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Štefan Füle European Commissioner for Enlargement and Neighbourhood Policy The European Union and Eastern Europe: Post-Crisis Rapprochement?

Commission Européenne - SPEECH/10/728   06/12/2010

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SPEECH/10/728

Štefan Füle

European Commissioner for Enlargement and Neighbourhood Policy

The European Union and Eastern Europe: Post-Crisis Rapprochement?

Conference to celebrate the 20th anniversary of the Centre for Eastern Studies

Warsaw, 6 December 2010

Ladies and Gentlemen,

I consider it a great honour to be invited to inaugurate this conference on the occasion of the twentieth anniversary of the Centre for Eastern Studies and to be in the presence of so many distinguished speakers and contributors, under the honourable patronage of the President of Poland.

During its first twenty years, the Centre has made an important contribution, rejuvenating political and economic thought in this region of Europe, which I am proud to call my own. Your research, and the spirit of open and informed debate which you fostered by example, has helped us to make sense of a sometimes confusing and often frustrating time of transition. The dualism of Cold War geopolitics had the advantage of simplicity: what we see today is a configuration which is far less clear-cut - but in its own way even more challenging.

In its twenty years, the Centre has made a singular contribution to policy development in terms of support for democratisation and economic reform in Eastern Europe. Looking at the list of speakers on the agenda, I observe an impressive and truly global network of world class experts and practitioners in the field of foreign policy, and a base of knowledge and experience of societies moving forward from authoritarian socialism to democracy and a market economy. Your pan-European forum has made crucial contributions to this process.

In these twenty years the EU has changed. Its membership has enlarged, most dramatically to the east, though of course we should not forget that it was actually the accession of Finland in 1995 that brought the EU to the borders of Russia. The EU is now the largest single market, the leading trading and exporting power in the world and the second largest source of foreign direct investment. It is the largest global provider of development aid. And now, since the Treaty of Lisbon, the EU is setting up the tools to ensure that it has a stronger, unified voice on the international stage. Under the leadership of President Van Rompuy, President Barroso and HRVP Cathy Ashton, we see already the benefits of more coherence and continuity in EU foreign policy. The European External Action Service will soon be a reality: I am sure that we will see teething problems in the first months and years, as for any new body on this scale. However, I sense a real excitement about the project. I am confident that the EEAS will bring enormous benefits to the EU’s practice of foreign policy, broadening and deepening our experience base and giving more flexibility and scope to our relations with partners.

As we turn to the substance of today’s conference, I would also like to recognize the role played by the Centre in policy development that led to the Eastern Partnership. A lot has been written recently about the Eastern Partnership, and I am sure a lot will be said today – I will be interested to hear your views. I do want to stress, however, my firm conviction that the Eastern Partnership provides a new dimension to relations with our Eastern neighbours. In a well-publicized article last month, Paweł Świeboda wrote that the Eastern Partnership was a “mission impossible”. Well, with five sets of Association Agreement negotiations now under way, in addition to the other progress which has been made in crucial areas such as short-term mobility and institution-building, I hope at least we can agree that the mission has well and truly started…

Dear Guests, let me turn now to today’s agenda. I would like in these remarks to say a little about the context of our discussions, about the main themes of the conference, and finally about the development of policy in the EU, and in particular the Neighbourhood Policy which is my responsibility.

Let me start with the context. As the Iron Curtain opened, a whole new set of difficult questions were revealed, to be faced by governments, civil society and citizens in both the East and the West. Mass democratic movements could not drive forward permanent and stable change without a period of consolidation: discipline and sometimes advice from friends outside was needed to plan and build new constitutions, state institutions and new government bodies staffed with the right people. In many ways the greatest challenge of all was identifying which reforms were needed first and how they could be implemented legitimately and effectively. We all have lived through this in our own countries.

These questions mattered not only to governments and peoples in Poland or Lithuania or the Czech Republic; they mattered to close partners, of course, but to those further afield as well. This should come as no surprise - when Churchill made his original “Iron Curtain” speech in Fulton, Missouri in 1946 he spoke about the value of European unity, not only to preserve the safety of Europe, but also to preserve the safety of the United States. I recall this aspect in the knowledge that distinguished participants from the United States will be joining us today.

