Institute for International Relations

Where is the EU Heading? Future Developments and Reflections on Croatia

EU-CONSENT Project Results' Presentation Meeting
Zagreb, Croatia, 6 March 2009

Report

EU-CONSENT Project; the Institute for International Relations (IMO), Zagreb and Friedrich Ebert Stiftung (FES) Croatia co-organized a meeting entitled: Where is the EU Heading? Future Developments and Reflections on Croatia to share and discuss some of the project insights and results with wider stakeholders' audience in Croatia. The discussion was organized within two panels: "EU Economic and Social Perspectives and Responses to the Global Financial Crisis" and "EU Institutional Reform: Impacts on Future Enlargement Policy and Croatia". The meeting gathered over seventy participants – stakeholders and actors of the EU integration process in Croatia such as academics, financial and business experts, representatives of NGOs, civil society, trade unions, different business associations, government policy makers and media.

The first panel discussion chaired by Dr Nevenka Čuččković, IMO focused on the global economic crisis; the EU performance and policy responses in this context, as well as on the innovation and education as main generators of long-term competitiveness. EU-CONSENT keynote speakers within this panel were Professor Iain Begg, London School of Economics, and Dr Felix Roth, Research Fellow, Centre for European Policy Studies, Brussels. Prof. I. Begg briefly described the outbreak and causes of the crisis and highlighted applied solutions as well as pitfalls in coping with the crisis so far. He pointed out that the world has changed after September 2008 and together with it the perception of economic policies – the crisis brought back the protectionism and suddenly, state aids are back in fashion and seen as good news. He stressed that we are now in the stage of assimilating some of the important lessons from recession such as that markets do fail - sometimes even spectacularly and that State has to act as ultimate rescuer. The question whether this would lead us to a new balance of interests, or even a new capitalism remains open. Regarding the impact of crisis on EU integration he stated that one of prime dilemmas is the policy coordination, with the questions of leadership strongly arising (EU in search for D'Artagnan, as he metaphorically put it) and what sort of economic governance arrangements are needed to recover. The answers to these questions are unclear for now. What is sure is that it is going to be very hard to coordinate national policies, especially those for the rescue of big companies, but Begg sees a potential solution in forming European economic government. He also raised the importance of issue of recovering from crisis in the long-term perspective by offering education, social protection and flexicurity policies as possible responses. Among the main challenges ahead of the EU he sees keeping sound macroeconomic policy and some fine-tuning re-regulation. He concluded that one should not also forget rebuilding the social confidence as the magic ingredient for the recovery.

Presentation of Prof Begg provoked some interesting thoughts and lively discussion by local commentators. Most commentators agreed that at this point it is not possible to forecast the consequences of the crisis on the EU integration in the long-run. They also believe that for now in the Central and South Eastern Europe, the crisis did not showed its worst yet in the real economy. Concerning the rise of protectionism by any name, Dr Sandra Švaljek, Director of Institute of Economics, Zagreb raised an issue whether this economic crisis would lead us to redefine totally our perception and knowledge of economics (rethinking the economics)? Is the new protectionism or increasing state aid really good news although they are widely back in fashion? As a matter of concern she pointed various policy options on agenda also in Croatia (rising VAT and introducing new taxes etc). She stated that it is important not to loose sight on economic fundamentals. Velimir Šonje, President of Board of Directors of the ICF Invest in his comment stressed that markets and governments work and fail together and that we should not loose perception on that. As for protectionist policies, it is important to avoid different sorts of political interventionism and adventurism which are mounting. He argued in favour of forming special fund EUF similar to IMF to finance macroeconomic adjustments on the EU level, especially in the new member states. As for lack of leadership he argued that Robin Hood figure might not be an answer either. Among others, the possible impact of economic crisis was also discussed by Dr Krešimir Jurlin (KBEs seam not resistant to crisis), Prof Nenad Zakošek (will EU continue business as usual or offer clear visions for future?), Dr Višnja Samardžija (double standards as EU impose stricter terms on state aid to candidate countries then members) and Dr Ana-Maria Boromisa (importance to focus on long-term goals).

The second presentation by Dr. Felix Roth examined the role of education in employment and competitiveness. Roth emphasised that achieving a goal of making the EU the most competitive global economy by 2010 would definitely be missed. He emphasized that education and innovation play a key role in generating employment and growth, but that the EU (on average) does not have a strong starting position in the global race for innovation. Compared to other OECD countries, the member states of the European Union perform poorly when it comes to key indicators of innovative potential, such as the percentage of students enrolled in tertiary education and the educational quality of Europe's students. Education makes a three-fold contribution to a country's economic health. First it is beneficial for employment rates, second it is a key driver for long-term economic growth and third it appears to be beneficial for social cohesion. It will be crucial for European countries to attain higher levels of tertiary education and increase the quality of their education. As a major setback he sees the insufficient skill level of the EU work force, especially when societies are becoming more and more knowledge driven. In his conclusion, he pointed out that the post 2010-Lisbon process should put educational policies in first place since education plays a key role in explaining the international variation of economic growth as well as the Lisbon goal of social cohesion.

The presentation also raised some interesting reactions and comments on the importance of education and knowledge in recovery and further economic development, especially for Croatia which lags behind the EU countries. The comments were among others given by Prof Slavica Singer, Faculty of Economics Osijek, Dr Krešimir Jurlin, IMO, Dr Sanja Crnkovic-Pozaić, BIT Croatia and Dr. Maja Vehovec, Institute of Economics. Prof Singer stressed the problem of subsidiarity within the EU as an issue in dealing with crisis efficiently. She also was in favour of continuity and importance of learning lessons from the past crises. As for human capital and education she stressed the importance of adopting key competences in the course of education process. The significance of knowledge-based economy in dealing with economic crisis was underlined by Dr Krešimir Jurlin from IMO with his analysis of Croatia's comparative position towards EU based on the Industrial Confidence Indicator (ICI). Dr Sanja Crnković-Pozaić raised an issue of moving from analyses towards plausible policy recommendations, while Dr Maja Vehovec stressed some negative selection practices within the higher education and research organisations in Croatia which affect the quality of human capital in these organisations.

