Journal of the Institute for Euroregional Studies “Jean Monnet” European Centre of Excellence

University of Oradea University of Debrecen

Volume 8

Europe and its Economic Frontiers

Edited by LuminiŃa ŞOPRONI, Angelo SANTAGOSTINO & Ernı MOLNAR

References by

Fabienne MARON & Georgio TSURVAKAS

Autumn 2009

Eurolimes

Journal of the Institute for Euroregional Studies “Jean Monnet” European Centre of Excellence

Autumn 2009 Volume 8

Europe and its Economic Frontiers edited by Luminita SOPRONI, Angelo SANTAGOSTINO & Ernı MOLNAR

Honorary Members Paul Allies (Montpellier), Peter Antes (Hanover), Enrique Banús (Pamplona), Robert Bideleux (Swansea), Erhard Busek (Wien), Jean Pierre Colin (Reims), George Contogeorgis (Athene), Gerard Delanty (Sussex), György Enyedi (Budapest), Richard Griffiths, Chris G. Quispel (Leiden), Moshe Idel (Jerulalem), Livio Missir di Lusignan (Brussels), Jaroslaw Kundera (Wroclaw), Ariane Landuyt (Siena), Kalypso Nicolaidis (Oxford), Gheorghe Măhăra (Oradea), Adrian Miroiu, Şerban Papacostea (Bucureşti), Vladimir Pessenko (Rostov-on-Don), Frank Pfetsch (Heidelberg), Vasile Puşcaş, Vasile Vesa (Cluj-Napoca), Mercedes Samaniego Boneau (Salamanca), Rudolf Rezsohazy (Leuven), Maria Manuela Tavares Ribeiro (Coimbra), Dusan Sidjanski (Geneve), Goran Therborn (Uppsalla), Maurice Vaïsse (Paris)

Advisory Committee Iordan Bărbulescu, Gabriela Drăgan, Mihai Răzvan Ungureanu (Bucureşti), Teresa Pinheiro (Chemnitz) Czimre Klára, Kozma Gábor, Szabó Gyula, Teperics Károly, Varnay Ernı (Debrecen), Rozália Biró, Anca Dodescu, Antonio Faur, Alexandru Ilieş, Rodica Petrea, Sorin Şipoş, Barbu Ştefănescu, Ion Zainea (Oradea), Maria Crăciun, Ovidiu Ghitta, Adrian Ivan, Nicoale Păun, Ioan-Aurel Pop, Radu Preda (Cluj-Napoca), Margarita Chabanna (Kiev), Serge Dufoulon (Grenoble), Gunilla Edelstam, Thomas Lunden (Stockholm), Didier Francfort (Nancy), Tamara Gella (Orel), Ion Gumenâi, Alla Roşca, Octavian Tîcu (Chişinău), Karoly Kocsis (Miskolc), Iolanda Aixela Cabre, Cătălina Iliescu (Alicante), Savvas Katsikides (Nicosia), Anatoly Kruglashov (Chernivtsi), Renaud de La Brosse, Gilles Rouet (Reims), Giuliana Laschi (Bologna), Stephan Malovic (Zagreb), Maria Marczewska-Rytko (Lublin), Fabienne Maron (Brussels), Silvia Mihalikova (Bratislava), Ivan Nacev, Margareta Shivergueva (Sofia), Carlos Eduardo Pacheco do Amaral (Asores), Procopis Papastratis (Athens), Alexandru-Florin Platon (Iaşi), Mykola Palinchak, Svitlana Mytryayeva (Uzhgorod), Daniele Pasquinucci (Siena), Stanislaw Sagan (Rzeszow), Angelo Santagostino (Brescia), Grigore Silaşi (Timişoara), Lavinia Stan (Halifax), George Tsurvakas (Tessalonik), Peter Terem (Banska Bystrica), Esther Gimeno Ugalde (Wien), Jan Wendt (Gdansk), Gianfranco Giraudo (Venice)

Editorial Committee Ioana Albu, Ambrus Attila, Mircea Brie, Mariana Buda, Carmen Buran, Lia Derecichei, Cristina Dogot, Dorin Dolghi, Diana Gal, Marius Lazar (Oradea), Natalia Cuglesan, Dacian Duna (Cluj-Napoca) Fulias Soroulla Michaela Maria (Nicosia), Andreas Blomquist (Stockholm), Nicolae Dandis (Cahul), Molnar Ernı, Penzes Janos, Radics Zsolt, Tımıri Mihály (Debrecen), Bohdana Dimitrovova (Belfast), Mariana Cojoc (ConstanŃa), Sinem Kokamaz (Izmir), Florin Lupescu, Simona Miculescu, Adrian Niculescu (Bucureşti), Anca Oltean, Dana Pantea, Istvan Polgar, Irina Pop, Adrian Popoviciu, Alina Stoica, LuminiŃa Şoproni, Marcu Staşac, Constantin łoca (Oradea), Toma Tănase (Paris), Şerban Turcuş (Roma), Natasha Trajkova (Prilep), Viktoryia Serzhanova (Rzeszow)

The full responsibility regarding the content of the papers belongs exclusively to the authors.

Address: University of Oradea 1, Universitatii st.

410087-Oradea/Romania Tel/fax: +40.259.467.642

e-mail: ihorga@uoradea.ro www.iser.rdsor.ro

Image: Cluj-Napoca Square , XIX Century, painting by Joseph Hefreit, Lucian Blaga, University Library, Stampe Collection, Quota XVII/2

Eurolimes is a half-yearly journal. Articles and book reviews may be sent to the above mentioned address. The journal may be acquired by contacting the editors.

Journal of the Institute for Euroregional Studies (IERS) is issued by Ioan HORGA (Oradea) and Istvan SULI-ZAKAR (Debrecen)

with the support of the Action Jean Monnet of the European Commission and in the Co- Edition with Bruylant (Brussels)

Proofreading: Simona Veronica ABRUDAN CACIORA (Oradea); Editorial Assistance: Dr. ing. Elena ZIERLER (Oradea)

Oradea University Press

ISSN: 1841-9259

Cuprins ◊ Contents ◊ Sommaire ◊ Inhalt ◊ Tartalom

LuminiŃa ŞOPRONI & Ioan HORGA (Oradea) ◄► The Economic Frontiers of Europe –

Introduction - ………………………………………………………………………………... ......5 1. Monetary frontiers of Europe ...................................................................................................... ......7

Jacques BOURRINET (Paris) ◄► L’évolution de la zone euro a travers de la plasticité de ses frontières ............................................................................................................................

......9

Bogumiła MUCHA-LESZKO, Magdalena KĄKOL (Lublin) ◄► Will the financial-economic crisis of 2008–2009 accelerate monetary integration in the EU? ….…………..…

…...17

Olha YEHOROVA (Uzhgorod) ◄► Investment Attractiveness of Special Legal Regimes of Economic Activity in Border Regions between Ukraine and the EU ………………………..

…32

2. Role of the economic frontiers …………………………………………………………………. …41

LuminiŃa ŞOPRONI, Ioan HORGA (Oradea) ◄► The Romanian – Hungarian Border, link or delimitation for the post-adhesion process of Romania and Hungary? …………………..

….43

László GULYÁS, Erzsébet SISÁK (Szeged) ◄► Survey of Urban Competition between Szeged and Timişoara ..............................................................................................................

….57

Laura SCICHILONE (Siena) ◄► European Ecological Borders ............................................ ….66 Florica ŞTEFĂNESCU, Andreea BRAD (Oradea) ◄► Aspects of sustainable development

in Romania and its neighboring countries ...............................................................................

…..72 3. Dynamics of the economic frontiers .......................................................................................... .…81

Angelo SANTAGOSTINO, Andrea FORNARI (Brescia) ◄► The EU’s Mediterranean policy. An assessment over a decade (1995-2005) ……………………………................

….83

Jaroslaw KUNDERA (Wroclaw) ◄► The Migration of Poles to the European Single Market .....100 Lerzan OZKALE (Istanbul) ◄► Turkey and the European Union: a Never-Ending Story or

an Irrevocable Membership? ..............................................................................................

...120 Georges CONTOGEORGIS (Athens) ◄► État, marché et société. La question de l’équilibre

dans la relation entre société et politique ...........................................................................

....129 4. Focus ............................................................................................................................................... ....139

Andrei MARGA (Cluj Napoca) ◄► Democracy as Form of Life ............................................. ….141 5.Book Reviews .................................................................................................................................. ...155 6. Our European Projects .................................................................................................................

LuminiŃa ŞOPRONI (Oradea) ◄► International conference ”Identities, Citizenship and Democracy: 20 years after” (Charleroi, Belgium, 22-24 October 2009) ...........................

Constantin łOCA (Oradea) ◄► The European project ”The Law Regime of Cross-Border Cooperation in Romanian and Hungarian Law Organisms” ……………………………..

….175

….176

….177 7. About the Authors ......................................................................................................................... ....179

The Economic Frontiers of Europe

- Introduction - LuminiŃa ŞOPRONI & Ioan HORGA

The year when, sooner or later, the global economic crisis has struck all the economies of the

world, an issue of EUROLIMES, dedicated to Europe’s economic frontiers, is more than welcome. As reflected by the thematic structure of the journal, we intend to discover and establish bridges between intra and extra European economic sectors, especially since the current economic and financial crisis has unpredictable consequences upon all the segments of social life.

In the last decades, the economic frontiers of Europe have undergone profound changes, as the attempt to facilitate the free movement of capital, technologies, goods and people, generating competitive advantage, has determined changes in the economic politics of different states. In the present climate, the protectionist politics of European countries are almost forgotten, since the new strategic directions of trade and development are really open to both European and the global markets, in the absence of restrictions and tariff barriers.

Nowadays regions have become bridges between local and global models of economic progress, offering new opportunities for development strategies.

The globalization phenomenon turns frontiers more permeable and confirms the “vision” of Thomas Friedman, who argues that “the world is flat” (Friedman, The World is Flat, 2007). At least in the economic world, uniformity represents one of the aims of development.

Obviously, the concept of “economic frontier” should be enriched with new connotations, adapted to the context of the world today. Etymologically, the word “frontier” makes reference to a boundary between states – a border that, when trespassed, generates conflict. However, things appear to be different in the economic domain. “Breaching” economic boundaries – through exchanges and other types of activities – represents a demand of our contemporary world but, in order to avoid diverse disturbances, it is crucial to find answers to questions such as:

- What is the role played by the Euro, both in the European and the global economy? - What is the impact of the international financial crisis upon the economy of the European

Union on the one hand and upon the countries within the Euro zone on the other hand? - How attractive are the European countries for foreign investors and how could one gain

access to the European market? - How strong are the administrative frontiers of the UE countries, as regards their influence

upon the economic politics of neighboring states? - What are the ecologic frontiers? - What is the new global economic order and what are its pitfalls? - How could the relationship between states, markets and societies be defined in the

contemporary world? - What is the meaning of democracy today? The current issue of our journal aims to provide possible and pertinent solutions to the

problems mentioned above, using the experience of specialists in the field. This volume approaches the question of economic frontiers from several perspectives. The

first section discusses not only the problem of monetary frontiers, but also the provocations and opportunities induced by the European monetary integration. The second part evaluates the role of frontiers in the economy of European countries and discusses different types of European frontiers and their impact upon the actors involved. The third part approaches issues related to the dynamics of the European frontiers, such as migration of labor forces, controversies concerning the enlargement of the European Union and the European cooperation politics with other non-member states. The Focus Section opens a very topical subject – the issue of democracy and democratic life in the globalization-shaped contemporary world.

6

Our hope is that this volume will represent a starting point for discussions concerning the current situation of European economic frontiers, encouraging the specialists interested in this domain to approach and at the same time expand this topic. Obviously, the economic discourse will not be turned banal or ridiculous, as we strongly believe that the way of addressing the issues on question will prove beneficial not only for specialists, but also for large numbers of readers, interested in different aspects of economic life and, especially for those daring persons, attracted by the perspective of European economic investments.

I. Monetary frontiers of Europe Jacques BOURRINET (Paris) ◄► L’évolution de la zone euro a travers de la

plasticité de ses frontières Bogumiła MUCHA-LESZKO, Magdalena KĄKOL (Lublin) ◄► Will the

financial-economic crisis of 2008–2009 accelerate monetary integration in the EU?

Olha YEHOROVA (Uzhgorod) ◄► Investment Attractiveness of Special Legal

Regimes of Economic Activity in Border Regions between Ukraine and the EU

L’évolution de la zone euro au travers de la plasticité de ses frontières

Jacques BOURRINET

Abstract: This paper deals with the making of the euro and the monetary frontiers of the euro zone, not overlapping with those of the European Union. At the very start of the monetary union, the dimension of the euro zone has been determined by the interplay of institutional and political pressures. After the last enlargement, only four small economies have managed to enter the euro. The present economic crisis has delayed the accession programmes of some new Member States. The central and eastern European countries are thus trying to ground their application on political criteria rather than on institutional ones. However the European Council has not given any positive answer to these claims. In the future the absorption of new members into the euro zone will be based on conditionality and adaptation of the structures of the monetary union, as it has to deal with a higher number of participants.

Keywords: European integration, Euro Zone, external relations of the European Union,

Stability and Growth Pact, economic and social cohesion.

La zone euro est constituée par les États membres de l’Union européenne qui ont adopté la monnaie unique dans le cadre de l’Union économique et monétaire établie par le traité sur l’Union européenne (1992) et instaurée le 1er janvier 1999.

S’agissant d’une monnaie unique, l’on pourrait, a priori, supposer que les frontières de la zone euro coïncident nécessairement avec celles de l’Union européenne soit dans l’immédiat, soit à court terme.

La réalité n’est pas aussi simple quand on considère l’évolution des configurations de la zone euro depuis 1999. Dès la conclusion du traité de Maastricht, certains États membres (Danemark, Royaume-Uni) ont obtenu des clauses dérogatoires consignées dans deux protocoles du traité pour refuser ou différer l’adoption de la monnaie unique.

Configurations successives de la zone euro depuis 1999

Dates Liste des États de la zone euro Rapport nombre d'États de la zone euro / nombre total d'États membres de l'Union européenne

1-1-1999

Groupe initial (Euro-11)

Allemagne, Autriche, Belgique, Espagne, Finlande, France, Irlande, Italie, Luxembourg, Pays-Bas, Portugal

11 15

1-1-2001 entrée de la Grèce 12

15

1-1-2007 entrée de la Slovénie 13

27

1-1-2008 entrée de Chypre et Malte 15

27

1-1-2009 entrée de la Slovaquie 16

27 Ces configurations successives appellent deux observations principales :

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• Aucune des 5 configurations de la zone euro enregistrées depuis le 1-1-1999 n'englobe la totalité des États membres de l'Union européenne. La monnaie “unique” n'existe donc pas dans les faits; elle demeure, depuis plus de 10 ans, un objectif inaccessible.

• Après les élargissements de 2004 et 2007, le nombre d'États membres adoptant l'euro n'augmente que faiblement (4 sur 12 nouveaux adhérents à l'UE). Le mouvement ne concerne que des États de petite dimension (Slovénie, Chypre, Malte). Les « poids lourds » de l'élargissement 2004 (Pologne, Hongrie, République Tchèque) et les États baltes, en dépit de déclarations enthousiastes pour rejoindre au plus vite la zone euro, s'avèrent incapables de respecter les critères d'adhésion, créant ainsi de nouvelles incertitudes sur la configuration de la zone. Au total, en 2009, la zone euro ne comprend que 16 des 27 États membres de l'UE. L'échéance d'une zone euro englobant la totalité des États de l'Union reste indéterminée malgré l'obligation d'adopter dès que possible la monnaie unique formellement consignée dans le traité sur l'Union européenne comme dans les différents traités d'adhésion à l'UE.

Après avoir rejeté le traité de Maastricht par referendum en 1992, les Danois approuvent en 1993 une version édulcorée du traité qui les exempte de la monnaie unique. Le referendum du 28 septembre 2000 confirme le rejet de l’euro par une majorité de 53,1 % des électeurs et un taux de participation de 86 %.

Pour le Royaume-Uni, le protocole prévoit que ce pays conserve ses pouvoirs dans le domaine de la politique monétaire conformément à son droit national, qu’il n’est pas tenu de passer à la troisième phase de l’Union économique et monétaire « sauf s’il justifie au Conseil son intention de le faire ». Il s’agit de la clause dite d’opting out qui laisse toute latitude au Royaume-Uni pour rester hors de la zone euro jusqu’au jour (indéterminé) où il déciderait d’adopter la monnaie unique. Sur la base de cette situation juridique singulière, la spécificité britannique a été poussée à l’extrême lorsque, le 27 octobre 1997, le Chancelier de l’Échiquier de l’époque, qui n’était autre que l’actuel Premier ministre Gordon Brown proposait d’organiser dans les quatre mois un referendum sur l’adhésion à l’euro si cinq conditions étaient remplies : compatibilité des cycles britannique et européen, degré de flexibilité requis pour faire face à un choc asymétrique, conséquences de l’appartenance à la zone euro sur les investissements à long terme, maintien de la position concurrentielle des services financiers, conséquences sur la croissance et l’emploi à long terme. Aucune évaluation positive sur ces cinq points n’ayant été produite, le referendum prévu n’a jamais été organisé… et la zone euro ne comprend donc pas la deuxième place financière mondiale…

Quant à la Suède qui n’avait pas obtenu de clause d’opting out de type britannique ou de dérogation de type danois, elle s’est appuyée sur le non-respect de certains critères d’adhésion pour ne pas entrer dans la zone euro. Un referendum organisé le 15 septembre 2003 a confirmé le rejet de l’Union économique et monétaire par ce pays avec une majorité de 56,1 % des votants et un taux de participation de 81, 2 %. Depuis cette date, l’obligation juridique d’adopter la monnaie unique n’est pas suivie d’effet et n’empêche pas ce pays de rester en dehors de la zone euro…

Pour les adhérents plus récents à l’Union européenne (élargissements de 2004 et 2007), la monnaie unique est un élément de l’acquis communautaire que doivent impérativement reprendre les nouveaux membres dans les mêmes conditions que les États ayant déjà adopté la devise européenne. Mais l’accès de ces États à la zone euro reste soumis au contrôle d’un degré élevé de convergence durable de leurs économies à travers différents critères chiffrés censés garantir des conditions économiques et financières favorables pour les nouveaux entrants et pour la cohésion d’une zone euro élargie. Or ces critères s’avèrent souvent difficilement accessibles: depuis 2004, sur les douze nouveaux adhérents à l’UE, seuls quatre (Malte, Chypre, Slovénie, Slovaquie) ont été considérés comme respectant les critères de convergence leur ouvrant l’accès à la monnaie unique.

Il faut donc constater qu’en 2009, soit dix ans après la création de la zone euro, les frontières de cette zone ont évolué assez lentement et restent très différentes de celles de l’Union européenne ; seuls seize des vingt-sept États membres ayant adopté la prétendue monnaie unique. L’évolution des frontières de la zone euro demeure donc problématique en regard de trois types de situation. À côté des États membres qui veulent et qui peuvent (garantissant un degré élevé de convergence) intégrer la zone euro, persistent les États membres qui refusent d’adopter la monnaie unique (Danemark, Royaume-Uni, Suède) et ceux qui voudraient entrer dans la zone euro mais sont dans l’incapacité de respecter les critères de convergence (majorité des États membres d’Europe centrale et orientale).

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Les frontières de la zone euro évoluent en définitive sous l’emprise de deux mouvements contradictoires. Alors que de strictes conditions d’accès tendent à limiter le périmètre de la zone, une pression institutionnelle et politique pousse à un élargissement continu de cette même zone.

I. Un périmètre de la Zone Euro limité par de strictes conditions d’accès L’euro ayant été positionné comme monnaie unique de l’Union européenne par le traité de

Maastricht, les mécanismes de l’Union économique et monétaire auraient logiquement dû comporter des incitations à une entrée rapide de tous les États dans la zone euro. Si l’obligation d’adopter l’euro s’impose à tout État membre de l’Union européenne et à tout nouvel adhérent, elle reste, néanmoins, soumise à la constatation qu’ « un degré élevé de convergence durable » a été réalisé en respectant toute une batterie de critères chiffrés qui conditionnent et hypothèquent l’entrée de chaque État membre de l’Union européenne dans la zone euro.

1 - Une zone euro ancrée dans une culture de stabilité Au plan fonctionnel, face à une politique monétaire centralisée conduite par une Banque

centrale européenne (BCE) dotée de tous les pouvoirs, la zone euro conserve des politiques économiques et budgétaires qui demeurent de la compétence des États membres. La coordination de ces politiques nationales prévue par le traité sur l’Union européenne (1992) et considérée comme indispensable au bon fonctionnement de la zone monétaire européenne dès les premiers projets d’union économique et monétaire (1969), demeure, aujourd’hui encore, plus formelle que réelle en dépit d’un pacte de stabilité et de croissance (1997) qui n’assure pas une convergence effective suffisante des politiques budgétaires nationales.

Or, dès les premières discussions sur l’Union économique et monétaire, l’Allemagne, sur la base de son histoire économique et sociale et de la domination des doctrines monétaristes de l’époque, a imposé la stabilité des prix et de la monnaie comme bases incontournables de l’Union économique et monétaire européenne.

Considérant les risques de passager clandestin (free rider) dans une union monétaire hétérogène où certains États d’Europe du sud pratiquaient des politiques économiques et financières jugées laxistes, le traité sur l’Union européenne (1992) organise1 une surveillance multilatérale des politiques économiques nationales (notamment par les grandes orientations des politiques économiques et les programmes de stabilité et de convergence imposés à chaque État membre). Plus précisément, le traité traduit en critères chiffrés deux obligations fondamentales pour tout État adoptant l’euro :

– une discipline budgétaire évitant les déficits publics excessifs, – un degré élevé de convergence durable. La discipline budgétaire évitant les déficits est ordonnée par référence à deux critères : – le rapport entre le déficit public prévu et le produit intérieur brut ne doit pas excéder 3 %

sauf dépassement exceptionnel ou évolution marquée vers la valeur de référence, – le rapport entre la dette publique et le produit intérieur brut ne doit pas dépasser 60 % « à

moins que ce rapport ne diminue suffisamment et ne se rapproche de la valeur de référence à un rythme satisfaisant » (article 104 C du traité de Maastricht).

Le degré élevé de convergence durable résulte du respect par chaque État de quatre critères : – la réalisation d’un degré élevé de stabilité des prix, le taux d’inflation moyen observé au

cours d’une période d’un an avant l’examen de la candidature à l’entrée dans la zone euro ne doit pas dépasser de plus de 1,5 % celui des trois États membres présentant les meilleurs résultats en matière de stabilité des prix;

– le caractère soutenable de la situation des finances publiques s’appuie sur l’absence de déficit public excessif (n’excédant pas 3 % du produit intérieur brut);

– le respect sans tension grave, pendant deux ans au moins, des marges normales de fluctuation prévues par le mécanisme de change du système monétaire européen sans dévaluation de la monnaie par rapport à celle d’un autre État membre;

– l’évolution des taux d’intérêt à long terme sur un an qui n’excède pas de plus de 2 % celui des trois États membres présentant les meilleurs résultats en matière de stabilité des prix.