Let me conclude my remarks on the context: if we are no longer quite sure what is meant by “Eastern Europe”, or where it begins and ends, that is perhaps no bad thing. What is important is to recognize the variety of influences which matter, culturally, economically and politically: national and regional traditions, including those of ethnic minorities, neighbours both inside the EU and those outside such as Russia and Ukraine, but also increasingly Turkey and other regional players as well.

Broader global aspects should also be considered: contributing to a stable and prosperous future for this region is a challenge for the world at large. The active role of the G8 and the IMF in responding to the economic crisis in Eastern Europe is proof enough of that. Indeed, if the economic crisis has brought one obvious benefit it has been the painful but timely reassessment of our ideas about sound economic governance based on a very real risk of contagion to which co-operation is the only possible response.

Let me turn now to the themes of our conference. Distinguished guests, the programme includes in-depth reflections on three specific issues – the relationship of Russia and the EU, the transformation of Ukraine and the question of convergence in Eastern policy, linked to the Eastern Partnership.

As Commissioner for Enlargement and Neighbourhood Policy, my remit does not extend to Russia but let me make a few general remarks about EU-Russia relations. The relationship with Russia is distinct from that with the Eastern Partnership countries. It is a Strategic Partnership which recognizes very strong mutual interests and interdependence in areas such as trade, investments, and energy, and of course in facing common global threats. The EU’s overarching goal is to bind Russia into a rules-based international and multilateral order, including the WTO, because transparency and predictability are the key to good economic and political relations, and because Russia itself has an enormous potential contribution to make to strengthening global order.

We are currently making great strides towards the WTO accession of Russia. I am confident that the EU-Russia Summit in Brussels tomorrow will confirm this important progress. We are also negotiating a new, comprehensive EU-Russia Agreement, which we believe will better capture the potential of EU-Russia relations, which have been underperforming over the last years. It is also in our own interest that the modernization agenda set out by President Medvedev succeeds: to support this agenda, we are engaged in an EU-Russia Partnership for Modernisation. This partnership will cover critical economic areas like improving the investment and business climate and technical standards, contributing overall to modernization and transparency. At a broader political level, the Partnership for Modernization will address issues such as strengthening the rule of law, fighting corruption and judicial reform.

In the foreign policy field, our policy recognizes an obvious truth: we need cooperation with Russia in order to be able to tackle the main international issues of the day – in international economic co-operation, in security, in climate change, in resolving regional disputes – in particular those in our common neighbourhood - and in other aspects of global governance. Accordingly, we must engage with Russia to advance our interests and defend our values.

Finally, in taking forward what can be a positive and highly beneficial dialogue with Russia, we need to recognize that the psychological process of reconciliation following the Cold War has to run its course, and of course this aspect has a particular resonance in Poland. Recent Polish-Russian efforts in this respect are of crucial relevance here and I hope further progress will also be possible between Russia and its other neighbours.

Let me say a word now on Ukraine, which is the second specific theme of the conference. I believe we have set out our approach very clearly. An Association Agreement linked to a Deep and Comprehensive Free Trade Area will create economic opportunities in Ukraine and will promote real integration with the EU and, not just on an economic level. Two weeks ago, the EU-Ukraine Summit reconfirmed our joint commitment to complete negotiations in 2011.

When you consider that we have now been able to announce a concrete Action Plan towards visa liberalization, the prospects are very positive. But I must also sound a note of warning: Ukraine has to implement real reforms to benefit from the possibilities which lie ahead. The possibility exists to deepen political relations between us at every level and in every sphere, but this must be based on common values such as respect for human rights and democratic principles. Some people in Ukraine do not understand that the attainment and preservation of political stability need not and must not be in contradiction with the promotion and protection of fundamental rights, or that the overall pace and depth of rapprochement with the EU will depend on clear and verifiable progress in this area.

