South East Europe: Revisiting Convergence – Diagnosis and Prognosis

Jonathan Scheele

SEESOX, at the invitation of the Global Strategy Forum, addressed a well-attended seminar at the House of Lords on 19 March.  It was co-chaired by Lord Lothian (the former Michael Ancram) and Jack Straw MP.  SEESOX provided three speakers – David Madden, Max Watson and Jonathan Scheele.  The theme was “South East Europe: Revisiting Convergence – Diagnosis and Prognosis”.

David Madden launched the discussion, highlighting the background to and the thinking behind, the SEESOX Hilary Term seminar series and posing – and partially answering - three questions:

• Do the countries of South East Europe have an alternative to EU accession? Probably No.
• He did not believe that even Turkey has a long-term alternative to EU membership.
• Can the EU exercise conditionality? Probably Yes.
• And does the EU have a transformative effect? Possibly Yes.

He pointed to some positive elements in the situation – enlargement was still on the radar, with Montenegro probably leading the other states in South East Europe; there appeared to be openings between Serbia and Kosovo; the election of Nicos Anastassiades brought a champion of solution to the tackling of the Cyprus problem, though he no doubt had other more pressing concerns at the moment; and there appeared to be some stirrings in Paris, particularly, and Berlin on EU/Turkey. On the negative side of the ledger was the growing level of asperity in the region about the credibility of the accession process; the lack of a really committed champion of accession in Continental Europe (though partial champions have caused a few problems in the past); and the possibility of proliferating vetoes, even if countries get near the finishing line.

He also noted the emergence of a big new issue in the region: Cyprus Gas. This potentially involved all the main actors in the East Mediterranean region, including Israel, and some from outside, including the US and Russia. He felt it could have bad consequences or good.  While he hoped the latter would be the case, he believed that, whatever happened, Cyprus Gas would certainly exercise enormous influence in the region for years to come.

Max Watson recognised the intertwined nature in the region of economic convergence and political reconciliation.  Economic convergence offered an alternative to nationalism and rent-seeking behaviour of elites.  But the credibility of the economic strand had been weakened during the crisis. To counter this, a there was a high premium on economic strategies that could restart growth in the region on a more sustainable basis.  In this respect, he noted that Turkey had seized the opportunity of its earlier crisis to carry out a number of these reforms – and was benefitting form them.

He stressed the critical importance of a more targeted set of structural reforms; though the exact make-up of these reforms varied between countries, there were common threads, such as a deficient business environment, a skills gap, and key infrastructure shortages. He noted the significant role that the state could play in this process, citing the example of the Tirana-Pristina (and hopefully Belgrade) motorway as a key driver for economic development and regional integration.  Alongside this, regional networks and linkages of all types needed to be strengthened; cooperation between central banks in the region was beginning to work well and should be emulated in other areas.

The challenge was to instil- and institutionalise - a greater degree of bottom up reform into the process, rather than relying primarily on top down, Brussels-led stimuli. In terms of economic reform, more self-help was needed.  While there was no substitute, in the broader political-economic perspective, for the EU anchor, there was need to think globally, and not just regionally, in terms of trade potential.  The countries of the region should make better use of their collective potential to compete on the global market.  Finally, the importance of maintaining high level political engagement in the EU would remain critical for future progress.

Jonathan Scheele addressed the political aspects of the question, noting that the concept of convergence was implicit in the Copenhagen criteria for enlargement.  He stressed the importance of developing a domestic constituency for reform, especially when the attractiveness of the EU as an anchor for reform was weakened.  In any case the EU neither could nor would impose reform on an unwilling partner.  He pointed to the huge challenge that reform posed for current candidates, compounded in the SEE region by the problems of dealing with the aftermath of recent conflict.  In this respect, the EU often found it difficult – at political level - to focus on more than one key priority at a time, with the risk that other issues had to be dealt with at too late a stage in the process.  At the same time however, this was understandable, since the EU had no desire to import new bilateral issues with successive enlargements.

He also reflected on the need to learn from previous accessions and also to ensure that emerging challenges, such as the importance of media freedom for the rule of law, were fully addressed.  Corruption issues remained a problem – and the availability of substantial EU funding increased risk in this area.

The key to the whole process of accession-led reform lay in the credibility of the accession perspective.  Current circumstances weakened this expectation however, exacerbated by a general loss of legitimacy of EU institutions and of national politicians. It was important that, in Brussels and in EU capitals, the right leadership and vision was shown, and the key EU institutions could profit from working together more visibly and effectively. There really was no real alternative to EU accession for the region.  The EU could exercise conditionality, but needed to reflect more on what conditionality and how it exercised it.  It still had transformative power, but more effort needed to be made to ensure a genuinely receptive environment in the country affected.

In the Q & A session, issues raised included:

• The importance of genuine conditionality, with negative as well as positive consequences, and the welcome emphasis being put on the Justice and Home Affairs chapters in current negotiations,
• How to get better leverage from EU pre-accession funding - and greater management capacity in the candidate countries - in order to secure political and economic objectives,
• The need to deal with pre-existing ethnic and bilateral tensions and resolving them before accession,
• The possibility of using the current economic crisis in Cyprus as a springboard for addressing the division of the island,
• The creation of political and economic circumstances that reduced the incentives for large-scale economic migration out of the region,
• The importance of resolving the EU’s economic crisis and restoring growth, if reform in SEE was to continue.
• The overriding importance of sustained and broad-based domestic consensus in favour of accession for the process and also for the associated reforms,
• The different options for Turkey in relation to the EU,
• The potential weakening of UK influence in favour of EU enlargement as a result of the current debate on the EU within the UK.

At a lunch after the seminar, Jill Morris, Alternate Director for Europe at the FCO, spoke on the UK’s view on all these issues, under the Chatham House rule.  Issues that arose during the discussion included:

• The importance of maintaining the momentum of the enlargement process, despite the on-going economic crisis (and the positive impact on this of the on-going work under the Belgrade-Pristina dialogue),
• A welcome developing alignment of narrative between some key EU Member States and Turkey, which highlighted the importance of maintaining momentum in the negotiations, as well as some very positive and fundamental changes  taking place in Turkey,
• While it was too soon to gauge the impact of the economic crisis on enlargement, it would be important not to lose sight of its transformative effects and its role in projecting European values throughout the region,
• The need to give more consideration to the challenge of dealing with bilateral disputes prior to accession, while avoiding giving an effective veto on the process to a third party.