1 Voir notamment Traité sur l’Union européenne, articles 104 C, 109 J, Protocole sur la procédure concernant les

déficits excessifs, Protocole sur les critères de convergence visés à l’article 109 J du traité instituant la Communauté européenne.

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Le pacte de stabilité et de croissance adopté en 1997, avant le lancement de la zone euro, impose le respect permanent de la discipline budgétaire et de la convergence durable établis par le traité de Maastricht à tout État adoptant la monnaie unique. Il établit des procédures de surveillance étroite des politiques nationales sur ces différents points et prévoit des sanctions en cas de non-respect de ces obligations espérant, ainsi, garantir les bases d’une union monétaire débutant sans tension et se poursuivant sans conflits2.

2 - Une conditionnalité fondée sur le respect des critères de convergence Le respect de tous les critères de convergence incluant la soutenabilité des finances publiques

établis par le traité sur l’Union européenne s’impose à tout candidat à l’entrée dans la zone euro. Aucune dérogation ou adaptation n’est prévue. Cette rigidité s’ajoutant à la diversité des critères retenus hypothèque le rythme et le nombre des entrées dans la zone euro qui sont, de ce fait, soumises à une stricte conditionnalité.

Faut-il considérer, aujourd’hui, ces instruments de contrôle de la situation économique, monétaire et financière des candidats à l’entrée dans la zone euro comme satisfaisants et pleinement adaptés à l’environnement européen et international de la fin de la première décennie du XXIe siècle? La question mérite d’être posée pour de multiples raisons.

Au plan théorique, tout d’abord, les justifications des limites fixées aux déficits publics, à l’endettement public et à l’inflation sont considérées par certains comme arbitraires, freinant le jeu des stabilisateurs automatiques et des politiques économiques contracycliques que les États se doivent de conduire face à des chocs symétriques ou asymétriques. On aboutirait finalement à imposer des stratégies favorisant des niveaux de convergence nominale élevés au détriment d’un renforcement préalable et subséquent des niveaux de convergence réelle. En outre, dès que la conjoncture économique est sérieusement détériorée, le respect d’un degré élevé de convergence et la limitation des déficits publics tels que chiffrés par les critères de convergence semblent difficiles à maintenir (France et Allemagne en 2002, ensemble des États de la zone euro en 2008 et 2009). On évoque alors pour justifier cette impossibilité l’adage « À circonstances exceptionnelles, mesures exceptionnelles » et l’engagement de reprendre le respect des critères dans les meilleurs délais. Cependant personne ne peut préciser les délais indispensables ou la nature des circonstances exceptionnelles ; les réformes du pacte de stabilité et de croissance adoptées en 2005, étant demeurées, nous semble-t-il, dans un certain “flou artistique”…

Paradoxalement, alors que l’application des critères de convergence s’est avérée aléatoire dès que la conjoncture économique se dégradait au niveau de la zone euro, la Commission européenne, gardienne des traités européens, ne cesse de rappeler que le strict respect des critères de convergence pour entrer dans la zone euro fait partie de l’acquis communautaire et ne doit comporter aucun assouplissement. « Tous les critères, rien que les critères » résume le Commissaire en charge des affaires monétaires Joaquin Almunia. Si cette position est parfaitement conforme à la lettre des traités, il n’est pas évident qu’elle réponde aux problèmes que rencontrent, depuis 2004, les nouveaux adhérents à l’Union européenne désirant adopter la monnaie unique. Pour la plupart de ces États, l’adoption immédiate ou différée de l’euro conduit en termes de politique économique à de véritables dilemmes. Le respect des critères s’avère difficilement accessible car il remet en cause certaines options stratégiques de leur développement économique accéléré. En effet, leurs politiques économiques marquées par l’achèvement de la transition vers l’économie de marché et le rattrapage des niveaux de développement par rapport aux moyennes européennes sont orientées vers la croissance la plus rapide, l’investissement public le plus large pour la restauration et/ou la création des infrastructures. Ces impératifs peuvent conduire à accepter une certaine souplesse sur les soldes budgétaires, l’endettement public, l’inflation, la politique monétaire, le taux de change de la monnaie nationale. Or les conditions d’adhésion à la zone euro limitent ces libertés:

– elles entraînent un strict contrôle des déficits budgétaires, de l’endettement public et de l’inflation;

– elles suppriment les possibilités d’ajustement par les variations du taux de change de la monnaie nationale;

2 Sur l’application du pacte cf. J. Bourrinet, Le pacte de stabilité et de croissance, Presses universitaires de France,

coll. Que sais-je ? n° 3706-2004 et « La nécessaire réforme du pacte de stabilité et de croissance », Revue des affaires européennes, 2005/1.

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– elles conduisent à une politique monétaire européenne unifiée gérée par une Banque centrale européenne totalement indépendante, dont l’objectif principal est de maintenir la stabilité des prix;

– elles obligent à une coordination renforcée des politiques économiques nationales qui aboutit à une centralisation européenne des grandes orientations des politiques économiques.

En conséquence, les pays d’Europe centrale et orientale candidats à l’entrée dans la zone euro ne manquent pas de rappeler qu’en raison de leur inflation structurelle élevée, il leur est impossible de poursuivre simultanément un objectif d’inflation faible et de change fixe par rapport à l’euro sans instaurer une politique d’austérité.

La protection monétaire et financière liée à toute adhésion à la zone euro risque donc en termes de contraintes économiques de se payer à un prix élevé. Mais les derniers adhérents à l’Union européenne n’ont pas le choix ; ils doivent obligatoirement adopter la monnaie unique qui fait partie, selon les traités d’adhésion, de l’acquis communautaire.

Le périmètre de la zone euro sera donc limité aussi longtemps que le strict respect des critères de convergence par chaque État membre devant adopter la monnaie unique n’aura pas été constaté sur la base de deux rapports établis par la Commission européenne et la Banque centrale européenne3.

Une telle procédure d’admission en zone euro centrée sur les réalités juridiques et statistiques est non seulement difficile d’accès en raison des lourdes contraintes qu’elle impose aux orientations de politique économique des pays candidats, mais surtout ignore les réalités politiques (notamment les intérêts, les idées et les sensibilités qui déterminent largement la politique). Elle génère, en conséquence, une absence de compréhension et de perception par les nouveaux États membres des finalités politiques de la construction européenne.

II. Un périmètre de la Zone Euro élargi sous la pression des facteurs institutionnels et politiques

La rigidité dans le contrôle du respect des critères de convergence pour accéder à l’euro consignée dans les traités, proclamée sans répit par les institutions européennes (Commission européenne, Banque centrale européenne) comme par les États membres ayant déjà adopté la monnaie unique ne peut éliminer le jeu des facteurs politiques et institutionnels qui poussent à un élargissement continu de la zone euro. Ce constat peut être fait au niveau d’un rappel historique concernant la constitution du groupe initial de la zone euro comme dans les débats d’aujourd’hui sur une accession rapide des États membres de l’Union européenne qui veulent adopter la monnaie unique sans être en mesure de respecter tous les critères de convergence prévus.

1 - Le jeu des pressions institutionnelles et politiques lors de la constitution du groupe initial

de la zone euro Les pressions institutionnelles résultent tout d’abord des dispositions du traité sur l’Union

européenne. Le protocole sur le passage à la troisième phase de l’Union économique et monétaire précise qu’aucun État membre, qu’il remplisse ou non les conditions nécessaires à l’adoption d’une monnaie unique, ne peut empêcher l’entrée dans la troisième phase (démarrage de la zone euro) fixée irrévocablement au premier janvier 1999.

La décision de création du groupe initial de la zone euro a été prise par le Conseil réuni au niveau des chefs d’État ou de gouvernement sur la base de recommandations adoptées par le Conseil des ministres statuant sur les propositions de la Commission établies sur la base de deux rapports de la Commission et de l’Institut monétaire européen. Un avis du Parlement européen était également prévu. Toutes les principales institutions européennes sont associées à l’évaluation du degré élevé de convergence qui sera faite à travers la recommandation soumise à l’instance de décision, instance qui subira une forte pression en cas d’avis similaires des différentes institutions consultées.

Le traité précise enfin (article 109 J 2) qu’il convient, avant la création du groupe initial de la zone euro, d’évaluer pour chaque État membre s’il remplit les conditions nécessaires pour l’adoption

3 Sur la procédure d’admission que nous n’entendons pas développer ici, voir parmi de nombreuses études Frédéric

Allemand, « L’impact de l’élargissement sur l’Union économique et monétaire : quelles leçons tirer pour la mise en œuvre des mécanismes d’intégration différenciée dans l’Europe élargie » ? in L’élargissement et la nouvelle Europe après 2004. F. Snyder, dir. Bruylant 2005, collection Travaux du CERIC, vol. 9.

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d’une monnaie unique et si une majorité d’États remplit les conditions nécessaires pour l’adoption de cette monnaie unique.

L’on peut facilement comprendre l’exigence d’une majorité d’États membres pour la constitution du groupe initial de la zone euro. Cette exigence conforte la viabilité du processus de mise en place de la monnaie unique en conférant, dès l’origine, une masse critique d’États suffisante pour étayer sa réalité aussi bien à l’intérieur qu’à l’extérieur de l’Union européenne, renforcer son attractivité et affirmer une volonté de réalisation de la monnaie unique dans les délais les plus brefs possibles. À l’évidence, un groupe-croupion initial pour l’adoption de la monnaie unique aurait constitué un paradoxe et aurait sans doute été interprété comme un processus timide, voire incertain, impliquant à tout le moins des délais de réalisation indéterminés.

Pour pallier le risque d’un groupe initial d’États membres adoptant l’euro trop peu nombreux susceptible de mettre en cause, dès l’origine, la crédibilité du processus de création d’une monnaie unique, de longues et multiples tractations politiques s’engagèrent pour obtenir le maximum d’États membres dans ce groupe initial en dépit du non-respect des critères de convergence constatés chez certains d’entre eux. Tractations multiples et variées non seulement entre États membres, mais aussi entre institutions européennes, comme entre États membres et institutions européennes. Au terme de ce processus complexe, dont la transparence n’était pas la qualité première, la Commission européenne proposait, le 25 mars 1998, une liste de 11 États membres pour constituer le groupe initial des États adoptant l’euro4, proposition adoptée par le Conseil européen le 3 mai 1998.

Si l’on considère que le Royaume-Uni et le Danemark avaient obtenu, dès 1992, des clauses les dispensant d’adopter la monnaie unique, c’est donc une très large majorité d’États membres (onze sur treize) que réunit le groupe initial de la zone euro (seules la Suède et la Grèce s’en trouvent exclues). Ce résultat n’a pu être obtenu, à l’évidence, qu’en donnant une priorité aux facteurs institutionnels et politiques par rapport au strict respect des critères chiffrés mesurant la convergence effective des États membres entrant dans la zone euro.

Sans développer sur ce point une analyse détaillée (on sait que les informations fiables sur les tractations politiques ne sont pas légion) limitons-nous à évoquer les deux situations de la Belgique et de l’Italie qui, avec des endettements publics avoisinant 125 % du PIB, étaient très largement au-delà de la limite prévue par les critères de convergence (60 %) et ne pouvaient sérieusement justifier d’aucune des exceptions mentionnées sur ce point par l’article 104 C du traité de Maastricht : diminution de manière substantielle et constante pour atteindre un niveau proche de la valeur de référence, dépassement exceptionnel restant proche de la valeur de référence. Malgré ce volume d’endettement structurel très supérieur aux limites fixées par les critères de convergence, il a été considéré que l’on ne pouvait pas exclure du groupe initial adoptant l’euro deux des six États fondateurs en 1957 de la Communauté économique européenne.

La prise en compte de facteurs politiques peut-elle conduire, aujourd’hui comme hier, à un assouplissement des conditions d’entrée dans la zone euro ?

2 - Les pressions des États membres d’Europe centrale et orientale pour une entrée

accélérée dans la zone euro Bien que l’adoption rapide de l’euro soit inscrite dans l’acquis communautaire que les douze

nouveaux adhérents à l’Union européenne de 2004 et 2007 se sont engagés par les traités d’adhésion à reprendre, seuls quatre d’entre eux, de petite dimension, ont pu au début de l’année 2009, s’acquitter de cette obligation (Slovénie au 1er janvier 2007, Malte et Chypre au 1er janvier 2008, Slovaquie au 1er janvier 2009). Les autres candidats à l’entrée dans la zone euro clament sur différents registres leur volonté d’entrer le plus rapidement possible dans cette zone, mais doivent constater que leurs situations économiques, monétaires et financières nationales demeurent éloignées des critères de convergence imposés par l’Union européenne pour l’accès à la zone euro. La crise financière et économique mondiale qui se développe depuis 2008 dégrade, souvent dans des conditions dramatiques, la situation globale de ces pays, les éloignant ainsi un peu plus du respect des critères de convergence. Dans ce contexte, pour beaucoup, y compris certains experts du FMI, l’entrée dans la zone euro réduirait l’extrême fragilité monétaire et financière vers laquelle évoluent la plupart de ces États. C’est donc sur le terrain politique que les pays d’Europe centrale et orientale vont tenter de placer leur demande d’adhésion accélérée à la zone euro.

4 Cf. liste présentée supra en introduction.

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Confrontée comme bien d’autres pays à la fragilité des banques et à des attaques contre la monnaie nationale dans le cadre de la crise financière mondiale de 2008, la Hongrie, par la voix de son Premier ministre Ferenc Gyurcsany soulignait5 fin février 2009 : « Le meilleur mécanisme protecteur est d’accélérer notre adhésion à la zone euro ». Il précisait que la demande ne visait pas une remise en cause des critères de convergence fixés pour l’entrée dans la zone euro, mais une accélération de la procédure d’admission soulignant, notamment, qu’il n’était sans doute pas nécessaire d’exiger deux ans de participation au mécanisme de change européen II avant l’entrée dans la zone euro. Quelques jours plus tard le même Premier ministre hongrois affirmait qu’il fallait, à travers les péripéties de la crise mondiale « éviter la mise en place d’un nouveau rideau de fer » en relevant un nouveau défi « unifier l’Europe financièrement et économiquement »6.

Ces arguments politiques en faveur d’une entrée accélérée dans la zone euro sont repris dans des termes voisins par les autres États d’Europe centrale et orientale qui subissent les contrecoups de la crise mondiale et considèrent que la zone euro est le seul refuge leur permettant de limiter les dégâts causés à leurs économies, à leurs monnaies et à leurs finances.

Le Conseil européen informel du 1er mars 2009 n’a pas répondu favorablement à ces demandes. Il a exclu toute reconsidération des critères de convergence, affirmant que la stabilité de l’euro et la crédibilité de la zone sont dus au principe d’une adhésion fondée sur un système de règles juridiques. Tout au plus, certains dirigeants européens envisagent-ils de discuter une réduction du délai de deux ans de participation au mécanisme de change européen II imposé à tout candidat à l’entrée dans la zone euro.

On voit, ici, aujourd’hui, les limites de l’engagement politique pour l’élargissement de la zone euro qui conduisent à maintenir un périmètre restreint de la zone pendant un délai indéterminé. Des adhésions non contrôlées par le respect des critères de convergence sont considérées comme de véritables risques pour l’euro et la cohérence de la zone monétaire européenne.

Face à ces demandes réitérées d’assouplissement et d’accélération du processus d’entrée dans la zone euro, on peut s’interroger sur le fondement du maintien d’un strict respect des critères de convergence alors que les États de cette même zone, sous l’impact de la crise financière et économique, apparaissent de plus en plus hors d’état de respecter ces mêmes critères. Évoquons parmi bien d’autres, la situation de l’Irlande dont le déficit public s’élève en 2008 à 6 % du PIB (plus de 10 % prévu pour 2009)… bien au-delà de la limite fixée à 3 % par le traité sur l’Union européenne et le pacte de stabilité et de croissance !

* * *

Au total, les frontières de la zone euro apparaissent donc mouvantes et incertaines. Sous l’effet des dérogations concédées, dès l’origine, à certains États membres refusant d’adopter la monnaie unique comme dans les débats actuels sur l’assouplissement des conditions d’entrée dans la zone, ces frontières apparaissent sensiblement différentes des frontières externes de l’Union européenne.

L’irréversibilité de l’adoption de la monnaie unique pour tous les États membres de l’Union européenne n’a sans doute pas dans les faits la force impérative que lui prêtent les textes européens, les États membres ou les institutions. Certains États membres ne semblent toujours pas prêts à adopter la monnaie unique. L’Union économique et monétaire européenne ne semble pouvoir “absorber” un nombre croissant de candidats qu’en maintenant une stricte conditionnalité et en recherchant une adaptation de ses structures en regard des contraintes d’un plus grand nombre de participants conduisant à une hétérogénéité accrue de la zone euro.

Bibliographie Allemand, Frédéric (2005), « L’impact de l’élargissement sur l’Union économique et monétaire:

quelles leçons tirer pour la mise en œuvre des mécanismes d’intégration différenciée dans l’Europe élargie ?», in F. Snyder, L’élargissement et la nouvelle Europe après 2004, Bruylant, collection Travaux du CERIC, vol. 9.

5 Bulletin Europe n° 9847, 25 février 2009. 6 Bulletin Europe n° 9851, 1er mars 2009.

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Bourrinet, Jacques (2004), Le pacte de stabilité et de croissance, Presses universitaires de France, coll. Que sais-je ? n° 3706/2004.

Bourrinet, Jacques (2005), « La nécessaire réforme du pacte de stabilité et de croissance », Revue des affaires européennes, 2005/1.

Bulletin Europe n° 9847 – 25 février 2009. Bulletin Europe n° 9851 – 1er mars 2009.

Will the financial-economic crisis of 2008–2009 accelerate monetary integration in the EU?

Bogumiła MUCHA-LESZKO, Magdalena KĄKOL

Abstract: The subject of the study is to present opportunities resulting from the enlargement

of the Economic and Monetary Union. According to the authors, the current financial-economic crisis can accelerate this process. An extension of the euro area is going to bring benefits, both to the whole EU and to individual member countries. From the EU’s point of view the main opportunities lie in: 1) strengthening the international role of the euro, 2) deepening the financial integration and creation of a more unified financial system, 3) stabilising the EU’s balance of payments and 4) verifying the fiscal policy principles. In terms of primary benefits for the countries entering and functioning in the euro area the authors identify, among others: 1) accelerating the real convergence and economic cycle synchronisation, 2) increasing the price stability, 3) improving the budgetary balance and the condition of public finances. However, there is a risk of introducing the common currency for the economies with lower GDP per capita, lower labour productivity and competitiveness. Nevertheless, the rise in macroeconomic stability, especially in conditions of crisis, exchange rate fluctuations and speculative attacks, can overbalance that risk.

Key words: European integration, financial crisis, monetary integration acceleration, benefits

and problems of the EMU enlargement

The aim of the study is to present: 1. the impact of consequences triggered by economic and monetary-financial crises on the

acceleration of market and monetary integration within the European Community, 2. the real opportunities and benefits of the enlargement of the Monetary and Economic

Union area.

1. The impact of global crises’ consequences upon the acceleration of the European integration process

There are plenty of metaphors associated with the European integration process. H. and W. Wallace compared the principles of EU functioning to the flying formation of wild geese, where the stronger birds took over command (Wallace and Wallace, 1995: 28-29), which relates to the EU’s character as a block of economically highly diversified countries. Comparisons to architectural forms have also gained great popularity, especially when presenting the European Union as a structure based on pillars, according to the Maastricht Treaty provisions. Passing to the appraisal of actual achievements of the European integration we should present J. Zielonka’s (Zielonka, 2006: 6) interesting views on that matter, who interpreted the principle of “small steps” in the European integration history. He found that this principle, alongside the vagueness of plans, constituted a chance for the establishment of further cooperation, while the EU’s aim, as well as its model, were always a controversial, even mysterious matter (Zielonka, 2006: 4-5). Differences between the heads of member countries concerned the EU’s foundations: 1) a model of integration (federalism or multi-governance system), 2) the scope of integration (security or economy), 3) the degree of the independence of member countries and the permanent problem of national parities. J. Monnet supported an integration method by stealth, a strategy “to promote spillover from one economic sector to another and eventually from market integration to political integration” (Dinan, 2000: 349).

J. Delors tried to put in practice Monnet’s method – “integration by stealth” – in order to foster the integration processes in the 1980s. Although this turned out to be effective with the Single European Market Project, which was actually achieved, promoting the spillover from economics to politics has not been accomplished.

Most certainly there have been, and there still are, many reasons that caused the attainment of European integration plans under conditions of tension and of tough play of national interests; they

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have been corrected by political and economic realities in Europe and in the world. One can also observe that situations in the world economy, and especially crises and their consequences, had a great impact upon the direction of integration and its effects. While introduction of the common market took place in accordance with the assumptions of the Spaak Report (1956) and of the EEC Treaty, the monetary union was included into the plan of integration after a difficult discussion (Hague, 1–2 December 1969) between France and Germany. Destabilisation of the Bretton Woods international monetary system, a decrease in the value of French currency and the appreciation of Deutschmark caused the French politicians to consider the formation of the monetary union as a solution of France’s own currency problems, thereby counteracting the growing international position of the Deutschmark. France, in favour of launching the common currency, presented an important argument regarding subsidies for farmers under the common agricultural policy with growing fluctuations of exchange rates on the foreign exchange market. The floating of exchange rates meant further complications in implementing the system of farm subsidies. The Werner Plan (1970) constituted the basis of the monetary integration strategy in the 1970s. Its achievement could have led to the creation of an economic and monetary union within 10 years. In February 1971 the Werner Plan was accepted by the Council of Ministers (Ecofin) and the introduction of its first stage began formally. The two subsequent crises – the energetic and the economic ones – which began in 1974, made it impossible to bring off not only the Werner Plan, but they also reduced the effectiveness of the currency snake as a stabilisation instrument of exchange rates of the EEC countries. An increase in prices of petroleum and other energy sources caused a rise in the inflation rate, which was still two digits in Denmark, France, Ireland, Great Britain and in Italy in 1980. Most of the Community countries (excluding Germany) conducted monetary policies, which were presumed to be right from the point of view of domestic policy interests, and the stabilisation of their exchange rates became a secondary goal.

The serious outcomes of the crises were payment balance deficits of many European countries, which increased in connection with fundamental changes of petroleum prices and exchange rate manipulations because of considerable difficulties in selling goods in the circumstances of a downturn in the world economy. Since the United States was not interested in the return to fixed exchange rates, and the work on reforming the international monetary system at the IMF forum did not bring the expected results, France continued initiatives on accelerating the monetary integration. Fourcade, the Minister of Finance, presented the plan of the “European Bretton Woods” in 1974.

The launching of the European Monetary System (1979) was of a great significance in the process of reaching the monetary and the economic union and common currency. It can be compared to the Bretton Woods monetary system. Their common elements included (Mucha-Leszko, 2007:348): an exchange rate mechanism, an exchange rate policy, a policy for ensuring currency stability, the introduction of contractual currency into the cashless circulation. The bases of both systems were fixed exchange rates with acceptable margin of exchange fluctuations on the market. The mechanism of exchange rate stabilisation was much more complicated in the European Monetary System than in the Bretton Woods system.

