House of Lords - European Union - Fifty-Third Report

Select Committee on European Union Fifty-Third Report

Chapter 4: Absorption capacity and the borders of Europe

131. The EU treaties do not provide any guidance on the question of which countries can and should join the Union. Article 49 of the Treaty of the European Union states that any European country that respects and applies European values (democracy, human rights, the rule of law and fundamental freedoms) may apply for membership of the EU (see box in Chapter 1). It was only in 1993, at their summit meeting in Copenhagen, that EU leaders drew up a more detailed list of the conditions that a country should fulfil before it can join the Union.

132. The so-called Copenhagen criteria refer to a candidate country's political system, the functioning of its economy and its ability to apply EU law (see box in Chapter 3). They do not include any reference to the EU's ability or willingness to admit more countries. In recent years, politicians from several EU countries have called on the EU to modify the list of accession criteria, both to include a definition of where geographically the final borders of the EU should lie and to add a reference to the EU's ability to "absorb" new members.

133. The debate about "absorption capacity" and the borders of the Union has caused considerable uncertainty in those countries hoping to join the EU in the future. Enlargement Commissioner Olli Rehn has warned that the people and politicians in the Western Balkans and Turkey are following these debates "like the devil reads the bible" and that the ensuing doubts about their accession process is already eroding support for the reforms that are needed to prepare their countries for membership (Q 140).

134. Andrew Duff MEP advised the EU to incorporate a clear definition of the accession criteria into any new treaty it may adopt in the future (Q 229), arguing that this would help to reassure European citizens that only well-qualified candidates will join the Union. However, such a move entails the risk that those Member States that are opposed to further enlargement would try to raise the bar for accession in the future.

135. Professor Richard Rose[42] points out that the EU's focus on the acquis in evaluating a country's readiness entails the risk that it might miss broader political and social developments. He therefore advocates that the EU pay more attention to the attitudes and bottom-up developments in the candidate countries themselves (pp 192-194). This may be a useful suggestion for future candidates. It could help the EU for example to ascertain how far and how fast reforms are acceptable in say, Turkey, or whether current constitutional/political reforms in the Balkan countries will be sustainable in the long run.

136. The Copenhagen accession criteria have enabled the EU to encourage and monitor economic and political change in the candidate countries. The EU should not modify the list of the criteria or set them in stone by including them in a future treaty.

BOX 4

The Copenhagen criteria for EU Membership

At the European Council in Copenhagen in June 1993, EU leaders for the first time explicitly acknowledge the Central and East European countries as candidates. At the same time, they spelled out the conditions for accession, which then became known as the Copenhagen criteria.

There is one political criterion, two economic ones and one relating to the adoption of the acquis. The Council added (and has reiterated on various occasions since), not as a new criterion, that "the Union's capacity to absorb new members, while maintaining the momentum of European integration, is also an important consideration in the general interest of both the Union and the candidate countries."

The Copenhagen criteria require candidates to have:

stable institutions to guarantee democracy, the rule of law, human rights and respect for and protection of minorities;

a functioning market economy;

the capacity to cope with competitive pressure and market forces within the EU's internal market;

the ability to take on all the obligations of membership.

In 1997, at the Luxembourg European Council, EU leaders specified that compliance with the political criterion should be a prerequisite for the opening of any accession negotiations. This was applied to Slovakia, whose application was suspended as long as the government of Vladimir Meciar, which disregarded democratic principles and civil liberties, stayed in power. In the case of Croatia, the start date of the accession negotiations was postponed until the EU declared itself satisfied that the government was co-operating with the war crimes tribunal in The Hague.

The economic criteria and the acquis criterion were to be assessed in a "forward-looking, dynamic way". The European Commission submitted its' 'opinions' on the preparedness of the candidates in 1997 and subsequently assessed progress towards accession in annual 'regular reports'. The Commission has used these documents to elaborate on the Copenhagen criteria.

For its assessment of whether a country has a 'functioning market economy', the EU has looked at: the working of market forces: free prices and liberalised trade; barriers to market entry (establishment of new firms) and exit (bankruptcies); business regulation, protection of property rights, contract enforcement; financial sector to channel savings into investment; macroeconomic stability: inflation, budget, external account; and a broad consensus about the essentials of economic policy.

Whether a country has the ability to compete in the single European market would depend on: the existence of a functioning market economy; macroeconomic stability; human and physical capital; economic policy: trade, competition, subsidies, small enterprises etc; innovation and flexibility, small firms; and existing trade integration with the EU.

