House of Commons - European Scrutiny

Select Committee on European Scrutiny Second Report

16 EU Enlargement

(a)

(28018)

14968/06

COM(06) 649

(b)

(28022)

15122/06

COM(06) 672

Commission Communication: Enlargement Strategy and the main challenges 2006-07

Commission Communication: Instrument for pre-accession assistance (IPA): Multi-annual indicative financial framework for 2008-10

Legal base —

Documents originated 8 November 2006

Deposited in Parliament 16 November 2006

Department Foreign and Commonwealth Office

Basis of consideration EM of 21 November 2006

Previous Committee Report None; but see (27865): HC 34-xxxviii (2005-06), para 3 (18 October 2006) and (28023-29): HC 41-i (2006-07), para 17 (22 November 2006)

To be discussed in Council 11-12 December 2006 General Affairs and External Relations Council and 14-15 2006 December European Council

Committee's assessment Politically important

Committee's decision Cleared; relevant to the debate on enlargement to be held in the European Standing Committee on 15 January 2007

Background

16.1 In the introduction to its annual Enlargement Strategy Paper (document (a)), the Commission says enlargement has been at the heart of the EU's development over several decades: "The very essence of European integration is to overcome the division of Europe and to contribute to the peaceful unification of the continent". Politically, enlargement has consolidated democracy, human rights and stability across the continent, and "reflects the EU's essence as a soft power, which has achieved more through its gravitational pull than it could have achieved by other means".

16.2 Economically, enlargement has helped to increase prosperity and competitiveness, respond better to the challenges of globalisation and increase the EU's weight in the world. The accession of Bulgaria and Romania on 1 January 2007 will complete the fifth enlargement, following the accession of ten Member States in May 2004. "Rigorous preparations" having paved the way, the ten new Member States "have reached an excellent level of compliance" with EU law, made a significant contribution to the work of the EU institutions, generated increased levels of economic activity, trade and investment, and produced high rates of economic growth.

The Commission Communications

16.3 Building on the EU's existing strategy, the first Commission Communication "outlines an approach to draw lessons from the fifth enlargement, to support countries on their way to membership, to foster public support for further enlargement, to address the enlargement challenges, and to ensure the EU's integration capacity [as] the basis for building a renewed consensus on enlargement". In line with the conclusions of the June European Council, it includes sections on public support, absorption capacity and institutional reform, with an annex that "sets out an approach designed to ensure that the EU retains its capacity to function effectively while pursuing an enlargement agenda which is designed to meet the challenges of the years ahead".

16.4 It covers the countries of the Western Balkans and Turkey. Croatia and Turkey are negotiating their accession. Macedonia became a candidate country in December 2005. The other Western Balkan countries have not yet submitted membership applications, but are "making progress towards fulfilling their European perspective". The main challenges for 2006/07 are:

Turkey's accession negotiations;
Kosovo's future status;
relations with Serbia; and
Bosnia and Herzegovina's assumption of greater ownership of its governance.

BULGARIA AND ROMANIA

16.5 Despite both having introduced far-reaching reforms in the course of the accession negotiations, the Commission's monitoring reports of October 2005, May 2006 and September 2006 highlighted areas of particular concern where further efforts were needed.[34] The September report set out strict conditions to ensure continued progress in the reform process before and after accession, and drew attention to the provisions in the acquis and in the Accession Treaty to ensure that EU policies and institutions will continue to function effectively: the Commission "will not hesitate to use these mechanisms at any time, if the need arises".

16.6 Although their accession demonstrates to countries at an earlier stage in their preparations for membership that their ultimate goal is achievable, it also provides a number of lessons — especially that judicial reform and the fight against corruption and organised crime need to be tackled at an early stage and the need for an accountable and efficient civil service, based on professional career development criteria, to prepare efficiently for accession and subsequently operate as a Member State, which is beneficial to the country as a whole.

ENLARGEMENT PROCESS

16.7 The Strategy Paper states that the Union's enlargement policy continues to be based on three key principles:

consolidation of commitments, which means that the EU honours its existing commitments but is cautious about assuming any new commitments;
conditionality, which must be applied rigorously but fairly to all candidate and potential candidate countries; and
communication, which refers to the importance of communicating the enlargement process effectively and in particular its benefits for EU citizens. Member States must take the lead in communication. The democratically elected governments of Member States take every key decision leading to a country's accession, and national Parliaments ratify the decision to accept new members.

16.8 The Paper describes the changes that have already been made to the enlargement process since the fifth enlargement, including strengthening conditionality through the introduction of benchmarks for opening and closing each negotiating chapter. It also stresses the importance of the political criteria in the process and recommends that increased attention should be paid to political reforms. These reforms are addressed as part of the political dialogue as well as in the chapter on Judiciary and Fundamental Rights. There will also be greater Member State involvement in the preparation of the Commission's political dialogue with the candidate countries. Regarding the economic criteria, the results of the economic dialogue will henceforth be fed into the negotiation process, and pre-accession assistance will be targeted more precisely to help ensure that candidates are functioning market economies by the time of accession.

