The Debate continues: Serbian membership of the EU or EEA?

As a follow up to my comment on Boris Begovićs suggestion that Serbia should join the EEA rather than the EU, NIN has published a series of responses. These include a clarification by Boris Begović, a comment by Boško Mijatović sand Miroslav Jovanović. The latter two I am including below.

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I am pleased that NIN is glad to see a debate gowing, so there will be further comments by Suzana Grubišić, the Minister for EU Integration and a representative of the EU delegation.

Quiet interestingly, this debate is going on in parallel with the debate of the UK-exit/referendum. Here, similar arguments have been made about the Norwegian model. Here, a comment published on Open Democracy is instructive, as it makes some similar arguments I am making for Serbia. Below is my response for NIN in a slightly longer version than the Serbian text that will be published shortly.

I am glad that my response to Boris Begović’s article has triggered a number of responses and is leading to a useful exchange. However, I regret that sometimes the tone of the responses descends to insinuations that is neither helpful not appropriate. I used the term “shortcut” for membership in the EEA, not because of some kind of Balkan stereotype, but simply because EU membership and the negotiations require profound reforms that are crucially important for Serbia. The alternative proposed by Boris Begović is to me neither realistic nor desirable.

Miroslav N. Jovanović suggests that the EU is not very attractive, with foreign debts rising, agriculture destroyed and people migrating. This is a very one-sided view. The foreign debt in new member state did not rise because of EU membership, but due to the global economic crisis. The fact that people migrated is also in part a result of EU membership and not necessary a loss for a country (he should know better, being a UN diplomat in Switzerland) : many have come back with money and new skills, as has been the case with Poles that left for the UK in 2004 and came back.

Of course, the EU and the members have many problems. However, to blame the EU for all of them is simplistic. While many EU citizens are skeptical towards the EU, and despite having undergone a deep crisis, only the Great Britain and Eurosceptic parties on the extreme left or right are playing with the idea of leaving the EU. This is telling that most EU citizens consider it better than any alternative.

Second, let me know outline why I think EEA-EFTA membership is not a likely alternative for Serbia.  Boško Mijatović is right to point out that EFTA has signed a free trade agreement with Serbia. However, this is not evidence for a possible Serbian membership. Some 33 countries around the world have also signed a Free Trade Agreement with EFTA, including Columbia, Ukraine, Mexico and Singapore, hardly plausible candidates for EFTA membership.

The 2012 EU report on relations with Norway, the most important EEA partner, notes that “EEA membership entails either EFTA or EU membership. Until now, the EFTA states have not wanted to enlarge EFTA.”  Thus, unlikely the EU which has a commitment to enlargement, EFTA has none. It is thus hard to see why EEA membership is more likely than EU membership.

In addition, the responses suggest that the EU is setting unfair political conditions that Serbia is unwilling to fulfill (the only concrete example given is Kosovo). It is not clear why the authors believe that the EU member state would not insist on these conditions to join EEA. Consider that membership in the EEA entails freedom of movement: i.e. citizens can take a job anywhere in the EEA, one can expect EU member state setting high criteria, including political demands.

Next, does EEA membership reflect Serbia national interests? Being an EEA member means that much of EU law needs to be implemented, but there is no ability to influence the content. The relationship is not that different than during the accession when future members adopt laws, but don’t sit at the negotiating table. It is no surprise that the EU noted that the “EEA Agreement is best suited to small states, which are accustomed to having to adapt to others and have no particular desire to influence developments in Europe.” I also do not consider the EU to be a ‘humanitarian organisation’, but the EU provides substantial financial support to many member state that, if well used, can have tremendous impact.

Finally, Kosovo. Boško Mijatović suggest that EU is a good trader and demands that Serbia gives up part of its territory for nothing in return. Two points :  The EU  has not demanded Serbia to recognize Kosovo. The EU has asked for the normalization of relations which does not need to entail recognition. While some individual officials from EU member states have asked for Serbia’s full recognition, this is NOT EU policy. Second, some of the polemics and other comments suggest that Serbia has to ‘give up’ Kosovo for the EU. Who is being unrealistic now? Kosovo is not under Serbian control (except 15% in the North), it is recognized by nearly 100 UN members around the world. Kosovo’s independence is a fact and will not go away. It is good advice of the EU to Serbia to come to terms with this reality. It seems a folly to foresake EU membership for the fiction of Kosovo. This brings me to the comment by Miroslav N. Jovanović.  His suggestion that the EU would ask for an independent Vojvodina or “Raška” is totally unfounded and belongs to the horror cabinet of extreme nationalist ideology and merits no further comment.  His argument that there are 1890 possibilities of a veto and thus it is hopeless to even start negotiations is unfounded. First, his math is wrong, because from July 2013, there will be 28 member states, not 27. Croatia had 1890 possible vetoes and it took 5 ½ years (October 2005 to June 2011) to conclude its negotiations. That is long (too long), but not impossible. Yes, Kosovo will make it more difficult for Serbia, but there is no reason to believe that negotiations would take substantially longer.