The European Currency Unit (ECU) functioned on similar principles like Special Drawing Rights (SDRs) – the IMF contractual money. From the perspective of time ECU can be acknowledged as a solution which facilitated introduction of the common currency into official circulation, whereas SDRs were not promoted to the role of international currency (as it was assumed). It was the ECU that was used in the private sphere and performed functions of a currency of international financial operations in the United States, Japan and other Asian countries in the 1980s because it was distinguished by stability.

There were many factors resulting from the economic situation of the EEC member countries, downturn and lack of currency stability on a global scale that contributed to the creation of the European Monetary System, which was the regional area of currency stability. We can divide these factors into two groups: external and internal (Table 1).

The crises of the 1970s were a period of stagnation and even of regressive tendencies in implementing the common market principles. Member countries focused in their trade policy on protecting their own markets and subsidising exports. Under the already functioning customs union they revealed great inventiveness in applying non-tariff instruments. During the crises of the 1970s member countries conducted an anti-integration economic policy, which constituted a serious problem concerning the future of the European integration. Therefore, the crises outcomes resulted in the

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necessity to make the process of building the common market more dynamic and for that purpose the Project of Single European Market 1992 was prepared in 1985. The SEM assumptions – especially the free movement of capital (introduced on 1 July 1990) – resulted in an increased support and activities for strengthening the monetary integration.

External and internal factors that contributed to the creation of the European Monetary System Table 1

External factors Internal factors 1. Collapse of the Bretton Woods system

and floating of exchange rates 2. Currency destabilisation, substantial

exchange rate fluctuations in the world markets

3. Using exchange rates to increase export competitiveness

4. Dollar destabilisation 5. Liquidation of the dollar gold standard

1. Low effectiveness of the currency snake as an instrument of the common currency policy and stability of member countries’ currencies

2. Appreciation and depreciation of currencies were a threat to the development of mutual trade and market integration

3. High inflation and necessity of price stabilisation 4. The need to introduce the common currency unit

after eliminating the dollar gold standard 5. French-German compromise – developing the

common project aiming at controlling inflation and making the Community independent of the depreciating dollar.

Source: Authors’ own source

The introduction of free movement of capital under the conditions of fixed exchange rates and independence of member countries’ monetary policy within the Community jeopardized the security of the European Monetary System, exposing weaker currencies to speculative attacks, the evidence of which was the system destabilisation in 1992–1993, widening of the market exchange rates fluctuation margin from the central exchange rates to +/– 15% and maintaining it until the substitution of the euro for ECU. After the introduction of free movement of capital the further functioning of EMS was possible, provided that the monetary policy was centralised and the common currency was adopted. In theory one could have thought about the floating of member countries’ exchange rates, which in practice would have undermined the common market foundations and the sector and macroeconomic policies (Mucha-Leszko, 2007: 84).

Despite the fact that EMU became the only rational solution along with the realisation of SEM and the elimination of barriers in the transfer of capital, the experiences and effects of the EMS functioning were also of great importance. It performed well as an external shock-absorbing mechanism. Owing to the coordination of monetary policy, shock outcomes within the Community area were less diverse. The question concerning the impact of control over the transfer of capital on exchange rates stability is of special importance. J. Pelkmans expressed his view on that matter as follows: the control of movement of capital was of minor significance in maintaining exchange rates stability within EMS, but it constituted a security device against speculative attacks on the exchange market (Pelkmans, 2001: 333-334).

Without going into details related to the political reasons that decided the acceptance of the EMU plan and which at every stage of European integration were not less important than the economic ones, one can observe a clear connection of the monetary integration within the European Community with the collapse of the Bretton Woods international monetary system and the changeover to floating exchange rates. It should be remembered that the meeting of the G-6 group in Rambouillet (15–17 November 1975) was of decisive significance because the discussion on the possibility of returning to fixed exchange rates was in principle closed there. The plan of the Dutch finance minister, W. Duisenberg (1976), was an important starting point for a debate on new projects of an economic and monetary union. The cooperation of the president of France, V. Giscard d’Estaing and the chancellor of the Federal Republic of Germany, H. Schmidt, brought about a compromise solution, which was the European Monetary System, the Community’s own currency stabilisation area. The exchange rates destabilisation and downturn in the world economy were the main factors mobilising the member countries to cooperate, due to which the monetary and market integration process led to the attainment

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of the stage of Economic and Monetary Union. On account of the fact that the current crisis (2008–2009) had its source in the financial and foreign exchange sphere and resulted in a deep economic slump, one can consider the faster introduction of the common currency in the EU countries that do not belong to EMU, and anticipate the benefits of this step both for individual countries and for the whole EU economy.

2. Opportunities, benefits and problems associated with the enlargement of the Economic and Monetary Union area

The current crisis in the world economy is marked by the fact that a situation in the foreign exchange and financial markets affects the real sphere of economy to a larger extent than in the past. This is caused by the development of speculative transactions on the foreign exchange market and by an increase in the free movement of capital as well as by globalisation of the financial market. High economic openness ensures benefits under the conditions of a stable economic growth but also poses a greater threat of external shocks during crises. The small and narrowly specialised economies are at the most risk of shocks. When we additionally take into account speculative attacks on currencies of the emerging economies it is legitimate to consider adopting the common currency by new member countries.

Let us present in the first place the reasons for introducing the euro in the whole European Union area.

Firstly, if there are 27 countries functioning in the euro area it would be the largest currency area in the world, with an advantage over the United States as regards the population number (EU-27 – 498.4 m., USA – 304.5 m.)1, its share in the world GDP (EU-27 – 34.5%, USA – 28.2%)2 and in international trade3. The role of the euro as a global currency would increase (domestic and cross-border use) owing to the development and further EU financial market integration. The global role of currencies is an important factor determining their use by the world investors. Ch. Thimann points out three main reasons for the strong global position of the dollar (Thimann, 2009: 23):

1) size and liquidity of the US capital market, 2) value of debt securities issued by financial institutions and corporations, 3) the leading role of the dollar in the global foreign exchange market and as a currency of the

world foreign exchange reserves. Secondly, the EMU enlargement will contribute to the deepening of financial integration

within the whole EU area and will constitute more solid bases for further unification of the financial system. There will be an increase in financial market liquidity and in the attractiveness of the euro as the currency of financial transactions. The elimination of exchange rate risk will enhance the cross-border transfers of capital, including mergers and acquisitions.

Thirdly, the current financial-economic crisis has revealed weaknesses of the foreign exchange and financial leadership of the United States, which was already put to serious test at the beginning of the 1970s when the Bretton Woods monetary system collapsed. However, despite the fact that, from the formal point of view, the dollar stopped fulfilling the functions of an international currency, it remained in that role anyway for the reason of its use in both official and private spheres. The German mark, a competitive currency against the dollar at that time, gained the position of the second international currency, owing to the Federal Republic of Germany’s competitive advantage and to the Bundesbank’s policy, but the far larger US potential and its role in the world economy guaranteed the dollar maintaining the role of a global currency. The introduction of the common currency and creation of the euro area resulted in the creation of a new system in global foreign exchange and financial relations.

The launching of the euro has a stabilising effect on the global balance of payments. However, the euro internationalisation process has been proceeding more slowly than one could expect, and especially since the US external balance deficit deepened and the global financial crisis occurred. The EU economy, including EMU area, still represents a lower growth potential as compared to the United

1 Data for the year 2008, European Central Bank, „Statistics Pocket Book”, Frankfurt am Main, September 2009, p. 7. 2 Data for the year 2008, International Monetary Fund, World Economic Outlook Database, October 2009. 3 In 2008 the European Union share in the world exports of goods amounted to 18.4% (extra-EU27) and that of the

United States 17.4%, in case of services exports it equaled for EU in 2007 24% (extra-EU27) and for USA 14.8%. World Trade Organization, World Trade Report 2008: Trade in Globalizing World, Appendix Table 4 and World Trade Organization, International Trade Statistics 2008, p. 15.

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States. It results from low labour productivity as well as low innovativeness. Chances of a decrease in the economic gap lie, among others, in fostering financial integration, which can contribute to a rise in investment opportunities through easier access to financial resources and to a more efficient allocation of capital. Both these factors will positively influence economic growth, enhance the effectiveness of monetary policy and lead to the establishment of the same rules for all market participants.

Fourthly, financial integration fostered by the EMU enlargement will contribute to verification of the fiscal policy principles, at least to some extent. Leaving this area of macroeconomic policy in the hands of member states, with their growing number and systemic diversification, would complicate the coordination of the policy principles as well as its realisation. Gradual centralisation of activities in this field will become necessary. This also relates to tax systems. The EMU enlargement will be a great challenge to the European Central Bank on account of: 1) lowering the common currency area convergence level because of the admission of catching up countries and 2) likely difficulties in reaching a consensus on monetary policy strategy and its priorities. A group of countries with a much lower development level (GDP per capita) will be aiming at fostering the convergence process, which can lead to a difference of opinion between members of the Governing Council. There will also appear the problem of effective ECB management if the number of the Governing Council members grows. In any case, the monetary policy conducted by ECB cannot contribute to deflation and decrease in the economic growth rate and thereby to deterioration in the economic situation of the transition economies.

One cannot forget about the financial system specificity of Great Britain and its main difference when compared to the system of the other EU countries, which it is based on the banking system, while in Great Britain it is founded on the capital market. This fact is of great importance for the ECB policy after Great Britain’s entry to EMU. This country will be expecting the bank reaction to changes on the capital market. There is also a difference between the Bank of England and the European Central Bank as regards the manner itself of realising the monetary policy strategy. The basis of the Bank of England’s monetary policy strategy is an inflation target established by the Parliament and the way of conducting this policy is left with the Bank, which must make sure that an increase in prices does not exceed the set inflation level (Kaltenthaler, 2006:161). However, an instrument of the ECB strategy is the control of the volume of money supply and its limiting when an increase in prices exceeds an inflation target. The representatives of the Bank of England are convinced about greater effectiveness of their own strategy and its advantage over the European Central Bank strategy. One can expect a difficult discussion at the time of Great Britain preparing for the EMU membership.

3. The impact of entry into the euro area upon the economies of member countries The consequences of the introduction of the Economic and Monetary Union are the subject of

intensive research conducted by EU institutions, international organisations and authors from scientific centres. The research aim is to determine the impact of formation of the common currency area upon: 1) a further increase in mutual trade between member countries, 2) growing the transfer of foreign direct investments, 3) accelerating the real convergence and especially the economic cycles synchronisation, 4) an increase in price stability, 5) an improvement in the budgetary balance and the condition of public finances, as well as 6) a rise in macroeconomic stability.

The most often highlighted success of the ECB monetary policy was maintaining prices stability with their growth slightly above the 2-percent inflation target (the euro area average) in 1999–2007.4 Only in 2008 the annual inflation rate rose to 3.3%, but in March 2009 it already dropped to 0.6%, became negative in June and reached –0.7% in July 2009.5 In comparison with the 1980s and 1990s, the price stability, measured by the Harmonised Index of Consumer Prices (HICP) and by the core inflation index, was an important achievement. The inflation rate in the 1980s was high and amounted annually to around 8% on average, in the 1990s it decreased to almost 4% (annual average) and in 1999 it equalled only 1% (Mucha-Leszko, 2007: 151). Even though in some periods the inflation rate in the euro area exceeded the inflation target, it was caused mainly by an increase in the prices of petroleum and food products. One should not also omit the impact of growing prices of market services

4 European Commission, Special Report: EMU@10 – Assessing the first ten years and challenges ahead, Quarterly

Report on the Euro Area, Vol. 7, No 2, 2008, p. 7. 5 It amounted to -0,2% in August 2009 and is supposed to be positive in coming months. European Central Bank,

“Monthly Bulletin”, September 2009, p. 52.

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because of lower labour productivity and the lower level of competitiveness. The average inflation rate and a decrease in its diversity between countries are presented in Chart 1.

0

2

4

6

8

1990 1995 2000 2005 2010

inflat

ion

rate

0

2

4

6

8

stan

dard

dev

iation

inflation rate

standard deviation

Chart 1. The unweighted average inflation rate (on the basis of Consumer Prices Index) and inflation

rate dispersion (measured as annual standard deviation) across the 12 euro area countries in 1990-2008 in %

Source: Marcel Fratzscher, Livio Stracca, The Political Economy Under Monetray Union: Has The Euro Made A Difference?, “ECB Working Paper Series”, No. 956, November 2008, p. 29.

It results from Chart 1 that parallel with a fall in the inflation rate there was a decrease in its

dispersion, measured by the standard deviation index. Whereas the spread of extreme inflation rates (the highest and the lowest) dropped in the 1990s from over 10 percentage points to 4 percentage points or lower (depending on a year) (Lane, 2006: 48).

F.M. Mongelli and Ch. Wyplosz (Mongelli and Wyplosz, 2008: 28-29) emphasise that the inflation dispersion in EMU has dropped to a level comparable to USA, although there are at least a few reasons indicating that it should be higher than in the United States and these are: 1. The lack of a single fiscal policy, whereas the United States operates with strict rules limiting an increase in state budget deficits. However, according to theoretical assumptions, divergent fiscal policies lead to the inflation rate dispersion, which can be sizeable in the short term. 2. Cost differences between countries, which are to a large extent the result of wage policy and existence of national job markets, although the authors observe a decreasing diversity in this field within the euro area. 3. The national conversion exchange rates for the euro accepted in 1998 were not equal to the macroeconomic equilibrium exchange rates for all countries, which could affect inflation rate dispersion. 4. The equilibrium exchange rates can change, especially as a result of income catching up, the phenomenon known as the Balssa-Samuelson effect. A growth of GDP per capita (in real value) has an influence on an increase in purchasing power, which in turn equalises the purchasing power of different currencies.

Conducting the single monetary policy within the EMU area produces diverse economic outcomes depending on an economic cycle phase of the countries, their position in EU in respect of the level and growth rate of labour productivity, wages, unit production costs and inflation. The lower the economic convergence of the common currency area, the more difficult it is to adjust the monetary policy to aims preferred by economically diverse member countries. As the monetary policy is a basic instrument influencing an economic situation, the degree of economic cycles synchronisation of the EMU countries is of great importance.

The phenomenon of economic cycle synchronisation in the euro area presents a special interest for economic analysts. The authors of most studies agree that the economic cycle synchronisation of the countries functioning in the euro area increased mainly in the 1990s.6 It is thought that the primary reason for this occurrence was the progress achieved in market integration of the EU member countries, owing to the realisation and benefits of the Single European Market 1992. After the launching of the common currency any significant changes in the process of further economic cycle synchronisation of

6 European Commission, “Quarterly Report on the Euro Area”, Vol. 5, No 2, 2006, p. 19-24 and European

Commission, Special Report: EMU@10, op. cit., p. 11.

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the EMU countries were not observed. However, there was an increase in the business cycle synchronisation of the euro area with the cycles of Great Britain, the United States and Japan. This can be explained by high dynamics of structural changes in the world economy as a result of the intensive globalisation of production, trade and financial market as well as predominance of the global economic cycle, with the United States having the greatest influence on it. The correlation coefficients, characterising economic cycle convergence on the basis of changes in GDP and manufacturing production in the euro area and those of the euro area with some selected countries, presented in Table 2, confirm this trend. It is anticipated that the further business cycle convergence in the euro area will come along with advanced structural reforms.7 The main factors that directly contribute to the ever closer convergence of economic cycle phases in EMU are: market integration, monetary integration and monetary policy centralisation as well as economic cycle synchronisation on a global scale.

Correlation coefficients of economic cycles in 1978-2008 Table 2

Average correlation coefficients of economic cycles in the euro area GDP -

- 1989-1998

0.56 1999-2008

0.60 Manufacturing 1978-1986

0.48 1989-1997

0.59 1999-2007

0.61 Correlation coefficients of economic cycles of the euro area with selected countries

Period 1989-1998 1999-2008 Euro area – USA -0.18 0.35 Euro area – Great Britain 0.06 0.65 Euro area – Japan 0.46 0.56 Average correlation coefficient 0.11 0.52 Correlation coefficient in the euro area 0.56 0.60

Source: European Commission, Special Report: EMU@10, op. cit, p. 12. In the light of these deliberations and from the perspective of the EMU enlargement, the

economic cycle synchronisation of new member countries (CEECs) is a fundamental condition for their effective functioning within the common currency area. It relates especially to results of the monetary policy and the threat of its pro-cycle effect on individual economies. Studies into the field of real convergence of the new EU member countries with the euro area or with the German economy were conducted by many authors. Their results depended on the methods applied and are characterised by large divergence. We present them in Table 3.

Summing up the research results it should be indicated that the kind of analysed shocks, i.e. related to either demand or supply, is of great significance. Their symmetry is studied with the use of econometric models. In the studies conducted in 2004–2009, assessing the correlation of business cycles of the Central and Eastern European Countries (CEECs) with the euro area, the correlation was confirmed in all five cases, but in most of them only partially. The research of M. Artis, covering the years 1993–2002, shows that in the group of CEECs the highest convergence of economic cycle phases with the euro area characterised Hungary (with correlation coefficient 0.91) and Poland (0.67) (Artis, 2006: 27). Skrzypczyñski, however, maintains that in the period from quarter I, 1995 to quarter III, 2007 economic activity fluctuations in Poland were ahead of the euro area cycle and were distinguished by a larger amplitude (Skrzypczyñski, 2008: 22). In this case asymmetry of shocks, mainly of demand nature, was shown in relation to the euro area8. A positive tendency is the strong cycle synchronisation of Poland with the euro area regarding reactions to structural shocks9.

7 See for example Alberto Alesina and Roberto Perotti, Income distribution, political instability and investment,

“European Economic Review”, No. 40, Vol. 6, 1996, p. 1203-1212, Alberto Alesina, Nouriel Roubini and Gerald D. Cohen, Political cycles and the macroeconomy, Cambridge, The MIT Press 1997.

8 See Narodowy Bank Polski, Raport na temat pełnego uczestnictwa Rzeczypospolitej Polskiej w trzecim etapie Unii Gospodarczej i Walutowej, NBP, Warszawa 2009, p. 70.

9 Ibidem, p. 72.

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Review of the literature on business cycles correlation between the euro area and acceding countries Table 3

Author, year Country Method Frequency Country of reference

Result

Boone, Maurel (1998)

CZ, HU, PL, SSL

Hodrick-Prescott Filter

Monthly data

Germany High degree of business cycle synchronisation

Frenkel (1999)

CE5, BG, EE, LV

Demand and supply shocks

Quarterly data

Germany Low correlation

Horvath (2000) CE5, B3

Demand and

supply shocks Quarterly

data Germany High correlation

Korhonen (2001, 2003)

CE5, B3, RO

VAR Monthly

data

Euro area

High correlation (particularly Hungry)

Fidrmuc (2001, 2004)

CE10 Correlation of GDP and of

IPC

Quarterly data

Germany Divergent results between CEECs

Frenkel, Nickel (2002)

CE5, BG, EE, LV

Demand and supply shocks

Quarterly data

Euro area Low correlation

Babetski et al. (2002, 2004)

CE5, EE, LV, RO

Demand and supply shocks

Quarterly data

European Union

Integration has increased demand shocks correlation

Fidrmuc, Korhonen

(2004) CE10

Demand and supply shocks

Quarterly data

Euro area High correlation

Artis et al. (2004)

CE5, B3 Band Pas

Filter Monthly

data Euro area

Business cycles of Poland and Hungry are similar to those of euro

area Demanyk,

Volosovych (2004)

CE5, B3

Correlation of GDP growth

rate

Quarterly data

Europe of the 25

Asymmetric business cycle

Darvas, Szapáry (2004)

CE5, B3 HP and BP

Filter Quarterly

data Euro area

Business cycle correlation increase in a half of the sample and drop in the other one

Ramos, Surinach (2004)

CE5, B3 Demand and

supply shocks Quarterly

data Euro area

Monetary shocks correlation is similar

IMF (2000) CE10 Correlation of the GDP and

of the IPC

Annual data

Germany

Relatively high degree of business cycle synchronisation

Boreiko (2002) CE10 Hodrick-

Prescott filter (IP)

Monthly data

Germany

Convergence between euro area and CEECs

(particularly for Slovenia and Estonia)

Ind: CE4: Czech Republic, Hungary, Poland and Slovakia, CE5: CE4 plus Slovenia, B3: Estonia, Latvia and Lithuania, BG: Bulgaria, CZ- Czech Republic, EE - Estonia, HU - Hungary, LV - Latvia, LT-Lithuania, PL-Poland, RO-Romania, SSL-Slovenia, CE10- all countries.

Source: Jarko Fidrmuc and Iikka Korhonen, The Euro Goes East: Implications of the 2000-2002 Slowdown for Synchronization of Business Cycles between the Euro Area and CEECs, “Comparative Economic Studies” 2004, 46 (1): 45-62. Quated in Nabil B. Arfa, Analysis of Shocks Affecting Europe: EMU and some Central and Eastern Acceding Countries, “Panoeconomicus” No 1, 2009, pp. 23 and 24.

25

According to Z. Darvas and G. Szapáry, Hungary, Poland and Slovenia were distinguished by the highest convergence of business cycles with the euro area in 1998-2002. They based their analysis on GDP and its major expenditure and sectoral components10. The final result of their research work is not optimistic. They found that an increase in correlation of business cycle took place only in the half of CEECs, while in case of the second half there was a growing asymmetry (Darvas and Szapáry, 2006: 9; 15-16; 20). A part of the presented research results was confirmed by N.B. Arfa (2009). We present the outcomes of his studies on economic cycle correlations of 11 new member countries and Croatia in Table 4.

Correlation with euro area business cycle (according to the Hodrick-Prescott method) Table 4

Country Correlation Bulgaria 0.13 * Croatia 0.15 * Estonia 0.08 * Hungary 0.59 Latvia 0.58 Lithuania 0.37 Malta 0.32 Poland 0.58 Czech Republic 0.13 * Romania 0.57 Slovakia 0.13 * Slovenia 0.51

* These values are not significant (probability of 5%). A correlation coefficient lies between -1 and 1; however, this coefficient rarely approaches these limit values, so the tests of significance (Student’s t-test) are often carried out to draw reliable interpretations.

Source: Nabil B. Arfa, Analysis of Shocks, op. cit., p. 27.

The data in Table 4 show that cycle interdependence exists although only a few countries are characterised by a stronger correlation, including Hungary and Poland. It follows from N.B. Arfa’s research that the Central and Eastern European Countries are not fully adjusted to the EMU membership since they react asymmetrically to supply shocks compared with the euro area, whereas there is a considerably greater symmetry as regards demand shocks. The correlation coefficients characterising the supply shock asymmetry and the demand shock symmetry are presented in Table 5.

