Boris Vujcic – how to conduct accession negotiations

Boris Vujcic. Photo: cc Friends of Europe/flickr

Boris Vujcic. Photo: cc Friends of Europe/flickr

“This is what the negotiations are about: you talk, you push, you remind, in order to keep the momentum.”

 

Boris Vujcic, the new governor of the Croatian National Bank, was the leading figure in Croatia’s EU accession negotiations on fiscal issues and financial markets. As deputy chief negotiator for the full length of the talks, from 2005 to 2011, he was involved in setting up the framework for the negotiations and the negotiation team. He was also directly responsible for three financial chapters: free movement of capital (chapter 4), financial services (chapter 9) and economic and monetary policy (chapter 17).

Born in 1964 in Zagreb, Vujcic initially felt drawn to the arts, photography in particular, but started to read economics “and kind of liked it”, as he puts it. He graduated in 1988 from Zagreb’s Faculty of Economics and remained on the school’s faculty as an assistant lecturer. He spent time in France on an EU scholarship in 1989/1990, was a Fulbright fellow at Michigan State University from 1994 to 1995, and became one of the first Croatian interns at the European Commission in 1995.

Vujcic briefly stayed on in Brussels as a consultant for ECOFIN, before being invited to join the Croatian National Bank to lead its research department in 1996. In 2000 he was appointed one of the bank’s deputy governors. His term was renewed in 2006, and on 8 July 2012 he took over as governor.

One of the big challenges for Vujcic and his team at the beginning of the negotiations was to set up structures for a process that differs vastly from anything to which a state administration is accustomed.

“I think the success of the process of technical negotiations depends very much on this initial phase, when you decide how to set up the negotiating team and who to choose in the negotiating team. We had this, I would say, wide approach whereby we did not include only people from the government, from the official sector, but also include people from the private sector, if nothing else than to be observers, so they can inform their constituencies, what changes will come through early on in the process …

When we were setting up the team and the structure, we first went to some of the countries of the previous [enlargements], which was helpful, because people would tell you pretty much what to expect from [the] side on which you will be sitting, not only from the Commission side.”

Vujcic and his colleagues travelled to the Czech Republic and Romania, and even to older member states like Portugal and Spain, to hear about “some very specific issues we knew they had dealt with.”

As deputy chief negotiator Vujcic was responsible for forming three working groups that managed the course of the talks in the three chapters he was in charge of.

“I was the negotiator for the chapter, but then there was the head of the working group who really managed the work. And that would be the person that would do most of the writing of papers and positions, going through the positions with me, clarifying things, but then talking with other people from the working group on how to prepare the analysis for the Commission that you were sending … There is a lot of coordination work: you have to write letters, remind people, ask them to send the data, organize meetings.”

“First we started having regular meetings. Then you find out that you have to meet when you have to meet. Sometimes when you work on something you meet a few times a week to get things done and then you don’t have to meet at all with part of the people because you’re done with that. Or maybe a few months later, if things re-emerge, then you start work again on that issue.”

At the start of the negotiations is the screening process, which takes place in two stages. First, Commission staff explain the acquis and the related European norms and what a given accession country eventually has to accomplish. Second, the national working groups produce a report on the country’s state of alignment with the acquis.

“You have to present to the Commission the state of the affairs in that chapter in your country and this is basically the development of the first action plan. Because by doing that you are outlining the things that you have to do to align with the acquis … And then you do a kind of timeframe: how and when you are doing this.”

In order to meet the concerns of the old member states after the fifth enlargement round, the accession process was made more demanding. The member states, usually on the proposal of the Commission, could set so-called “opening benchmarks” before a negotiation chapter could be opened and “closing benchmarks” before it could be closed. Croatia had to meet 23 benchmarks for the opening of 11 chapters and 104 benchmarks for the closing of 31 chapters.

“Sometimes in order to meet the opening benchmarks you have to do more than what countries [of the 5th enlargement round] had to do before for closing the chapter. They would just promise to do something, and close the chapter. And we sometimes had to do that only to open it.”

Croatian officials consulted continuously with Commission experts to reach an agreement on the benchmarks. Once the Commission opined that the relevant benchmarks for a particular chapter had been fulfilled, and once member states agreed, Croatia received an invitation to transmit its negotiating position for the chapter in question.

Opening benchmarks usually consist of some kind of legislative action, but can also encompass the provision of additional information.

“With the closing benchmarks it’s often the case that you also have to prove somehow that you not only changed your legislation but that you are also implementing it. For example, in chapter 4 (free movement of capital) we have “money laundering”, and then you have to show how many cases have been reported; how many indictments you had; how many judicial procedures; how many sentences you had over a certain period of time. And then, based on this, it is decided if the benchmark has been fulfilled, or not.”

Meeting EU standards and implementing the acquis often requires deep institutional change.

