU, particularly in the Commission’s abundant reflections on enlargement. Unfortunately, this has not been the case so far. In Agenda 2000 the Commission only recognized that ‘the enlargement process will also require careful management in the Union’s relations with other partners in Europe and beyond, in order to ensure that it contributes to the overall objectives of strengthening international security and co-operation’, 68 but at the same time Agenda 2000 took for granted without any further explanation the fact that ‘enlargement should benefit relations and co-operation with Russia, the Ukraine and other New Independent States’ and that ‘by consolidating democracy and enhancing stability and security in Central and Eastern Europe, enlargement will increase the security of the EU’s eastern neighbours as well’.69 Of course, the Commission was not totally blind to the fact that additionally ‘adverse effects could result from enlargement, were it to be perceived as raising new barriers in Eastern Europe’, 70 which implies that the Union is to take steps ‘to minimise such risks and to create conditions for exploiting fully the opportunities created by enlargement’. 71 The Commission is aware that particular attention must be paid to the ‘legitimate security and economic concerns’ of those who are not included in the enlargement strategy.72 However, once again, no further specification is provided and besides applying the Partnership and Co-operation Agreement, suggesting the development of trans-European networks and giving support to the New Independent States for their participation in the pan-European and global economic and political system, no serious policy was formulated by the Commission or any other EU institution to develop an adequate policy towards Russia. There are of course various reasons which may explain or even justify this lacuna. Russia herself has no policy towards the EU and is weak and unstable in so many respects. She is militarily involved in Chechnya and was, certainly in the recent past, much more concerned with NATO than EU enlargement.73 In addition, in Russia, the handling of the Kosovo war by the West has not increased confidence in the West. The move of Mr Solana, former Secretary-General of NATO, to the seat of High Representative for the Common Foreign and Security Policy has given rise to increased suspicion of EU foreign and security policy as a whole. But the question remains: is a large-scale eastwards EU enlargement without a wellsubstantiated parallel policy towards Russia feasible, workable and acceptable? At the 1998 Vienna European Council a progress report on the development of a comprehensive policy towards Russia had been discussed while at the 1999 Cologne European Council a Common Strategy Paper was adopted.74 Unfortunately, no matter how good the intentions of these ‘papers’ may be and have been, again virtually no link was made then nor is it made now between eastward enlargement and EU–Russia relations.75 In

The EU Pre-Accession Strategies 23

the Cologne Strategy Paper the European Council recognizes that ‘a reinforced relationship’ with Russia based on shared democratic values is needed and that this ‘will help Russia to assert its European identity and bring new opportunities to all the peoples of the continent’. Then follows, without any further explanation, the axiom that ‘enlargement of the Union will further increase these benefits and opportunities’. Notwithstanding the title of Part 1 of the Strategy Paper, improperly called ‘Vision of the EU for Its Partnership with Russia’,76 the enlargement process as a whole is completely disconnected from EU–Russia relations. As a matter of fact, as is well known, the Strategy Paper was almost exclusively a unilateral exercise by the EU with an evident lack of strategy, and notwithstanding some Russian attempts to make some links between the Partnership Agreement and enlargement, 77 the position of the EU has always been that enlargement was something which should by no means be treated in the bilateral framework of the relations between the EU and Russia. In other words, Russia did not and should not have a kind of droit de regard on enlargement. Seen in this context the bombastic remark that ‘a stable, democratic and prosperous Russia, firmly anchored in a united Europe free of new dividing lines, is essential to lasting peace on the continent’ has a somewhat hidden and ironic undertone if one knows that it is precisely eastwards enlargement, as organized today, that is in the end creating and consolidating, almost in a mechanical way, such new dividing lines. The isolation of Russia from the rest of Europe, something which is strongly regretted by the Helsinki European Council, may in the first place be the result of the situation as it has developed in Russia itself over the last decade, but it is in a way also an unavoidable consequence of the EU policy followed so far. The lack of an adequate bilateral framework between the EU and Russia linking Russia in a firm way with and in Europe may also explain, at least in part, why the EU is virtually impotent in influencing Russia in the Chechnya crisis. Seen in this context it was hard to believe that the suggested sanctions in the Helsinki Declaration on Chechnya (review of the European Union’s Common Strategy towards Russia, suspension of some provisions of the Partnership Agreement and strict application of the trade provisions, and a review of TACIS), published the same day that President Yeltsin – by a strange symbolic coincidence – was on an official visit in Beijing, could have any serious influence on the military operations. Of course, it is true that incorporating the Russia factor in any reflection on eastward enlargement complicates the whole exercise tremendously. The picture of the 1999 Helsinki European Council offers the perfect contrast: enlargement means stability, including ‘reconciliation’ with Turkey, while Russia is chaos and war. The operations of the Russian army in Chechnya and their excesses could not have come at a more timely moment to highlight this fact. But is this the correct analysis at the beginning of the new millennium? Acting as though Russia does not exist may

24 Marc Maresceau

be workable and very attractive from a short-term perspective. Russia is weak and cannot influence the course of events, but is the EU policy towards Russia as it has been applied so far likely to contribute in the longterm to global security in Europe? One of the main EU objectives of the enlargement process, as proclaimed by the Luxembourg European Council and confirmed by that of Helsinki, is obtaining ‘stability and prosperity for the entire European continent’ (emphasis added). But can this be achieved by imposing on Russia an all-embracing EU enlargement as a fait accompli? Would the EU not be better, particularly in the light of the EU choice for a large enlargement strategy, to take seriously – and in parallel with this policy – Russian sensitivities and concerns? The way in which EU enlargement strategies have been proposed so far leads necessarily and in an irreversible way to a particularly strict compartmentalization within Europe between the EU and ‘the others’, the ‘others’ becoming gradually the remaining ‘other’. In the long run the EU approach towards Russia could well become the Achilles heel of the EU enlargement policy.

Notes 1. On the role of the Commission in the accession procedure, particularly in relation to the accession of Austria, Finland and Sweden, see D. Boos and J. Forman, ‘Enlargement: legal and procedural aspects’, CML Rev., 1995, 98–9. 2. In order to prepare such a study the Commission sent a detailed questionnaire to the applicant countries from Central and Eastern Europe in April 1996. 3. The case of Malta’s application for EU membership needs some further explanation. In 1993 the Commission had given a favourable opinion on Malta’s application for membership of 1990. The Maltese government formed after the election of 26 October 1996 had decided not to open negotiations on accession on the scheduled date. In other words, Malta’s application for membership was ‘frozen’, not withdrawn. This suspension resulted in Malta’s exclusion from the enlargement process launched by the 1997 Luxembourg European Council. After new elections on 5 September 1998 and the composition of a new government, Malta expressed on 10 September 1998 her wish to ‘reactivate’ her application. On 17 February 1999 the Commission published an update of its 1993 Opinion, in which the view was expressed that it may be expected that Malta was considered to be able to join the group of candidate countries with which negotiations were already underway (COM(1999)69 Final) and this was reconfirmed in the Regular Report from the Commission on Progress towards Accession, Malta, 13 October 1999, COM(1999)508 Final. At the 1999 Helsinki European Council Malta was indeed included in the accession process and accession negotiations were opened in February 2000. The biggest efforts which Malta will have to make are in the fields of legislation concerning the Internal Market and Common Customs Tariff. For a survey and an analysis of EU–Malta relations, see P. Xuereb, Malta, the European Union and the Mediterranean: Closer Relations in the Wider Context (Malta: Publishers Enterprises Group, 1998), and by the same author (co-ordinator), ‘Malta–EU relations and the acquis communautaire in the wider context’, in Xuereb (ed.), The Mediterranean’s European Challenge (Malta: EDRC, University of Malta, 1998), 148–54.

The EU Pre-Accession Strategies 25 4. This is an unworthy paraphrase of the title of Norman Cohn’s magisterial book Cosmos, Chaos and the World to Come. The Ancient Roots of Apocalyptic Faith (New Haven, CT and London: Yale University Press, 1993). 5. COM(97)2000 Final, Vols I and II. 6. On the preparation of these Opinions and some comments, see M. Maresceau, ‘On association, partnership, pre-accession and accession’, in Maresceau (ed.), Enlarging the European Union. Relations Between the EU and Central and Eastern Europe (London and New York: Longman, 1997), 15–19; also M. Maresceau, ‘The legal dimension of the EU enlargement to Central and Eastern Europe’, in European Union Eastward Enlargement. Challenges and Consequences. Papers presented at a Conference held in Jerusalem, 21–22 June 1998 (Jerusalem: Konrad Adenauer Stiftung–Helmut Kohl Institute for European Studies, The Hebrew University of Jerusalem, 1998), 16–20. 7. See COM(97)2001–10 Final. The Opinions on the application of Turkey, Cyprus and Malta had already been published in 1989 (Turkey) and 1993 (Cyprus and Malta). 8. On Malta’s application for EU membership, see above, note 3. 9. Agenda 2000, Vol. I, 66 (italics added). 10. Agenda 2000, Vol. I, 66. 11. In a reaction from the Turkish Cypriot side it was argued that the beginning of accession negotiations ‘with the Greek Cypriot administration’ would ‘render useless the process of negotiations recommenced between the Turkish Cypriot and Greek Cypriot leaders’. Parallel and similar to the progress made in the EU accession process by the Greek Cypriot side the Turkish Republic of Northern Cyprus together with Turkey decided to take the necessary measures aimed at economic and financial integration of the two parties: see Joint Statement by the Republic of Turkey and the Turkish Republic of Northern Cyprus of 20 July 1997. 12. Agenda 2000, Vol. I, 67–8. 13. Agenda 2000, Vol. I, 15 (italics added). The ‘reconfirmation’ of Turkey’s ‘eligibility’ for EU membership had already been expressed in a statement of the Association Council of 29 April 1997: see Bull.-EU, 4–1997, 1.4.74. The Association Council had also taken the position that Turkey’s application for membership would be judged according to the same objective standards and criteria as other applicants. 14. COM(97)394 Final, 15 July 1997. 15. Italics added. The broader expression ‘aspiring to accede’ in the Luxembourg European Council formulation was precisely used to include Turkey in a more or less elegant way (the CEECs and Cyprus were ‘candidates’ for accession). 16. This notwithstanding the fact that Greece had for a long time strongly opposed the idea of inviting Turkey to the Conference: see Agence Europe, 22 and 24–25 November 1997. 17. At the 1998 Vienna European Council Switzerland received the status of ‘member elect’ at the European Conferences: see Presidency Conclusions, No. 65. 18. See Council Regulation on assistance to the applicant states in the framework of the pre-accession strategy, and in particular on the establishment of Accession Partnerships, OJ, L85/1, 20 March 1998. 19. See OJ, L121/1 of 23 April 1998. Detailed information, country by country, is contained in OJ, C202/1 of 29 June 1998. 20. Composite Paper, Regular Reports from the Commission on Progress Towards Accession by each of the Candidate Countries, COM(1998)712 Final, 4.

26 Marc Maresceau 21. See 1999 Composite Paper, Regular Report from the Commission on the Progress towards Accession, COM(1999)500 Final, 13 October 1999, 12. 22. Conclusions, No. 60. See in this context also the General Affairs Council Conclusions on enlargement of 7 December 1998, Annex III to the Vienna European Council, Presidency Conclusions. 23. See Speech before European Parliament, Brussels, 13 October 1999 (http://www.europa.eu/rapid/sta … gt&doc=SPEECH/99/130/0/RAPID&lg=EN); see also the recommendations in Reports on Progress towards Accession by each of the candidate countries, Composite Paper, Regular Report from the Commission on Progress towards Accession, COM(1999)500 Final, 13 October 1999, 27–8. 24. Presidency Conclusions, No. 60. Countries facing difficulties in this respect are, for example: Slovakia, Lithuania and Bulgaria; see also the statement by Mr Günter Verheugen, Commissioner for Enlargement, Uniting Europe, 6 September 1999. 25. Accession negotiations on specific chapters, however, are part of a global package. Moreover, negotiations need time, while certain issues develop rapidly. Therefore, the need may arise to ‘reopen’ again certain chapters previously ‘concluded’. For a detailed overview of the state of affairs of the negotiations at the end of June 2000, see Uniting Europe, 19 June 2000. 26. See Commission Communication, European Strategy for Turkey. The Commission’s Initial Operational Proposals, COM(1998)124 Final, 2. 27. Communication quoted above – see note 9 (italics added). 28. COM(1998)711 Final, 17 December 1998. At the 1997 Luxembourg and 1998 Cardiff European Council the Commission had indeed also been asked to report on Turkey on the basis of Article 28 of the Association Agreement with that country. This provision stipulates: ‘As soon as the operation of this Agreement has advanced far enough to justify envisaging full acceptance by Turkey of the obligations arising out of the Treaty establishing the Community, the Contracting Parties shall examine the possibility of accession of Turkey to the Community.’ 29. See Agence Europe, 26 June 1999. 30. The German Presidency also proposed to invite Turkey to the ministerial meetings held together with the other candidate countries. For the formulation of the text of the German proposal, see Agence Europe, 5 June 1999. 31. The implementation of the Fourth Financial Protocol has already been frozen since 1980 (see H. Kabaalioglu, ‘The Turkish Model of Association: Customs Union before Accession’, in P. Demaret, J.-F. Bellis and G. Garcia Jimenez (eds), Regionalism and Multilateralism after the Uruguay Round (Brussels: European Interuniversity Press, 1997), 152), and when the Customs Union (1 January 1996) was established the financial package of 375 m euro budgetary aid together with a 750 m euro European Investment Bank facility to provide loans to Turkey have been blocked by Greece. (For an analysis of this issue, see N. Neuwahl, ‘The EU–Turkey Customs Union: a Balance, but No Equilibrium’, EFA Rev., 1999, 48–50.) 32. See Financial Times, 1 September 1999. 33. See COM(1998)711 Final, 17 December 1998, 53 and 21 (Cyprus issue); see also Regular Report from the Commission on Progress towards Accession, Turkey, COM(1999)513 Final, 13 October 1999. 34. On this episode see Le Monde, 12–13 December 1999: ‘La Turquie, candidate officielle à l’Union européenne, participe au déjeuner des chefs d’Etat et de gou-

The EU Pre-Accession Strategies 27

35.

36. 37. 38. 39.

40. 41. 42. 43.

44. 45.

46.

47. 48. 49. 50. 51. 52. 53.

54. 55. 56. 57.

vernement’; also the Financial Times, 11–12 December 1999, ‘Solana tries to clear Turkey’s path to EU candidacy’. For a thorough analysis, see M.-A. Gaudissart and A. Sinnaeve, ‘The role of the White Paper in the preparation of the Eastern enlargement’, in Enlarging the European Union, mentioned at note 6, 41–71. COM(97)2004 Final, 17. Regular Reports from the Commission on Progress towards Accession by each of the Candidate Countries, Composite Paper, COM(1998)712 Final, 4. This final Opinion must be clearly distinguished from the one given before the accession negotiations are opened. See COM(97)2003 Final, 14–15; also Progress Report, COM(1998),702. On this sensitive issue, see N. Girasoli, ‘Roma/Gypsies and Immigration Issues in the EU’, RAE/LEA, 2000, 128–38. COM(1998)707 Final, 11. COM(97)2007 Final, 15. COM(97)2005 Final (italics added), 18. Regular Report, COM(1998)704 Final, 11–14. Many non-citizens prefer to keep the non-citizen passport because this passport allows them to travel to Russia without a visa, whereas a Latvian passport needs a visa. See 1999 Regular Report from the Commission on Progress towards Accession, Latvia, COM(1999)526 Final, 13 October 1999, 18. Ten days before the publication of the Commission’s Opinions even the usually very well informed journalist of Le Monde, Mr P. Lemaître, still published an article with the title: ‘L’élargissement de l’UE ne concernerait que trois pays’, Le Monde, 5 July 1997. According to Lemaître and Scotto ‘l’inclusion de l’Estonie dans la liste apparaît comme une anomalie qu’aucune raison objective ne justifie’, Le Monde, 18 July 1997. This, at least, is the suggestion made by two close observers of this question and advisers at the European Commission: G. Avery and F. Cameron, The Enlargement of the European Union (Sheffield: Sheffield Academic Press, 1998), 43. On 5 March 1999 a border treaty between Estonia and Russia was initialled but it is uncertain whether the Duma will quickly ratify it. COM(97)2006 Final, 16. Agenda 2000, Vol. II, The Effects on the Union’s Policies of Enlargement to the Applicant Countries of Central and Eastern Europe, 15. Composite Paper, COM(1998)712 Final, 4. COM(1998)705 Final, 11. Act Amending Sections 13, 15, 18, 19 and 14 of the Citizenship Act (unofficial English translation). The Estonian Language Act which entered into force on 1 April 1995 was already restrictive for the Russian-speaking minority. Russian is qualified as ‘a foreign language’ (Article 2) and treated as such. Detailed rules on the use of the language of a national minority are laid down in the Act. The Amendment Act of the Language Act and State Fee Act approved on 9 February 1999 imposed further linguistic requirements on the Russian-speaking minority. Regular Report from the Commission on Estonia’s Progress towards Accession, COM(1999)504 Final, 16. COM(1998)712 Final, 4. Composite Paper 1999, mentioned at note 21 above, 13. The European Parliament’s Resolution on the Regular Report from the Commission on Estonia’s Progress Towards Accession (A4–0149/99) is also an

28 Marc Maresceau

58. 59. 60. 61. 62.

63. 64.

65.

66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77.

example of such a very sympathetic but simplistic approach towards Estonia’s application for EU membership, minimalizing the existing discriminations and ignoring the language law restrictions. In the 1999 Regular Reports the treatment of minorities in Latvia takes up three out of 95 pages and in Estonia takes up three out of 85 pages. Agenda 2000, Vol. II, The Effects on the Union’s Policies of Enlargement to the Applicant Countries of Central and Eastern Europe, 15. COM(1999)235 Final. See note 3 above (italics added). See our study published in 1992: ‘The European Community, Eastern Europe and the USSR’, in J. Redmond (ed.), The External Relations of the European Community. The International Response to 1992 (London: Macmillan, 1992), 109–12. COM(90)398 Final, 27 August 1990. On these agreements, see J. Raux (ed.), Le partenariat entre l’Union européenne et la Fédération de Russie (Rennes: Apogée, 1998); and C. Hillion, ‘Partnership and Cooperation Agreements between the European Union and the New Independent States of the ex-Soviet Union’, EFA Rev., 1998, 399–420. Of course, with the accession of Finland to the EU there is already a lengthy EU border with Russia but the sensitivity of an EU border west of Saint Petersburg or around Kaliningrad is of a different nature. Russia has submitted a list of ‘concerns’ regarding EU enlargement to the President of the Commission. For text, see Uniting Europe, 13 September 1999, 4. See also M. Emerson, Redrawing the Map of Europe (London: Macmillan, 1998), 152–3. Agenda 2000, Vol. I, 6. Agenda 2000, Vol. II, The Effects on the Union’s Policies of Enlargement to the Applicant Countries of Central and Eastern Europe, 14. Ibid. Ibid. Ibid. For a critical analysis of this position and its consequences, see V. Shemiatenkov, ‘The Relations between Russia and the EU’, RAE/LEA, 1997, 277–89. This was the first application of Article 13 TEU since the conclusion of the Treaty of Amsterdam. For a summary of this report, see Agence Europe, 8 January 1999. Italics added. Article 102 of the PCA with Russia stipulates that the Parties ‘agree to consult promptly through appropriate channels at the requests of either Party to discuss any matter concerning the interpretation or implementation of this agreement and other relevant aspects of the relations between the Parties’. Notwithstanding some attempts from the Russian side, the EU has consistently avoided the use of this provision to discuss matters of enlargement affecting Russia while there can be no doubt that such matters are necessarily covered, if not by the expression ‘any matter concerning the interpretation or implementation of this Agreement’, then at least by the expression ‘other relevant aspects of the relations between the Parties’ in that article.

2 Europe’s Mediterranean Strategy: The Security Dimension Álvaro de Vasconcelos

Introduction In terms of security institutions, at first glance a marked asymmetry is apparent between the northern and southern shores of the Mediterranean. While European integration has grown in strength and depth along the northern shore where a dense network of security institutions is present, integration has progressed little, if at all, along the southern shore and the institutional security vacuum is evident there. Over the last ten years, the European Union has widened to include the former GDR, Austria, Finland and Sweden. It has completed the Single Market, virtually achieved free movement of persons across its borders and all but one of its twelve members who wished to do so adopted the single currency in January 1999. Among them are all the Mediterranean members of the European Union which succeeded in meeting the requirements set forth in order to be able to join Stage Three of the Economic and Monetary Union. The Mediterranean dimension of the Union may be strengthened in the not so distant future with the inclusion of Malta 1 and Cyprus. Further enhancement is more unlikely, however, since the prospects for Turkey or any of the Balkan States (with the exception of Slovenia) joining the European Union over the next ten years or so look rather slim at present. When it comes to security, the institutional pattern is dense. NATO remains, perhaps, the centrepiece of European security, with its core function of collective defence and its newer, but none the less important, peace support role. Through NATO, furthermore, the United States became an integral part of the European security and stability equation. While European membership of NATO and the European Union does not entirely overlap, and one southern Mediterranean power is a member of NATO (Turkey), the function of the European Union in terms of ensuring a stable environment in the European continent which reaches beyond its present borders cannot be overemphasized. Indeed, and somewhat paradoxically, its role in 29

30 Álvaro de Vasconcelos

managing potential conflicts between its present and prospective members is greater, if anything, than that of NATO.2 The South, however, provides a sharp contrast to this picture of cohesion. Both in the Maghreb and the Middle East, security arrangements are sparse and little or no progress has been made towards integration. The most ambitious project, which combines elements of economic integration and security co-operation, has never actually come into being. In spite of its promising start, stemming from the relaxation of tensions between Algeria and Morocco, the Arab Maghreb Union3 (AMU) was unable to grow out of the lethargy into which it plunged almost as soon as it was created. The unresolved issue of the western Sahara, the worsening situation in Algeria and, to some extent, Libya’s international isolation are the primary reasons for its virtual paralysis. In the Middle East, the picture of what concerns subregional co-operation is equally grim. The stalling of the Middle East Peace Process (MEPP) after the high hopes raised through the Oslo breakthrough took a heavy toll on the whole of the Middle East and beyond. It brought the multilateral and bilateral tracks of the peace process to a halt, shattering Yitzhak Rabin’s vision of a new Middle East into pieces even before it had a chance to take shape. The Arab League never developed a real security dimension and efforts towards integration, or at least increased economic co-operation among its members, have seen no real progress in recent years. As Gamal Soltan aptly notes, the balance of power approach still dominates both Arab–Israeli and Arab–Arab relations.4 A number of efforts were made in the North–South direction to fill up the existing institutional vacuum. NATO and the Western European Union (WEU) have a set of multi-bilateral dialogues with selected countries of the South, launched respectively in 1994 and 1992 under NATO’s Mediterranean Initiative and the WEU’s Mediterranean Group.5 The OSCE has also set up a Mediterranean Contact Group. Egypt and Italy jointly launched the Mediterranean Forum6 in 1994, an initiative that has survived the launching of the Euro-Mediterranean Partnership (EMP) in Barcelona in November 1995.7 The EMP is by far the most relevant of these initiatives, not only because it has a multilateral character but also because it is intended to be a multilayered process, comprising dimensions which are of a political and security nature as well as economic and human. Based on a set of agreements signed by the EU and its Member States and each Mediterranean partner, the EMP aims to develop into a qualified free-trade area sometime around 2010. If this were actually to happen, although progress achieved so far does not allow for many high hopes, the EMP would lead to the world’s largest FTA. It should be noted, however, that the EMP was launched at a time when there was solid cause for optimism regarding substantial progress in achieving peace between Israel and the Arabs. The exceedingly modest

Europe’s Mediterranean Strategy 31

progress achieved in the political and security basket of the EMP has remained hostage to a stalled and deteriorating MEPP ever since Prime Minister Rabin’s assassination. The economic and military co-operation between Israel and Turkey, which gives rise to misgivings on the part of neighbouring countries such as Egypt and close co-operation among other Middle Eastern countries, is the exception. Mr Barak’s coming to power in 1999 was welcomed in the Arab world and Arab leaders concurred that it constituted a chance to push the Peace Process forward that must not be missed. It is much too soon, however, to predict a successful outcome, particularly along the Palestinian track. It remains unclear, for example, how the conflicting stances towards territorial concessions within the broad government coalition are ultimately going to affect the Peace Process. Although the impetus of the MEPP for the goal of progress towards truly co-operative security all across the Mediterranean cannot be overemphasized, it is true that other obstacles remain. The effect of mutually distorted North and South perceptions is prominent among them. The perverse effect of perceptions Security perceptions are a decisive component of Mediterranean security in North–South and South–North directions alike. In the minds of a number of European publics, political Islamism – identified with terrorism and, at its worst, confusingly identified with Islam itself – tends to replace the defunct Soviet threat as the number one enemy, potentially at its best. Military establishments, even though defence policies have been altered, are still geared up to confront invasion, if not from the East, now deemed unlikely as a source of potential threat, then from the South, a closer neighbour than the distant Cold War enemy for most southern European countries. In Europe as a whole, declining demographics, in sharp contrast with rapidly increasing demographics in the southern Mediterranean and few signs of accompanying economic and social progress sufficient to safely accommodate the increasing pressure on labour markets, prompt fears of tidal waves of southern migrants flooding Europe in the coming years. As a combined result of high unemployment and the influence of the extreme right (which has succeeded in ‘contaminating’ immigration and asylum policies in a number of European countries), significant sections of the European public tend to perceive migrations from the South, in particular those from Islamic countries, as a societal threat, one that would put national identities at stake. In the South, the post-Cold War world order is seen as unjust. The West is perceived as set towards confrontation with the Arab and the Islamic world: while apathy prevails when it comes to implementing UN Security Council Resolutions concerning Israel, resolve does not fail, including recourse to military action, whenever an Arab country such as Iraq is concerned. Notwithstanding the position of their respective

32 Álvaro de Vasconcelos

governments during the Gulf War, the fact remains that Arab public opinion actively condemned the war against Iraq. This was seen not as a move to prevent the unlawful annexation of Kuwait by Iraq but rather as a deliberate attack on the part of the United States and its western allies against a powerful Arab country. A sense of betrayal developed particularly against France for having agreed to side with the United States against the Arab people. Another example, albeit with an incomparably smaller impact, were public reactions to the creation of EUROFOR and EUROMARFOR, generally seen as a move on the part of Europe in preparation for intervention in the South. Western inconsistencies in humanitarian or human rights related issues are often cited as proof of consistency in upholding double standards. Prolonged inaction on the part of Europe and the United States to prevent ethnic cleansing in Bosnia was seen in the South as having been tolerated only because Muslims were the victims.8 NATO’s Kosovo intervention provoked mixed feelings among the Arab elites. It was generally seen as a display of solidarity towards persecuted Muslims, and received the rather unexpected support of the Muslim Brotherhood in Egypt. Israel too had mixed feelings and, even within the government, first reactions at the outbreak of the crisis were contradictory. On a different key, it was also noted that a parallel could be drawn between Milosevic’s deportation of the Albanians from Kosovo and the expulsion of Palestinians from Israel in 1948, which partly explains Israel’s hesitant reaction to NATO’s intervention. The fact that bombing failed to stop deportation, however, and especially the fact that NATO’s campaign was not legally endorsed by the UN, contributed to raising fears among Arab states that the United States and NATO would take international legality into their own hands. Mirroring western public perceptions, radical Islamists defend policies based on identity and consider the influence of ‘western’ ideas as a societal threat. The time has come, according to radical Islamist leaders, for bringing decolonization to its final stage: it is now the turn of cultural decolonization,9 and the time for those who have fallen under the influence of the West to be intellectually and ideologically banished. Perverse effects are of course aggravated by the fact that governments’ perceptions are not, especially in the South, necessarily attuned with public opinion or the main currents among the intellectual elites. More often than not, governments are closer to their European and western counterparts than to their own domestic constituencies. As a consequence, more so perhaps than in Europe, the internal discourse of southern governments is at odds with their discourse, and sometimes even their stances, in international fora. During the Gulf War, for example, mounting public pressure in favour of Iraq led King Hassan II to affirm that the sole reason for the presence of Moroccan troops in the US-led coalition was the protection of the holy shrines in Saudi Arabia. It would be a gross

Europe’s Mediterranean Strategy 33

mistake, however, to discard public opinion in the South on the grounds that those governments are authoritarian anyway and hold a firm grip on power. Even where this is the case at present, regimes cannot afford to discount domestic constituencies altogether, and indeed do not. And civil societies, although generally weak at present, are becoming stronger at making and keener to make their voices heard. An awareness of the discrepancy between the views of governments and the feelings of public opinion and the majority of the intellectual elites is essential to the success of any European initiative towards the Mediterranean dealing with security and defence.

NATO’s new strategic concept Generally speaking, the post-Cold War strategic thinking of NATO countries has evolved from the pre-eminence of territorial defence to the predominance of security interests. Concomitantly, the dominant concern is the management of crises and conflicts that are deemed to put relevant security interests within the Euro-Atlantic area at stake. NATO’s fiftieth anniversary Washington Summit approved a new strategic document which enumerates the potential risks that the Alliance should brace itself to confront in the coming years. The Mediterranean, or at least parts of it, is undoubtedly among the ‘peripheral regions’ where potential risks to NATO’s security are bound to originate. There is no common definition of the Mediterranean among NATO members, however. While for Europeans the Mediterranean means the Maghreb primarily and the Middle East (the near East, rather), the United States has a broader notion that extends to the Middle East and the Gulf, and the Maghreb is seen as a sort of pathway to that core region. Security concerns in such ‘peripheral regions’ include the proliferation of weapons of mass destruction (WMD), delivery means and warheads alike, terrorism and the disruption of energy flows. Instability caused by the uncontrolled movement of large numbers of displaced persons (i.e. refugees and illegal migrants) is also included. In the specific context of the Mediterranean, concerns with the rise of radical political Islamism, although not specifically mentioned, are obviously implicit as an aggravating factor of any such potential risks. A hard look at security risks across the Mediterranean, however, demands that a number of obvious conclusions are drawn. There is no credible direct military threat against Europe originating in the Mediterranean. Existing security problems are South–South, both inter- and intra-state alike (e.g. Middle East, Algeria). Although the primary targets of both are in the South, overspills from WMD proliferation and terrorism may affect Europe (e.g. Lampedusa in, 1986, Paris in 1995), and to some extent this leads to a ‘Europeanization’ of Mediterranean issues.

34 Álvaro de Vasconcelos

Radical Islamism, in and of itself, does not represent a threat to Europe; again, the driver of such movements is internal, and these aim primarily at overtaking the state. Why then is there a perceived ‘threat from the South’? Terrorist activities are prominent among the reasons that account for this perception. In recent years, terrorist attacks in Paris, in 1995, attributed to the Algerian GIAs (Armed Islamic Groups), left eight dead and 41 people wounded. Tourists in southern countries are also targeted, as was the case in the November 1997 Luxor attack, perpetrated by Islamist extremists 10 where 58 predominantly Swiss citizens were killed; nine German nationals had also been killed in an attack on a tourist bus outside the Cairo Museum in September. The number of casualties caused by such attacks pales, however, in comparison to the number of victims of terrorism in the South. Since they began in 1992, and up to and including the Luxor massacre, the total number of fatal victims as a consequence of terrorist attacks by Islamist extremists in Egypt is estimated at some 1000–1200, of which less than 100 were foreign tourists. In Algeria, the figure for fatal casualties since the civil war broke out in 1992 is currently put at some 70 000. Although terrorism is a grave threat, its effects are felt essentially within the countries of the South. Similarly, proliferation is primarily linked to attempts at regional hegemony and existing Arab–Israeli tensions. Aside from Israel, it is thought that Libya’s and Algeria’s missiles could be launched at a maximum range of some 550 km, which brings their primarily southern neighbours within range.11 Disruption of energy flows could indeed affect Europe. On the one hand, if alternative sources could be found for the oil supplies channelled through the Mediterranean basin, including those from the Gulf, the impact would primarily be felt on the price of oil rather than on its availability; gas, on the other hand, poses a different problem for countries relying primarily on pipeline supplies. France and Italy rely heavily on gas supplies from Algeria, as do Spain and Portugal. In all, North African gas accounts for some 25 per cent of the EU’s present gas consumption, a proportion likely to increase in the near future. Algeria is one of the main suppliers, linked to southern Europe through two main pipelines (through Tunisia in the case of Italy and through Morocco in the case of Spain and Portugal). Sabotage attempts on both these pipelines by armed Islamist insurgents have been reported in 1996 and 1997.12 Currently, the main vulnerability of gas supplies to Europe is primarily a result of the open confrontation between radical Islamist factions and the military power in Algeria. The threat of disruption to gas supplies should not be overemphasized, however. Any Algerian government, whatever its political allegiance, has a major interest in securing the undisrupted flow of energy which is by far its main source of revenue. And Libya’s ‘rogue state’ status has certainly not stopped the continuous flow of its gas and oil supplies, mainly into Europe.

Europe’s Mediterranean Strategy 35

The root causes of the major problems confronting southern countries are mainly domestic. They result from the failure to address the situation that permits radical Islamism to flourish as the sole apparent alternative to the military-backed regime. Although in varying, less acute degrees this same pattern – the stifling of pro-democracy, non-violent political opponents – exists in other countries of the South. As a result, the most extreme forms of opposition, including the wholesale recourse to violence and terrorism, tend to prevail. It should be borne in mind that political Islamism is an identity-based nationalistic current. It emerged towards the end of the 1980s against the backdrop of a perceived loss of political legitimacy of existing regimes in the face of mounting economic and social crises that they had failed to prevent or to adequately address. And if the rejection of ‘western’ values consistent with the unquestionably totalitarian character of its radical varieties is obvious, it would be a mistake to see such movements as some kind of new ‘anti-western international’. Radical Islamist movements are first and foremost nationalistic. This is clearly illustrated, for example, by the uncompromising pro-Morocco attitude of Moroccan Islamists as far as the western Sahara question is concerned. The totalitarian leanings of radical Islamist movements constitute first and foremost a threat against the societies that they wish to control through the power of the (theocratic) state. It is not possible to counter their influence unless economic measures are combined with political reform that will allow for better governance, in particular through freedom of thought and expression and through encouraging civil societies to freely and actively participate in the political life of their countries. Migration is not a security problem, even in the softer realms, and should indeed be decisively decoupled from security concerns. Migrations originating in the Maghreb have obviously been the combined result of poorly absorbent labour markets in Morocco, Tunisia and Algeria, while Europe needed cheap labour for its own development. In spite of the fact that the migratory pressures have not diminished in the South, the European Union has effectively shielded itself from such pressures. The anticipated huge numbers of North Africans pouring into Europe failed to materialize. According to the OECD, the total Maghrebi migrant population in Europe rose from 1.76 to 2.07 million between 1983 and 1995, i.e. over more than ten years. The perception of migration as a societal threat is primarily a result of the demagogic and persistent campaign of extreme right movements in Europe, which mistakenly points to migrants as the main threat to employment of nationals and a grave menace to their national identity. Indeed, considering migration as a security concern amounts to legitimizing the extremist rhetoric of such right-wing parties as the French Front National. Refugees and asylum-seekers are a political problem that should be adequately addressed. In 1996, 226 000 asylum requests were filed across the EU Fifteen. Their vast majority, however, come from the Balkans and Turkey, in the latter case as a result of the Kurdish issue, and not from

36 Álvaro de Vasconcelos

North Africa or the Middle East. Even the prolonged situation of political violence in Algeria has failed to produce asylum-seekers, predictably in France, in any significant proportion. As the Kosovo crisis has potently illustrated, the issue to be addressed is not primarily that of refugees as such, but rather the causes that force people out of their country. There lies, in the cause not in the consequence, the true security dimension of the refugee problem.

The prevailing South–South dimension The eminently South–South or even domestic nature of Mediterranean issues is illustrated both by the existing crises and conflicts in the region and by the security concerns of southern Mediterranean countries themselves. As far as the latter are concerned, with the exception of Israel, the ‘internal threat’ plays a prominent part. Algeria represents the most extreme case at present of this trend and this primarily accounts for the growth in its military expenditure in these last few years. Aside from the Arab–Israeli conflict (the status of Palestine, and Israel’s occupation of parts of Syria and Lebanon), the question of the western Sahara, which opposes Morocco to the Polisario Front backed by Algeria, is typical of the South–South nature of most existing security issues. The main exception to this rule is to be found in the tensions between Turkey, a member of NATO, and Syria, Iraq and Iran especially over the Kurdish question. In a NATO context, these should be viewed as North–South. Turkey’s security concerns should be fully taken into consideration by NATO as, by virtue of Turkey’s membership, NATO indeed borders the Middle East and the Gulf. All initiatives taken in regard to Mediterranean security, including NATO’s Mediterranean Initiative, meet with one common and insurmountable difficulty. While these dialogues are North–South, and their confidence-building dimension is therefore strictly confined to the North–South and to a lesser extent the South–North direction, the existing security problems are, to a vast extent, South–South. Furthermore, their format, as noted above, is ‘multi-bilateral’, i.e. NATO talks to each individual southern Mediterranean country. There is not much that can be achieved in terms of cooperative security, since no form of partnership or association is offered. The usefulness of these dialogues should not be ignored, however, at the level of information-sharing (although it is unclear what exactly has been shared so far) which is instrumental in changing mutually existing negative perceptions. This is unquestionably a major element in building confidence, but again not in the South–South direction where it is most needed. Common security concerns, such as proliferation, are currently not included in the dialogue. There is little chance they will be so included while Israel, one of NATO’s dialogue countries, fails to accept arms control mechanisms.

