Download new neighbours

Beyond enlargement: The
EU’s “new neighbours”
Ben Slay
Director, UNDP Regional Centre
Bratislava
UNECE Executive Forum:
Competing in a Changing Europe
11 May 2004, Geneva
Key challenges
after 1 May

For EU-25:
– Internal governance reforms
– Lisbon “knowledge society” agenda

For new EU states:
– EMU accession

Easy for Baltic states, not so for Central Europe
– Absorption of structural, cohesion funds

For both: Trans-border “new neighbour”
issues in Western CIS, Balkans
Who are the EU’s
“new neighbours”?

EU “hopefuls” in SEE:
– Countries now negotiating for accession:
Romania, Bulgaria, Croatia
– Preferential access to EU markets: these
countries plus Turkey, Western Balkans

Western CIS: Russian Federation,
Ukraine, Moldova, Belarus
– No “date for a date”
– No preferential access to EU markets
How do they compare?
Preferential No preferential
EU market
EU market
access
access
“Date for a
date”
No “date
for a date”
Bulgaria,
Romania,
Croatia
Turkey,
Western
Balkans
XX
Russia, Ukraine,
Belarus, other
CIS
How competitive are
these economies?

Potentially: very competitive
– GDP growth exceeds EU averages

Particularly in Western CIS countries
– Low unit labour costs
– Locational, logistical advantages

Key: preferential access to EU markets
– SEE countries have it, CIS countries don’t
Result: Different
patterns of integration

South East Europe:
– 60-80% of SEE trade with EU-25
– Since 2000 SEE has attracted significant FDI from
EU-focused multinationals
– Repeat of Central European experience? FDI-led
restructuring of manufacturing, energy, finance

Western CIS:
– Russian Federation is largest export market, source
of FDI (smaller levels)
– EU markets very important for Russia, but largely
for energy exports
It’s also about crossborder issues . . .

Migration:
– Legal (labour force growth)
– Illegal (trafficking)

HIV/AIDS, TB
– HIV prevalence rates much higher in Western CIS
than new EU members

Environment/international waters
– Tisa River basin
– Baltic Sea

Organised crime
. . . And about governance

State sector—Good governance means:
– Decentralisation, to empower regions,
municipalities, communities
– Public administration reform, to modernise state
structures, make them market friendly
– Tax reform, to broaden tax bases, reduce grey
economy, promote MSMEs

Private sector—Good governance means:
– Corporate governance reforms, to improve
investment climate
– Public-private partnerships (e.g., IT sector)
Conclusion: New
challenges for EU-25

Will “Schengen curtain” bring new barriers to
free movement of goods, services, people?
– Will “European anchor” move eastward?

Challenges for EU-25:
– Reduce de facto trade discrimination against
Western CIS countries
– Don’t close EU’s eastern border to labour flows
from “new neighbours”

Challenges for “new neighbours”:
– More reform
– Better governance