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EU's Influence on Candidate Nations Development

by Markus Petteri Laine Prague 2005

The European Union (EU) has always been, and remains, a powerful pole of attraction to its neighbours, as successive waves of enlargement have shown. The greatest and most ambitious of these enlargements took place on 1 May last year when the EU welcomed ten new Member States. There are more to come.

The political importance of EU enlargement must not be underestimated. It has already contributed to the consolidation of political stability, democracy, and respect for human rights throughout <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Europe. But enlargement is also economically important. Accession to the EU has provided its newest members with the opportunity to firmly anchor their process of economic catch-up with the older Member States.

The institutional, legal and economic policy frameworks associated with preparation for EU membership, and membership itself, provide a basis for closing the income gap. The Commission recently estimated that enlargement could raise annual GDP growth in the new Member States by 1.3 to 2.1 per cent in the current decade.

This short essay takes a look into the general requirements, and effects to the domestic markets of the next to enter EU membership applicants namely Bulgaria and Romania. 

The availability of sizeable EU funds is also a clear sign of the EU's commitment to closing the gap. These have reduced risk in the new Member States and boosted FDI (foreign direct investment) inflows, which should help modernise the economy and encourage the expansion of domestic financial intermediation, which is as yet under-developed in these countries.

ROAD MAPS FOR THE NEXT INCOMMNNG MEMBERS

 

The EU has set roadmaps for Bulgaria and Romania to cover the period up to accession. Their purpose is to indicate the main steps that Bulgaria and Romania need to take to be ready for membership. They are based on the commitments made in the negotiations and on what needs to be done to fulfil the Copenhagen and Madrid criteria for membership. They also follow the principles that have guided the accession process from the outset, notably that all candidates participate on an

equal footing and all are expected to join the European Union on the basis of the same criteria

and depending on their individual progress.[1]

 

The roadmaps aim to support the two countries' efforts to meet the remaining criteria for

membership by identifying the tasks ahead and providing increased financial assistance.

There is particular emphasis on administrative and judicial capacity necessary to implement

the acquis[2] and on economic reform.

 

For the acquis chapters, the roadmaps provide benchmarks against which Bulgaria and

Romania's progress can be monitored. These cover both alignment of legislation and

development of administrative capacity. A detailed assessment of the remaining challenges is

contained in the Overall Assessment and Conclusions of the 2002 Regular Reports on

Bulgaria  and on Romania. Short and medium term issues are identified in the roadmaps and

will be further developed in the revised Accession Partnerships.[3]

 

SNEAKIN IN?

 

 

The analyses in the 2002 Regular Reports lead to the conclusion that, whilst Bulgaria and

Romania are making progress the countries have a high level of need, in terms of: Agricultural and rural development, transport and environment infrastructure, economic and social cohesion, investment and institution building related to the implementation of the acquis.[4]

 

Bulgaria and Romania signed the integration treaty in Luxemburg on Monday the 25^th of May together with the foreign ministers of the current members. There are lots of improvements set by the EU that the applicant countries have to take care of before they can join in the beginning of the year 2007. If the amendments would not prove to be adequate, the current member states can postpone the integration at least with a year. All the 25 current members have to ratify Bulgaria's and Romania's membership in order for them to be approved.

 

The European Commission has repeated often that the signing of the Accession Treaties does not mean that the work would be complete. Recently, the European Parliament agreed with the Commission that MEPs[5] should also remain involved in the accession process of the two countries, particularly concerning the question of a possible postponement of membership. "The European Commission will seriously consider European Parliament's view before issuing any recommendations", Enlargement Commissioner Olli Rehn said.[6]

 

Bulgaria and Romania both overcame communism in 1989 and struggled with the transition to capitalism through the 1990s.The countries are poor by European standards with a per capita GDP of less than 3000 euro, which is below 40 percent of the EU average. Latvia, the poorest of the ten newest member states, has a GDP of 4800 euro while Germany has one of over 26,000 euro.
But the EU accession process, supported by the majority of both countries' populations, is irreversible and has already made a huge difference, analysts say. Amongst other things, the countries have stabilised their economies and initiated many reforms of state and social institutions.
The countries have shown important economic growth with Bulgaria's economy growing by an average of 5-6 per cent annually and Romania registering a record 8.3 per cent GDP growth in 2004.[7]

 

BULGARIA

 

Population: 7.9 million

Capital: Sofia

Republic

Currency: Lev (tied to Euro)

Unemployment: 19.4% (2001)

 

According to the EU commission Bulgaria is advancing towards its goal to become an EU member. Bulgaria has seen many constructive initiatives to improve the public governance and the justice system, but the gap between the legislation and its proper execution still remains problematic.

 

The future challenge for Bulgaria is to execute efficiently the reform, and to reduce bureaucracy and to develop the public governance more transparent. Organized crime and vast corruption is huge everyday problem in Bulgaria.

