Speech/06/58 Danuta Hübner

Member of the European Commission responsible for Regional Policy

Warsaw, 3-February 2006

Ladies and Gentlemen

It is a great pleasure once again to address a Conference of the Group of Three. And I am particularly happy that you are meeting this time in my own country, Poland.

The subject you have chosen is a very emotive one. The debate on the ‘frontiers of Europe’ is rarely about geography, ethnography or even history, as normal people would expect. It is usually about foreign policy, security, governance and, unfortunately sometimes about prejudice.

Those of us who were brought up on this Continent learnt at school about Europe and therefore about its limits. They were always clear in the north, south and west but hazy in the east. We used to discuss whether Europe goes just to the Urals or all the way to Vladivostok. Of course the frontier in the south-west was unfortunate because it cut Turkey in two but that was just ’geography’ and we could not do anything about it.

Of course Europe was divided into two as well by the Iron Curtain, but this did not lead us in Poland ever to think we were no longer in Europe. It was however disturbing to note that as the European Community began to enlarge, people began to confuse it with Europe. One would hear people talk about ‘Europe’s Common Agricultural Policy’ or political leaders would declare that ‘Europe was completing its internal market’.

Naturally prior to the Polish election in 1989 and Hungary’s opening of the Iron Curtain, west Europeans could see an eastern border which was very clearly defined by barbed wire and mines. It was perhaps natural that many of them considered this border to be permanent and what was beyond did not concern or interest them. Fortunately 1989 changed all of this. The ‘Old Continent’ was reunited and some of the countries behind the Iron Curtain actually joined the European Union.

I think that no one should make the mistake of confusing the Union with the Continent again. This is why I would answer the question ‘what sort of Europe’, which is the title of this session, by saying it must be a free, peaceful, inclusive and democratic Europe, in which common European values are respected and promoted.

However would my answer be the same if the question had been ‘what sort of European Union’? I would like to explore this question a little further.

The great difference of course between ‘Europe’ and the ‘European Union’ is that while one is defined by culture, history and geography, the second is defined by treaties, policies and laws. While no rational human being could dispute that Poland was part of Europe, many people, some of them in high places and eminently rational, disputed that Poland could be a member of the European Union.

Pushing the frontier of the Union east from the river Oder to the river Bug could not change geography or history but it radically changed Poland and I think and hope that it changed the European Union.

But every enlargement has changed both the acceding states and the Union itself. At the first enlargement, Denmark, Ireland and the United Kingdom adopted the CAP and the Common Commercial Policy, changing trading relations with third countries and notably those with the British Commonwealth. Change appeared to be uni-directional, as always at enlargements. The new member states had to adopt the Acquis, while the EU appeared to survive unchanged.

But did it really? No set of institutions could remain unchanged by the accession of the British, even though the British themselves frequently demonstrate a remarkable resistance to change. Eventually the enlargement led to the creation of EU Regional Policy, which is now my portfolio in today’s European Commission. But it also changed the relatively cosy way of doing things which had existed amongst the original six member states.

Subsequent enlargements again saw the Union trying to resist changing in the face of new members but failing. The Iberians changed its relationship with the Mediterranean and Latin America, the ‘EFTANS’ brought more transparency and more democracy into the Union.

So it should not surprise us if the recent enlargement and indeed future enlargements change the nature and functioning of the European Union. The new member states will clearly contribute to answering the question, ‘what sort of Europe’.

I would like to illustrate this point by underlining three areas where the Union is changing; geopolitics, foreign relations and economics.

The new member states in central and eastern Europe have close relationships through history, culture and language with eastern Europe and parts of the western Balkans. Just as Spain and Portugal pressed for closer relations with Latin America, so the new member states are pressing the case of their neighbours in the east and south. This is natural and of benefit to the whole Union. This will also affect the Union’s relations with Russia, which in some of the new member states is not seen just as a neighbour and partner. The old member states will need to accept this and bear it in mind when developing the Union’s relationship with Russia.

In the foreign policy area the new member states have already shown themselves to be more Atlanticist than some of the EU-15. This comes from the history of the Cold War and from the sometimes large ethnic communities living in America. This characteristic is sometimes exaggerated and dramatised by certain member states of the Union. It certainly does not mean a blind support for American policy. It is true that the new members however tend to see no alternative to strong Euro-Atlantic foreign and security policy.

