31 January 2014

Does EU enlargement policy change countries? Can it inspire the people who have to push through deep and complex reforms? Does it help ensure respect for fundamental rights?

What really are the minimum political standards that candidates will have to meet? What is, in the European Commission’s view, a “functioning market economy”?

What is the future of the Directorate General for Enlargement, the department of the European Commission in charge of this policy? And what is the future direction of the DG for Enlargement’s actions, given the unpopularity of the current policy in certain key member states?

 

Measuring alignment?

2013 EU assessments of countries according to the 32 chapters assessed. When it comes to the state of alignment, Turkey is ahead, despite many chapters being blocked. Macedonia is second, despite not being allowed to negotiate. Serbia is ahead of Montenegro. In October 2013 Albania was the very last. For the origins of the assessments in the 2013 reports see at the bottom of this text. The effects of producing such tables in a credible way is the subject of this text.

For the score this conversion used is:  Advanced = 3 points, Moderate = 1 point, Early = 0 points (Source: EU progress reports – see below!). Since Bosnia and Kosovo have different types of progress reports they are not included here.

 

This week in Brussels I gave a presentation on the future of EU enlargement policy. The occasion was a strategy brainstorming session of the senior team of DG for Enlargement in Brussels, made up of some 60 people. The meeting followed similar presentations to policy makers in Berlin, Stockholm, Zagreb, Skopje, Brussels, Istanbul, Paris, and Rome. While I spoke in Brussels, my colleague Kristof presented similar ideas to Croatian Foreign Minister, Vesna Pusic, in Zagreb.

I was asked to be provocative. So I started with a personal encounter from a few weeks ago.

During a late night conversation in Zagreb, a journalist from a very respected European paper in a large EU member state told me that in his view “DG Enlargement should be shut down.” The argument, (which I had heard before in large EU member states I know well) was as follows:

None of the countries in the Balkans (or Turkey) are today even close to meeting what should be the EU’s demanding standards. They have weak institutions, corrupt administrations, create few or no jobs, and have incredibly polarised political environments. Nor are they moving in the right direction at a credible speed in overcoming these problems to make real change likely in the next decade or two. The EU has already admitted too many weak countries. Against this background having a DG for Enlargement creates constant pressure to repeat an earlier mistake. “Can you really imagine Albania in the EU any time soon?” And if you cannot, what then, is the point of a DG for Enlargement?

A few years ago such a view would have been very radical. In some European member state parliaments it is now on the way to becoming the new mainstream.

Of course, there will continue to be a DG dealing with enlargement for the foreseeable future. There is a policy, there are commitments, and there is inertia. The “European perspective” still produces real results. It is an “anchor.” It is leverage, at a low cost to the EU.

However the challenge posed by skeptics calls for a credible answer to the question of whether or not the basic premise of accession policy – that it changes countries for the better, and for good – is valid. And does the European Commission offer credible assessments of progress, or is it condemned by bureaucratic self-interest to be a cheerleader for badly prepared countries? (Or, to avoid this criticism, does it end up being seen as unfair in accession states?)

We accept that there is a crisis of credibility of the process. We are also convinced that there is an opportunity to substantially improve the impact of what is being done today by the EU in accession countries without changing the basic policy. The focus must return to the concrete and visible results in accession countries –  “concrete” and “visible” for skeptics as well.

Enlargement policy needs to mobilise people or it fails. Without the mobilisation of policy makers, civil servants, civil society, and interest groups in accession countries, the kind of changes that have to happen will not happen.

It is here that we encounter a problem with the way many measure accession progress today: the language of “counting chapters opened.” Any complex process generates technical language, bureaucratic procedures, and jargon for those most involved. In the case of enlargement, however, the technical language has crowded out a focus on what makes this policy worthwhile and inspiring.

Recently I asked some of my Turkish friends what they thought the EU should do next in Turkey. Their answer: “Open Chapter 23. Then the EU can seriously discuss fundamental rights with Turkey.” This is how very serious and committed people talk, full of good intentions. And yet, it is puzzling. For when one asks “what do you believe happens after a ‘chapter is opened’ that makes any real progress more likely? Is there evidence that ‘chapter-opening’ produces change?” people pause. Rightly so, as I showed in my Brussels presentation. There is in fact no evidence that “chapter opening” produces change – Turkey shows this best in recent years – that progress in “un-opened” chapters is faster or slower than in “opened” ones. A country can make all the reforms and then “open and close” all chapters at the very end (Croatia did this in many key policy fields). It can open many chapters and make no progress for years.

See this table. Note that it is based on the Commission’s own assessments in the 2013 progress reports (For more on these assessments see the ESI scorecard further below):

The argument is not against the need to have “chapters,” which define separate policy areas, from consumer protection to public procurement or waste management. These are useful conventions to deal with the vast range of European standards and policies.

However, what really matters is that the EU spells out clearly, publicly, fairly, and strictly – and in a way that is understood by the broadest possible public in Albania, Turkey, Serbia or Macedonia – WHAT the basic and fundamental rights and standards should be in a country that wants to join. And it should do this regardless of whether a “chapter” is opened (or a member state decides to veto this, as has happened and may well continue to).

This is what accession is about from the very beginning. To allow for a “veto” against focusing on key issues makes no sense at all. What does make sense is a focus on closing “chapters,” which in any case only happens at the very end, and in turn depends on the nature of the reforms being done!

So by all means, open Chapter 23 with Turkey (and every country), if this is possible. And yes, it was good to “open a chapter on regional policy” (Chapter 22), last summer. It was a “signal” that there was still a process in motion. But in the end, it was also a strange response to the drama of the Gezi protests and their subsequent repression. Yes, there is a process, as the EU stated, but one that does not address WHY opening Chapter 22 is an answer to the question most observers were asking about the state of democracy. How did opening a chapter on regional policy change anything meaningful in Turkey in 2013?  What has it changed since this was done?

The bureaucratic steps designed many years ago to make enlargement manageable are here to stay: the categories of potential candidates, opening one of 35 chapters, opening benchmarks, closing chapters. The bureaucratic process is not the problem. Nor is the fact that at every step, 28 member states have a veto. This is simply a fact of life.

However, what can and must happen is that the European Commission – and supporters of enlargement – see this ladder and the more than 70 steps for what it truly is: an instrument to many more worthwhile ends. And it is only those ends that matter to skeptical EU member states and to people in accession states: more vibrant public debates on political issues, particularly on television. Less discrimination of minorities, whether LGBT or religious minorities. More transparent spending whenever public agencies procure goods and services. A credible strategy to ensure safe food. Environmental inspectorates that ensure that dangerous waste is dealt with appropriately. Less polarised politics. A credible judiciary. Rules for businesses that allow fair competition. And many more…

Take another example. There is an esoteric debate, reminiscent of what scholars discussed in the cathedral schools of medieval Europe, on what is a “functioning market economy” for the European Commission. And in every progress report there is one section on “economic criteria.”

The EU insists that all accession candidates have a functioning market economy before they join: this makes intuitive sense. But the European Commission does not explain how it recognises one. Turkey has a “functioning market economy,” according to the EU. Serbia does not. One could have many long debates on whether a country that is not creditworthy has a functioning market economy (Greece? Cyprus?). Is this status linked to growth or its absence? (Was Finland a functioning market economy in 1988, stopped being one in 1993, and became one again in 1995?)

In fact, I recently learned that some people are trying to take the Commission to court (!) to disclose what its (secret) yardstick for measuring the functionality of an economy is. But it seems a misleading and irrelevant debate. If the Commission WOULD say that Albania will have a “functioning market economy” in 5 years, would members of the Bundestag or the Dutch public believe it? What does withholding this label do for Albania and the EU?

