Europe’s next transformation: Enlargement and the future of the EU

Athens 20 October 2006

ELIAMEP organised a lecture by Mr. Olli Rehn, Commissioner for Enlargement on Europe’s next transformation: Enlargement and the future of the EU. Read the transcript of Mr. Rehn’s speech…

It’s a pleasure to be here at ELIAMEP, which has so often hosted key debates in the EU’s history. I would like to thank you for the opportunity to discuss “Europe’s Next Frontiers” with you. I have recently published a book on this subject. It is not an academic exercise but instead an effort to communicate on Europe, to practise what I preach. You won’t be surprised to learn that it is partly about enlargement. But it is also about the wider malaise afflicting Europe. I find the contemporary debate to be characterised by defensiveness, and a lack of the economic and intellectual openness that has been Europe’s fundamental strength since the age of the Enlightenment.

Seldom has this kind of ostrich attitude – of putting one’s head in the sand – carried the day. Instead of limits and borders, the debate on the future of Europe should focus on the next frontiers of the European Union.

Borders are restrictive. Borders limit our minds, chain actions, and reduce our influence. Frontiers are innovative. Frontiers free our minds, stimulate action, and increase our influence. Frontiers are much more substantive and functional – even mental – than geographical. Our challenge is not to close gates but to open new frontiers. We need a positive but practical vision for a better Europe. What are, then, the new frontiers of Europe? Let me focus on three of them.

The first frontier, and the most urgent challenge for Europe, is to rebuild confidence in the European economy. We have to improve our competitiveness and innovative capacity to enhance job creation and to raise employment rates.

The internal market has liberalised European economies and created the biggest economic area in the world, reaching 500 million consumers when Bulgaria and Romania join our European family in January 2007. The latest enlargement round has been an economic success. It has boosted growth and created new jobs in the European economy – not least here in Greece.

Yet employment is the key challenge to most of the European economies. To enhance job creation, we must improve the employability of Europeans by investing more in education and training and conducting labour market reforms that enhance flexibility and security.

Many citizens oppose such reforms because they believe that the reforms only mean flexibility but not security. We should show them that the reforms can achieve both. It is no coincidence that the economies that have emerged as winners in globalisation, such as the Nordic countries, are open and knowledge-based economies that long ago adjusted to internationalisation. They have managed to combine permanent policy adjustment with educational and social inclusion.

I am encouraged that the Lahti summit is focusing on the key issues of innovation and economic renewal. We need to tackle two issues simultaneously: to create more idea-generated jobs, on the one hand, and to ensure that Europeans are educated and trained to be employable in those jobs, on the other.

The second frontier is the political revival of Europe. Debate about how to make this revival happen should avoid false dichotomies, such as economic versus political Europe, or deepening versus widening.

It is often customary to maintain that the EU should develop only as a large free trade area, without strong political integration. That is a fallacy which is not backed by empirical evidence. There would not have been any Single Market of 1992 without the Single European Act of 1986, which extended qualified majority voting.

We need both an economic Europe and a political Europe. We need economic reforms to enhance competitiveness, and political reforms to make the Union more effective and democratic. These go hand in hand.

Widening versus deepening is another false dichotomy. History has proven that further political integration and rounds of enlargement have mostly gone in parallel. Since the 1980s, the number of EU members has more than doubled from 12 to 25, while the Union has simultaneously taken major steps towards deeper political and economic integration by establishing the single market, the single currency and reinforcing the common foreign and security policy.

Deepening and widening can continue in parallel. If it concentrated solely on deeper integration, the Union would fold in on itself. If it focused only on enlargement, the Union would simply become too weak.

Accepting the differentiated integration, or the principle of enhanced co-operation stated in the treaties, is important. This principle is not something new that was invented just because of enlargement. We would not have the Schengen zone of passport-free travel or the single currency without it. Differentiated integration has enabled the Union to maintain dynamism by allowing some Member States to pursue a project that is later adopted by all. But any such future project – e.g. in justice, liberty and security matters – should be open to any member state willing and able to participate in it, and it should be decided in the EU framework and respect its decision-making rules.

The third frontier is to extend the European zone of peace, liberty and prosperity by better projecting the EU’s soft power, especially through a gradual, rigorous and carefully managed accession process.