Europe’s Mediterranean Strategy 37

The possibility of transforming NATO’s Mediterranean Initiative into a mechanism similar to its Partnership for Peace (PfP) has been aired. But the organization’s new strategic concept seems to play down any significant upgrade of the existing dialogues at least for the time being. It merely states that ‘The Alliance is committed to developing progressively the political, civil and military aspects of the dialogue with the aim of achieving closer co-operation with, and more active involvement by countries, that are partners in this dialogue.’ The document is slightly less cautious in mentioning another element which can provide an important countermeasure to the perception that NATO is preparing to confront the South, namely their taking part in NATO military exercises. ‘The participation of southern Mediterranean countries in manoeuvres in the Mediterranean together with Allied military forces’ should, according to the document approved in Washington, ‘become the rule rather than the exception.’ The cautious attitude of NATO regarding a significant upgrade of its Mediterranean Initiative is linked to two factors. First, it is aware of the negative attitude towards NATO harboured by the southern Mediterranean public. Secondly, it is aware that the current prevalence of authoritarian regimes on the southern shores of the Mediterranean would prevent political convergence between the full membership of such a Mediterranean Partnership, unlike what happens with most of its current PfP partners. Military co-operation, in its most concrete form, was intensified with southern Mediterranean countries in recent years, with Egypt, Jordan and Morocco’s participation in NATO-led IFOR/SFOR operations in Bosnia. Beyond the Mediterranean basin, the United Arab Emirates (UAE) have contributed 150 men and a refugee camp within Operation Allied Harbour in Albania. At least in its initial stages, however, non-NATO southern EMP members were not expected to take part in the KFOR peace-enforcement military force in Kosovo.

The Euro-Mediterranean Partnership Although the EMP security dialogue is multilateral, it encounters a similar obstacle to that of the NATO dialogue in confronting security problems in the Mediterranean. Syria and Lebanon refuse to discuss security in any official institutional framework in which Israel also participates. The confidence-building role of the EMP is therefore severely curtailed, although the mere fact that dialogue was indeed pursued even if the MEPP virtually collapsed may be regarded as an achievement in itself. The EMP is, in fact, the sole multilateral Mediterranean framework in which a consistent, high-level dialogue in which Israel and a significant number of Arab countries take part has been pursued. Senior officials in charge of the Barcelona process have succeeded in launching some confidence-building measures, such as a joint initiative on the part of Egypt and Italy for sea-rescue operations. At the civil society level, the EuroMeSCo network of

38 Álvaro de Vasconcelos

foreign policy institutes from the EMP countries, launched in 1993 and enlarged to full EMP participation in 1996, is also tackling both soft and hard security issues. Syria and Lebanon, however, have blocked more ambitious confidence-building measures so far. The EMP ministerial meeting held in Stuttgart in April 1999 has taken the decision to proceed with the drafting of a Euro-Mediterranean Charter for Peace and Stability, which is considered ‘a functional instrument for the implementation of the principles of the Barcelona Declaration’, and was able to agree on a schedule for its completion as well as produce a set of guidelines and topics to be contemplated in the Charter. These include partnership-building measures, as well as improving co-operation among neighbours, through the gradual establishment of a network of subregional co-operation agreements and cross-border projects, and crisis management and post-conflict rehabilitation. These measures are expected to develop, at a later stage, into ‘joint action modalities’. It is interesting to note that much effort went into ‘decoupling’ progress towards the adoption of the Charter from the MEPP. It is unlikely that much ground will be covered, however, without concomitant progress along the bilateral and multilateral tracks of the MEPP. The change of leadership in Israel seems to create a favourable environment for the process to resume. Arabs, Europeans and Americans should all act swiftly and coordinate their efforts as far as possible to support progress in the MEPP. This would also help remove existing obstacles to subregional co-operation in the Middle East, a process that should be encouraged by all actors involved. If progress is indeed achieved along the various tracks, it is most likely to speed up the process of adoption of the Euro-Mediterranean Charter, thus enhancing the EMP’s security dimension.

The European Union’s common Mediterranean strategy In accordance with the enhanced foreign and security policy dimension contemplated in the Amsterdam Treaty, the 1998 Vienna European Council has decided to devise a common strategy for four areas which rank high in the Union’s foreign policy priorities: Russia, Ukraine, the western Balkans and the Mediterranean. 13 In the case of the Mediterranean, the common strategy devised by the Fifteen will integrate the acquis and the furtherance of the Barcelona process, which will form the basis of its more long-term approach. At the same time, however, it should include a blueprint for those issues that require both long- and short-term action, such as the MEPP or the Algerian crisis. As far as security in the Mediterranean is concerned, however, the European Union, especially in light of its declared commitment to a stronger defence dimension while at the same time building stronger ties with NATO, is well advised to bring its own relations with the United States into the picture.

Europe’s Mediterranean Strategy 39

While transatlantic solidarity remains the core foundation of European security, the same kind of solidarity cannot automatically be transposed to Mediterranean security as a whole. For one thing, as noted above, Europeans and Americans differ on the very geographical definition of the Mediterranean region and their main areas of concern are also not the same. The European Union now has a definition of the Mediterranean that coincides with the southern membership of the EMP (plus Libya), and sees it primarily as the meeting point between the Arab-Islamic and the European world. The Maghreb is an area in its own right and an important one for Europe. The differences in approach and in priorities have led some to propose a schematic division of labour between Europe and the United States in the Mediterranean along geographic and priority action lines. Europe should take care of the Maghreb where social and economic issues are the main challenge to be confronted. The United States should take care of the Middle East on their own where security issues prevail and the effects of the MEPP are more intensely felt. As for the Gulf, the United States should take the lead while allowing Europe to play a supporting role and carry a fairer share of the burden. American analysts contend that this would suit both the European Union, whose hesitations in foreign and security policy make it a weak power player but do not affect its strong foreign economic policy role, and the United States, which sees itself as the sole real player in the Middle East backed by a credible military presence.14 This is unacceptable to Europe, not least because the Middle East is now a part of the EMP. Israel is indeed crucial to this Euro-American divergence. The United States regards Israel’s security problems as its own. For Europe, the Arab–Israeli dispute is a South–South issue. The link between the European Union and NATO has been further reinforced by the fact that NATO for the first time recognized the European Union as a security actor in its own right and, at the same time, by the strengthening of the security and defence dimension of the Union agreed in Cologne. The fact that the current Secretary-General of NATO was chosen as High Representative for the Common Foreign and Security Policy of the EU is yet another indication that security and defence will move higher up in the European Union’s agenda. This was powerfully prompted, quite obviously, by the crisis in Kosovo. There is no question that the United States remains a Mediterranean power, as much as a European power, as far as security and defence issues are concerned. This should be fully appreciated by the European Union. This is not to say that NATO should be enlarged to the South but merely to say that all those involved stand to benefit from a Mediterranean dialogue between the European Union and the United States. It is doubtful, however, that NATO would be the adequate framework for this dialogue. Mediterranean issues of concern to both Europe and the United States

40 Álvaro de Vasconcelos

clearly transcend the realm of security. On the other hand, although it may increasingly tend to be so, the European Union as such is not a part of NATO. The Transatlantic Dialogue, where a comprehensive approach, including political and economic issues may be included together with security, seems to be the right forum for such a dialogue to bear all its potential fruits. One final consideration seems in order regarding the interplay of external and regional actors in any given area, and in this particular region especially, which is suited to the application of the notion of cooperative security. Indeed, common security concerns and potential risks clearly transcend threats in their ordinary definition. Countries across the Mediterranean, in the Maghreb and the Middle East alike, should be treated as full partners in any security arrangements in which they are concerned. Taking the southern countries on board as full partners is indeed the aim of the Barcelona process. Similarly, it is a precondition for the success of any Mediterranean initiative involving the United States. It should be noted, furthermore, that because they are indeed committed to the success of the EMP, Europeans are increasingly bound to take into account the points of view of their southern partners and engage in consultations with them in the case of any contingency involving the Mediterranean.

Notes 1. After freezing its application for EU membership, Malta revived it after the 1998 elections had brought a new government to power. 2. Paradoxically, since the bonds between NATO allies are built on the commitment enshrined in the North Atlantic Treaty of going to war, if necessary, to defend any other member under attack, the new Strategic Concept, while underlining the continued commitment to Article 5, also stresses that ‘it is clear that Article 5 would apply come the attack from where it may’. Shared NATO membership, however, had little effect on either Greece or Turkey when their dispute over the Aegean Sea islet was on the verge of leading to military confrontation. 3. Created in 1989 by the Treaty of Marrakech, the Members of the Arab Maghreb Union are Algeria, Libya, Morocco, Mauritania and Tunisia. 4. Presentation on ‘Subregional Co-operation and Integration’, EuroMeSCo Annual Conference, London, May 1998. 5. NATO’s dialogue countries are Egypt, Israel, Jordan, Morocco, Mauritania and Tunisia. The WEU’s Mediterranean dialogue, launched in 1992, includes these same countries plus Algeria. These dialogues consist mainly of meetings between the relevant sections of each organization’s secretariat with the southern countries’ ambassadors in Brussels. 6. The Forum for Dialogue and Co-operation in the Mediterranean, created in Alexandria in July 1994, although it emphasizes economic, scientific and technological co-operation, is also concerned with political dialogue. The Mediterranean Forum is formed by Algeria, Egypt, France, Greece, Italy, Malta, Morocco, Portugal, Spain, Tunisia and Turkey. 7. The Euro-Mediterranean Process, a Franco-Spanish proposal to the EU European Council, was launched during the Spanish Presidency of the EU in 1995. The

Europe’s Mediterranean Strategy 41

8.

9. 10.

11. 12.

13.

14.

EMP is currently made up of the signatories of the Barcelona Declaration: the Fifteen and 12 southern partners: Algeria, Cyprus, Egypt, Israel, Lebanon, Malta, Jordan, Morocco, the Palestinian Authority, Syria, Tunisia and Turkey. Two members of the AMU are not among the EMP: Mauritania and Libya, and Turkey, although a member of NATO, is part of the South in the EMP process. The prospects for developing some form of closer co-operation gradually evolving to its inclusion within the EMP look brighter after the UN sanctions have been suspended. On the initiative of the German Presidency, Libya was asked to attend the EMP Ministerial Meeting held in Stuttgart in April 1999. On Arab and Muslim public reaction to the Bosnia crisis, see, for example, A. Hallil Dessouki’s chapter in M. Jopp (ed.), The Implications of the Yugoslav Crisis for Western Europe’s Foreign Relations, Chaillot Paper No. 17, Paris, WEU Institute for Security Studies, October 1994. François Burgat, L’Islamisme en face (Paris: La Découverte, 1995). Although at the time of writing the full official report on the Luxor attack was not finalized, it is thought to have been perpetrated by Al-Gama’at al-Islamiyya (The Islamic Group). It should be noted that Al-Gama’at renounced violence in March 1999, and in May some 1000 convicted militants and prisoners in preventive detention were freed from Egyptian jails. See I. O. Lesser, A. J. Tellis, Strategic Exposure: Proliferation Around the Mediterranean (Santa Monica, CA: Rand, 1996). The only case of major disruption to gas supplies (in 1998, when the supply to Italy was stopped for three days), however, was attributed to a technical problem. Suspicions of a terrorist attack on the pipeline were aired but never proven. A common strategy for Russia was indeed approved by the 1999 Cologne European Council. The Cologne European Council reiterated the decision taken in Vienna to adopt a common strategy for the Ukraine, South–East Europe and the Mediterranean. The ‘common strategy’, which provides for decision-making on a qualified majority basis, was added to the array of CFSP instruments in the Amsterdam Treaty. The common strategy for the Mediterranean was approved by the 2000 Feira European Council. On the ‘division of labour’ between the European Union and the United States, see D. C. Gompert and F. Stephen Larrabee (eds), America and Europe: A Partnership for a New Era (Cambridge: Cambridge University Press/Rand, 1997).

3 Towards a Pan-Euro-Mediterranean Association of Proximity Jean Raux

Introduction The very title of this contribution gives the game away. We have purposely favoured the ‘Pan-Euro-Mediterranean’ stance, projecting ourselves into the future and taking as a starting point the hypothesis of an enlarged European Union, or one in the process of enlargement, envisaging its relations with its neighbours. We take as a principle a Europe reconciled with its history and its geography, which has refound its centre in welcoming the Central and Eastern European Countries (CEECs, including the Baltic States) in their turn, and which has taken up a strategy of Europeanizing the Balkans in order to better counteract any possibility of a Balkanization of Europe. Thus, we take account of the relations to the South with the Mediterranean Non-Member Countries (MNMCs), already associated with the Community ‘in a spirit of partnership’,1 and to the East the relations with the countries of the post-Soviet space, members of the Commonwealth of Independent States (CIS), notably the countries of the western front from the Baltic to the Black Sea,2 liable in turn to be caught up in a ‘partnership association’ of a bilateral character. This new form of relationship could nevertheless be modulated, in the future, to the advantage of the Russian Federation, member of the Security Council and the undeniable power for the durable regulation of Pan-European problems external to the European Union. A privileged partnership association with the Russian Federation could be the guarantee for a harmonious integration of new Member States within the EU. The Pan-Euro-Mediterranean relationship would rest on three inextricably linked pillars: one pillar comprising the enlarged European Union, one pillar comprising the associated MNMCs, invited to one or more regional groupings in a spirit of partnership as espoused in the Barcelona Declaration of 28 November 1995, and one pillar made up of the ‘partners’, signatories to the Partnership and Co-operation Agreements (PCAs) and invited to a bilateral ‘partnership association’ without any prospect of 42

A Pan-Euro-Mediterranean Association of Proximity 43

admission, to handle carefully the independence of each while always cultivating the convergence of all. At the intersection of the three areas Turkey, as a key country, would naturally be a privileged partner of the European Union and a major element of the latter’s ‘proximity policy’. Already associated with the Community on the basis of a customs union, in principle effective since 1 January 1996, Turkey must not, however, be under any illusion as to the unanimous eagerness of the Member States of the European Union to welcome it in the immediate future. It is true that the 1999 Helsinki European Council has given Turkey the status of ‘candidate country’, but no indication is provided when accession negotiations will start and even less when they could possibly be completed. Various reasons explain this state of affairs. The official reason, and one which is legitimately cited by the Commission, is the lack of respect for democratic principles, human rights and, more particularly, the rights of the Kurdish minority. But also the Member States are fully conscious of the fact that they would not shy away from raising other obstacles to a potential ratification. An alternative prospect must be offered to suit Turkey’s geopolitical and geostrategic situation. The definition of a ‘proximity policy’ of the European Union could provide the occasion to formally recognize the major role of Turkey. The Amsterdam Treaty could actually offer the legal bases. The ‘reinforced co-operation’, foreseeable on the basis of Articles 43 to 45 TEU and 11 EC Treaty, could allow the tenacious opposition of Greece to be bypassed and open the way to a narrower association with the European Community. The European Union itself might even consider it ‘necessary’ to conclude a complementary agreement on the subject of security and judicial co-operation, in accordance with Article 24 TEU, while Greece could decline any possibility of participation. Once associated ‘in a spirit of partnership’, or parallel to the conclusion of their partnership association, the European Union and the Russian Federation could, at least partially, themselves take inspiration from the association framework applied to Turkey in order to underline the privileged character of their new relations. In this way, the European Union would take into account the major role and distinguished responsibilities of its large eastern neighbour. Thus the reference to ‘proximity’ is such that it would favour the emergence of a specificity of association with the European Community in the sense of Article 310 EC Treaty (ex-Article 238) for the states neighbouring the enlarged European Union. A specific category could find its place in the typology of the EC’s association agreements (I). Moreover, proximity amounts to an invitation to secure coherence with the external policy of the Union. The specificity of the ‘associative relationship’ is its intensity. The specific association with the EC must be, at its optimum, coherent with the external policy of the European Union (II). The specificity and intensity must, in particular, be reinforced in so far as Turkey and Russia are concerned. A specific privileged association in maximum coherence with the external policy of the European

44 Jean Raux

Union must bear witness to the major role of its two partners in the framework of a proximity policy (III).

I. The emergence of a specific association for states neighbouring the enlarged European Union A priori, association is foreseeable ‘with one or more States or international organisations’ (Article 310 EC Treaty), without geopolitical limit. Nonetheless, the initial practice was to take a strict approach. Association was first reserved for European countries and those considered as such (Greece, Turkey, Cyprus, Malta) and called upon to join the EC. However, the associative link was also necessarily and legitimately used with regard to the CEECs, in the prospect of joining the European Union, creating an ‘ever closer union among the peoples of Europe’. For its part, association, with a perspective of co-operation and a view to ‘economic and social development’, was first reserved for those countries maintaining, or having maintained, ‘special relations’ with certain Member States. Yet the arrival of those new Member States having colonial pasts (the United Kingdom, Spain and Portugal) saw the hypothesis of ‘special relations’ filled out and carried further justification for extending the associative link. Thus the practice was inverted and association became in a way generalized. The ‘banalization’ of the associative link would have been, without a doubt, more acceptable if the specificity of the relationships with neighbours of the EU had been safeguarded or, even better, developed. It is becoming obvious that it is necessary to institute a specific association for neighbouring states at Pan-Euro-Mediterranean level. Such an evolution, however, appears feasible while the European associated countries prepare to join the European Union in successive waves, to the stage where the category of association agreements with European states is rendered progressively obsolete. The dynamic peculiar to the Partnership and Co-operation Agreements, on condition that in particular a more rational internal mutation within the Russian Federation takes place, could favour the emergence of a ‘partnership association’ comparable to the Euro-Mediterranean model. That admission to the European Union is nevertheless reserved for European states, in view of the fact that it requires the acquis communautaire to be preserved so that the objectives of the European Union may continue to be pursued. One should therefore stress that the Members of the CIS cannot be associated in any other way than on a basis of ‘partnership’ without any prospect of admission. In other words a specific ‘association in a spirit of partnership’ must be instituted in an appropriate way. A necessary specific association The associative relationship is on the way to becoming the common lot of the partners of the European Community. The partnership association in

A Pan-Euro-Mediterranean Association of Proximity 45

the Mediterranean basin risks losing its distinctiveness in the light of the dual evolution of the association with ACP States, signatories to the Lomé IV/Mauritius Convention, 3 on the one hand, and co-operation with the Latin American countries and emerging regional economic groupings on the other.4 To the East, the simple substitution of a Partnership and Cooperation Agreement by a ‘classical’ association agreement could, in itself, no longer constitute an appropriate response to the particular requirements of a neighbour country. It seems increasingly evident that the partnership co-operation initiated with the East can no longer be left in the background. The ‘banalization’ of the association with the southern countries To the South, it appears that the new Partnership Agreement (succeeding the Lomé IV Convention) with the ACP States should be accompanied by specific agreements at the level of regional unions (West Africa, Southern Africa, East Africa, the Caribbean, the Pacific) on the basis of a reciprocal liberalization of trade accompanied and compensated by a multidimensional co-operation, itself driven by partnership. Only the least developed countries should still benefit from special preferences without reciprocity on their part but on condition that equality of treatment with the other least developed countries, to date non-associated and beneficiaries of the EC’s GSP, is respected. Association, since then, has been recognized as the ultimate objective for certain Latin American countries and regional groupings. The ‘Interregional Framework Co-operation Agreement between the European Community and its Member States, of the one part, and the Southern Common Market and its Party States, of the other part’, had already announced the intention of the signatories. The preamble states: The ultimate objective [is defined as] a political and economic interregional association founded on greater political co-operation and progressive and reciprocal liberalization of all trade, taking account of the sensitivity of certain goods and complying with World Trade Organization rules, and founded, finally, on the promotion of investment and closer co-operation.5 A ‘Joint Declaration on political dialogue between the European Union and Mercosur’, published at the same time as the Agreement but independent of it, confirms this long-term objective.6 More audacious still, the ‘Framework Co-operation Agreement’ with Chile is, at a glance, explicit in that it states in the very title itself that it is ‘leading ultimately to the establishment of a political and economic association between the European Community and its Member States, of the one part, and the Republic of Chile, of the other part’. A Common Declaration concerning

46 Jean Raux

the political dialogue between the European Union and Chile is annexed to the Agreement. The text is joined to the Agreement and approved as such by the Decision of the Council of the Community carrying the application of the Agreement.7 The states party to MERCOSUR and Chile could be among the first associated, on the basis of Article 310 EC Treaty. They could also open a comparable route to the ‘partners’ of South East Asia and those of the Indian subcontinent! But what is then the specificity of relations of proximity? A partnership of co-operation to the East henceforth in the background To the East, the upholding of the Partnership and Co-operation Agreements would seem well in the background when compared to the association agreements with the South. The substitution of the Partnership and Co-operation Agreements by association agreements, notably under the hypothesis of an enlarged European Union, could in itself turn out to be insufficient if the formula carried over is inspired by that applied to the South. The model envisaged must take inspiration from the constraints of proximity, while at the same time move away from the dynamic formula specific to those association agreements that carry a prospect of admission. Enlargement underlines, on the other hand, the opportunity of an association specific to third countries in proximity to the EU. Such association even becomes plausible under the condition that the Partnership Agreements are given a new impetus and their signatories are prepared to use the Agreement’s potential. A plausible specific association The foreseeable obsolescence of the association with European states It is already reasonable to consider, in a relatively near future, that all the European states, or else all those considered as such, will have joined the European Union in successive waves. The first wave reaching the shores of the European Union will announce inexorably the following waves. 8 Repeated admissions will render the category of association agreements with European states progressively obsolete, in particular the specific category of ‘Europe Agreements’ concluded with the CEECs, currently implemented according to a ‘pre-accession strategy’ which is, in our sense, inappropriately referred to as ‘pre-accession partnership’.9 The perspective of an association with countries of the post-Soviet space, today members of the CIS, would thus become feasible. The novelty of that ‘partnership’ association, in its nature and spirit, would result from the absence, whether explicit or implicit, of any perspective of admission even though it would concern first of all the countries said to be ‘East European’ (Belarus, Ukraine, the Russian Federation and Moldova). Better integration into the world economy in conformity with WTO rules, notably on the basis of a free trade zone with the enlarged EC, has

A Pan-Euro-Mediterranean Association of Proximity 47

already been foreseen in the framework of the Partnership and Co-operation Agreement with the Russian Federation. The provision of the Agreement referring to the possible opening in 1998 of negotiations establishing free trade could not be materialized. This is partly due to the late entry into force of the Agreement (December 1997), but above all for reasons internal to the Russian Federation, let alone the lack of enthusiasm among the EC and its Member States. Nevertheless, the principle has been established and accepted by the Parties. Thus a parallel might be drawn in the longer term with the freeing up of trade between the two shores of the Mediterranean. Again it would require that the Partnership Agreements’ potential is fully used. Using the political potential of the Partnership Agreements The enlargement of the European Union offers the possibility to use fully the political potential of the Co-operation and Partnership Agreements, until now retained, and this opens the perspective of a partnership association. Partnership is in fact a catalyst to co-operation. It can provide the impetus to the fullest possible co-operation in answer to the hopes of the partners, both in terms of scope and intensity. Co-operation can thus be as wide-ranging as possible for some, in particular with the Russian Federation and Ukraine. The objectives of the partnership can act as incentives upon relations between the partners.10 The adoption of a market economy, something that is already the case for the associated CEECs, is a fundamental objective in this regard (see, for example, the 14th indent to the preamble and Article 1 PCA with the Russian Federation). Russia is not yet considered a market economy country. Nevertheless, since the European Council in Cardiff of 15 and 16 June 1998, she is assimilated as a market economy country as far as anti-dumping is concerned. 11 Above all, ‘respect for democratic principles and human rights …, underpins the internal and external policies of the Parties and constitutes an essential element of partnership and of this Agreement’ (see, for example, Article 2 PCA with the Russian Federation). The comparison with an association agreement appears essential. However, the enactment of appropriate measures ‘if either Party considers that the other Party has failed to fulfil an obligation under the Agreement’ (Article 107, paragraph 2, PCA with the Russian Federation)12 cannot escape a political reading of which the parameters are not those which govern the interpretation and the enforcement of an association agreement. What is important is that a partnership approach is taken in the reading of it. The promotion of peace is actually at stake from the point of view of all partners and, most importantly, the Russian Federation. The existence of common interests must encourage the partners to search for and create converging positions in international fora, all the more so in any question concerning security issues. In this regard, the European Union’s Action

48 Jean Raux

Plan for Russia13 draws up a statement of the willingness of the Union to reinforce its dialogue with Russia on questions of the peaceful regulation of conflicts in the framework of the OSCE and the UN. The same document in particular conjures up problems linked to controls on arms exports and to conflict prevention. The Yugoslav crisis was not to be missed as an opportunity to provide the European Union and Russia with the chance of putting their partnership to the test and, in so doing, to assess its limits. The political dialogue institutionalized by the Agreement is conceived, first of all, to promote reforms in so far as the partner makes them known. The Democracy Programme, destined to reinforce a pluralist society in the partner states under the greater framework of the TACIS Programme, is itself going in this direction. A more systematic dialogue can provide the impulse to political co-operation at the appropriate level in order to ensure the promotion of peace. The political willingness of the parties remains fundamental. The spirit of partnership specific to an association may seem more appropriate. A specific association in an appropriate ‘spirit of partnership’ ‘Partnership’,14 having become the master word in the external policy of the European Community and its Member States, members of the Union, could become a first step towards association, from the moment that it provides the impulse to a multidimensional co-operation and a political dialogue, as could be the case for the New Independent States of eastern Europe. Such an evolution to the East would provide a means of counterbalancing ‘the associations … in a spirit of partnership’ concluded or in the process of conclusion with the Mediterranean Non-Member Countries, and even of ‘dynamizing’ the next development at Pan-Euro-Mediterranean level. A generalized ‘spirit of partnership’ with the Mediterranean Non-Member Countries The European Community and its Member States, on the one hand, associated ‘European’ countries, MNMCs in the process of re-association (the states of the Maghreb, the Mashreq 15 and Israel) and the PLO, on behalf of the Palestinian Authority, on the other, made commitments at Barcelona 16 on the basis of a global declaration with the objective of establishing a multilateral dialogue superimposed on the bilateral dialogue emanating from the association agreements. In this respect, the proximity of the MNMCs was decisive. Beyond the economic stakes, peace in the region, notably in the Middle East, and the need for each partner’s security, particularly that of the European Union which is being exposed to uncontrolled migratory flows, forces them to make a fresh attempt at co-operation.

A Pan-Euro-Mediterranean Association of Proximity 49

An appropriate ‘spirit of partnership’ to be instituted with the countries East of the European Union The plausible hypothesis of a generalization of the ‘partnership association’, as a privileged model of relationship with the Community in the progress of enlargement, can only bring to the fore the pressing need for ever more deep specific links with third countries in proximity to the EU. The enlarged European Union ought to move closer again to the ‘near abroad’ of the Russian Federation (states of the former USSR) and, above all, the Russian Federation itself. 17 The solution to the specific problems with third countries in proximity to the EU must be sought, in the first place, without the assistance of states foreign to the zone and not directly concerned. The indispensable reference to the Atlantic Alliance should not be solicited until after all regional ways and means have been exhausted, subject to their having actually been consolidated and even reinforced on the basis of a reinforced co-operation with the neighbouring States. The European Union needs a vast Pan-Euro-Mediterranean co-operation in order to succeed in its enlargements. Assigning precise limits to Europe is useless. We know where Europe does not end; we do not really know where Europe does end precisely. The European Union needs a flexible approach in this matter (‘frontières profondes’, Jean-Louis Bourlanges) in order to assure its future. An association to the East must be invented and enriched or refined with the South. Only a Pan-Euro-Mediterranean ‘proximity association’ can bear witness to the political dimension of the European Union and guarantee it. That is to say, there is no place for a specific type of association with third countries in proximity to the EU in the absence of coherence with the external policy of the European Union.

II. An association specific to the EC in full coherence with the external policy of the European Union Association ‘in the current state of Community law’, that is to say in the sense of Article 310 EC Treaty, only concerns the European Community. It does not aim at the European Union in its entirety. It is thus differentiated from admission based on a ‘common provision’ of the European Union Treaty since the Treaty of Maastricht (Article 49 Amsterdam), whereas originally the provision relating to the admission of a European state into the European Community (ex-Article 237 EC Treaty) immediately preceded that relating to association (ex-Article 238 EC Treaty) and could logically have inspired the first, the provision concerning admission is now clearly distinct and governs the admission of a European state into the European Union without reference to the association regime. Yet the logic of the ‘common provisions’ of the TEU authorizes a more finely tuned and more coherent approach to the association.

50 Jean Raux

An association with the Community respecting the objectives of the European Union, on the basis of the ‘common provisions’ of the Treaties The concept of association to the European Community alone cannot, however, be envisaged in ignorance of the European Union in which the Community participates and of which it is one of the foundations (Article 1, third indent, TEU). The European Community, most often acting together with its Member States, members of the European Union, cannot disregard the emergence of a Common Foreign and Security Policy, nor the extension of the police and judicial co-operation, and all the more so when it is in the process of ‘communautarisation’. Association, as part of the general and final provisions of the EC Treaty, 18 also confers upon it the authority to share certain perspectives of the European Union opened up by the common provisions of the Treaty on the Union (Articles 1 to 7 TEU). Where necessary, with the help of the Member States on the basis of a mixed agreement, if it departs from the field of competence of the EC, the association to the EC must itself contribute to carrying out the objectives of the European Union, notably to affirming its ‘international identity’ on the international scene (Article 2, second indent, TEU). Therefore coherence is essential. An obligation of coherence governs ‘the external activities of the Union as a whole in the context of its external relations, security, economic and development policies’ (Article 3 TEU). Thus, the ‘association’ seems to be something of a privileged field in which greater coherence can be sought with the other policies within the external policy of the Union. Nevertheless, coherence will have to be optimal when association governs (as in the Mediterranean) or potentially governs (as in the postSoviet space) the ever more sensitive relations with the proximity states. Each of the partners recognizes the other in terms of geographic, demographic, economic, social, cultural, political and strategic identity. The pursuit of mutual interests in the framework of multiple and graduated actions does not prejudice a new status according to the terms of the subsequent evolution, even if, exceptionally, such a status can be confused with that of a Member State, when the associated country has been considered as European and has seen itself recognized as having a right to accession (Turkey). Theoretically, the equation 1 + 1 = 2 constitutes the rule and remains the reality. ‘An ever closer union among the peoples of Europe’ is not an objective shared with the Mediterranean or in the post-Soviet space of the CIS. Partnership implies a legal relationship based on parity, whether involving a bilateral relationship or, rather, a multilateral one at regional level. That being the case, the partnership of proximity implies the most extensive and global intergovernmental co-operation imaginable. The partnership must contribute to structuring the continent and participate in defining the new European

A Pan-Euro-Mediterranean Association of Proximity 51

architecture. It must permit the states bordering the Mediterranean Sea to take up possession of the Mediterranean and to make of it a place privileged with co-operation and peace. The same conclusions are imperative to the Baltic or Black Sea states, in as much as the common frontiers with eastern Europe must be places of trade and peace. To make this scenario a reality, the partners are invited to enter into a political dialogue which is both revealing as well as a catalyst to an ever more rich association. The ‘spirit of partnership’ expresses itself in solidarity and the respect for common values. The respect for human rights, democratic principles and the rule of law constitutes an ‘essential element’ of the partnership association. ‘Good management of public administration’ provides the best evidence of its efficiency. In a general sense, ‘good governance’ could be the best guarantee of it. A global and coherent approach is imperative in the framework of a proximity policy. A globally understood association in the framework of a coherent proximity policy External relations were subjected to a scattered approach. In principle, the Commission acts as a college 19 in carrying out its functions of proposal, negotiation and control coming from the initiatives of the Commissioners and the Directors General over which they have authority. Regarding the field of our study one should note, however, that, under the Santer Commission, one Commissioner (Mr Marin) was in charge of the Mediterranean countries of the southern shore and the Middle East, while another (Mr Van Den Broek) was in charge of the eastern countries which were members of the CIS but without taking account of the associated European MNMCs (Cyprus, Malta and Turkey). The former could not be insensitive to the centrifugal forces at play since he was also in charge of the Latin American countries, naturally privileged partners for every Spaniard, despite being an independent Commissioner. The latter was more inclined to set the CIS against the CEECs over which he also had authority. Fortunately, the Prodi Commission brought resolution to this scattered approach and from then on ‘external relations’ have been principally governed by Commissioner Patten. With the CEECs in a position to become members, the countries of the post-Soviet space, members of the CIS, as a result the more distant partners, are supposed to remain in such a position. If, paradoxically, a terminological rapprochement takes place, it is to clumsily place the candidate countries for admission under an accession partnership, a partnership that is very different from that with the CIS partners. Of the twelve Mediterranean partners, three are considered EU candidates (Cyprus, Malta and Turkey since the 1999 Helsinki European Council), although these three still face uncertainties. Turkey is now a candidate country but accession remains problematic.

52 Jean Raux

Of course, it is for the Council to take decisions, to frame the negotiations conducted by the Commission or to conclude the Agreements, but the Council, considering the opposing national interests within it, can only confirm or amplify the identifiable divergence in approaches at Commission level. Recourse to unanimity for the Association Agreements or for any foreseen co-operation on the basis of the lastresort Article 308 TEU, as well as the intervention of the Member States alongside the Community with their ratification requirements, add to this effect. The hegemony of the various instances of the Council on the subject of the CFSP (or even its own paralysis coming from recourse to unanimity, with the exception of reverting to constructive abstention henceforth possible on the basis of the Amsterdam Treaty) renders the respect for coherence between the procedures making the external action of the Union even more uncertain. A global and coherent approach is vital. No matter how many Commissioners there will be in the future or, possibly, whether a hierarchy of Commissioners will be established, a proximity policy and its translation on the basis of an ‘association of proximity’ would require the appointment of a single Commissioner in charge of all relations with partner countries from Gibraltar over Istanbul to Saint Petersburg. The services of the Commission would have to sketch out and propose to the Council the contours of this Pan-Euro-Mediterranean policy, showing concern for coherence. The global approach concerned with the common development of a proximity zone to treat the countries of proximity tactfully implies homogeneous relations with the partner countries to the South and the East, but it does not have as a corollary a uniform policy. One way or another, certain partners could have a major role to play. By reason of their immediate proximity Morocco, Turkey and the Russian Federation are already in this situation while Belarus and Ukraine will be in a comparable situation when Poland is admitted. The same holds true by reason of their present political weight in the region for Egypt and Israel in the Middle East, or in the region and beyond for the Federation of Russia in the Caucasus and in eastern Europe, if it is not in central Asia, the Black Sea and the Mediterranean. And by reason of its political stability and opening up to democracy (albeit recent): Morocco. Above all, Turkey by reason of its geostrategic position and the Russian Federation by reason of its political power, whether actual or alleged, also have a major role to play. On the basis of their current or future associative relations, Turkey and the Russian Federation call for, in our sense, a specific privileged association in maximum coherence with the external policy of the European Union.