Would it not be better to assess countries by a few clear, measurable, and meaningful outcomes – the results of good economic policy? And to rewrite the currently unreadable and incomprehensible economic sections of progress reports so as to trigger regular and widespread public debates on economic fundamentals?

This could be done by defining and explaining a few key indicators for non-economist readers. Take the employment rate – how many people of working age have worked at least some in the past week, as measured by a credible standardised labor force survey? (Counting people employed in subsistence agriculture – how many of them are among the “employed?” This is also hugely interesting.)  Then one looks a bit closer: if employment is low, is this because few young people work? Or few women?

An accession candidate should focus on these questions, and a progress report by the commission should highlight them, which it does not currently do. In the 2013 Macedonia progress report the authors gave TWO employment rates: 40.7 percent on page 16 and 48.2 percent on page 61, in the same report! (It obviously did not seem central to the authors).

A country that has a low employment rate and yet aims to convince the EU that its economy can, after accession, “withstand competitive pressures” should be asked to show – over the period of the accession process – that it can address this issue seriously, and with at least some success. This is a debate worth having and renewing every year.

The same could be said for other outcomes of economic policy: what about exports per capita, the stock and flow of FDI, the qualifications of the future work force (as measured by the OECD’s PISA tests, which amazingly, not all candidate countries are currently required to participate in), or the ability to spend EU grant money on development?

For most of these outcomes of economic policy there are robust indicators that allow comparisons over time and between countries.  For some the European Commission can easily construct them. Indicators work best if they are completely plausible, and intuitively make sense to a broad public. And there need not be 20. The World Bank’s Doing Business reports started with five in 2004. Better five that every reader can understand, than twenty that are esoteric and hard to grasp.

The same is true for policy areas covered in the chapters. In my Brussels presentation I suggested doing for each chapter – and for each country – what the EU has done in the recent visa liberalisation process: produce one document that clearly sums up what the core requirements are under each policy area (or chapter) that every accession candidate should meet. They could look like visa liberalisation roadmaps (see here examples)

“Core” requirements means that these roadmaps for chapters need not include everything, but rather most of the important criteria – requirements that countries only need to meet shortly before actual accession can be excluded. These requirements should focus on OUTCOMES:  not just to pass a law, but also to “pass a law, have a credible institution and implement it.” And these requirements should be assessed annually in the progress reports for all countries, so they can be compared. There is no reason not to do this in all 7 countries, including Albania and Montenegro, Serbia and Kosovo. This would trigger very healthy debates and competition everywhere. In this way the annual progress report of the European Commission, its sections on “economic criteria” and on the policy areas in the 33 chapters, would become readable, interesting, and useful. It would address all four strategic objectives:

  • Fairness: Regular fair public assessments of where accession countries really stand in terms of meeting EU criteria.
  • Strictness: Strict public assessment of where accession countries are failing or even falling behind. The more concrete and specific the assessments are of what is missing, the better.
  • Clarity: Any EU assessment needs to be understood, not just by a handful of experts, but by the broader interested public in accession countries and in the EU. (Sections that are incomprehensible to an interested non-expert should be cut and rewritten).
  • Comparability: Any assessment should encourage two types of comparisons: between the situation in accession countries and EU standards, and among accession countries. Comparisons help both the fairness and the strictness of assessments.  They encourage friendly competition and mutual learning from best practice.

ESI believes that the regular progress reports – published annually by the European Commission on every applicant country already now – are the obvious and best instrument to achieve all of these objectives. Improving them is rightly at the center of any debate on how to increase the impact and credibility of current enlargement policy.

We are convinced that, building on what the Commission is already doing, progress reports could easily have the same impact on reform debates and reforms in accession countries as the regular OECD Pisa reports have had. Since 2000 these have reshaped the global debate on education.

This would help the Commission to keep (or regain) the trust in its assessments, which it needs to be effective.

In the end, the success of the commission in the field of enlargement cannot be measured by formal criteria: how many countries have started accession talks or how many chapters have been opened is not what matters most. What matters is closing chapters. And this can only happen after reforms are implemented. This means what matters now is what best helps the reform process.

 

BRUSSELS PRESENTATION

Below are a few slides from my Brussels presentation. In the next weeks we are planning to organise many more presentations across Europe. We integrate the feedback into the next presentations and policy papers. If you have thoughts on this, please do let us know: you can write directly to g.knaus@esiweb.org.

One reason PISA tests capture the public imagination: they make it possible to compare results between countries and over time. But the ranking is not a gimmick for the media: the results also allow detailed analysis, such as what kind of schools are doing better than others? Are there differences between reading and science results? Between girls and boys? How significant are the discrepancies between the best and the worst performing schools?

A notable strength of PISA is that it focused on results, not perceptions. DG enlargement needs the same. A credible yardstick – a gripping, readable annual report – would achieve all of these goals. The progress reports should be this:


This requires that all parts of the reports be read, understood, and taken seriously by at least the following members of a focus group: the civil servants who work on it, political leaders in government and opposition, business people who care about EU accession for what it means for them, critical journalists, civil society activists, and interested followers of the news, who might be tempted to look for a translation of the report.

See below a possible focus group in Macedonia: this IS the readership of these reports in any country.

At the same time EU member states need to see what is being done.

There are three parts to progress reports, where different ways of assessment are needed:

Political criteria: A focus on outcomes and areas where countries fall short. This is NOT likely to be usefully measured in quantitative terms, but best by reference to minimum standards, (which need not be low, but should be plausible). More on this in the next ESI reports.

Economic criteria: A focus on plausible OUTCOMES of good policy, a mere handful of key and obvious indicators.

Alignment with EU policies and regulations in sectors: The production – for the 33 chapters – of roadmaps would help because it would allow turning implementation into scorecards. This WAS done for visa liberalisation:

The key is how to identify core objectives in each policy field. The expertise for most or all of the policy fields currently exists in the Commission, as does the text.

This would then also allow comparisons. And this in turn would inspire debates, allow leaders to focus, and allow the media to analyse … it would put the results of the process – not the formal opening of closing of chapters – at the center of attention.

Rethinking the methods of assessment would also allow countries to make real efforts to try to beat low expectations… and to know that this would be recognised. It would allow certain ministers in a government to stand out. This is what happened to Bosnia during the visa liberalisation process in the summer of 2010. (See below the scorecard before and after this real effort).

At the same time, this would allow critical member states to understand in detail HOW the European Commission arrives at its assessments.

All this leads to a few concrete suggestions for EU accession future progress reports:

  • Precise formulations (even more so than today, though in 2013 this was already done)
  • In assessing “alignment” (or “preparation”) consider moving towards terms that more clearly indicate the required end-state: “Fully met,” “Largely met,” and “Not yet met.”
  • Build each chapter assessment on publicly available individual chapter roadmaps, which also list the indicators used to assess implementation.
  • Add scorecards for each chapter
  • Report on all seven countries in the same way so they can be compared.
  • Consider adjusting chapter roadmaps every three years in light of the changing EU acquis.

Scorecard legend for the table below:

Green: alignment is/preparations are advanced / well advanced / rather advanced / relatively advanced; high / sufficient level of alignment)

Yellow: alignment is/ preparations are advancing / moderately advanced / on track

Red: alignment is/ preparations are starting / at an early stage / not very advanced / not yet sufficient. / A country has started to address its priorities in this area.

