Member of the European Commission, responsible for Enlargement Challenges and opportunities on the path to the European Union Lecture at the University of Osijek, Croatia. Faculty of Economy, Osijek, 1 December 2006
Lecture at the University of Osijek, Croatia. Faculty of Economy
Osijek, 1 December 2006
Your Excellencies, Ladies and Gentlemen,
As a former scholar and university lecturer, it is a particular honour for me to address this audience of the Economic Faculty of the University of Osijek. I am delighted to have the opportunity to discuss the challenges and opportunities Croatia will face on its path to the European Union. I would like to extend warm thanks to the Dean of the University, Professor Kralik, and the Faculty of Economy for hosting this event.
Being among so many young Croatians it strikes me that you, I am convinced, will be the first generation from Croatia who will live the great majority of your lives as citizens of the European Union. Most of you were born before the war which affected this region deeply. You were born in a peaceful country but grew up in a country in war. Therefore, unlike many students in the EU who take peace for granted, you know the price and value of peace and stability.
This is first and foremost what the EU is about. The EU is based on common values and a common purpose, a future of peace and prosperity. The EU is a way of working whereby confrontation is replaced by dialogue and conflicts by compromise.
This is also why reconciliation, at the heart of the European project, is so important. And it must start at schools and university, with respect and promotion of all minority rights, for all citizens, irrespective of their origin.
Against this background, it is clear that the European unification process cannot be complete without Croatia and its regional neighbours as members. Croatia is the front runner in our enlargement agenda.
EU enlargement sealed the peaceful reunification of Western and Central Europe. The accession to the EU of 10 new Member states in 2004 has been a great success. In the new Member States, there were numerous fears and worries before 1 May 2004 (farmers would not be able to adjust, SMEs would not be able to compete, national identity would be diluted, traditions lost).
But there have been no major difficulties and overall strong support to EU integration has been reaffirmed. Economies are growing faster, farmers are benefiting from significant EU support and rather than having lost cultural identity, there is the clear perception of an increase in self-esteem.
The internal market has liberalised European economies and created the biggest economic area in the world, reaching 500 million once Bulgaria and Romania have joined our European family in January 2007. Economically enlargement has been a win-win process for both old and new Member States alike, boosting growth and creating new jobs in the European economy.
Nevertheless, in the EU voices have been raised calling for a pause to enlargement. There are those who have concerns about issues such as the effect on the labour market or the costs for the present Member Sates.
It is in this context that the Commission President José Manuel Barroso clarified recently that a new institutional settlement should have been born by the time the next member is going to join the Union.
That is why the EU will address the question of integration capacity while pursuing the enlargement process. The Commission tabled its views recently. We need to reform EU institutions and policies, while taking account of the budgetary dimension, and to ensure good preparation of candidates (hence the application of strict conditionality). While we are cautious about any new commitments, we stick to our existing commitments – keeping one’s word is a fundamental European principle.
Therefore, we need to build a new consensus on enlargement, which recognises the strategic added value of enlargement while ensuring the Union’s capacity to function. The challenge for the EU is to improve the functioning capacity of the current EU now, not only the more abstract absorption capacity in distant future. That’s why the EU needs to work for economic and political revival, and not make enlargement the scapegoat for domestic failures.
While we prepare internally for a new institutional settlement, the gradual and carefully managed accession process with Croatia moves on. With negotiations underway, as things stand, Croatia should become the 28th Member State of the EU. The preparations ahead will be tough, but the efforts to be made are not only for the sake of joining the Union, but for the good of the country as a whole.
Negotiations have got off to a good start. Technical preparations are proceeding according to plan. In October 2006 the first stage of negotiations, the so-called screening process, was completed.
So far, one negotiating “chapter” has been opened and provisionally closed (science and research). For six chapters the EU has set ‘opening benchmarks’, conditions which have to be met before negotiations on these chapters can begin. Croatia is working towards fulfilling them (competition, public procurement, social policy, justice freedom and security, free movement of capital, free movement of goods).
The EU has requested and received from Croatia negotiating positions on six other chapters, and the EU’s positions are being prepared. In fact, the Commission yesterday submitted its proposal on 2 of these to the Member States. Decisions on whether to propose the opening of negotiations on other chapters will also be taken soon.
Negotiations will proceed on the basis of Croatia’s own merits and its ability to meet all the requirements for membership.
The membership conditions are well known. Alignment with EU rules needs to continue. The capacity to implement and enforce rules has to be reinforced. These are not arbitrary requirements. They reflect sound principles that any country, determined to face the future with confidence, would want to display. They reflect sensible policies that any country, determined to deliver prosperity and stability to its citizens, would want to adopt.
Take competition policy and state aid for example, where there is extensive Community competence and where the EU has set certain benchmarks Croatia has to meet before negotiations on this chapter can open. I was surprised to discover that Croatia spends a greater percentage of its national wealth on state aid to companies than any EU country!
Under its competition rules, the Commission does not ban state aid, but it does provide a framework for a more efficient and impartial allocation of taxpayers’ money. It creates a level playing field which encourages healthy and fair competition.
