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Olli Rehn

EU Commissioner for Enlargement

Future of EU Enlargement in South-East Europe

EU Observer Conference Western Balkans
Brussels, 3 March 2009

Ladies and Gentlemen,

The year 2009 marks a historic double-anniversary. Twenty years ago, we saw the Iron Curtain crumble, and peaceful democratic change transform central and Eastern Europe. And in May this year, we celebrate the 5th anniversary of the latest enlargement that brought in altogether 12 new Member States.

Today, we are pursuing our enlargement policy in a context where the global economic crisis has shaken deeply our economies and taken centre-stage in both domestic and international politics. The European Union has launched a recovery plan, aimed at stimulating the economy by a coordinated and tailored injection of 200 billion Euros, or 1.5 per cent of the EU’s GNP. Together with the so-called automatic stabilizers that are substantial in European welfare states this amounts to over 3, almost 4, per cent of GNP.

Those of us who are based in Brussels have enough experience with rainy clouds to know that most of them have a silver lining: The solidarity and swift support shown for certain troubled member state economies has illustrated very clearly the value of EU membership – and, not least, of the Eurozone.

This is an important signal and incentive for today's enlargement countries, to press ahead with their own membership preparations. Moreover, they already benefit from EU crisis support.

Regarding the candidate countries and potential candidates for EU membership in South Eastern Europe, 150 million Euro have been set aside in the EU Recovery Plan to support their economic stability and development which should leverage around 600 million Euro in loans from international financial institutions. The European Investment Bank, the European Bank for Reconstruction and Development and other financial institutions are also contributing with amounts that have been significantly increased to a total of about 5.5 billion euro in 2009.

In addition to the economic recession, the ratification of the Lisbon Treaty weighs heavily on the minds of European leaders these days. We need the Lisbon Treaty to make the current EU function better and deliver the results its citizens expect. This is clearly a priority for the EU, but it does not mean that our important work in other areas should be put on hold.

While the EU pursues its institutional reform, we will keep on working in parallel on a carefully managed and gradual accession process in South East Europe.

Against this background, it is worth reminding ourselves why the people of the Western Balkans are so keen to join our Union.

Like in Central and Eastern Europe before, the European perspective of South East Europe has already proved a formidable transformational force. The region is part of Europe and we have common security, economic and energy interests. And let us not forget about the region's citizens: They, more than anything, want a European future.

EU Membership brings benefits that we often take for granted. Joining the EU is about personal freedom. The Western Balkans today are entirely surrounded by the EU - yet e.g. Serbs or Bosnians, cannot travel to their EU neighbours without often cumbersome visa procedures.

The freedom to travel matters enormously to the citizens of the region. That is why the Commission is pursuing dialogue on visa liberalisation with the Western Balkans. The countries that are the most advanced in meeting these conditions could see visa restrictions lifted by the end of this year.

Croatia's citizens already enjoy visa free travel to the EU. Furthermore, Croatia is currently the country closest to EU membership. Accession negotiations are at an advanced stage.

In November, the Commission presented Croatia an ambitious indicative roadmap for how to reach the final stage of the negotiations. I welcome that the country has taken up this challenge: Croatian government is pressing to complete its preparation in the various chapters by the end of 2009, as foreseen in November's roadmap.

Croatia has made plenty of progress. Croatia knows, however, that it needs to deliver still more to meet the benchmarks in the negotiations, especially on its fight against organised crime and corruption and restructuring its ship-building industry.

Judicial and administration reform is of critical importance. The EU can only function properly when the rule of law applies. That is why more progress in Croatia on these cross-cutting issues is essential. This is first and foremost in order to improve the everyday lives of all Croatian citizens by guaranteeing their rights, and ensuring that justice prevails.

But these reforms are also necessary if Croatia is to fully benefit from EU policies as a Member State and adequately apply EU law. Deficiencies in these areas can have a knock-on effect on economic issues, as they hamper the development of the private sector, foreign investment, and enforcement of property and creditor rights.

Providing a satisfactory model for restructuring of the shipbuilding sector is also of high importance for both the Croatian economy – such an important sector needs to be economically viable for the sake of the overall economy of the country – and the EU internal market as a whole.

Ladies and Gentlemen,

We have just been positively reminded of the importance of conditionality and thorough preparations for accession. This was the main message of the comprehensive study on the economic impact of the latest 2004/2007 enlargement, which Commissioner Almunia and I presented on 20 February.

This study shows that the Eastern enlargement strongly boosted the economies of the new member states. At the same time, it also benefited the economies and job creation of the old ones. To illustrate this with a concrete example: trade between the old and new member states grew almost threefold in less than 10 years. An even more illustrative is the fivefold growth of trade among the new member states themselves.

This is a key factor explaining why, since 2004 until the current financial crisis broke out, there was a robust 1,5% annual growth in employment in the new member states – which went alongside strong job creation in old member states, about 1% per year.

This did not occur either naturally or by chance. Instead, it was the result of thorough preparation and of bold legislative and economic reforms. These factors made EU enlargement a win-win situation.

I am determined to keep it this way, so that Croatia can carry its obligations and meet the challenges of the EU's single market from day one as an EU member state.

The Croatian government also knows that the EU is concerned of the level of cooperation with ICTY. On this matter, we are in close touch with Chief Prosecutor Serge Brammertz and we strongly support his work. Full co-operation remains a necessary condition to move ahead in negotiations.

As you know, to our regret, the border issue with Slovenia is currently blocking Croatia's progress in the accession negotiations.

We have put forward a proposal for a certain kind of European facilitation, which should help solving the border issue and allow continuing Croatia's accession negotiations. All previous attempts to resolve this issue have failed over the past 18 years.

Since I cannot see another viable way forward, I expect a positive response to our initiative by both countries, without such impossible conditions that would effectively imply its rejection. Otherwise I am concerned that Croatia may be prevented from concluding its accession negotiations in the envisaged timeline.

But I don't want to paint the devil on the wall yet, and I try to remain confident that such realism will prevail that would allow Croatia to conclude accession negotiations in due time – provided that all legitimate conditions are met, of course.

If this realism of the will sounds too Nordic in the context of the Balkans, I am glad to confess my cultural prejudice and to elaborate on the merits of the Nordic way of rationalism over emotionalism in the construction of Europe.

Ladies and Gentlemen,

To conclude, enlargement has served as a driver of liberty and democracy and an anchor of peace and prosperity in Europe.

We, on the EU side, are advancing our enlargement agenda in the troubled context of the economic crisis and other political challenges. In the same way, the Western Balkans have to push their European agenda forward to face the challenges we share.

Let me wish Croatia the best of success in its European endeavour which we share. – Thank you for your attention.

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