 

The commission thinks that Bulgaria can be considered as a functioning market economy. Structural reform is necessary that Bulgaria could survive the market pressure and competition in the EU even tough its economy is quite stable.[8]

 

Since the Commission concluded in its 1997 Opinion[9] that Bulgaria fulfilled the political

criteria, the country has further consolidated and deepened the stability of its institutions

guaranteeing democracy, the rule of law, human rights and respect for and protection of

minorities. This trend has been confirmed over the past year. Bulgaria continues to fulfil the

political criteria.

 

Tangible progress was made in public administration reform with the adoption of

amendments to the Civil service law. The specific structures for co-ordinating European

integration continue to function well, and in view of Bulgaria's aim of building a qualified

and efficient civil service by the time of accession this progress needs to spread throughout

the public administration. Also, interdepartmental coordination should improve. Attention

should be given to the legal framework for local and regional administration, which will play

an important role in the implementation of the acquis.[10]

 

Building on important reforms of the judiciary system achieved in recent years, there have

been positive developments with regard to the recruitment and appointment of judges. Still,

certain key parts of the reform of the judiciary remain to be adopted. The complexity and

efficiency of the penal structures, in particular in the pre-trial phase, is a matter of concern.

Strong efforts will be necessary to foster Bulgaria's capacity to prosecute organised crime and

corruption, which involves further reforms in the structures of the judiciary and of the police.

Bulgaria has implemented several measures in the fight against corruption, but it remains a

problem. Renewed efforts are needed, including tackling high level corruption.[11]

 

Overall, Bulgaria has now achieved a reasonable degree of alignment with the acquis in the

large majority of areas. It is also on track in developing adequate administrative capacity to

implement the acquis in a considerable number of fields. Bulgaria has established most of the

necessary institutional structures. Nevertheless, in some sectors, further efforts and resources

are required to strengthen the capacities of these institutions and to ensure their effective

functioning. In order to cover the remaining gaps, due attention should be given to the full and

timely implementation of the strategies and action plans for the reinforcement of

administrative capacity already approved in these areas.[12]

 

In the field of internal market, Bulgaria has continued to make progress in most areas as

regards the free movement of goods in terms of transposition of the acquis and the

development of the administrative capacity. However, further efforts are required to develop

the administrative capacity to implement the acquis on industrial products and as regards

foodstuff and food safety. Mutual recognition clauses are still to be introduced into the

Bulgarian legislation falling under the non-harmonised areas. Alignment of the legislation on

public procurement needs to be completed. As regards free movement of persons, some

progress was made in the field of mutual recognition of professional qualifications but work is

still needed on the framework legislation for mutual recognition and with regard to the future

co-ordination of social security systems. As regard the right for establishment and the freedom

to provide services, efforts are required to unequivocally eliminate the remaining restrictions

and discriminatory measures on foreigners despite some corrective actions. As regard

financial services, major parts of the acquis on insurance remain to be transposed. In the area

of free movement of capital, Bulgaria still has to adopt legislation on capital movements and

payment systems. Efforts to improve the framework in the fight against money laundering

should be maintained. As regards company law, particular attention should be paid to the effective enforcement of industrial and intellectual property rights, in particular through strengthening border controls and improving co-ordination between the law enforcement bodies. In the area of competition, Bulgarian has further updated its legislative framework and further strengthened its administrative capacity. Sustained efforts are required in order to continue to improve the

quality of its State aid enforcement.[13]

 

The Bulgarian Prime Minister and former King of Bulgaria, Simeon Skakskoburggotsk, took Bulgaria to the NATO, and he is determined to lead the nation to the EU. The Bulgarians feel that the nation is quite young even though its roots are ancient. Therefore it's thought that the western connections will stabilize and develop the domestic conditions and better secure its sovereignty like in its neighbour's case in Greece at the 1970's.    

 

ROMANIA

 

Population: 22.4 million

Capital: Bucharest

Republic

Currency: LEU

Unemployment: 6.6%

 

According to the EU commission Romania is advancing towards its goal to become an EU member for example by emphasizing efforts in child's rights issues, reducing discrimination and improving the minorities living conditions. Romania too has seen many constructive initiatives to improve the public governance and the justice system, but the gap between the legislation and its proper execution still remains problematic. Also the governance of the EU funding has raised doubt in the current member states.

 

The future challenge for Romania is to execute efficiently the reform, and to reduce bureaucracy and to develop the public governance more transparent. Organized crime and vast corruption is an everyday problem in Romania.

 

The commission thinks that Romania can be considered as a functioning market economy. Structural reform is thought necessary that Romania could survive the market pressure and competition in the EU.  

 

Since the Opinion (1997)[14], Romania has made good progress in adopting the acquis and more

recently, has also made progress in gradually building up the administrative capacity to

implement and effectively enforce the acquis.

 

Over the past year, Romania has made further progress in the vast majority of the chapters of