A transmission process of shocks into an economy takes place through different mechanisms and depends on the degree of market and economic policy integration. The fastest is the market mechanism. Mutual transfers of goods and services indicate the advanced interdependence of national goods and financial market segments and the results of shocks in some markets spill over quickly into the other segments of the common market. The second mechanism of transmission of shocks is connected with the realisation of the monetary policy, money transfer channels and adjustment of this policy to the outcomes of economic and political shocks. In the situation when the monetary policy is conducted by the monetary union’s central bank it is not possible to fully reconcile the divergent interests of its member countries (Baldwin and Wyplosz, 2004: 339-340) and the fulfilment of the nominal EMU criteria does not guarantee achieving benefits from the adoption of the common currency.

The most essential condition is the real convergence that reduces the costs of the loss of autonomy in monetary policy, and in the case of the new EU member countries it can be conducive to an excessive increase in credits as a result of greater access to cheaper money. The monetary expansion stimulates economic growth and an increase in prices and unit production costs in relation to other euro area countries.

10 The highest degree of correlation with the euro area of the three mentioned countries was find in GDP

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Correlation coefficients between euro area and acceding countries: shocks specification

Table 5 Country Supply shocks Demand shocks Euro area 1.000 1.000 Estonia 0.280413 0.376883 Hungary 0.255249 0.366702 Latvia 0.238848 0.395844 Lithuania 0.127847 * 0.361129 Malta 0.359200 0.182020 * Poland 0.033626 * 0.439294 Romania -0.125608 0.078744 * Czech Republic -0.037494 0.509900 Slovenia 0.241872 0.408526 Bulgaria -0.392937 -0.048359 * Slovakia -0.057729 0.099131 * Croatia -0.101964 0.389543

* These values are statistically non significant (5% of probability). Source: Nabil B. Arfa, Analysis of Shocks, op. cit., p. 33.

The next result is a decrease in price and cost competitiveness and a growing deficit in the

current account. A rise in prices in the situation of a very booming economy, also owing to a greater inflow of foreign capital, contributes to an increase in labour demand. A rise in prices and demand on the labour market results in turn in growing wages. Labour costs can become an important factor of diverse competitiveness within EMU, especially when the wage growth rate is bigger than the labour productivity growth rate. In Table 6 we present data on the cumulative growth of unit labour costs in 12 EMU countries after the introduction of euro.

Unit labour costs across euro area countries in 1999–2007 (annual percentage changes) Table 6

1999 2000 2001 2002 2003 2004 2005 2006 2007

Cumulative growth

1999-2007 Euro area 0.9 1.2 2.3 2.3 2.1 0.8 1.1 1.0 1.5 14.0 Belgium 1.3 0.3 4.2 2.1 0.7 -0.3 1.5 1.6 2.0 14.2 Germany 0.5 0.7 0.9 0.9 1.0 0.0 -0.8 -1.0 0.2 2.3 Ireland 0.6 3.4 4.4 0.8 3.9 5.1 3.7 3.1 4.2 33.0 Greece* 2.5 6.0 2.4 1.8 3.7 4.6 4.4 28.3 Spain 1.9 2.8 3.2 2.9 2.9 2.4 2.5 2.3 2.7 26.4 France 0.9 1.1 2.3 2.9 1.8 1.1 1.7 1.9 2.3 17.2 Italy 1.2 0.6 3.1 3.6 4.4 2.1 2.8 2.3 1.5 23.7 Luxembourg 0.7 2.5 6.5 2.2 1.9 1.3 1.7 2.2 3.4 24.7

The Netherlands 1.7 2.9 5.0 4.8 2.7 0.2 -0.2 1.1 1.6 21.7 Austria 0.1 -0.2 1.0 1.0 0.8 -0.3 1.4 0.7 1.2 5.9 Portugal 2.4 4.9 5.2 3.7 3.2 1.2 2.0 1.8 0.4 27.6 Finland 0.8 1.0 3.5 1.1 1.1 0.2 2.3 -0.2 1.1 11.6

Note: The table shows data for the years since the introduction of the euro in the respective country. *In the case of Greece, the cumulative unit labour cost growth refers to the period 2001-2007.

Calculations of the Bank of Greece may differ from those shown in this table. Source: European Central Bank, Monitoring Labour Cost Developments across Euro Area Countries,

Monthly Bulletin, November 2008, p. 70.

27

The highest increase in unit labour costs took place in Ireland (33%), Greece (28.3%), Portugal (27.6%) and Spain (26.4%), while the lowest one occurred in Germany (4.3%), Austria (5.9%), Finland (11.6%) and Belgium (14.2%).

The specification of unit labour costs, compensation per employee and labour productivity shows that in most cases the main factor of increasing unit labour costs were growth rates of compensation per employee. However, in a few countries, the cumulative labour productivity growth rate was very low, especially in Italy (3.9%), Spain (4.1%), Portugal (9.1%) and in France (9.2%). The highest labour productivity growth was characteristic of Ireland (26.6%), Greece (21.3%) and Finland (18.9%). The detailed data illustrating relations between the cumulative growth of labour productivity, compensation per employee and unit labour costs are presented in Table 7. Cumulative growth in unit labour costs, compensation per employee and labour productivity in 1999–2007 (percentage changes) Table 7

Unit labour costs Compensation per employee Labour productivity Euro area 14.0 25.9 11.0 Belgium 14.2 27.6 11.7 Germany 2.3 17.6 15.0 Ireland 33.0 68.4 26.6 Greece* 28.3 55.6 21.3 Spain 26.4 31.5 4.1 France 17.2 28.0 9.2 Italy 23.7 28.5 3.9 Luxembourg 24.7 40.1 12.3 The Netherlands 21.7 39.4 14.6 Austria 5.9 20.4 13.7 Portugal 27.6 39.2 9.1 Finland 11.6 32.7 18.9

*In the case of Greece, the cumulative growth rates refer to the period 2001-2007. Source: European Central Bank, Monitoring Labour, op. cit., p. 72.

Chart 2. Cumulated changes in Harmonised Competitiveness Indicators (HCIs) based on intra-euro area trade in 1999-2007, percentage changes

Source: European Central Bank, Monitoring Labour, op. cit., p. 74. The diversity of costs and prices affects the change of the competitive position of countries,

which is defined by different measures, but mainly by real effective exchange rates based on unit labour costs or consumer price indices. The Eurosystem has regularly published the harmonised competitiveness indicators (HCIs). They are used for an assessment of the international price and cost

28

competitiveness of the EMU countries. An increase in the HCIs indicates a real effective appreciation or a decline in national competitiveness.11

After the launching of the euro the differences in price and cost competitiveness of the EMU countries deepened. This concerns both intra-euro area trade competitiveness and total trade (intra+extra) competitiveness. The Harmonised Competitiveness Indicators based on intra-euro area trade are presented in Chart 2.

Germany is the most competitive country in intra- euro area trade. Austria and Finland improved their price competitiveness, while Belgium and France maintained it in principle. However, the price competitiveness of other countries evidently deteriorated, especially in the case of Ireland, Spain, Greece and Luxembourg. An even larger decline in price competitiveness, except for Germany, Austria and Finland, occurred in the case of the other EMU countries in total euro area trade (intra and extra), (see Chart 3).

Chart 3. Cumulated changes in Harmonised Competitiveness Indicators (HCIs) based on total trade in 1999-2007, percentage changes

Source: European Central Bank, Monitoring Labour, op. cit., p. 73. As a result of the decrease in price and cost competitiveness in the euro area countries there

was a growing deficit in the current account. A distinct improvement in the current account balance occurred in Germany, Austria and the Netherlands, while in Spain, Ireland, Greece, Portugal, France and Italy there was an increase in deficit (see chart 4).

The competitiveness deterioration as a result of an increase in labour costs and prices took place first of all in the catching up economies. An inflow of foreign capital contributed not only to the growth of investment demand, but also, to a large extent, of consumption demand. According to the authors of the European Commission report (Competitiveness developments within the euro area), it was the increase in domestic demand in some EMU member countries that mostly influenced the deterioration of their external balance. A strong pressure on the part of demand brought about an increase in imports and in the current account deficit.12 The authors of this report estimated that changes in domestic demand were the most important factor that caused the deepening of differences in the current accounts of the euro area member states, and that they were responsible for as much as 40–50% of these differences.13

11 European Central Bank, Monitoring Labour, op. cit., p. 73. 12 European Commission, Special report: Competitiveness developments within the euro area, “Quarterly Report

on the Euro Area”, Volume 8, No 1, 2009, p. 26 13 Ibidem, p. 27

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Chart 4. Current account positions across the euro area countries and the Harmonised Competitiveness Indicator (HCI), percentage and percentage changes

Source: European Central Bank, Monitoring Labour, op. cit., p. 75. In accordance with this analysis, the strong growth of domestic demand (especially in Spain

and Greece) resulted in the deterioration of the current account balance and then a rise in labour costs and prices contributed to a decrease in export competitiveness.14 The internal and external factors affected to a different degree the deterioration of the competitive position and position on the current account in individual euro area countries. The EMU accession means there is one common external exchange rate with all the countries not belonging to the common currency area. Depending on the scope of their trade and financial ties, rapid changes in the exchange rates of other important currencies in relation to the euro can affect the EMU countries’ economies to a different extent.

4. Conclusions The financial, currency and economic destabilisation in 2008–2009 determined a deep decline

in the economic growth rate in the European Union countries. This crisis, like the previous ones, revealed the weaknesses of the entire Community’s economy. Once again it revived the discussion concerning the deepening of integration processes: 1) elimination of the still existing regulations on the product and service markets as well as on the labour market, 2) enlargement of the common currency area and 3) strengthening of the common macroeconomic policy.

The introduction of the common currency is a major structural shock for countries with lower GDP per capita, lower labour productivity and innovativeness, as well as lower competitiveness. It is precisely such economic shocks that were experienced by those euro area countries which did not belong to the group of the hard core countries. Spain, Portugal, Ireland and Italy constituted the group of converging economies. Their development was characterised by an increase in internal demand, appreciation of the real exchange rate and a rise in the current account deficit.

The fundamental problem for the new member countries lies in the choice of optimal strategy of entry to the euro area. Their economies, despite some common features (like GDP per capita gap or price level gap), vary considerably in respect of the potential and structure of their economies, the structure of exports, the development of the financial market and the condition of public finances. Consequently, every country standing as a candidate for EMU should optimise its adjustment policy considering the situation and specificity of its economy. The legitimacy of such an attitude to the policy in the transition to the Economic and Monetary Union was emphasised by Athanasis Orphanides during the Fifth ECB Central Banking Conference on 13–14 November 2008.15 However, he also indicated certain principles to which all countries should adhere: 1) avoidance of the devaluation of their own currencies, 2) striving to reach the balance in their current accounts.

14 Ibidem 15 European Central Bank, The Euro at Ten. Lessons and Challenges, op. cit., p. 241

30

Stabilisation of the exchange rate is very important because of the later consequences of changes in the real exchange rates (after the adoption of the euro). The real exchange rates develop under the influence of external factors and changes in unit production costs in individual countries. An increase in costs leads to a decline in competitiveness. However, the nominal depreciation of a currency, the traditional way of solving problems of this kind, is no more possible under the conditions of EMU.

The analysis of the impact of introducing the euro on diverse competitiveness of the EMU countries and on the increase in the current account deficit in Spain, Ireland, Greece and Portugal constitutes a valuable lesson for countries such as Poland, Czech Republic, Hungary and all the countries outside the area of the common currency. The better the position in the current account at the moment of adopting the common currency, the lower is the deficit in the case of a decrease in export competitiveness after the entry to EMU.

The next important condition for the strengthening of an economy is the stabilisation of public finances before introducing the euro and maintaining the budget discipline after joining the EMU. The example of a country that incurred high costs of the lack of the budget discipline is Portugal, which has been in economic stagnation since 2001. When the nominal convergence (the criteria of the Maastricht Treaty) and real convergence (especially GDP per capita, economic cycle synchronisation, symmetry of shocks) are fulfilled, then the country will feel the consequences of the adjustment process to EMU to a lesser extent.

The contemporary crisis and its results contributed to the growing interests in joining the euro area. The significance of the currency risk premium increases under the conditions of crisis when exchange rate fluctuations and speculative attacks destabilise an economy. However, the EMU criteria are considered less important and this can mean serious economic problems after the adoption of the common currency. Therefore, the acceleration of the EMU enlargement produces a high risk for the catching up countries, while the postponement of this process for further years is also a risk. The only solution can be the acceleration of reforms and adjustment processes, this being the challenge for both sides – the EMU member countries and the candidate countries – i.e. the whole EU.

Bibliography

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Alesina, Alberto, Roubini, Nouriel and Cohen, Gerald D. (1997), Political cycles and the macroeconomy, Cambridge, The MIT Press

Arfa, Nabil B. (2009), “Analysis of Shocks Affecting Europe: EMU and some Central and Eastern Acceding Countries”, Panoeconomicus, No. 1

Artis, Michael J. (2006), What Do We Know About Currency Unions?, CEPR Discussion Paper Series No 5577, May 2006.

Baldwin, Richard and Wyplosz, Charles (2004), The Economics of European Integration, McGraw Education, London

Darvas, Zsolt, Szapáry, György (2006), “Business Cycle Synchronization in the Enlarged EU”, Working Paper 2006/4, Corvinus University of Budapest

Dinan, Desmond (2000), Encyclopedia of the European Union, Macmillan Press LTD European Central Bank, “Monthly Bulletin”, September 2009. European Central Bank, „Statistics Pocket Book”, Frankfurt am Main, September 2009. European Central Bank, Monitoring Labour Cost Developments across Euro Area Countries, “Monthly

Bulletin”, November 2008. European Commission, “Quarterly Report on the Euro Area”, Vol. 5, No 2, 2006. European Commission, Special report: Competitiveness developments within the euro area, “Quarterly

Report on the Euro Area”, Volume 8, No 1, 2009. European Commission, Special Report: EMU@10 – Assessing the first ten years and challenges ahead,

Quarterly Report on the Euro Area, Vol. 7, No 2, 2008. Fratzscher, Marcel, Stracca, Livio (2008), The Political Economy Under Monetray Union: Has The

Euro Made A Difference?, “ECB Working Paper Series”, No. 956, November 2008.

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International Monetary Fund, World Economic Outlook Database, October 2009. Kaltenthaler, Karl (2006), Policy-Making in the European Central Bank: The Masters of Europe's

Money, Rowman & Littlefield Publishers Inc. Lane, Philip R. (2006), “The real effects of European Monetary Union”, Journal of Economic

Perspectives, Vol. 20, Issue 4, Fall 2006. Mongelli, Francesco P. and Wyplosz, Charles (2008), “The Euro at Ten – Unfulfilled Threats and

Unexpected Challenges” [in:] European Central Bank, The Euro at Ten. Lessons and Challenges, Fifth ECB Central Banking Conference, 13-14 November 2008, edited by Maćkowiak Bartosz, Mongelli Francesco P., Noblet Gilles, Smets Frank.

Mucha-Leszko, Bogumiła (2007), Strefa euro. Wprowadzanie, funkcjonowanie, międzynarodowa rola euro, Wyd. UMCS, Lublin

Narodowy Bank Polski, Raport na temat pełnego uczestnictwa Rzeczypospolitej Polskiej w trzecim etapie Unii Gospodarczej i Walutowej, NBP, Warszawa 2009.

Pelkmans Jacques (2001), European Integration. Methods and Economic Analysis, Second Edition, Financial Times Prentice Hall, Pearson Education Ltd, Harlow

Skrzypczyński, Paweł (2008), Wahania aktywności gospodarczej w Polsce i strefie euro, Materiały i Studia, Zeszyt nr 227, Narodowy Bank Polski, Warszawa

Thimann, Christian (2009), “Global Roles of Currencies”, ECB, Working Paper Series No 1031, March 2009

Wallace, Helen, Wallace, William (1995), Flying Together in a Larger and More Diverse European Union, Netherlands Scientific Council for Government Policy, The Hague

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University Press

Investment Attractiveness of Special Legal Regimes of Economic Activity in Border Regions between Ukraine and the EU

Olha YEHOROVA

Abstract: The article deals with the investment attractiveness of the existing special legal

regimes of economic activity (SLREA) in the border regions between Ukraine and the EU, for the business entrepreneurs of neighboring countries. Their potential for investment-attraction was underused, given the instability of the state policy in this sphere (moratorium on the expansion of existing and established new SLREA, simultaneous abolition of the state aid forms and guarantees of the stable legal regime to the economic entities of SLREA in 2005 etc.). It also indicates measures and initiatives of the state policy for improving the investment field and the international prestige of Ukraine, such as compensation mechanisms for “bona fide” investors of SLREA, recovering and restoring the state aid forms for the entities of SLREA, establishment of new structures and new forms of SLREA. These measures should again renew the interest of investors to SLREA in border regions in particular and Ukraine in general.

Keywords: border regions, special legal regime of economic activity, special economic zone, priority development territory, technological park.

The recent EU enlargement towards the East made Ukraine its direct neighbor and, taking into account the strategic progress of Ukraine towards the European integration, has created new potential opportunities for the development of cooperation, especially in border regions. At that time, in four (Volyn, Lviv, Transcarpathian and Odessa) out of six border regions of Ukraine, in the East of the EU, SLREA has been established in forms such as special economic zones (SEZ), technological parks (TP) and priority development territories (PDT). It has been predicted before that the geopolitical changes in Europe will trigger an increasing interest on the part of business entrepreneurs from the neighboring EU countries to the border regions of Ukraine, mainly to the SLREA established there. These are objectively more attractive for business due to territorial proximity, abundance of raw material and resource bases, relatively cheap and skilled work force, and more favorable conditions for economic activity in comparison with the national regime etc. However, one part of this SLREA did not cause the expected interest on the part of the investors of neighboring countries and the investment activity in other parts decreased or was even suspended. So now it is important to understand the causes for this situation and identify measures to enhance the investment attractiveness of Ukraine’s border regions.

The aim of this article is to analyze the investment activity in the frame of the SLREA in border regions between Ukraine and the EU, define factors of influence and identify future prospects.

SLREA is a legal regime, established by a country’s national legislature for a fixed term, which regulates the activities of entities on a defined local area or a certain type of entrepreneurial activity (industry) in any place within the state, in order to achieve specific purposes regarding the economic and the social development of a region (industry) and of a whole country.

Since 1998 the following 10 SLREA have been established in the above mentioned border regions of Ukraine, viz.: 6 “Interport Kovel”SEZ, “Yavoriv”, “Health Resort System of Truskavets”, “Zakarpattya”, “Reni” and “Porto-Franko”, 2 TP “Yavoriv” and “Ukrainian Microbiological Center of Synthesis and Modern Technologies” and 2 special regimes for investment activities in the PDT in Volyn and Transcarpathian regions (Table 1), which benefited from specified state aid (Table 2).

It should be mentioned here that the registration of investment projects, as well as the economic and financial activity, was not carried out in the “Interport Kovel” SEZ, given the incompleteness of the legal process of its creation (President of Ukraine issued the Decree concerning the establishment of this SEZ - Decree of the President of Ukraine, 22.06.1999), but the corresponding law of Ukraine was not adopted by the Verkhovna Rada of Ukraine). In addition, the “Yavoriv” Technological Park was originally established as a scientific and technological park within the limits of the SEZ “Yavoriv” and used the forms of the state aid for the projects realization defined for this SEZ only within its frames. The state registration of this TP (as the group of entities) took place in August

33

2007 and nowadays it is operating under the Law of Ukraine “On Special Regime of Innovation Activity of Technological Parks”. So it got an extraterritorial status and today it can put into practice different projects throughout Ukraine. Concerning the TP “Ukrainian Microbiological Center of Synthesis and Modern Technologies”, the process of its state registration has not been completed yet.

SLREA in the Border Regions of Ukraine with the EU

Table 1 Border EU

countries with Ukraine

Border regions of Ukraine with

the EU Name of the SLREA Territory of location (area)

Activity term

“Interport Kovel” SEZ Kovel 20

Volyn Special regime for investment activity in the PDT in Volyn region

Novovolynsk, v. Zhovtneve

30

“Yavoriv” SEZ Yavoriv district, including

auto-port “Krakovets” 20

“Yavoriv” TP Yavoriv 15 Lviv SEZ of tourist-recreation type “Resort Truskavets”

Truskavets 20

Poland

“Zakarpattya” SЕZ Uzhgorod and Mukachevo

districts 30

Slovakia Hungary

Thrascarpatia Special regime for investment activity in Transcarpathian region

Transcarpathian region 15

“Porto-Franko” SEZ Odessa Trade seaport 25 “Reni” SEZ Reni 30 Romania

Odessa “Ukrainian Microbiological Center of Synthesis and Modern Technologies” TP

Odessa 15

The absence of a single systematic view, on the part of the various political forces in the

Ukraine, regarding the SLREA role in the activation of social and economic development of regions, industries and the whole country, resulted in the volatility of governmental policy concerning its entities. Moratoriums on expansion of existing SLREA and establishment of the new SLREA were issued several times. Moreover, in 2005, the statutory forms of the state aid and the guarantees, regarding the irreversibility of the legal regime of activities, for all entities of the SLREA, were abolished (Law of Ukraine, 25.03.2005). That is, the achievement of investment projects in the SLREA has to be carried out on the general conditions of economic activity. Such a radical solution, without the introduction of transitional periods and compensation mechanisms for investors, violated the international law and caused substantial damage to the international prestige of Ukraine and its investment climate. Ukraine lost already operating and potential investors and the economic performance of the SLREA declined.

Soon, the falsity of such a decision became obvious for the leaders of the state. Thus, compensation mechanisms were introduced for bona fide investors of the SEZ and PDT (Decree of the President of Ukraine, 28.10.2005; Decree of the President of Ukraine, 10.04.2006). Besides, the state aid was partially restored for entities of the SEZ, in particular the “Zakarpattya” SEZ (the import of goods for their further processing is free of import duty and value added tax payments - except excisable goods and groups 1-24 of the Ukrainian Classification of Goods for Foreign Economic Activity – while putting into practice the investment projects) (Regulation of the Cabinet of Ministers of Ukraine, 30.11.2005). For all entities of the TP the state aid was partially restored and reconstructed (exemption from the income tax; exemption from the import duties; foreign currency revenues not subject to sales; payments for the export-import transactions conducted in up to 150 days; payment of the value added tax by tax bill when importing new equipment and components - 720 calendar days, materials - 180 days, financial support - full or partial (50%) - without charging interest on loans, full or

34

partial compensation of interests); accelerated the amortization of fixed assets (Law of Ukraine, 12.01.2006). At present, these specified forms of the state aid are applied for the “Yavoriv” TP.