Alignment with the acquis – per chapter – 2013 Progress Reports

 

Chapter

Turkey

Mace-donia

Serbia

Monte-negro

Albania

1: Free movement of goods

3

3

1

3

1

2: FoM for workers

0

0

1

0

0

3: Right of establishment, freedom to provide services

0

1

1

0

1

4: Free movement of capital

0

1

1

1

1

5: Public procurement

1

3

1

1

1

6: Company law

3

1

3

1

1

7: Intellectual property law

3

1

3

3

0

8: Competition policy

1

3

1

1

0

9: Financial services

3

1

1

1

1

10: Information society & media

1

1

1

1

1

11: Agriculture & rural development

0

1

0

0

0

12: Food safety

0

1

1

0

0

13: Fisheries

0

1

1

0

0

14: Transport policy

1

1

1

3

0

15: Energy

3

1

1

1

0

16: Taxation

1

1

1

1

1

17: Economic & monetary policy

3

3

1

1

0

18: Statistics

3

3

3

1

1

19: Social policy & employment

1

0

0

0

0

20: Enterprise & industrial policy

3

1

1

0

1

21: Trans-European networks

3

3

1

1

0

22: Regional policy, structural instr.

1

0

1

0

1

23: Judiciary & fundamental  rights

24: Justice, freedom & security

0

3

1

1

1

25: Science & research

3

1

1

1

0

26: Education & culture

1

1

1

3

1

27: Environment & climate change

0

1

0

0

0

28: Consumer & health protection

1

1

1

1

0

29: Customs union

3

3

1

1

1

30: External relations

3

1

1

1

1

31:Foreign, security, defence policy

1

3

1

1

1

32: Financial control

1

0

1

1

1

33: Financial & budgetary prov.

0

0

0

0

0

 

 

Detailed assessment by the European Commission (2013)

Chapter

Turkey

Macedonia

Serbia

Montenegro

Albania

1: Free movement of goods

The state of alignment in this chapter is advanced.

Preparations in the area of free movement of goods are advanced.

Preparations in the area of free movement of goods are moderately advanced.

Preparations in the area of free movement of goods are relatively advanced.

Preparations are moderately advanced.

2: Freedom of movement for workers

Preparations in this area are at an early stage.

Preparations in this area are still at an early stage.

Preparations in this area are moderately advanced.

Alignment with the acquis is still at an early stage.

Preparations in the area of freedom of movement for workers are at an early stage.

3: Right of establishment and freedom to provide services

Alignment is at an early stage.

In the area of postal services, the level of alignment is advanced. There is not yet full alignment with the acquis, particularly as regards mutual recognition of professional qualifications, free movement of services and establishment.

Preparations are moderately advanced.

Substantial efforts are still needed to align the legislation and implement the acquis on mutual recognition of professional qualifications.

Preparations are moderately advanced.

4: Free movement of capital

Preparations in this area are at an early stage.

Preparations are on track and gradual harmonisation of the regulatory framework for payment systems is under way.

Alignment in this area is moderately advanced.

Preparations are moderately advanced.

Preparations are moderately advanced.

5: Public procurement

Preparations in this area are moderately advanced.

Preparations in the area of public procurement are advanced.

Alignment in the area of public procurement is moderately advanced.

Preparations in the area of public procurement are moderately advanced.

Preparations in the field of public procurement are moderately advanced.

6: Company law

Turkey is well advanced in this area.

Preparations in the area of company law as a whole are moderately advanced.

Alignment in the area of corporate law is well advanced.

Preparations remain moderately advanced.

Preparations are moderately advanced.

7: Intellectual property law

Alignment with the acquis is advanced.

Preparations in the field of IPR are moderately advanced.

Alignment in the area of IPL is advanced.

Preparations are advanced.

Preparations are not very advanced.

8: Competition policy

Turkey is moderately advanced in this area.

Preparations in this area are advanced.

Alignment in this area is moderately advanced.

Preparations are moderately advanced.

Preparations for the revision of state aid legislation are at an early stage.

9: Financial services

Preparations in the area of financial

services are advanced.

Alignment with key parts of the acquis on financial market infrastructure has not yet been achieved. In the area of financial services, alignment with the acquis is moderately advanced.

Alignment in the area of financial services is moderately advanced.

The level of alignment is moderately advanced.

Preparations are moderately advanced.

10: Information society and media

Preparations are moderately advanced.

Preparations in this area are on track.

Alignment with the

acquis in this area remains moderately advanced.

Preparations are on track.

Preparations are moderately advanced.

11: Agriculture and rural development

Preparations in the area of agriculture and rural development are at an early stage.

Preparations remain moderately advanced.

Alignment with the acquis remains at an early stage.

Alignment with the acquis is at an early stage.

Preparations in this area are not very advanced.

12: Food safety, veterinary and phytosanitary policy

Preparations in this area are at an early stage.

Preparations in the area of food safety and veterinary policy are well on track. Preparations in the phytosanitary area are at an early stage.

Preparations in the area of food safety, veterinary and phytosanitary policy are moderately advanced.

Preparations remain at an early stage.

Preparations remain at an early stage.

13: Fisheries

Alignment in this area is at an early stage.

A large proportion of the fisheries acquis is not relevant as the country is landlocked.

Preparations in the area of fisheries are moderately advanced.

Preparations in this area are at an early stage.

Preparations are not very advanced.

14: Transport policy

In the area of transport, Turkey is moderately advanced.

Preparations in this area are moderately advanced.

Serbia is moderately advanced in its alignment with the acquis in this area.

Preparations in this area are advanced.

Preparations in the area of transport are not very advanced.

15: Energy

Turkey is at a rather advanced level of alignment in the field of energy.

Preparations in this area are moderately advanced.

Preparations in the area of energy are moderately advanced.

Preparations in the area of energy are moderately advanced.

Preparations are not very advanced.

16: Taxation

Preparations in this chapter are moderately advanced.

Preparations in the area of taxation are moderately advanced.

Preparations in the area of taxation are moderately advanced.

Montenegro’s alignment with the acquis is moderately advanced.

Preparations are moderately advanced.

17: Economic and monetary policy

Turkey’s level of preparedness is advanced.

Preparations in this area are advanced.

Serbia is moderately advanced.

Alignment in the area of economic and monetary policy is moderately advanced.

Preparations are not yet sufficient.

18: Statistics

Alignment with the acquis is at an advanced level.

Preparations in the field of statistics are advanced.

Serbia is advanced in the area of statistics.

Preparations in the area of statistics are moderately advanced.

Preparations are moderately advanced.

19: Social policy and employment

Legal alignment is moderately advanced.

Preparations in this area are at an early stage.

Serbia has started to address its priorities in this area.

Montenegro has started to address its priorities in this area.

Preparations in the area of social policy and employment are not very advanced.

20: Enterprise and industrial policy

Turkey has a sufficient level of alignment in this chapter.

Preparations in this area are moderately advanced.

Preparations in this area are on track.

A strategic effort to promote skills at all levels in sectors where Montenegro has significant trade with the EU will be important to improve competitiveness and ensure preparedness for competitive pressures and market forces within the Union.

Preparations are moderately advanced.

21: Trans-European networks

Alignment in this chapter is advanced.

Preparations in this area are advanced.

Preparations in the area of trans-European networks are moderately advanced.

Preparations in this area are moderately advanced.

Preparations in the area of trans-European networks are not very advanced.

22: Regional policy and coordination of structural instruments

Preparations in this area are

moderately advanced.

Preparations in

this area are not very advanced.

Preparations in this area are moderately advanced.

Preparations in this area are at an early stage.