A Pan-Euro-Mediterranean Association of Proximity 53

III. A privileged association between Turkey and the Russian Federation and the EC in maximum coherence with the external policy of the European Union The Pan-Euro-Mediterranean proximity policy cannot be fully expressed on the basis of a ‘partnership association’ with the EC only, even if inspired by the concern for optimum coherence with the external policy of the European Union and modulated to this effect according to the partners. Some associated countries or ‘associable’ partners already occupy specific positions in the foreground or assume such political responsibilities that the European Union must privilege them in order to achieve maximum coherence with its own external policy. Geography, history, mutual interests of the partners and political efficiency conspire to put the Russian Federation and Turkey at the top of the list. Turkey is already a ‘European State’ associated with the EC, a status conferred by the 1963 Association Agreement. Without actually envisaging admission in the short term, Turkey could become ‘associated’ to the European Union. Without expressly mentioning it, the new provisions of the Treaty on European Union could be used in this respect. Already a ‘partner’ of the European Union, before finally being associated to it on a partnership basis, the Russian Federation itself could be an associate of the European Union straight away, so as to share, notably, common objectives in matters of external and security policy, and, if necessary, in matters of police and judicial co-operation at penal level. On this basis, the whole Eurasiatic continent could be remodelled in the interests of peace. Towards a privileged ‘association’ between Turkey and the European Union Turkey in the situation of a privileged partner Turkey is in a privileged partnership situation: between Europe, Asia and the Middle East; at the heart of the oil resources and their transit to the European Union; at the head of a Turkish-speaking area running from the Mediterranean to the Chinese frontier, as far as Almaty, the first capital of Kazakhstan. Turkey is above all a vanguard of NATO no matter what the theatre of operations would be: to contain an Islamic fundamentalism from Iran or Pakistan, to combat the menacing dictatorship in Iraq, to maintain the equilibrium in the Middle East and contribute to the peace process or even to facilitate an intervention in Europe. Because of this specific position Turkey is thus a master component in the Atlantic Alliance and in NATO, with which CFSP of the Union is in the process of being coordinated.20 Associated to the EC with a view to becoming a member, Turkey is equally associated to the Western European Union, considered by the

54 Jean Raux

signatories of the Amsterdam Treaty as the operational arm of the European Union.21 On these two counts, Turkey is thus more engaged in the development of the CFSP than some of the Member States of the European Union, namely those ready to invoke their neutrality. It is important to put all this in the context of the provisions of the Treaty of Amsterdam. Recourse to the new provisions of the Treaty on European Union The new provisions can be used to encourage a new approach to the associative relationship with the EC and to open the way to a relationship with the European Union itself. In contrast with the MNMCs, Turkey, although being a state associated to the EC, did not benefit, in practice, from the financial co-operation to which the Member States signatory to the financial protocols committed themselves. The absence of political dialogue formalized in a bilateral institutional framework hindered any well-considered revival of the association. By its systematic veto, Greece forbade any progress. It remains to be seen whether and to what extent the dynamic of the Helsinki European Council will be able in the future to generate a more constructive approach. ‘Reinforced co-operation’ in the sense of the Amsterdam Treaty (Article 11 EC in conjunction with Articles 43 and 44 TEU) 22 could appear legitimate, since it is by nature, according to Article 43, paragraph 1, TEU, aimed at furthering ‘the objectives of the Union and at protecting and serving its interests’ and that, by hypothesis, ‘the objectives of the … Treaties could not be attained by applying the relevant procedures laid down therein’ (such as the recourse to unanimity foreseen by Articles 300 and 310 EC Treaty combined). Far from ‘affecting’ the acquis communautaire and the measures taken on the basis of the Treaties, the recourse to reinforced cooperation guarantees its application and preservation. Objections could be raised. A priori, the ‘foreseen co-operation’ must not concern ‘fields relevant to the exclusive competence of the Community’. Then again, association is in principle optional and the exclusive competence of the EC. It is the same today for financing since, henceforth, it is charged to the Community budget. The EC can even enjoy a greater autonomy since she has substituted the former financial co-operation agreed in a common agreement on the basis of the financial protocols which have been regularly negotiated but refused by Greece for a unilateral financing instrument. Nevertheless, association is not conceivable other than in a field within the reach of Community competence and in the framework of the Community policies. Thus the European Community cannot escape the cooperation of the Member States and it must revert to the conclusion of a mixed agreement where the Member States enjoy competence. This may be the case for sectors which do not affect the commercial policy referred to as

A Pan-Euro-Mediterranean Association of Proximity 55

‘common’ in the sense of the Opinion 1/94 of the European Court of Justice, other than by the application of Article 113, paragraph 4 of the EC Treaty. Above all, this may be the case from the moment there is any question concerning political dialogue, its institutions, its objectives and its instruments. In the first case, the competence of the Member States could be replaced by ‘reinforced co-operation’ under the conditions foreseen in Article 11 EC Treaty, on condition that a Council Decision was adopted by qualified majority on a Commission proposal and after consultation with the European Parliament. A Member State (Greece?), for ‘reasons of national policy’ (Article 11, paragraph 2, EC Treaty) and in the name of its ‘interests’ (Article 43, paragraph 1, TEU), could attempt to have the matter referred to and decided by the European Council by unanimity, but subject to the precondition that the Council decide to so refer by qualified majority. It is reasonable to think that Greece would not be systematically followed by the other Member States and better still that she would not react. On this basis, but eventually without Greece, association could take shape and comprise a more extensive trade dimension. In the second case, the competence of the Member States on the subject of political dialogue could be replaced by a ‘reinforced co-operation’ under the general conditions foreseen in Articles 43 and 44 TEU. The political dialogue could be established without the participation of one (Greece) or even a few Member States. It would graft on the association, as it results from the exclusive competence of the Community. Nevertheless, one might ask oneself whether a political dialogue in which Greece did not participate would be of any use. Given the fact that the objective of the dialogue is to closely define the problems and attempt to resolve them, setting Greece aside may lead to the problems being denied. On the other hand, to resolve the problems, where ‘necessary’, Article 24 TEU foresees the conclusion of ‘an agreement’ with one or more third states or international organizations, implementing the Title devoted to CFSP or, in parallel, implementing the title on police and judicial cooperation. Without expressly appointing it, the European Union is referred to by this Article in that it is the Presidency of the Union which is the appointed negotiator and which recommends conclusion by the Council. The ‘agreement’ is not qualified, but it is not ruled out that it will be qualified, where necessary, as an ‘association’ agreement with the European Union, complementary to an association agreement with the EC. Let us acknowledge that such a hypothesis would apply perfectly to the case of Turkey, a privileged partner of proximity, if we take into account its strategic importance and the role that it can play in mastering migratory flows and the fight against transboundary crime. Still, the difficulties cannot be minimized, ‘in the current state of the law of the Union’. The procedure has a very intergovernmental character. The decisions are taken on a case-by-case basis by unanimity in the

56 Jean Raux

Council, with the exception of constructive abstention applying to every decision relating to the title devoted to the CFSP (Article 23, paragraph 1, TEU), and negotiation is undertaken by the Council Presidency. Schematically, the states are only bound if they really want to be bound. Nevertheless, in cases of unanimous agreement or in the absence of the express opposition of a state (Greece preferring this substitute over admission), the European Union would have more of a confirmed ‘international identity’. It would even become urgent to confirm the international personality of the European Union and to substitute it for that of the EC. The European Union would then have the international ability to express itself according to the different procedures in the framework of the spheres of competence which are expressly or implicitly recognized by the Community Treaties or sketched out by the Treaty on European Union, but thus ‘developed in practice’. For the moment, only the Member States have the ‘ability’, while the Union has only virtual ‘competences’. At the very most one can conjure up a potential personality for the European Union. The future will decide this. This could be a precedent for another partner of the first order: the Russian Federation. The international situation ought to draw the attention of the Union to the ‘necessity’ of urgently concluding such an agreement with this ‘associable’ partner. Towards a privileged association of the Russian Federation with the European Union The Russian Federation, a politically unavoidable partner The Cold War ended and the Russian Federation took up a chaotic process of transition. The principle heiress of the USSR appears weak, drained and nostalgic. At the mercy of the goodwill of its western lenders, exposed to mafia corruption, the Russian Federation survives in a situation of inflation, public deficit and public debt, which the political class has often been too incompetent to successfully master because it is one of the principle beneficiaries. In this nightmarish adversity, the Russian people, by the greater majority, have shown a patriotic self-sacrifice and an inventive imagination in the quest for survival. However, public opinion in search of a refound grandeur is not sheltered from dream merchants. The former communist becomes pious and is drawn by the memory of his people rooted in Orthodox religion. This orthodoxy, which was able to coexist with Communism in the name of nationalism, called for solidarity with fellow Slavs, notably the Serbs. If the rhetoric of the poor together with that of the humiliated patriots could give birth to nationalistic activity and in so doing cause a fresh line of fracture in the pacification of the continent, threatening the unity of the peoples of Europe on which the European Union is based.

A Pan-Euro-Mediterranean Association of Proximity 57

Facing this situation, the European Union must be very attentive towards the evolution of the Russian Federation and encourage the European opening up which marked the history of the Russia of Peter the Great. The conclusion of a Partnership and Co-operation Agreement expressed the Community’s intention but the European Union has not been able to make any gains at political level. However, the European Union cannot ignore the major political responsibilities of its ‘partner’. The crisis in Kosovo is a reminder. The crisis was aggravated when the Russian Federation participated in the control of the Serb operations in Kosovo, under the aegis of the OSCE of which it is a member, and when she participated in the Rambouillet negotiations and again in Paris within the framework of the ‘Contact Group’.23 In accepting to act as guarantor for Kosovar autonomy, she ought to have aroused the confidence of the Serbs. She could have used her experience to this end since she had concluded stability pacts and agreements of good neighbourliness with the Baltic states where the Russian minority is often very important. As a member of the G8 (ex-G7), she could have favoured the search for a diplomatic solution and, as a member of the IMF, she could have backed the favourable orientation of structural reforms in the future. On the other hand, as a Permanent Member of the Security Council of the UN, she could not have guaranteed a military intervention by NATO, in charge of maintaining international peace and security without being directly associated with it. Moreover, NATO abstained from legitimizing her intervention by not applying for the authorization of the Security Council. The intervention of NATO in the form of ‘air strikes’ has not, for all that, got the better of President Milosevic. The follow-up to the conflict must be envisaged, but its subsequent resolution underlines the need for the assistance of the Russian Federation, as a Permanent Member of the Security Council and the second power keeper of nuclear arms, the threat of which could be stirred up at any moment. Beyond the demonstrations of solidarity towards the Serbs, it is in the interest of the Russian Federation actually to live in good relations with the West in general and with the European Union in particular. Mr Primakov, Prime Minister during the Kosovo crisis, was the first to bend Perestroika in the sense of opening towards Europe. Before even being Minister for Foreign Affairs for Mr Gorbachev, Mr Primakov, the then Director of IMEMO, took a favourable attitude towards the project for a ‘Common European House’. It does not appear that he favoured exacerbating Russian nationalism beyond the borders of the current Russian Federation and he was more inclined to ensure the integration of Russian minorities, whether in Ukraine, Kazakhstan or the Baltic states. This in any case is probably the only solution to reassuring the ‘near abroad’ of Russia and to giving body to the actual CIS. Only the voluntary gathering of the Member States can counteract the play of centrifugal forces of the states of the Caucasus and

58 Jean Raux

those of Central Asia. The maintenance of good relations with the Turkish speaking states in general, and with the partners of Turkey around the Black Sea in particular, requires good relations with Turkey, the associate of the EC, member of NATO and secular state of Muslim religion. The realism of Mr Primakov, once Director of the KGB, is at the other pole of the archaic nationalism of Mr Milosevic and, objectively, closer to the objectives of the European Union, a fortiori when the latter is promoting an autonomous security policy, even within the NATO framework, and in coordination with NATO. This political line is certainly the most reliable. The European Union must therefore come closer to the Russian Federation and associate its efforts with those of its partner in the interests of peace and security on a continental scale – subject to the condition that these efforts are not diminished by the repressive actions driven by the electoral opportunism of President Putin in Chechnya. The provisions of the Amsterdam Treaty give it the opportunity to do so. Recourse to the new provisions of the Treaty on European Union The Common Foreign and Security Policy is placed, by the TEU, under the ‘principles of the United Nations Charter’ (Article 11, paragraph 1). The reference to the United Nations Charter thus legitimizes the actions of the Union, notably regarding the preservation of peace and the strengthening of international security. In this sense, coercive actions of the Member States of the European Union, joined as such or within the framework of NATO, is only conceivable with the authorization of the Security Council and thus in the absence of a veto by a Permanent Member, notably the Russian Federation or China. Recourse to a ‘regional organization’ is legitimate (Article 53, UN Charter), but it requires a preliminary authorization of the Security Council. Failing to have appealed to the Security Council at the appropriate moment and to have been able to prepare the way for an appropriate resolution, comparable to that which legitimized the Gulf War, the Member States of the European Union and NATO exposed themselves to criticism and threw suspicion on the legitimacy of their intervention. A privileged dialogue with Russia, notably in the framework of the Contact Group, a mini Security Council on a European scale, could have convinced the Security Council of the necessity to ‘delegate’ its power.24 In choosing not to take such a route, the Member States of the European Union could nevertheless claim that they behaved in accordance with the objectives henceforth assigned to themselves. The European Union is now based on ‘the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States’ (Article 6, paragraph 1, TEU). Consequently, by natural projection, the Common Foreign and Security Policy, has the following as its objective: ‘to develop and consolidate

A Pan-Euro-Mediterranean Association of Proximity 59

democracy and the rule of law, and respect for human rights and fundamental freedoms’ (Article 11, paragraph 1, TEU). It is in this spirit that the European Union is ready to welcome progressively all the European States (Yugoslavia included) so long as they bend to this shared demand (Article 6, paragraph 1). The Member States of the European Union have assumed their role and have not missed an opportunity to draw arguments from numerous Resolutions of the Security Council. It is in this way that they have referred to Resolutions 1160 (1998), 25 1199 (1998)26 and 1230 (1998)27 of the Security Council adopted on the basis of Chapter VII of the Charter and in which the Council expressed and reaffirmed its ‘support for an enhanced status for Kosovo which would include a substantially greater degree of autonomy and meaningful self-administration’. Equally, they drew arguments from the refusal of the draft Security Council Resolution, submitted not without any ulterior diplomatic motive on the part of the Russian Federation, with a view to demanding the immediate halt to air strikes. The draft Resolution having been refused by 12 votes to 3 (including Russia and China),28 the violation of human and minority rights by Yugoslavia seemed implicitly to be a blow to international security and, as such, a violation of the Charter. Moreover, the Member States of the Union, together with NATO, could argue that the Security Council Resolution was not capable of preventing the fall of Srebrenica and Zepa in July 1995 despite their having been declared ‘security zones’ two years earlier by the Security Council. It was important to act fast in the face of the dictator who had been able to use the negotiating time of Rambouillet and Paris in order to pursue his policy of ethnic cleansing in Kosovo. Interference seemed vital. But, once the Kosovo affair is embarked upon, a political solution will need to be found with serious international military guarantees. Therefore the response of the Security Council remains, more than ever, the order of the day. Everything leads us to believe that such a solution cannot be foreseen unless it is with the active co-operation of the Russian Federation, alone capable of opening the way for the UN; the Russian veto could bring with it a Chinese abstention. The European Union was not prepared for such a situation. She ought to be prepared for the future on the basis of a ‘privileged association’ with Russia with a view to adopting a common position within the UN framework, from the moment that international security is at stake at European level, and possibly even to embark upon common actions. The European Union does not have a seat at the UN. Only two Member States are Permanent Members of the Security Council with a right of veto. These could be involved officially in expressing the consensus of the Member States of the European Union from the moment that they themselves subscribe to it.

60 Jean Raux

Article 24 TEU could be used to secure the conclusion of an ‘association’ of the European Union and the Russian Federation with a view to maintaining peace and security in Europe. In concluding such an agreement, account would be taken of the commitments of the EU Member States with regard to NATO and could draw its inspiration from a ‘common strategy’ under the framework of the CFSP. What good does it serve to foresee NATO intervention if it is not legitimized by the UN? What good does it serve to undertake coercive action under the aegis of NATO if it is not appropriate? The European Union can be considered to be in the best position to seek the co-operation of Russia with a view to action in Europe mandated by the UN. The European Union can be considered the most justified to intervene in Europe, with a NATO guarantee, in order to be the operational master component. She would act alone or where necessary with the co-operation of Russia. Common Positions and Common Actions could pave the way for a revision of the UN Charter with a view to reinforcing its efficiency while, at the same time, a common strategy in the perspective of a partnership association with the Russian Federation could assure its viability in the longer term. Contribution translated from the French by Kirstyn Inglis.

Notes 1. Including Palestine linked to the Community on the basis of an interim Association Agreement: see E. Lannon, ‘L’accord d’association intérimaire Communauté Européenne-OLP: l’institutionnalisation progressive des relations euro-palestiniennes’, RAE/LEA, 1997, 169–90. 2. Without, however, excluding the Caucasus and Central Asian States because of their ties with both the Federation of Russia and Turkey and which, as such, cannot be dissociated from a homogeneous proximity policy. 3. J. Raux ‘Convention de Lomé (Accord de Maurice)’, in Répertoire Dalloz, vol. I, Paris, 1998. 4. See C. Flaesch-Mougin and J. Lebullenger (eds), Le partenariat entre l’Union Européenne et les Amériques (Rennes: Editions Apogée, 1999), notably the contribution of M.-A. Gaudissart himself evoking the ‘banalization’ of Association Agreements. 5. OJ, L69/1, 19 March 1996. 6. Ibid., 21. 7. OJ, L209/1, 19 August 1996. 8. (a) The CEECs (1): (Poland, Hungary, the Czech Republic, Estonia, Slovenia) and Cyprus. (b) The CEECs (2): (Slovakia, Romania, Bulgaria, Lithuania, Latvia) and Malta. (c) Other states of the former Federal Yugoslav Republic: Croatia, Bosnia and Herzegovina, the Former Yugoslav Republic of Macedonia, Yugoslavia (except for new secessions and accession to independence of Kosovo and Montenegro because of the unconsidered policy of the Serbian President of Yugoslavia Milosevic) and Albania (except, for its part, the reconstitution of a state). All

A Pan-Euro-Mediterranean Association of Proximity 61

9.

10.

11. 12. 13. 14. 15.

16. 17. 18. 19.

20.

21. 22.

23.

these states must, to various and differing degrees, demonstrate an indisputable democratic evolution, while the European Union must affirm its determination to contribute to the establishment of peace in the region, for the direct interest of neighbouring Member States, as for its own interest. (d) Turkey sooner or later, subject to a democratic evolution and a global settlement of its most serious problems with Greece and subject to unanimity of the Member States of an enlarged European Union. The hypothetical nature of such a decision, and a fortiori of its ratification, could and even should lead the European Union to make Turkey a master component in its proximity policy between the Mediterranean and the Black Seas and beyond (see below). In parallel, Norway, Iceland, Liechtenstein (EEA) and Switzerland, if they reiterate their call for admission or submit it for the first time, if they accept the acquis communautaire and ratify the Treaties they have signed. The pre-accession strategy was decided at the European Council of Essen in December 1994. The ‘Accession Partnership’ is now the unique instrument applicable to each Applicant State, OJ, C202/1, 29 June 1998. J. Raux ‘Un partenariat aux finalités spécifiques’, in J. Raux and V. Korovkine (eds), Le partenariat entre l’Union Européenne et la Russie (Rennes: Editions Apogée, 1998), 163–78. J. Lebullenger, ‘Un accord de partenariat confronté aux règles du GATT et de l’OMC’, in Raux and Korovkine, op. cit., 199–215, notably 213–15. J. Dhommeaux, ‘Le partenariat sous condition: la clause de conditionalité droits de l’homme’, in Raux and Korovkine, op. cit., 179–99. COM(95)223 Final, 31 May 1995. J. Raux: ‘Association et perspectives partenariales’, in M.-F. Christophe Tchakaloff (ed.), L’association (Brussels: Bruylant, 1999). With the exception of Libya, even though the lifting of the embargo towards this country might incite it to join the other Mediterranean Non-Member Countries. E. Lannon, ‘La déclaration de Barcelone, acte fondateur du partenariat euroméditerranéen’, RMCUE, May 1996, 358–68. V. Baranovsky, ‘Le partenariat en perspective: la Russie sur la scène internationale’, in Raux and Korovkine, op cit., 15–35, notably 25–31. On the basis of Article 310, ‘General and final’ provisions of the EC Treaty in its Amsterdam version, after Article 238 in its Rome and Maastricht versions. It is precisely the absence of such a ‘collegiate system’ that the ‘committee of wise men’, created by a European Parliament in search of censure, challenged. This accusation was no stranger to the collective dismissal of the Commission. See Article 17 (ex-Article J.7) of the Amsterdam Treaty and increasingly convergent interpretation of France and the United Kingdom: St Malo Franco-British Summit of 4 December 1998, Bull.-EU, 15 January 1999, 94. Article 17, paragraph 2, TEU. On reinforced co-operation see notably V. Constantinesco, ‘Les clauses de coopération renforcées’, RTDE, no. 4, October–December 1997, Special issue on the Amsterdam Treaty; F. De La Serre, ‘Une Europe ou plusieurs?’, Politique Etrangère, no. 1, 1999, 21–34; C. Schmitter, ‘Co-opération renforcée et compétences externes de la Communauté, in M. Dony (ed.), L’Union Européenne et le Monde après Amsterdam (Brussels: Université Libre de Bruxelles, 1999), 77–103. Members of the Contact Group are Germany, France, Italy, the United Kingdom the United States and Russia. This group was created on 25 April 1994 in order

62 Jean Raux

24.

25.

26. 27. 28.

to try to find a solution to the Bosnian issue, but its existence was perpetuated beyond the Dayton–Paris Agreements of 14 December 1995. On the notion of ‘legitimation delegation’ see J.-M. Sorel, ‘La place des Nations Unies dans la négociation et la conclusion des accords de paix’, in Y. Daudet and R. Medhi (eds), Les Nations-Unies et l’ex Yougoslavie, Aix-en-Provence Colloquium, 12–13 September 1997 (Paris: Pedone, 1998). S/RES/1160 (1998), Resolution 1160 (1998) on the Letters from the United Kingdom (S/1998/223) and the United States (S/1998/272), adopted by the Security Council at its 3868th meeting on 31 March 1998. Security Council Resolution 1199 (1998) on the situation in Kosovo (FRY), adopted by the Security Council at its 3930th meeting on 23 September 1998. S/RES/1203 (1998), Resolution 1203 (1998), adopted by the Security Council at its 3937th meeting on 24 October 1998. UN Security Council Press Release CS, No. 1036, 26 March 1999.

4 Differentiation and Association within the Pan-Euro-Mediterranean Area Catherine Flaesch-Mougin

Introduction The Pan-Euro-Mediterranean Area seems a particularly rich terrain for experiment in the study of differentiation in the external relations of the European Union, and more especially in the Community component thereof since it is the Community that, to date, holds legal personality. Besides the concessions originating in its autonomous policy and sectoral agreements, the EC has entered into general agreements with most of the countries of the region: only Libya, Bosnia and Herzegovina, Croatia and the Federal Republic of Yugoslavia, although also falling within her sphere of proximity, are an exception because of their political situation, both internally and internationally. Nonetheless, the existing links with all the other countries are varied in nature and the Community has stressed its concern to differentiate between them. Differentiation, defined as ‘the organized and structured form of diversity’,1 constitutes a component of the external policy of the European Union which is being worked out more and more frequently in the framework of a global approach towards a region or a grouping of countries. The determination of a model of relationship proper to each is made taking into account the characteristics of the states of that group, the long-standing relations with Europe and the economic and political interest which they represent for the European Union. Those states which remain outside these models and maintain an atypical link with the European Community are rare. In the Pan-EuroMediterranean Area, this is the case of the micro-states Andorra 2 and San Marino,3 and of Switzerland following its refusal to ratify the European Economic Area Agreement.4 Nevertheless, the existence of a common model of relationship does not exclude a certain degree of differentiation among the states which are part of this model, some benefiting from more or less substantial concessions within agreements or outside agreements. But, the treatment afforded, in terms of a group or a state, does not necessarily respond to the wishes expressed by the third country or countries. 63

64 Catherine Flaesch-Mougin

For example, association, 5 which has always been a ‘must’ in the Community’s external relations, is very attractive. However, until now it has been reserved for a privileged circle; 6 but, even for the states in the zones concerned (ACP, Mediterranean, Europe), no right of association exists and the major division within the Pan-Euro-Mediterranean Area rests on the existence or not of such a relationship. As such, differentiation may be solicited in order to lead to a real strategy pushing third countries aspiring to an associated status towards the political and economic evolution judged desirable and the respect of values drawn on by the Union. But conversely, upholding definitively the division between associated and nonassociated, resented by a third country, can be dangerous. One discovers here the debates that have left their mark upon the reflections on the differentiated co-operation or integration at internal level. From an optimistic perspective, one can see there an incentive, a motor, to stimulate states which are ‘out’ towards a solution from which they, so far, have been held at a distance. From a pessimistic view, differentiation can carry hidden risks of fracture between the ‘ins’ and the ‘outs’, or even bring about the isolation of the latter. This double reading of differentiation reflects perfectly the challenges facing the Community, and by implication the European Union, within the Pan-Euro-Mediterranean Area. Both must take into account not only the reality of the diversity in the situations but also invite their partners of proximity to evolve in a way which is beneficial to the stability of that region of the world and to quell any risk of ‘marginalization’. The examination of differentiation practised there, however, bears witness to the difficulty of the exercise. The division between the associated and nonassociated countries which still constitutes a major differentiation (I) does not seem to be of the kind to offer the perspective of relationship which is sufficiently stimulating to some partners of proximity. As for the possible forms of differentiation between associates abiding by the same model of relationship, the example of southern and eastern Mediterranean countries (II) shows that, even if they commit to a clearly defined strategy, they are hard to handle and the outcome uncertain.

I. A major differentiation within the Pan-Euro-Mediterranean Area: the cleavage between associated and non-associated countries The Pan-Euro-Mediterranean Area, other than the exceptions referred to above, can be subdivided into five zones of relationship more or less homogeneous stemming from association or not: the Agreement on the European Economic Area now only concerning Iceland, Norway and Liechtenstein;7 the Europe Agreements with the ten Central and Eastern European Countries (CEECs); 8 the Euro-Mediterranean Association Agreements (EMAAs)9 coexisting on the one hand with the old Co-operation

Differentiation and Association within the PEMA 65

Agreements, and on the other with associations with Turkey, 10 Cyprus11 and Malta.12 Contrary to the above, the Partnership and Co-operation Agreements (PCAs) with Russia, 13 Ukraine,14 Belarus15 and Moldova16 are not based on Article 310 EC Treaty but, for want of specific Treaty provisions, on various articles from which Community competence flows.17 The troubled area of South-Eastern Europe is far less homogeneous. Even having been tackled by a regional approach, it is characterized by a differentiated situation: only Albania 18 and Macedonia19 are linked to the Community by Co-operation Agreements; in terms of completion and intensity of relationship, this area seems very backwards compared to the other regional models. But in the meantime it is undergoing development following the end of the Kosovo conflict. Among these relationships, association, reserved for some states, is at the origin of a ‘risky’ line of fracture which, from a strategic point of view, ought to be overcome in the case of proximity partners. Association as a foundation of privileged but differentiated relations reserved for certain states in the Pan-Euro-Mediterranean Area The associations with the three European Free Trade Association (EFTA) countries (in the EEA), the CEECs and the Mediterranean Non-Member Countries undeniably constitute the highest level of relations with the Community. Associations are characterized, according to the Court, by the creation of ‘special, privileged links with a non-member country which must, at least to a certain extent, take part in the Community system’.20 The creation of privileged links which are likely to be upgraded These privileged links come into being by means of substantial concessions within the agreement: commercial relations of a preferential nature leading to a free trade zone or a customs union, sometimes even doing so straightaway (as in the case of the EEA); narrow co-operation in different fields opening, for some, the way to the participation of the third country in Community programmes and policies, a more or less strict approximation of laws, and political dialogue between the parties. Moreover, the association brings the parties into a spiralling relationship which is open to constant upgrade by complementary instruments in order to serve the objectives of the association (initial or even redefined as in the case of the CEECs). Examples are specific agreements, whether envisaged or not in the association agreement, such as those on scientific and technical co-operation and those concerning certain products covered, partly or not, by the initial agreement (as is often the case for agricultural products); even autonomous instruments can be mobilized by the Community, more especially financial instruments. The association agreement itself also contains the germs of potential evolution. In fact, it possesses a more or less consistent institutional machinery but has the peculiarity of being made up of mixed institutions equipped

66 Catherine Flaesch-Mougin

with decision-making powers. For example, the EC-Turkey Association Council adopted, on 6 March 1995, the important decision foreseeing the establishment of the Customs Union. Many decisions concerning participation in Community programmes were also taken by the Association Councils set up under the Europe Agreements. Finally, if association finds its basis in the EC Treaty, the presence of states ‘acting within the framework of the European Union’21 alongside the Community makes of it an instrument comprising political and/or judicial co-operation dimensions. As such, it contributes to coherence in the Union’s external action, such as foreseen in Article 3 TEU. Moreover, nothing forbids relations established through an association from being combined with common actions (e.g. the Stability Pact) and, since the Amsterdam Treaty, from taking their roots in common strategies and/or being completed by the agreements under the second and third Pillars (Articles 24 and 38 TEU). Without a doubt, the above-mentioned upgrades are not all reserved for associated countries but they do benefit from them in a privileged and cumulative way. Despite all this, the ‘bonus’ for the associates comes about in a modulated way. The creation of special links implying a diversity of associative models Insisting on the very specificity of the link of association, the Court of Justice of the European Communities implicitly underlines its multifaceted character: the adaptation of the relationship to the characteristics of the partner, to the nature of the traditional links maintained with the partner, to its geopolitical positioning, to its level of economic development. All this opens the way to the various associative models. Within the Pan-EuroMediterranean Area, these models are organized around three formats. The European Economic Area22 rests on a multilateral relationship completed by bilateral agreements specific to the different countries. Thus the homogeneity of the model is large: it extends the Internal Market to Norway, Iceland and Liechtenstein and associates them with the various Community policies. The intensity of the relationship is translated in a concrete way through the participation of Norway, Iceland and Liechtenstein in the Union’s budget, not only for the programmes with which they are associated but also to contribute to the solidarity between the rich and less well off within the European Union. The intensity of the relationship also comes into being through the existence of an institutional mechanism without precedence and the creation of bodies which are consulted on the adoption of Community rules and which guarantee the respect for law henceforth common in the field of the Internal Market and competition. The narrowness of the link of association implying ‘taking part in the Community regime’ is illustrated by the homogeneity of the partners and the existence of privileged relationships ‘based on proximity, long-standing

Differentiation and Association within the PEMA 67

common values and European identity’. 23 The partners have all the qualities for accession but do not wish it. This alternative model to accession has still not prevented Austria, Sweden and Finland, signatories of the Porto Agreement, from leaving the EEA in order to enter the European Union in 1995. Relations with the CEECs are, as such, far more recent. The Europe Agreements, which are of a bilateral character, have been put into place progressively and, without being completely identical, nevertheless have large similarities.24 Moreover, complementary instruments have been used to reach the objectives of the agreements. Association, from the outset, has been presented as a ‘revisited’ model which responds to the peculiar requirements of political and economic transition (progressive and asymmetrical establishment of a Free Trade Area, co-operation finalized with this objective in mind) and includes, for the first time in a ‘Community’ agreement, the establishment of a political dialogue between the partners. But, even though concluded with European states, the Europe Agreements only recognized in their preambles the wish of the partner to join the EU. It was only following the 1993 Copenhagen European Council that this objective also became a mutual one and that the conditions to be respected in order to become a member would be fixed. This in turn set in motion a strategy of pre-accession resting on the Europe Agreements and giving formidable acceleration to the relations (the 1995 White Paper on the preparation for integration into the Internal Market, complementary protocols to the Agreements, the adaptation of the PHARE Programme, structured relations, etc.). Although the preparation of the pre-accession strategy took a common approach towards the partners, progress has been more or less rapid. Only five states, in the term of the 1997 Luxembourg European Council, ‘qualified’ for the first wave of accession negotiations. In the meantime, for them as well as for the other five, an enhanced pre-accession strategy was set up thanks to a new instrument made up of the Accession Partnerships.25 It is a single framework within which preparations were programmed and adapted to each candidate, whether qualified or not. A single document mobilizing all available financial means was integrated into it, notably a substantially increased PHARE. Furthermore, it progressively steers, according to the Commission, each eligible country towards accession in a spirit of differentiation but without discriminating among candidates.26 Thus, the Europe Agreements model differs from the EEA model for various reasons: the objective of the relationship, but also the differences of the respective partners which explains the specific modalities to establish free trade (whether or not staggered in time), the different degree of concessions in certain fields (e.g. free movement of persons), the level of the financial commitments (mobilization in favour of the CEECs whereas the EFTA countries contribute to the European Union’s budget).

68 Catherine Flaesch-Mougin

These two models are themselves original compared to association in the Mediterranean zone which, of the three ‘privileged’ areas within the PanEuro-Mediterranean Area, is certainly the least homogeneous. It is first necessary to distinguish the ‘northern Mediterranean countries’, the Europeans, which are linked by old association agreements. Of a preferential character, these were original in that they foresaw the institution of a customs union in stages. It is this third and last stage which was put in place on 31 December 1995 with Turkey, placing this country in an exceptional position among the highly economically integrated partners to the Community but not assuring it of entry to the EU. At the 1999 Helsinki European Council Turkey obtained candidate status 27 (see M. Maresceau, above). On the other hand, negotiations with Cyprus are ongoing and as a result of the Helsinki European Council accession negotiations with Malta have also started in February 2000. As for the new Euro-Mediterranean Association Agreements, these have only been proposed to the states and territories of the southern and eastern Mediterranean. It concerns important agreements foreseeing a political dialogue between the partners, the progressive completion of a free trade zone and a multifaceted co-operation served by financial assistance resting principally on the autonomous MEDA instrument. Showing certain analogies with the Europe Agreements, they can nevertheless be distinguished from them by the fact that these states cannot accede to the Union and, except for Israel, they are developing countries confronted with the problems of integrating themselves into the world economy and of consolidating their democratic regimes. Besides, only a commitment to this path opens access to these new agreements, failing which the above mentioned old co-operation agreements are maintained. These diverse elements explain that, beyond the existence of a privileged relationship and a global approach brought into being by the Barcelona dialogue,28 the Mediterranean area to date remains heterogeneous. The existence of these differentiated relationships within the Pan-EuroMediterranean Area is justified by the specificity of the state concerned and the objective of the established relationships. All these relations are of a considerable intensity and characterized by the association but should not be confused, nor even considered to lead to interaction. The once proposed hypothesis of the passage of the CEECs via the European Economic Area before their accession has thus been abandoned, to the advantage of the more supple formula provided for in the White Paper. The risk of making their inclusion within the European Economic Area an alternative to accession was certainly curbed but without, however, neglecting the market. Thus these are relatively watertight systems of relationship which respond to their own logic and demand an identical legal instrument in terms of conception but which are plural in both implementation and designation.29 Moreover, in its Communication of 1994 on the Euro-Mediterranean

Differentiation and Association within the PEMA 69

Partnership, the Commission insisted that ‘the Community’s policies towards central and eastern Europe on the one hand and towards its southern partners on the other spring from different geographic, historical, political, economic and cultural circumstances’ and went on to add: It is the Community’s policy to base its relation with each region on its specific needs and capacities. This communication demonstrates that the pre-accession strategy the Community is pursuing with countries in central and eastern Europe in no way interferes with its commitments to developing closer ties with its Mediterranean neighbours.30 For all that, this watertightness in the systems did not exclude solutions experienced in one area from being used as a source of inspiration for another: certain agreements initiated with EFTA served as a model for relations between Israel and the Community. In the same way, the diagonal cumulation of rules of origin experienced with the Visegrad countries could be taken up in the case of the Mediterranean. What is more, links must be interwoven between the subregions of the Pan-Euro-Mediterranean Area in a way that does not institute a ‘hub and spokes’ relationship in which the European Union would be the hub. The Community thus invited its Mediterranean partners to consider the perspective of an enlarged Union and to conclude agreements with the CEECs. Equally, cross-border co-operations concern, besides those of the EU itself, the borders of the CEECs with the MNMCs, as well as those of the CEECs shared with the CIS, but, in the last case, such relations are of a ‘nonprivileged’ nature. In fact, the fundamental problem for the future is to know whether the associated zones, while watertight within, are ready to open up to states which to date have not been associated. So far, the response seems to be negative but that does not exclude new formats for relationship, including the associative kind, from being ‘invented’ for the benefit of the non-associated countries. An associated/non-associated cleavage to be overtaken for the benefit of differentiated associative perspectives on grounds of proximity Association constituted from the very beginning a coveted agreement in the typology of the external agreements of the Community. Over and above the intensity of the established links, it embodies the narrowness of the quasi-political relationship. It is in the context of a possible association with a European state that, for the first time, political considerations were taken into account by the Community leading to a refusal to associate Franco’s Spain. Thus political motives were extended to external relations generally. Moreover, the association assumed a peculiar dimension because, after the agreements with Greece and Turkey, it was perceived as opening the way to possible accession.