PRE-ACCESSION ASSISTANCE

16.9 From 2007, all pre-accession assistance will be co-ordinated under the Instrument for Pre-Accession Assistance (IPA), which will replace previous assistance instruments such as PHARE, CARDS, ISPA and SAPARD. Candidate countries and potential candidate countries are eligible for funding under the new instrument. The Western Balkan countries and Turkey will benefit from almost €11.5 billion over the next seven years. The EU adopted the IPA Regulation in July.[35] The Commission is now finalising the detailed regulation for implementation.

16.10 The Multi-Annual Indicative Financial Framework (document (b)) provides a breakdown of assistance by country and by component for 2007-2010. It confirms the 2007 figures included in the Commission's 2007 Preliminary Draft Budget. Under the Financial Framework, no country receives less in 2007 than it received in 2006. Per capita allocations for the Western Balkans will reach at least the 2004-06 average of €23. As Candidate Countries, Macedonia and Croatia will receive at least €30 per capita by 2008. Turkey's per-capita allocation is lower, as a result of its large size and its limited capacity to absorb funds. However, its allocation will gradually increase over 2007-13. A table with the breakdown by country and component is at Annex 1 of this Report.

WESTERN BALKANS STRATEGY

16.11 The Strategy Paper reports on the progress that has been made in implementing the road-map for the Western Balkans.[36] The March 2006 meeting in Salzburg between EU and Western Balkans foreign ministers reiterated the perspective of EU membership for the Western Balkans and called for the countries of the Western Balkans to take stronger ownership of the process of regional co-operation. In this context, the Commission welcomes the establishment of the South East Europe Co-operation Process and the launch of negotiations for a regional free trade agreement. The EU will continue to promote more people-to-people contact through the provision of more scholarships to residents of the region while simplifying visa arrangements for travel.

ENSURING PUBLIC SUPPORT FOR ENLARGEMENT

16.12 The Strategy Paper states that the benefits of enlargement need to be better communicated to the public. Member States must take the lead, with the support of the Commission and European Parliament. The Commission will support increased transparency by recommending that screening reports, benchmarks and final EU common positions be made public, and retain its emphasis on civil society dialogue and personal contact with the citizens of prospective members. The report also highlights the need to monitor public opinion on enlargement and to communicate more clearly with members of the public, for example by explaining the process in everyday language on targeted web-sites.

16.13 The paper ends with 13 Conclusions and Recommendations, which are at Annex 2.

INTEGRATION CAPACITY

16.14 The Commission says that, following the request of the June 2006 European Council, the annex to the Strategy paper focuses on medium to long term issues concerning the EU's capacity to integrate new members and "puts forward an approach for ensuring that Union can maintain and deepen its own development, in terms of policies and institutions, while pursuing an enlargement agenda with major challenges in the world today". It notes that in 1993 the Copenhagen European Council concluded that "the Union's capacity to absorb new members, while maintaining the momentum of European integration, is an important consideration in the general interest of both the Union and the candidate countries" and that, as set out in the Commission's 2005 Strategy Paper and confirmed by the June 2006 European Council, "the pace of enlargement must take into consideration the EU's integration capacity". The approach presented in the paper is based on:

"ensuring the EU's capacity to maintain the momentum of European integration;
ensuring candidate countries fulfil the rigorous conditions; and
better communication".

16.15 The Report refers to absorption capacity as "integration capacity", which is "about whether the EU can take in new members at a given moment or in a given period, without jeopardising the political and policy objectives established by the Treaties". The Report argues that integration capacity is determined by two factors — the transformation of applicants into worthy member states; and the development of the EU's policies and institutions — and that the capacity of the Union to maintain the momentum of integration has three main components: institutions, EU policies and the EU budget.

16.16 It notes that "widening the EU has proceeded in parallel with the deepening of European integration". The EU honours existing commitments but is cautious about assuming any new ones. Future "group" accessions are unlikely; individual accessions are likely only in the medium to long term. As to the question of the ultimate borders of the European Union, the Commission concludes "the term 'European' combines geographical, historical and cultural elements which all contribute to European identity" and that "the shared experience of ideas, values, and historical interaction cannot be condensed into a simple timeless formula and is subject to review by each succeeding generation". For now, the Union "needs to ensure that its institutions continue to act effectively, that its policies meet their goals, and that its budget is commensurate with its objectives and with its financial resources".

16.17 The Commission argues that "the EU needs new institutional arrangements simply for the sake of enlargement; it also needs them so that the current Union can function better". Noting that the Treaty of Nice provides only for a Europe of 27, the Annex says that the allocation of seats in the European Parliament and the weighting of votes in the Council "are clearly central to the EU's capacity to take decisions" and that "a new institutional settlement should have been reached by the time the next new member is likely to be ready to join the Union".