Preparations in this area are moderately advanced.

23: Judiciary and fundamental rights

24: Justice, freedom and security

Alignment in the area of justice and home affairs is at an early stage.

Preparations in this area are advanced.

Serbia is moderately advanced in the area of justice, freedom and security.

Alignment with the acquis in the field of legal migration, asylum and visas is still at an early stage.

Preparations in this field are advancing.

25: Science and research

Turkey is well prepared in this area.

Preparations in this area are on track.

Preparations in the area of science and research are on track.

Preparations in this area are well on track.

Preparations are not sufficiently advanced.

26: Education and culture

(No assessment of the state of alignment.)

Preparations in the areas of education and culture are moderately advanced.

Preparations for aligning with EU standards are moderately advanced.

Preparations are advanced.

Preparations are moderately advanced.

27: Environment and climate change

Preparations in these fields are at an early stage.

Preparations in the field of the environment are moderately advanced while preparations in the field of climate change remain at an early stage.

Priorities in the fields of environment and climate change have started to be addressed.

Preparations in these areas are still at an early stage.

Preparations in the fields of the environment and climate change are at an early stage.

28: Consumer and health protection

Preparations in this area are on track.

Preparations in this area are moderately advanced.

Preparations in this area remain moderately advanced.

Preparations in these areas are moderately advanced.

Preparations are starting.

29: Customs union

The level of alignment in this area remains high.

Preparations in this area are advanced.

Preparations in the area of the customs union are well on track.

Preparations in the field of customs union are moderately advanced.

Preparations are moderately advanced.

30: External relations

There is a high level of alignment in this area.

Preparations in this area are moderately advanced.

Preparations in the area of external relations are moderately advanced.

Preparations in the area of external relations are on track.

Preparations are moderately advanced.

31: Foreign, security and defence policy

Preparations in this area are moderately advanced.

Preparations in this area are well advanced.

Preparations in the area of foreign, security and defence policy are well on track.

Preparations in the area of foreign, security and defence policy are on track.

Preparations in this field remain on track.

32: Financial control

Preparations in this area are moderately advanced.

Preparations in this area are at an early stage.

Preparations in this area are moderately advanced.

Preparations in this area are moderately advanced.

Preparations are moderately advanced.

33: Financial and budgetary provisions

Preparations in this area are at an early stage.

Preparations are at an early stage.

Preparations in this field are at an early stage.

Preparations in this area are at an early stage.

Preparations in the area of financial and budgetary provisions are at an early stage.

5 September 2013

Gerald Knaus with next Minister of Labor and welfare, former ESI analyst Erion Veliaj, incoming prime minister Edi Rama and the next minister of Finance, Shkëlqim CaniModerating a one day brainstorming on the future of the Albanian economy in Tirana, August 2013 with next Minister of Labor and welfare, Erion Veliaj, incoming prime minister Edi Rama and the next minister of Finance, Shkëlqim Cani

Last week I went to Tirana to participate in two events on the Albanian economy. One was a brainstorming with senior international economists and some of the incoming new Albanian ministers, which I was asked to moderate (see picture above); the other was a public event on the future of the Albanian economy.  It was an interesting, and sobering, debate.

The economic challenges Albania faces are familiar, and enormous. There is the prospect of short-term crises. There is concern about an energy supply crisis later in the year. Some worry about discovering the true state of public indebtedness following an audit (including all unpaid bills by Albanian public institutions which will come due).  The motor of previous growth, the construction sector, has come to a halt. At this moment there is almost no credit being given to Albanian companies by banks, a disaster if the goal is structural change.

More than two decades after the end of communism the private enterprise sector is small and weak. The total number of companies with more than 50 employees that are in manufacturing is 282. There are only 851 companies in the country with an annual turn-over higher than 250 million Lek or 1.8 million Euro. Without credit for investment, and with limited savings by companies due to low turn-over and even lower profit margins, it is hard for entrepreneurs to develop and move up the value chain, to invest in producing more sophisticated products or train their work force. And without a more competitive manufacturing sector and rising exports Albania will never catch up.

In preparation for this event ESI prepared a handout for three pages with four tables. I share it here for those who are interested:

 

FOUR TABLES, TWO MAIN CONCLUSIONS -  How Albania is not catching up

Gerald Knaus, European Stability Initiative (ESI) www.esiweb.org

 

Here are four simple tables to inform a debate on the Albanian economy and on the challenge of catching up with the rest of Europe in terms of employment and overall welfare of citizens.

On 23 June 2013 Albanian voters went to the polls in parliamentary elections. Voters had the choice between dozens of parties organised in two main coalitions. Both coalitions presented a vision of Albania’s long-term future as member of the European Union. The Alliance for a European Albania led by the Socialist Party announced its program in is very name.

Here is a simple argument in three pages to suggest that there is a good economic reason for this focus on EU integration. Since 2003 – when the EU first promised a European future to the Balkans in Thessaloniki – the economic gap between the wealthier and the poorer countries of the Balkan region has grown further between two groups of countries. Countries that negotiated accession to the EU during the past decade (Croatia) or joined the EU (Bulgaria and Romania) were already richer in 2003 than the “Balkan five” – Albania, Bosnia, Macedonia, Serbia and Kosovo. Since 2003, rather than catching up, the laggards have fallen further behind.

 

1

Today Western Balkan states remain poor compared to the rest of Europe, including Greece (see Table 1).

However, within the Western Balkans there is significant diversity: some countries – Kosovo, Albania – are significantly poorer than others.

Table 1: GDP per capita in 2011 in comparison2

EU27 average is 100
Kosovo

18

Albania

30

Bosnia-Herzegovina

30

Serbia

35

Macedonia (candidate)

35

Montenegro (candidate)

42

Bulgaria (EU)

46

Romania (EU)

49

Croatia (negotiating)

61

Greece (EU)

79

 

One correlation is striking: the poorer a country in terms of per capita GDP, the less advanced it is in its EU accession (here the status in 2011). Or should we reverse the argument: the more advanced a country on its EU accession, the higher its GDP per capita is likely to be? A correlation is not causation, but this is certainly noteworthy.

 

2

If one looks at development and growth in the past decade (since 2003) a clear trend emerges.

In some countries Gross National Income per capita has increased significantly more than in others. Again there is a correlation between increases in gross national income per capita and EU accession (with Montenegro an outlier; this may be due to its small and peculiar economy with a population of only 600,000). Romania, then Bulgaria, then Croatia did best in the years since 2003. Bosnia, Albania and Kosovo did worst.

Table 2: Gross National Income (GNI) per capita 2003-2011
(PPP-adjusted, in international USD)3

2003 2011 Change
Romania 7,600 15,800 +8,200
Montenegro 7,500 13,700 +6,200
Bulgaria 8,400 14,400 +6,000
Croatia 13,00 18,800 +5,800
Macedonia 6,400 11,400 +5,000
Serbia 6,900 11,600 +4,700
Bosnia 5,700 9,200 +3,500
Albania 5,400 8,800 +3,400
Kosovo (5,800)4 7,500 +1,700
EU27 24,400 32,600 +8,200

 

3

There is another interesting correlation between per capita GDP and exports per capita. Compare Albania on the one hand and Bulgaria on the other (table 3).

Bulgaria already had higher exports in 2003, exporting goods per capita worth 900 USD more that Albania did. In 2011, however, Bulgarian exports per capita were worth 3,500 USD more than those exported from Albania. The absolute gap has more than tripled: it is growing, not closing.