70 Catherine Flaesch-Mougin

For these various reasons, association was refused to certain countries in the Pan-Euro-Mediterranean Area. Although justified in itself, this attitude had always to be managed in a constructive way in order to avoid the perception of isolation or ‘marginalization’ by those ‘excluded from association’. Future perspectives, subject to the satisfactory political and economic developments, had to be offered. However, this would appear not to have been the case: the Kosovo crisis had to take place before this type of approach emerged vis-à-vis the states of South-Eastern Europe. A coveted relationship of association refused to certain states of the PanEuro-Mediterranean Area: differentiation or discrimination? In the Pan-Euro-Mediterranean Area, association was not foreseen with the European states of the CIS and it has only been envisaged in the very recent past with the states of South-Eastern Europe. Still, some of these states would have wished, for (sometimes) different reasons, to benefit from an association agreement or the prospect of such a relationship. Thus Russia, to replace the Trade and Co-operation Agreement with the former USSR, had in mind a new agreement based on Article 310 EC Treaty (ex-Article 238).31 The weak progress of the democratic process and economic reforms did not allow this to be considered in 1992 and an association agreement with all its possible implications could, at that time, not be contemplated. Politically it was excluded in order to link the CIS by agreements comparable to those signed with the CEECs. It was these constraints combined with the necessity to create a closer link with a partner of prime importance on the political stage which gave birth to a new type of agreement: the Partnership and Co-operation Agreement. This Agreement, signed by the Community and its Member States with the Russian Federation on 24 June 1994,32 is distinguished by a substantial content, near in certain aspects to the Europe Agreements: political dialogue at the highest level, multidimensional co-operation focusing on support for transition and reverting to the TACIS Programme for its financing, facilities on the subject of establishment and the freedom to provide services. However, despite being matched with a ‘rendez-vous clause’ to open the way to a possible perspective of free trade, the trade concessions are of a nonpreferential character. This new format relationship would, moreover, be taken up with the other states of the CIS, but alone the partnership and co-operation agreements with the European countries of the ex-USSR benefit from the ‘rendezvous clause’.33 However, neither the initial agreement nor the prospects of evolution will lead to association. In fact, even if these partners might come to accept that they are initially to be held at a distance, depriving them of future association could be strongly resented. Accordingly, at the very first meeting of the Co-operation Council under the Agreement with Moldova (14 July 1998), Moldova reiterated its aspiration to become associated with a view to integration into the Union. This assimilation of

Differentiation and Association within the PEMA 71

association with a prospect of membership explains the prudence of the latter to commit to association with countries which, to date, have not been included in the list of candidates for potential accession. The other region initially set aside from association was South-Eastern Europe and, up until very recently, only co-operation agreements – following the example of those with Albania and Macedonia – seemed possible on condition that they satisfied the requirements set down by the General Affairs Council of 27 April 1997 (respect for democratic principles, human rights, the rule of law and minorities, and obligations resulting from the peace agreements as well as those concerning the transition to a market economy and regional co-operation).34 But, as was the case in October 1995 when the Council put forward its wish ‘to establish … a long-term relationship [in] the form of agreements … taking into account, as far as possible, the aspirations of the countries concerned’, no reference was made to the possibility of association, which would have signified being anchored to the European Union in the eyes of those interested. The conditionality policy accompanied by prospects of a specific relationship must be seen in a constructive way (See E. Lannon, K. M. Inglis and T. Haenebalcke below). However, it is not always clear that these prospects are sufficiently attractive, notably with regard to those countries which have undertaken or have committed to undertake huge efforts in order to satisfy them. An examination of the provisions of the co-operation agreement with Macedonia thus translates the gap between the expectation of certain partners and the Community’s response to them. In fact, the preamble refers to ‘a first step of contractual relations between the Community and the former Yugoslav Republic of Macedonia’ and to the desire of the parties ‘to strengthen their contractual relations as soon as possible, taking full account of the aspiration of the former Yugoslav Republic of Macedonia for an advanced relationship with the European Union’. Moreover, Article 45 of the Agreement details this ‘unilateral’ aspiration looking to the development ‘towards an association with the European Community’.35 One inevitably imagines the wording of the preamble in the first Europe Agreements, which merely stated formally the wishes of the Central European states to accede to the Community, to mean that the Community did not wish itself initially to enter into commitments on the matter. The ambivalence in the Community’s intention concerning the open prospect of integrating the CEECs36 emerges here in relation to a possible evolution towards association. But this wait-and-see policy threatens to feed the frustrations of the ‘non-associated’ unless a more constructive approach is undertaken. The opportunity to make differentiation constructive: defining clear and attractive perspectives The differentiation practised by the Community in its association policy could be read in two ways. It could be seen and experienced by the States

72 Catherine Flaesch-Mougin

concerned as a very real discrimination against them. As such, it can reinforce the feeling of isolation, even of marginalization, and be a factor in the resurgence of new dividing lines within the ‘reunified’ Europe. Leshoukov even suggests the idea of a return to the Cold War: The tendency towards growing differentiation between Russia and the rest of Europe entails a risk of ‘normative divide’, and heightening feelings of isolation in Russia. As a result, the conflicting images – the European one of Russia as not pushing for reforms, and the Russian one of the EU as discriminating Russia – will serve the function of a selffulfilling prophecy. This brings us back to the cold ages of divided Europe.37 From a more optimistic perspective, differentiation could also be ‘recovered’ and give rise to a more constructive approach: knowing that association is reserved for states which respect the political and economic principles defended by the Union, it could constitute a strong incentive to satisfying the conditions in order to benefit from such treatment and a stimulant to behaving accordingly. The inherent limit to such a policy remains, as ever, in the reach traditionally extended to ‘European’ associations: an agreement opening the way to accession. Faced with these challenges, the Union has shown prudence, but not inaction. Conscious of the risk of re-establishing watertight frontiers between states of the Pan-Euro-Mediterranean Area, it has undertaken a variety of actions designed to curb it. Thus various European Councils have underlined the importance of regional co-operation to stability and prosperity in Europe.38 Moreover, the Union supports groupings initiated between CEECs, the CIS and beyond in order to reduce, by ‘de facto solidarities’, the potential tensions between the protagonists (for example the Council of the Baltic Sea States, Economic Co-operation in the Black Sea). The Finnish initiative for the development of the northern dimension of the European Union’s policy took up this approach by bringing together on questions of common interest (e.g. the environment but also nuclear security policy and organized crime of international character) EU Member States, CEECs, Norway, Iceland and the Russian Federation.39 Cross-border programmes, in a spirit of INTERREG at the intra-Community level, have also been developed between the regions of the CEECs and the CIS, such as the Euro-region of Bug bringing together local authorities of Poland, Belarus and Ukraine.40 PHARE and TACIS financing, under the cross-border programme, has been mobilized for this type of project, the idea of which is to associate civil society with institutional players. In the same spirit, since 1991 the ECOS-OUVERTURE Programme has associated towns and regions in the Union, CEECs and the CIS with a view to exchanging experiences. Finally, the Union pays particular attention, in this perspective, to

Differentiation and Association within the PEMA 73

the geographically strategic countries such as Turkey and Ukraine. The preamble to the Partnership and Co-operation Agreement with the latter, the drafting of which differs from that with Russia, is revealing. Point eleven puts forward the desire of the Parties ‘of encouraging the process of regional co-operation in the areas covered by [the] agreement with the neighbouring countries in order to promote the prosperity and stability of the region’. Point fifteen notes their consciousness of the fact that the Agreement favours a ‘gradual rapprochement between Ukraine and a wider area of co-operation in Europe and neighbouring regions’.41 Without minimizing the merits of such initiatives which must be pursued and even amplified, they can only constitute an element of a strategy, the objective of which must be clear to the third states and attempt to respond to their wishes. If association is desired and if it constitutes a sufficiently attractive prospect to stimulate the necessary evolution towards stability throughout the continent, new forms adapted to the needs concerned must be contemplated. The Community, on the basis of the relatively scant provisions of the Treaty of Rome, has been able to show great inventiveness when facing the transformation of Eastern Europe. Such a transformation constituted a challenge to the legal tools which the Community had at its disposal in the field of external relations. 42 Seen in this context, the Community should continue in this direction and wipe out the associated/non-associated cleavage between proximity states. The Kosovo conflict and the threats linked to the instability of the region have led the European Union to steer along this path vis-à-vis the countries of South-Eastern Europe. In the context of the stabilization process, ‘a new kind of contractual relationship’ was offered to them.43 The Stabilization and Association Agreements thus advocated by the European Commission44 ought to constitute ‘an important political and economic incentive’ and respond to the need to ‘define a new approach to the changed general circumstances (internal and external), and to overcome the failure of the countries to adequately respond to the incentives already offered’. Thus it contains implicit recognition of the inadequacies of the previous Union policy. Consequently, one of the aims of the new agreements is to offer, in the words of R. Prodi, a credible European future to these countries, allowing those among them which agree to undertake the developments hoped for to progress in stages towards full association, once the preliminary phase of association/stabilization has been completed. In the end integration into the European Union is possible. Today, it seems to be imperative that a new format of association is ‘invented’ for future relations with the European countries of the CIS. So far, they are effectively excluded from such prospects within the Pan-EuroMediterranean Area and this situation appears politically untenable. A partnership association possibly with the European Union45 could constitute a suitable model reflecting the status of these partners. But it is necessary to

74 Catherine Flaesch-Mougin

situate this in relation to accession and, in so doing, anticipate special treatment for Russia. The Mediterranean example shows nevertheless that such possibilities of differentiation exist and that they can be used in a strategic way between countries united by the same model of relationship.

II. Possible forms of differentiaton between associated countries within a common model of relationship: the example of the southern and eastern Mediterranean countries The Mediterranean basin has always represented an important dimension to the external relations of the Community. Today, it is ‘an area of strategic importance for the Community’46 and stands among the primary priorities of Europe. The Union effectively committed itself, in the mid-1990s, to the creation of an ambitious Euro-Mediterranean Partnership. Its aim is fundamentally political: to create an area of security and stability on the doorstep of Europe and to take up the many challenges likely to threaten it. But its privileged carrier is economic and rests upon the bringing into being of a Euro-Mediterranean free trade zone by 2010. The approach, global in many ways, rests on a multilateral dialogue initiated by the Barcelona Declaration of 28 November 199547 and on the bilateral relations with each of the third states (or entities). Contrary to the Declaration and its work programme which are only of political value, these rest on legally binding instruments, first and foremost the EuroMediterranean Association Agreements signed 48 with Tunisia, Morocco, Israel, Jordan and the PLO for the benefit of the Palestinian Authority 49 and, thereafter, on the Community’s MEDA Programme of financial assistance thereto50 which constitutes the operational arm. Differentiation is carried out at this second level and constitutes a strategic component of the Union’s policy: it is a means of reaching its ends, and notably of bringing the Euro-Mediterranean free trade zone into being by 2010. However, the relatively slow start-up of this policy has uncovered hurdles of a kind capable of hindering it from taking further shape. Differentiation – a strategic component of the Mediterranean policy The Mediterranean policy of the European Union cannot be reduced to a mosaic of relationships and a merely differentiated approach. On the contrary, when compared to the previous situation, it seeks a greater unity and a common format of relationship is suggested to any willing partner. However, that does not exclude certain differences: ●

the conclusion of the Euro-Mediterranean Association Agreements, being staggered over time, resulting today in a legal situation which varies from partner to partner;51

Differentiation and Association within the PEMA 75 ●

● ●

specific provisions within the Mediterranean agreements, in spite of their common structure and a content which is often very similar, except in the case of Israel; the volume of financial aid, notably under the MEDA programme; sectoral agreements and/or complementary autonomous measures specific to certain states.

These forms of differentiation exemplify the Union’s concern to organize its relations according to the differences between the states. However, the justification used varies. Sometimes in a neutral way, it involves taking into due consideration ‘the characteristics and distinguishing features of each of the countries’;52 sometimes in a more ‘humanist’ way, it takes account of the ‘specific needs and capacities’ of each state; 53 but also, in a more ‘activist’ way, it makes use of the new Euro-Mediterranean Association Agreements not only to safeguard but also to ‘accentuate the specific nature of each of those bilateral relations within the new multilateral framework’.54 In fact, differentiation responds to a double logic in the Union’s approach. It aims both to be respectful of national identities and to be used as an incentive, seeking to reconcile the contradictions harboured by these two approaches. Differentiation respectful of national identities In any regional approach, even following a common model of relationship, the characteristics of the states concerned are taken into account: wealth, population, production models, geographical position, special links with the Union or certain Member States. This can be seen, for example, in the agreements by the specificity of the concessions given in the field of agriculture, by the rhythm at which tariffs are dismantled which varies according to the sensitivity of the products within a transitional period lasting a maximum of twelve years common to all states, and by the sectors of privileged co-operation or provisions on social issues. This differentiation, respectful of national identities, in line with the principle confirmed as regards the European Union at constitutional level (Article 6 TEU), however, becomes particularly relevant with regard to Mediterranean partners. First of all, from now on the relationship is in ‘a spirit of partnership’, clearing away any trace of the ‘colonial taste’ which lingered in the preceding agreements (deliberately denominated as ‘co-operation agreements’). Based on the principles of reciprocity and mutual interest, partnership implies recognition of ‘the other’ in all its sovereign component parts and does away with the idea of the traditional forms of assistance in the relations, with due regard for, in accordance with the Barcelona Declaration, ‘the characteristics, values and distinguishing features peculiar to each of

76 Catherine Flaesch-Mougin

the participants’.55 The preambles of all the new Agreements refer to it, albeit in a formula adapted to each partner.56 Moreover, the Euro-Mediterranean project is a bold venture aiming at structuring a profoundly heterogeneous grouping of states, having among themselves limited trade relations57 and sometimes even political conflicts. A realistic concern required, at least initially, respect for national sensibilities. The choice of agreements for subregions has been clearly rejected since the first Commission Communication of 1992 with regard to the Maghreb. According to this Communication: The new Community approach will be implemented through agreements concluded with each of the three States separately, following the same general outline but with timetables and procedures tailored to meet the needs of the specific country.58 This appeared as a first step in every subsequent regional approach and remains the objective sought after. Moreover, the preambles of each of the new agreements make reference to the need to reinforce regional cooperation and integration and various provisions59 are designed to underpin these efforts, with the financial support of MEDA.60 Such a perspective assumes, however, that those interested themselves act accordingly. Nevertheless, the weak progress made in the field of South–South cooperation and the reiterated importance of the latter in order to bring about the horizontal dimension of the Euro-Mediterranean free trade zone61 could lead the Community to a policy which is, at the same time, more proactive and based on incentive.62 This would have, additionally, the benefit of tempering the perverse effects of a ‘pure and strict’ bilateralism pitching the states into competition rather than enticing them to co-operate. Finally, differentiation respectful of national identities is also vital because the completion of the Euro-Mediterranean project presupposes considerable efforts by the states concerned, particularly so in terms of opening up their economies and the various reforms involving significant costs and representing what are not negligible political risks. These efforts imply a personalized treatment, which is careful to take account of the difficulties and needs specific to each. This concern to ensure a ‘made to measure’ treatment can be seen within the Euro-Mediterranean Association Agreements in the provision for a ‘dialogue’ in various fields (economy, finance, social, etc.). One of the aims of these agreements is to act in common in identifying the problems and seeking adequate solutions.63 The Council Decision of 6 October 1996 concerning the adoption of guidelines for the National Indicative Programmes relating to the MEDA Programme64 should be seen in this same perspective and bears witness to the concern to adapt to the economic and social realities of the partner. In fact, ‘the priorities are to be decided taking into account the stage of development of each

Differentiation and Association within the PEMA 77

country’s economy and society as well as the capacity of its institutions’.65 However, this approach implies the prior commitment by the partner to meeting the challenges facing the region and responding to the objectives of co-operation with the European Union. Thus a more activist facet of differentiation becomes apparent. Differentiation as an incentive Differentiation is also conceived of as a ‘lever’ within the strategy of the European Union. It serves the political and economic ends accepted by the signatories of the Barcelona Declaration, but also expresses the will of the Union to affirm its identity on the international scene (Article 2 TEU). Thus, specific, differentiated treatment will be accorded to those countries which respond to the strategy. Conversely, the new advantages of the reinforced Mediterranean policy will be denied or, at best, grudgingly offered to those not committing to the Union’s wishes. The Euro-Mediterranean Association Agreements, notably, according to the terms established by the Council,66 will make it possible to ‘safeguard or even accentuate the specific nature of each of these bilateral relations within the new multilateral framework’, and will at the same time ‘constitute one of the main instruments’ for implementing the objectives of the Euro-Mediterranean Partnership. Chronological differentiation, 67 seen in the calendar of the EuroMediterranean Association Agreements, can be explained in part by considerations of this nature. In fact, these are meant to represent an important political signal for the southern and eastern Mediterranean countries accompanied by increasing financial support and even additional benefits. However, they are reserved for those which commit to decisive political and economic reforms, not excluding at least a temporary differentiation between potential beneficiaries. Besides Israel, the first countries to have negotiated,68 Tunisia and Morocco, were those which achieved ‘considerable progress made … towards achieving their objectives of full integration’ of their economies into the ‘world economy and participation in the community of democratic nations’. 69 Jordan, moreover, with which negotiations began a year later (July 1995) was also one of the countries to experience rapid growth as a result of the reforms. Consequently, ‘the need to strengthen the process of social and economic modernisation that Jordan has undertaken’ was incorporated in the Agreement. 70 With other countries, on the other hand, negotiations were launched much later and have not yet been completed. The strategy developed rests on the idea that signature of the first agreements would pull them into reform processes judged as unavoidable by all parties in order to ensure sustainable economic development. It is also important as an incentive to the ‘poor students’ not to be left behind by the ‘good students’. Nevertheless, for its part, the Community runs a progressive policy

78 Catherine Flaesch-Mougin

of encouragement in order to make it easier to satisfy the economic and political requirements. These are both cumulative, even if the latter are of a quasiexistential nature since the respect for democratic principles and human rights constitutes an ‘essential element’ of all Euro-Mediterranean Association Agreements71 and of the MEDA Regulation.72 Yet, appreciation of the threshold of the commitment in the reform process is the object of an exclusive decision of the Union. In principle, the partner must not only commit, without ambiguity, to the ‘Barcelona acquis’ but also give tangible evidence that it is being put into practice. However, the European strategy is sophisticated and is not wholly ignorant of the reality. In fact, the Union relies on every slightest indication to influence developments and to preserve contacts with all the states. Certain aspects of the relations with Algeria are, in this regard, rich with example. Algeria’s request to participate in the negotiation process for the Euro-Mediterranean Association Agreements, like Morocco and Tunisia, was received at the beginning of 1994 ‘with satisfaction’. But the political support of the Twelve was only promised on the condition that progressive advances be made in economic stabilization and political dialogue and that a precise electoral calendar be established.73 Nonetheless, ‘informal exploratory’ talks took place shortly thereafter, following the signature of an agreement with the IMF, and Algeria received financial support from the Community. These talks were themselves followed by ‘exploratory contacts’ which were extended to the beginning of 1996. Having secured certain promises from the Algerian authorities, the Commission considered the economic evolution sufficient and proposed that the Council open official negotiations, despite the lack of progress74 and also despite the persisting instability in terms of security. The lenient attitude is not extraneous to the risk of marginalizing Algeria within the Maghreb, nor, without doubt, to Algeria’s importance in terms of energy (providing 35 per cent of the Union’s gas). In practice, the negotiations started on 4 March 1997 but are still not completed. In fact, the continuation of the negotiations, like the signature and the conclusion of the agreement proper, follow the rhythm of the commitments undertaken by the third country. It is even possible to drag out the negotiations just as it is possible that a third country’s efforts could be rewarded by speeding up signature of the agreement and through granting certain (notably financial) benefits. As such, the MEDA instrument plays an important complementary role in the differentiation strategy to take account of national identities and to act as an incentive. The progress towards the conclusion of a EuroMediterranean Association Agreement thus has financial implications. In this sense, the Commission mentioned in its MEDA Report 1996/1997 that the criteria applied to establish the initial indicative country allocations are, over and above the traditional criteria (population size, per capita income), efficiency in implementation as well as progress in structural

Differentiation and Association within the PEMA 79

reform and foremost progress towards the conclusion of the EuroMediterranean Association Agreements. This latter criterion is particularly important since it effectively justifies a substantial increase in fund allocation, with the aim of accompanying the transition process to an economy integrated with the EU-market.75 Tunisia, with which the Agreement was first signed, thus obtained an initial allocation in excess of the average percentage of the growth in financial aid effected in the Mediterranean zone.76 The incentive to obtain rapid signature of an agreement, thereafter, continues for the most ‘active’ partners. In fact, contrary to the preceding system of protocols which assured the third country a determined financial input (until its exhaustion), the allocations are only indicative; they give an ‘idea of the resources’ available and one of the ‘important principles of the new programming approach’ is that they can be reviewed according to the results obtained. 77 Moreover, a degree of subtlety is maintained for adapting the aids, outside the programming, to the rhythm of the reforms and progress accomplished.78 No doubt, it is from this angle that Tunisia, having committed from 1996–97 the whole amount of the funds foreseen for the period 1996–98, was able to benefit from a supplementary amount of 71.75 m euro for MEDA projects.79 As well as more or less rapid access to the Euro-Mediterranean Association Agreements and to increased financial support, differentiation between states can also be made by means of specific concessions provided for in the agreements and the mobilization of complementary instruments. Certainly, these specificities can be explained by their own characteristics, even in their negotiating capacity, but the grant of certain advantages also comes from the deliberate will of the Union. The example of Israel is topical in this regard. Israel benefits from specific treatment as a result of reasons relating to its level of economic development compared to that of the other southern and eastern Mediterranean states. But, over and above this, for more strategic reasons, in anticipation of the objectives of Barcelona and to serve the essential interests of the Union in the short term, the 1994 Essen European Council granted it ‘special status’.80 The rapid negotiation and then signature on 20 December 1995 of the ‘new formula’81 Euro-Mediterranean Association Agreement expressed this ‘special status’, as did the subsequent sectoral82 agreements in order to gain ground in the relations. The objectives of the 1975 Agreement had already been reached, notably the free trade in industrial products and economic co-operation, so that it was then considered necessary to foresee new reciprocal concessions on agricultural products and services as well as to allow Israel to participate in Community research programmes and thus to contribute to the development of high technology. The Commission’s will to react quickly, moreover, can be seen in the existence of an Interim

80 Catherine Flaesch-Mougin

Agreement which allowed Israel, as of 1 January 1996, to benefit from the provisions relating to trade and accompanying measures set out in the Association Agreement.83 What is more, the sectoral agreements came into force before the implementation of the Association Agreement. This mechanism also aimed at reducing the significant deficit in the Israeli balance of trade84 and to make loyal a country that, despite already having significant relations with the European Union, is increasing its free trade zones with other partners. But, above all, the privileged treatment reserved for Israel stems from the will of the European Union to bring, in the terms of the Essen European Council, ‘a significant economic and political contribution in support of the Middle East peace process’. It is a question of leaning on the ‘dynamizing’ virtues of the Israeli economy in order to reinforce regional development in the Middle East, ‘including in the occupied territories’. Effectively, ‘it is essential to improve economic conditions in the region in order to weaken the extremist factions on both sides which are posing an obstacle to peace.’85 However, the support for Israel cannot be dissociated from the unerring support afforded by the Community and the Union to the Palestinian people. Thus, it is interesting that before the European Parliament, the Commission was careful to mention that the Palestinian People benefited from a more favourable preferential regime than that provided under the Israeli Agreement and that this new Agreement would not affect the economy of the Palestinian Territories in the short term.86 Moreover, since the 1980 Venice Summit, the political declarations in favour of the creation of a Palestinian state have multiplied and have been completed by common positions and actions under the CFSP. 87 Exports of Palestinian products have also been afforded trade concessions, and financial support, on a per capita basis, is higher than anywhere else in the Mediterranean area or even in the world.88 Above all, the European Community signed an agreement with the PLO ‘for the benefit of the Palestinian Authority of the West Bank and the Gaza Strip’ 89 which is particularly original in so many ways. The Agreement has been possible only through a judicious use of the EC Treaty provisions on development co-operation as they refer to ‘countries’, rather than those on association which target ‘states’. 90 Its heading, despite its legal foundation (ex-Article 130Y), made reference to association as with the other Mediterranean Non-Member Countries. It is the first time that one can see this dissociation of the qualification of the agreement from its legal basis bearing witness to the Union’s willingness to look to the future and, as far as possible, to assimilate the treatment of this entity with that of the other MNMCs. Undoubtedly, the Agreement is only an interim one91 but its structure and content, over and above certain peculiarities bound up with the field of Community competences and the situation of the partner, bring it closer to many of the other Agreements. Also worth bearing in mind is that this Agreement was a pure Community agreement

Differentiation and Association within the PEMA 81

which was made possible to avoid the heavy institutional Community machinery relative to the Euro-Mediterranean Association Agreements, and which started in anticipation of the process of differentiation. Obstacles that might disrupt the differentiation strategy in the Mediterranean: 2010 – a mythical date? In spite of the considerable development and deepening of the partnership provided by the 1999 Stuttgart Conference and in spite of the fact that it has proved viable in difficult circumstances, take-off remains slow and most MNMCs have deplored the delays in the completion of the association agreements.92 In terms of bilateral relations, the situation has only progressed a little since the Malta Conference of 1997 which underlined notably the need ‘to implement rapidly and in an efficient and careful manner financial assistance’.93 Two years later, little has changed: only the Agreements with the PLO94 and Tunisia have entered into force and that with Jordan was signed at the end of 1997. Probably the freeze in the Middle East Peace Process, which one would have preferred to see dissociated from the Barcelona Process, is an explanatory factor. Nevertheless, there are undeniable institutional obstacles on the Community side. The weight of unanimity upon the key instruments of the partnership, the mixed nature of the association agreements, the difficulty of predicting the reactions of the European Parliament: all are elements which often limit the flexibility of the instruments, this flexibility being indispensable to differentiation. All this renders uncertain the target date of 2010 for the completion of the free trade zone.95 The weight of unanimity upon the key instruments of the Euro-Mediterranean Partnership With future enlargements in mind, the 1996 Intergovernmental Conference sought to reduce the significance of unanimous voting but it remains one of the key instruments in the Mediterranean policy. It must be remembered, however, that the positions of the Member States in this zone are particularly diverse as much because of political considerations (e.g. past colonial links, sensitivities concerning Israel and the Palestinians) as because of economic considerations (e.g. competition in Mediterranean production, energy interests, fisheries issues) and also social considerations (e.g. the weight of ‘foreign’ communities in certain Member States). This gives rise to the risk of numerous blockages in terms of the level of association agreements and that of the MEDA Programme. Based on Article 310 EC Treaty, the Euro-Mediterranean Association Agreements, because of their importance, carry the mark of unanimity. This conditions every step of their elaboration at Council level: setting the mandate for their negotiation on the basis of the Commission’s recommen-

82 Catherine Flaesch-Mougin

dations, potential amendment (where necessary) of the mandate during the negotiations, the signature of the Agreement and the subsequent decision on its conclusion. These all constitute steps where the opposition of one Member State suffices to throw off balance compromises which have been difficult to build. Effectively, it is a dual negotiation: at internal level, first of all, between the Fifteen to finalize, often laboriously so, a mandate leaving the Commission little margin for manoeuvre; then, at the negotiations themselves, with a more or less ‘resistant’ third country. This situation is not uncommon if we consider the length of the negotiations which characterize the Euro-Mediterranean Agreements: two years with Morocco, 28 months with Jordan, nearly four years with Egypt. In fact, the initial offer of the Community deeply disappointed those southern and eastern Mediterranean countries of which great reform efforts had been demanded. The attractiveness of the proposed model lay more in the political anchorage to Europe and future perspectives deriving from free trade than in the short-term concessions which the agreements provided.96 In reality, it was for the Mediterranean partners to progressively abolish their tariff protection in order to offer European products concessions equal to those from which they benefited on the Community market. Yet, for its part, the European Community intended to guarantee the existing concessions to the associates97 but not to afford them any new ones – notably for agricultural products, the principle focus for argument during the negotiations. As a result of the fears of competition emanating from the southern Member States of the EU, paradoxically the firmest advocates of the reinforcement of the Mediterranean policy, agreement could not be reached on better access for Mediterranean agricultural exports. The concessions have been put off until later since the agreements foresee greater reciprocal liberalization of trade in agricultural produce only coming about gradually98 and the situation will be re-examined from 1 January 2002,99 with a view to applying liberalization measures as of the following 1 January. However, the Mediterranean partners considered a Community effort in this regard to be fundamental just as they considered financial support to be fundamental. 100 The reaction of Morocco, a substantial exporter, was very strong when it presented a Memorandum which was perceived as amounting to a counter-proposal to the Community’s offer. 101 According to the partner’s attitude 102 with regard to its agricultural exports and its power of influence, negotiation was made rather difficult on that basis – but it is clear that the Commission has lacked the necessary flexibility to adapt to the specificities of the partner and secure the rapid conclusion of negotiations in line with the envisaged timetable. 103 Moreover, in its 1994 Communication, the Commission noted that the attainment of the latter objective required ‘flexibility on the part of the Council, in particular as far as agricultural trade and financial support (were) concerned’. Unless the Community wants to be

Differentiation and Association within the PEMA 83

reproached for having side-stepped the fixed guidelines, something which may well have been the case, 104 the Commission must return before the Council to request the extension of its mandate. This has always been difficult to do and signature in itself has often stumbled at the final bargaining stage relating to products which are of great importance to the partner. 105 Nevertheless, if the Commission’s impact study on the concessions awarded to MNMCs106 is to be believed, some supplementary quotas would not have rocked internal balances. The bilateralism adopted in the relations with the MNMCs accentuates once again the inconveniences of unanimity because the search for compensation is more limited for the concerned Member States unless the partner has ‘external’ assets (as in the case of Morocco which was able to secure certain concessions against the maintenance of fishing rights, notably to the advantage of Spain), or if, at Community level, arrangements can be found (as in the case of Portugal which benefited from the support of 2.2 m euro for its canning industry in exchange for a compromise on the import of tinned Moroccan sardines).107 Moreover, the need for unanimity in the negotiation phase and the conclusion of the association agreement does not preclude its requirement at a later date, with the same lack of operational flexibility in the implementation of the agreements. In the hypothesis of additional protocols amending the provisions of the initial agreements, such as in the case of the Union’s enlargement, the rules of procedure for agreements based on Article 310 EC Treaty will apply. Since the Amsterdam Treaty, these will also be required for the purposes of ‘establishing the position to be adopted on behalf of the Community in a body set up by these agreements’. Where previously the Treaty rules corresponding to the concerned field were applicable108 and so majority voting often applied, the new Article 300 EC Treaty requires unanimity. Furthermore, unanimity on the basis of Article 300 EC Treaty will also be required for the suspension of the application of an association agreement should an essential element, such as a breach of democratic principles, be lacking. This requirement is an onerous and difficult one because the weight of the economic and political interests of a Member State can prevent a decision from being taken and thus throw doubt upon the credibility of the Union’s declarations defending such values. In any case, its differentiation policy requires that a third state violating them be sanctioned rapidly. Otherwise, the Council’s procrastination could be synonymous with complaisance and have the opposite effect. No doubt, other autonomous instruments are less difficult to suspend, but the symbolism underpinning association agreements, an essential element of the partnership, is in question here. The unanimity that permeates the Association Agreements can also be found in the MEDA programme, the principal instrument of the

84 Catherine Flaesch-Mougin

Euro-Mediterranean Partnership in terms of non-refundable aid: for the period 1996–99, 3425 m euro of the five-year package of 4685 m euro approved at the 1995 Cannes European Council. But the regulation governing this programme was founded upon Article 308 (ex-Article 235) EC Treaty which requires unanimity and allows each Member State to control its adoption. Recourse to this legal basis was justified by the fact that Israel was one of the beneficiaries, which, as a result of its level of development, excluded the possibility of reverting to Article 179 (ex-Article 130 W) EC Treaty on development co-operation policy. However, it seems that Israel, in as much as it is cited in the MEDA Regulation, according to the Commission’s 1997 report, has not profited from any financing under this heading and that this country is not even cited in the Council Decision setting out the guidelines for the indicative programmes for each country. Paradoxically enough, on the other hand, it is interesting to note that Israel has received support under the ECIP, 109 it in turn being based on Article 179 (ex-Article 130W) EC Treaty. 110 But whereas the latter requires a qualified majority, Article 308 (ex-Article 235) EC Treaty enables unanimity to be retained. This voting mechanism is no stranger to the difficulties in the adoption of the 1996 MEDA Regulation where a variety of delicate questions had to be settled: the adoption procedure for the indicative programme guidelines, the nature of the committee taking decisions on the financing by the Commission, the duration of the regulation, the degree of transparency in tendering procedures and the mechanisms for the suspension of aid should an essential element be lacking. The difficulties were such that the adoption of the latter was put back to a later date in order not to block the adoption of the basic Regulation.111 Also here, unanimity is capable of delaying Community support for otherwise (preferably) rapid reforms. Not only does the instrument become less of an incentive but it causes third parties to doubt the will behind the support of certain states of the Union. Happily, it was decided that these subsequent decisions taken by the Council on the national guidelines or any suspension of aid would be adopted by qualified majority. This is undeniable progress, as noted by Commissioner Gradin before the European Parliament: ‘The introduction of qualified majority voting also ensures that necessary decisions can be taken quickly and effectively. This strengthens the Union’s credibility.’112 However, at the level of carrying out the MEDA Programme, the obstacles remain and it seems that Member States have excessive powers in financial decision-making and even in the field of calls for tenders.113 In the short term the main problem again is the adoption of the new MEDA Regulation, which will amount to a test of European commitment. Already, as a result of the resignation of the European Commission 114 in 1999, there have been delays and the then Commissioner Marin, in his speech to the Stuttgart Conference, mentioned the ‘the risk of a legal and

Differentiation and Association within the PEMA 85

financial void from the end of this year, upon expiry of Meda I’. 115 Actually, as has recently been confirmed by the European Court of Justice, no financial commitments under MEDA II will be possible in the absence of a legal basis.116 And what is more, the adoption of the latter is only a first step in the settlement, in conjunction with the Mediterranean partners, of the guidelines for the National Indicative Programmes and the subsequent signature of the Financing Framework Conventions for disbursement. Once again, unanimity threatens the speedy adoption of a text that carries a fundamental political and financial weight, notably for those states which have engaged in the desired reforms and which need urgent financing. Moreover, such a delay would further confirm the impression of slowness given by the Euro-Mediterranean Association Agreements. The mixed nature of the Euro-Mediterranean Association Agreements – an additional cause of delays in the entry into force of the agreements Already slowed down by the length of the negotiations, the application of the agreements is threatened by delicate problems linked to the dividing up of competences within the Union and to their mixed character. Indeed, as a result of their contents, which echo the three baskets of the Barcelona Process, the new agreements go beyond the field of exclusive Community competences and require the intervention of the Member States as well as the Communities. This is so notably in the political dialogue established in the agreement, in the various provisions on the subject of the struggle against the traffic of drugs, on cultural co-operation and relating to certain aspects of trade in services or linked to intellectual property rights. Accordingly, the concluding phase demands, over and above the Community process, the approbation of the agreement by each of the Member States. This amounts to an ever uncertain process since a single state can make it fail and it seems it will be difficult to get around this risk by reverting to the provisions on reinforced co-operation. 117 Be that as it may, the mixed procedure remains a great cause of additional delay to the entry into force of the agreements. As is demonstrated by the following example, specific blockages can arise. Thus Belgian senators blocked the ratification of the Euro-Mediterranean Association Agreement with Israel 118 because of the hurdles which the Israeli Prime Minister presented to the peace process. While this attitude falls perfectly within the spirit of the Union’s differentiation strategy, sometimes the considerations are less ‘noble’ and well organized lobbies can play procedural imperatives in order to delay the national ratifications. Even without specific difficulties, long months are always needed for ratification – and sometimes even years. In this context, Commissioner Marin reminded the European Parliament of the difficulties experienced when starting up the association strategy and stated that on average two years and four months were needed for ratification of the agreements.119 This situation has been revealed over and

86 Catherine Flaesch-Mougin

again but, in spite of urgent demands addressed to the Member States, 120 things continue to evolve slowly. From this, one better understands the reason behind maintaining a purely Community procedure which does not need the ratification of the states and which is based on a legal foundation which does not impose unanimity, following the example of the Interim Association Agreement with the PLO. The delays to the entry into force of the new agreements may have negative implications on the global Mediterranean strategy. This strategy relies on the progressive implementation of the new agreements and the dynamizing virtues of the most advanced states, on economic reforms and the opening up of frontiers allowing for the deepening of free trade with Europe and on the stimulation of intra-regional co-operation. But, in the absence of the entry into force of the new provisions and unless specific provisions are adopted, the previous co-operation agreements will remain applicable so that the new clauses will not apply, particularly those on free trade, political dialogue and new fields of co-operation. Therefore the Community has sought to minimize the negative consequences of these delays. Thus the financial advantages of MEDA I have not been linked to the formal conclusion of the agreement, but to the progress made with a view to this conclusion. Moreover, the conclusion of sectoral agreements, even where evoked within the association agreements, is not dependent on the entry into force of the latter, as is illustrated by the existence of agreements on scientific and technical co-operation with Israel.121 Besides, the Community has the opportunity to anticipate the application of certain provisions in the Euro-Mediterranean Association Agreements when it is ‘in the interest of the Parties to implement as speedily as possible’,122 as mentioned in the Interim Agreement with Israel on trade and trade related matters.123 As regards the other countries (Tunisia, Morocco, Jordan), this solution has not been taken up and only the new agricultural concessions have been put into practice by autonomous measures. This choice, at first sight less favourable, effectively leaves the Mediterranean partners additional time for adaptation in order to prepare themselves for the ‘opening shock’, but there is nothing obliging them to do so. In terms of the agreements the calendar for dismantling the barriers will actually only start on the date of their entry into force.124 These solutions, designed to alleviate the inconveniences of the delayed entry into force of the agreements, however, give no legal guarantee as to the creation of the free trade zone by the 2010 deadline. Bearing in mind the twelve-year transitional periods, and given the lack of (unlikely) measures to accelerate matters, only Tunisia will be in a position to meet the deadline. No doubt it is a sort of political reference date 125 essentially designed to mobilize the European and Mediterranean partners. However, certain imperatives external to the area cannot be ignored. In the trade competition between Europe and the United States, first of all, it is in the

Differentiation and Association within the PEMA 87

interests of the European Union to actively bring about its regionalist EuroMediterranean policy in response to the activist strategies of the United States, especially on the American continent. Moreover, the Mediterranean states themselves could suffer the negative consequences of competition with the more successful of the Latin American countries. 126 Indeed the Community and its Member States – in order to curb the risk of eviction from the entire American continent – undertook commitments through preferential agreements, thus completely breaking away from their previous policy towards this part of the world.127 What is more, the WTO constraints threaten to make the position no more comfortable. The reciprocity of the concessions envisaged in the new association agreements respond to the concern to ensure conformity with the WTO requirements. However, at present these commitments are more a declaration of intent rather than a reflection of the reality. As the agreements are not in force, a system of non-reciprocal preferences remains applicable as foreseen in the preceding co-operation agreements, with the exception of Israel. In view of the numerous problems arising caused by the delays pending the Member States’ ratification, one can only hope that the new provisions of Article 300 EC Treaty will be used for the signature of the next agreements. This would allow the Council to provide for their provisional application. For this to happen, however, the Member States will have to accept this for the entirety of the agreement. Also, the European Parliament has no more than a right to be kept informed and a situation where it feels that it has been bypassed should be avoided. To do otherwise may provoke its negative reaction when consulted under the assent procedure for the conclusion of an agreement of which the trade chapters are already in force. The problem of predicting the attitude of the European Parliament The European Parliament, thanks to its many powers, has the opportunity to oppose the Council, even to reorient its decisions. As such, it can strengthen but also contradict or simply make slight modifications to certain aspects of the differentiation strategy applied to the Mediterranean. Thus one may recall that the European Parliament, strong from its power of assent on the subject of association agreements given to it by the Single European Act, has not hesitated to play the role of ‘trouble-maker’ in the Mediterranean policy. Thus it withheld its opinion on a number of protocols based on Article 310 (ex-Article 238) EC Treaty, as it considered the third state did not sufficiently respect democratic principles and human rights.128 This attitude, not without criticism in the name of a certain political realism, nevertheless pushed the Community to adopt a more systematic assertion of these values. In the light of evolution in the world context, these values became an essential element in the strategy pursued in the Mediterranean. How does it stand today?