After all, taxpayers do not want their money used to give one company an unfair advantage over another. They want resources efficiently targeted to maximise the creation of more wealth and jobs. This is what competition rules are for.
Another chapter of the negotiations on which Croatia needs to meet opening benchmarks concerns public procurement. Here too, we have a framework that allows for more efficient allocation of resources. Good public procurement rules are essential if citizens are to get value for money. The current rules in Croatia do not guarantee this.
There are a number of other chapters of the negotiations which will pose particular challenges, whether in the field of environment, justice and home affairs, food safety, or agriculture to name but a few.
But nobody said accession would be easy. It is a process which all acceding Member States, have had to go through. And they do it because it is in their long-term interest.
I should recall that negotiations are not about whether a candidate country will adopt the EU legislation. The rules of the club have indeed to be accepted. Negotiations are about determining how and when this will happen. This will also be the case for Croatia.
Only with constant, intensive work by the Croatian authorities on legislative alignment, the building up of administrative capacity and correct enforcement, will the negotiations be able to proceed at a good pace.
With negotiations underway, the focus in Croatia increasingly turns to sectoral issues under the acquis chapters.
However, it is crucial not to neglect the key outstanding issues under the political criteria such as: the rights of minorities, refugee return, impartial prosecution of war crimes trials, as well as regional cooperation and good neighbourly relations.
The progress you make in these areas will make Croatia a leading example for the whole region. It will also smooth the ratification of the future Accession Treaty by EU parliaments and citizens.
There are three cross-cutting issues I would like to mention which present particular challenges for Croatia. There are judicial reform, public administration reform and fighting corruption and organised crime. I had the opportunity to address these issues yesterday in Zagreb at a conference organised together with the Croatian Supreme Court. These are issues of critical importance which need to be tackled early in the process.
The EU can only function properly when the rule of law applies. That is why more progress in Croatia on these cross-cutting issues is essential. This is first and foremost in order to improve the everyday lives of all Croatian citizens by guaranteeing their rights, and ensuring that justice prevails.
But these reforms are also necessary if Croatia is to fully benefit from EU policies as a Member State and adequately apply EU law. Deficiencies in these areas can have a knock-on effect on economic issues, as they hamper the development of the private sector, foreign investment, and enforcement of property and creditor rights.
On the economy, Croatia needs to consolidate its market economy status. It has to prepare itself to cope with the competitive pressures of the Union. It has to attract more foreign investment. Croatia has already achieved a lot. Its macroeconomic policies have contributed to relatively low inflation and a stable exchange rate, and significant budget and current account deficits have been reduced. So there are solid foundations to build on.
The challenges are nevertheless many. But tackling the shortcomings is an investment for the future. The whole accession process galvanises reform efforts which in turn generate new opportunities.
The EU also helps in this process through one of its most important policies: its regional policy. Already Croatia benefits from millions of Euros of pre-accession funds.
After accession, poorer regions stand to benefit far more from the structural and regional funds. These funds make up more than 40% of the total EU budget and are targeted at the Union’s less prosperous regions. Regions such as Eastern Slavonia should be generously supported from the EU’s regional policy. Infrastructure projects and investments in human capital will promote economic activity creating jobs and improving quality of life.
Let me take advantage of being in the premises of the University, with an audience of young people, students, who are the future of this country, to stress other important multiple opportunities that enlargement will represent for you and your future. This will not only enable you to live in a peaceful and stable environment, but will also contribute to the widening of your cultural horizons, language skills and professional prospects. Many of you will go on to work for companies making their living from the EU’s huge single market.
Many young people would like to go abroad at some stage during their time of study. A year studying abroad gives the opportunity to achieve knowledge not only in your area of academic interest, but also knowledge about the way of living in another country.
Many Croatian students have participated in the Tempus programme that supports projects between the EU and Croatian higher education institutions. After accession, these opportunities, will multiply, with the successors to Community programmes such as Erasmus, Socrates, Leonardo da Vinci or Youth. These aim to promote the European dimension for education encouraging trans-national co-operation between universities, preparing labour for the rapid technological changes and so on.
If the accession process is to succeed, access to information about the facts, the challenges as well as the opportunities is crucial. The public is a key actor, not just an observer. When the time comes for the Croatian people to make the fundamental choice about their future, they should be fully informed about the implications of EU membership.
Students and other young people have a special role here. You have a thirst for knowledge. Play your part by discussing and debating the challenges and opportunities the accession process presents. Work for your country, promote your country abroad, help the development of its enterprises in the internal market. This would be my message to the young generation. Your educational institutions and civil society actors also have their role to play.
Our common objective remains clear: Croatia as a full member of the European Union, fully sharing our values, enriching the Union with its culture and traditions, and enjoying the mutual benefits of closer integration.
A lot has been achieved already. Croatia has come a long way in a short period of time. And you can be proud of your achievements. But difficult challenges and a lot of hard work still lie ahead. I can assure you that the Commission for its part will continue to assist Croatia in this process.
And when this process ends, and Croatia takes its rightful place at the heart of the European family, then not just Croatians, but all Europe’s citizens will have reason to celebrate.