Table 3: Annual export of goods and services per capita (current USD) 5

2003 2011 Increase
Slovenia 7,858 17,447 9,589
Hungary 5,064 12,957 7,893
Bulgaria 1,282 4,844 3,562
Croatia 3,273 5,930 2,657
Romania 950 3,403 2,453
Montenegro 833 2,857 2,024
Macedonia, FYR 893 2,759 1,866
Serbia 583 2,277 1,694
Bosnia Herzegovina 670 2,038 1,368
Albania 375 1,362 987
Kosovo - 718 -

One final table shows the social cost of not catching up (table 4). Employment rates (all people of working age actually working) are significantly lower in Kosovo, Bosnia and Albania than in Croatia, Greece, Bulgaria or Romania (all Balkan countries are below the EU average here). Only 42 percent of the working age (!) population in Albania actually works.

Table 4: Employment rate (percent)

employment rate – people of age 15-64 working (percent)
Kosovo

37

Bosnia Herzegovina

39

Albania

42

Macedonia

44

Montenegro

46

Serbia

47

Croatia

52

Greece (EU)

56

Bulgaria (EU)

58

Romania (EU)

59

EU (27 countries)

64

Employment rate for Kosovo 2012, for Albania 2010

This indicates an enormous development challenge. A decade of peace has allowed all the Western Balkan countries to develop. However, growth based largely on construction and remittance-powered simple services has not helped a country like Albania catch up.

These four tables, and common sense, point towards two central policies for Albanian leaders to focus on in the coming decade to do better and break out of the current trap: 1. take exports seriously; 2. take EU integration seriously.


Erik Berglof, Chief Economist of the EBRD, listening to the incoming prime minister


The former Mayor of Korca (and incoming deputy prime minister) and Erion Veliaj, incoming minister of Labor


Preparing for an interview on the future of the Albanian economy. There are no easy answers.

 

Filed under: Albania — Gerald @ 10:49 am
2 September 2013

Summer always offers plenty of opportunities for reading. One of the most interesting new books I came across this time was a little tome, freely available on the internet, written a long time ago and almost from the moment of its first publication in 1759 part of the canon of European literature: Voltaire’s Candide, or Optimism.

This is a text everyone who ever went to school in France has probably read then; although I wonder if an adolescent can appreciate it as much as an adult with a bit more experience of the ways of the world. Since I had not read it before it was a pleasure to discover its wit this summer.

Classics can be read in myriad different ways. I read Candide while thinking about the economic and social future of the Western Balkans. I feel impatience with complacent assumptions that it is somehow a given that countries of the region will develop and catch up before long (because they remove trade barriers; because they have a European perspective; because they rise in the Ease of Doing Business tables; etc …). There is little sign for it at the moment and no reason to assume that they will unless a lot changes. On the other hand, it seems clear that there are also no simple and obvious policy prescriptions to be applied with no new intellectual effort, certainly not without taking into account the specific realities, legacies and potentials of these societies.

I read Candide while preparing project applications for ESI to work more on economic development in Macedonia, Albania and Kosovo in the coming months. And as I looked up from this little book one thought struck me:  unless policies, mentalities and public debates in Balkan societies change a lot, and fast, it is perfectly possible and indeed likely that in ten years the main economic activities will still be what they have been ten years ago, and are now: construction of private houses (some of them never to be inhabited), fuelled by remittances; the organisation of sumptious weddings, funded from money earned abroad; the purchasing of gold bracelets for brides for thousands of Euros, with little left for investments in education, new skills, or technologies to bring about development; misallocating scarce resources, one household at a time.

There is no need here to further interpret Voltaire’s 18th century master piece; this has been done before by tens of thousands of impressed readers, many much more qualified than I am. Candide is one of the most biting and witty attacks ever written against superstition and optimistic determinism, authoritarian rule and religious extremism, scholarly arrogance and brutal traditionalism. However, I do want to  whet your appetite if you happen to belong to the small group of people coming here and not having read it yet. I simply defer to the wisdom and genius of Voltaire and quote three short excerpts (The whole book is online.)

Candidate is, above all else, an unrivalled attack against complacency, as presented by the German teacher of the ingénue Candide, Professor Pangloss:

“Pangloss was professor of metaphysico-theologico-cosmolo-nigology. He proved admirably that there is no effect without a cause … “It is demonstrable,” said he, “that things cannot be otherwise than as they are; for all being created for an end, all is necessarily for the best end. Observe that the nose has been formed to bear spectacles–thus we have spectacles. Legs are visibly designed for stockings–and we have stockings. Stones were made to be hewn, and to construct castles–therefore my lord has a magnificent castle; for the greatest baron in the province ought to be the best lodged. Pigs were made to be eaten–therefore we eat pork all the year round. Consequently they who assert that all is well have said a foolish thing, they should have said all is for the best.”

Candide, after erring around the world, like a naive and hapless 18th century Ulysees, from France to Constantinople and across the world, discovers in the end that looking for ultimate answers to the biggest questions may well be in vain.

“In the neighbourhood there lived a very famous Dervish who was esteemed the best philosopher in all Turkey, and they went to consult him. Pangloss was the speaker.

“Master,” said he, “we come to beg you to tell why so strange an animal as man was made.”

“With what meddlest thou?” said the Dervish; “is it thy business?”

“But, reverend father,” said Candide, “there is horrible evil in this world.”

“What signifies it,” said the Dervish, “whether there be evil or good? When his highness sends a ship to Egypt, does he trouble his head whether the mice on board are at their ease or not?”

“What, then, must we do?” said Pangloss.

“Hold your tongue,” answered the Dervish.

“I was in hopes,” said Pangloss, “that I should reason with you a little about causes and effects, about the best of possible worlds, the origin of evil, the nature of the soul, and the pre-established harmony.”

At these words, the Dervish shut the door in their faces.”

So what is the conclusion of this tale, the distilled wisdom Candide arrives at … after travelling the four corners of the world? It is a lesson of startling simplicity: let everyone cultivate their gardens. The good life, and the good philosophy, is practical, like that of a gardener … sweating while working to help along things which can grow, aware that all good things are the result of patience as much as effort.

“”Grandeur,” said Pangloss, “is extremely dangerous according to the testimony of philosophers. For, in short, Eglon, King of Moab, was assassinated by Ehud; Absalom was hung by his hair, and pierced with three darts; King Nadab, the son of Jeroboam, was killed by Baasa; King Ela by Zimri; Ahaziah by Jehu; Athaliah by Jehoiada; the Kings Jehoiakim, Jeconiah, and Zedekiah, were led into captivity. You know how perished Croesus, Astyages, Darius, Dionysius of Syracuse, Pyrrhus, Perseus, Hannibal, Jugurtha, Ariovistus, Cæsar, Pompey, Nero, Otho, Vitellius, Domitian, Richard II. of England, Edward II., Henry VI., Richard III., Mary Stuart, Charles I., the three Henrys of France, the Emperor Henry IV.! You know—-”

“I know also,” said Candide, “that we must cultivate our garden.”

“You are right,” said Pangloss, “for when man was first placed in the Garden of Eden, he was put there ut operaretur eum, that he might cultivate it; which shows that man was not born to be idle.” “Let us work,” said Martin, “without disputing; it is the only way to render life tolerable.

The whole little society entered into this laudable design, according to their different abilities. Their little plot of land produced plentiful crops. Cunegonde was, indeed, very ugly, but she became an excellent pastry cook; Paquette worked at embroidery; the old woman looked after the linen. They were all, not excepting Friar Giroflée, of some service or other; for he made a good joiner, and became a very honest man.