88 Catherine Flaesch-Mougin

On the subject of the conclusion of an association agreement founded on Article 310 EC Treaty, the European Parliament always possesses a power of assent and, consequently, also a potential veto. This power has even been extended by the Maastricht Treaty to other agreements. 129 In practice, however, this power has been withheld from the European Parliament in financial matters. Actually, the financial protocols bound up with the cooperation agreements and based on Article 310 EC Treaty have been replaced by an autonomous instrument under which the European Parliament is consulted only for its opinion. Thus, it is essentially at the conclusion of the association agreements that the EP is able to exercise its power of assent. At this level, if the risk of blockage continues, certain developments must be taken into account, apparently making that risk less significant than previously. In the first place, the voting requirements have been made more flexible by the Maastricht Treaty. 130 Moreover, because from now on the European Parliament has at its disposal significant legislative powers, it has less need to play all its trump cards in its strategy to establish its institutional position in external matters. Above all, the European Parliament reflects an attitude that is more pragmatic than before. In this way, facing regimes which are not ‘ideal democracies’ such as Morocco or Tunisia,131 the European Parliament has given its assent, 132 taking the view that the existence of strong relations makes potential sanctions or pressure on the partner more effective. Such an ‘understanding’ presupposes, however, that the differentiation–sanction policy of the European Union towards any state making a serious violation of human rights and democratic principles is effective. Yet, on the subject of the suspension of agreements or aid under MEDA, the European Parliament is deprived of the right to hold up the Council and is not even consulted upon the final decision. 133 Where there is too much laxity, there is a chance that the European Parliament will be more reticent in any future examination of association agreements, and all the more so since the political situation of certain states might become ‘even less ideal’. Nevertheless, the European Parliament would, no doubt, be sensitive to the risk of marginalizing these countries within the Mediterranean area and could, in this light, make it more inclined to grant its assent in return for closer monitoring of these countries. Concerning the autonomous dimension of the Mediterranean policy, the European Parliament, in spite of the changes resulting from the Amsterdam Treaty, only possesses the power of consultation in fields as important as agriculture, trade policy or financial aid under the MEDA Regulation. 134 Should it disagree with the Council on matters it considers to be determining factors in the Mediterranean strategy, the European Parliament could attempt to lean on the Council via other powers, be they through the budget or judicial actions. The adoption of the MEDA II Regulation could provide the opportunity for the Parliament to act in this way. It has already

Differentiation and Association within the PEMA 89

been said that it might be possible to contest the legal basis of the preceding Regulation. If reverted to again, the European Parliament, availing itself of its power of co-decision under Article 179 (ex-130W) EC Treaty, could threaten an action for annulment of the envisaged text should it not be satisfied with the provisions. It could even point to the non-compulsory character of spending for MEDA credits135 and use its powers on that matter to justify a refusal to allow their inclusion in the budget. But to do so would further stretch the delay in the adoption or implementation of a long awaited text.136

Conclusion In conclusion, the example of the Union’s relations within the Pan-EuroMediterranean Area shows how differentiation constitutes an important component of the European Union’s external policy. Beyond taking into account the specificities of a third country, it seeks to engender proactive, stimulating effects. This presupposes, first of all, that a coherent policy vision of these relations with all regions of the world is defined and that such a vision rests on instruments flexible enough to implement it. As far as the association policy of the Union towards this proximity area is concerned, neither of these aspects appears to have been mastered properly. Contribution translated from the French by Kirstyn Inglis.

Notes 1. This quotation is a translation of P. de Schoutheete’s definition of differentiation: ‘la forme organisée et structurée de la diversité’, in Une Europe pour tous (Paris: O. Jacob, 1997), 110. 2. Agreement between the EEC and Principality of Andorra, OJ, L374/13, 31 December 1990. 3. Agreement on Customs Union and Co-operation between the EEC and the Republic of San Marino, OJ, C124/1, 21 April 1997. 4. The Free Trade Agreement of 1972 (OJ, L300/189, 31 December 1972) is still in force but a package of seven sectoral agreements is on the verge of signature: Bull.-EU, June 1999, point 1.3.6. 5. We take it to mean the relationship resting on the agreement founded on Article 310 (ex-Article 238) EC Treaty since the denomination does not always make express reference to it. This is the case, for example, for the European Economic Area where the term association does not appear. 6. Even though not yet in place, this is the fixed objective of the future relationship with Chile and MERCOSUR: see M.-A. Gaudissart, ‘Vers une association avec certains partenaires latino-américains?’, in C. Flaesch-Mougin and J. Lebullenger (eds), Le partenariat entre l’Union européenne et les Amériques (Rennes: Apogée, 1999), 205. 7. OJ, L1/1, 3 January 1994.

90 Catherine Flaesch-Mougin 8. Europe Agreements between the European Communities and their Member States (see the appendix at the end of the book). 9. The Euro-Mediterranean Association Agreements establishing association between the European Communities and their Member States and Tunisia, Israel, Morocco and Jordan have been signed, but only the first is in force: see OJ, L97/1, 30 March 1998; SEC (95) 1719, COM(95)740 Final, 20 November 1995 and COM(97)554 Final, 29 October 1997; moreover, an Interim EuroMediterranean Association Agreement exists with the PLO; OJ, L187/1, 16 July 1997. 10. OJ, 217/3685, 29 December 1964. 11. OJ, L133/1, 31 May 1973. 12. OJ, L161/1, 14 March 1971. 13. Partnership and Co-operation Agreement between the EC and their Member States and the Russian Federation, OJ, L327/1, 28 November 1997. 14. OJ, L49/1, 19 February 1998. 15. The procedures on the conclusion of the agreement are suspended because of the situation in the country. 16. OJ, L181/1, 24 June 1998. 17. Articles 54, paragraph 2; 66; 73C, paragraph 2; 75; 84, paragraph 2; 99; 100; 113; 235 in conjunction with Article 238, paragraph 2 on procedure. 18. The Co-operation Agreement between the EC and Albania on trade and trade and economic co-operation, OJ, L343/2, 25 November 1992. 19. Agreement between the EC and the Former Yugoslav Republic of Macedonia of 29 April 1997, OJ, L348/1, 18 December 1997. 20. ECJ, 30 September, Meryem Demirel v. Stadt Schwäbisch Gmünd, Case 12/86, ECR, 1987, 3751. 21. See the designation of the ‘European party’ of the Europe Agreement with Slovenia, OJ, L51/1, 1 February 1999, above. 22. For analysis of the Agreement, see O. Jacot Guillarmod, L’accord EEE: analyse et commentaire (Zurich: Schulthess, 1992), and for a recent appraisal see J. Forman, ‘The EEA Agreement five years on’, CML Rev., 1999, 151. 23. Preamble to the Agreement, OJ, L1/1, 1 January 1994. 24. There is an abundance of literature on the subject; for an analysis of the agreements and the evolution of the relations, see in particular M. Maresceau (ed.), Enlarging the European Union, Relations Between the EU and Central and Eastern Europe (London and New York: Longman, 1997). 25. OJ, L85/1, 20 May 1998. 26. As for the Commission position and some reactions, see S. Holveque, ‘L’Union européenne s’ouvre à l’est’, RMCUE, no. 421, 1998, 514–23. 27. 1999 Helsinki European Council, Presidency conclusions. 28. See G. Edwards and E. Phillipart, ‘The Euro-Mediterranean Partnership: fragmentation and reconstruction’, RAE/LEA, no. 2, 1997, 465. 29. The qualification of the new generation of agreement with the Mediterranean countries has long since remained suspended, certain Member States wishing, so as to properly differentiate them from the CEECs, that reference to Association does not appear. 30. COM(94)427 Final, 19 October 1994, 4. 31. See J. Raux and V. Korovkine (eds), Le partenariat entre l’Union Européenne et la Russie (Rennes: Apogée, 1998). 32. OJ, L327/1, 1 December 1997.

Differentiation and Association within the PEMA 91 33. For an analysis of these agreements, see C. Hillion, ‘Partnership and Co-operation Agreements between the EU and NIS’, EFA Rev., vol. 3, 1998, 399–420. 34. See Bull.-EU, April 1997, point 1.4.67 and COM(98)618 Final, 28 October 1998. 35. OJ, L348/169, 18 December 1997, 3 and 10. 36. In this sense, see P.-C. Müller-Graff, ‘Legal framework for EU–CEEC relations’, in Enlarging the European Union, above, 27. 37. I. Leshoukov, ‘Beyond satisfaction: Russia’s perspectives on European integration’, Discussion Paper, C26/1998, Center for European Integration Studies, Bonn. 38. See, for example the Conclusions of the 1997 Luxembourg European Council, point 67, Agence Europe, 14 December 1997. 39. Conclusions of the 1997 Luxembourg European Council, point 68, above and COM(98)589 Final, 26 November 1998. 40. J. Blaha, D. Heimerl, ‘Les co-opérations transfrontalières’, Courrier des pays de l’Est, no. 413, October 1993, 28. 41. OJ, L49/1, 1 March 1998. 42. Translated from a French quotation: ‘mis à l’épreuve l’arsenal juridique dont [elle] dispose dans le domaine des relations extérieures.’ 43. 1999 Cologne European Council Conclusions, point 72, Agence Europe, no. 7480, 6 June 1999, 17. 44. COM(1999)235 Final, 26 May 1999. 45. See the contribution of Jean Raux. 46. Report of the Council to the Essen European Council, Annex V of the Presidency Conclusions, Bull.-EU, 12, 1994, point 1.55. 47. Bull.-EU, 11, 1995, 153. Signatories thereto are: the Council, the Commission, the Fifteen Member States, the three ‘northern States’ capable of acceding to the Union (Turkey, Malta and Cyprus), the three Maghreb states (Tunisia, Morocco, Algeria), the four Mashrek states (Jordan, Syria, Lebanon, Egypt) as well as Israel and the Palestinian Authority. Libya, sanctions having been lifted, was invited to the Stuttgart Conference as a special guest and could soon join the process if it accepts ‘the Barcelona acquis’. Mauritania is an observer, as is the Arab Maghreb Union (AMU) and the Arab League, but would like to become a full member. 48. By the European Community and the ECSC and their Member States other than the Agreement with the PLO. 49. For references see appendix at the end of the book. 50. Council Regulation 1488/96 of 23 July 1996 on financial and technical measures to accompany (MEDA) the reform of economic and social structures in the framework of the Euro-Mediterranean Partnership, OJ, L189/1, 30 July 1996. 51. See appendix at the end of the book. 52. Position of the European Union before the Barcelona Conference, Bull.-EU, June 1995, point 1.49. 53. Report of the Council to the Essen European Council, above. 54. Position of the European Union before the Barcelona Conference, above. 55. See E. Lannon, ‘La déclaration de Barcelone, acte fondateur du partenariat euro-méditerranéen’, RMCUE, May 1996, 358–68. 56. Reference is made to the relations based on ‘reciprocity, partnership and codevelopment’ (Tunisia) to which ‘solidarity’ is added for Morocco; the

92 Catherine Flaesch-Mougin

57. 58. 59.

60.

61.

62.

63.

64.

65. 66. 67. 68. 69. 70. 71. 72. 73.

Agreement with Jordan and that with the PLO make no mention of co-development. Bearing in mind that intra-regional trade is estimated as representing 5 per cent of the total foreign trade. Sec (92) Final, 30 April 1992, 12. It is foreseen in the common provisions under the heading free movement of goods that the agreement ‘shall not preclude the maintenance or establishment of customs unions, Free Trade Areas or arrangements for frontier trade insofar as they do not have the effect of altering the trade arrangements provided for in this Agreement’. Similarly under the heading devoted to economic co-operation, regional integration (or co-operation) is considered to be part of the general objectives to be pursued and reference is also made to certain specific domains of co-operation. Next to these provisions common to all agreements, declarations are annexed on possible granting by the Community of cumulation of rules of origin in case of the conclusion of free trade agreements among MNMCs. One must recall that support for regional and cross-border co-operation is part of the objectives of the Programme (Annex II of the Regulation of 23 July 1996, above) representing 10 per cent of the total financial input. See in this sense the Conclusions of the 1997 Malta Ministerial Conference, Agence Europe, no. 2035, 16 May 1997 and those of the 1999 Stuttgart Conference, Documents d’actualité internationale, no. 12/99, 484, where the issue is tackled within the preliminary provisions (point 3: ‘Ministers emphasised the fundamental importance of intra-regional and sub-regional co-operation and integration in all three chapters’), and then within the framework of the financial and economic basket (notably at points 21, 22 and 27). The Ministers at the Stuttgart Conference asked the Commission ‘to contribute a reflexion paper on the methodology for regional co-operation’; this had tackled the problem in the two Communications of 1998, COM(98)538 Final concerning the Euro-Mediterranean Partnership and the Single Market on the one hand and COM(98)254 Final on the Euro-Mediterranean cumulation of rules of origin on the other. See, for example, the economic dialogue on the macroeconomic and financial problems (Article 44 of the heading on economic co-operation and Article 77 of that on financial co-operation in the Tunisia Agreement, OJ, C97/12–18, 30 March 1998, above. Council Decision of 6 December 1996 concerning the adoption of the guidelines for the indicative programmes concerning financial and technical measures to accompany the reform of economic and social structures in the framework of the Euro-Mediterranean partnership (MEDA), OJ, L325/20, 14 December 1996. Point 11 of the above Decision, 23. Bull.-EU, June 1995, point 1.49. See appendix at the end of the book. Opening negotiations at the beginning of 1994. See the preamble to the Euro-Mediterranean Association Agreements with Tunisia and Morocco. See the Preamble of the Agreement. Including in the Interim Agreement with Israel (Article 1). Article 3 also aims at the respect of law and fundamental freedoms. Agence Europe, no. 6166, 9 February 1994, 8.

Differentiation and Association within the PEMA 93 74. Agence Europe, no. 6719, 1 May 1996, 8. 75. COM(1998)524 Final, 14 September 1998 on the implementation of the MEDA Programme. 76. Aproximately 258 m euro being twice the amount of the preceding protocol over a shorter period (three instead of five years), see Agence Europe, no. 6524, 17–18 July 1995, 1. On the preceding system of financial protocols see E. Lannon and J. Raux ‘La co-opération financière et technique bilatérale avec les Pays de la Méditerranée Sud et Est’, in Jurisclasseur-Europe, relations extérieures, fascicule 2233, éditions Techniques, Paris, May 1995. 77. Council Decision below, point 4.21. 78. Point 3 of the above Council Decision. 79. See the implementation report, below, 10. 80. Conclusions, Bull.-EU, December 1994, point 1.14. 81. It should be recalled that association status had been refused for Israel for 1975. This Agreement itself was based on Article 113 and not further qualified. 82. Agreements between the EC and the State of Israel on procurement by telecommunications operators and government procurement, OJ, L202/72–85, 30 July 1997; Agreement for scientific and technical co-operation, OJ, L209/22, 19 August 1996, followed by a new agreement consequent to the adoption of the fifth Framework Programme, OJ, L83/50, 27 March 1999. 83. OJ, L71/1, 20 March 1996, 1. 84. One must recall that, in 1994, trade with the European Union represented 35 per cent of Israeli exports, 50 per cent of its imports and 85 per cent of its trade deficit. 85. Caligaris Report on the proposal for a decision of the Council and the Commission on the conclusion of a Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, on the one part and the State of Israel on the other part, A4–21/96, 30 January 1996. 86. OJ Series of Debates, no. 4–472, 307. 87. See E. Lannon, ‘La PESC et le processus de paix au Moyen-Orient: bilan et perspectives offertes par le traité d’Amsterdam’, in M. Dony (ed.), L’Union Européenne et le Monde apr e` s Amsterdam (Brussels: Université Libre de Bruxelles, 1999), 259. 88. 258.7 euro per capita as opposed to 11.2 throughout the rest of the Mediterranean and 23.2 for Lomé countries: see COM(97)715 Final, 11 March 1999 on ‘The role of the European Union in the peace process and its future assistance to the Middle East’. 89. Euro-Mediterranean Interim Association Agreement. 90. For an exhaustive study of the Agreement and its political significance, see E. Lannon, ‘L’accord d’association intérimaire Communauté Européenne-OLP: l’institutionnalisation progressive des relations euro-palestiniennes’, RAE/LEA, 1997, 169–90. 91. However, it remains in force until the conclusion of the (definitive) Association Agreement for which the preparatory negotiations ought to have started 4 May 1999 (Article 75). 92. Agence Europe, no. 7447, 17 April 1999, 9. 93. Agence Europe, no. 2035, 16 May 1997, 4. 94. This Interim Agreement did not pose problems to ratification comparable to the other agreements (see below). 95. Conclusions of the Malta Conference, above.

94 Catherine Flaesch-Mougin 96. See E. Rhein, ‘Europe and the Mediterranean: a newly emerging political area’, RAE/LEA, 1996, 83. 97. Bearing in mind that the Mediterranean countries benefit from a more or less privileged access for their agricultural exports to the Community market and from a quasi-free access for industrial products. 98. See, for example, Article 16 of the Tunisia Agreement. 99. Article 17, Jordan Agreement. 100. COM(94)427 Final, 19 October 1994, 10. 101. Agence Europe, no. 6172, 17 February 1994, 9. 102. With Tunisia, olive oil proved a major difficulty but this country is a lesser exporter of agricultural produce than Morocco where it makes up 30 per cent of export receipts, and it has directed its negotiating strategy towards increased financial support and the rapid conclusion of the Agreement. 103. A situation which continues according to the report of J. Sakellariou containing the European Parliament’s proposal for a recommendation to the Council on the European Union’s Mediterranean policy, A4–95/99, 25 February 1999, 5. 104. The delay between the initialling and the signature of the Agreement with Jordan thus takes root in the opposition of Spain to the insertion of a clause to allow the Association Committee to revise the allowable quotas in terms of exemption from obligations where those quotas have been exhausted. The Council reproached the European Commission for having stepped outside of its mandate by inserting this provision which was subsequently deleted and the compensation for this was an increase in the quotas for imports of Jordanian tomato concentrate. See the EP Report of Mrs Aelvoet, A4–0165/98, 28 April 1998. 105. Thus the signature of the Agreement with Morocco was delayed by the opposition of certain states to the level of quotas for flowers (the Netherlands, Germany, Belgium, France) and the signature of the Agreement with Tunisia stumbled as a result of Spain and Italy’s attitude to the access regime for guaranteed imports of olive oil. 106. COM(97)477 Final, 1 October 1997. 107. Agence Europe, no. 6604, 13–14 November 1995, 4 and 5. 108. See Article 2 of the Decision on the Conclusion of the Agreement with Tunisia which, since the entry into force of the Amsterdam Treaty, becomes obsolete as a result of the provisions of Article 300 EC Treaty. 109. See the ECIP Progress Report (1997), Annex 5.1. 110. Council Regulation of 29 January 1996, OJ, L28/2, 6 February 1996. 111. The definitive procedure in terms of Article 16 of the MEDA Regulation ought to have been determined before 30 June 1997; the Regulation was not actually adopted until 7 April 1998: OJ, L113/3, 15 April 1998, 3. 112. OJ, Series of Debates, no. 4–516, 12 March 1998, 271. 113. M. Gianni, ‘L’architecture décisionnelle du programme MEDA’, Collegium, no. 16, VI-1999, 17. 114. The Commission considered such a question was not part of its current and urgent business. 115. Agence Europe, no. 7447, 17 April 1999, 10. 116. ECJ, Case C-106/96, United Kingdom v. Commission, 12 May 1998, ECR, 1998, 2729. 117. In view of the conditions of Article 11 EC Treaty.

Differentiation and Association within the PEMA 95 118. The text was kept out of the current and urgent business of the European Commission for Foreign Affairs and even after approbation was again put back. In parallel, the Agreement was not put before the French National Assembly. See La Libre Belgique, 18 December 1998. 119. Plenary session of the EP of 11 March 1998, Agence Europe, no. 7423, 4. 120. See, for example, the Resolution of the EP of 14 May 1998 on the EuroMediterranean agreements, OJ, C167/196, 1 October 1998 and the Conclusions of the Malta Conference, above, 4. 121. The motivation behind the Decision recalls that the two Parties ‘have signed a Euro-Mediterranean association agreement providing for the negotiation of a co-operation agreement in the field of science and technology’ (OJ, L209/22, 19 August 1996). For a contrary view see Article 38 of the Agreement with Jordan which foresees specific Agreements on the subject of transport to be negotiated, if necessary, following the entry into force of the Association Agreement. 122. Motivation behind the Interim Agreement with Israel, OJ, L71/2, 20 March 1996. 123. This Agreement includes provisions that precede the exclusive Community competences and substitute those of the Agreement of 1975 which remain in force in other areas (Article 40). 124. See, for example, Article 11 of the Tunisia Agreement. 125. Bearing in mind the fact that it appears in the Barcelona Declaration and has regularly been reconfirmed in Ministerial Conferences, especially in Stuttgart (Conclusions, point 19) but does not appear in the Euro-Mediterranean Association Agreements 126. See already in the investment field, ECIP Progress Report, 1997, 8: ‘The growth performance, local economic, political, regulatory and legal environments … are less favourable to incoming European investors than in Asia and Latin America.’ 127. See J. Lebullenger, ‘Les relations de partenariat de la CE et de ses Etats membres avec le Mercosur et le Chili’, in Le partenariat entre l’Union européenne et les Amériques, above, 179. 128. Protocols with Syria (OJ, C39/52–55, 17 February 1992), Morrocco (OJ, C39/54, 17 February 1992, 54) and Israel (OJ, C94/55–56, 11 April 1998). 129. This is the case for the fisheries Agreement with Morocco because of its noteworthy implications for the budget (OJ, C141/94, 13 May 1996). The European Parliament is scrupulous in its surveillance of respect for its rights; see ECJ, Judgment of 8 July 1999, in the case European Parliament v. Council, C189/87, not yet published. 130. The vote is taken by the majority of those expressed and not by the majority of the members. 131. Von Habsburg report on the proposal for a Council Decision on the conclusion of a Euro-Mediterranean agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part, A4–173/96, 29 May 1996. 132. OJ, C181/15, 24 June 1996 and C17/190, 30 March 1996. 133. See Article 300 EC Treaty, paragraph 2, for the agreements and Article 16 modified by the 1998 Regulation, above, for MEDA. 134. Even if, as a result of the financial implication applying to the procedure of legislative involvement, the European Parliament has no veto under Article 308 EC Treaty (ex-Article 235).

96 Catherine Flaesch-Mougin 135. See the classification annexed to the interinstitutional Agreement of 6 May 1999, OJ, C172/18, 18 June 1999. 136. Concerning the litigation threat, this is a minimum risk since the Court can provide that the effects of the text will not be annulled until the adoption of a replacement and often makes use of this possibility in cases between the Council and the Parliament.

5 The Many Faces of EU Conditionality in Pan-Euro-Mediterranean Relations Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

Introduction: conditionality – a multifaceted and evolving concept The use by a state, a regional or an international body of political, diplomatic and economic instruments and policies in order to influence the internal and external policies of a third state is nothing new in international relations. The collapse of the USSR, however, marked a turning point as during the Cold War what was generally referred to as ‘linkage’ was used mostly as a policy tool in the context of the bipolar confrontation. Throughout the last decade, the somewhat ambiguous concept of ‘conditionality’ has also begun to take shape in European spheres. Such an evolution is borne out by the progressive institutionalization of internal and external conditionality within the treaties. Whereas the Treaty of Rome envisaged only socio-economic rights, 1 the Single European Act gave the Community the ‘responsibility for promoting the principles of democracy, the rule of law and respect for human rights’ and gave the European Parliament (EP) a right of veto within the framework of the external relations of the EEC. With the Treaty on European Union (TEU) adopted in Maastricht arose the Union’s self-appointed mission to propagate human rights and democracy. The development and consolidation of democracy and the rule of law as well as respect for human rights and fundamental freedoms were to be fostered within the framework of the development co-operation policy on the one hand, and as an objective of the emerging Common Foreign and Security Policy (CFSP) on the other. As a result of the Amsterdam Treaty, certain significant developments regarding internal conditionality merit special attention. One should recall the introduction of Article 7 which states that ‘the Council, acting by a qualified majority, may decide to suspend certain of the rights’ of the Member State in question, ‘including the voting rights of the representative of the government of that Member State in the Council’ in case of a 97

98 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

‘serious and persistent breach by a Member State’ of principles mentioned in Article 6 TEU.2 Certainly the insertion within the EC Treaty of provisions on the respect of fundamental social rights is of importance regarding conditionality3 – as is, in the framework of the TEU, the mention of the promotion of ‘economic and social progress’ to achieve ‘balanced and sustainable development’ as the very first objective of the Union.4 Despite the improvements of the new Treaty, the proposal that the EU have its own Bill of Rights is still on the table. In the field of external conditionality one must refer, in the framework of the EC Treaty, to Article 60 relating to measures that may be adopted for ‘serious political reasons’ against a third country with regard to capital movements and payments. Article 300, requiring a unanimous decision of the Council for the conclusion and decision to suspend the application of an agreement based on Article 310, is also fundamental. Within the TEU, it is important to recall Article 49, devoted to principles and conditions of membership. Specific references should also be made, in the field of the CFSP, to the access of the EU to an operational capability notably in the context of the Petersberg tasks (peacekeeping tasks, tasks of combat forces and so on) that in theory might be used to implement coercive actions or as preventive measures.5 The Kosovo war, however, reflected the absence of the Western European Union. Lack of credible military capacity deprives the EU of the most powerful tool to influence a third state – even if certain Member States may, of course, participate in operations under the aegis of the UN and/or NATO. The growing importance of the third pillar, especially provisions devoted to the ‘area of freedom, security and justice’ – and its external dimension: the ‘soft security’ aspects (migration, terrorism and so on) – is finally to be underlined. Justice and Home Affairs concerns must be, according to the conclusions of the 1999 Tampere European Council, integrated in the ‘definition and implementation of other Union policies and activities’.6 Conditionality – a concept difficult to circumscribe Conditionality as a concept is difficult to circumscribe as it is still in its infancy. Proper delimitation of conditionality will therefore always require the assessment of its application in the light of the specific bilateral relationship. The overall economic and (geo)political context must also, of course, be taken into account. The carrot and the stick One may, at a preliminary stage, try to distinguish between a positive approach, encouraging or rewarding a third country, and a restrictive/negative one potentially leading, in the last resort, to a sanction. It is, however, increasingly hard to draw the dividing line between these two approaches. Indeed, the EU nowadays has the instruments at its disposal to establish

The Many Faces of EU Conditionality 99

bridges and formal links between policies. Moreover, synergy and complementarity between the positive and negative approaches are expected. Preconditions, conditions, incentives and other instruments to influence the EU’s partners’ internal and external policies One can identify three main instruments used for conditionality purposes: preconditions, conditions and incentives. Again, strict delimitation of such instruments is not always obvious. Preconditions. Preconditions might be defined as political and economic criteria to be fulfilled by a third country before it may benefit from a specific relationship with the Community or as prerequisites to EU membership. The decision to establish contractual relations with a third country and consequently negotiate an agreement was increasingly used by the Community as a way of promoting economic and political reforms. The Community made its preconditions explicit, for example when negotiating the Europe Agreements (EAs). 7 The negotiations for nine EuroMediterranean Association Agreements (EMAAs) also demonstrated that the new conditionality provisions were carefully taken into account by Europe’s Mediterranean partners. One should note that the political pressures on entry into force of the EMAAs is also imposed by EU Member State legislative bodies through the ratification process of the mixed association agreements.8 As the conclusion of an association agreement requires the European Parliament’s assent, the EP has not shied away from using this as a veto in order to impose its ‘own’ preconditions. To take as an example the EAs with Romania and Bulgaria, the European Parliament made its assent subject to assurances that reforms would be pursued and respect for human and minorities rights ensured.9 Similar political pressures were experienced by the Mediterranean Non-Member Countries (Morocco, Israel and Syria) in the field of bilateral contractual financial assistance. So far, the EP has not used its veto for the first EMAAs but one should follow the ongoing negotiations as it may be expected to revert to this tool more frequently.10 The preconditions for accession have, for their part, an important degree of appraisal flexibility and are of a very political nature. Apart from the well-known Copenhagen Criteria, with which compliance ‘is a prerequisite for the opening of accession negotiations’, 11 one must recall here that the 1994 Corfu European Council made clear that implementation of the Europe Agreements was one of the ‘essential conditions for accession’. The 1994 Essen European Council, for its part, stressed that the promotion of good neighbourly relations and ‘intra-regional co-operation between the associated countries themselves and their immediate neighbours’ were of particular importance. Membership of the Council of Europe and of the

100 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

European Convention for the protection of Human Rights and Fundamental Freedoms has also become an implicit precondition for accession to the EU.12 Preconditions for accession also cover the whole acquis communautaire. Thus, the adoption of the acquis communautaire may be interpreted as a strict precondition because eventual accession might be rejected failing its full adoption. As stated by the 1999 Helsinki European Council ‘progress in negotiations must go hand in hand with progress in incorporating the acquis into legislation’. The prospect of membership is therefore a ‘unique incentive to the applicants to speed up the implementation of policies which comply with the Union acquis’. Integration of the acquis ‘is necessary, but is not in itself sufficient; it will also be necessary to ensure that it is actually applied.13 Conditions. Explicit conditions proper, adopted in the framework of external relations, might be defined as a set of legal provisions inserted within the body of a financial or trade regulation adopted unilaterally by the EC or in a contractual framework. Such conditions are considered as being the ‘essential elements’ of the regulation or the contractual relation. If the conditions are not fulfilled the Community may adopt ‘appropriate measures’. If such explicit conditions are to be considered as ‘hard conditionality’ in the sense that they might induce a sanction, for the time being they are circumscribed to the political and to a certain extent socio-economic spheres. Thus, environmental conditionality would appear more ‘soft’ in that it is unlikely to induce a sanction. Moreover, recent developments show that explicit conditions proper must have a high degree of flexibility and are also to be used as incentives. Such a discourse also aims to impose EU conditionality in a more palatable way from the viewpoint of third countries. Incentives. Incentives may be defined as measures aiming to encourage or reward a third state’s progress towards political and socio-economic reforms. Incentive measures are adopted within a constructive approach framework and are now considered by the EU as being the preferred option. However, if incentive measures are not legally binding instruments and therefore cannot de jure lead to sanction, they may de facto penalize countries which are unable to fulfil certain criteria in order to benefit from financial aid or an economic advantage. Among the various forms that such measures may take, one should mention the ‘incentive clauses’ inserted within agreements, autonomous trade regulations or co-operation programmes. In this respect, the progressive development of regional, social and environmental incentive clauses must be underlined.

The Many Faces of EU Conditionality 101

Unilateral initiatives of the EU promoting political, social and economic rights and rewarding third states for their progress in these fields are also increasingly apparent in the EU’s external relations. 14 In the Pan-EuroMediterranean Area, PHARE, MEDA and TACIS Democracy Programmes – and the European Initiative for Democracy and Human Rights – are to be mentioned. The enlarging scope of conditionality: exporting the Community Model? Another aspect of EU external conditionality is its widening scope. Increasing use of social, environmental and regional incentives and even sometimes social or hygiene conditions, to some extent reflects the will of the EU to export what is commonly referred to as the ‘Community Model’. One of the aims of the present paper is to highlight these new trends. Social conditionality The introduction of EC tariff preferences through the Community’s General System of Preferences15 (GSP) to promote observance of labour and environmental standards shows the increasing importance granted to social conditionality. GSP may also be withdrawn in cases of significant violation of fundamental labour standards, as was the case in 1997 for the Union of Myanmar on account of the use of forced labour.16 There seems, however, to be an overall trend away from a strict social conditionality in favour of a minimum standard level. The International Labour Organization adopted conventions of principles concerning fundamental workers’ rights but to date a number of Member States have not ratified the key conventions among them. Labour standards nevertheless are insisted upon within the GSP, thus establishing a minimum level required by the Community. Moreover, replies to questionnaires forwarded to the nominee Commissioners referred to minimum labour standards. Although there exists an international convention for labour standards, there is no equivalent for environmental standards (other than those touched upon within the auspices of the UN’s CODEX Alimentarius food standards) despite the potential barriers which they present at the WTO level. Environmental conditionality A growing environmental conditionality can be traced throughout the evolution of the Community’s external relations, particularly in trade and development. Internal environmental conditionality is the basis for this external environmental conditionality.17 But the Member States and the EC act using mixed agreements for multilateral treaties to bind themselves to given ends while, conversely, multilateral co-operation is not binding other than at operational level through the management and application of the

102 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

incentive ‘carrot’ of aid and technical assistance. Indeed, Principle 12 of the Rio Declaration 1992 advocated co-operation based on international consensus over binding fixed commitments. At WTO level, the developing countries, in Marrakesh in 1994, expressed fears of environmental protectionism by the industrialized countries and, since 1996, the WTO’s Trade and Environment Committee has been researching the ‘cluster approach’ under the themes of market access and the linkages between the multilateral environment and trade agendas. 18 Multilateral co-operation, based on implementation, was preferred to fixed agreements requiring negotiation and updating before enforcement could be undertaken. Compared to political conditionality, for example, environmental conditionality takes the form more of the means of implementing an existing relationship.19 In external trade relations, the explicit use of hygiene conditions has long been used in respect of food imports, for example. Moreover, the EU has been pressing for the incorporation of the precautionary principle in respect of human health within the context of the beef hormones dispute and, in the context of the escalating dispute over genetically modified organisms (GMOs) and the labelling of the GMO content of food for the benefit of consumer choice. Regional conditionality Regional co-operation, or even integration, incentives are implicitly derived from the very nature of the European integration model. If Community regional co-operation programmes are numerous but financial resources continue to be limited, regional integration or co-operation cannot yet be considered as an ‘essential element’ within bilateral agreements, trade regulations or aid programmes. The reactivation of the subregional dimension of the Barcelona Process following the 1999 Stuttgart Euro-Mediterranean Conference and the adoption of a regional approach to the countries of South-Eastern Europe, however, demonstrate the increasing importance given to regional incentives. As was recalled by the 1999 Cologne European Council the ‘immediate neighbourhood’ of the EU is fundamental to the stability and security of the entire European continent. Nevertheless, the relationship which the EU has built with neighbouring Central and Eastern European Countries (CEECs) and Mediterranean Non-Member Countries (MNMCs) does not yet take root in any EU ‘pan-Euro-Mediterranean external relations policy’. This applies equally to the conditionalities incorporated into the EU’s external relationships with their CEEC and MNMC partners, be they political, economic, social, regional, environmental or otherwise. Within the framework of the next section below, emphasis is laid on the ‘EU conditionality towards (potential) applicants for membership’. The following section is devoted to the increasing conditionality facing southern

The Many Faces of EU Conditionality 103

and eastern MNMCs within the context of the Euro-Mediterranean Partnership (EMP).