Europe without the Union

Below I am publishing the original text in English by Boris Begović (which he kindly provided) to which I posted a comment yesterday. I will also posted a response to my comment by Boris Begović, both of which will be published in NIN in the coming weeks and I am glad to open my blog to this debate and welcome also further contributions.


Boris Begović

Europe without the Union

Serbia should abandon the path to EU accession, that is has taken, for several reasons. (1) After the accession of Croatia, enlargement of the EU is postponed indefinitely, or at least for a long time. New membership should not be expected until, let’s say, 2023. (2) The question is how the EU will look like in ten years, having in mind increasing political crisis that is happening in the EU, resulted from efforts to resolve the issue of sovereign debt of its member states and structural adjustment of the Eurozone. It is most probable that, in ten years’ time, a completely different community can be expected, for example, a community of concentric circles where the outskirts would be much less integrated than the central countries. The future of British status in EU integrations will have a significant influence to the future structure of the community. (3) These two reasons indicate that EU membership at this point is a „moving target“. Serbia simply does not know what to „aim at“. (4) Our insisting on EU membership, through existing channels for accession creates extraordinary possibilities for EU member states to create political conditions for Serbia and its Government, which has little or nothing to do with the Copenhagen criteria; instead it is mostly formulated through insisting on good neighborly relations, which means, more or less, implicitly or explicitly, the acknowledgement of Kosovo independence.

Instead, Serbia should ask for membership in the European Economic Area (EEA), an institution solution based on full economic integration which is not follow by political integration. It includes four basic freedoms that currently exist in the EU: free movement of goods, services, capital and persons. Basis for EEA membership is access to a unique market, based on a customs union and other institutional solutions that enable full freedom in movement of goods, services and capital. EEA member state takes over the obligation to harmonize its regulations in the area of movement of goods, services and capital with the EU regulations, without having the possibility to influence them. Due to that, this type of arrangement in Norway, which is the largest member state of EEA (only), is called „fax democracy“. Free movement of persons is enabled through accession to the Schengen Agreement, which is not mandatory when joining EEA.

This type of arrangement would provide Serbia with full integration to the European economic area and strong competitive pressures on a unique market, which would create incentives for economic efficiency of companies and institutional certainty regarding free movement of goods essential for export oriented business ventures, which are necessary for Serbian economic growth. In such circumstances, where no one is privileged, business circles would have incentives to strongly influence domestic Government to implement institutional reforms in order to improve business environment in the country thus increasing competitiveness of domestic economy. That kind of influence would be strong and sustainable – which is better than conditions coming from Brussels, that are directed towards the resolution of their own problems, such as the project „Independent Kosovo“, and not ours, such as bad business environment.

Through this type of arrangement, in comparison to full membership (under present conditions), Serbia would lose: (1) donations from the EU Budget and (2) the possibility to influence politics that is being created in Brussels which needs to be applied in Serbia. The first loss is not so big. New EU member states currently get though (net) transfers around 1.1% and 1.8% of their GDP (except in the Baltic States). This is very, very small amount. And it is not even certain that this will exist in the new budget. The second loss practically does not exist. The existence of any possibility for Serbia to influence politics in Brussels is close to zero. The number of people that would represent Serbia in Brussels is not to be confused with their negligible influence, which would not depend on them personally. However, if somewhere in the future it is estimated that this level of integration is not sufficient and full integration is needed, the accomplished economic integration will not represent an obstacle – on the contrary.

In the area of diplomacy, through this proposal Serbia would start having active relationship with its European partners, and not just fulfill their ideas. I believe that some stakeholders in Europe would not like it, but they could do no other thing than to respect this shift.

It just needs to happen!