State Aid for the Entities of SLREA in the Border Regions between Ukraine and the EU until 31. 03. 2005

Table 2 Forms of the state aid

Name of the SLREA

Spe

cial

cus

tom

s zo

ne

regi

me

Inco

me

tax

Inve

stm

ent t

ax

Lan

d ta

x

Impo

rt d

uty

and

valu

e ad

ded

tax

Exc

ise

tax

Sal

es o

f f

orei

gn

curr

ency

rev

enue

Sat

e In

nova

tion

Fun

d

Em

ploy

men

t Fun

d

Sta

te g

uara

ntee

s

“Interport Kovel” SEZ + 20% rate - + (5 years) - + + + -

Special regime for investment activity in Volyn region

- + 3 years (from the 4th to the 6th year - 50% rate)

+ - + 5

years - - - -

“Yavoriv” SEZ - + 5 years (next

years - 50 % rate)-

+ 3 years (next years - 50% rate )

+ 5 years

+ - + +

SEZ of tourist-recreation type “Resort Truskavets”

- + 3 years (from the 4th to the 6th year - 50% rate)

+ + (development period), next 10

years – 50% rate) + - + - -

“Zakarpattya” SЕZ + 20 % rate - + (area development

period) - + + + -

Special regime for investment activity in Transcarpathian region

- + 2 years (from the 3rd to the 5th year - 50 % rate)

+ - + 5

years - -

+ 2 years

-

“Porto-Franko” SEZ + + 3 years (from the 4th to the 6th

year - 50 % rate) + - - + + + -

“Reni” SEZ + 20 % rate + - - + + - -

+

“+” - state aid is applied in the form of a total exemption from the corresponding payment within the duration under the basic law / in the form of state guarantees / in the form of priority funding;

“+ n years” - state aid is applied in the form of a total exemption from the corresponding payment during the certain number of years;

“+ n %” - state aid is applied in the form of paying only the specified percentage of the corresponding payment rate; - corresponding state- aid is not applied.

Some entities of the SLREA restored previous forms of the state aid by appealing to the court. The regulation measures of the legislative, executive and judicial branches of the authority in

Ukraine brought about the situation in which some entities of SLREA stopped their activities, others did not receive planned investments and reduced their production working in the new regime, or were partially restored to the previous forms of the state aid and introduced new ones.

Nowadays one can see the results of the investment activity of the entities of SLREA in the border regions of Ukraine with the EU and the investment attractiveness of these SLREA to neighboring countries.

Entities of the SLREA totally attracted 753,2 mln US dollars of foreign and domestic investments from the beginning of the investment process (as of 01.01.2009). Meanwhile, the “Zakarpattya” SEZ attracted the largest investment volume (188,5 mln US dollars) (Table 3). The largest share of foreign investments in the total volume of investments (attracted from the beginning of investment projects realization) belongs to the “Reni” SEZ - 62%, although their volume is the smallest among the other SLREA in the border regions between Ukraine and the EU. Foreign investments prevail a little bit over the Ukrainian ones on the PDT in the Transcarpathian region (51% and 49% respectively). The share of foreign investments attracted to other SEZ and PDT in the border regions is smaller, viz. nearly 38% in PDT in the Volyn region, 33,4% in “Zakarpattya” SEZ, 24% in “Resort Truskavets” SEZ, 20% in “Yavoriv” SEZ and 18% in “Porto-Franko” SEZ.

35

It should be noted that the results of the activity of “Yavoriv” TP, until August 2007, are part of the performance of “Yavoriv” SEZ. The further economic activity of “Yavoriv” TP is not indicated in tables 3-6, since the first innovative project was registered only in 2009.

Investment Volumes in the SLREA of Border Regions of Ukraine as of 01.01.2009 (from the beginning of the investment projects realization, thousands US dollars)1 Table 3

Foreign Investments Name of the SLREA total from the European

countries

Ukrainian investments

Total

PDT in the Volyn region 15004.9 15004,9 24932,4 39937 “Yavoriv” SEZ 42567,6 34820,2 141338,9 183906,5 “Resort Truskavets” SEZ 26061,1 7001,1 89265,2 115326,3 “Zakarpattya” SЕZ 36168,3 10228,7 155298,7 188467 PDT in Transcarpathian region 105281,4 87613,8 155420,4 183675,1 “Porto-Franko” SEZ 4498 2497,8 32632,3 37130,3 “Reni” SEZ 5172 2506,8 3627,5 8799,5

If considering the foreign investments by donor countries, all these SLREA actually attracted

investments from Europe (Table 4). However, only 4 SLREA, viz. the PDT in Volyn and Transcarpathian regions, the “Yavoriv” SEZ and the “Zakarpattya” SEZ, attracted investments from their direct neighboring countries of the EU. Total investment volume attracted during 1999-2008 in the these SLREA from the neighboring countries of the EU (Poland, Hungary, Slovakia) is 87,3 mln US dollars. The investments from Ukraine’s neighboring EU countries have never been attracted in the SEZ of Odessa region (“Porto-Franko”, “Reni”) and Lviv region (SEZ “Resort Truskavets”). Total Foreign Investment Volumes in the SLREA from Ukraine’s EU Neighboring Countries (thousand US dollars)2 Table 4

During the year Total Name of the

SLREA

Investor - Neighboring

EU countries

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

PDT in the Volyn region

Poland - 99.2 76.5 1801.3 7404.9 2326.1 2831.5 - - - 14539.5

«Yavoriv» SEZ Poland 252.3 1945.7 3520.7 3090.2 1760.2 1701.9 1725.4 3469.9 2640.1 275.7 20382.1 «Resort Truskavets» SEZ

- - - - - - - - - - -

«Zakarpattya» SЕZ

Slovakia - - - - - 61.7 0 - - - 61.7

Poland 293.9 355.0 0 590.0 6209.9 4500.2 3842.8 5946.3 4272.0 527.9 26538 Slovakia 110.3 497.6 680.2 440.8 72.7 487.3 384.8 0 0 0 2673.7

PDT in Transcarpathian region Hungary - 282.7 843.5 2609.1 3098.0 4181.4 4042.5 2477.6 2507.4 3034.5 23076.7 «Porto-Franko» SEZ

- - - - - - - - - - - -

«Reni» SEZ - - - - - - - - - - - -

«-» the receiving of investments is not provided by investment projects from the neighboring EU countries; «0» investments were not received from neighboring EU countries; «n» the investment volumes actually attracted from neighboring EU countries during the given year.

Poland became the investor in the “Yavoriv” SEZ, on PDT in Volyn and Transcarpathian

regions, Hungary - in the “Zakarpattya” SEZ, Slovakia - in the “Zakarpattya” SEZ and PDT in

1 The table was calculated by the author, using information from Ukraine’s Bulletins of the State Committee of

Statistics: “Receiving and Development Investments in Special (Free) Economic Zones and Priority Development Territories of Ukraine in Accordance with Investment Projects” for 2000-2009.

2 Ibidem

36

Transcarpathian region. As indicated in Table 4, the attracted foreign investment volumes from their neighboring countries of the EU in these SLREA are different and equally distributed in years.

If we are to consider the implementation of investment obligations by neighboring EU

countries, Poland fulfilled and even surpassed its project obligations concerning the investment volumes in the PDT in the Volyn region (172.4%), in the “Yavoriv” SEZ (148.9%) and PDT in Transcarpathian region (100.6%). Slovakia fulfilled its investment volumes obligations totally in “Zakarpattya” SEZ (100%) and for 98.2% in the PDT in Transcarpathian region (investments were attracted only in 2004). Hungary slightly exceeded its obligations concerning the investment volumes just in the “Yavoriv” SEZ (100.1%). In the PDT in Transcarpathian region, Hungary fulfilled these obligations in a percentage of only 6.1%.

The largest share of the attracted foreign direct investment (FDI) to the SLREA, in total volume of FDI, from neighboring EU countries, attracted in the economy of the border region, is in PDT, in the Transcarpathian region, namely from Poland (Table 5). Besides, the “Zakarpattya” SEZ and PDT in Transcarpathian region attracted the largest volume of FDI from neighboring EU countries, as compared to other SLREA in border regions.

FDI in the Border Regions of Ukraine with the EU (from the beginning of investment) and the Share that Falls to the SLREA as of 01.01.20093 Table 5

Border regions of Ukraine with EU

Total volume of attracted FDI in the economy of border regions (mln. US dollars)

Share of the attracted FDI within the SLREA in total volume of FDI in the economy of border regions (%)

Total volume of the attracted FDI in the economy of border regions from the neighboring countries of EU (mln. US dollars)

Share of the attracted FDIfrom neighboring EU country within the SLREAin total volume of FDI from neighboring country in the economy of border regions (%)

Volyn 388.7 3.9 (PDT in the Volyn region)

151.1 (Poland) 9.6 (PDT in the Volyn region)

4.6 (SEZ “Yavoriv”) Lviv 930.7 2.2 (SEZ “Resort

Truskavets”)

158.3 (Poland) 12.8 (SEZ “Yavoriv”)

33.1 (Poland) 80.1 (PDT in the Volyn region)

34.7 (Hungary) 66.6 (PDT in the Volyn region)

29.6 (PDT in the Transcarpathian region)

24.1 (PDT in the Volyn region)

Transcarpathian 355.8

10.2 (SEZ “Zakarpattya”)

11.2 (Slovakia)

0.5 (SEZ “Zakarpattya”)

Ivano-Frankivsk 480.8 - 0.2 (Romania) - Chernivtsi 60.1 - 2.9 (Romania) -

0.5 SEZ (“Porto-Franko”)

Odessa 991.5

0.6 (SEZ “Reni”)

1.3 (Romania) -

According to the data provided by the Main Directorates of Statistics in the border regions, the

largest volume of FDI, from the beginning of investment activity, was attracted in Odessa and Lviv regions. However, the share of attracted FDI within the SLREA, as regards the performance of these regions, is insignificant. The smallest volume of FDI was attracted in the Chernivtsi region, where the SLREA has not been established.

Primarily, the establishment of the SLREA in the border regions was characterized by the tendency to increase the number of concluded contracts on the realization of investment projects (Table 6). However, it was replaced by the tendency to decrease the number of investment projects, firstly in

3 The table was calculated by the author using information from the Main Directorates of Statistics in Lviv,

Transcarpathian, Ivano-Frankivsk, Chernivtsi, Odesa regions “Total Volume of Attracted FDI into the Economy of Border regions, 2009

37

2004 in PDT in Transcarpathian region, in 2005 in the PDT in Volyn region and in the SEZ of Lviv region (“Yavoriv” SEZ, «Resort Truskavets» SEZ, in 2006 in “Zakarpattya” SEZ and in 2008 in the SEZ of Odessa region (“Porto-Franko”, “Reni” SEZ).

Number of Investment Projects and Investment Volumes Determined by the Projects of the SLREA in Border Regions between Ukraine and the EU4 Table 6

Number of investment / innovation projects (investment volume determined by investment projects, thousand US dollars) Name of the SLREA

2000 2001 2002 2003 2004 2005 2006 2007 2008

PDT in the Volyn region 5 (3996.3)

10 (5687.9)

13 (17815.4)

14 (18608.6)

17 (33655.1)

14 (35933.0)

12 (35933.0)

14 (35327.8)

11 (34818.1)

«Yavoriv» SEZ 38

(182381.7) 49

(207478.0) 61

(203608.5) 65

(181966.8) 75

(208837.3) 76

(215359.6) 76

(215359.6) 75

(217834.6) 73

(214721.9)

«Resort Truskavets» SEZ 11 (25768.0)

14 (30835.5)

17 (33955.9)

22 (31217.3)

25 (95130.6)

26 (97944.9)

25 (100621.7)

24 (96261.7)

10 (78232.7)

«Zakarpattya» SЕZ

2 (4439.5)

6 (14927.3)

12 (67476.0)

12 (78365.6)

18 (251552.0)

18 (301807.6)

16 (306485.4)

17 (243972.3)

15 (258094.9)

PDT in Transcarpathian region

49 (195140.8)

63 (207932.2)

78 (240937.8)

85 (260793.9)

82 (283432.9)

51 (244505.8)

23 (223700.4)

38 (208640.7)

18 (212129.2)

«Porto-Franko» SEZ - 1 (4839.5)

4 (19901.1)

4 (21581.6)

5 (29981.6)

5 (29981.6)

5 (29981.6)

5 (29981.6)

5 (29981.6)

«Reni» SEZ - 2 (26650.9)

5 (30423.1)

5 (30423.1)

5 (30423.1)

6 (433573.1)

7 (445582.7)

7 (446820.4)

6 (415109.4)

The above-mentioned measures of the state regulation concerning the entities of SLREA

played a positive part in improving the investment climate of the country. But they did not restore the confidence of a number of foreign investors, who lost their interest to the economy of Ukraine and left this country.

The full restoration of the previous economic conditions, by providing the state aid to the entities of the SLREA, continues to be an actual issue. Nowadays there are several bills concerning it. In particular, the Lviv regional authority repeatedly appealed to the Ukrainian government to restore the previous state aid for the entities of the “Yavoriv” SEZ and “Resort Truskavets”, which faithfully perform according to the conditions of contracts on investment projects realization. But the corresponding bill includes the provisions concerning the partial recovery of the state aid to their entities, which concluded contracts on the realization of investment projects before March 31, 2005 (such as exemption from the import duty on equipment and its components for the period until the starting of entity functioning, defined by investment project, but no more than two years). This proposal does not apply to investment projects realization, which includes imports of the groups 1-24 of the Ukrainian Classification of Goods for Foreign Economic Activity) (Draft of a law of Ukraine, 07.04.2008).

The modern period is characterized by an increasing awareness of leaders of political elites, government officials and Ukraine’s Members of the Parliament concerning the necessity to adopt measures for generating a more favorable investment climate in Ukraine, as well as the use of the SLREA potential to solve the economic problems of the country, especially as regards the overcoming of financial and economic crises consequences.

Verkhovna Rada of Ukraine started to receive again proposals to create new structures of the SLREA in the border regions of Ukraine with the EU, after a long period of validity for several moratoriums on their establishment.

Thus, in 2006, the bill on establishing «Euroregion Bukovyna» SEZ throughout the Chernivtsi region was presented to the Verkhovna Rada of Ukraine, but it was recalled next year because of its nonconformity with the acquis communitaire (Draft of a law of Ukraine, 12.09.2006).

In 2008, following the Decree of the President of Ukraine «On Urgent Measures for the Development of South-Western Part of the Odessa Region» (Decree of the President of Ukraine, 15.01.2008), the bill on the establishment of the «Ahiliya» SEZ, on the Zmiyinyy (Snake) Island of

4 Table was calculated by the author using information from the Bulletins of the Ukraine’s State Committee of

Statistics “Receiving and Development Investments in Special (Free) Economic Zones and Priority Development Territories of Ukraine in Accordance with Investment Projects” for 2000-2009

38

Kilikia district, in Odessa region, was prepared (Draft of a law of Ukraine, 18.11.2008). Taking into account the geographical, geological and historical specificity of the island (limited and remote areas with problems for the provision of energy and drinking water), the investment directed to the development of tourism and recreation areas and preservation of cultural heritage is probably not interesting for investors in the area. However, the establishment of this SEZ for the conservation and effective use of natural resources and creating new jobs may be quite promising and attractive for investments. Soon after, the bill was rejected.

In the same year, the bill regarding the creation of a new TP, «Hemo-Pol», in Teplodar (Odessa region) was submitted to the Verkhovna Rada, in order to accelerate the development and the production of high-tech and competitive products, to satisfy the needs of Ukraine on domestic and foreign markets (Draft of a law of Ukraine, 10.07.2008).

To encourage the investment and innovation activity in Ukraine, new forms of SLREA, adapted to the standards of the EU, are being developed. So far, the law on the operation of scientific parks in Ukraine has been recently adopted. There are also proposals for the establishment of investment, innovation, industrial parks and zones of high and new technologies with special customs, monetary, tax and other mechanisms, aimed at encouraging investors. Obviously, the creation of these new forms of the SLREA in the border regions of Ukraine, providing a variety of sate preferences for entities, may again renew the interest of investors in these regions. But the political elite of Ukraine should avoid the use of the politicized approach to solving economic problems and to provide systematic revisions of bills. The importance of these laws for Ukraine in general and for the border regions in particular, is becoming more obvious in the context of the contemporary situation, marked by a deepening of the world’s financial and economic crisis and increased competition for investments. Delaying the adoption of these laws, due to internal political strives, causes problems to the national interests of Ukraine.

Bibliography Cabinet of Ministers of Ukraine, Some Issues on Import (Carriage) Goods to Special (Free) Economic

Zones and Export goods out of Zone, Regulation No. 1119, Kyiv, 30.11.2005. Main Directorates of Statistics in Lviv, Transcarpathian, Ivano-Frankivsk, Chernivtsi, Odesa regions,

Total Volume of Attracted FDI into the Economy of Border regions, 2009. President of Ukraine, On Measures Concerning the Improvement of the Investment Climate, Decree No.

1513/2005, Kyiv, 28.10.2005. President of Ukraine, On Plan of the Top Priority Measures in the Sphere of Investment Activity,

Decree No. 300/2006, Kyiv, 10.04.2006. President of Ukraine, On the Special Economic Zone, Decree No. 702/99, Kyiv, 22.06.1999. President of Ukraine, On Urgent Measures for the Development of South-Western Part of the Odessa

Region, Decree No. 16/2008, Kyiv, 15.01.2008. State Committee of Statistics of Ukraine, Receiving and Development Investments in Special (Free)

Economic Zones and Priority Development Territories of Ukraine in Accordance with Investment Projects, Statistical Bulletins, Kyiv, 2000-2009

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Verhovna Rada of Ukraine, On Bringing Changes to the Law of Ukraine «On Special Regime of Investment and Innovation Activity of the Technological Parks » (concerning «Hemo-Pol» (Teplodar, Odessa region), Draft of a law of Ukraine No. 2751, Kyiv, 10.07.2008. Retrieved from http://gska2.rada.gov.ua/pls/zweb_n/webproc4_1?id=&pf3511=33003

Verhovna Rada of Ukraine, On Bringing Changes to the Law of Ukraine «On the Budget of Ukraine for 2005» and Some Other Legislative Acts of Ukraine, Law of Ukraine No. 2505-ІV, Kyiv, 25.03.2005.

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Verhovna Rada of Ukraine, On Special Economic Zone «Euroregion Bukovyna» and Special Regime of Investment Activity on this Territory, Draft of a law of Ukraine No. 2145, Kyiv, 12.09.2006. Retrieved from http://gska2.rada.gov.ua/pls/zweb_n/webproc4_1?id=&pf3511=27990.

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II. Role of the economic frontiers LuminiŃa ŞOPRONI, Ioan HORGA (Oradea) ◄► The Romanian – Hungarian

Border, link or delimitation for the post-adhesion process of Romania and Hungary?

László GULYÁS, Erzsébet SISÁK (Szeged) ◄► Survey of Urban Competition

between Szeged and Timişoara Laura SCICHILONE (Siena) ◄► European Ecological Borders Florica ŞTEFĂNESCU, Andreea BRAD (Oradea) ◄► Aspects of sustainable

development in Romania and its neighboring countries

The Romanian – Hungarian Border, link or delimitation for the post-adhesion process of Romania and Hungary?

LuminiŃa ŞOPRONI, Ioan HORGA

Abstract: Today, Romania and Hungary are two countries sharing the same wish: to become

active and responsible members of the new great European family. Even if the start was slightly differentiated – Hungary acceded to the EU in 2004 and Romania in 2007 – the post-adhesion evolutions of the two countries are demonstrating the same effort towards the complete integration in the European Union, through the adhesion to the Euro Zone. This paper intends to reveal if the border between the two states plays the role of either connection or demarcation between the economic evolutions of these two member-states of the European Union. On this matter, we will analyze the economic conjuncture, the evolution of the economic indexes and the condition of the different fields of the neighboring economies.

Keywords: border, crisis, European Union, member states, economic conjuncture

After a prolonged economical growth, in 2007 and especially in 2008, the economy of the countries in the Central and Eastern Europe has begun to display a medium rate of growth, due to the lower external demand – as a result of the demand decrease in Western Europe – due to stricter conditions of external financing and, more importantly, due to the outcome of the international financial crisis. The prolonged economic crisis has powerfully stricken the economy of this country in 2009, leading to economic recession and the collapse of several indicators. Central and Eastern Europe’s GDP has dropped by 5,0% in 2009 and IMF predicts a 1,8% growth in 2010. The investors are more careful with their involvement in the region, and pay more attention to the conditions of the internal market and the efficiency of public politics. Some countries have large debts in hard currency, which can be extremely pricey if the exchange rate alters. According to IMF experts, in 2010, „recovery in the emerging Europe is likely to be difficult, especially for economies most affected by sharply falling capital flows and domestic financial sector turmoil” (IMF, World Economic Outlook, October 2009:67).

The economic situation After years of sustained growth, Romania deals with a significant economic moderation due

to the decline of the exports, the reduction of activity in the construction area and the shrinkage of the financing level. According the European Commission, „the economic boom between 2004 and 2008 has led to overheating pressures and unsustainable fiscal and external imbalances: real GDP growth in this period averaged 6.6%; inflation peaked at 8.4% in Q2-2008; the current account deficit reached 12.3% of GDP in 2009; banks and other businesses were increasingly reliant on short-term external funding; half of domestic private credit was in foreign currency. […] The years of pro cyclical budgetary policy had led to a sizeable deterioration in the underlying fiscal position, with the structural deficit rising from 2.4% of GDP in 2005 to 8.5% of GDP in 2008.” (European Commission, Economic Forecast, Autumn 2009:138).

After adhering to the EU in January 2007, Romania has entered a new phase of economic growth, with major foreign investments. The growth rate of the GDP (Gross Domestic Product) was 8.4% in 2004 and decreased substantially in 2005, to 4.1% (IMF, World Economic Outlook, April 2008:246) as a result of the flood and imports increase. Nevertheless, beginning with 2006, the country has seen spectacular evolutions in the growth rates: 8.6% in 2006 and 6.0% in 2007. Romania’s GDP increased by 6% in 2007 as a result of the expansion of such economic areas as the constructions and services, which were able to compensate for the major decline of the agricultural sector (-1.3%). The factors that have led to the decrease in the agricultural product were: the drought, the low productivity rates, the reduction of the cultivated areas and the surfaces left uncultivated (more than one million hectares). The constructions field represents one of the most dynamic economy branches: in 2007 it has

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increased with 37.5%, the highest level in Europe. Services have also increased, representing more than 50% of GDP; the industry has the same value in the last years, which is about 27-28% of GDP.

In its 2008 autumn economical forecast, the European Commission considered that Romania’s economy was „overheated”, and the growth would slow down. Even though during the first half of 2008 the economic growth has speeded up to 8.8%, during the second half of 2008, a reduction of the internal demand was expected (as a result of the international financial crisis). (European Commission, Economic Forecast. Autumn 2008:106-107). The International Monetary Fund also forecasted a major reduction of Romania’s economic growth for the following years, with a value of 4.8% in 2009, as a consequence of the decrease in the economic growth supported by expenditure, a consequence of the restricting monetary policy for credits and of the international financial situation that would have a negative influence on investments. The IMF representative for Romania considered that there was a „large amount of incertitude about this prospect because it is difficult to evaluate the effects that the present turbulence will have” (Mediafax News Agency, 23 September 2008).