In the economic area, I do not feel that the new member states are instinctive liberals as some of our Union partners believe. Look at some of the labour codes or the role of the state in the economy and you will get a nuanced view of basic macro- and micro-economic policy. What makes the region different from western Europe is its capacity to adapt and change in the face of the need of rapid economic growth. This comes, to a large extent, from the experience of transition.

Rapid economic growth requires a high degree of flexibility in the economy and an open trading system as well as responsible macroeconomic policy. In spite of all the problems for citizens which economic transition and accession to the European Union creates, all the new member states have managed to reform successfully. On the latest statistics, Slovenia is now ahead of Portugal and on a level with Greece in terms of GDP per capita (measured in PPP) and the Czech Republic has also overtaken Portugal. Economic growth rates of the new member states have been around double that achieved by the EU-15. Yet still GDP per capita in the new member states is only slightly over half the average for the EU-25 and obviously lower still in relation to the EU-15 average.

The need to catch up with western Europe in income terms will force the new member states to continue to pursue relatively liberal policies and to resist protectionist policies in the Union. There may be periods where this does not appear to be the case but then growth will slacken and ‘catch up’ will be delayed.

Within the Union this means that in general the new member states will push for the completion of the internal market, including in services, and for the objectives of the so-called Lisbon Agenda. This however will be less of a change in direction for the Union than a return to first principles on which the Union was founded.

In this sense, the last enlargement is having a positive effect on economic development in the Union. It has focussed attention on the arthritic characteristics of some of the economies and is thus forcing politicians to address the problems now rather than in a few years time. In today’s world there are fewer places for inefficient or uncompetitive firms to hide than a decade ago and competition will get more severe. The answer for the new member states cannot be more protection, even if the wealthier member states could afford it for a short period.

The solution to the high unemployment rates in some of the core economies in the Union will be found in economic reforms, particularly on labour markets, in better education and training and higher investment in research and development. Introducing protectionist measures inside the Union which aim to raise the cost to enterprises of new investment in the new member states is no solution.

So it is clear to me that the last enlargement is bringing changes to the Union, its policies and the way it operates. But the new member states have moved far further towards the Union than the Union itself has moved. The conditionality associated with accession was never so strong as that applied to the central and east European countries. The new states had to meet the political and the economic conditions and take on the whole of the acquis communautaire. In my view, this was beneficial for these countries. But it means of course that all 25 countries are now working on the same legal basis and above all sharing the same values. If you look at the number of problems which have arisen through the non-implementation of the acquis since May 2004, it is an astonishingly small number given both the size and complexity of the acquis and the enormity of the reform process which these countries had to undergo to accede to the Union.

But if everything has worked rather well in the new member states, one must ask the question of whether the lack of reform in the Community institutions will not be the Achilles heel of the enlargement process. Today the Union of 25 appears to be working relatively smoothly with the current institutions and procedures. But of course further enlargement are on the horizon after Romania and Bulgaria join and this will put further strains on the institutions.

I am fairly sure that the Union will have to come back to some of the proposals made in the draft Constitutional Treaty in the coming years, if we are to avoid a loss of efficiency in the institutions. As a member of the Convention which drew up the Treaty, I guess I will be suspected of bias here, but I would maintain that our proposals in the area of institutional change make a great deal of sense.

I think that one of the great challenges for the Union is to remain open to European countries which meet the conditions for accession while reforming in such a way that effective decision-making is guaranteed. There are two sides to this challenge. On the one hand candidate countries must be rigorously assessed in terms of the Union’s conditionality to ensure that they share our values but also implement our laws. On the other hand we must return to institutional reform in the very near future to ensure that a Union of 30+ countries can operate decisively and does not degenerate into a talking-shop.

I am convinced that the Union must keep its doors open to European countries which are not yet members. There may be an alternative to membership of course which will satisfy some of these states, even though the experience of the European Economic Area does not bode well for alternatives. Excluding some countries by artificially drawing the ‘frontiers of the Europe’ will only create frustration and problems for the future. I hardly dare mention the word Yalta in this context.

I hope that the European Union will remain open and democratic, protecting human and minority rights and exporting its fundamental values throughout the world. I am convinced that this can only be guaranteed if our economic performance in the long term improves and we regain some of the dynamism which has been a characteristic of Europe’s post-war history.

Thank you