Pangloss sometimes said to Candide:

“There is a concatenation of events in this best of all possible worlds: for if you had not been kicked out of a magnificent castle for love of Miss Cunegonde: if you had not been put into the Inquisition: if you had not walked over America: if you had not stabbed the Baron: if you had not lost all your sheep from the fine country of El Dorado: you would not be here eating preserved citrons and pistachio-nuts.”

“All that is very well,” answered Candide, “but let us cultivate our garden.”

I just returned from Albania. There I came across a strong sense of new optimism in this late August; a can-do-spirit accompanying the arrival of a new government.  Now I just hope that Candide’s final motto will become the guiding idea for reformers, there and across the Balkans, in coming years: let them all be like good gardeners!

Committed, hard working, confident. Better harvests are possible. Panglossian philosophies are dangerous. All good things take time and patience. And politics is either a succession of rulers, one replacing the other, in an almost meaningless carousel of vanity (at least today this no longer involves bloodshed in the Balkans) … or, at its best, the noble art of helping society cultivate its talents: producing crops, embroidery, citrons and pistachios.

Can this be all? And how does this argument relate to other current debates, like those on international interventions – from Afghanistan to Egypt? Is this really an argument for wise restraint or an excuse for selfish navel gazing?

What you make of it depends on you, of course. And yet it is always worth hearing this call for humbleness, this appeal in favour of practical, concrete and modest activism. Voltaire seems to say: do not pretend to change things you do not understand … but do change those you can, and make every effort then.

 

PS: If you want to read Candide you find the whole text here: http://www.gutenberg.org/cache/epub/19942/pg19942.txt

Filed under: Albania,Europe — Gerald @ 6:12 pm
11 May 2013

THE EU SHOULD ACT NOW IN ALBANIA

The EU should become stronger and more outspoken well before the Albanian elections taking place on 23 June 2013. This requires it to keep its distance from all parties, while strongly defending core principles, including the rules that govern the core bodies involved in election administration.

The EU goal is to contribute to the respect of rules that will allow free and fair elections. Following legitimate elections a legitimate winner would form the next government, and a gracious loser would concede and form a credible opposition. This would open the door for cooperation between all serious Albanian parties to take their country and the whole Balkans further on the road to European integration.

A dream? Or a realistic goal that deserves timely European support?

Presentation on Albania in spring 2013 in Edirne

 

Interview with Gerald Knaus published in Osservatorio Balcani e Caucaso

Albania: crucial elections for Europe

The EU should be unambiguous about the forthcoming parliamentary elections in Albania, taking a joint position spelling out concretely what are the red lines that must not be crossed. An inteview with ESI chairman Gerald Knaus

What can the EU do to prevent polarization in Albania surrounding the upcoming elections?

Two things are important. The first is not to have any illusions. Most previous Albanian polls have been marked by controversy, with irregularities and election results challenged. This was also the case in 2009. After the elections politics was paralyzed, the parliament was boycotted, some in the opposition went on a hunger strike.

One can hope for a positive surprise and an uncontested election in June 2013, of course, but sound EU policy should be based on the opposite assumption: that these election will be close and contested and that all parties will try to put pressure on the election administration. In the end, whoever is declared to have lost will challenge the legitimacy of the whole process and protest. And the big loser in such a scenario will be Albania as a whole.

Therefore, since this is a possible, even, likely outcome it becomes all the more important that the EU has a united, clear and principled position already before the elections. The European Union has stated that it expects these elections to meet “European and international standards.” It now needs to spell out more concretely what this means, what the red lines are that must not be crossed. This does not reduce its flexibility. On the contrary: it is a precondition for it to have any real influence. If red lines are crossed and important rules are broken, as we saw recently in the unlawful dismissal of a member of the Central Election Committee, the EU must speak out more forcefully than it has done so far.

Above all the EU needs to try to stay united. The European Commission, all the big political groups in the European Parliament, from the Center right to the Liberals to the Center left, all key member states, like Italy and Germany, should tell the parties in Tirana the same thing: here are our common red lines. Do not be tempted to cross them. And then, whoever wins, the loser also has to accept the result as legitimate.

What does this mean concretely? Recently the Albanian parliament has dismissed one of the seven members of the Central Election Committee (CEC)? Should the EU declare in advance that this was unlawful, and that therefore the coming elections will not meet its standards? Does this not reduce EU leverage?

Elections in Albania will not be perfect. They cannot be, and there are even problems in established democracies. But some problems are much more serious than others. This is why we argue for a need to focus on what is essential, not on what is merely desirable.

For this reason we have proposed a few specific red lines, concerning the core issues always disputed in Albania: the election administration supervising voting and counting, and the process of adjudication of complaints and appeals. Complaints in particular must be resolved through strict observation of Election Code procedures. If there are problems this can be resolved through a credible adjudication mechanism. But in this process the role of the Central Election Commission is vital.

Albania has a good Election Code today. In this Code some rules are crystal clear: members of the election administration cannot be removed for reasons unspecified in the Election Code. Central Election Commission members are political appointees and voted in by parliament, but then they become something else, like US Supreme Court judges chosen by the president and the Senate: they become guardians of rules. There is a reason why they are appointed for six years and are not to be dismissed unless they commit a crime. They must act on the basis of the Election Code and defend it, not engage in party politics. Will they want “their” party to win? Perhaps, but this should be irrelevant to how they do their job.

Now, to accept from the very outset that, in any case, the CEC will and can never be apolitical in Albania, is to give up on basic standards even before a single vote has been cast! This sends a terrible message.

Some might say: it is unrealistic to expect the recent dismissal of a CEC member to be reversed. And perhaps everything will go well in any case from now on: voting, counting, there will be few disputes, these will be resolved peacefully, there will be a clear result. Would anybody then remember this current debate?

But everything will not go well. Not if the past is any guide at all to the present. And the CEC is not a marginal actor in elections. It must be seen as legitimate and based on the law. If things go wrong I fear that later people will look back and point to the dismissal of the CEC member, the collapse of the CEC, and the weak international reaction as a crucial bad turning point.

On the other hand, imagine that the EU takes a strong joint position NOW. This would send a clear signal: some institutions must not be touched. Some rules must not be broken. What really matters is not who wins but that Albanian voters have the chance to participate in a free and fair contest.

How can the international community avoid being seen to take sides?

This is a crucial challenge. It is one the European Union in particular failed in the past. Everybody knows that different political parties in the EU have political friends in Albania. This is normal and legitimate. And therefore different Europeans parties will usually back the arguments of different players in Albania.

This starts becoming a serious problem, however, once it leads politicians in Albania to expect thatwhatever they do and argue, they will receive some backing from their friends outside. The primary role of the European Union should be to insist that all parties play to win in a fair manner. And to lose in a fair manner: there can be no mass protests after fair elections.

This should not be so hard. Take Croatia in the past decade. The European People’s Party has supported and been close to the HDZ in Croatia. Social Democrats in the EU have rooted for their political family members in Zagreb. But everybody has above all hoped that Croatian elections are free and fair, that there is an alternation in power when voters decide on it, and that Croatia will join the EU soon as a consolidated democracy. And Croatia has had an internal consensus that some issues are beyond party politics.

What would be the regional consequences if Albania has bad elections and remains stuck on its EU path?

In 2009 Albania submitted its application for EU accession. In 2010 the European Commission rejected taking this further, and denied Albania official candidate status. Until today Albania has not been recognized as an official EU candidate, unlike Montenegro, Serbia and Macedonia. Kosovo of course cannot even apply to the EU as long as all EU members have not recognized it as a state. And Macedonia is stuck until the name issue is resolved. This could be in one month, but it could also be in one decade, or never. Thus we risk seeing the Balkans divide again. One group makes progress (Croatia, Montenegro, Serbia) while the others stay behind, at a time of already severe social and economic stress. This is not a good development for anyone, not for the region’s Albanians nor for their neighbours.