EU conditionality towards (potential) applicants for EU membership In order to illustrate the general trend in conditionality towards more flexibility and differentiation and as a means, among others, to promote the export of the Community Model, we will successively examine: the emerging conditionality in eastwards relations, the tremendous development of conditionality within the regional approach to the countries of SouthEastern Europe and finally the specificity of pre-accession conditionality. The progressive and inconsistent introduction of conditionality into eastwards relations An overview of the progressive emergence of conditionality into eastwards relations20 is necessary to evaluate the evolution of the strategy and practice, as is a comparison with EMAAs which is made in the following section. The introduction of ‘essential element’ clauses First of all one must recall the absence of proper conditionality clauses within the body of the first Agreements concluded with OSCE participants.21 Following the Declaration on human rights adopted by the 1991 Luxembourg European Council22 and the Resolution of the Council on human rights, democracy and development,23 the Council adopted a Declaration on 11 May 1992 stressing that ‘respect for democratic principles and human rights, as defined by the Helsinki final Act and the Charter of Paris for a new Europe, and the principles of Market economy are essential components of co-operation or association agreements between the Community and its CSCE partners’24 (emphasis added). The reasons for the introduction of such an ‘essential element clause’ were, according to the Commission, that it made human rights the ‘subject of common interest, part of the dialogue between the Parties and an instrument for the implementation of positive measures, on a par with other key provisions.’25 Also it enabled the parties to take ‘restrictive measures in proportion to the gravity of the offence’ allowing the ‘parties to regard serious and persistent human rights violations and serious interruptions of democratic process as a material breach of the Agreement’ and thus constituting ‘grounds for suspending the application in whole or in part in line with the procedural conditions laid down in Article 65’ 26 in line with the Vienna Convention on the Law of Treaties 27 (VCLT). This was confirmed by the ECJ when it stated that the introduction of such an essential element clause may be, among other things, an ‘important factor for the exercise of the

104 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

right to have an agreement suspended or terminated where the nonmember country has violated human rights’.28 However, such a clause ‘does not transform the basic nature of agreements which are otherwise concerned with matters not directly related to the promotion of human rights. It simply constitutes a mutual reaffirmation of commonly shared values and principles, a precondition for economic and other co-operation under the agreements.’29 The insertion of an appropriate suspension/non-execution mechanism operational in emergencies It was its Haitian and Yugoslav experiences that confronted the Community and its Member States with numerous political and legal problems regarding the immediate unilateral suspension of relations 30 and which led the Council31 in its above-mentioned Statement of 1992 to request the Commission to act in order ‘to ensure that agreements to be concluded by the Community contain an appropriate mechanism which is operational in emergencies, including provisions relating to non-fulfilment of obligations’.32 In order to provide for an immediate response in a case where serious breach of the essential provisions occurs, additional clauses were inserted in the body of the Agreements thus offering an alternative to the procedure laid down in the VCLT, notably regarding notification and delay requirements.33 In the TCAs concluded in 1992 with the Baltic states and Albania,34 complementary to the ‘essential element’ clause an ‘explicit suspension clause’ was inserted. According to this so-called ‘Baltic clause’: ‘The parties reserve the right to suspend the agreement in whole or in part with immediate effect if a serious violation occurs of the essential provisions of the present agreement.’35 Major inconveniences of the Baltic clause were that it was indeed too vaguely formulated and therefore opened the way to arbitrary or abusive application by both parties to the Agreement. A more appropriate ‘general non-execution clause’ was inserted within the Agreements concluded with Bulgaria, Ukraine and Romania, for example. This so-called ‘Bulgarian clause’ states: If either Party considers that the other has failed to fulfil an obligation under this Agreement it may take appropriate measures. Before so doing, except in case of special urgency, it shall supply the Association Council with all relevant information required for a thorough examination of the situation with a view to seeking a solution acceptable to the Parties. In the selection of measures, priority must be given to those which least disturb the functioning of the Agreement. These measures shall be notified immediately to the Association Council and shall be the subject of consultations within the Association Council if the other Party so requests.36

The Many Faces of EU Conditionality 105

The advantages of the Bulgarian clause were obviously numerous in comparison with the Baltic clause. It provided for preliminary consultations and a conciliation procedure within the framework of the Association Council and was designed to keep the agreement operational wherever possible. One of the problems was that the link between the cases of ‘special urgency’ and human rights violations was still not clear enough nor were any ‘appropriate measures’ clearly defined. An ‘increasingly varied range of interpretative Declarations’37 were adopted consequently in order to ‘regain the flexibility lost in the clauses themselves’. 38 In this respect one should mention here that during the negotiation of the EAs with the Czech Republic and Slovakia the latter requested the insertion of a Joint Declaration in order to ‘prevent the Community from using the Bulgarian clause for economic reasons’.39 The adoption of a more consistent approach post-Maastricht In response to the ‘disparate nature of the references’ in Agreements concluded with third countries the Commission decided to adopt a nondiscriminatory approach by proposing guidelines and negotiating directives on conditionality. The Commission stressed the ‘need to improve the consistency, transparency and impact of Community policy, while at the same time allowing for the sensitivity of the countries concerned and respecting the principle of non-discrimination’.40 Following the request of the EP, the Commission adopted on 23 May 1995 a Communication ‘on the inclusion of respect for democratic principles and human rights in agreements between the Community and third countries’ (COM(95)216). After an evaluation of the strategy, examined partly above, and an attempt to justify the Community approach, a standard wording for conditionality clauses and interpretative declarations was proposed. The proposal provided for an extension of the legal scope of the wording intended to be included in ‘all draft negotiating directives for Community agreements with third parties’. The system proposed was composed of an ‘essential element’ clause (Article X) ‘to be adapted to circumstances’ and complemented by an article regarding non-execution (Article Y, i.e. the Bulgarian clause), accompanied by two interpretative declarations. The two interpretative declarations were formulated as follows: (a) The parties agree, for the purpose of the correct interpretation and practical application of this Agreement that the term ‘cases of special urgency’ in Article Y means a case of the material breach of the Agreement by one of the Parties. A material breach of the Agreement consists in: (i) repudiation of the Agreement not sanctioned by the general rules of international law; or

106 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

(ii) violation of essential elements of the Agreement, namely its Article X. (b) The parties agree that the ‘appropriate measures’ referred to in Article Y are measures in accordance with international law. If a party takes a measure in case of special urgency as provided for under Article Y, the other party may avail itself of the procedure relating to settlement of disputes. Such interpretative clauses circumscribed the use of the non-execution clause. According to the Commission, the use of the concept ‘special urgency’ opened an option ‘without creating an obligation’ and therefore, by referring to ‘appropriate measures’, allowed the parties ‘to gauge what measures they should take’.41 The Commission Communication also stressed that the inclusion of such conditionality clauses required, among other things, special analysis with a view to defining ‘the criteria that must be met before establishing contractual relations thereby enabling a non-discriminatory approach’. The importance of ‘continuous dialogue’ with the third country and consultation was also considered as being ‘the only way of promoting a flexible approach that makes due allowance for the cultural sensitivities and specific needs of the countries concerned, while ensuring that the Union’s priorities are also respected’. However, even if significant improvements were achieved, important problems still remained. First of all, the timing was disastrous. The Communication was published after the end of negotiations (or, in some cases, after entry into force) of most Europe Agreements and before the finalization of the negotiations on the mid-term revision of Lomé IV where the ‘appropriate mechanism’ is much more detailed.42 Moreover, the strategy was adopted after the end of negotiations of the EMAAs with Israel and Tunisia which consequently contain no interpretative declaration. The precise delimitation of essential elements is still clouded and subject to ad hoc analysis. Recourse to immediate suspension in cases of ‘special urgency’ seems to be inadequately circumscribed as it is, for example, in the Lomé Common Declaration.43 The EP also regretted ‘the ambiguity of the positions adopted by the Commission’ concerning the fact that priority must be given to measures which least disturb the functioning of the Agreement.44 The use of the immediate suspension procedure is not purely theoretical, although it will only be used in the last resort. 45 Examples of use of the suspension clause of the somewhat specific Lomé Mauritius Convention46 demonstrate that, if necessary and if internal and international political conditions are fulfilled, such suspension or non-execution clauses will be reverted to. In a second Communication, adopted on 22 November 1995 and entitled ‘The European Union and the external dimension of human rights

The Many Faces of EU Conditionality 107

policy: from Rome to Maastricht and beyond’ (COM(95)567), the Commission carried out an assessment of the various instruments and objectives and defined a grand strategy ‘designed to improve the consistency and impact’ of the EU’s activities in this field. As recognized by the Commission itself it was ‘the first exercise of its kind’. In the framework of the ‘positive, practical and constructive approach’, the search for synergy between the objectives and the activities of the various European organizations is highlighted. Lists of instruments, priorities and targeted groups (national minorities) and specific initiatives (education on human rights) are established. One must also underline the mentioning of the GSP as ‘countries undertaking to respect ILO conventions on freedom to form unions, the right to collective bargaining and child labour, will benefit from certain additional trade concessions’. Reference to WTO and OECD initiatives are also made (points 66–8). In the contractual field, the approach ‘should not be seen as imposing conditions, but in the spirit of a joint undertaking to respect and promote universal values’ (point 63). The list of appropriate measures of COM(95)216 is completed by the mentioning of possible interventions in international forums and participation in international and regional enquiries. The need to ensure that the populations are not penalized is also stressed. Regarding financial assistance programmes, Regulation 443/92 of 25 February 1992 (Asia and Latin America), TACIS Regulation and the then proposed MEDA Regulation are mentioned alongside the ‘suspension’ clause and the very detailed consultation mechanism of the mid-term review of Lomé IV.47 The tremendous development of conditionality within the regional approach to the countries of South-Eastern Europe The implosion of the former Yugoslavia led to a tremendous development of conditionality. The fear of experiencing again the disastrous repercussions of the recognition of the former Yugoslav republics 48 led to progressive definition of a conditionality strategy regarding the countries of South-Eastern Europe.49 The Co-operation Agreement concluded with the Former Yugoslav Republic of Macedonia The Agreement concluded with the Former Yugoslav Republic of Macedonia50 (FYROM) is a good example of a bilateral agreement inserting, in the body and in one and the same Article (Article 1), political and economic conditions alongside strong regional and social incentives. According to this article, the ‘readiness’ of FYROM to enter into ‘cooperative and good neighbourly relations with the other countries of the region including the promotion of economic co-operation and trade, constitutes an important factor in the development of the relations and

108 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

co-operation’ between the Community and FYROM. Such an ‘evolutionary clause’ spelt out the essential preconditions for a further development of relations with the Union. Respect for the democratic principles and human rights established by the Universal Declaration of Human Rights, the Helsinki Final Act and the Charter of Paris for a New Europe ‘underpins the internal and international policies’ of the Community and of FYROM, and ‘constitutes an essential element’ of the Agreement. The same applies to the ‘principles of a market economy as reflected in the document of the Bonn Conference on Economic Co-operation’. Finally, the parties have acknowledged ‘the importance of social development which should go hand in hand with any economic development’ and added that they ‘give particular priority to the respect for basic social rights’. According to the Joint Interpretative Declaration of the Agreement, a material breach of the Agreement consists in a repudiation of the Agreement not sanctioned by the general rules of international law or the ‘violation of the essential elements of the Agreement set out in Article 1(3) and (4)’. In other words, it is only nonrespect for democratic principles and human rights and the principles of a market economy that constitutes an essential element of the agreement. To confirm this general trend of reinforcement and differentiation of conditionality within contractual relations one should also refer, for example, to the Partnership and Co-operation Agreement concluded with Georgia,51 where respect for ‘international law’ is, alongside democracy, human rights and the principles of a market economy, considered an essential element. The adoption of a ‘conditionality strategy’ regarding the countries of SouthEastern Europe In order to define a consistent approach towards countries in South-Eastern Europe ‘without Association Agreement’ (Bosnia and Herzegovina, Croatia, FRY, FYROM and Albania), the Council adopted, in April 1997, conclusions on the ‘application of conditionality with a view to developing a coherent EU strategy’.52 According to the Council, the EU agreed to establish political and economic conditions ‘as the basis for a coherent and transparent policy towards the development of bilateral relations in the field of trade, of financial assistance and economic co-operation as well as of contractual relations, allowing for the necessary degree of flexibility’. Moreover, it was stressed that the EU strategy ‘should serve as an incentive, and not an obstacle, to the countries concerned to fulfil these conditions’. Regarding principles and guidelines, it was stressed that the approach had to be ‘graduated’ (‘trade preferences, the extension of financial assistance and economic co-operation as well as the establishment of contractual relations are subject to different degrees of conditionality’). The renewal of autonomous trade preferences was clearly linked to respect for the

The Many Faces of EU Conditionality 109

fundamental principles of democracy and human rights and to the readiness of the countries concerned to allow the development of economic relations between themselves. Implementation of the PHARE Programme ‘could be considered subject to evidence of a country’s credible commitment to democratic reforms and progress in compliance with the generally recognised standards of human and minority rights’. Preconditions upon the negotiation of Stabilization and Association Agreements The Council, in defining the conditionality strategy, also stressed that the application of conditionality had to be seen as ‘an evolutionary process’ – the start of the negotiations requiring ‘a lower level of compliance than the conclusion of the agreements. At each stage, including after the conclusion of agreements, the situation should be monitored and, in accordance with the relevant articles of the agreement, its application could be suspended in case of serious non-compliance.’ To allow the beginning of negotiations, ten general preconditions 53 applying to all countries concerned were listed alongside specific preconditions devoted to Croatia, Bosnia and Herzegovina and the FRY. More recently,54 with regard to the possible start of negotiations of a new kind of contractual relations – Stabilization and Association Agreements (SAAs) – the Commission stated that given its positive record to date, and its compliance with the relevant conditions, it is likely that negotiations will first be opened with FYROM. It would not yet be appropriate to consider the opening of negotiations with Bosnia and Herzegovina or Croatia, as the relevant conditions have not yet been fulfilled. The FRY has the ‘same general perspective as the other States once it respects the relevant conditions. At present, it disregards the most fundamental of these.’55 According to the Sarajevo Summit Declaration of 30 July 1999,56 endorsing the purposes and principles of the ‘Stability Pact for South Eastern Europe’, regional co-operation will also serve ‘as a catalyst to the aspirations of the countries in the region to integrate themselves into broader structures’. The specificity of pre-accession conditionality The start-up of the accession train has reoriented the incentive in the EU’s use of conditionality towards candidates but the EAs remain the basis for relations. Three milestones stand out in this inconsistent reorientation of the incentive towards accession: the 1993 Copenhagen European Council; the 1995 Commission’s White Paper on the preparation for integration of the CEECs into the Internal Market; 57 and the Agenda 2000 Communication which includes the enlargement strategy. 58 Whereas the

110 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

Europe Agreements were, at least from the side of the EC, not originally considered as pre-accession instruments, the Copenhagen European Council amounted to a unilateral, political reorientation of the EAs for both the EU and the associates.59 The Agenda 2000 reorientation also maintained flexibility as regards the (political) differentiation of candidates. In the reorientation of the incentive, the introduction of more coherence into the conditionality becomes apparent but there is a reluctance to commit to prioritizing candidates in the short to medium term. The aim is more to keep flexibility within the broad differentiation of the pre-accession train in the context of the region rather than to risk diminishing the incentive that accession provides in the subregion of the candidate CEECs. The progressive reorientation and introduction of more coherence into financing conditionality Both PHARE, established in 1989 for the CEECs, and TACIS, established in 1991 applying to the NIS and Mongolia, were essentially technical assistance programmes. PHARE’s evolution reflects the reorientation towards accession of the CEECs, and the increased use and reorientation of the conditionality therein bears this out.60 Originally, it was intended to be a partnership between the EC and the recipient countries, designed to respond to the demands of the beneficiaries. Conditionality attached to European Bank for Reconstruction and Development (EBRD) and European Investment Bank (EIB) funds are also to be mentioned. The EBRD was established in 1990 in direct response to the upheavals in Central and Eastern Europe of the late 1980s and its stated purpose is to foster the transition towards open market oriented economies and to promote private and entrepreneurial initiative in those CEECs ‘committed to and applying the principles of multi-party democracy, pluralism and market economies’ (Article 1 of the EBRD Charter 61). The recipient CEECs and CIS committed to establishing political and economic systems which mirror the western model and membership of the Bank may be suspended, or operations suspended, modified or terminated, should a member implement policies which are inconsistent with Article 1. Thus, in 1991 the EBRD suspended operations in the Federal Republic of Yugoslavia and Bosnia and Herzegovina.62 The search for complementarity and flexibility of financing conditionality while maintaining differentiation between candidates and non-candidates The lack of proper conditionality provisions within PHARE funding and regulation was obvious during the first years of its implementation. One must recall that the PHARE regulation was adopted long before the 1995 strategy (see below). One must also not forget that the absence of proper conditionality provision within PHARE was progressively

The Many Faces of EU Conditionality 111

counterbalanced by other types of pre-accession conditionality (e.g. the Copenhagen criteria, the Europe Agreement’s conditionality, Accession Partnerships and so on). At the operational level, an interim evaluation of PHARE published in 1997 by the European Commission states that: ‘The lack of commitment devices in Phare programmes themselves, through financial, political and other forms of conditionality, weakened the partners’ commitment to good programme performance.’63 A second study, of November 1998, produced by an independent consulting firm (GOPA) for the European Commission on the ‘evaluation of Phare Restructuring and Privatisation Programmes’ stresses, for its part, that: Phare is a policy taker. There have been no conditionalities associated with either changing policies to more realistic ones, or to maintaining a period of policy stability. To improve the effectiveness and impact of Phare funding and project outputs, conditionality should be introduced explicitly, as is for instance the case in the recently adopted Accession Partnerships. Conditionality should cover both upstream conditions to be fulfilled before the programme or project is launched and downstream conditions for their continued implementation.64 Such lack of conditionality provisions was partially solved by two distinct regulations adopted in 1998 and 1999 the scope of which is, however, limited to the pre-accession strategy and, therefore, only applies to candidate countries. Significantly, the Council built into the pre-accession strategy Regulation 622/9865 enabling it to suspend pre-accession assistance. According to Article 4 of Regulation 622/98: Where an element that is essential for continuing to grant pre-accession assistance is lacking, in particular when the commitments contained in the Europe Agreement are not respected and/or progress towards fulfilment of the Copenhagen criteria is insufficient, the Council, acting by a qualified majority on a proposal from the Commission, may take appropriate steps with regard to any pre-accession assistance granted to an applicant State [emphasis added]. First, it is important to note that insufficient progress towards fulfilment of the Copenhagen Criteria is specified as an essential element alongside commitments under the EAs. Thus, this Regulation upgrades the Copenhagen Criteria from political preconditions of the European Council to legally binding conditions, subject to sanctions, alongside the conditions contained in the EAs. Regulation 622/98 also shows the intent to introduce complementarity into the pre-accession financing conditionality.

112 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

Second, Regulation 622/98 does not list the essential elements but, rather, leaves them to the ‘political’ decisions of the Council acting by qualified majority. Flexibility is introduced by the wording in particular, and/or, and the mention of appropriate steps to be compared with appropriate measures used in the Bulgarian clause and interpretative declarations of the EAs. In June 1999, Regulation 1266/99 – on ‘coordinating aid to the applicant countries in the framework of the pre-accession strategy and amending Regulation (EEC) No 3906/89’ 66 (PHARE) – incorporated an explicit reference to pre-accession conditionality and introduced differentiation among candidate and non-candidate countries within the body of the PHARE Regulation. The new paragraph 3 to Article 3 of PHARE Regulation reads as follows: ‘For applicant countries with accession partnerships with European Union funding under the PHARE programme shall focus on the main priorities for the adoption of the acquis communautaire’ (Article 4 of Regulation 1266/99). This provision is, however, not comparable to the ‘essential element’ clause of the 622/98, MEDA, OBNOVA67 or TACIS68 regulations. In other words, at the time of writing, the PHARE Regulation, as amended by Regulation 1266/99, still does not contain a proper ‘essential element clause’ nor a procedure for adopting ‘appropriate measures’ in case of special urgency. Candidate countries benefiting from PHARE funding are nevertheless subjected to the preaccession conditionality based on a wide range of preconditions, conditions and incentives, e.g. the Copenhagen criteria, the preconditions and conditions attached to EAs, conditions in the implementation of preaccession financial assistance (notably Regulation 622/98), conditions laid down in the Accession Partnerships. One of the aims of Regulation 1266/99 is also to reinforce coordination between the various instruments of assistance granted in the framework of the pre-accession strategy and, consequently, the conditionality applying in the single pre-accession financial assistance framework. According to Article 6 of Regulation 1266/99 (this time not technically amending the PHARE Regulation): Financing of the schemes or measures provided for in this Regulation shall be subject to compliance with the undertakings contained in the Europe Agreements as recalled in Regulation (EC) No. 622/98 and with the conditions laid down in the Accession Partnerships, as well as to the relevant provisions of Regulations (EEC) No. 3906/89 [PHARE], (EC) No. 1267/1999 [structural instrument for transport and environment], (EC) No. 1268/1999 [agricultural instrument] and of this Regulation. The mounting EU differentiation strategy between candidate and noncandidate countries in the implementation of PHARE activities is, as

The Many Faces of EU Conditionality 113

already mentioned, also increasingly apparent. As stressed by the Commission: As the role of Phare in the accession process has grown, it has become clear that a conceptual distinction needs to be drawn between activities in the candidate countries and those in Albania and the Former Yugoslavia (except Slovenia), which have not applied to join the Union, and whose programmes do not, therefore focus on accession [emphasis added].69 In other words, the general guidelines of the pre-accession process apply only to PHARE activities in the candidate countries. As underlined by the 1999 Helsinki European Council, there is a need for a ‘single regulatory framework for financial assistance which should contribute to more effective action on the ground and co-operation in [South-Eastern Europe]’. Of course, this differentiation does not mean that the countries not (yet) included in the pre-accession strategy are not subject to conditionality. As regards Croatia, for example, the Commission mentioned that ‘in order to lift the suspension of PHARE, further progress towards democracy will be necessary, inter alia, in the fields of media reform, electoral reform, and refugee return, in accordance with the 29 April 1997 conditions’.70 That is to say that the South-Eastern European countries, eligible for PHARE but not included in the pre-accession strategy, are subjected to the specific ‘South-Eastern conditionality strategy’ (see above). Coordination and coherence of assistance granted in the framework of PHARE has therefore a limit: the differentiation strategy applying to European countries. An increasing use of the positive approach An increasingly constructive approach began to emerge in the conditionality arising in the use of assistance and funding to the CEECs. Examples include the introduction of the PHARE Democracy Programme in 1992 or the specific 10 per cent allocation of PHARE funds to environmental projects. Regional conditionality had already become apparent in the EAs which, in the framework of economic co-operation, provided for special attention to be devoted to measures designed to foster co-operation between CEECs. As already mentioned, this regional conditionality was clearly reinforced following the 1994 Essen European Council. The Cross Border Cooperation Programme,71 introduced in 1994 within the PHARE Programme, was designed to encourage strategic planning in the development of the border regions of the EU and PHARE eligible countries. Thus a variety of bilateral CEEC agreements on good neighbourly relations and co-operation grew up. The positive approach in the use of pre-accession assistance and funding is also apparent in the reoriented pre-accession conditionality of the Agenda 2000 strategy.72 The programming documents for projects under

114 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

PHARE73 have been replaced by the APs (which establish the multi-annual programming) and Commission Decisions fixing the annual financing for project implementation. The operational level: the search for the ‘maximum multiplier effect’. At an operational level, financial investment has been reinforced by reformed administrative methods, including the continuation of decentralized management in favour of beneficiary countries. Two entirely new funds supplement PHARE as of the year 2000, for agriculture (SAPARD) and for structural adjustment (ISPA), facilitating the absorption of the candidates upon eventual entry. The key phrase, ‘maximum multiplier effect’, guides all the EC aid measures so that ‘all of these resources can be mobilized in pursuit of the objectives of the pre-accession strategy through improved interlinking, particularly through the APs and within the framework of the administrative responsibilities already devolved to the Commission’.74 Not forgetting that PHARE funds must be supplemented by the applicants, the idea is that joint financing must follow the rules of EU Structural Funds and PHARE grants will act as a ‘catalyst’ to private and public loans. Moreover, Framework Agreements are envisaged by Agenda 2000 with the EIB, the EBRD and the World Bank which lend in profit-yielding sectors such as trans-European networks (TENs) and telecommunications. In the nuclear safety sphere, PHARE and EURATOM lending will also be coordinated with the various lenders implicated. Importing the ‘acquis communautaire’ The 1995 White Paper set out a detailed approximation programme for legislation directly affecting the Internal Market (and, thus, to the exclusion of whole tracts of other chapters of the acquis communautaire) and this prompted the autonomous adaptation by the candidates to that programme. Agenda 2000 distanced itself from the tunnel vision of the 1995 White Paper and reorientated the incentive, elaborating upon the Copenhagen Criteria within a strategy for accession, albeit without a timetable (other than in the short, medium and long terms). The pre-accession strategy was reinforced 75 by the bilateral Accession Partnerships76 (APs) which establish the short-term priorities and intermediate objectives necessary for accession negotiations to commence. The APs follow closely the Council Decisions of 30 March 199877 on the principles, priorities, intermediate objectives and conditions in the APs together with the future financial framework. While the APs incorporate the word ‘partnership’, they take the form of a Commission Decision taken after consultation with the applicant country. 78 They are implemented through National Plans for the Adoption of the Acquis (NPAAs), which lock the candidates into their timetables, but also through national benchmarks contained in country-specific ‘road maps’ drawn up with Commission

The Many Faces of EU Conditionality 115

guidance or technical assistance. A pre-accession financing package is built into this, as are bilateral and multilateral dialogues in order to deal with the anticipated increasing intensity in negotiations for which the structured dialogue ‘no longer appear(ed) appropriate’.79 PHARE now concentrates on the adoption of the acquis communautaire 80 and, more particularly, on institution building (30 per cent) and the financing of investment (70 per cent) of the PHARE budget for each applicant. Here also, prior to Agenda 2000, approximation to EC standards had been contained in the EAs, and references to social and environmental conditionalities, for instance, had been included. Their inclusion was not, however, systematic or coherent. Thus, while social justice was referred to in the EA with Hungary, no other EA contains such a commitment. As regards essential element clauses, for example, EAs do not contain any explicit environmental conditionality although action on the environment is foreseen in the field of approximation of laws and in the field of economic co-operation. The priorities highlighted in the articles of the EAs which are dedicated to environmental co-operation, however, differ from one country to another according to the environmental concerns arising in the bilateral context. And environmental protection or sustainable development or both are mentioned explicitly under the heading of energy and nuclear safety but not always under the section for co-operation in agriculture, transport, regional development or industry. While the conditionality on the approximation of environmental standards for the purposes of trade was made an imperative, the environmental conditionality under economic co-operation by its very nature seemed weaker, it being an expression of an aim rather than any obligation to take action. As referred to above, the Copenhagen Criteria, later upgraded to legally binding conditions by Regulation 622/98, effectively imported the acquis communautaire into the relations between the EU and the CEECs – but then, in direct response to the 1995 White Paper, the candidates set about autonomously approximating with the Internal Market model. The apparent priority afforded to Internal Market legislation over other chapters of the acquis was questionable, not only in terms of the legitimacy of prioritizing one chapter of the acquis over others but also, for example, in terms of how the jurisprudence of the ECJ would be included in that chapter. Beyond the accession strategy requiring adoption of the acquis communautaire, certain chapters of the acquis have already been identified for transitional arrangements post accession. The environment, for example, is one area where there is considerable opportunity for clashes between the acquis on the functioning of the Internal Market and protection of the environment/sustainable development. Indeed, in the White Paper itself, the Commission recognized the need to complement the environmental legislation having a ‘direct bearing on the Internal Market’ – basically product-related Directives and

116 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

Regulations. EU measures aimed primarily at environmental protection, taken under the legal basis of Article 175 (ex-130s) EC Treaty, allow for stricter national measures. In practice, the distinction is not clear and stringent standards under ‘pure’ environmental legislation in the past have involved the adoption of standards that have a direct impact on products or their free movement within the Internal Market.81 Agenda 2000 strives to correct the impression of the 1995 White Paper that the acquis communautaire is divisible. Only one month after Agenda 2000, the Commission issued a staff working paper 82 to the CEECs which ‘takes the approach of the White Paper a step further’. A later Commission Communication83 dedicated to the environmental aspects of the next enlargement serves as guidance to the applicants and to complement the APs. Transitional measures are to be the exception, not the rule, and new projects must meet all environmental standards (including the Internal Market standards) and the CEECs should be capable of keeping up with the evolution of the acquis. At operational level, the apparent prioritization of the Internal Market acquis over other chapters of the acquis was equally apparent. Even at administrative level, the incentive of accession appeared to concentrate on the Internal Market. Set up under the 1995 White Paper, the Technical Assistance Information Exchange Office (TAIEX) of the Commission was concerned with Internal Market legislation only. TAIEX was split off from the DISAE office,84 for example, and only took over its operations in 1998 as a result of the Agenda 2000 reorientation. A fundamental criticism of TAIEX was the fact that the assistance it provided was independent of the various other Directorates General which would have provided useful insight to the candidates. Added to the criticisms must be the fact that only applicant governments had access to it until Agenda 2000 opened the doors of TAIEX to firms. Its information role was extended to the entire acquis and active participation in EC programmes (research and development, culture, transport, SMEs) and increased contacts with EC agencies (the Medicines Evaluation Agency or the European Patent Office are examples) are also central components of the strategy for approximation with the acquis. Generally, it is difficult to evaluate the CEECs’ progress in importing the acquis and, consequently, the actual effect of this pre-accession conditionality. A variety of Commission reports on their progress towards accession provide little more depth of insight into their progress than did the Commission Opinions accompanying the Agenda 2000 Communication and the ‘screening process’ is no more transparent. Increasingly, however, questions are being raised as to the appropriateness of requiring the CEECs to import the Community Model. As regards the competition chapter of the acquis, for example, detailed approximation by the transition economies has been questioned on the grounds that it might even reduce

The Many Faces of EU Conditionality 117

their overall readiness for membership or ‘deflect attention from more serious problems of ensuring that the application of competition law and policy should remain reasonably objective in the face of the substantial political pressures to distort it for the private advantage of particular interest groups’.85 The appropriateness of the adoption of the environmental acquis by the CEECs is another example. Agenda 2000 provides for adoption of the acquis without exception. Fundamental policy gaps exist in the environmental acquis, such as the lack of provision for responsibility for the clean-up of contaminated land which is a determining factor in securing external investment and therefore necessary to long-term competitiveness. In adopting the acquis, the CEECs are being steered away from tackling their own pressing environmental needs, generally more acute than those of the Union. Transitional measures are anticipated for legislation such as that for large combustion plants, 86 conceived at Community level precisely because of the favourable effects on the quality of Europe’s environment.

Conditionality facing MNMCs within the context of the Euro-Mediterranean Partnership The deep change that has occurred in the nature of Euro-Mediterranean relationships, since the adoption of the Barcelona Declaration, has also led to an important development of conditionality. The analysis will concentrate on the countries on the southern and eastern shores of the Mediterranean basin which are, contrary to Cyprus, Malta and Turkey, not eligible for EU membership. The creation of a multilateral framework of relations based on a spirit of partnership: the Barcelona Declaration From the Barcelona Declaration to the ‘Barcelona acquis’ The Barcelona Declaration (BD), the founding act of the EuroMediterranean Partnership (EMP), is not legally binding. It is a political declaration based on common principles and objectives establishing a multilateral and multisectoral framework of dialogue and co-operation between 27 Euro-Mediterranean partners. The draft declaration was submitted as such for appraisal to the twelve MNMCs a few months before its adoption,87 and therefore mutually agreed. Moreover, the final declaration was not even signed by the participants.88 The BD is now considered a Euro-Mediterranean political acquis for potential members of the EMP (such as Libya and, more surprisingly, also Croatia89). As stated by the Chairman’s Formal Conclusions of the third Euro-Mediterranean Conference of Foreign Ministers held in Stuttgart in April 1999: ‘Ministers agreed that Libya, which participated as a guest of the Presidency, will become a full member of the Barcelona Process as soon

118 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

as the UN Security Council sanctions have been lifted and Libya has accepted the whole Barcelona acquis.’ 90 In other words, the latter are two preconditions to be fulfilled by Libya before it envisages becoming a partner of the EU. Within the preamble of the Barcelona Declaration two elements are of particular importance. First of all, one must underline that the ‘strengthening of democracy and respect for human rights, sustainable and balanced economic and social development, measures to combat poverty and promotion of greater understanding between cultures’ are ‘all essential aspects of partnership’. Second, it is said that the 27 partners are resolved to establish a multilateral and lasting framework of relations ‘based on a spirit of partnership, with due regard for the characteristics, values and distinguishing features peculiar to each of the participants’. The limits of the consensual approach immediately become apparent. On the one hand the EU is willing to promote ‘universal values’ and export, to some extent, the ‘Community Model’, while at the same time it remains conscious of the danger of adopting a too paternalistic or neocolonial approach that could be harmful to the declared ‘spirit of partnership’ of the Barcelona Process. On the other hand, the MNMCs are aware of the necessity to comply with certain ‘common agreed international principles’ but each MNMC is also willing to affirm its identity and preserve its own interests. This nearly contradictory approach appears again within the first part of the Declaration devoted to the ‘political and security partnership’, where the participants agreed to develop the rule of law and democracy in their political systems, while recognizing in this framework the ‘right of each of them to choose and freely develop its own political, socio-cultural, economic and judicial system’. However, one must stress the importance and specificity of such a consensual approach compared with, on the one hand, the unilaterally imposed conditionality for candidate countries and the regional approach adopted towards the countries of South-Eastern Europe on the other. The adoption of a ‘declaration of principles’ within the framework of the political and security basket of the Euro-Mediterranean Partnership Within the first part of the Barcelona Declaration, the participants have undertaken a ‘declaration of principles’. This declaration of principles is composed of a list of political principles, inter-states rules of conduct and guidelines regarding security issues, with a view to the creation of an ‘area of peace and stability in the Mediterranean’. The participants agreed to act in accordance with the UN Charter and with the non-legally binding Universal Declaration of Human Rights, as well as ‘other obligations under international law, in particular those arising out of regional and international instruments to which they are party’. Respect for human rights and fundamental freedoms and the

The Many Faces of EU Conditionality 119

guarantee of the effective legitimate exercise of such rights and freedoms includes, in the terms of the declaration, ‘freedom of expression, freedom of association for peaceful purposes and freedom of thought, conscience and religion, both individually and together with other members of the same group, without any discrimination on grounds of race, nationality, language, religion or sex’. Racism and xenophobia are also mentioned as well as the importance of ‘diversity and pluralism’ and the need to ‘combat manifestations of intolerance, racism and xenophobia’. The question of the rights of minorities, envisaged in the early drafts of the Barcelona Declaration, was not explicitly mentioned. Only the vague formula mentioned above was finally adopted. The mention of respect of ‘sovereign equality’ as well as the ‘equal rights of peoples and their right to self-determination’ and the ‘territorial integrity of States’ must be observed in the light, for example, of the Israeli–Palestinian and Kurdish issues. According to the second part of the declaration of principles, which is in fact the embryo of a long expected ‘Euro-Mediterranean Charter for Peace and Security’ (EMCPS), the parties shall, among other things: promote regional security by acting in favour of nuclear, chemical and biological non-proliferation; pursue a ‘mutually and effectively verifiable Middle East Zone free of weapons of mass destruction’; promote conditions likely to develop good neighbourly relations among themselves; and support processes aimed at stability, security, prosperity and regional and subregional co-operation. According to the guidelines adopted in Stuttgart in April 1999 the EMCPS will be a non-legally binding political instrument founded on the global security concept. The implementation of the EMCPS will be based on a consensual approach. Confidence-building measures, preventive diplomacy initiatives and crisis management will apparently constitute the main instruments while promotion of human rights, democracy, regional cooperation and social development will be considered as essential objectives. Finalization of the EMCPS is expected to take place during the 2000 French Presidency. An economic and financial partnership based on the principles of market economy, promoting sustainable and balanced development and regional integration Within the framework of the second basket of the BD the participants emphasized the importance they attached to ‘sustainable and balanced economic and social development’, to the promotion of ‘regional co-operation and integration’ and to the ‘development of policies based on the principles of market economy’. First of all, one should mention that the participants established a clear link between, on the one hand, the political and economic issues and, on the other, the social and human factors, declaring they were ‘all essential aspects of partnership’. Second, even if the

120 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

participants to the Conference have affirmed that regional co-operation is to be implemented on a ‘voluntary basis’, it is clear, from the design of the reinforced Mediterranean policy, that the EU wanted to try to impose a certain degree of regional conditionality (i.e. offer the cumulation of origin to MNMCs that concluded free trade zone agreements with their neighbours91) especially after the signature of the Oslo Agreements. This was obviously very difficult to achieve given the poor neighbourly relations among the MNMCs. More innovative is the recognition of the importance of social development which ‘must go hand in hand with any economic development’. The necessity of respecting ‘fundamental social rights, including the right to development’ was also stressed. The relationship with the MNMCs in the field of environmental protection is more one of economic co-operation and concerted action in areas where environmental problems arise which necessitate a regional approach and increased co-operation. The implementation of the aims of achieving an ‘environmental equilibrium’ depends very much on the implementation of Community assistance for economic transition. The Declaration in the context of economic co-operation and concerted action makes explicit reference to the environment, social issues and in particular the importance of the key role of women, the energy sector, fish stocks, the water sector and environmentally friendly agriculture. All of these themes are taken up separately in the work programme adopted by the Conference – except for the role of women in society. Regarding environmental matters, the very first focal point for co-operation set out in the work programme attached to the Barcelona Declaration is ‘the need to assess the environmental problems in the Mediterranean region and defining, where appropriate, the initiatives to be taken’. Thus, key to any future approach to the problems at hand is the evaluation of the actual environmental situation in the region. In terms of social conditionality, the promotion of the active participation of women in economic and social life and the creation of employment is highlighted. To this shopping list can be added cooperation towards harmonizing environmental standards in multi-modal combined sea and air transport and the use of international and European standards. The role of civil society and decentralized co-operation in the promotion of support for democratic institutions and for the strengthening of the rule of law Within the third part of the Declaration devoted to partnership in social, cultural and human affairs, the participants stressed that ‘dialogue and respect between cultures and religions are a necessary pre-condition for bringing the peoples closer’. A clear link between political conditionality and the participation of civil society, notably via decentralized cooperation, was established in the Declaration. The participants recognized

The Many Faces of EU Conditionality 121

the ‘essential contribution’ civil society can make in the process of development of the EMP and that it is an ‘essential factor for greater understanding and closeness between people’. With that aim in mind they agreed to promote ‘actions of support for democratic institutions and for the strengthening of the rule of law and civil society’. In this respect, the role of the Euromed Civil Forum is to be underlined. Conditionality within Euro-Mediterranean Association Agreements A network composed of nine Euro-Mediterranean Association Agreements92 (EMAAs) with a view to establishing a free trade area and three association agreements establishing customs unions constitute the bilateral legal framework of the EMP. We will use the Agreement concluded with Tunisia in our examination. Comparisons will be made with the Interim Agreement concluded with the PLO (for the benefit of the Palestinian Authority) and with the three EMAAs already signed with Israel, Jordan and Morocco. The preambular provisions of the EMAAs: the ‘very basis of the Association’ In the Euro-Tunisian Agreement, the Parties underline the importance they ‘attach to the principles’ of the UN Charter, ‘particularly the observance of human rights and political and economic freedom, which form the very basis of the Association’ and recall the commitment of both the EC and Tunisia ‘to free trade, in compliance with the rights and obligations arising out of the General Agreement on Tariffs and Trade’. All EMAAs already concluded contain such a ‘very basis preambular clause’ but mention of the ‘respect of democratic principles’ is added in the Israel, Jordan, Moroccan and PLO preambular provisions. This is, however, not really of much importance as respect of democratic principles is mentioned in the essential element clause. The essential element clauses inserted in the body of the EMAAs: the respect for human rights and democratic principles Regarding the body of the Tunisian EMAA, and as stated in Article 2: ‘Relations between the Parties, as well as all the provisions of the Agreement itself, shall be based on respect for human rights and democratic principles which guide their domestic and international policies and constitute an essential element of the Agreement’ (the provisions of the Accords concluded with Israel, Jordan, Morocco and the PLO, are similar). This ‘essential element clause’ is practically identical to those generally inserted in the Europe Agreements (see previous section). However, the ‘Helsinki Final Act and the Charter of Paris for a New Europe’ are not mentioned and the ‘principles of the market economy’ are not considered as essential elements. This seems to be somewhat ambiguous as one of the goals of the EMP is to establish a free trade area in conformity with WTO rules. However, according to the 1995 guidelines such provision was to be