The economic crisis hit Ukraine badly – in terms of balance of payments, in terms of the budget deficit, in terms of negative growth and in terms of a real threat to the stability of the banking sector. All these aspects have been addressed in the IMF Standby Arrangement which will be supported by an unprecedented EU macro-financial aid package of €610 million. But long-term recovery and the sustained growth that is needed to boost public revenue depend on action, which only Ukraine can take itself – to reform the taxation system, to improve budgetary planning, to strengthen financial supervision and above all to improve the business climate, which is so often shown by independent reports to be a major constraint to growth. Ukraine has taken the decision to link these reforms to an ambitious process of regulatory approximation with the EU, through the Association Agreement process.

Your debate may well question whether such an effort is worthwhile for Ukraine without a membership perspective and without a larger volume of financial assistance. We have to operate within the limits of the political and economic climate, certainly, but that is not the end of the matter, and there are some further aspects to this issue which should be stressed:

Firstly, we never prejudge future developments in EU-Ukraine relations. In other words, we should be as ambitious as possible in driving forward real integration and reform within the framework we have, and success in doing so will be the best possible encouragement to further deepen relations. In this way we are effectively building a solid foundation of European Union values and norms in Ukraine itself.

Secondly, we should do our best to build on the favourable political atmosphere towards EU integration in Ukraine. This was recognized by the European Parliament in its resolution of 25 November which welcomed the consensus statements by the Ukrainian Government and political opposition on Ukraine's aspirations with regard to its path towards European integration and its long-term ambition to become an EU Member State.

Thirdly, EU financial aid is not the only resource to support reform. We are encouraging stronger participation from International Financial Institutions, especially in energy, infrastructure and in boosting the availability of credit to entrepreneurs, and I am pleased with the results. Of course, I will continue to fight for funds to support the Eastern Partnership, but we should not forget significant domestic sources of revenue, and the enormous potential for Ukraine to boost levels of private investment and tax revenue through overdue reforms to economic governance. We should not neglect either the compelling arguments to work harder on aid effectiveness issues.

To achieve higher political goals, Ukraine and its friends need to win hearts and minds. Let me add to these remarks an observation from my own experience. I know that my country’s perspective and pathway towards EU membership depended on three critical factors. Firstly, the need for advocates and supporters beyond our borders, because integration is a political process, and not just an economic and legal one. Secondly, a recognition that our reform agenda coincided with that of our neighbours and that working together would bring benefits for all. This is why the Eastern Partnership is so important and why Ukraine should play a leading role there. Third and most importantly, a commitment from within my country was demonstrably shared by different strands of political opinion. We all believed that sustained and viable development would only come if we could set the conditions for democracy, for stable governance, and for growth. For this to happen in other contexts, we need government and opposition to come together on core common endeavours such as constitutional reform.

Dear Guests, The third theme of the conference focuses on the role of Germany, and in particular visions of development of the Eastern Partnership. I know that Germany is fully behind the Commission’s efforts to make the Eastern Partnership a success. Indeed, I would like to quote some words from Foreign Minister Westerwelle, whom I joined recently at the Eastern Partnership Civil Society Forum. I think these words express very eloquently indeed the values at the core of what we are trying to achieve:

“Freedom, democracy, the rule of law and human rights are pan-European values. They bind us together, within the European Union and beyond….it is in the interest of us all that our neighbours also share these European values. The aim of the Eastern Partnership is to create a pan-European area of freedom, security, justice and prosperity. The European Union seeks to build on friendship with all its neighbour states.”

I consider Guido Westerwelle’s vision sets the scene perfectly for our consideration of this issue: as you know, we are consulting now on the future of the European Neighbourhood Policy, focusing on four main issues: firstly, what should be our vision for the ENP within a 10-15 year horizon? Secondly, what should be the medium-term objectives we pursue, during the term of this Commission? Thirdly, what can we improve in terms of our instruments and resources? Finally, what should be the regional specificities within our neighbourhood? I firmly believe that a tailor-made approach towards our neighbours must remain a key characteristic of the ENP. I am also convinced that the ENP should promote co-operation among ENP partners, particularly in the context of the Eastern Partnership and the Union for the Mediterranean which are the main, although not the only, ENP regional dimensions.