What is the role of international election monitors in such a polarised environment?

Did elections in 2009 meet “international and European standards”? It is surprisingly hard to answer this question. Will it be easier in 2013? This is the key question for observers, and this is what decides whether monitors succeed or fail in their job in Albania in June.

International election monitors are aware that their assessments have consequences. If they disapprove of elections they can trigger massive protests (Ukraine 2004). If they approve of elections they reduce the political ammunition for any challenge (Ukraine 2010). There is an understandable incentive to take refuge in ambiguous language. But this can also be dangerous, as we saw in Albania in 2009.

Of course assessing elections is difficult. Albanian institutions are weak, and elections close. Even small irregularities might have a major impact. In 2009 the Office for Democratic Institutions and Human Rights (ODIHR), the most professional institution in the field of election monitoring in the world today, summed its findings up as follows: “…while meeting most OSCE commitments, these elections did not fully realize Albania’s potential to adhere to the highest standards for democratic elections.”

What does this mean? Did any country in the Balkans, or indeed elsewhere in Europe, ever fully adhere to these “highest standards”? Is meeting “most” OSCE standards really good enough for Albanian voters? I think there is a challenge for monitors also to be clearer and less ambiguous. Let us hope we will not hear later this summer that Albanian elections have met most OSCE commitments, but did not fully realize Albania’s potential to adhere to the highest standards for democratic elections. It would certainly be true. It would also be irrelevant.

What can member states like Italy do?

We argue that the EU should pay close attention to these crucial elections. Here member states matter hugely. Clearly Italy is close to Albania, has interests and expertise. But above all Italy is led by a coalition government today. This government can talk to all sides in Tirana.

Imagine if the big Italian parties adapt a joint position now, and push the EU to do this as well: to insist that the Central Election Committee is reconstituted before the official election campaign starts on 23 May 2013 in line with the Election Code, and to warn that unless this happens the EU will not consider these elections conducted in line with European standards. On the other hand, Italy could also warn all parties in Albania that this time there must be no post-election boycotts. Disputes have to resolved within the responsible institutions, not on the street. And that Italy would strongly push for accession talks to start with Albania as soon as possible after free and fair elections.

This would send a strong positive message. What happens in Albania today matters to all of Europe. Italians know this better than most Europeans.

 

Gerald Knaus is the chairman of Berlin-based think tank European Stability Initiative (ESI). He is co-author of the report: Red Lines for Albania – The EU and the June Parliamentary Elections

 

 

 

Filed under: Albania,Balkans,Enlargement — Gerald @ 2:14 pm
1 April 2013

One decade has been lost. What about the next one?

Op-ed by Gerald Knaus (for Koha Ditore)

 

In Athens, spring 2003

 

One decade ago, in spring 2003, the New York Times published an appeal by four Balkan leaders, the presidents of Croatia and Macedonia and the prime ministers of Albania and Serbia. Its title: “The EU and South-East Europe need each other.”[1] The occasion was a special Balkan meeting of the World Economic Forum in Athens where all these leaders also came together.

I was there too at the time, and I remember both the appeal and the atmosphere in Athens well. In fact, together with my friend Misha Glenny, I drafted it. There was a sense of urgency in the air, and of anticipation. Zoran Djindic, the prime minister of Serbia who had delivered Slobodan Milosevic to the Hague tribunal, had been assassinated by ultra-nationalist members of the Serbian security forces. Croatia had handed in its application to join the EU, the first Western Balkan state to do so. The host of the meeting, Greece, then the EU’s rotating president, pushed hard to get a European commitment to continued Balkan enlargement.

Shortly before the Athens gathering Boris Trajkovski, the president of Macedonia, invited me to draft an appeal that he planned to ask other leaders to co-sign. He knew that the region would receive a better hearing if it spoke with one voice. He was concerned. His own country had recently been on the verge of civil war. Serbia was on the edge, its ultranationalists growing in confidence. The future of Montenegro and Kosovo was not yet settled. Would the EU, following its 2004 enlargement to Central Europe – then just about to happen – get tired of further expansion? The Balkan leaders’ appeal warned: “Until the whole Southeastern Europe is safely integrated into the European Union, the job will not be complete. And until it is, Europe cannot feel secure about itself.”

One decade later, where do we stand? Today, when EU leaders talk about crises in South-East Europe they think of Athens not Skopje, of Nikosia, not Belgrade. Europe does not feel “secure about itself” but it is not the Western Balkans or the threat of renewed conflict that keeps EU leaders awake, literally, at one crisis summit after another.

Montenegro and Kosovo are independent states; the fear of armed conflict in the region has never appeared more distant. And yet, despite these important breakthroughs, it is hard not to regard the years since 2003 as a lost decade for the Balkans. Boris Trajkovski tragically died in an airplane crash in the Bosnian mountains, on his way to submit Macedonia’s own application for EU membership. His country has been stalled for years now by a Greek veto (a threat which did not appear real in 2003 in Athens). Serbia, ten years after the death of Djindic, has still not even opened EU accession talks. Albania is not an EU candidate yet. The Greek foreign minister in spring 2003, George Papandreou, became prime minister, only to be swept away by the Greek economic melt-down. 2003 was perhaps the last success of Greek diplomacy. At the European Union summit on the Balkans in Thessaloniki in summer EU leaders stated their “unequivocal support to the European perspective of the Western Balkan countries. The future of the Balkans is within the European Union.”[2] Croatia used the past decade, opened accession talks, closed them, and is today on the verge of accession. And yet, it is likely that ten years from now in 2023 Croatia will still be the only Balkan country inside the EU.

Rereading the Trajkovski appeal today highlights a further disappointment. It contained a specific proposal: to make EU regional and cohesion funding available to the region, so as to help it catch up economically, rather than fall further behind. The appeal warned that “the long-term stability of Southeastern Europe depends on the region’s economic health, but this does not mean the usual plea for more money … We are committed to opening our markets to our neighbors and to the EU. We have made huge progress in curbing inflation. And we are now greatly encouraged by the proposal by Greece … that the Thessaloniki summit meeting focus on the possibility of applying cohesion and development policies in our region.”

This was a hope that has not come true. The Western Balkans remains one of the poorest regions of Europe. In Serbia today less than half of the working-age population is actually employed. Unemployment levels in Macedonia and Bosnia are disastrously high. Foreign direct investment in the region, which had transformed the economic structures of Central European countries, has fallen to very low levels. And yet, if a focus on underdevelopment in the Balkans has never been more urgent, the EU’s confidence in its ability to bring about convergence and growth in its own periphery has rarely been lower. The 2003 Trajkovski appeal stated that “The EU has a remarkable record of triggering economic success by helping poorer regions — Ireland, Greece, Spain and Portugal have experienced veritable revolutions in social and economic development in the last 20 years.” It is hard to imagine anybody writing like this today, in the wake of bail-outs, bank failures and rapidly rising unemployment in Spain or Greece.

EU leaders no longer worry about war in the Balkans. They are no longer confident in their ability to bring about economic convergence. They fear the weakness of democratic institutions in Romania or Greece. They worry about inadequate regulation in Cyprus or Spain. Given this state of affairs: what arguments can sway them to open their institutions to accept even poorer states, with even weaker institutions, and even worse images among the public and political elites in Berlin, Paris or The Hague?