Therefore, we need to build a new consensus on enlargement, which recognises the added value of enlargement while ensuring the Union’s capacity to function. The challenge for the EU is to improve the functioning capacity of the current EU now, not only planning for a more abstract absorption capacity in the distant future. That’s why the EU needs to work for the economic and political revival, and not make enlargement the scapegoat for domestic failures.

It is in this context that President Barroso clarified recently his view that a new institutional settlement should have been born by the time the next member is likely to join the Union. While we prepare internally for further institutional reforms, the gradual and carefully managed accession process continues with the countries of South-eastern Europe – after Bulgaria and Romania, with Turkey and Croatia, and the other Western Balkans countries. We are cautious about taking on any new commitments, but we must stick to our existing commitments to these countries.

Some people in the enlargement countries interpret this as a sign of the EU weakening its commitment. No, the commitments are as strong as ever – and the European Council has recently confirmed this. However, it is also perfectly normal that, every time we welcome a new member to our family, we want to ensure that the house is comfortable and functional for everybody. In other words, the EU must be able to effectively continue to deliver its policies. This is nothing new – rather, it was also the challenge in all previous enlargements.

On 8 November, the Commission will set out in a report the areas that the EU will have to consider over the years ahead to ensure that it can continue to function effectively as it also continues to enlarge. Our concept of absorption capacity is functional rather than geographical. We have to consider the homework that the EU needs to do, as well as the work that the future members are undertaking to meet the rigorous requirements for accession. We take this issue very seriously, because the EU must function well, both for its future and its current members.

Rigorous conditionality combined with the incentive of a credible EU perspective provides the EU with a strong leverage for reforms. Conditionality works. Bulgaria and Romania have responded strongly to our policy of conditionality. This has resulted in a remarkable transformation, with reforms peaking in Romania over the past 18 months and Bulgaria over the past six months. Without the incentive of EU membership, Croatian General Ante Gotovina would not be behind bars in The Hague, nor would Orhan Pamuk necessarily be a free man.

Ladies and Gentlemen,
That preparatory work by the enlargement countries has great value in itself, because it offers them the opportunity to transform themselves while preparing to join. Enlargement has proven to be one of the most important instruments for European security.  It reflects the essence of the EU as a civilian power; by extending the area of peace and stability, democracy and the rule of law, the EU has achieved far more through its gravitational pull than it could ever have done with a stick or a sword.

The biggest benefit of the enlargement process is the EU’s ability to help the countries to stand on their own feet. The EU will have to be engaged in the Balkans, whether we like it or not. It is much more effective and cheaper to keep these countries on track by offering them the accession process than to run international protectorates and military occupation in the region. We also have an unparalleled opportunity to influence Turkey’s development, ensuring an open society with fundamental freedoms there and building a sturdy bridge to the Muslim world. A more European Turkey is also in our interests, given the country’s significance as an anchor of stability in a troubled region.

Finally, a point on the relationship between commitments, credibility and conditionality – and the reforms in the candidate countries.  What is the best strategy for the EU to deal with Turkey?

Simply, we should be both fair and firm. We should be fair and uphold our commitment to give Turkey the chance to show whether it can meet the accession criteria. We should be firm by maintaining rigorous conditionality, which is the driver of reforms and modernisation in Turkey.

Hence, the burden of proof is on the Turkish side.  Turkey knows there is no shortcut to Europe, only the well-trodden road towards meeting the rigorous conditions for accession.
Those who talk continuously about privileged partnership are creating a vicious circle of reversed commitment, weakened conditionality and stalled reforms. By keeping our word and sticking firmly to the accession perspective, we can create a virtuous circle of credible commitment, rigorous conditionality and reinforced reforms.

If we want to have a European Turkey, and have it on our side, it should be obvious which option we must choose. I would like to conclude by reminding you of the words of Robert Schuman in 1963: “We no longer fortify the frontier, there is no longer any Maginot line, this marvellous illusion behind which we foolishly sheltered ourselves.”

Instead of working on building more fortifications, let’s make the EU fit to reach out and embrace its next frontiers.

Thank you for your attention, and I look forward to your questions.