But all these predictions have been dramatically changed by the major event that started in the final part of 2008: the world economic crisis. Romania’s GDP growth was substantially reduced by the final trimester of the year, marked by the first effects of the international crisis that could be felt. Despite the optimistic estimations made at the beginning of last year, economic growth was just 7.1%, only 1.1% more than in 2007. Therefore, in 2008 the final total consumption grew by 8% as compared to 2007, the expenses for the population’s final household consumption went down by 4.7% in the final trimester, due to the reduction of the amount of retail trade (-1.8%) and of services offered to the population (-14.7%). The industry’s ratio in the total of the GDP has come to be lower than that of commerce in 2008, recording a rebound of four percentages compared to 2002. It is most likely that the assessment of the Romanian currency, which stimulated credits in foreign currency and the purchase of estate, was the factor that determined a series of economic agents to reorient from the industrial area towards the construction domain. This explains why, along with the reduction of industry’s ratio to the GDP, there was a growth of the construction’s ratio in 2008 compared to 2002. During this time, the agriculture’s ratio in GDP has shrunk; decline which was compensated by the growth of services (seen as a whole, including trade) and net product tax (Săptămâna Financiară online, March 22, 2009).

According to the Romanian economist Liviu Voinea, the analysis of the internal economic crisis in Romania outlines the vulnerability of Romania’s economic growth after 2001, dependent on private short term external loans and sustained by the internal consumption based on external financing, the real estate boom and the pro cyclic fiscal and budgetary politics (single tax quota, the increase of the budget salaries). Voinea therefore calls the Romanian economy an “economy of illusion” (the illusion of the personal common wealth), based on the speculative inflows of foreign capital that have financed the imports. He also emphasises the role the anti cyclic politics had in 2006-2008, at the outset of the crisis. The large budgetary deficit leads to the understanding of Romania’s difficulty in adopting anti cyclic politics in order to reduce the effects of the crisis, as well as the countries in the Euro Area or in the USA. The lack of a strategic vision and the postponing of the deeply needed structural reforms have led to chaotic economic development, based on consumption and debt rather than investments. Voinea considers that the economic crisis in Romania is an internal one, which would have appeared in the absence of the global economic crisis just as well. The Romanian crisis is in fact a typical crisis of financing of the current account deficit (Voinea, 2009:63-78).

Romania. Contributions in the GDP increase (sectors) Table 1

% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 GDP 4.2 7.9 6.0 7.1 -7.7 0.5 2.4 3.7 4.4 5.2 Industry 0.6 1.7 1.2 0.3 -1.7 -0.3 0.2 0.7 0.9 1.0 Agriculture -2.2 0.3 -1.3 1.2 -0.5 0.1 0.2 0.2 0.3 0.2 Constructions 0.6 1.6 2.5 2.3 -2.1 0.3 0.6 0.7 0.8 0.8 Services 4.2 3.4 3.5 2.6 -2.4 0.3 1.2 1.7 1.9 2.8 Net taxes on product

1.0 0.8 0.2 0.7 -1.2 0.0 0.2 0.4 0.4 0.5

Source: The National Forecast Commission, the Autumn forecast 2008, October 20th, 2008 The National Forecast Commission, the Autumn forecast 2009, November 5th, 2009

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The European Commission considers that, in 2009, Romania’s economy would shrink by 8%, followed by a slight growth in 2010, for which period of time they estimate, just like the National Prognosis Commission, a growth of 0.5% (European Commission, Economic Forecast, Autumn 2009:140). The European Bank for Reconstruction and Development (EBRD) also estimates a contraction of Romania’s economy by 8% in 2009 and a growth of 1% in 2010 (EBRD, Transition Report 2009). The estimation of Fitch’s rating agency for 2009 – a 7.5% contraction – is slightly more optimistic than those of EC, EBRD and the National Prognosis Commission, which believe that Romanian economy’s contraction would be 7.7% in 2009, and than that of IMF which considers GDP’s reduction to reach 8-8.5%. As for 2010, Fitch predicts a return of growth, with a rate of 2%, this time far larger than the 0.5% predicted by Romania’s National Prognosis Commission1.

In the second half of 2009, the first signs of economic recovery started to appear, initially driven by export demand. The decline in industrial production and exports has been moderate and the private credit developments turned positive. The recovery of domestic demand is expected to follow with some delay, given the still rising unemployment-rate and the decelerating wage growth. Real GDP growth is expected to turn positive by the first quarter of 2010 (European Commission, Economic Forecast, Autumn 2009).

Romania. Contributions in the GDP increase Table 2

% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 GDP 4.2 7.9 6.0 7.1 -7.7 0.5 2.4 3.7 4.4 5.2 Internal demand 8.6 14.0 14.8 9.0 -14.4 0.9 3.0 4.7 5.4 6.1 Final consumption 8.2 8.1 8.5 6.6 -8.8 1.0 1.3 2.6 2.8 3.4 Gross fixed capital formation

0.4 5.9 6.2 2.4 -5.6 0.0 1.7 2.1 2.6 2.8

Net exportation -4.4 -6.2 -8.7 -1.9 6.7 -0.5 -0.6 -1.0 -1.0 -0.9

Source: The National Forecast Commission, the Autumn forecast 2008, October 20th, 2008 The National Forecast Commission, the Autumn forecast 2009, November 5th, 2009

Over the last few years, Hungary has been facing a much more difficult situation than

Romania. The country had lower GDP growth compared to most neighboring countries and even old Member States in both 2007 and 2008 (European Commission, Economic Forecast, Autumn 2009:120).

After it benefited from an economic revival in 2004, subsequent to its adhering to the European Union, Hungary recorded a decrease in the growth of the GDP as compared to the rest of Europe: from 4.8% in 2004 to 4.1% in 2005 and 3.9% in 2006 (IMF, World Economic Outlook, April 2008:246). In 2005, the economic growth had a lower value as compared to that of the other economies which had joined the European Union in 2004. The difference was even greater in 2006, when the GDP growth decreased to 3.9%, in a period of time when many of the European countries have had an accelerated growth pace. According to Askoka Mody, Executive of the European Department of the IMF, indicators of in depth issues have been visible before the consolidation was initiated. By mid 2006, before the fiscal consolidation was made public, investments decreased substantially. Mody says that that was rather unexpected and represented a warning regarding the fact that investors were becoming increasingly cautious as far as Hungary's future was concerned (The Budapest Sun, 24 October 2007). Private consumption has also started to decrease before the fiscal consolidation policies were announced, and the latter included more lax employment provisions and leveling real net incomes. Within this context IMF specialists have also forecasted a decrease in Hungary's relative profitability. Gross national investments decreased to 23% of GDP in 2006, while foreign direct investments increased to 2.7% of GDP (IMF, Hungary. Staff Report for the 2007 Article IV Consultation, 2007:7-8).

1 „Estimare optimistă de la BERD: Economia României va creşte cu 1% în 2010”; in Wall Street, 16 October 2009,

http://www.wall-street.ro/articol/Economie/73421/Estimare-optimista-de-la-BERD-Economia-Romaniei-va-creste-cu-1-in-2010.html; „Fitch: Economia României va creste cu 2% in 2010”, in Wall Street, 30 October 2009, http://www.wall-street.ro/articol/Economie/74274/Fitch-Economia-Romaniei-va-creste-cu-2-in-2010.html

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Beginning with the last months of 2006, the growth rate of the GDP (around 3%) dropped down under the rate manifested in the Euro Zone. According to IMF experts, the forecasts for the following years announce a slight resilience of the economic growth: 1.8% in 2008 and 2.5% in 2009 (IMF, World Economic Outlook, April 2008:246). The high rate of unemployment contributes to maintaining a low growth rate in consumption. Recent developments of the investments are not favorable either, and the virtual standstill in corporate borrowing contributes to keeping investments at a low level (IMF, Hungary. Staff Report..., 2007:14). Economic growth was reduced to 1.1% in 2007 as compared to the historical average of 2001-2006. The severe financial measures adopted at the middle of 2006 have had a significant role in slowing down the pace. The private sector has had a slight improvement, consumption costs increased by 0.7% in 2007, despite the 5% decrease of the real salary. For the year of 2007, the agricultural sector, dominant in former days, represented only 4.2 % of the GDP, equal to the construction sector. The industry amounted to a percentage of 25.2% of the GDP, and services contributed with 66.4% (CEE Economic Data – Outlook for 2009-2010, Issue 2, 2008:14).

This moderately positive evolution continued in the first half of 2008 but was annihilated by the international financial crisis. Hungary was in a fragile economic condition when the financial crisis broke out in the autumn of 2008. Hungarian financial markets were strongly affected starting with October 2008. The country faced the freeze of the government bonds market, the fall of the stock market and the severe depreciation of the forint. These events were brought about by Hungary's weaknesses, for instance the highly significant external debt. Consequently, the European Commission foresaw a 1.7% increase for 2008 and only a 0.7% increase for 2009 (European Commission, Economic Forecast. Autumn 2008:92-93). The Prime Minister of Hungary feels that the recession which Hungary has entered is long term (18 months) and the difficult part is yet to come. Hungary’s economy will slow down even more in 2009, as export drops and the national consumption is connected to budget limitations and salary drops. Therefore, the Hungarian government has launched a plan of economical stimulants in order to save the country from recession, but the strict budget control doesn’t allow new expenses and the central bank has sent the warning that the economical regeneration will be slow (Budapest Business Journal online, November 2008).

In November 2008, acknowledging the government’s commitment to maintain the fiscal consolidation process and to prevent a more severe financial market crash, a joint financial assistance of up to EUR 20 billion was provided to Hungary by the EU, the IMF and the World Bank linked to policy conditions. In order to counteract the decreasing revenues caused by declining output, the government also implemented a mix of structural and temporary expenditure saving measures. However, the European Commission foresees a reduction of GDP by 6.5% in 2009, followed by another reduction in 2010, only this time much smaller: -0.5% and a growth of 3% in 2011 (European Commission, Economic Forecast. Autumn 2009:120-122). The European Bank for Reconstruction and Development (EBRD) also estimates a contraction of Hungary’s economy by 6.5% in 2009 (EBRD, Transition Report 2009). According to IMF experts, „real GDP is projected to fall by 6.7 percent in 2009 and 0.9 percent in 2010. In 2009, domestic demand and imports are now projected to be slightly weaker, reflecting the outcome in the first half of 2009. In 2010, net exports are broadly unchanged, as the improvement in the global outlook is offset by a more appreciated exchange rate” (IMF, Hungary: Country Report No. 09/304, 19 October 2009).

Based on diminishing real wages and increased uncertainty regarding employment, consumption expenditure by households is foreseen to decline by more than 10% between 2008 and 2010. At the same time, fixed capital formation is also expected to decrease substantially due to financing difficulties and low capacity utilisation, with the possible exception of infrastructure investments linked to EU funds. Net exports are projected to make a large positive contribution to growth as imports fall even faster than exports (European Commission, Economic Forecast. Autumn 2009:120).

Aspects of the monetary policy Monetary policy in Central and Eastern Europe countries loosened up noticeably toward the

end of 2008 and the beginning of 2009 in the face of sharply slowing economies and easing inflation. Policymakers started to rethink monetary easing given the dramatic currency declines across the region at the beginning of 2009. Romania and Hungary have flexible exchange rates and independent monetary policy.

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Starting with 2000, disinflation in Romania has been continuous, the phenomenon being confirmed by the annual inflation average rate, which dropped every year from 45.7% in 2000 to 6.6% in 2006 and 4.8% in 2007 (IMF, World Economic Outlook, April 2008:252). In 2005, the strategy of direct inflation targeting had a special role in this process; consequently, the prognoses of the inflation level had low values. The anticipations for 2008 are not very optimistic and the National Commission of Prognosis has estimated a level of 8% for the average inflation (Mediafax News Agency). In the report on inflation published at the beginning of February 2008, the National Bank of Romania (NBR) revised by 1.6 per cent the increase for the inflation forecast in 2008, from 4.3% to 5.9%, while the estimated value of inflation for December 2009 is 3.9% (NBR, Inflation Report, February 2008). The data given to publicity by the European Office of Statistics, Eurostat, confirms the previsions, showing that the annual inflation in Romania has been 7.3% in January 2008 as compared to the same month of the last year (placing our country on the seventh place in the European Union) and 8% in February, when Romania went two places up in the European top of inflation rate, reaching place five, left behind only by the Baltic countries and Bulgaria (EUROSTAT, February 2008).

On the 26th of March 2008 the increase of the inflation has determined the Central Bank to increase the monetary policy rate from 9% to 9.5% (NBR Press release, March 2008). Thus they are trying to decrease the consumption and the possibility of opening new credits which increase the inflation. This is the fourth consecutive increase of the monetary policy rate performed by the Central Bank; on 31st October 2007 the key interest rate was 7%. The National Bank of Romania explains that the analyses performed confirm the possibility to achieve an annual inflation rate above the highest limit of the variation band due to the continuous and excessive domestic demand and also to the lasting effects of the shocks caused by the nature of the offer (mainly the international prices for food and fuels). In the Convergence Programme 2006-2009, elaborated by the Romanian Government, they consider that „the monetary policy rate together with the policy of market liquidity control and the additional measures aimed at slowing down the pace of non-government credit growth are expected to be the main pillars of controlling the aggregate demand” (Government of Romania, Convergence Programme 2006-2009, 2007:9).

On July 31, 2008, the Administration Council of the NBR decided to increase the monetary policy rate to 10.25% per year. The context created by the internal macroeconomic evolutions and the uncertain climate of the international markets rendered NBR to decide, in its session of October 30, 2008 to the monetary policy rate at 10.25% per year. The decision had the aim to provide a balance between the gradual growth of monetary restrictions – as a result of increased inflation, in order to achieve medium term disinflation targets, and the required caution due to the emergence of new sources of risk on the macroeconomic side (NBR Press releases, 2008). As a consequence of the ongoing turbulence on the financial markets and of the slowing down of the overall activity, a slowing of the economic growth and an increase of the inflation rate were expected towards the end of 2008 and 2009. That is why NBR has once again revised the inflation rate for 2008 from 6.6% to 6.7%, with these figures being much over the ones from the beginning of the year. This evolution has been generated by the pressure exerted by the growth of labor unit cost, the increase of the external prices of industrial products and by the demand excess subsequent to the population income increase and of the credits given to the private sector. The forecasts for 2009 have also been modified from 4.2% to 4.5% (NBR, Inflation Report, November 2008). The NBR Governor motivated the decision by the major uncertainties on the market during the period analyzed.

In 2009, a year strongly marked by the effects of the crisis, Romania’s Council of Administration of the National Bank has decided to reduce the interest rate of monetary politics to 9.5% per year, starting with May 7, 2009, in order to invigorate the credit process of the Romanian economy. The process started by BNR continues with the following steps: reduction of interest rate of monetary politics to 9% per year starting with 2009, as disinflation continues, the inflation annual rate descends to 5.95% in May 2009, due to a tempered dynamic of administrated and essential prices. This decision is desired to contribute to the insurance of an adequate level of cash flow and to the gradual come back to the interest rates practiced by commercial banks to their natural functional position reported to the interest rate of monetary politics; the reduction of interest rate by monetary politics to 8.5% per year starting with 5th of August 2009 as a consequence of the strengthening of the disinflation process through the reduction of prices dynamics of fuel and aliments as the set reductions of request and the temper of the sensitivity of the leu’s exchange rate. Although the process of disinflation continues, its

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track is marked by the continuing evolution of the economic crisis worldwide and the maintaining of significant structural rigidity in Romanian economy; the reduction of interest rate of monetary politics to 8% per year starting with September 30, 2009 in a context marked by the reduction of the annual inflation rate to 4.96% in August, the significant and persistent adjustment of external deficit as the effects of economic and financial crisis can be seen worldwide, the persistency of high annual dynamic of credits given for the public sector, the recording of a positive monthly dynamics of the credits given to the private sector for the first time in the past six months and the continuation of the growth tendency for savings at the level of national economy. In the session of November 3, 2009, Romania’s National Bank’s Administration Council set as an inflation target for 2009 a level of 3%, with a variation interval of ±1%, lower than 3.5% in 2010 (NBR Press releases, 2009).

As far as the inflation rate is concerned, at the beginning of 2000, Hungary was far better off than Romania, having a 9.8% inflation rate, as compared to Romania’s rate of 45.7%. The rate of inflation in Hungary gradually decreased in 2000-2003, reaching 4.6% in 2003. The year when Hungary joined the European Union (2004) the value of inflation was higher (6.8%) but decreased afterwards to 3.6% in 2005 and 3.9% in 2006. Nevertheless, in 2007 the inflation pressure determined the inflation to reach 7.9%. The IMF forecast for the following years is 5.5% for 2008 and 3.4% for 2009 (IMF, World Economic Outlook, October 2008). In august 2008 the inflation rate reached 6.5 %, high above the target value of 3% set by the Central Bank. This increase determined the National Bank of Hungary (Magyar Nemzeti Bank) to modify the inflation target to 6.3% in 2008 and 4,1% in 2009 (Magyar Nemzeti Bank, Quarterly Report on Inflation, august 2008:10).

According to officials from the National Bank of Hungary, „rapid disinflation continued at the end of 2008”. The average annual inflation rate was 6.1% in 2008. The sharp drop in international commodity prices was the main contributing factor to the fall in inflation; however, declining domestic demand also had a perceptible effect on prices: despite the substantially weaker exchange rate, tradables inflation declined and the rate of increase of services prices fell further.” (Magyar Nemzeti Bank, Quarterly Report of Inflation, February 2009: 7, 18). The descending trend continues in 2009, as „subdued domestic demand has accelerated the nominal adjustment of the economy. The price-reducing effect associated with the general trend of shrinking sales opportunities is increasingly strong. Accordingly, following the indirect tax raises, the ensuing increases in price levels were weaker than expected, and a strong disinflationary trend was observed even amongst market services, which have a history of persistently rising price levels. Increasingly subdued pricing decisions have been accompanied by deceleration in nominal wages as well. This process is also expected to remain characteristic in the coming years, contributing to the development of a sustained, low inflation path” (Magyar Nemzeti Bank, Quarterly Report of Inflation, November 2009:3).

The monetary policy rate set by the National Bank of Hungary has had the same value of 8,5% since May 27, 2008, second in EU only to Romania’s rate. The Monetary Council of the Central Bank decided in its extraordinary session held on October 22, 2008 to increase to monetary policy rate to 11,5% (Magyar Nemzeti Bank, Press release, October 2008), after the forint’s significant depreciation to the euro. The decision is made in a time when Hungary is trying to consolidate its financial markets and to annihilate the impact of the global financial crisis, against a background of decreased economic growth and increased budget deficit, which lead investors to sell the assets they owned on the Hungarian market. Some analysts think that the decision of the Hungarian authorities was one of the last means Hungary has for supporting the national currency (Capitalul.ro, 23 October 2008).

Just like in Romania, the officials of the National Bank of Hungary have come to accomplish five successive reductions of the interest rate of monetary politics during 2009, starting with the month of July. In November, the Central Bank has reduced the interest rate of monetary politics to 6.5% (Magyar Nemzeti Bank, Press releases, 2009). The National Bank of Hungary's monetary policy council has decided to remain cautious on interest rates mainly due to external risks. The key interest rate in Hungary is one of the highest in the European Union, but not as high as in Romania, where it is of 8%.

After Romania has ranked first for several months in the EU as regards the annual inflation rate, in August 2009, Hungary, which registered a rate of 5%, passed beyond Romania, with a 4.9% rate, while Poland ranked third with 4.3%. At the level of European Union, the Eurostat data for August 2009 showed that the inflation rate is at 0.6%, ascending from 0.2% in July 2009. In November 2009, Romania, with an inflation rate of 4.6% was behind Hungary, which recorded a rate of 5.2%, as EU’s

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annual inflation rate was of 1% in November, and in the euro zone it reached 0.5% (EUROSTAT, 2009).

External support Hungary’s very low economic growth in 2008 is an indicator that the slowing down in the

Eurozone has already been felt in this country and that the effects of the international financial crisis have a major impact upon it. Hungary’s economic perspectives are not encouraging, since the country has had to impose severe fiscal and monetary targets, in order to be able to receive the IMF support package of 25 billion USD in October 2008. This package includes strict fiscal targets, which will prevent Hungarian authorities from increasing expenses so as to stimulate economic growth (here included reducing expenses, even freezing salaries). Thus, in October, the National Bank of Hungary increased the interest rate by 3 per cent points (to 11.5%), while Central Banks in the Czech Republic and Slovakia reduced it in the foregoing weeks, in accordance with the European Central Bank (Capitalul.ro, 17 November 2008). Moreover, the European Central Bank (ECB) announced that it will provide the Central Bank of Hungary with a loan up to 5 billion euro, while the latter is to present an extensive package of policies targeting the support of the internal financial markets (Romania Libera online, 16 October 2008).

Although even from 2008 the Romanian and foreign experts and financial analysts

recommended Romania to reach for external help in order to diminish the effects of the crisis, the Romanian authorities did not consider help to be necessary at that time, claiming that the Romanian economy would not be affected too much by the crisis. Almost all along 2008, most of the voices were hoping that „their crisis will not hit us” (Dijmărescu, 2009:6). Subsequent events and data infirmed these excessively optimistic claims (with no solid reasons other than the elective one) and unrealistic at the same time, so as the authorities had to request external financial support. In March 2009, Romania contracted a two year stand-by agreement with the International Monetary Fund for 12.95 billion euro, the total package of external financing, from IMF, European Union, World Bank and EBRD, reaching 19.95 billion euro. The European Union contributes with 5 billion euro after a favorable response from the European Commission and European Council, the World Bank allows Romania to lend one billion euro, and the European Bank for Reconstruction and Development, alongside with other international financing institutions will give another billion euro. The program’s objective is to soften the effects of the dramatic decrease of private capital flows towards Romania and to implement at the same time, the necessary economical politics measures to reduce fiscal misbalance and the consolidation of the financial system. The basic measures from the program are to strengthen fiscal politics, to reduce the Government’s need of financing and to improve fiscal sustainability, therefore preparing Romania to possibly enter the euro zone (Mediafax News Agency, March 25, 2009).

Hence the international crisis has led in this area as well, of foreign help, to the leveling and reduction of the borders to the role of a simple administrative delimitation, which cannot stop the consequences of global effects upon one or the other of the two countries.

The evaluation of the rating agencies International rating agencies consider the emergent countries to be most vulnerable to the

international financial crisis due to high current account deficits and to important risk concerning short term external debt.

Standard & Poor’s has lowered in October 2008 Romania’s rating for long-term foreign currency sovereign credit from BBB- to BB+ with negative outlook, and to B from A-3 for short-term foreign currency sovereign credit, as a consequence of financing risks; this has dazzled the analysts, the Central Bank and the financial market. Although even the most pessimistic appraisals show a significant growth of its economy, Romania has the lowest rating in the European Union, lower than that of countries who have officially reached a crisis. The Governor of the National Bank of Romania has roughly criticized S&P’s decision to downgrade Romania’s rating, stating that the public debt of the country is at a low level (12% of GDP), contrary to the information looked into by the agency. The analysis made by the National Bank of Romania shows that Standard & Poor’s decision is groundless, taking into consideration that other states in the region still have investment grade, despite the fact that certain macroeconomic indicators show a vulnerability at least as significant as Romania’s, and the

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market’s perception concerning Romania’s country risk is rather different than that of the financial evaluation agency (Ziarul Financiar Website, October-November 2008; Romanian Agency for Foreign Investment, 11 November 2008).