This text was published in NIN, December 13, 2012

The President of Center for Liberal-Democratic Studies and Professor at the Faculty of Law, University of Belgrade

No shortcuts to Europe

Here is a small letter I recently sent to NIN, regarding a comment in December, but I am not sure it will be published. It comments an idea Boris Begovic launched namely that Serbia should no join the EU, but instead join the European Economic Area. The original article is behind the NIN paywall, but this idea is also discussed in B92, Vecernjie Novosti and elsewhere.

Cartoon from Novosti, 29.12.2012

In his comment “U Evropu bez unije” on 13 December 2012 Boris Begović makes a tempting suggestion: Serbia should abandon the difficult accession process to the EU with its supposedly changing criteria for membership and instead join the European Economic Area (EEA), Europe’s large zone of economic integration that includes all EU members, Norway, Island, and Liechtenstein.

His idea might sound tempting, but is nothing but an illusion.

It is true that the EEA creates freedom of movement, free trade, free movement of capital and services among its members and thus offer a key component of EU integration to non-members. The idea that Serbia could join this agreement without EU membership is, however, rather absurd.

Countries cannot join the European Economic Area directly. The economic area was established in 1994 between the EU and the European Free Trade Agreement (EFTA) and most their members. There is no possibility foreseen for a country to join that is not either a member of the EU or EFTA. So let’s consider the only option Serbia would have to enter the EEA without joining the EU.

First, it would have to join EFTA. EFTA has only four members, Switzerland, Norway, Iceland and Liechtenstein. Of the four members, only three are part of the EEA, Switzerland rejected membership in 1992 in a referendum. Serbia would be an odd partner for some of the richest countries in Europe. Furthermore, no country has joined EFTA since 1991 when Liechtenstein joined. The previous accession was that of Iceland in 1970, all others were founding members in 1960s. Countries left EFTA rather than joined it in recent decades to become EU members (UK, Denmark, Sweden, Austria and Portugal were original members). Thus, EFTA is composed of a rather odd and small number of countries. Since no country has joined for such a long period there is no clear accession process, but membership would require agreement among all four member states. At the moment, there is little reason why Switzerland, Norway, Iceland or Liechtenstein would be interested in free trade with Serbia. Now for the second obstacle: A country joining EFTA is not automatically member of the EEA.  The EEA agreement states clearly in Art. 128 that “… any European State becoming a member of EFTA may, apply to become a party to this Agreement. .. The terms and conditions for such participation shall be the subject of an agreement between the Contracting Parties and the applicant state. That agreement shall be submitted for ratification or approval by all Contracting Parties in accordance with their own procedures. “

What this means is that a member of EFTA can apply to join the EEA, but there has to be an agreement between that country and the European Union and all its members and needs to be ratified by all of them.

If Serbia abandons EU accession and then would join EFTA in the unlikely case that Switzerland, Liechtenstein, Norway and Iceland find Serbia an attractive partner, the EU and its members would have to agree to join the EEA. It does not take a lot of imagination to see that the EU and its members are not going to eager to see Serbia access key EU benefits (such as freedom of movement of workers) by skipping the accession process and the conditions. The only scenario under which it would be imaginable for the EU to accept Serbia as a member would be if it had abandoned offering a membership perspective for the Western Balkans and saw this as a viable alternative. Still, Serbia would not be accepted without fulfilling numerous conditions, in particular in terms of adhering to the acquis communitaire, the EU legislation, that is relevant for the free movement of goods, people, services and capital before the EU and its members would be willing to accept Serbia. In brief, if Serbia decides not to opt for full EU membership and go for the EEA, it will still end up negotiating with the EU.

I am not going to comment in any detail the suggestion that an independent Kosovo is a problem of the EU, as if it had nothing to do with Serbia or the argument that the conditions of EU membership keep changing, or the suggestion that the financial contributions of the EU are “very, very small”. Croatia for example has 687.5 Million Euros set aside for the second half of 2013 alone, which is around 1.45% of the GDP of Croatia or some 4.2% of the Croatian state budget planned for 2013, hardly negligible amounts.

It is true that enthusiasm for enlargement among its member state is decreasing and that individuals members might make sometimes unreasonable demands. However, this is largely linked to the current economic crisis inside the EU. By the time Serbia is close to joining, it is realistic to expect that crisis to have passed and member state taking a more positive view towards enlargement. If Serbia pursues EU membership, it will be have an easier time to join then. Of course, Serbia can decide not to join, but it is a dangerous illusion to believe that the EEA is a viable alternative or easy way to get some of the benefits of free trade and movement without joining the EU.

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