Perhaps Greece will prepare for its EU presidency in 2014 by changing its policies on Skopje and Pristina.  Perhaps Serbia and Kosovo will soon reach an agreement that allows both countries to move beyond their confrontation. Perhaps Albania will manage to hold free and fair elections this summer. Perhaps Bosnia’s leaders will soon be able to put together a credible application for EU accession. Perhaps Macedonia’s leaders will be capable of renewing the national consensus to focus on EU integration that existed in 2003. Perhaps politicians throughout the region will wake up late at night worrying about youth unemployment and the inadequacy of vocational training, about export opportunities and the best way to use scarce public resources for growth, rather than about building  statutes or wasting public money on prestige infrastructure of little proven economic benefit. And then, perhaps, a successor of Boris Trajkovski will invite all his regional counterparts to an informal meeting to seriously discuss what they might do together to correct the image of their region, driven by the recognition that the whole region has dropped out of the focus of the rest of Europe.

If Boris Trajkovski would be around today, and would propose drafting a new appeal for Balkan leaders to sign and publish, what could it say? Appeals are expected to end with proposals, a sense of hope, recommendations. But sometimes it is better to resist this temptation. To acknowledge just how steep the wall is that one has to climb. To recognise that before any new appeals to the EU a whole series of steps have to be taken by the region itself. To recognise that time matters; and that April 2013 is another crucial moment which Balkan leaders miss at their peril. I believe Trajkovski would have realised this. Will his successors?

Perhaps this is not a time for appeals at all, but for a blunt and honest recognition: a decade has been lost. The next might be as well. And it is not by formulating words on paper that this can be prevented.


2 November 2007

Tirana

1st of November. I am sitting in the conference room of Hotel Tirana, the big hotel on Skanderbeg square in the heart of the Albanian capital. I first stayed here in 1990 when this country was still communist, there were no private cars on the streets, and I was a tourist guide taking around a group of Austrian adventure tourists on a study tour. Albania was then isolated; the topic today is how to finally overcome this country’s isolation in Europe.

Around the table sit the crème de la crème of Albanian diplomacy. This is the annual Albanian ambassadors’ conference. I realise that I have been invited to present some provocative ideas early in the morning to stir up debate. Next to me are the Italian ambassador to Albania, Ilir Meta, former prime minister, foreign minister and currently chair of the European Affairs Committee of the Parliament, and the head of the European Commission Delegation. The title of my presentation is “The threat of never-ending accession”. The basic idea is that Albania should seriously consider to submit an application for EU membership in the first half of next year. Here, in a nutshell, is the outline of the argument, structured around three sets of “lessons” from the recent Balkan experience: lessons from Bulgaria, from Croatia/Macedonia after the Thessaloniki summit in 2003 and from Turkey since 1999.

The first lesson concerns the success of Bulgaria entering the European Union in 2007, almost exactly a decade after the collapse of its economy in the winter 96/97 (It is a story told elsewhere on this website). It is a case of a striking and surprising transformation. It is also a story of political courage and vision on the part of the European Union, which decided from the outset to treat Bulgaria similarly to other, seemingly more advanced candidates for EU accession. It is, finally, the story of the success of single-minded determination. When Ivan Kostov, upon becoming Bulgarian prime minister in 1997, promised the Bulgarian parliament that he would pursue the goal of EU accession within a decade, polite scepticism was universal. And yet, one decade later it turns out that this ambitious goal was actually within reach.

Set yourself an ambitious goal that seems impossible and then make the process of EU accession the centre-piece of your reform efforts in a very visible manner: that is the Bulgarian lesson for Albania.

The second lesson derives from the “Thessaloniki campaign” that preceded the EU summit in Thessaloniki in summer 2003. I remind the audience that as late as the summer of 2002 there were policy papers circulating in parts of the European Commission that suggested placing the Western Balkan countries in the same category as the countries of the wider European neighbourhood (both the Western Balkans and the neighbourhood were then administratively under the roof of the Directorate General for external affairs, not the DG for enlargement): to view them as European countries, obviously, but with no real immediate accession perspective.

It took the determined efforts of the Greek EU presidency in early 2003, led by Foreign Minister Papandreou, and a broad alliance of like-minded individuals (in the European Commission and among member-states) to produce the more concrete promises of the Thessaloniki agenda.

At the same time the post-Thessaloniki experience shows the importance of the “gatecrashing principle” in pre-accession diplomacy: the need for any country that wants to make progress on the road to EU accession at strategic moments to ignore the advice, warnings and calls for patience coming from EU members and institutions who argue against pressing its case “because this is a bad moment.” Croatia ignored such advice when it decided to apply for candidate status in the wake of the Thessaloniki summit. Macedonia did the same in late 2004, when it too ignored strong lobbying on the part of some EU member states who told Macedonia’s leaders at the time not to consider submitting an application since this was “too early” and might risk rejection.

To “gate-crash” is to insist to go to a party to which you have not received an invitation. But to succeed in this, and then walk away successfully with either EU candidate status or later a date for the beginning of negotiations, a country needs both determination and good preparation. This may seem obvious, but it has some profound implications for the policies of the Albanian government.

Above all, a country needs to be able to tell a convincing story of positive change. This was something both Croatia (following the end of the Tudjman era) and Macedonia (refering to the experience of implementing the Ohrid Peace Agreement after 2001) had. So did Turkey, particularly in the period after 2001. All of these countries pursued reforms while leading a robust and determined diplomatic effort to make sure that achievements were actually widely noticed by EU policy makers.

A story of convincing change is also almost never a story about how a country fights corruption. This may seem counterintuitive: since most people assume that countries in the Western Balkans are and will remain corrupt any talk (including the most positive) about efforts to fight it only remind people of their initial assumption. Fight corruption seriously by putting in place systems of accountability in the administration, but resist talking about it too much abroad: regardless of what you do, it is not going to help improve your image and any possible success is very hard to prove to a sceptic.

Focus on achieving things that can be measured: setting up functioning standards agencies, having credible strategies to implement the EU environmental acquis (even if this takes 15 years it is worthwhile to show that you have thought about the implications of doing so now), talk about social changes that make your country visibly more mainstream European. I mention the debate over women and their position in society, and how Turkey has now overtaken Albania in terms of the number of women in parliament. And deal with the most urgent and most visible concerns of the Commission – such as a civil registry in Albania – without delay.

The party that Albania is considering to gatecrash next year is of course EU candidate status; the question in front of the government is when to submit its application for membership. I warn the audience that it has never yet worked to a country’s advantage to wait too long to knock at the European door. Albania also needs to be prepared in case Serbia submits its application sometime next year not to fall behind.

The presentation is followed by a vigorous debate. In the end I come away with the impression that Albania is in fact likely to submit its application for membership sometime in 2008.

Tirana

Hoxha’s villa

The day ends in the former villa of Enver Hoxha, Albania’s long-time communist dicatator, in the centre of Bloku. This former closed communist residential district has long been turned into the café corner of Tirana, a pleasant Albanian Soho. (for more on the coffee culture of Bloku visit this website)

Inside the villa nothing appears to have changed, however: both the furniture and the books on the shelves are still those put there by Hoxha himself. His residence is now used by the Albanian government, and on this occasion for a dinner hosted by the foreign minister. Lulzim Basha for the foreign speakers at the ambassador’s conference.

The debate on “gate-crashing” continues over dinner. I will keep you posted on how it develops, but given the nervousness this might elicit among EU diplomats it is probably better to say no more here …

Rumeli Observer

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