Credit ratings – Central and Eastern Europe (long-term foreign currency) Table 3

Moody’s Standard & Poor’s Fitch Aaa AAA AAA Aa1 AA+ AA+ Aa2 Slovenia AA Slovenia AA Slovenia Aa3 AA- AA- A1 Czech Republic,

Estonia, Slovakia A+ A+ The Czech Republic,

Slovakia A2 Poland, Lithuania A The Czech Republic,

Estonia, Slovakia A

A3 Hungary, Latvia A- Poland A- Estonia, Lithuania, Poland

Baa1 BBB+ Lithuania BBB+ Baa2 BBB Bulgaria, Hungary BBB Hungary, Latvia Baa3 Bulgaria,

Romania BBB- Latvia BBB- Bulgaria

Ba1 BB+ Romania BB+ Romania Ba2 BB BB Ba3 BB- BB- B1 B+ B+ B2 B B B3 B- B-

Source: Website CIB Bank from Portfolio.hu data collection

Standard & Poor’s lowered its credit rating on Hungary as well, to BBB from BBB+ with negative outlook, stating that „the ratings could be lowered further if the economic adjustment were to prove more disruptive than currently expected or if political support for fiscal consolidation were to falter”. The Hungarian analysts, unlike the Romanian ones, weren’t surprised by the decision taken by the rating agency, which was noticed due to a nearly entire lack of reaction on the market (the Standard & Poor’s announcement has only determined a minimal depreciation of the forint compared to the euro). They feel that the agency’s decision was to be expected, due to the fact that Hungary’s economy is extremely vulnerable at the moment, and that their country is the focal point of the crisis in Central and Eastern Europe and the crisis was predictable. Therefore, they believe the state should have taken certain measures against the crisis a long time ago, and the bad economical policies between 2000 and 2006 (high inflation and interest rate, low and unstable economical growth, growing external debt) is a factor that has only worsen the crisis (CIB Bank Hungary, November 2008).

Fitch has also downgraded Romania and Hungary’s ratings in November 2008, alongside of two emerging countries (Bulgaria and Kazakhstan), as they felt that they were exposed to large risks as a consequence of an increasing current account deficits and the dependence of external financing. Out of the four downgraded countries, Romania was most severely ratified, because its credit rating was cut by two notches to junk status. The country was downgraded to BB+ with negative outlook from BBB. The Fitch analysts motivate their decision with the concern induced by the economical politics of the country and its ability to avoid a financial and economic crisis. After reducing the country’s rating, Fitch went on to downgrade the ratings of five different banks in Romania. The president of the Romanian Association of Banks, Radu Ghetea, claims that the downgrade of the banks is strictly connected to the downgrading of the country and not to the banks’ performances which have a high stability. The Romanian Agency for Foreign Investments think that the decrease of Romania’s rating by Fitch cannot be explained by the economical evolution and that the country will continue to be an attractive and profitable destination for investments, even though the rate of foreign investment growth will decrease, due to the world crisis. The financial analysts within the Association of The Financial

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and Banking Analysts of Romania also claim that the downgrading of Romania’s rating wasn’t an economically founded decision, although they admit that there have been economic politics mistakes (The Money Channel.ro; MoneyLine.ro; HotNews.ro, November 2008).

Hungary was given a less severe attendance, being downgraded one notch from BBB+ to BBB with stable outlook. In Hungary’s case, the decision shows the seriousness of the recession in which the country abides at the moment and the correction of the economical imbalance. The help given to Hungary by IMF has eliminated the risks concerning external financing and liquidity, and therefore, Fitch assigned its ratings a stable perspective (The Money Channel.ro).

As for Romania’s and Hungary’s position in the classification of the countries in Central and Eastern Europe, the Romanian economical analysts think that placing Romania on the last position is groundless, considering that Hungary’s economical situation is much worse. According to the euro parliamentarian Daniel Daianu – former Minister of Finances of Romania – Hungary’s main advantage is the lower current account deficit, half of Romania’s, and the rating’s history which is far better than that of Romania (Bloombiz.ro, October 2008). Although the country’s rating decrease might scare the investors, Romania still has the advantage of an expanding market.

Moody’s is the only large rating agency which still gives Romania a grade with recommendation of investments, after Fitch and Standard & Poor’s (S&P) have downgraded Romania during the fall of 2008 to a speculative level (junk).

Considering the mistakes made by the rating agencies in the past, it appears that their evaluations are not quite as significant as they used to be to the investors. This is due, on the one hand, to their loss of credibility, and on the other, to the evaluation that these investing companies will accomplish independently which therefore allows a fair analysis of the risks on the international markets. However, the ratings given by agencies, on long term will mark up the external financing, which might be seen in an abrupt decrease of the economical growth of the two countries in 2009.

In December 2009, Moody’s has come up with a list of the most vulnerable states to the international crisis and amongst these were Romania and Hungary, alongside Bulgaria, Croatia, Korea, Kazakhstan, Turkey, Ukraine, South Africa, Baltic states and Pakistan. The agency’s experts believe that the basic scenario for 2009-2010 shows that in general, the emerging economies will record a growth beneath their potential level (NewsIn News Agency, December 2008).

Foreign Direct Investment Central and Eastern Europe attracts 28% of the projects and captures 58% of all jobs created.

In 2007, investment projects into Central and Eastern Europe grew by 15%, despite a 7% fall in job creation (against 29% fewer jobs in Western Europe and 18% fewer across the continent). Most of the investments in Central and Eastern Europe are in the industry area (87%). The service sector recorded a decrease in 2007 compared to the year before, and the market part of the region in the area of service investments has remained reduced – 13% compared to 60% in Western Europe (Ernst & Young, European Attractiveness Survey, 2008:22).

Top 10 countries for job creation in 2007

Table 4

Rank in 2007

Country Number of jobs

created 2007 Market share

2007 Evolution 2006-2007

1 UK 24.186 13.7% -13% 2 Poland 18.399 10.4% -41% 3 Czech Republic 15.102 8.6% -14% 4 Russia 14.934 8.5% 85% 5 France 14.488 8.2% -29% 6 Romania 12.464 7.1% -12% 7 Hungary 11.104 6.3% -1% 8 Slovakia 8.479 4.8% -37% 9 Spain 7.335 4.2% -31%

10 Germany 5.972 3.4% -40%

Source: Ernst & Young Investment Monitor 2008

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In 2007, Romania was at the top in Central and Eastern Europe concerning the number of FDI projects, with a growing evolution since 2005 and in the top 10 European countries concerning the number of jobs created, tapping 7.1% of the jobs created in Europe (See Tables 4 and 5). The main investments are still in the industrial area, with 91% of the jobs having been created in this area. The worsening of the country’s rating successively in October and November 2008 by two different international agencies (S&P and Fitch), have removed Romania from the group of the countries with investing rate, which offers unfavorable perspectives for the following years regarding attracting foreign investments. Many Romanian analysts feel that this downgrade will be reviewed shortly, being wrongly based and influenced by the international crisis and by a series of rushed actions concerning economic politics performed by the Romanian government (the announced salary growth). Therefore, Romania might still be an attractive destination for investments, although the international crisis will lead to the decrease of the foreign investment growth rate.

Hungary – after dominating the top of the countries in the region for a while, as a consequence of the measurements for fiscal consolidation, massive depreciation of the forint and more recently, of the powerful negative consequences of the financial crisis – was surpassed by Romania as well as by other central European countries due to the fact that many foreign investors sold their assets on the Hungarian market (See Table 5). Still, in 2007, it was in the top 10 countries of origin, on the 7th place as number of jobs created (but behind Romania). Concerning the number of projects, Hungary has drawn 25% more projects, notably manufacturing and logistics, climbing four positions on the scale compared to 2006, when it didn’t even make it to top ten (Ernst & Young, European Attractiveness Surve, 2008:25-26). At the beginning of the 1990s, the market base privatization, a unique phenomenon in Central and Eastern Europe at the time, was the main stimulation for foreign investments in Hungary. FDI were crucial in the heightening of the country’s economical performances and have built the motor behind Hungary’s economic success for a good while. Hungary focused intensely on attracting advanced technologies and innovations in good production, which represents a higher added value. Investments in research and development, ICT, biotechnologies and logistics have become highly important. Not only have a high number of producers and service providers established in Hungary, but they have also brought within the country the main international suppliers, alongside with their subsidies. In 2006, there were over 30.000 companies with foreign capital in Hungary. Just like in all the other European states, the foreign investors from the UE-15 countries have been the main investors in Hungary (79%). Geographic proximity and historical relations explain the majority of European investors. Hungary’s most important partner was Germany, participating with 30% of the total FDI, followed by the Netherlands (18%) and Austria (11%). The most significant non European investor was USA, with 5% of the total, and from the Asian countries, Japan and South Korea have had an expanding significance in FDI (Hungarian Investment and Trade Development Agency, 2006).

Top 10 countries for number of projects in 2007 Table 5

Rank in 2007

Country Number of

projects 2007 Market share

2007 Evolution 2006-2007

1 UK 713 19.2% 4% 2 France 541 14.6% -4% 3 Germany 305 8.2% 7% 4 Spain 256 6.9% 21% 5 Belgium 175 4.7% -5% 6 Romania 150 4.0% 7% 7 Poland 146 3.9% -4% 8 Russia 139 3.7% 60% 9 Hungary 135 3.6% 25%

10 Switzerland 124 3.3% -9%

Source: Ernst & Young Investment Monitor 2008

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The study made by the company Ernst & Young, 2008 Southeast Europe Attractiveness Survey, shows the fact that Southeast Europe is bridging the gap with Central Europe, because the attractiveness of this region for potential investors has grown by 4% in 2008 compared to 2007, whereas Central Europe’s attractiveness has diminished by 2% over the same period of time. The top of the most attractive countries for investments of the region is led by Romania, followed by Turkey, Bulgaria and Greece. Romania also lies first in the top of the countries with the largest number of FDI projects, followed by Serbia and Bulgaria. On the psychological map drawn according to perception versus reality, Romania is also a detached leader, its strong points being labor costs, potential productivity increase and labor skills and its weaknesses, telecommunication infrastructures, transport and logistics infrastructures and social climate (Ernst & Young, 2008 Southeast Europe Attractiveness Survey, 2008:8-23).

Over the past years, foreign investors have come to realize the fact that Romania is a powerful and mature consumer market. They have directed the investing trend towards mass consumption by developing projects mainly in the service area, but there are significant percentages in the financial and banking area, as well as communications (Business Standard.ro, 16 May 2008). The improvement of the business environment, the introduction of the unique rate of tax and a positive attitude of the foreign partners towards Romania have led to attracting a significant number of FDI between 2005 and 2008. In 2006, foreign direct investment has reached its highest level after 1990. The FDI record of 2006 is due to an extra amount of trust that Romania has earned through stability and predictability of the investing climate, competitive fiscal politics, low costs and qualified work and the nearing of Romania’s joining of the European Union, which gave access to the unique European market to those who chose Romania for implementing their production abilities. In 2007, foreign direct investment in Romania has reached a level of 7 250 million euros, 31% representing foreign direct investors’ equity stakes in the share capital of direct investment enterprises, 18% reinvested earnings and 51% the net credit received from direct foreign investors, including from within the group. The main areas where FDI has been accomplished are: manufacturing (32.9% of total), financial intermediation and insurance (23.3%), wholesale and retail trade (14%), construction and real estate (7.8%), telecommunications (6.5%) and services rendered to enterprises (4.5%). The main countries that have done FDI in Romania were: Austria (21.4%), the Netherlands (16.3%), Germany (11.7%), France (8.8%) and Greece (7.5%) (NBR, Foreign Direct Investment in Romania as of 31 December 2007). According to the Romanian Agency for Foreign Investment, „the total volume of foreign direct investments attracted in Romania reached Euro 7.194 billion in the first 9 months of 2008, representing a 40 % increase as against the same period 2007 and covering 56.6% of the January-September 2008 current account deficit (the rest of 47.3% is represented by intra-group credits).”(The Romanian Agency for Foreign Investment, 12 November 2008).

According to the study conducted by Emst&Young, South Central Europe Attractiveness Survey 2009, the investors’ loyalty towards this area remained constant during the past years, but there is a larger preoccupation amongst them for the quality of the business environment. The countries in South Central Europe have attracted 25% of FDI projects in CEE in 2004-2008, out of which 50% projects for manufacturing activity. The area has a leader (România, 49% from FDI), 3 followers (Bulgaria - 23%, Serbia – 13% and Croatia – 5%) and 6 emerging (Bosnia and Herzegovina, Macedonia, Moldova, Albania, Montenegro, Kosovo). The first investor in terms of job creation is Renault, with 3.657 jobs in the manufacturing sector, in Romania. In the top of most attractive countries in South Central Europe in 2009, Romania is on second placed, after Croatia, with a difference of just one percent (39% compared to 40% of the leader), being followed by Bulgaria (34%) and Serbia (33%). The major concerns of the investors regarding the business environment refer to threats such as corruption, political instability, salary increase, growth of real estate costs and skilled labour shortage. However, there is trust in the future from the investors, given by the four engines that can pull the entire region: Romania, Bulgaria, Croatia and Serbia (Ernst&Young, South Central Europe Attractiveness Survey 2009).

According to the Ernst&Young study, CEE Attractiveness Survey 2009, although Hungary is perceived as a quality location in the international competition, the country R&D potential is not recognized at its real value. As for the market quota as number of FDI attracted, Hungary ranked on the third place in 2008, with 10%, following Poland (18%) and Romania (15%). The crisis and competition in change have led to the change of market quota in 2004-2008, leading Hungary to go from second to third

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place and Romania to go from fourth to second place. The most important FDI accomplished by Hungary were in the following areas: automotive (45%), machinery and equipment (10%), retail (6%), furniture (6%), pharmaceutical (6%), business services (5%) and IT (4%). The top five quality assets for Hungary, as seen by the foreign investors, are: telecommunication infrastructure, local labour skills level, transport and logistics infrastructure, quality of education and quality of life. Meanwhile, the strategic weaknesses to be improved are: political stability, corporate taxation, labour costs, R&D quality, performance in innovation and labour law flexibility. The investors’ confidence in the future attractiveness of Hungary is high and the measures recommended in order to improve Hungary’s attractiveness are: to make tax and legal regulation more flexible, to ensure predictable environment, to promote economic growth and SME development, to promote entrepreneurship, to reform the social model and to renew the training and the education system (Ernst&Young, CEE Attractiveness Survey 2009).

The international financial crisis is starting to be felt in the FDI area all over Europe. The potential investors will reanalyze their plans and investment decisions for the following years and some will certainly postpone their investments. The negative evaluations of the international rating institutions and lack of trust will influence the level of investments in the European Union and especially in its emerging countries, changing the market shares of these countries and generating changes in the FDI area structure.

Conclusions Nowadays, the world economy is dominated by a widely used idiom: “the international

economical crisis”, which influences all the areas of a country’s economy, its economic politics, its image and credibility in the eyes of foreign investors. For that matter, this crisis seems to be the only common ground between the two neighboring countries, Romania and Hungary. Despite being neighbors and having both only recently entered the European Union, the two states have different economic paths, marked by national economic politics, the strategies chosen by their governments and the way they are internationally perceived.

The new “tiger of the East” versus the “poorly prepared student” – a durable situation? In November 2007, the French economic journal Capital, in an article dedicated to the newest

EU member countries in Central and Eastern Europe, named Romania “the new tiger of the East”, considering its economic growth one of the most outstanding in the region, and Hungary “the poorly prepared student of the class”, following its modest indicators recorded by this country during the past years (Capital, November 2007:56-82). How durable, but even more so, how real is this situation?

Romania’s “spectacular” economical growth was mainly based on consumption based on external financing and on private short term external loans, which will definitely be a problem in the following years, when the financial crisis will force the state to adopt politics of consumption limitation. On the contrary, Hungary is considered “the poorly prepared student” of the new UE members, due to the fact that it’s been facing a low economic growth and high unemployment rate for several years now, which appears to be leading to a prolonged recession. Therefore, the country was forced to ask for external financial help, which has only enlarged its external debt, which was rather large either way. The inflation has also contributed to the reversal of the ratio between the two countries: if in 2000, Hungary had a far better situation compared to that of Romania (Hungary’s inflation rate was only 9.8% as compared to Romania’s 45.7%), the year 2008 finds the two states in a totally different situation, with similar inflation values. The inflation targets set by the Central Banks of the two countries for 2009 are 3.5% for Romania and 4.1% for Hungary. As far as the FDI goes, Romania has surpassed its neighbor, at least until 2008, both in the area of the country’s attractiveness for foreign investors and as concerns the number of projects and jobs created. However, there is a significant difference of perception between the foreign investors and the view of the international rating agencies, which have placed Romania, more or less legitimately, at the bottom of the list of the Central and Eastern Europe, therefore behind Hungary.

We don’t feel that the fact that, during a certain period, Romania having a better situation than Hungary is a long term trend, as worldwide economical instability and spectacular twists of classifications are a daily occurrence. Both governments have to understand that reaching and maintaining an ascending path requires, at this time, compelling measurements, even non populist and

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clear objectives for reaching and maintaining the economic indicators within the limits imposed by their desire to adhere to the Euro Zone.

It can be said, following this analysis, that the frontier doesn’t induce similar evolutions of the two countries, which evolve according their own economical realities, but is subscribed to the general European frame. It can therefore be noticed that the specific forms of separation of the international trade – especially developmental, political and cultural separation – are still present (Head, 2007:7-21), even at the level of the European Union, through the different effects created in the economic evolution of the states.

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Survey of Urban Competition between Szeged and Timisoara

László GULYÁS, Erzsébet SISÁK

Abstract: Throughout history, competition between towns has always been present, either for power (Which should be the bishop’s residence?), or for economic advantages (Which town could enjoy the privilege of organising fairs?). This competition between the regioncenters of the EU still exists. This paper presents the results of research related to urban competition between Szeged and Timisoara.

Keywords: urban competition, Szeged, Timisoara

Introduction In a market economy, settlements are usually competing with each other. This means that they

have to direct their resources towards the market so that they can preserve their competitive advantage and generate new opportunities. The leaders (politicians, namely elected local government’s leaders, directors of firms working in a certain area, leaders of civil organisations), who are responsible for a certain settlement/area, have to think about the way they can use the advantages of their settlements’ geographical location, natural resources, industry, agriculture and human resources.

Nowadays most of the Western-European settlements (large, medium and small towns) are struggling with each other for fulfilling different regional functions. This struggle changed the competitive scale of European towns as well. Traditional regioncenters (Manchester, Torino, and Geneva) are declining as towns (Bologna, Stuttgart), which have not been so important so far, start to rise (Horváth, 1998:33). The international and domestic scientific literature of regional science uses the notion “urban competition” more and more often.

We started our research, related to the competition between two regioncenters, by focusing on two sides of the south-eastern Hungarian-Romanian borderline, namely the Hungarian town called Szeged and the Romanian town called Timisoara. The first part of this paper presents the method of our research, while the second part of this paper reveals one dimension of urban competition.

Method of survey According to Judith Timár, inhabitants of settlements evaluate the success of their town in

terms of three points of reference (Tímár, 2003:21): 1. Position of the town, compared to its own possibilities.

The recent position of the town in the urban competition, compared to the position that the town would have.

2. Position of the town, compared to its own past. The position of our town in the urban competition is better or worse than it used to be in the past.

3. Position of the town, compared to another town. What is the position of our town, as compared to other town/towns.

The first point of reference is very subjective, so we excluded its investigation. The survey of

the second point of reference would result in a historical paper, so we also excluded its investigation. That is why our survey is based on the third point of reference, as we investigate the urban competition between Szeged and Timisoara.

Competition has always involved winners and losers. Therefore the question that arises is: When can we say that a town is a winner or a loser?

The international regional literature offers both short and long answers to this question. A typical „short answer” is that provided by Hall and Hay (Hall and Hay, 1980), who believe that only increasing the population and the employment opportunities could represent a success criterion. On the other hand the typically “long answer” could be considered the report of Brunet, made for DATAR, which is ordering a rank of 165 European towns according to 16 index numbers.

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According to mainstream Hungarian regional literature, urban competition is a kind of regional competition, whose final goal is the permanent enhancement of economic progress, development ant the revenue produced in the settlement (Lengyel and Rechnitzer: 130-152). Judith Timár points out that, in the terminology of this stream of Hungarian regional literature, the categories of success and competitiveness are usually mixed (Timár, 2003:11). In our survey we did not want to analyse the theoretical difference between the concepts of competitiveness and of urban competition: our aim was to determine the possible dimensions of urban competition.

Our standpoint relates to the publications of György Enyedi and Gyula Horváth Gyula, in which the authors tried to systematize those factors on which the success of towns depends.

In 1996, György Enyedi has summarised in 10 points the characteristics of successful towns (Enyedi, 1996:62-64):

1. A town is successful if it is able to change its economic structure, so that the employment structure is changing from industrial production to supply.

2. That town is successful where big value-enhancing sub sectors (for example R+D) are growing inside third sector.

3. A town is successful if it demonstrates an ability to innovate. 4. A town is successful if production is based on knowledge. When deciding about the

location of a knowledge-based enterprise with highly qualified employees, it is a crucial condition that the potential location is an enjoyable living place. The highly qualified workers are significant consumers with special demands on supplies, environment and life-quality.

5. That town is successful where decision centres are developed locally, partly by the local society and companies.

6. In the successful town the middle class is developing quickly, which means that there is large, high quality middle class sector.

7. In the successful town there is a growing demand on protecting the urban environment; there are also varied possibilities for spending one’s spare time, and available non-profit supplies.

8. The successful town is prepared for the inconvenient consequences of a growing economy and consumption, such as traffic jams and environmental pollution.

9. A town is successful if it has strong international connections. 10. A town is successful if its inhabitants’ income and the employment rate are growing.

According to Gyula Horváth, the success of a town – its position in the hierarchy of Hungarian

towns – is determined by 11 factors, which are as follows (Horváth, 1998:227): 1. Presence of multinational groups’ headquarters. 2. Diversification of production structures. 3. Higher education’s research bases. 4. Experimental developing places. 5. Presence of infrastructures that ensure the rapid movement of the population (flights,

motorways, telecommunication networks). 6. Presence of connecting systems, ensuring the informational flow (conferences, meetings). 7. Presence of production supplying branches (business advising, marketing, advertisement). 8. Financial resources and supporting systems. 9. Innovation-orientated development strategy. 10. Easy access to educational, cultural and sport establishments. 11. High-level residential districts.

As it can be seen, several points are similar in the two lists presented above. That is why we

combined and slightly modified them, and therefore got the following 12 dimension (Gulyás: 37-40). Dimensions of the survey on Szeged-Timisoara urban competition

1. Dimension: How does the structure of towns look like? 2. Dimension: Did important big companies start their activity in the town? 3. Dimension: How does the town’s third sector look like? 4. Dimension. What is the R+D activity of the town like? 5. Dimension: What is the higher education of the town like?

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6. Dimension What is the so-called connection system (tourism and events) of the town like?