With the Eastern Partnership the EU has established an ambitious agenda for deepening relations with the six Eastern partners, both bilaterally and as a group. Looking back on the time since the Prague Summit, I welcome the progress made on establishing new contractual relations through Association Agreement negotiations, and in intensifying multilateral co-operation. I am particularly pleased by the level of involvement of non-state actors, though there is always room for improvement. As a next step, the ENP review offers us an opportunity to look at these first achievements and prepare for the Summit in Budapest next May.

During these processes, I call for realism. We need to recognize that the Eastern Partnership is still in its infancy and that the various partners will need to reconcile different expectations and goals – I believe this is normal and healthy. Certainly, gaps exist between the partners’ expectations and what we in the EU can offer. These cover for example the extension of the four freedoms to partner countries, and in particular the concerns of some EU Member States when it comes to the freedom of movement. I certainly hope that the EU will be more generous on short-term mobility with those countries that take credible steps to control their external borders and meet other preconditions. Visa liberalization is without doubt a subject that unites opinion across the political spectrum in Eastern neighbouring countries and which can help the EU to capture the hearts of citizens. I believe the Action Plan launched at the EU-Ukraine Summit on 22 November is a very important milestone in this respect.

Another is of course financial allocations, which I already touched on in relation to Ukraine. Here I reiterate my personal view that financial allocations should be much higher for those countries that undertake real reforms when implementing Association Agreements and their DCFTAs, which involve taking over significant parts of the acquis.

This brings me to the issue of differentiation, which is often raised when the Eastern Partnership is discussed. It is easy to speak in generalities, but let us consider the concept in relation to the concrete negotiations of an Association Agreement. These agreements are indeed special, and an innovation for the EU’s relations with third countries, because they include binding commitments for partner countries to approximate with the EU acquis, both in order to gain new access to our markets, and also to allow for broader economic and social integration in line with the policy priorities of the countries concerned. The different state of the legal framework, and the different state of institutions in the five countries concerned, mean that such differentiation is unavoidable.

With Ukraine we have been negotiating since 2007, with the Republic of Moldova since the beginning of 2010 and with Georgia, Armenia and Azerbaijan since this summer. These negotiations are highly complex and demand intensive work by experts on both sides. I want to stress one aspect, and that is that we support a coherent approach but not a uniform approach. Certainly we have a core of EU norms and standards, which we believe should be taken on board, if reforms to which partners are committed are to be successful and linked to EU integration. That means that for the most challenging and complex commitments we negotiate not only the timescales needed, but also the sequencing of different actions and also where appropriate special arrangements where both sides believe a partner country’s institutions are not yet ready to take the necessary steps.

So I believe we are making some useful progress on substance. But this does not mean that we should throw away our ambitions. I recognize the calls on many sides for a more political dimension to the Eastern Partnership. However I do not share the analysis that what we are doing now is just “business as usual” or simply a push for reform offering little in return.

The fact is that deepening the links between EU institutions, the Member States and our neighbours, including at the level of civil society, will have a transformational effect in our partner countries and a political impact on both sides. Even more so, real and tangible progress with reforms will boost confidence and encourage politicians to take bolder steps. Why should this be so? Because effective reforms indicate a shift in values, and the EU is, at its heart, a Community of values.

This commitment to basic values explains why there are some red lines on our side, and why our approach has to be tailored to individual circumstances. In the case of Belarus, for example, we cannot engage fully without clear movements towards democratisation and respect for human rights. On the other hand, we cannot walk away from engagement. EU support for civil society in Belarus will be enhanced, and we will work to facilitate people-to-people contacts. These contacts will serve us well in providing a foundation to take more ambitious steps when the circumstances allow. Progress in the conduct of elections in Belarus will determine how far and how fast we can go in engaging in a reform agenda.

I am pleased to inaugurate today’s conference. I am looking forward to today’s exchange of views and expect to learn a great deal.

Thank you for your attention.


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