Editorial by Michael Emerson: "Review of the Review - of the European Neighbourhood Policy"

Review of the Review - of the European Neighbourhood Policy

Editorial by Michael Emerson,
Senior Research Fellow at the Centre for European Policy Studies (CEPS), Brussels

The Commission and High Representative have now published on 25 May the results of their review of the European Neighbourhood Policy, which was conceived in 2003 when the big Eastern enlargement was set to go, and became fully operational in 2006. So there is five years of experience to review. Taken together with their emergency March report responding to the Arab spring the review documents amount to almost 400 pages of text. Much of this consists of routine progress reports on the twelve states of East and South where the ENP is functioning, which excludes the two virtual pariah states, Belarus and now Syria. The country reports are a useful documentary source, giving systematic appraisals of developments in these states and their cooperation with the EU according to a standard format that allows comparisons.

But any review of this kind should ask basic questions: what are the objectives, and what results are being obtained? Does the policy prove to be well conceived? The objective is to help transform these counties into democratic and open market economies, integrating substantially with the EU, which provides the normative and regulatory anchor. The results are fairly clear but not positive: the hoped for transformation is not happening in the East, where the semi-authoritarian and mostly very corrupt political regimes are stagnating – the so-called Rose and Orange Revolutions did not produce bright new democracies. The political stagnation in the South Mediterranean has now been overturned by the Arab spring, but not thanks to the ENP, whose actions were largely supporting the status quo.

The reports show how the EU engages in a huge number of sector and country-specific actions, with systematic monitoring of how far the partner states are adopting or converging upon EU norms and standards. The reason is that the Commission has been transposing its experience of the enlargement process, with a similar long list of chapters. This has led some commentators to use the term ‘enlargement-lite’, while Romano Prodi when President of the Commission used the term ‘everything but the institutions’. During these last years the member states have debated whether some of the Eastern partners might be granted ‘membership perspective’, which Ukraine, Moldova and Georgia actually want. There were some advocates of this (Poland, Sweden) but several opponents (France, Germany). Since this is a unanimity matter, the question is for the time being  closed. What is not closed however is the basic question whether this ‘enlargement-lite’ process, entailing much burdensome adoption of EU standards without the political or financial incentives that come with accession is a sound policy concept. Many independent commentators warned from the beginning that the cost-benefit ratio was too weak in incentives for the partner states. The lack of results suggests that this warning was valid. There is implicit recognition of this in the review documents, with use of the expression ‘more for more’, meaning more aid with more conditionalities.

Let us look therefore at three key aspects more closely: aid, democracy and trade.

On aid and investment, more money has been found to support the Arab spring. A little over ?1 billion extra has been found for 2011-2013 from the EU budget. The European Investment Bank (EIB) has had its mandate for South Mediterranean operations increased by ?1 billion. It is proposed that the European Bank for Reconstruction and Development (EBRD) should be mandated to open up operations in selected South Mediterranean states for the first time, also for around ?1 billion for an initial period. These are positive steps, especially taken together with the pledges that were discussed at the G8 summit on 28 May for further much bigger total amounts. If the major official donors and investors can put together credible coherence in their conditionalities, this could make a difference.

The review document has now invented the term ‘deep democracy’, adding to the existing lexicon of ‘comprehensive institution-building (CIB)’, and the ‘deep and comprehensive free trade agreement (DCFTA)’ to which we return below. Support is announced for a recent Polish proposal for a European Endowment for Democracy (EED), and also a Civil Society Facility. These sound interesting, but in searching the 400 pages one finds nothing specific on how these two initiatives would be organised, which one might say is deeply disappointing. Poland has promoted the EED idea, but apparently without any idea how this should be structured – ‘we are open to all proposals’ say their diplomats whose ‘non-paper’ launching the idea was empty of concrete ideas. Meanwhile there is a long-standing battle-royal going on between Commission and Parliament on this subject. A number of influential parliamentarians are pushing for a fund that they would be responsible for, with Parliament thus becoming an executive body in this field. We hear some parliamentarians in various seminars making the following argument ‘the Commission are bureaucrats who don’t know about democracy. We in the Parliament are politicians, not bureaucrats, and know what to do’. This is a very primitive argument: the Parliament would have to create its own bureaucracy to execute a substantial programme, which would also run against central constitutional principles about the separation of powers between legislature and executive.

