Europeanisation of the Balkans: The corruption test

David Madden

On 28 January, the SEESOX Hilary Term seminar series on Revisiting Convergence looked at its third theme: “Europeanisation of the Balkans or Balkanisation of the EU?” Alina Mungiu-Pippidi presented, Renee Hirschon chaired, and there was lively discussion of the main theme of corruption.

Trying to summarise academic discussion is not the easiest task for a rookie blogger, but there seemed broad agreement on the following (though I am open to being proved wrong by dissentient voices).

• corruption represented a considerable obstacle to economic development in South East Europe (SEE)
• the record in Central Europe and the Balkans was worse than in Western Europe and North America, but enormously better than in the countries of the former Soviet Union
• generally the Balkans performed less well than the Baltics in countering corruption
• the situation in SEE didn’t appear to be improving, though perceptions might obscure the real picture
• the main constraints on corruption were legal (assuming an autonomous and effective system) and normative
• “Europeanisation” was not proving a magic cure. It tended to be bureaucratic and non-transparent, undermining good governance. Misuse of EU funds in e.g. Italy and Greece had not lead to an avoidance of bad practice in Romania and Bulgaria. Transition could actually foster corruption, given the scope for misuse of privatisation and public funds; though e.g. Estonia in the Baltics was an example of good transition. The EU could impose normative constraints only pre-accession
• Companies disadvantaged by corruption tended not to go to the ECJ, appearing to sit back thinking their turn would come if they played their cards correctly
• Countries with a history of recent ethnic strife were particularly susceptible to corruption
• SEE countries could be sustainably reformed only from within, and through active civil societies

The tone of the seminar was therefore rather sombre, but like all good seminars ended with a good joke. A neophyte Minister of Development from country A is invited by a long-serving Minister of Development in country B. He is amazed by his colleague’s villa, swimming pool etc. etc. He asks the obvious question. His colleague takes him to the window. “You see that highway? 10%. You see that bridge? 10%. Easy.”  A few years later, there is a return visit. This time it is the more senior Minister’s turn to be amazed: by the villa, tennis court, solarium etc. etc. He asks: “How?” He is taken to the window, and shown the empty wastes outside. “You see that highway?” “No”  “Exactly. 100%”.

The economics – is the Brussels-Washington model still applicable?

Adam Bennett

The seminar which I chaired on the future of the Brussels-Washington model for the development and convergence of South-east Europe generated a lively discussion and some interesting observations.

The Brussels-Washington model never was a single immutable model. The model was and remains multifaceted and has kept evolving in light of events. The first phase of reforms emanated mainly from Washington and eschewed gradualism in favour shock therapy—with recommendations to cut fiscal deficits, open up capital accounts, privatize as quickly as possible, and liberalize prices across the board. This version of the model ran into the Acemoğlu dilemma—economic reform without political reform can bring new problems, especially in governance. Sequencing became a watchword in a more differentiated second phase. The third phase saw the lure of EU accession as a key driver of the region’s systemic transformation, with the acquis communautaire and associated reform programs devised in Brussels. The multiplicity of reform targets and their wide range over social and economic issues, however, threatened to overburden the accession countries, and seemed untargeted. This was in contrast with the Washington side of the model which was ramping down structural elements in its programs. The fourth phase, which is where we are now, has seen the model go through some serious soul-searching, as first the global banking crisis and then the Eurozone crisis both rocked the economic foundations of South-east Europe and also raised profound questions about the benefits of accession, as well as about the appetite of the EU for further enlargement.

Solidarity and convergence at risk...

Convergence – in the sense of economic catching-up – is not a goal specified in European Treaties, one seminar participant observed on January 14th. But convergence and political reconciliation have in practice operated as the mutually-reinforcing drivers of the EU machine, and especially of the Enlargement process. In the case of South East Europe, with its deep reform challenges, some problems had emerged in implementing this formula before the crisis, and one silver lining (it was noted) has been to remove the ‘deniability’ of such problems. But the risk is that the crisis may have gone beyond this and fundamentally shaken faith in solidarity – North and South, East and West, core and periphery.

The question was also raised, in light of the crisis, whether the EU’s economic paradigm truly works. If not only Greece but even Ireland can descend into crisis, and at times appear politically isolated, then what are the prospects for the candidate countries in the South East European region. Is the convergence model still valid? – That is indeed the question to be addressed centrally in the second seminar on Monday 21^st...

Max Watson

Europeanisation and convergence in practice – in neutral or in reverse?

Jonathan Scheele

The first seminar, on Monday 14 January, focused on the state of convergence in the region in practice; is it in neutral or reverse? The panel of speakers, Kalypso Nicolaïdis, Dimitar Bechev and Jonathan Scheele, laid a good foundation for the rest of the series, which will look at future prospects.

Key ideas which emerged included:

• the current crisis in Europe means that the EU, in promoting convergence, needs to go much deeper into addressing the structural obstacles to reform in the region, but at the same time should be more humble in its prescriptions for specific reforms.
• convergence tends to be seen in terms of accession to the EU, but there is a historical continuity with efforts, going back to the 19th century, by the periphery in SE Europe to join "the centre" (represented by Western Europe).
• the demand for convergence in the region is mediated by national elites so as to preserve their advantages as far as possible; they seek modernisation, but not at any cost and not too quickly.
• much has in fact been achieved in the Balkans; there is more stability and little ethnic violence. But economic integration has made the region more vulnerable to external shocks; while recovery in the Euro zone is necessary for the Balkans to grow again, it will not be sufficient on its own. And periodic elections do not on their own ensure real democratic accountability, so that Brussels is still seen as a legitimate counter-balance to poor quality national governance.
• within the region there is no perceived realistic alternative to convergence towards the EU by accession. But enlargement in the region is no longer, for the EU, the geo-strategic imperative that it was in 1993 up to 2004.

As a result, if convergence (= EU accession) does not move forward at a steady pace, to what extent does this pose risks for political stability in the countries of the region? If the goal of convergence provides a common agenda for opposing political groups, what else will preserve that stability if the goal begins to be seen as unattainable in a realistic timescale?

South East Europe: Revisiting convergence

David Madden

In the good old days, it was a relatively straightforward process for European countries to join the EU. One met the political and economic criteria for membership, received the formal avis or tick of approval from the European Commission (a bit like giving one’s coin to Charon), passed the entrance exam of satisfying the acquis communautaire (all the rules and regulations painstakingly negotiated and agreed by ones future partners) and entered as a full member. Countries joined individually or as in groups: diplomats spoke of regattas and flotillas - the land-lubbers in Brussels tending to favour nautical terminology. Easy!!
   One joined a club where there were agreed norms, rules and values. Joining it showed that one had arrived, and that one belonged: that one was entitled to the benefits of membership; and even had an equal voice on the Council with eg Germany. Not bad for a country of the size of Cyprus or Slovenia. More, joining pointed the way towards transition, economic convergence and strengthened democracy.