Critics have argued that the Copenhagen criteria are too vague to be operational. There were negative reactions whenever the Commission upgraded some candidates as 'functioning market economy' but not others. The EU has tended to focus on the rate of progress rather than absolute measures of preparedness, which is difficult to compare across countries. Some economists have criticised the heavy emphasis on the acquis criterion

On the other hand, the vague nature of the criteria allows the EU to get involved in most areas of reform. The EU has been able to specify different priorities for each country through the 'accession partnerships', ranging from orphanages in Romania to banking sector reform in the Czech Republic. They also allow for different paths toward compliance, leaving the candidates with more flexibility. The criteria do allow a certain intrusiveness on the part of the EU. But arguably, since most of the candidates have been (and are) small open economies, they have limited policy-making autonomy anyway.

The borders of the EU

137. Under Article 49 of the Treaty of the European Union, "Any European State which respects the principles set out in Article 6(1) may apply to become a member of the Union."[43] The EU has not so far attempted to define what "European" means in this context, and no collective effort had been made to take a decision on where its final borders should lie. Quentin Peel pointed out that the EU had implicitly defined what does not constitute a "European" country when it rejected Morocco's application for membership (Q 57). The question of the EU's ultimate borders really only arose after the collapse of the Berlin Wall. Before that, the Soviet Union closed the eastern borders of the EU (Q 65).

138. The subsequent eastward enlargement was partly driven by the Central and Eastern European countries' desire to "rejoin Europe" and partly by the EU's desire to have stable, secure and prosperous countries as its neighbours. Germany in particular was in favour of eastward enlargement since it did not want to be the frontier country after the collapse of the Berlin Wall. Now that the EU's external border has shifted further east, there is a new wave of countries interested in joining, including former Soviet countries. Just like Germany before it, Poland and other Central and Eastern European countries are now pushing for the EU to be prepared to admit Ukraine because they fear that excluding it would increase the risk of instability across their eastern borders.

139. With regard to the EU's continued enlargement, Quentin Peel suggested that: "Somewhere we have to stop" (Q 64). Some witnesses argued that EU citizens will not feel comfortable in a Union that cannot define its borders and therefore its identity. In a survey conducted before the last enlargement, 76 per cent of EU citizens were in favour of defining the EU's borders before commencing another round of enlargement (p 173).

140. But the majority of our witnesses took the view that for the EU to try and define its external borders was neither feasible nor desirable. Several experts agreed that a geographical definition made little sense. David Bakradze [44]makes the point that since the EU is a political project, its borders should also be political (p 170). In other words, which countries are allowed to join the EU should be determined by whether they share a common vision and common values with the existing members.

141. Quentin Peel argued that the EU's current policies on enlargement already put paid to any geographical definition of "European". He pointed out that Turkey—a candidate for membership—only has a "small bit" in Europe.[45] Russia—which no witness regarded as a potential future member[46]—is "half and half" (on the basis of a widely adopted definition of Europe stretching to the Ural mountains). Édouard Balladur (Q 434) pointed out that the EU would face the dilemma of either including the western part of Russia in its potential territory or drawing an artificial line along the Eastern border of Ukraine and Moldova.

142. According to the conventional geographical definition of Europe, Ukraine and Moldova lie entirely within Europe. Yet the EU has not offered them candidate status. Graham Avery (Q 59) argued that these former Soviet states could conceivably join under the provisions of the treaties, although he added that the EU had already "bitten off more than we can chew" and may not be able honour further promises with regard to enlargement.

143. Since the EU Treaty gives any European country the right to apply for Union membership, any attempt to draw a final boundary around its territory which excluded European countries would not be consistent with the Treaty. Moreover, politically it would be undesirable for the EU to attempt to define its final boundaries since this would weaken the EU's ability to encourage positive change in potential candidates. Ambiguity is preferable to a definite 'no'.

Absorption capacity

144. In the debate about future enlargements, some EU leaders have repeatedly pointed to the Union's 'absorption capacity' as a possible obstacle for taking in new members. When EU foreign ministers met their counterparts from the Western Balkan applicant countries in Salzburg in March 2006, they noted in their official communiqué that the EU's "absorption capacity has to be taken into account" in future enlargements. Shortly afterwards, the European Parliament in a resolution asked the European Commission to draw up a report on absorption capacity. And it reminded EU governments (inaccurately) that "the capacity for absorption of the Union [...] remains one of the conditions for the accession of new countries". The European Council in Vienna in June 2006 similarly concluded that "the pace of enlargement must take the Union's absorption capacity into account".

145. Enlargement Commissioner Olli Rehn has explicitly stated that absorption capacity would be a "consideration" in future enlargements but not a formal accession criterion. However, Christian-Democrat politicians from several EU countries, including Bavarian Minister President Edmund Stoiber and the former Austrian Chancellor Wolfgang Schüssel, have said that the Union's absorption capacity, rather than the preparedness of the candidates, should be the "decisive criterion" in the EU's further enlargement. Consequently, Mr Stoiber has called on the EU to halt enlargement once Bulgaria, Romania and Croatia have joined. Mr Schüssel would like the EU to proceed with enlargement to the Western Balkans but argues that the EU would not be able to cope with the accession of Turkey.