The Poles have borrowed the EED name from the US National Endowment for Democracy (NED). If NED’s structure would be copied there would be separate organisations for each of the main  party political groups, which is also how the German political foundations are organised. Incidentally the German political foundations are endowed with budget funding of the order of ?450 million, which is a reference for the EU when it will come to discuss budgets. Extrapolating these models would see the EED establishing three or four separate democracy support offices in Cairo, where NED and the German political foundations are already active. Would this really be the way to go? Maybe one dedicated democracy support office for the EU would suffice. But this connects with the bigger issue how to organise the EED, and what to do at the same time with the European Instrument for Democracy and Human Rights (EIDHR), which is a substantial operation executed by the Commission with policy guidance from the External Action Service. The idea that has the support of many independent observers is that the EU should establish a democracy foundation or agency to execute democracy programmes worldwide, which would incorporate the EIDHR. Whether a foundation, or endowment, or agency, this would depend on the degree of operational autonomy the body would have from the Commission and Parliament.   

The EU’s trade policies in the neighbourhood are in a lamentable state, filled with glaring contradictions between East and South, based on a poorly adapted concept, and still with zero results to the East. The general report asserts that “The main and most effective vehicle for developing closer trade ties in the Deep and Comprehensive Free Trade Area (DCFTA)” (p. 8 of the main communication), whereas the policy has so far not been effective at all. In the case of Ukraine “progress was rather limited in 2010” (p.4 of the sector report), although this was meant to be the leading example. Ukrainian negotiators complain that while the EU wants free trade for industrial goods, it offers little for agriculture, which is a credible complaint, but nothing is transparent here to the outside observer.

As regards the conditions for such agreements, apart from WTO membership, it is stated that “They [partner states] must also have made sufficient progress towards common values and principles” (p.8). Later on we read “Progress in the negotiations of the trade related part of the framework agreement with Libya was slow” (p.4 of the Sector Progress Report). The need for progress on values is declared, yet the Commission was negotiating with Libya last year, presumably because of the oil revenues there – so much for the values.

Georgia is specifically required to “accomplish additional work as regards .... building adequate institutional structures and administrative capacity for the negotiating process” (p.11, Georgia report), before the Commission will agree to the opening of negotiations, whereas a table on governance issues (p.29 of the sector progress report) shows in almost illegible miniscule font size that Georgia has been outstandingly successful in improving regulatory quality according to a World Bank source. It also fails to mention that Georgia has unilaterally opened itself to basic free trade with the whole of the world, and accepts all EU standards for its imports.  

It is further stated that “in the medium to long term” it is intended to negotiate DCFTAs with South Mediterranean states (Partnership for Democracy document, p.9). Thus a DCFTA is only necessary in the medium to long term for the South, but is necessary immediately for the East. The approach taken for the South, to do relatively simple FTAs first, and deepen them later, is much more plausible. Yet this is dogmatically denied for the East, hence zero results so far.

The DCFTA concept has not been worked out properly, with the Commission making no attempt to assess the cost of ‘acquis’ compliance, whereas these costs are often punishingly high for poor economies: it is a matter of time and level of economic development before various parts of the DCFTA agenda could deliver net benefits. Independent commentators have been arguing from the outset that the Commission should have undertaken a systematic cost-benefit analysis of all EU internal and external market regulations which it considered suitable for including in the DCFTA agenda. Where the costs of compliance would be too high for economically poor partner states, the Commission should sketch templates for low-cost applications for neighbours, or simply to remove them from the agenda, of defer them to years later. This homework has simply not been done. Instead the Directorate General for Trade of the Commission simply insists on large blocks of acquis compliance before even agreeing to open negotiations (as for Georgia and Armenia now, although it was not required of Ukraine), appearing at times to behave like a robotic bureaucratic bulldozer.      

This review of the official review may be summarised as follows:

• The Arab spring has pushed the EU institutions into advocating a ‘more for more’ concept, confirming the view that the neighbourhood policy has not been offering sufficient net benefits for its attempted values-based conditionality to work.

• More official aid and investment finance from the EU is offered, especially for the progressive parts of the Arab spring, but for conditionality to be effective is going to require effective coherence and coordination between all major external financiers. The EU’s resources are insufficient to do this effectively on its own.            

• Democracy makes a belated return to the announced agenda, after years of neglect or only token interest. It is now to be ‘deep democracy’, but new mechanisms to do this have not been defined in operationally meaningful terms, and the institutions seem unable to agree on what to do.

The trade and wider DCFTA policy in the neighbourhood suffer from glaring contradictions and lack of any sound analytical basis. The Commission has not been willing to assesses what parts of the DCFTA agenda are suitable, and when, for various partner states. There has been no adequate review done here. A policy rethink is necessary, without which good results cannot be expected.

Download Issue n. 71  of the CEPS European Neighbourhood Watch