122 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

applied to all OSCE participants, ‘and to other countries at the discretion of the Council’.93 One of the other main innovations of the Euro-Mediterranean Association Agreements, in comparison with the co-operation agreements concluded in the 1970s, is the inclusion of a political dialogue covering all issues of common interest to the Parties ‘in particular the conditions required to ensure peace, security and regional development through support for co-operation’ (see Articles 3, 4 and 5 of the Tunisia Agreement). The provisions devoted to the adoption of ‘appropriate measures’ if a Party has failed to fulfil an obligation under the Agreement are to be founded in Article 90. This clause is in fact the so-called ‘Bulgarian clause’ (see previous section). EMAAs concluded with Jordan (Article 101), Morocco (Article 90) and Israel (Article 79) also contain the same provision. However, the Interim Agreement concluded with the PLO (Article 70) is different in one respect: a Joint Committee replaces the Association Council. There are, in the proposals for the conclusion of the agreements establishing an association with Morocco and Jordan, joint interpretative declarations relating to the additional Bulgarian clause. These declarations follow the wording proposed in 1995 (see previous section). No such declaration is inserted in the agreements concluded with Israel and Tunisia because negotiations were finalized before the adoption of the 1995 strategy. The principles of market economy and GATT conformity As mentioned above ‘the principles of market economy’ are not considered, contrary to the Europe Agreements, an essential element of the EMAAs. Economic freedom forms only the ‘very basis of the Association’ and is limited to the preamble. However, most of the MNMCs are founding members of the WTO and subject to structural adjustment programmes (SAPs) under the aegis of the Bretton Woods institutions. In other words, they must on the one hand respect obligations undertaken in the WTO framework and on the other follow the specific conditions of SAP in order to benefit from Community aid. The second title of the EMAAs is devoted to the free movement of goods. A first and noticeable condition is included in Article 6 where it is said that: The Community and Tunisia shall gradually establish a Free Trade Area over a transitional period lasting a maximum of 12 years starting from the date of the entry into force of this Agreement in accordance with the provisions of this Agreement and in conformity with those of the General Agreement on Tariffs and Trade 1994 and the other multilateral Agreements on trade in goods annexed to the Agreement establishing the WTO. Tunisia, as a founding member of the WTO, is legally subject to the ‘principle of conformity’ adopted in Marrakesh implying the inclusion of such a

The Many Faces of EU Conditionality 123

provision as ‘Each Member (of the WTO) shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.’ 94 Of course, such a condition applies equally to the EC and its Member States because of the mixed nature of the EMAA. Jordan is not yet a WTO member but a WTO conformity clause has been inserted in anticipation of its accession (Article 6). The same applies to the Interim Agreement concluded with the PLO (Article 4). According to the Agreement, the objective of economic co-operation shall be to support Tunisia’s own efforts to achieve sustainable economic and social development. The link between economic and social development must be underlined especially, as it is made within the framework of the objectives of the co-operation. A regular dialogue on any social matter which is of interest to the Parties is also scheduled (Article 69) and a chapter (III) is devoted to co-operation in the social field in the EuroMoroccan and Euro-Tunisian agreements. Regional integration and co-operation incentives Regarding regional incentives, Article 43, paragraph 3, provides that ‘cooperation shall foster economic integration within the Maghreb using any measures likely to further such relations within the region’. Article 45 adds that ‘in order to make the most of this Agreement, the Parties shall foster all activities which have a regional impact or involve third countries’. 95 Regarding the Agreement concluded with Israel one should note a specific common declaration where regional co-operation is directly linked to the Middle East Peace Process. Other types of declaration made by the Community relating to rules of origin must also be mentioned as they represent regional incentives. The declaration relating to Article 29 of the Euro-Tunisian Agreement states, for example, that ‘if Tunisia concludes agreements with other Mediterranean countries with a view to establishing free trade, the Community is willing to consider cumulation of origin in its trade with those countries.’ The promotion of sustainable development as a central component of the various fields of Euro-Mediterranean co-operation Under the title on economic co-operation, in Article 43, paragraph 4, establishing the scope for co-operation, preservation of the environment and ecological balance is identified as a central component of the various fields of co-operation. Article 48 is dedicated to environmental co-operation for environmental preservation and improvement and for sustainable development. The environment is selected for co-operation in the field of regional co-operation in Article 45, paragraph (b). Conditionality within the framework of the MEDA Programme From the mid-1970s, financial co-operation with the MNMCs was implemented through bilateral technical and financial protocols annexed to the

124 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

agreements. These protocols were of a contractual and binding nature and submitted to the assent of the European Parliament. The EP used its right of veto several times.96 From traditional bilateral and contractual financial assistance to autonomous unilateral measures to accompany the reform of the MNMCs Council Regulation 1488/96 of 23 July 1996 ‘on financial and technical measures to accompany [MEDA] the reform of economic and social structures in the framework of the Euro-Mediterranean Partnership’, based on Article 235 (now Article 308 EC Treaty) is the main instrument for implementing financial assistance towards the MNMCs. According to a Council Decision of 6 December 1996 concerning the adoption of the guidelines for the indicative programmes: ‘After four generations of financial protocols with the Mediterranean partners it has become necessary to seek an improvement in the system of delivery of co-operation activities.’ 97 There was especially a need for increasing flexibility in the programming, avoiding dispersion of the co-operation effort and adapting the financial allocations to the pace of reform and to the progress achieved in macroeconomic stabilization. A very explicit political conditionality In the preamble of the MEDA Regulation it is stated that: The Community’s Mediterranean policy must play a part in achieving the general objective of respect of human rights and fundamental freedoms and of the promotion of good-neighbourly relations, while respecting international law and the territorial integrity and external frontiers of the Member States and Mediterranean Non-Member Countries. Article 3 of the Regulation adds that the latter is based on ‘respect for democratic principles and the rule of law and also for human rights and fundamental freedoms, which constitute an essential element thereof, the violation of which element will justify the adoption of appropriate measures’. Indeed, it constitutes a very explicit political conditionality. It is appropriate to underline the reference to ‘fundamental freedoms’ and, therefore, the implicit link made with the European Convention on Human Rights and Fundamental Freedoms (ECHR). Finally, in this regard, Article 2, paragraph 1, states that the purpose of the MEDA Regulation is to contribute to initiatives of joint interest in the three sectors of the EMP, the first sector being, according to the wording of the Meda Regulation: ‘the reinforcement of political stability and of democracy.’ One should notice that ‘the reinforcement of political stability and of democracy’ is not exactly the same as the original formula used for the

The Many Faces of EU Conditionality 125

first basket of the Barcelona Declaration which reads as follows: ‘Political and security partnership: establishing a common area of peace and stability.’ The word ‘democracy’ has been added unilaterally into the autonomous Regulation. Progress towards structural reform as a cornerstone of Euro-Mediterranean co-operation and financial assistance Economic performance is a cornerstone of the EMP and one should stress that the passage from a logic of assistance to a logic of partnership is the novelty of the EMP in the field of financial assistance. Regarding the link established between the economic, regional and social dimensions one should note that the support measures shall be implemented ‘taking account of the objective of achieving long-term stability and prosperity, in particular in the fields of economic transition, sustainable economic and social development and regional and cross-border cooperation’. Following these general considerations a much more explicit economic conditionality appears in Article 5, paragraph 1: Measures to be financed under this Regulation shall be selected taking account, inter alia, of the beneficiaries’ priorities, evolving needs, absorption capacity and progress towards structural reform. Selection shall also be based on an assessment of the effectiveness of those measures in achieving the objectives aimed at by Community support, in line, where appropriate, with the provisions of Association or Co-operation Agreements. The issue of ‘good governance’ One of the most interesting points included in Annex II to the MEDA Regulation is the mention of ‘good governance’. According to point IV: Good governance shall be promoted by supporting key institutions and key protagonists in civil society such as local authorities, rural and village groups, mutual-aid associations, trade unions, the media and organisations supporting business, and by assisting in the improvement of the capacity of the public administration. One should underline the fact that good governance is not mentioned in either the Barcelona Declaration or in the bilateral agreements but is explicitly mentioned in MEDA. In the MEDA Regional Indicative Programme, the moves towards ‘greater respect for human rights, the strengthening of democracy, good governance and the emergence of civil society’ is also underlined. In other words, ‘good governance’, 98 even if it cannot be put on the same footing as respect for human rights, might in the future be considered, if not de jure, de facto – as a condition for aid allocation in the EMP context.

126 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

Environmental and social incentives compared In the MEDA Regulation, the Community undertakes to support, inter alia, the efforts of the MNMCs to mitigate social and environmental consequences resulting from economic development for economic and social reform. Of course, the building of civil society is essential to the long-term success of environmental management. The first two paragraphs of Article 2 give an idea of the priority afforded environmental protection in the hierarchy of conditionality: the former makes clear that, as already mentioned, the goal of the Regulation is ‘reinforcement of political stability and of democracy, the creation of a Euro-Mediterranean free-trade area, and the development of economic and social co-operation, taking account of the human and cultural dimension’; the latter only requires that measures in support of these goals ‘take account of the objective of achieving long-term stability and prosperity, in particular in the fields of economic transition, sustainable economic and social development and regional cross-border cooperation’. While no express reference is made to environmental considerations involved in ‘sustainable economic and social development’, Annex II to the Regulation sets out the objectives and rules for the implementation of Article 2 and provides a weaker environmental conditionality of general application when compared to the economic and social conditionalities. Social conditionality, however, is more clearly delineated in relation to support measures for economic transition and the establishment of a EuroMediterranean free trade zone, or to achieving a better socio-economic balance. For regional and cross-border co-operation a general proviso is made that account be taken of promotion of the role of women in economic and social life. Special importance shall be attached to education and the creation of jobs for women. The measures shall also take account of the need to promote education and the creation of jobs for young people in order to facilitate their social integration. Also, the classification of human rights and fundamental freedoms as ‘essential elements’ in financial and technical measures under the EMP makes these conditions more certain than environmental considerations. In case of violation of essential elements, the Council may take ‘appropriate measures’ to (presumably) suspend, restrict or withdraw financing by qualified majority. No such opportunity for sanctions exists in respect of failure to meet environmental or social conditions. The procedure for adopting ‘appropriate measures’ Article 3 of MEDA provided that the definitive procedure for adopting the ‘appropriate measures’ where an essential element for the continuation of support measures to a Mediterranean partner was lacking had to be

The Many Faces of EU Conditionality 127

determined by 30 June 1997. It was consequently necessary to amend the MEDA Regulation in order to adopt such a procedure. This is the aim of Council Regulation 780/98 of 7 April 1998. This Regulation states, in its Article 1, that Article 16 of the MEDA Regulation shall be replaced by the following: ‘When an essential element for the continuation of support measures to a Mediterranean partner is missing, the Council may, acting by a qualified majority on a proposal from the Commission, decide upon appropriate measures.’ In other words, a Member State cannot impose its veto in order to avoid the adoption of such ‘punitive measures’ towards a MNMC. It is, however, doubtful that sanctions could be adopted without consensus among the Member States.

The guidelines adopted by the Council for the adoption of Bilateral and Regional Indicative Programmes The Council Decision of 6 December 1996 ‘concerning the adoption of the guidelines for the indicative programmes concerning financial and technical measures to accompany the reform of economic and social structures’ in the framework of the EMP, 99 adopted consequent to Article 9 of the MEDA Regulation, is also to be mentioned. According to these guidelines, and among other things, first, the Commission should include ‘appropriate conditionality’ in the project proposal and ensure coherence with Bretton Woods criteria when necessary (point 6). Secondly: Concerning the bilateral programmes, the priorities are to be decided taking into account the stage of development of each country’s economy and society as well as the capacity of its institutions. In the light of the conclusion or implementation of association agreements, the indicative programmes are to be decided taking into account the needs of the Mediterranean partners, their capacity to absorb funds and the progress made in structural reform process … A considerable effort will be made to promote programmes which could contribute to the development of democracy and respect for human rights. (point 11) Last but not least, the ‘economic viability’ and ‘cost-effectiveness’ of the various activities are to be taken into account. Particular attention will also be paid to ‘the way in which the indicative programmes and projects have addressed the key issues set out in these guidelines. The results of such analyses will be shared with the Member States’ (point 22). One of the major novelties relating to financial assistance is the linkage established between the legal framework level and the operational level (i.e. the indicative programming). The new indicative programming system is expected to generate a competitive effect.

128 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

The National Indicative Programmes (NIPs), concluded in 1995 and 1996 and covering three-year periods, involve nine of the twelve Partners: Algeria, Egypt, Jordan, Lebanon, Morocco, Syria, Tunisia, Turkey and the Palestinian Territories. 100 NIPs shall, according to Article 5 of the MEDA Regulation: take into account the priorities identified with the Mediterranean partners, including the conclusions of the economic dialogue … define the main objectives of, the guidelines for and the priority sectors of Community support … together with factors for the evaluation of the programmes … include indicative amounts (overall and by priority sector) and list the criteria for funding the programme concerned … The programmes may be amended taking into account experience acquired, the progress achieved by the Mediterranean partners in structural reform, macroeconomic stabilization and social progress as well as the results of economic co-operation under the new Association Agreements. The NIPs are binding on both parties to the association agreement to ensure that the recipient country applies the priorities established under the Barcelona Process. Regional initiatives complement the bilateral ones. They are designed to reflect the progress made in the framework of the Barcelona Process in taking action at multilateral level on issues of common concern, and will support decentralized co-operation. The Regional Indicative Programme (RIP) was concluded in 1998. All twelve Mediterranean partners are eligible for regional activities within the MEDA RIP. One should finally mention the Financing Framework Conventions which are the legal documents for (monitoring) the implementation of projects/programmes and defining, among other things, the roles and obligations of the different parties. During the first phase of the implementation of the Barcelona Process (1995–99) there has been a clear reinforcement of conditionality mainly because of internal developments in the EU (adoption of the 1995 strategy, entry into force of the Amsterdam Treaty). Some agreements were negotiated before the adoption of the 1995 guidelines and the MEDA indicative programmes were adopted after them. Sectoral multilateral conferences such as the Valencia ‘Euro-Mediterranean Conference on Regional Integration’ 101 of January 1999 have also influenced the process. Conditionality was therefore again introduced in a quite inconsistent manner and MNMCs are entitled to complain of a discriminatory approach. All the above developments indicate the foreseeable reinforcement of conditionality within the coming MEDA II Programme. At the time of writing, the Commission’s proposal relating to MEDA II has not yet been

The Many Faces of EU Conditionality 129

published. However, it seems that, essentially, conditionality will be reinforced at the operational level, notably in terms of progress achieved by each MNMC in structural reform and macroeconomic stabilization, as well as in the political, social and environmental fields. An indispensable simplification and rationalization of (decision-making) procedures requested by the MNMCs is also expected.

Conclusion At present, Community conditionality is still full of contradictions. There is undoubtedly a need for a more coherent approach even if considerable flexibility is required to take account of the specificity of each situation or country. The reverse effect of such a necessary amount of flexibility, though, is that the Community is sometimes accused of implementing its conditionality in a discriminatory manner. The political decision to apply conditionality strictly may well be counterproductive. Pragmatism is and, therefore, will be the rule regarding conditionality. Among the achievements, the principles of universality, indivisibility of human rights, the interdependence between human rights, democracy and development, the relativity of the principle of non-interference and the principle of proportionality between the breach of an agreement and the degree of reaction, as well as non-discrimination, are now considered as bases of the EU’s external conditionality. The human and social factors are wholly taken into account and directly linked to the political and economic issues, for example sanctions should not affect populations and humanitarian aid must be maintained. The increasing complementarity between the positive and negative approaches of conditionality is illustrated by the suggestion of the 1999 Helsinki European Council to draw the consequences from the [intense bombardments of Chechen cities]: – for the implementation of the European Union’s Common Strategy on Russia, which should be reviewed; – for the Partnership and Co-operation Agreement, some of the provisions of which should be suspended and the trade provisions applied strictly; – for TACIS, the budgetary authority is asked to consider the transfer of some funds from TACIS to humanitarian assistance. Finance in the budget for 2000 should be limited to priority areas, including human rights, the rule of law, support for civil society and nuclear safety.102 The assumption that there is a kind of emerging European way or policy of conditionality must be tempered by the fact that Community conditionality, essentially because of the absence of a ‘European Bill of Rights’, is still

130 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

largely based on international and regional conventions. In that respect, participation of the EU and Member States in international conferences is fundamental to the promotion and defence of the ‘European Model’. The need to avoid duplication or even conflicting positions with the UN, OSCE and Council of Europe is also fundamental. One should also remember, especially regarding the Pan-Euro-Mediterranean Area, the importance of UN resolutions, for example in the case of sanctions adopted towards the ex-Yugoslav republics, the role of NATO and of the OSCE, and the binding commitments for WTO members. The crucial role played by the ECJ and the EP, in order to take into account the specificity of the ‘European Model’, is to be underlined. One must, however, ask whether conditionality is really playing a useful role in supporting economic and political reform in a country having different cultures, systems, resources and priorities. If conditionality is counter-productive it may challenge the Community’s credibility. Conditionality can therefore essentially be judged in terms of its effectiveness. Nevertheless unresolved issues are numerous. The mixed nature of European integration – the well-known intergovernmental approach versus supranational concessions of sovereignty of the Member States – is certainly one of the most problematic. The sovereignty issue arises equally with regard to third countries. On the grounds of different priorities and values with different resources and approaches and, consequently, different timetables, sovereignty has long been argued by weaker developing countries to resist social, political and policy preferences of the more wealthy. The interdependence of countries due to the transboundary nature of environmental pollution is used to counter such sovereignty arguments for the export of Community environmental standards and to justify concerted action in the interests of the global environment at international level. In fact, glaring anomalies undermine the Community’s ethical justification for the export of the Community Model. Thus, for example, following the Kyoto Protocol, countries likely to fall below the CO 2 emission targets are now proposing to sell the remaining emission allowance (emission trading) to countries wishing to exceed their targets. Certain dangerous wastes banned from intra-Community export nevertheless continue to be exported to developing countries. As regards the implementation of conditionality at the operational level, the Commission’s role is fundamental. Thus, for example, where guidelines incorporate conditionality, their implementation will depend heavily on the role played by the Commission’s external service in the administration of projects with third countries. Moreover, where states cannot administer the conditionality, economic operators may also find themselves penalized. For example, importers entitled to benefit from trade preferences for labour, environment and anti-drug measures under the Community’s GSP may not receive the preferences to which they are entitled as a result of

The Many Faces of EU Conditionality 131

inadequacies of that country’s administrative co-operation with the Commission. The Commission services, recognized as desperately understaffed, must implement much of the softer conditionality at an operational level, for environmental conditionality, for example, through carrying out environmental impact assessments of projects before they are allowed to go ahead. However, the lack of transparency in the work of these services makes it difficult to evaluate the application of conditionality. While the Commission undertakes to carry out environmental impact assessments in Declaration 12 to the Amsterdam Treaty, there is no obligation on the Commission to make them public. The Relex Common Service for the management of Community aid to third countries is only operational as of January 1999 which makes it difficult to evaluate the streamlining of the Commission services in order to eliminate the inefficiencies and inadequacies of the external assistance 103 so publicly lamented by the EP and the Court of Auditors. A greater socio-economic selectivity in projects and programmes in the EU’s external relations is expected to be the rule in the coming years as the allocation of Community resources will be based not only on needs but also on merits (progress reforms, performance of the recipient country in terms of commitments and disbursements of financial aid, promotion of regional integration and sustainable development, and so on). The economic ‘viability’ of financial programmes will now be taken into account. Such a conditionality may affect the poorer and the weaker countries, in other words the countries in need of the highest financial and technical assistance. How to evaluate or measure the political and economic performances of a third country is another question. More worrying is the fact that the considerable flexibility required could lead to abuses as conditionality may be used to safeguard EU co-operation budgets or as a form of disguised protectionism. The use of sanctions, the negative or punitive approach of conditionality, is obviously much more controversial than the positive one and is generally used sparingly as the last resort. Sanctions are therefore only the tip of the ‘iceberg of conditionality’. At the international level, economic and political sanctions applied in the 1990s on the basis of multilateral, regional or unilateral decisions are numerous. In 1998, the US International Trade Commission identified 142 provisions in 42 federal laws applying US unilateral economic sanctions to 29 third countries: 7 designated terrorismsponsoring countries, 11 other countries for foreign policy or security reasons, and also 11 countries were subject to unilateral economic sanctions that prohibit certain imports from these countries for ‘environmental protection objectives’. 104 Sanctions adopted within the framework of the WTO in the context of what some journalists call a ‘trade war’ between the US and the EU should also be mentioned. Jurisprudence of the Dispute

132 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

Settlement Body of the WTO and evolution of GATT/WTO rules may also have, depending on the results of the next round, a strong impact on the development of conditionality especially in the social and environmental field.105 Comparing the CEECs and the MNMCs in the light of the sanctions adopted by the Community one should note that numerous and strong sanctions were adopted in the Pan-Euro-Mediterranean Area even before the implementation of the Maastricht Treaty.106 Such sanctions were generally the result of serious human rights violation. However, some major human rights violations have not been sanctioned. As stressed by the EP, the Union is at a crossroads: ‘the first stage has been completed: human rights are now fairly consistently referred to in texts.’ However, a ‘second stage must now begin, consisting in making these commitments effective, monitoring their implementation and penalising failure to implement them’.107 There is undoubtedly a need for a more consistent approach. It seems hypocritical that the EU, still suffering its own democratic deficit, imposes108 in its relations with third countries the obligation to respect commitments that the EU or its Member States are still unable or even unwilling to undertake.109 The lack of legal foundation, albeit partially solved with the adoption of the Maastricht and Amsterdam Treaties and the mounting jurisprudence of the Court, becomes a question of principle: the principle of reciprocity which is one of the foundations of the EAs and EMAAs. There is no doubt that EU external conditionality will be a significant and strategic issue in the coming years. The next Intergovernmental Conference and WTO Millennium Round will be occasions to demonstrate that there is indeed a European Model of reconciliation and integration and an emerging European political identity aimed at promoting peace, security and progress in Europe and in the world.

Notes 1. Although it did make reference to the UN Charter in its preamble. 2. Liberty, democracy, respect for human rights and fundamental freedoms and the rule of law. 3. See Article 136 EC Treaty mentioning fundamental social rights. 4. Article 2 TEU. 5. Article 17 TEU. 6. See the conclusion of the paper by Kris Pollet below, and the 1999 Tampere European Council, Presidency Conclusions, point D: ‘Stronger external action.’ 7. EAs were only offered to those CEECs that showed practical evidence of their commitment to introduce the rule of law, respect human rights, create a pluralist democracy, organize free and fair elections and carry through economic liberalization with a view to the establishment of a free market economy.

The Many Faces of EU Conditionality 133 8. See C. Flaesch-Mougin on the role played by the French and Belgian legislative bodies regarding the delay in the ratification of the EMAA signed with Israel. 9. Agence Europe, 26–27 April 1993, 13–14. 10. See ‘Annual Report on human rights in the world in 1997 and 1998 and European Union human rights policy’, A4-0410/98, 6 November 1998, 20. 11. 1999 Helsinki European Council, Presidency Conclusions. 12. COM(95)567 Final, 22 November 1995, 8. 13. 1997 Luxembourg European Council, Presidency Conclusions, point 23. 14. See Council Regulation 975/1999, OJ, L120/1, 8 May 1999 and Council Regulation 976/1999, OJ, L120/8, 8 May 1999. 15. Council Regulation 2820/98 of 21 December 1998 applying a multiannual scheme of generalized tariff preferences for the period 1 July 1999 to 31 December 2001. OJ, L357/1, 30 December 1998. 16. Council Regulation 3281/97 of 24 March 1997 temporarily withdrawing access to GSP from the Union of Myanmar. OJ, L85/8, 27 March 1997. See B. Brandtner and A. Rosas, ‘Human rights and the external relations of the European Community: an analysis of doctrine and practice’, EJIL, 9, 1998, 468–90. 17. Treaty amendments were necessary to establish a Community environment policy. The Community’s environmental acquis, effectively split between the Internal Market legal basis (Article 95 – ex-Article 100a) and the environment legal basis (Article 175 – ex-Article 130s), has been used both to justify external environmental policy and to shape it. The Amsterdam Treaty makes further amendments (Article 3C) to integrate environmental requirements into the definition and to implement the Community’s policies and activities with a view to promoting sustainable development. The 1998 Cardiff European Council included a statement of objectives for the integration of the environmental policy into other policy areas. 18. Decision on Trade and Environment, Marrakesh, 15 April 1994, 3. 19. C. Flaesch-Mougin ‘Vers une conditionalité environementale?’, in J.-C. Masclet (ed.), La Communauté européenne et l’environnement (Paris: La Documentation Française, 1997), 185–208. 20. For a deeper analysis see M. Maresceau (ed.), Enlarging the European Union: Relations between the EU and Central and Eastern Europe (London and New York: Longman, 1997); on EAs see K. Pollet, ‘Human rights clauses in Agreements between the European Union and Central and Eastern Europe’, RAE/LEA, 1997, 290–301. On Russia, see J. Raux and V. Korovkine (eds), Le partenariat entre l’Union européenne et la fédération de Russie (Rennes: Apogée, 1998). 21. See the TCAs concluded with the ‘Hungarian People’s Republic’, OJ, L327/1, 30 November 1988 and the ‘Polish People’s Republic’, OJ, L339/1, 22 November 1989, and the first Europe Agreements, signed with Poland and Hungary (see appendix at the end of the book). 22. Bull.-EC, June 1991, 17. 23. Bull.-EC, November 1991, 122. 24. Bull.-EC, May 1992, 82. The Declaration was adopted on the same day as the Council decision authorizing the Commission to open negotiations with Romania and Bulgaria with a view to concluding EAs containing an ‘essential element clause’. 25. COM(95)216 Final, 23 May 1995, 7. 26. COM(95)216 Final, 7.

134 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke 27. One of the main requirements of Article 60 of the Vienna Convention is the existence of a ‘material breach’ invoked by one of the parties as a ground for terminating or suspending the Treaty in whole or in part consisting in a repudiation of the Treaty not sanctioned by the Convention or the violation of a provision essential to the accomplishment of the object or purpose of the Treaty. 28. Case C-268/94, Portuguese Republic v. Council of the European Union, ECR, 1996, I-6177, paragraph 27. 29. Brandtner and Rosas, op. cit., 474 . 30. See P. J. Kuyper, ‘Trade sanctions, security and human rights and commercial policy’, in M. Maresceau (ed.), The European’s Community’s Commercial Policy after 1992: The Legal Dimension (Dordrecht, Boston and London: Martinus Nijhoff, 1993), 401–38. 31. Such a statement closely followed the discussions held at the COREPER level regarding the negotiations of a trade and co-operation Agreement with Korea. 32. Bull.-EU, May 1992, 82, italics added. 33. The party must notify the other parties of its claim. The notification shall indicate the measure proposed to be taken with respect to the treaty and the reasons therefore: Article 65(1). The other main condition involves allowing a period that shall not be less than three months between the notification and the suspension, except in cases of special urgency: Article 65(2). 34. See appendix at the end of the book. 35. Article 21 of the Agreement between the EEC and Estonia, italics added. 36. Europe Agreement concluded with Bulgaria, OJ, L358/1, 31 December 1994, Article 118, paragraph 2. 37. See COM(95)216 Final, 23 May 1995, Annex I. 38. COM(95)216 Final, 11. 39. Pollet, op. cit., 294. 40. COM(95)567 Final, 22 November 1995, 16. 41. A list of ‘measures that may be taken in response to serious human rights violations or serious interruptions of the democratic process’ is introduced: ‘alteration of the contents of co-operation programmes or the channels used; reduction of the cultural, scientific and technical co-operation programmes; postponement of a Joint Committee meeting; suspension of high-level bilateral contacts; postponement of new projects; refusal to follow up the partner’s initiatives; trade embargoes; suspension of arms sales and military co-operation or suspension of co-operation’, COM(95)216 Final, Annex 2. 42. Article 366a states, among other things: ‘to hold consultations (unless there is special urgency) with a view to assessing the situation in detail and, if necessary, remedying it.’ The consultations shall begin no later than 15 days after the invitation and as a rule last no longer than 30 days. It is stressed that ‘suspension would be a measure of last resort’. The party concerned shall also receive ‘prior notification of any such measure which shall be revoked as soon as the reasons for taking it have disappeared’, OJ, L156/6, 29 May 1998. 43. Joint declaration on Article 366a (extracts): ‘The Contracting Parties will not have recourse to the provision of “special urgency” in Article 366a, other than in exceptional cases of particularly serious and flagrant violations that, because of the response time required, render any prior consultation impossible. 2. In the event that either Contracting Party has resort to this measure, the relevant Party undertakes to make arrangements to consult with the other expeditiously with a view to assessing the situation in detail and, if necessary, remedying it.’

The Many Faces of EU Conditionality 135 44. Annual Report ‘on human rights throughout the world in 1995–1996 and the Union’s human rights policy’, A4-0400/96, point 18, 28 November 1996. 45. Thus, for instance, when a number of undemocratic practices by the Slovakian authorities provoked an EP Resolution pointing out that continuous ‘insufficient respect for democracy, human and minority rights and the rule of law’ would make it necessary for the EU to ‘reconsider its programmes of assistance and co-operation under the Europe Agreement which might have to be suspended’ (OJ, C323/116, 4 December 1995), the matter was settled shortly afterwards. See Agence Europe, 29 November 1995, 14. 46. See Council Decision of 17 May 1999 repealing Common Position 98/614/CFSP concerning Nigeria, OJ, L133/5, 28 May 1999. 47. See J. Raux, ‘Convention de Lomé (Accord de Maurice)’, Répertoire communautaire Dalloz, May 1998. 48. See O. Paye, ‘Le processus de reconnaissance des républiques ex-yougoslaves: un précédent dangereux pour les états multi-nationaux’, Transitions, I and II, 1995, 73–86; J. Charpentier, ‘Les déclarations des Douze sur la reconnaissance des nouveaux Etats’, RGDIP, 1992, 343–55. 49. See P. Renauld, ‘La stratégie de conditionnalité et l’approche régionale de l’Union européenne dans ses relations avec la Bosnie Herzégovine’, RAE/LEA, 1997, 445–9. 50. OJ, L348/2, 18 December 1997. 51. PCA between the EC and their Member States and Georgia, OJ, L205/1, 4 August 1999. 52. 2003rd Council Meeting, General Affairs, Luxembourg, 29/30 April 1997. 53. Among them: ‘credible commitment to engage in democratic reforms and to comply with the generally recognised standards of human and minority rights’; ‘holding of free and fair elections’; ‘implementation of first steps of economic reform’; ‘proven readiness to enter into good neighbourly and cooperative relations with its neighbours’. 54. See also on ‘Regional approach to the countries of south-eastern Europe: compliance with the conditions in the Council Conclusions of 29 April 1997’: COM(1998)618 Final, 28 October 1998; on the launching of the Stability Pact of the EU on South-Eastern Europe: 2177th Council Meeting, 17 May 1999; on ‘Stabilisation and Association Process for Countries of south-eastern Europe’: COM(1999)235 Final, 26 May 1999. 55. COM(1999)235 Final, 26 May 1999, 5. 56. Stability Pact for South Eastern Europe, Press Release 3789/1/99, Brussels, 30 July 1999, point 6. 57. COM(95)163 Final and Final/2, 3–10 May 1995. See M. -A. Gaudissart and A. Sinnaeve, ‘The role of the white paper in the preparation of the eastern enlargment’, in M. Maresceau (ed.), Enlarging the European Union, op. cit., 41–71. 58. Agenda 2000, Vol. I, II and III, COM(1997)2000 Final, 15 July 1997. 59. See P. C. Müller-Graff, ‘Legal framework for relations between the European Union and Central and Eastern Europe: general aspects’, in Enlarging the European Union, op. cit., 27–40. 60. PHARE Regulation 3906/89, OJ, L375/11, 23 December 1989, as last amended by Regulation 1266/99, OJ, L161/68, 26 June 1999; TACIS Regulation 1279/96, OJ, L165/1, 4 July 1996. 61. Article 1 of the EBRD Charter of 29 May 1990; Council Decision of 19 November 1990 on the conclusion of the agreement establishing the EBRD,

136 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke

62.

63.

64.

65.

66. 67.

68.

69.

70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80.

81. 82.

OJ, L372/1, 31 December 1990; Agreement establishing the EBRD, OJ, L372/4–26. Until 1998, only two instances (in 1991) of suspension of operations (in Bosnia and Herzegovina and the FRY) have provided examples of this: see A. Slim, ‘L’aide occidentale à l’Europe de l’Est: les leçons d’un demi-siècle d’aides au developpement ont-elles été tirées?’, Transitions, II, 1998, 29–73. ‘The Phare Programme: An interim evaluation’. Report produced by the Evaluation Unit of the European Commission in 1997 (http://europa.eu.int/ comm/scr/evaluation/phare/Phareinterim-r.html). ‘An Evaluation of Phare Restructuring and Privatisation Programmes, Final Report’, November 1998 (http://europa.eu.int/comm/scr/evaluation/phare/ 951409-r.html). Council Regulation 622/98 of 16 March 1998 on assistance to the applicant states in the framework of the pre-accession strategy, and in particular on the establishment of Accession Partnerships, OJ, L85/1, 20 March 1998. Council Regulation 1266/1999, OJ, L161/68, 26 June 1999. Article 2: ‘This Regulation is based on respect for democratic principles and the rule of law and for human rights and fundamental freedoms, which are an essential aspect. The specific conditions laid down by the Council for the implementation of co-operation with former Yugoslavia are also part of this Regulation.’ Regulation 1268/96 of 25 July 1996, OJ, L204/1, 14 August 1996. Article 3, paragraph 11: ‘When an essential element for the continuation of co-operation through assistance is missing, in particular in cases of violation of democratic principles and human rights, the Council may, on a proposal from the Commission, acting by a qualified majority, decide upon appropriate measures concerning assistance to a partner State.’ Regulation 1279/96 of 25 June 1996 concerning the provision of assistance to economic reform and recovery in the New Independent States and Mongolia, OJ, L165/1, 4 July 1996. Guidelines for PHARE Programme Implementation in Candidate Countries, 1998–1999, 27 March 1988 (http://europa.eu.int/comm/enlargement/pas/phare /implementation/guidelines/98–99.htm). COM(99)235 Final, 26 May 1999. Regulation 1624/94, OJ, L171/14, 6 July 1994. Agenda 2000, Vol. II, A.5–A.8. Country Operational Programme (COP), Sectoral Operational Programme (SOP), Strategy Papers (SP), etc. See Agenda 2000, Vol. II, A. 9. Agenda 2000, Vol. II, A.7–8. Agenda 2000, Vol. I, 62. OJ, C202/1, 29 June 1998. Council Decision of 30 March 1998, OJ, L121/1, 23 April 1998. Agenda 2000, Vol. II, A, 8–9 Agenda 2000, Vol. I, 62. See Council Regulation 1266/99 on coordinating aid to the applicant countries in the framework of the pre-accession strategy, OJ, L161/68, 26 June 1999. See L. Kramer, EC Treaty and Environmental Law (London: Sweet & Maxwell, 1998), 87–91 and section 3.11 in particular. SEC (1997) 1608, 25 August 1997, 3.

The Many Faces of EU Conditionality 137 83. Communication on ‘accession strategies for environment: meeting the challenge of enlargement with the candidate countries of central and eastern Europe’, COM(1998)294 Final, 20 May 1998. 84. Development of Implementation Strategies for Approximation in Environment – which aimed to help CEECs with the adoption of the environmental acquis. 85. See J. Fingleton et al., Competition Policy and Transformation of Central and Eastern Europe (London: Centre for Economic Policy Research, 1996). 86. See Directive 86/609/EEC, as amended, OJ, L336/1, 18 December 1986. 87. See Agence Europe – Europe Document, No. 1930/31, 27 April 1995. 88. According to the declaration of Javier Solana made to Agence France Presse following the end of the Barcelona Conference. 89. According to Egypt, see Agence Europe, 6 February 1999, 10. 90. Conclusions of the third Euro-Mediterranean Conference, Stuttgart, April 1999, point 37. 91. See contribution by S. Inama and A. Tovias, ‘The EU and Mediterranean countries’, in P. Demaret, J.-F. Bellis and G. Garcia Jimenez (eds), Regionalism and Multilateralism after the Uruguay Round (Brussels: European Interuniversity Press, 1997), 95–113. 92. Including the specific Euro-Mediterranean Interim Association Agreement on trade and co-operation between the European Community and the Palestine Liberation Organization (PLO) for the benefit of the Palestinian Authority of the West Bank and the Gaza Strip. 93. COM(95)216 Final, 23 May 1995, 13. 94. Article XVI (4) of the Marrakesh Agreement establishing the World Trade Organization. 95. Notably: (a) intra-regional trade within the Maghreb; (b) environmental matters; (c) the development of economic infrastructure; (d) research in science and technology; (e) cultural matters; (f) customs matters; (g) regional institutions and the establishment of common or harmonized programmes and policies. 96. See, for example, OJ, C39/50, 17 February 1992. 97. OJ, L325/20, 14 December 1996. 98. On good governance within the Lomé framework see J. Raux, ‘Le respect des droits de l’homme, des principes démocratiques et de l’Etat de droit, sous le signe de “la bonne gouvernance”, principe fondamental “essentiel” de l’après Lomé IV’, in Liber amicorum en l’honneur du Recteur Jacques Georgel, La liberté dans tous ses états (Rennes: Apogée, 1998). 99. OJ, L325/20, 14 December 1996. 100. The NIP for the Palestinian Territories is supplemented with an aid programme which falls under the support framework of the Peace Process. The NIPs of Cyprus and Malta are funded outside the scope of MEDA while that of Turkey is supplemented with a pre-existing financial instrument. Israel is not entitled to an NIP on account of its high level of development: ‘Main principles of the Meda programme’, European Commission, DG1, 1999. 101. See Council of the EU, Press Release, 5460/99. 102. 1999 Helsinki European Council, Presidency Conclusions, Annex II. 103. COM(1999)180 Final, 23 April 1999. 104. USITC Report on US Unilateral Economic Sanctions, USA Text, US Mission to the EU, USAT TR 38, 11 September 1998.