“There are some institutions that you have to set up from scratch, institutions which we did not have, but which we needed because of the acquis. For example, in the area of money laundering, [we had to create] the FIU [Financial Intelligence Unit], which collects data on suspicious cases of money laundering … And then not only did you have a law on anti-money laundering and anti-terrorist financing and a new institution, but a new institution which is a kind of a centre of the whole process. All other institutions that existed before now have to, in a formalized way, constantly exchange information with the FIU. And not only that, but they also have to act upon this information.”

Sometimes the new legislation itself was a challenge, as in the chapter on “economic and monetary policy.”

“The law on the National Bank is the central piece of that chapter … On the face of it, it looks simple: you have the acquis, you have your own law, but we had to go through five, six meetings with people from the Commission, with lawyers to draft the sentences in the law and to agree what different forms of drafting would really mean in terms of the acquis … it goes down to ‘this sentence, well, until the comma it is ok, but after the comma we would ask to reformulate it because of this and that.’ Then you have to say it in a different way, and then you go on and on, sentence by sentence… not every article, but the tricky ones.”

The big challenge for the negotiators, the working groups and the Croatian institutions involved was to perform a huge amount of change in a relatively short time, from amending laws, building new or restructuring existing institutions, adopting new policies and ways of working. But another crucial aspect was, once the job was done, to communicate this effectively to the Commission.

“I was always asking: what is good? What is good enough for each benchmark? Compared to what? And then, for example, I would assemble the EU statistics of the member states, and then, when I was presenting, I compared Croatian statistics with the statistics of EU countries … So for example I would show them the number of important cases for the anti-money laundering normalized for the number of banks and reporting units, and say: ‘Look, we are above the average! Is this enough?’ And at the end they said: ‘OK, it’s enough’.”

Another issue was the nature of the benchmarks.

The more precise the benchmarks are, the more fair it is to the country that is negotiating. You need to know what exactly you need to do. And sometimes it is phrased in very vague terms. Then everybody can come and say: ‘Ah, yes, but this is not enough.’ That’s sometimes a problem.”

In certain cases it also paid off to address specific issues or problems head on. Some of the things discussed in Brussels would never show up in any official document.

“I went and talked with people, explaining why some things are like they are and why they should be like they are. And then, if you convince people that your position is right, then it never appears as a requirement from the Commission.”

Convincing the Commission was crucial. “If they agreed with us, they then would defend that position with the Member States,” says Vujcic. Sometimes member states had additional requests, however. The most extreme were Italy’s opposition to Croatia’s Ecological and Fisheries Protection Zone (EFPZ) and Slovenia’s ten-month-long blockage of 14 negotiation chapters over a bilateral border dispute.

While the accession process is usually understood as a dialogue between the government of the accession country on the one side, and the EU and the member states on the other, there is also a lot of work to be done on the home front, Boris Vujcic explains.

“Actually, I would say, thinking about it, there was more work domestically than in Brussels or with Brussels. Maybe in the beginning of the process it was more work in Brussels with the Commission, with the acquis, but later on [there was] more work at home. Explaining domestically what we are doing, what needs to be done, why it needs to be done, how it needs to be done … and eventually getting people to do it, sometimes in a very short period of time, across the whole spectrum, from the ministries to the regulatory bodies to the statistical office …

This is what the negotiations are about: you talk, you push, you remind, in order to keep the momentum.”

All negotiating positions submitted to Brussels needed not only the government’s approval, but also that of the National Committee for Monitoring the Accession Negotiations. This parliamentary committee was composed of 15 MPs from all parliamentary groups and 4 external non-voting members. Since 2007, it was headed by Vesna Pusic, now Croatia’s foreign minister. In contrast to all other parliamentary committees, it worked on the basis of unanimity. Each of the 15 voting members, therefore, had effective veto power over all of the government’s negotiating positions. Whatever its potential to halt progress in the negotiations, the unanimity principle proved indispensible.

“You need to have it if it is supposed to be a democratic process … If there is a supreme body in the country, then this is Parliament. So you have a kind of a clean track sheet. Without it you would always, I am sure, find people who would come back later, saying: ‘Ah, what did these people do? We were not aware! Who did know?’”

Overall, accession negotiations sent Croatia’s whole reform process into sixth gear, says Vujcic.

“Most of the things that you need to do [during the accession process] you would have to do regardless of the negotiations. The negotiation process has speeded it up …

In normal circumstances, for most of the things that are done in the governmental administration you do not have a precise deadline. But in the framework of negotiations you have this constant pressure. Although the EU never says that the process should be completed in so and so many years or months, the government usually gives itself some internal deadline for each task and that creates the pressure to move with the things faster than otherwise would have been the case. For example in chapter 9, we changed 11 laws, basically in two and a half years. That would have never happened at such speed, with engaging so many people working on that, without the negotiations.”

24 July 2012