16.18 The Commission observes that previous enlargements have strengthened EU policies in numerous areas, and argues that as it enlarges, the Union needs to be in a position to continue developing and implementing policies in all areas. To this end, the Commission will examine the impact of future enlargements at key stages of the process. It will in particular consider the impact on agriculture and cohesion policies when assessing the budgetary impact of enlargement. An assessment of the impact of enlargement on EU policies will also be included in all future Commission opinions on membership applications. Finally, in the course of accession negotiations, the Commission will provide substantial assessments of the impact of accession on key policy areas. This will inform the EU common positions in the chapters concerned, including, where relevant, transition periods or other arrangements.

16.19 For the budgetary component, the Commission notes that the EU must be able to continue financing its policies in a sustainable manner. An assessment of the impact of enlargement on the EU budget will therefore be included in all future Commission opinions on membership applications. Furthermore, the Commission will propose, in any future accession negotiations, a package of necessary financial measures.

The Government's view

16.20 In his 21 November 2006 Explanatory Memorandum, the Minister for Europe (Mr Geoffrey Hoon) says that the Government welcomes the Commission's emphasis on the importance of honouring existing commitments towards the Western Balkans and Turkey and continues as follows:

"Enlargement has been one of the EU's most successful policies and it is important the process continues. The Government welcomes the focus on continued rigour by the Commission in monitoring preparations by the countries concerned and the confirmation that each country will be judged solely on its individual merits. We welcome the Commission's proposals in the area of ensuring public support for enlargement but agree with its assessment that member states must take the lead in this.

"We agree that the EU must consider its integration capacity. This has been the agreed position of the EU since the Copenhagen Council of 1993. The effect of enlargement on the EU's institutions, budget and common policies has been considered in advance of previous enlargements. It is in the interest of existing Member States and candidates that the EU is properly prepared for future accessions. However, we do not want any assessment of integration capacity to create a new barrier for candidates. Their progress through the enlargement process should continue to be based on their success in meeting the Copenhagen criteria".

16.21 The Government also welcomes the introduction of the IPA from 2007 and supports the Commission's proposed Multi-Annual Indicative Financial Framework:

"We are pleased that the Commission is looking at the objective resource allocation criteria laid out in the IPA Regulation when establishing the Financial Framework, including needs assessment, absorption capacity, respect of conditionalities and capacity of management".

Conclusion

16.22 Although the documents contain no surprises, and cover considerable ground that has been covered in individual monitoring reports, they are nonetheless valuable in pulling together the challenges to further enlargement. They clearly identify the road ahead for the actual and potential candidates, and how the Commission plans to manage the accession process henceforth, with lessons from the process so far being relevant to both parties. That the road ahead for Member States is less clearly signposted signifies the intensely political nature of the questions raised.

16.23 The process of EU enlargement is to be debated in the European Standing Committee on 15 January 2007, on the basis of the last monitoring reports for Bulgaria and Romania. Since then we have considered similar reports on the Western Balkan aspirants, which we considered relevant to that debate. We consider these documents — which we now clear — likewise relevant.

Annex 1: Conclusions and Recommendations

Based on the above analysis, the Commission proposes the following conclusions:

1. The EU's enlargement policy continues to be based on the three principles of consolidation, conditionality, and communication. The EU honours the commitments made to the countries already in the process, but is cautious in assuming any new commitments. The pace of the accession process depends on the pace of reforms in the candidate country.

2. The current enlargement strategy, combined with ways and means to ensure the EU's capacity to integrate new members, forms the basis for a renewed consensus on enlargement.

3. The EU's capacity to integrate new members is determined by two factors:

4. maintaining the momentum to reinforce and deepen European integration by ensuring the EU's capacity to function. This is in the interest of both present and future EU citizens;

5. ensuring that candidate countries are ready to take on the obligations of membership when they join by fulfilling the rigorous conditions set. This is assessed by the Commission on the basis of strict conditionality.

6. The EU's integration capacity will be reviewed at all key stages of the accession process. In its opinions on applications for membership and in the course of accession negotiations, the Commission will provide impact assessments of accession on key policy areas. This will help Member States to define EU common positions for the negotiations of the chapters concerned, including, where relevant, transition periods or other arrangements.

7. When assessing the budgetary impact of future accessions, the Commission will examine the impact on key policies, in particular agriculture and cohesion policies.

8. The EU must ensure that it can maintain and deepen its own development while pursuing its enlargement agenda. Institutional reform is needed to improve the effectiveness of the decision-making of an enlarged EU. A new institutional settlement should have been reached by the time the next new member is likely to be ready to join the Union.

9. The Commission will further improve the quality of the accession process. Benchmarks can be laid down both for opening and closing negotiation chapters, and will provide grounds for suspending or re-opening negotiations on individual chapters. The results of political and economic dialogues will be fed into the negotiation process. Difficult issues, such as judicial reform and the fight against corruption, need to be addressed at an early stage of the accession process.

10. In order to enhance transparency the Commission recommends that key negotiation documents be made public, including impact assessments, screening reports, benchmarks for opening chapters and EU common positions for the negotiations.