138 Erwan Lannon, Kirstyn M. Inglis and Tom Haenebalcke 105. See the Opinion of the Economic and Social Committee on the ‘World Trade Organization (WTO)’, OJ, C101/43, 12 April 1999. 106. See: T. De Wilde d’Estmael, La dimension politique des relations économiques extérieures de la Communauté Européenne (Brussels: Bruylant, 1998). 107. Report ‘on human rights throughout the world in 1995–1996 and the Union’s human rights policy’, Explanatory Statement, A4-0400/96, 28 November 1996. 108. Reluctance of Egypt regarding the contents of the essential element clause of the new EMAA (still to be concluded) may, for example, be mentioned. 109. See EP Report on ‘respect for human rights in the European Union (1995)’, A40112/97, 20 March 1997.

Part II The Economic and Financial Dimension

This page intentionally left blank

6 Agenda 2000 and EU Budget Strategy: Funding Enlargement and Relations with Eastern and Southern Neighbours Geoffrey Denton Introduction The European Union is in the centre not only geographically, but also because the countries to the East and to the South are to a large degree dependent on the EU for trade access, budgetary transfers and investment. There is in the short term competition between East and South for limited fiscal resources, for investment and for political and bureaucratic attention from the EU. There is a well-known perception in the southern Member States of the EU that the priority given to Central European states 1 since 1989 diverts attention and resources from the Mediterranean. They have been since 1989 in an analogous situation to that of the southern EU Member States after the demise of undemocratic regimes in the mid-1970s. This imbalance is inevitable since the EU’s immediate East consists of states that are European and, since the demise of communism, becoming democratic and market oriented. They are therefore not only potential full members of the Union but a programme leading to their accession during the next decade was adopted at the Copenhagen Summit in June 1993. Among the Mediterranean Non-Member Countries (MNMCs) Cyprus and Malta are treated as prospective members while Turkey, which formally applied for membership in 1987, obtained the status of candidate country at the 1999 Helsinki European Council. The states of North Africa and the Middle East are not European, do not meet all the criteria of democracy, and have economies that are far from meeting the Copenhagen economic criteria. They are not even potential candidates for full membership; their relationship with the EU is analogous to that of the CIS states, not to that of the Central European applicants. But this essential difference should not imply confrontation between eastern and southern objectives of the EU. In the long term neither economics nor security are zero-sum games. The EU benefits from policies that bring countries to the East and to the South into the Union as full members, or into closer political and economic relations falling short of 141

142 Geoffrey Denton

full membership; otherwise it would not pursue those policies. And if it benefits, there is no reason why it should not pursue at the same time integration where that is relevant, and co-operation where integration is not feasible, with both the East and the South. The EU is already pursuing three strategies for its immediate environment: a strategy of integration by enlargement to Central and SouthEastern Europe, an eastern co-operation strategy for the CIS states, and a southern co-operation strategy for North Africa and the Middle East. Given the short time horizons of its politicians and electorates, it fails to make available for any of these adequate resources to ensure success in meeting its objectives. Given the greater ambition of the Central European than the eastern and southern objectives, a high proportion of the limited resources that will be made available are earmarked for Central Europe. After Central European enlargement has been completed, the larger EU will still have both an eastern strategy, concerned with the CIS states, and a southern strategy, and may then be willing to divert more resources to ensuring the success of both.

Central European enlargement and Agenda 2000 budgetary proposals At each successive enlargement of the EU in 1973, 1981, 1986 and 1995, new Member States were assimilated into the budgetary system by means of transitional periods phasing in their contributions to and receipts from the budget. Accession of new Member States in the 1973 (Denmark, Ireland and the United Kingdom) and 1995 (Austria, Finland and Sweden) enlargements increased net budgetary resources, and thus reduced the budgetary cost of membership to existing Member States. In the 1981 (Greece) and 1986 (Spain and Portugal) enlargements, net resources were reduced and the budgetary burden on existing Member States therefore increased. The response to the accession of the three poor southern Member States in 1981 (Greece) and 1986 (Spain and Portugal) was a substantial increase in the size and redistributory use of the budget, designed to bring assistance to the economic development of the new Member States and their adjustment to membership.2 The need to allocate funds to support Central European enlargement has been an important issue in the negotiations among the EU Fifteen on the new Financial Framework for the period 2000–06.3 Most of the applicants are more dependent on agriculture and all are much poorer than the EU Fifteen average GDP per capita, and so expect to be net recipients from the budget. Existing CAP price levels are considerably higher than those in Central European states, and their application to new members would be damaging to their economies as well as costly for the EU budget. Application of the Structural Funds in the new Member States will entail further burdens. The debates about the Financial Framework took place in an unfavourable climate. EU Member States had been absorbed over much of the 1990s with

Agenda 2000 and EU Budget Strategy 143

meeting the convergence criteria for EMU and, after EMU Stage III began on 1 January 1999, with meeting the terms of the Stability Pact which imposes fiscal discipline on EMU members. All feel pressure also to reduce high rates of national taxation so as to become more competitive and reduce the current high levels of unemployment. Budgetary provision for enlargement, or for external strategies, therefore has to be made against the background of intense competition among the EU Fifteen Member States to retain current levels of net receipts from the budget, or to reduce current levels of net contributions. Reforms of the CAP and revision of the Structural Funds were proposed to meet existing concerns about budgetary and other effects of these policies, as well as to release funds for enlargement. WTO ministerial talks on world trade at Seattle in November 1999, which may initiate a new round of trade negotiations, are certainly expected to include discussion of proposals for further reductions in levels of agricultural protection, and therefore to add to the pressure for reform of the CAP. The Commission’s proposals in Agenda 2000, published in July 1997, reflected these economic and political realities.4 They were based on retaining the ceiling of 1.27 per cent of EU GDP, set in 1992, until the end of the next Financial Framework in 2006, and envisaged that EU spending commitments would not rise above 1.22 per cent. This target would be achieved by tight control over spending in the EU Fifteen, holding it to a maximum of 1.10 per cent of EU GDP, with a provision of 0.12 per cent of EU GDP for enlargement. The ‘agricultural guideline’ would continue to limit increases in CAP spending to 74 per cent of the increase in nominal GDP. Proposed price reductions of 30 per cent for meat, 20 per cent for cereals and 10 per cent for dairy products could reduce expenditure on supporting agricultural prices, though their impact on total CAP spending would be offset in the short term by the need to compensate farmers by increasing spending on direct income support and rural development policies. Real expenditure in the EU Fifteen would increase by only 3.5 per cent in 2000–06, with a further real increase of 13.6 per cent in the budget to finance accession of new Member States. Transfers within the EU Fifteen were expected to be scaled down as some regional GDPs rise above the 75 per cent of average EU GDP per capita criterion for the main Objective 1 programme of assistance from the Regional Fund, and this would make room for the allocation to Central Europe. The proposed increase in total real spending of 17.1 per cent compared with a real increase of 31.6 per cent in the previous framework period, 1993–99, is a measure of the greater budgetary stringency now proposed.

The battle over the new Financial Framework Three major interests had to be reconciled in the new Financial Framework: those of the net contributors within the EU Fifteen; those of the net recipients within the EU Fifteen; and those of the future new Member States in

144 Geoffrey Denton

Central Europe. Two of the interests are inside the Union and have substantial power to affect the outcome. The third interest, that of the newcomers, is outside and has little power to affect the outcome. The British position on the Financial Framework for 2000–06 was that the rebates negotiated at Fontainebleau in 1984 must be retained.5 Although substantial reforms have taken place, especially the MacSharry reforms to reduce CAP price levels agreed in 1992, the structure of EU policies remains inappropriate to Britain’s economic structure, and the UK’s GDP per capita remains slightly below the EU average. The British position is indirectly supported, under the Labour government since May 1997 as under the previous Conservative government, by reference to the perceived superiority of British economic policy, which emphasizes: firm control over public budgets and debt; the avoidance of excessive prospective burdens of financing public pensions on an unfunded, ‘pay-as-you-go’ basis; privatization of industry and the elimination of subsidies; flexible labour markets designed to avoid high unemployment and the resulting burden on business of high social contributions. There is a public perception that in many of these respects policy in other EU Member States is not so sound, and that it is unjustified to expect British consumers and taxpayers to increase, or even to maintain, their net contribution in order to support those with less admirable policies.6 Other EU governments took a similarly nationalistic point of view to the British. The German government had given notice over many years that it would not forever act as the EU’s ‘Zahlmeister’, and reiterated its position at the 1998 Vienna Summit. Its determination to reduce its large net contribution to the EU budget was reinforced because its relative GDP per capita fell after unification, and was only 108 per cent of the EU Fifteen average in 1997. The Netherlands, with the highest net contribution per capita, and France and Italy which are also net contributors, also oppose any increases in the budget total and in the transfers within it. Among the net recipients, Ireland alone appears to acquiesce to an eventual reduction in its net receipts following its remarkable success in catching up with average EU GNP per capita during the 1990s, but even so will seek to defer these cuts as long as possible. The southern Member States insist on their right to continuing transfers through the Regional Fund for regional development and through the Coherence Fund for adjustment to EMU. Spain has been by far the most significant net recipient, with 23 per cent of the 1993–99 138 billion euro allocation to Structural Funds, and 55 per cent of the 1993–99 14.5 billion euro Cohesion Fund. Spain insisted that it still needs regional transfers to reduce the gap of 22 per cent between its GDP per capita and the EU average, that the Cohesion Fund, designed to assist compliance with the financial convergence indicators for entry into Stage III of Economic and Monetary Union, should continue even after the start-up of EMU, and that the solution to the budgetary problem of enlargement could lie in increasing the budget ceiling above 1.27 per cent, thus pushing the problem back onto the net contributors.

Agenda 2000 and EU Budget Strategy 145

The Commission’s Agenda 2000 proposals probably represented what in the Commission’s judgement was the extreme limit of the Member States’ willingness to finance enlargement in 2000–06. Even so, in its discussions on the Financial Framework at the 1998 Vienna Summit, the European Council appeared to take an even more parsimonious view than the Commission. Calls were made for a freeze on total spending, meaning that real expenditure would fall as a percentage of a growing EU GDP over the period 2000–06. To meet the problem that desired agricultural reforms would require in their early years an increase in total spending on the CAP, it was proposed that part of agricultural spending should be transferred to Member States’ budgets, a ‘renationalization’ of agricultural policy. At the 1999 Berlin Summit the European Council negotiated a series of compromises to reach agreement on the Financial Framework. 7 They agreed total commitments amounting to 640 billion euro, estimated at only 1.07 per cent (compared to Agenda 2000: 1.22 per cent of expected GDP over the seven years). This appeased the net contributors, allowing a small reduction in the estimated net contribution of Germany. Minor technical adjustments to the British rebates meant that this British acquis remained virtually unscathed. Revision of the regions eligible for regional assistance allowed Structural Funds commitments to be reduced over the seven-year period from 32 045 m euro in 2000 to 29 170 m euro in 2006, while a small increase in the Cohesion Fund to 18 000 m euro met Spain’s demands to retain this benefit. A much diluted package of agricultural reforms met French concerns. Past experience shows that setting targets for commitments over such a long period is fraught with uncertainty; all that is certain is that the outcome will be different from the intention. Whatever the actual outcomes may be, these compromises allowed the Council to find 3.12 billion euro for commitments to pre-accession expenditure in applicant countries, and funding for new Member States starting at 4.14 billion euro in 2002, rising to 14.21 billion euro in 2006, all at 1999 prices. The allocations to new Member States start at 4.4 per cent of total commitments in 2002, and rise to 7.1, 9.7, 12.7 and 15.9 per cent in subsequent years, reaching 15.9 per cent of total commitments in 2006. The spending over the five years, 2002 to 2006, for which there are allocations to new Member States, amounts to 9.9 per cent of total commitments in those years. The 15.9 per cent of total commitments allocated to new Member States in 2006, a total sum of 14 220 m euro, compares with 29 170 m euro allocated in that year to structural operations within the EU Fifteen.

The need for transfers to Central Europe That the new Central European Member States need substantial transfers through the EU budget to assist their adjustment to EU policies and their economic development can hardly be doubted. In 1997 the GDPs

146 Geoffrey Denton

per capita, at purchasing power parity exchange rates, of Poland, Hungary and the Czech Republic were 32, 37 and 54 per cent of the EU average, compared with 61, 72 and 78 per cent for Greece, Portugal and Spain.8 Thus GDPs per capita for Hungary and Poland are around half the level of the EU’s Mediterranean Member States, which have benefited from substantial transfers of funds through the EU budget since accession in 1986. Their people suffered reductions in real incomes for several years after 1989 as their former markets in the Soviet Union collapsed. They continue to undergo a harsh transition from socialist to market economies. Continuing instability in Russia, other CIS states and the Balkans has created further setbacks. Average real incomes have been rising since about 1995, but so far they remain below or around the 1989 level, except in Poland where successful transition policies had raised them by 1998 to 17 per cent above the 1989 level. Moreover, even as average real incomes begin to rise they are unevenly distributed, so social conditions remain under strain even if a minority are benefiting from new opportunities. Accession to the EU also requires new adjustments. Since the pre-accession ‘Europe Agreements’ opened up two-way trade, the Central European countries have had large deficits in their balances of trade with the EU. 9 Their enormous needs for transport and communications infrastructure, vital if they are to become attractive markets for West European business, can only be met by attracting large inflows of private-sector foreign investment. But public funds are needed also, to ensure non-exploitative terms from private investors. Central European prosperity is strongly in the economic self-interest of the EU Fifteen, since a wider Internal Market will bring gains from the reallocation of resources and economies of scale to all European business, and contribute to the competitiveness of the whole of Europe vis-àvis other parts of the world. 10 But such long-term economic benefits are overlooked in the political and media obsession with short-term budgetary accounts. Budgetary transfers towards Central Europe are not a matter of generosity, or even of some notion of equity, on the part of the EU and NATO. European security is also at stake. NATO membership in 1999 for Poland, the Czech Republic and Hungary, followed around 2004 11 by their accession to the EU, will not project the desired security into Central Europe if economic and social strains overwhelm their political systems. And if these pressures should in turn lead to conflict, the costs of peacekeeping and reconstruction, as in Bosnia and Kosovo, and in Serbia after Milosevic, could be greater than the transfers needed to help ensure that enlargement succeeds. However, burden-sharing wrangles, similar to those within the EU, surround the eastern enlargement of NATO, especially between the US and the European NATO members. Even if NATO has adopted a rather relaxed attitude towards the need for modernization of the new Member States’ military forces and equipment, the Central Europeans’ own

Agenda 2000 and EU Budget Strategy 147

contribution to financing NATO membership is a further prospective burden on poor economies already under great strain. Central Europe is in geostrategic terms more significant than the European regions involved in the previous north-western (1973), southern (1981, 1986) and northern (1995) enlargements. These incorporated into the EU peripheral peninsulas and islands. Central Europe is not a periphery but a bridge towards eastern Europe and Asia. Investments in infrastructure, and in the economic recovery and security of Central Europe, in addition to their own immediate return, will have a substantial pay-off in terms of influencing developments in, and improving access to, countries further East.

EU financial transfers to Southern Europe, Central Europe and the Mediterranean What do the allocations in the new Financial Framework mean in terms of the level of transfers to Central Europe compared with the transfers to existing Member States? Agenda 2000 proposed budget lines allocating a total of 45 000 m euro of Structural Funds to new Member States in the seven years 2000 to 2006, most of it after 2003, while 230 000 m euro was allocated for Structural Funds transfers to existing EU Member States. The Framework agreed at the Berlin Summit allocated 45 400 m euro to new Member States, and 212 830 m euro to structural operations within the EU Fifteen. If the first two years, when no allocations were made for new members, are excluded, the allocations within the EU Fifteen are 149 330 m euro. Even on this more favourable comparison, the new members will receive in 2002–06 only 30 per cent of the allocation for structural operations within the EU Fifteen. There is a remarkable demographic symmetry between the existing net recipients of the bulk of transfers within the EU Fifteen and the prospective net recipients in Central Europe. In each case there is one state of around 40 million people (Spain; Poland), and two states of around 10 million people (Greece and Portugal; the Czech Republic and Hungary). This means that roughly 150 euro per capita per annum has been allocated for 60 million people in Poland, the Czech Republic and Hungary in 2002–06. This is a big advance on the quantitatively insignificant, though important, assistance of the PHARE technical assistance programme. 12 But the 150 euro per capita EU budget allocation per head for Central Europe is about 30 per cent of the 500 euro per capita per annum within the EU Fifteen, and mainly benefiting 60 million people in Spain, Greece and Portugal. On any objective assessment of needs this is a strange disproportion, however well it may be explained by reference to political realities. The comparison between EU budgetary commitments to Central Europe and those to the Mediterranean shows similarly vast disproportions but

148 Geoffrey Denton

this time in favour of Central Europe. Security challenges (political instability, economic malaise, legal or illicit emigration to the EU, crime and terrorism) are a major reason why the EU Fifteen, especially Germany and Austria who are in the EU’s ‘front-line’ with Central and South-Eastern Europe, favour enlargement to Central Europe and are willing to envisage what they regard as substantial budgetary transfers being devoted to achieving it. The Mediterranean presents similar security challenges for the southern EU Member States, but the EU Fifteen’s willingness to devote funds to meeting them is less because the countries to the South and East of the Mediterranean are not prospective members of the EU. This leaves the southern EU Member States on the northern shore of the Mediterranean in an awkward and contradictory position on the external commitments of the EU budget. They resist the call to ‘graduate’ from being large net recipients from the EU budget so that funds can be diverted to Central Europe; this encourages the net contributors to take a similarly firm stance against any increase in the size of the budget and in their net contributions. At the same time the southern Member States demand that more funds should be devoted to Mediterranean policy, the case for which rests on similar grounds.

Budgetary accounting v. real costs and benefits With public debate in all Member States sharply focused on simplistic ‘league tables’ of national net contributions to the budget, the true impact of the budget itself, the wider economic effects of policies and even the political significance of integration and of enlargement tend to be overlooked. As the European Commission pointed out in a working paper, national budgetary balances ‘either misrepresent or are inadequate measures of the benefits of EU membership’.13 But the degree to which the conventional debates on the EU budget mislead the public and distort EU policies is even greater than the Commission suggests. The EU budget is a set of accounts that mixes different kinds of receipts and payments in ways which conceal the true incidence on the individual Member States of both contributions and receipts, and certainly does not reflect the real economic effects of EU policies. This is not the place for a detailed account of these technical, but also politically sensitive, issues.14 The following is a list of the main issues that call into question many of the interpretations of relative burdens of the EU budget on the Member States: ●

Relative prosperity and contributive capacity of Member States are often confused;

Agenda 2000 and EU Budget Strategy 149 ●

● ● ● ● ● ●

●

EU budget expenditures in Member States on goods and services are matched by the costs of providing those goods and services, and are not comparable with transfer payments through the Structural Funds; Tax revenues may have their real economic incidence in Member States other than those in which they are collected; Budgetary expenditures in one Member State may confer real economic benefits in other Member States; Net budgetary transfers are assumed to be net economic costs; A wider Internal Market will bring substantial economic gains which are not recorded in the budgetary accounts; Economic gains from projecting security are ignored;. Budgetary transfers can promote private investments and have a multiplied effect on the growth of poorer Member States, thus increasing the economic gains to the whole EU; Enlargement will contribute to the competitiveness of EU business.

Conclusion: the need for a positive and integrated approach If the EU is to enjoy the full potential benefits of enlargement, the negative and competitive approaches to minimizing the budget, described above, must be replaced by a more positive approach to sharing in the opportunity to invest in the integration of Central Europe into the Internal Market. A similar constructive approach is called for to that which followed the accession of the southern Member States in the 1980s. At the same time, there must be realistic funding for programmes to promote stability among neighbouring countries both in the Mediterranean and in the CIS. The net contributors must accept that their net contributions should continue Unless some Member States make net contributions there can be no net transfers to assist the poorer Member States. Germany must cease to complain of being the ‘Zahlmeister’ of the EU and recognize that it already enjoys the largest economic benefits from the Internal Market, and for geographical reasons will be by far the largest beneficiary, economically as well as politically, from the Central European enlargement. This requires that any adjustment to Germany’s net contribution must be modest, so that a substantial net transfer continues. The rebates of net contributions should be re-examined In the light of the considerations raised above about the true budgetary incidence and the economic benefits of EU membership, the UK must

150 Geoffrey Denton

accept that its support for enlargement requires some financial commitment to ensure it succeeds, and that this means the generous budgetary rebates should be scaled down. The present net recipients must ‘graduate’ through a phased reduction and eventual cessation of net budgetary transfers Financial transfers through the Structural Funds were introduced as a temporary measure to improve Community solidarity by assisting the poorer Member States to adapt to the Internal Market and to catch up with the rest of the EU. They have been remarkably successful in reducing the income disparities that gave rise to them. The negotiation of a new Financial Framework was the right occasion to reconsider them in the light of the needs of much poorer new Member States after enlargement, but the opportunity has not been taken. The smaller net recipients (Ireland, Portugal and Greece) have enjoyed annual transfers between 4 and 7 per cent of their GDPs, and have grown faster than the rest of the EU. The first Member State to graduate should be Ireland, which has been remarkably successful in the 1990s in building on generous transfers through the Structural Funds and the CAP over the 25 years since accession in 1973 by attracting foreign direct investment. With growth rates sustained for several years well above 5 per cent per annum, the GDP per capita of this ‘tiger’ economy has risen to near the EU average. Spain, with a GDP per capita approaching 80 per cent of the EU Fifteen average, should be the next to graduate, followed by Portugal and eventually Greece. If no budgetary solution can be agreed, extra-budgetary sources of funds should be considered, for example the use of excess reserves created by EMU The establishment of the euro will generate a considerable amount of excess reserves available to the European Central Bank, and thus poses the question of their use in the transition period and in the longer term. Once the amount of reserves needed to cope with the transition period is determined, the problem remains of allocating the remainder. Many alternative uses have been suggested in a 1998 TEPSA study.15 Estimates of the size of such excess reserves vary, but the mid-range value is about $100 billion. The paper focused on two options for their use, both related to EU enlargement: debt-relief operations in Central and Eastern European states, and the financing of a ‘convergence fund’ for the new Member States. The possible availability of excess reserves thus appears to offer the EU a unique opportunity to remove political obstacles and accelerate progress towards enlargement. There is thus an important potential positive linkage between EMU, the financing of a successful enlargement and political union, with the further bonus of a strengthening of future transatlantic relations.

Agenda 2000 and EU Budget Strategy 151

Conclusion The failure over many years to set EU budgetary discussions in their proper context of the inadequacies and misrepresentation inherent in budgetary data, and of the wider, non-budgetary, economic benefits of the EU, has done serious damage to the integration process by exacerbating nationalistic approaches to policy discussions. In the context both of Central European enlargement and of strategies for the Mediterranean and the CIS, it appears likely to cause more harm unless attitudes can be changed. Politicians and the media believe they understand the budgetary data. They know they do not understand the economic effects, which are indeed difficult, though not impossible, to measure and interpret, so they are either ignored, or worse, there is a selective quotation of some negative aspects, such as jobs lost to competition from Central Europe,16 to support tendentious arguments against any increases in budgetary spending. Political discussion is accordingly distorted, and public opinion is stirred up against the EU and against enlargement. There is a strong case for a positive approach to investing in a successful enlargement, not as an act of generosity towards Central Europeans, but in the economic and political interest of the EU Fifteen peoples themselves. But attention in the EU Fifteen has been focused on how to limit the supposed ‘costs’ of enlargement: by deferring accession of new Member States; by imposing long transition periods designed to reduce their net receipts from the budget; or by changing policies to reduce the budgetary costs of extending them to new Member States. If the enlargement is to succeed, a more balanced approach is required that takes into account the positive economics of enlargement as well as the short-term financing needs. This account has focused, as the title required, on the budgetary issues surrounding the prospective accession to the EU of new Member States in Central Europe. Similar conclusions apply to the funding of the EU’s external policies for the Mediterranean area, and in the CIS states, except that, since membership is not yet on the agenda, the prospects for substantial transfers must be even less than for the Central European applicants.

Notes 1. For the purposes of this paper the expression ‘Central Europe’ or ‘Central European’ refers to the area East of the EU and West of the CIS. 2. The Delors I Financial Perspective for 1988 to 1992 planned to increase structural spending from 7 790 m euro in 1988 to 13 450 m euro in 1992; the Delors II Financial Framework for 1993 to 1999 planned to increase this spending from 26 329 m euro in 1995 to 32 956 m euro in 1999. 3. The Financial Frameworks set the guidelines for the annual budgets, and determine the broad outlines of spending and revenue-raising. Known by the names of the Commission Presidents, the Delors I Framework covered the five years

152 Geoffrey Denton

4. 5. 6.

7.

8. 9. 10. 11.

12. 13. 14. 15.

16.

from 1988 to 1992, Delors II the seven years 1993 to 1999. The Santer I Framework also covers seven years, 2000 to 2006. European Commission, Agenda 2000: Financing the European Union, COM(97)2000, July 1997, and Bull.-EU, Supplement, February 1998. See Denton, ‘Re-structuring the EC budget: implications of the Fontainebleau Agreement’, JCMS, vol. XXIII, no. 2, December 1984. These views, and the positions held by British governments since the 1970s, do not take into account important questions about the interpretation of budgetary accounts. A good account of these decisions, with commentary on how the compromises were reached and their implications for the different Member States and interests, is to be found in the Financial Times, 27–28 March 1999. Economist Intelligence Unit, Europe Regional Overview. In 1997 the EU had a surplus in trade with all the Central European economies except Bulgaria: see Eurostat, April 1998. See, for example, R. Portes, ‘Bigger is better: the positive economics of enlargement’, Centre for Policy Research, London, 1997. The EU has entered so far into no firm commitment to specific dates for accession of any new members. The applicants have their own target dates for accession, but for the moment there is no formal agreement on this issue. This financing is supplemented by bilateral programmes, but these also are quantitatively not very significant. EU Commission, Budget contributions, EU expenditure, budgetary balances and relative prosperity of the Member States, Brussels, 9 October 1997. For a more detailed, though now outdated, examination, see G. Denton, The British Problem and the Future of the EEC Budget (London: Federal Trust, 1982). See S. Manzocchi and P.-C. Padoan, ‘The euro–dollar exchange rate, use of excess reserves and transatlantic monetary relations’, in The New Transatlantic Agenda (Brussels: TEPSA, June 1998). See R. Faini and R. Portes, European Union Trade with Eastern Europe (London: Centre for Economic Policy Research, 1995) for an overall positive assessment of the impact of trade with Central and Eastern Europe on the economies of the European Union.

7 The Optimum Strategy for a Spoke: Linking with Other Spokes or Other Hubs? Alfred Tovias

Introduction: a dynamic context facing the Mediterranean Non-Member Countries This chapter on policy is based on some analytical thinking and some practical experience gained by Israel over recent years. This country has, since the mid-1980s, adopted a strategy which conforms pretty well to the theoretical line followed later in the chapter. After reviewing Israel’s experience (section I), I explore the relationships of a Mediterranean Non-Member Country (MNMC) so-called ‘spoke’ (e.g. Israel) with the two relevant socalled ‘hubs’ (the EU and the US) in the developed world (section II). I look then into the inadequacies of the Euro-Mediterranean Partnership (EMP) agreed upon in Barcelona in 1995 between the EU and 12 MNMCs (section III) and the different strategies open to deepen the EMP (section IV). The question arises then as to what any MNMC should try to do regarding relations with its neighbouring countries, i.e. other MNMC spokes and other non-member countries in the EU’s periphery (section V). Ranking the different options in terms of policy priorities is presented by way of conclusion. But first, what is the context in which all these decisions must be taken by the MNMC? To begin with, the success of the Uruguay Round and the creation of the WTO in 1994 has not meant that the move towards the creation of huge regional trading blocs and the conclusion of numerous Regional Integration Agreements (so-called RIAs) has been stopped. The US and the EU seem to have lost interest over the last couple of years in the multilateral process of negotiations and sometimes have resorted to bilateral reciprocity for the granting of trade concessions. More recently the US is again imposing unilaterally retaliatory measures and resorting to threats. What the MNMCs perceive is that since at least the mid-1980s the process of economic and political integration of Europe is constantly being deepened (the so-called ‘deep integration’ by economists such as Ethier or Sapir – see bibliography) and the number of European countries taking part in this 153

154 Alfred Tovias

process is increasing. This is inevitably interpreted as a danger for them, given their trade, investment, aid and migrant remittance dependence on the EU. Access to each other Member States’ markets constantly improves and therefore there is a tendency for MNMCs’ relative privileges to be decreased. The EU’s monetary union, initiated in 1999, has further eroded the prevailing privileges (since exchange rate volatility is a barrier to trade) as has periodically any enlargement of the integration process to take in more countries (in 1986 to Spain and Portugal; in 1990 to Eastern Germany and in 1995 to Austria, Sweden and Finland). Negotiations for the full integration into the EU of four Central European countries, Estonia and Cyprus started in 1998. And the Internal Market for goods, services, capital and manpower has been completed by now. Ceteris paribus, the larger the area of geographic market discrimination, the more non-members in the periphery suffer from exclusion. We are not mainly speaking here about tariffs but rather about NTBs. The discriminatory removal of NTBs among members of the European Economic Area (EEA) grants an advantage to EEA-based exporters in relation to MNMCs. Between the latter and EU Member States there is no mutual recognition of laboratories and tests, or of academic diplomas for that matter. As third states, MNMCs do not participate in decision-making on norms and standards concerning them. They do not even participate in decision-shaping, as EEA members, like Norway, do. Adding to that, MNMCs must also take notice of the movement towards continental-wide regionalism in the western hemisphere, in the wake of the creation of NAFTA and MERCOSUR. The so-called ‘hub-and-spoke system’ around the US seems confined for the moment to FTA-plus agreements, but very important from an MNMC’s perspective is the fact that they cover agricultural goods. Of course, the third element to be taken notice of is the future implementation of the trade aspects of the EMP which will deepen the ‘hub-andspoke system’ which the EC had put in place in the mid-1970s (the so-called Global Mediterranean Policy). This system will be even more lopsided than it already used to be, once the EMP is implemented by 2010, promoting EU exports to Arab MNMCs, partly at the expense of other OECD countries’ exports. Finally, eastern MNMCs must take notice of the economic implications of the Peace Process, which is far from being completed. Arab states of the Middle East, excepting Egypt and Jordan, have no direct economic relations with Israel, the most dynamic and advanced economy in the subregion.

I. Israel’s trade policy as a particular case Israel has understood since early on that, being small, it needs to maintain export markets for sheer economic survival. Obsession with market access

The Optimum Strategy for a Spoke 155

has dominated trade policy since the early 1960s. Supporting the GATT system was part of Israel’s overall strategy. But in the wake of the energy crisis of the 1970s and ensuing economic recessions, it was felt that the fate of GATT or of the Tokyo and Uruguay Rounds was uncertain and would not be decided anyway in Jerusalem. Being a ‘pariah’ state in the UN system augured no good for Israel in case the GATT system should break down. Some policy-makers felt that it would not be capable of imposing discipline on or of restraining Israel’s major trading partners (the EC and the US). It should not be forgotten here that most-favoured-nation treatment (MFN) guaranteed to Israel under the GATT was without consequence in those countries applying a de jure or de facto boycott on Israeli goods. More than tariffs or QRs, it was the absence of formal diplomatic relations with a large number of UN members which was the critical trade barrier. Thus attention turned all the more naturally towards the EC and US markets. Some liberal-minded public officials at the Ministries of Finance, Industry and Trade and at the Bank of Israel, already in the 1970s and even more so in the 1980s and 1990s, thought that concluding bilateral agreements with Israel’s major trading partners (first the EC, then the US) would have disciplining effects on a ‘corporatist’ economy dominated by public and private monopolies and oligopolies and by an all-encompassing labour union (the Histadrout). At the same time these agreements would take care of the need for Israel to increase access to key markets. This strategy has clearly succeeded. For example, notwithstanding the fact that GATT still considers Israel a developing country, the latter has never been submitted to the rigours of the Multifiber Arrangement (MFA) and has never been restrained by MFA quotas imposed by the EC or the US. Why? Because Israel had FTA agreements with the EC and the US based on reciprocity. Reciprocity also has the advantage of minimizing as far as possible the temptation by the EU and the US to apply political pressure on Israel. Concluding numerous bilateral FTA agreements has allowed Israel to penetrate key markets without having to forsake an independent trade policy. Any potential partner knows that Israel will not be part of another customs alliance, customs union or trading bloc. This can be called, following De Sebastian (1995), ‘polilateralism’. In fact most of Israeli foreign trade (74 per cent in 1997) is, nowadays, covered by FTA agreements: 67 per cent of Israeli exports and 79 per cent of Israeli imports for the same year. Israel signed a free trade agreement with the European Economic Community as early as 1975, with the United States in 1985 and with EFTA in 1992. For a decade now, Israel and the European Community have applied a full-scale free trade regime to industrial products on a reciprocal basis, but Israeli agricultural products enjoyed EC duty-free treatment on limited quantities only. The 1995 Agreement ‘establishing an association’ between Israel and

156 Alfred Tovias

the EC (see official title of the Agreement in the bibliography below) contains more trade concessions on agricultural products by the EC, reciprocated by Israel. Another industrial and agricultural free trade agreement between Israel and the US, signed in 1985, was fully implemented as of 1 January 1995. The 1992 free trade agreement between Israel and EFTA aligned the trade regime between the sides to the Agreement to the Israel–EC regime. As of early 1995 it only applies to the four remaining EFTA members, Iceland, Liechtenstein, Norway and Switzerland. In 1996, Israel signed four additional FTA agreements with Canada, Turkey, the Czech Republic and the Slovak Republic, all of which entered into force on 1 January 1997. Then, also in that year, similar agreements were signed with Hungary, Poland and Slovenia, which entered into force at different dates during 1998. At the time of writing, formal negotiations with Mexico and Bulgaria are already engaged, while negotiations with Romania and MERCOSUR have reached ‘only’ a preliminary stage. Finally, it is worthwhile mentioning here that Israel and Jordan concluded a partial preferential agreement in 1995 and that Israel and the Palestinian Authority concluded a customs union agreement (with some loopholes characteristic of free trade area regimes) in 1994 for an interim period of five years. To sum up, Israel realized before other countries that FTAs were a good solution to getting tariff- and quota-free access to key markets more rapidly than by negotiating under the GATT, while obliging its industrialists to compete openly with OECD firms. Building coalitions within the GATT to launch or obtain concessions in multilateral trade negotiations (MTNs) of particular interest to Israel did not seem practical, the example of the Cairns Group notwithstanding. The principal problem posed by individual FTAs for Israel was the inherent cost of trade diversion in favour of the preferred trade partner: first an economic cost, because third-country imports are substituted by more expensive imports from the preferred partner; second, a political cost, because you not only discriminate ‘in favour of some country’ but by definition also ‘against other countries’. This explains, as a matter of fact, why Israel had no other remedy but to sign in 1985 an FTA agreement with the US, Israel’s strategic ally, once the results of eliminating tariffs on EC-originating products began to be felt. Incidentally, multiplying the number of FTAs signed has had the advantage of decreasing the trade diversion costs imposed on the Israeli consumer over time. And the proliferation of FTAs does not seem to pose Israel particular problems in the GATT or the WTO, since FTAs are accepted under Article XXIV GATT. The problem with FTAs, as seen from Israel, is that they take care ‘only’ of tariffs and QRs. In general, eliminating other NTBs requires a degree of intimacy, harmonization and political understanding with your trade partner extending beyond the level of commitment which the latter is prepared to undertake. Also, reaching an understanding with

The Optimum Strategy for a Spoke 157

one partner might be incompatible with future arrangements with other partners.

II. The relations of an MNMC spoke with developed hubs: trade-offs Using Krugman’s terminology, the EU is the ‘natural trading block’ with which any MNMC has an interest to be linked. The main reason is economic geography combined with the economic muscle of the EU Fifteen. In distribution activities, what counts is the time of delivery and economic distance and this is valid for MNMCs as well. It is particularly relevant for highly perishable, service-intensive or bulky products, as well as goods dependent on fashion. The short geographic distance facilitates real-time commercial intercourse (e.g. opening and closing times are practically the same; quick feedback from markets is possible; highly perishable products are tradable). MNMCs and parts of western Europe share the same sea and meteorological factors, conferring easy knowledge of the natural conditions prevailing in the trading partner. And any EU enlargement increases mechanically the relative importance of the EU for all MNMCs as a trading partner, e.g. in relation to the US or Japan. This being said, the main problem for MNMCs is that the widening EU is also a confederation in the making and MNMCs, except Cyprus and Malta, are not a part of this double process. They are not being consulted, and sometimes not even informed, in time. The EU is a moving target. Catching up with it is difficult per se and is aggravated by the fact that the EU has other priorities than deepening its relations with the MNMCs, assuming that this is what the latter wish or need (e.g. going beyond tariffand quota-free trade). The EU also has limited time to devote to MNMCs. One possibility is of adjusting progressively and unilaterally to the acquis communautaire (as proposed currently to the MNMCs in the context of the EMP, under the name of Approximation of Legislation). Apart from the cost of trade diversion, a disadvantage is that MNMC exporters would not try to adjust to world standards but rather to the hub’s standards. This is what Australia did in the 1950s and 1960s when it decided to follow British patterns with very bad results. The same applies to the case of the eastern European members in the ex-