146. Even some of those strongly in favour of enlargement, for example Charles Grant[47] (Q 84) and Hannes Swoboda MEP (pp 198-200), thought that absorption capacity was a legitimate concern, and that it was the task of those who support future enlargements to explain how the EU could function with an increasing number of members. Other witnesses, however, expressed concern that the term absorption capacity could become a shield behind which the opponents of future accessions (in particular that of Turkey) could hide. In short, absorption capacity could just be an excuse to keep Turkey out (Q 71) or to stop enlargement altogether (Q 156).

147. Witnesses pointed out that the thinking that underlies the current debate about "absorption capacity" was not new. With every previous enlargement the EU worried about the impact that the new member(s) would have on its institutions, policies and its budget. So far, it appears, the EU has been able to absorb all five previous rounds of enlargement without too much difficulty (Q 140). In 1993, the EU included a reference to absorption capacity when it defined the three Copenhagen criteria for accession. However, absorption capacity was not added to the list of criteria but was meant as a "reminder" to the existing members that they need to proceed with internal reforms and integration rather than a new criterion for accession (Q 68). Subsequent enlargement-related documents, such as Agenda 2000, looked in detail at how eastward enlargement would impact on the EU's budget and its policies, implicitly addressing the question of absorption capacity.

148. The EU has not defined what absorption capacity means, and many of the witnesses we spoke to suggested that it defies a definition that would render it operational in policy terms. It appears that the term absorption capacity invariably includes elements that are part of a much wider debate about the future of Europe, such as the debate about the EU's institutions and the acceptance of enlargement by the European public.

149. A number of enlargement experts have started to deconstruct the concept into its possible components. Such an exercise is likely to show that each individual challenge of absorption—with regard to EU decision-making, its institutions, its budget or individual EU policies—is solvable (Q 142, Q 179). This change from "fuzzy absorptive capacity" to "tangible absorptive capacity" (Q 202), could change the nature of the current debate.

150. In response to a request from the European Parliament, the European Commission has been working on a report on absorption capacity. This was scheduled to be published on November 8^th, after this inquiry was concluded. According to the Commission, the report will provide an "intellectual framework" for the debate on how to ensure the smooth integration of further members. In particular, the Commission will focus on three questions: First, which institutional and policy changes are required to ensure the EU's smooth functioning in the future? Here the Commission will provide some input to the ongoing or forthcoming debates about the future of the EU constitutional treaty and the 2008-09 EU budget review. Second, how can the EU provide better guidance for the candidate countries during the accession process? In particular, the Commission will recommend impact assessments at key stages of the accession process. Third, how can the EU improve communication about the costs and benefits of enlargement? The Commission says it is committed to increasing the quantity and quality of information on enlargement, and to providing this information in more user-friendly form. But the Commission will also remind the Member States that they will remain chiefly responsible for explaining enlargement to their national constituencies.

151. Another factor to be borne in mind is that new countries do not only constitute a burden to be "absorbed", as Baroness Nicholson noted they also bring new "capacity" to the Union (p 186). They make contributions in terms of budgetary resources (which is particularly true for the Nordic/Austrian accession), economic dynamism (eastward enlargement) or military capacity (which would hold true particularly in the case of Turkish accession).

152. The European Council has linked the Union's absorption capacity to public opinion in the Member States. In its June 2006 summit conclusions, the Council asked that the Commission in its report on absorption capacity should "also cover the issue of present and future perception of enlargement by citizens and should take into account the need to explain the enlargement process adequately to the public within the Union". As noted previously (in Chapter 2), linking future accessions directly to public opinion risks undermining the credibility of the enlargement process and could therefore weaken the transformative powers that enlargement has had in the past.

153. The debate about absorption capacity is harmful since the term is inherently vague and is interpreted by many in the candidate countries as an excuse for closing the Union's doors. However it now seems unlikely that the debate will go away. We therefore believe that it would be best if the term was deconstructed into its individual components and considered in that light. The debate would then shift on to solid ground and focus on real issues such as budgetary capacity and institutional adjustments. "Absorption capacity" would become a to-do list for the existing Member States rather than a barrier to the candidate countries or an excuse for delaying or preventing their accession.

42 Centre for the Study of Public Policy, University of Aberdeen Back

43 Article 6(1) states: The Union is founded 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. Back

44 Chairman of the Committee on European Integration, Parliament of Georgia Back

45 Turkey's eligibility for membership was laid out in the Treaty of Ankara signed between Turkey and the EU in 1963. The treaty explicitly referred to the possibility of Turkish membership in the future. Back

46 The accession of Russia would cause the EU "mega-indigestion" (Q 57) or would be "a contradiction in terms" because "it would be more like the European Union joining Russia" (Q 59). Back

47 Director of the Centre for European Reform Back