Panel II of the EU CONSENT Project Results' Presentation Meeting, chaired by Dr Višnja Samardžija from IMO was dealing with two issues. The first one was the EU institutional reform and its' impacts on future EU enlargement policy, while the second one was focused on security institutions and cooperation in wider EU. The panellists took wider perspective on the subject, from the point of view of EU deepening and widening scenarios, while commentators discussed those issues from the point of view of Croatia's accession and negotiation process with the EU.

In his presentation titled "EU institutional reform and enlargement" Dr Edward Best from the European Institute of Public Administration (EIPA) in Maastricht elaborated the effects of the enlargement on institutional changes within the EU. Most important institutions including the Council, the European Parliament, the Commission and the European Court of Justice were emphasized. Some views on problems related to ratification of the Lisbon Treaty were discussed, such as the expectation that further enlargements might be possible without ratification of the Treaty. The Lisbon Treaty itself was not seen as a magic answer to all problems of the EU. On the other hand, enlargement is not only one source of pressure for the change. However, it was noted that after the last big bang enlargement less legislation was produced but there was an increased need for flexibility. More precisely, there has been a slight drop in the total acts adopted by the Council (from 479 legislative acts adopted by the Council in 2003 to 455 legislative acts adopted in the period 2006/07). A tendency of bureaucratization within the Council accompanied by the reduction in the participation of the Ministers was noted. Parallel, there are more co-decision procedures. European Commission is becoming more presidential and more intergovernmental while formal equality becomes close to a fiction. Enlargement has caused a greater push toward non legislative methods in European Commission. There is the so called homeopathic effect which is visible in existing trends within the Commission (more presidential, no longer reliant on traditional power of initiative, etc).

Analyzing impacts of the enlargement on the European Parliament, Best has detected little substantial changes – there have been no real changes in voting patterns, majority of new MEP (Members of European Parliament) joined existing Groups. The European Court of Justice in Luxemburg has seen a greater number of judges and chambers. Thus, it is now possible to deal with more cases and Court proceedings are shorter. Average length of preliminary rulings has decreased from 24 months in 2002 to less than 20 months in 2006. However, greater number of judges and greater number of judicial chambers has increased the risk of contradictory judgments. In conclusion Dr. Best stated that enlargement did not constitute a critical juncture for the EU institutional framework but not quite business as usual either. There have been shifts in the nature of the outputs (less legislation, more flexibility) and in nature of the process (more informal). There was deeper integration in some parts, wile new forms of inter (or trans) governmentalism appeared in the others.

Second panellist Dr. Gunilla Herlof from International Peace Research Institute (SIPRI) in Stockholm, in her presentation named Security Institutions and Cooperation in a wider EU dealt with changes in European security since the Cold War. It becomes evident that security threats are no longer exclusively military ones - current threats are more complex and related with terrorism, weapons of mass destruction, regional conflicts, organized crime, environmental challenges etc. Gunilla Herlof explained the EU Pillars dealing with security trough European Security and Defence Policy (EDSP, II Pillar), Justice and Home Affairs (JHA, III Pillar) and other related relevant EU policies. EU security could be viewed form internal and external focus. Internal focus is founded on the idea of the Franco-German reconciliation and EU integration wile external focus is on the Enlargement policy, European Neighbourhood Policy (ENP) and on the global policy at large. Prüm Convention was mentioned as a good example of integration within integration (deepening) which could be an answer to a danger of fragmentation caused by the enlargement. The size of the EU makes decision making and discussions more difficult and a formation smaller group (ex G6 which is exclusive cooperation of major states or Directoire which is exclusive cooperation) is way of increasing control. The ratification of Lisbon Treaty was seen as one of the problems together with the enlargement fatique. The following changes within security policy were elaborated: Lisbon Treaty introduces majority voting in the and Home Affairs (JHA, III Pillar) and a regulation equivalent to the NATO Charter Article 5 (mutual defence). Furthermore, it was emphasized that the need of enlargement should be necessarily followed by deepening. The new global security threats (like climate changes, pandemics etc.) could only be met by joint efforts and the answer is, according to Herolf, bursselezation combined with traditional European Defence and Security Policy tasks (formation of battle groups, each country policy according to preferences).

Commentators of the second panel were Dr Igor Vidačak, Head of Croatian Government Office for NGOs; Prof Siniša Rodin, Jean Monnet Chair at the Faculty of Law, University of Zagreb; Prof Nenad Zakošek, professor at the Faculty of Political Sciences, University of Zagreb and Dr Mladen Staničić, Director of the Institute for International Relations (IMO) Zagreb. They have elaborated their concerns regarding the further enlargement process and promotion of common European values (Siniša Rodin), positive influence of the civil society organization on European integration process (Igor Vidačak), enlargement and its effects on the South Eastern Europe and Croatia (Nenad Zakošek). Dr Mladen Staničić, Director of the Institute for International Relations (IMO) Zagreb summarized how enlargement process reflects on security issues and position of Croatia. Finally, Prof Damir Grubiša, analyzed the quality of the new MEP's in the European Parliament and emphasized the need for more scrutiny.

Valentina Vučković and Dominik Vuletić

Contact

Valentina Vučković, IMO, Ul. Lj. F. Vukotinovića 2, P.O. Box 303, 10000 Zagreb, Croatia; tel.: +385-1-4877474; fax: +385-1-4828361; e-mail: valentina@irmo.hr