7. Dimension What is the infrastructure of the town like, which ensures the quick movement of the population?

8. Dimension: Is the town able to give suitable employees for knowledge-based production?

9. Dimension: How does the social structure of the town look like? 10. Dimension: Does the town have districts that satisfy high-quality living functions? 11. Dimension: How does the town treat the negative consequences arising from

development? 12. Dimension: What types of international connections does the town have?

After determining the 12 dimensions, the next steps were to add some concrete meaning to

these dimensions. We thought that, in order to measure the difference between the two towns, we needed to reduce these dimensions to comparable elements. This reduction was made by means of questions (see Table 1). In the next step of the research we tried to add concrete numbers to every question. At some parts of the questions it was easy. For example, in the case of higher educations, the number of students attending the courses of universities was absolutely comparable. But we have some dimensions which present double-sided problems. On the one hand we did not find concrete qualification data; on the other hand, if we figured it out, we were not able to get its exact number. Especially in the case of Timisoara we had serious problems, given the absence of statistical data.

Reducing the dimensions to questions

Table 1 Dimensions Questions

1. dimension 1. How to diversify the production structure? 2. Did the town change from industrial production to supply?

2. dimension 1. What kind of domestic big companies settled in the town? 2. What kind of multinational companies settled in the town?

3. dimension 1. Does the town have big value-enhancing sub sectors inside the third sector activity?

4. dimension 1. What type of R+D activity does the town have? 2. What type of innovation does the town have?

5. dimension 1. What is the role of the town’s higher education in the context of the country?

2. How many students are included in the higher-education system of the town?

6. dimension 1. Does the town have conference tourism, and what is its degree? 2. Does the town have that type of program which attracts several people?

7. dimension 1. Does the town have motorways? 2. Does the town have an airport?

8. dimension 1. What type of employees does the town have? 9. dimension 1. Is the middle class growing? 10. dimension 1. What type of houses and residential quarters are being built? 11. dimension 1. How does the town approach the problem of environment pollution?

2. How does the town approach the problem of overcrowded traffic? 12. dimension 1. How many fraternal town-twinning does the town have?

2. What type of content fills these twinning connections?

Source: Personal construction of the authors

Present results of the research Because of coverage limits we cannot show detailed data related to all the 12 dimensions.

Therefore we will sum our examination results in the second table. The + sign indicates the city that, according to existing data, surpasses the other in terms of urban competition. In relation to some

60

dimensions, we could not decide upon this situation. Therefore we have used the formula “is has a similar position”. Table 2 represents a summary of our evaluation.

Results after examining the dimensions Table 2

Dimension

Dimensions where Szeged occupies a

better position

Dimensions where Timisoara

Occupies a better position

Dimensions where both cities

Present a similar position

1. Dimension Economic structure

+

2. Dimension Foreign capital

+

3. Dimension Terciery sector

+

4. Dimension R+D

+

5. Dimension Higher education

+

6. Dimension Tourism and events

+

7. Dimension Transport

+

8. Dimension Qualitative labour

+

9. Dimension Structure of society

+

10. Dimension Residential environment

+

11. Dimension Environmental protection

+

12. Dimension Relations systems

+

Source: The personal construction of the authors To the first dimension: The economic structure of Szeged is more diversified than Timisoara’s.

Szeged is better than Timisoara in the post-fordist transformation (considering the background of industry, escalation of the terciery sector).

To the second dimension: After 1990 Timisoara could attract more wholesale foreign capital, as compared to Szeged.

To the third dimension: Terciery sector of Csongrád County is both horizontally and vertically wider and more developed than the terciery sector of Timis County.

To the fourth dimension: In the area of R+D, both cities present nearly similar capacities. To the fifth dimension: The number of students is two times larger in the higher institutes of

Timsioara – more exactly Timis County, than in the case of higher education institutes of Szeged – more exactly Csongrád County. Furthermore, the training structure of Romanian universities is better suited for contemporary demands. One can take into account only the fact that they organised the Faculty of Engineering for the University of Szeged, all in all for a half year, while in Romania, serious university level technological training has already been functional.

To the sixth dimension: With regards to tourism, Szeged definitely surpasses Timisoara. Its regular programmes – for example Open-air Performance of Szeged – and its conference tourism attracted a lot of people.

To the seventh dimension: An interesting situation can be observed in relation to this dimension: in the question of highways, Szeged presents advantages as far as the urban competition is

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concerned, while in relation to airports Timisoara has a clear advantages (this aspect will be detailed in a following subsection of our study).

To the eighth dimension: According to statistical data, Timisoara – more exactly Timis County - possesses more specialists and qualified workers than Szeged and Csongrád County. But we have to draw attention upon the fact that the population of Timis County is twice as large as the population of Csongrád County.

To the ninth dimension: According to primary examinations, in terms of society structure, Timisoara presents a better position than Szeged. However, with regards to this result, we have to mention that we did not manage to gain lot of information.

To the tenth dimension: With regards to the quality of residential environments, Szeged is in a better position than Timisoara.

To the eleventh dimension: In the field of environmental protection Szeged occupies a significantly better position than Timisoara. Szeged started clear environmental protection programms and investments in the field of public transport, selective rubbish collection, channelling of the city and usage of sewage.

To the twelfth dimension: Szeged built wider relation systems than Timisoara (Gulyás, 2004:5-14). We considered it important to present next short comments related to the + signs.

One example for the examination of the 7th dimension After we worked out the limits of examination, we assigned two concrete questions to this

dimension. What is the situation in terms of highways? What is the situation of existing airports?

The question regarding highways The location of the transport-geography of Szeged is significant. Szeged is situated in the crossing of nationwide and international transport corridors, which are the following (Erdısi, 2005): • The M5 highway ensures connections in southeast between Budapest, Szeged and the border crossing point of Röszke.1 This is the second highway of this kind, which connects to the frontier in Hungary. • Road 43 starts at Szeged, which reaches the Romanian border at Nagylak. • Road 55 connects the larger settlements of South-Lowland and creates connections with the South-Transdanubium region. • Road 47 ensures the connection between Szeged and East-Hungary (Békéscsaba-Debrecen). It is important to emphasize that specialists traced, during the second pan-European transport

conference on the map of continent, which was held in Crete in 1994, those transport lines and corridors, which got an important role in the development of the European infrastructure-system (Balogh, 1998:12-15). Two transport lines traced in Crete pass by Szeged.

• Corridor number IV This corridor starts, on the one hand, from Pozsony, and on the other hand from Wien (highway M1). It reaches Budapest and then it passes through Kecskemét to Szeged. Here it branches and it steps across on road 43 in the area of Nagylak, close to the Hungarian-Romanian border. The planned line heads towards Romania, entering it between Arad and Timisoara, continuing then towards Constanta. • The X/a corridor It connects at Szeged with the number IV corridor, where it continues across Röszke, heading towards Újvidék-Belgrád-Nis, then to Greece (Thessaloniki-Athén) or to Turkey (Istanbul).

1 Kiskunfélegyháza-Szeged-Észak motorway was finished in December of 2005, this was followed by M43

motorway which connected these two parts. At the end, in March of 2006 the part of M5 motorway between Szeged and Röszke was finished, which gave additional 14,7 km to M5 motorway.

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The south- and east-European transit-transportation is running on highway M5 and road 43

throughout the year. Particularly the trade route 43, after Romania’s accession to the EU. Given the above mentioned aspects, we can assume that Szeged is definitely a favourable location with respect to transport-geography, and it can exploit its position by building beltways and bypasses.

Given the situation presented above, Timisoara is by far an unfavourable location in terms of highways as compared to Szeged. At this moment the highway does not reach Timisoara. But the Romanian government tries to develop its road-system, this being one of its most important aims. Its highway-programme aims to build about 1300 kilometres of highways in the next 15 years. The developments costs 7,5 billion dollars, but they do not use EU-funding, but euro-bonds, loans and private capital. According to plannifications, the highway would reach Timisoara, which is part of channel IV. The European transport corridor starts from Szeged and heads towards Bucharest and then to Constanta.

The question that arises refers to the moment when the building of this highway segment is going to start. As long as this highway segment will not be ready, Szeged has a serious competitive advantage over Timisoara with regards to this dimension.

The question of the airport If we look at the air transport, countless case-studies demonstrate – look at Limerick County in

West-Ireland or the case of Verona city in North-Eastern Italy – that the building of airports has a favourable effect upon the development of narrower and wider environments of deployment place. Namely, the building and activity of airports is not only directed towards the creation of workplaces, but – with n adaptation of the external trade and industry-policy tools – it plays an important part in economic- and company development.

Szeged city has planned the development of the regional airport since 1990. However, it was ready only16 years later – in 2006, and the completion of Szeged airport cost 1,6 milliard forint. This 1,6 milliard forint budgets was supplemented by the contribution of the Regional Development Council with 380 million forint, the Municipality of Csongrád County with 100 million forint, and the Regional Development Office with 540 million forint.

As a result of this investment, the Transport Company of Szeged could begin the activity of the the airport on the 7th April 2006. In addition, they could benefit from the completed 1185 meter long tarmac in November 2006. Then a 706- meter- long taxiway was attached to it, sized 706mx15 m, and, eventually, a 11x57 m turf-inlaid foreground area was added.

To all this it was attached a rainwater table-system too, which collects the rainwater and lifts with a pump in an artificial lake up, and an ad hoc a light technique-system, too, which baffles the airplanes to the ideal descent level. They restored the filling station and storage tank, which suits for regulations of environmental protection for 25 thousand liter kerosene and 25 thousand liter petrol. They got a fire engine for 111 million forint, a minibus, which transports 14 passengers, a land rover for service, a radio device, which ensures the communication takes the connection between the tower and the airplanes, weather station, or rather regular luggage x-ray machine for international trade.

The investment is meant to have important results. According to expectations and forecasts, it will be able to start the regional timetable scheduled trade, in one-two years, which will give Szeged te opportunity to see some international air interchange. According to the director of the airports’ line of business, running of SZKT, István Bene, in the future the regional airport of Szeged will have to fulfill the functions mentioned below: 2

1. It has to function as a commercial airport. 2. Regular passenger, starting from here and the landing airplanes have to deal with pack and luggage transport. 3. It has to house different enterprises such as mosquito extermination, air-photoing, sightseeing from the air, sport, etc.

2 Interview with István Bene - director of airport, 2007.11.07., www.ericinfo.hu

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In our days – in the summer of 2007 – 7-8000 people went through Szeged airport and approximately 500 different airplanes took off and landed every month.3 If there will be a constant 800 passenger/month circulation, it means nearly 10 thousand passenger a year. We have to know the value and explanation of this number since, according to the air transport experts, about 60 thousand passengers a year would be the number that would make the airport economical. We can say that the Szeged airport is away from this situation.

The present technical capacity of Szeged airport (for example: tarmacs) is not enough and it needs other expansions, too. This is because the length of the runway is of 1185x35 meter and its support capacity is of only 20 tonne all in all.

As the runway of Szeged airport is perpendicular to road 55, given the lack of space, it can not be longer than 1185 meter. At the same time, according to the opinion of experts in tourism, the closeness of Ferihegy decreases the chances of Szeged airport. The last years’ development did not change the fact that Szeged airport is still the smallest among the airports in Pécs, Debrecen, Gyır. Charter airplanes do not take off from Szeged because it is not worth starting lines. So the trade of 6-12 passengers transporting airplanes remains its main activity.

We have to notice that the airport is not as important to get such trade activity as the one in Ferihegy. It is important because Szeged can be accessible by way of air, too. We can draw the conclusion that it is one of the elementary conditions of the economic boom.

We should mention here that the European Union does not support airport development for the rural cities. However, the investments of investors can bring an important contribution to such developments. But it is not a simple task because the airport is in among three roads.4

On one hand, it needs at least runways that have some 80-100 tonne support capacity and 2000 x 45 meter in dimensions. The aim is that the airplane of vizz air, skyeurope, rynair, easy jet can take off and land here. Namely the ascendant volume of these airplanes should be between 75 and 80 tonne. They can hold approximately 60-70 tonne weight and the structure of the airplane would create damage, given its bigger weight. On the other hand, they have to build passenger trade building that is capable to receive 300 000 passengers a year.5

The implementation of these developments is pending in this area. The airport of Timisoara is 3500 x 45 meter large and it is made up of concrete, while the one

in Szeged is made up of asphalt (the concrete can allow landing of airplanes with more significant weights – the authors). Therefore the airplanes with more engines can land in Timisoara airport. It means that airplanes with 80 tonne or more can use this runway: Airbuses, such as the Airbus A320 or a Boeing 737 airplane, which can transport 140-180 passengers.

In terms of weather conditions Timisoara has more advantages. Timisoara airport is usable irrespective of the weather conditions. In case of Szeged the activity of the airport is influenced by weather and light conditions. Timisoara airport is endowed with ILS CAT II equipment, which provides help for landing. The ILS is located in ground and diffuses radio signals. The airplane catches these signs and extrapolates for pilots. It shows where the gradient lane is, if they can not look it from the sky.6 It has equipments that can meet all demands. For light conditions they possess ALS F-II light line, which shows the location of the gradient lane.

If we look at the number of passengers, in the case of Szeged it is of 800 passengers every month. Contrary to this, the Timisoara airport had 510 thousand passengers from January 2006 to November 2007. It is a serious difference. 7

The next table indicates the advantage of Timisoara, in which we represented the country of destination and the starting lines from both airports.

It is obvious from the table above that we can represent more countries of destination in the case of Timisoara than in case of Szeged. We have to notice that airplanes, which use Szeged airport, are not related to table time lines. 60% of it serves business purposes, 40% tourism. They use the most common type of Cessna 173, which transports 4 people, or rather the Cessna 153, which transports two people.

3 Ibidem 4 http://www.delmagyar.hu/szeged/cikk/utak_koze_szorult_be_a_szegedi_repter/2020 5 www.aeroszeged.hu 6 www.jeppesen.com 7 www.ericinfo.eu

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Country of destination from Szeged airport and from Timisoara airport

Table 3 Accessible destination from Szeged Accessible destination from Timisoara

Germany Germany Austria Moldavia Slovenia Hungary Ukraine Italy Ljubljana Greece Italy Spain Romania Egypt - Tunisia - Turkey - Malta

Source: their own construction As compared to this, ten charter lines have started from Timisoara airport to the Greek,

Turkish, Spanish, Egypt, Tunisian and Malta tourism paradises, between May 2007 and October 2007.8 Carpatair, Tarom, Air Cairo, Blue Air, Atlasjet, Air Malta, Futura Airways and Nouvelair airline companies are using these lines.

Short conclusions to the 7th dimension We can state that, in this area, Timisoara unequivocally comes before Szeged. At the same

time we can see that, in relation to highways, Szeged comes before Timisoara. Szeged already has a highway, as long as the highway that connects Timisoara exists only as a project.

As a result, Timisoara is better position with regards to one dimension, while Szeged has better position in relation to another – as it can be observed from the 2nd table. Therefore we can conclude that „both cities have a similar situation”.

Continuation of research The first part of our research was completed in June 2007. The new part will start in

September 2007 and it will last for two years. We have two aims: 1. The importance of the examined dimensions is not the same, so to evaluate the weight of the dimensions is another important aim of the research. 2. We want to collect statistical data for the comparison between dimensions. Particularly we need some more information in relation to Timisoara.

Bibliography

Balog, Imre (1998), Az európai közlekedési folyosók és hatásaik. Eurótrió. A DKMT lapja, 1998/1,

szám 12-15. pp. Enyedi, György (1996), Regionális folyamatok Magyarországon, Budapest Erdösi, Ferenc (2005), Magyarország közlekedési és távközlési földrajza, Dialóg Campus Pécs-

Budapest Gulyás, László, Esélyek és elszalasztott lehetıségek, avagy Szeged régióközponttá válásának

problémái, Az EETOSZ Jubileumi Emlékkönyve, Budapest Gulyás László (2004), A Duna-Körös-Maros-Tisza Eurorégió rövid története 1997-2004, Múzeumi

Kutatások Csongrád Megyében, évi Évkönyv, Szeged Horváth, Gyula (1998), Európai regionális politika, Dialóg-Campus. Budapest-Pécs Hall, P. and Hay, D. (1980), Growth center sin the European urban system, Heineman, London

8 www.ericinfo.eu

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Lengyel, Imre and Rechnitzer, János, „A városok versenyképességérıl”, in Horváth, Gyula and Rechnitzer, János (ed.), Magyarország területi térszerkezete és folyamatai az ezredfordulón, MTA RKK, Pécs, 130-152. pp.

Tímár, Judit (2003), „A városverseny, várossiker elméleti kérdései: Kutatási célok, módszerek”, in mő Timár-Velkey (ed.), Várossikere alföldi nézıpontból, MTA RKK Alföldi Tudományos Intézet, Békéscsaba-Budapest

www.aeroszeged.hu www.jeppesen.com www.szegedportal.hu www.timisoara.ro

European Ecological Borders

Laura SCICHILONE

Abstract: The article describes the evolution of the “ecological border” concept in Europe in general and in the European Community/Union in particular. After the Second World War the environmental pollution, caused chiefly by chemical plants, determined important changes in the perception of this concept. In this context the European Economic Community demonstrated a special experience of political cooperation in the environmental field. It represented a new perspective of ecological border. Another important step was the East-West re-unification, following the 2004 and 2007 enlargements of the European Union (EU). This article also describes the EU international role and the construction of a global political cooperation such as the last “ideal” ecological border.

Keywords: ecological border, environmental crisis, European Community/Union,

environmental policies, European civil power.

1. Introduction What does the concept of border mean? How has it developed in the course of time? In the

Contemporary World, we usually use the term “border” not only to specify the “dividing lines” among different geographical areas, but also to describe "membership factors": religious beliefs, economic archetypes, specific civil communities with particular interests. In this respect we talk about religious, economic and social borders. In the course of time, the concept of “border” has changed in relation to particular circumstances and challenges the world societies have known and overcome.

One of the most important challenges delineating our age is represented by the attempt to overcome the ecological crisis (Foster, 1999; Goudie, 1981; Turner, 1990), resulting from the absolute achievement of the economic-industrial system, as well the energetic one, which is based, first and foremost, on fossil fuels. The contemporary ecological crisis has changed the concept of border and has reformed it by renovating it – as we will see – in its geographical sense - and not only. However, the concept of “ecological border”, in its present-day understanding, does not represent a categorical surprise of this age, like the result of micro and macro developments that have contributed to the renewal of the idea of environment and its perception.

To sum up, the concept of ecological border has at least two dimensions: the temporal and the spatial one. If people originally perceived the place where they lived as their own environment, during the Modern Age we have witnessed the most important transformation that happened or, in particular situations, that strengthened in the experience of the European continent, even if it hasn't been important for this last one only. The formation of National States has determined a deep change in the public perception of the territory and its administrative management. In most of cases, the national territory has been understood as a relevant part of that cultural estate which allowed the identification of a specific Nation (Van Ham, 2007:260).

In Europe, for example, this happened in Great Britain, where the cultural landscape (Daniels, 1993; Turner, 1979) has been understood as an integral and substantial part of the national tradition (Turner, 1979). In a different way, North America has seen the development of a particular attention to the wilderness myth (Oelschlaeger, 1991) and to wild places, above all in the Western area, which, in the course of the 20th century, have been perceived as “escape archetypes” (Miur, 1998) from the impressive urbanization and oases (even if only virtual ones) for the re-unification of man with nature (Miur, 1986; Miur, 1998). The existing differences between the European experience and the American one are not the result of historical and cultural features, but rather of political, economic and social performances characterizing both realities during the course of time.

From the end of the 19th to the beginning of the 20th Century, most national European States have strengthened the concept of territory, including it among the identification elements of Country-

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Nation-Empire1. Even if some pollution situations, caused by industry, were already present in some national contexts, the environmental crisis didn’t manifest itself in all its dimensions and the problems perceived were mainly connected to the degradation of life and work conditions, such as factories and unhealthy flats where employees worked and lived. On the contrary, when the ecological situation will begin to have a special importance and become one of the most important points in the relationship between a population and the territory where it lives, even the concept of territory will change and will be gradually substituted by the concept of “environment”. Europe has seen the beginning of such deep transformation during the second post-war period.

2. The Ecological Borders in the European Countries after the Second World War After the Second World War, the European States’ political and economic profile was

considerably changed. First of all, Europe was divided into two areas, East and West: the progress in the central-eastern part, as well the developments in the West, would have differed under many aspects. However, compared to the past, both parts of the world would have produced some completely new pollution, in measures and typologies, caused by industry.

The Soviet Union applied the State industrialization in Central-Eastern Europe, while the capitalist model spread in Western Europe, even if with different nuances. In both cases, the intensification of some industrial productions and the introduction of some other different ones caused a new pollution both from the quantity and the quality point of view. The meaningful difference between the two realities was obviously caused by the lack of a democratic system of information in the countries on the Eastern part, able to publicly express the environmental defeats that took place in time. In many cases, this is the reason – the lack of mass media public control – why State industrialization has caused more serious damage if compared to the harm produced in Western Europe (Bevilacqua, 2006).

Even during the 19th century, many countries knew some pollution typologies, but they were mainly perceived – and rarely faced – from the point of view of people’s health, while the aspects connected to the environment protection were weak or absent. But, in the 50s, Europe witnessed a new situation and knew even new pollution types. With regard to pollution, one of the most important new aspects was represented by the strong growth of chemical industry, both in Europe and in the USA; in fact, at the beginning of the 60s, the serious effects caused by the diffusion of new substances began to be particularly evident. In fact, the development of chemical productions was rapid and rampant2.

During the post-war period, different states followed the myth of a strong industrialization and, especially in Western Europe, they gave a special attention to an economic development, understood both as a purpose and as a way for their society’s progress. However, the economic-industrial development sometimes caused, increasingly and notably, negative effects for human health and environmental damage. Such negative effects exceeded the national borders, especially in some cases, such as that of chemical substances. It often happened that an environmental damage, with consequences upon human health, appeared far from its source; this last one was often present in a specific country, while pollution appeared even in other ones. It caused a crisis the administration of states and the country control skills which, in some cases, shared some pollution types.

The case of the border-river Rhine is emblematic3. The pollution of this river was caused by the industrial discharge of chemical substances; in the 50s, this situation worried the public authorities of the interested countries. As a matter of fact, one of the first intergovernmental cooperation types started in 1950. A forum among the countries crossed by this river, including Switzerland, Luxemburg, Germany, France and Holland, was carried out in accordance to a proposal endorsed by the Dutch government4.

1 In particular the concept of territory was enlarged following the colonization process and it was linked to the

identification of national empires. This is the case of Europe, where many countries had colonial territories. 2 In the 60s the American biologist Rachel Carson wrote about the negative effects of chemical pollution in the

book entitled Silent Spring, which was a scientific and political public declaration. 3 About the cross-border pollution of the Rhine, see I. Romy, Les pollutions transfrontières des eaux: l'exemple du

Rhin. Moyens d'action des lésés, Lausanne, Payot, 1990. 4 In 1963 these countries signed the Convention of Berne creating the International Commission for the Protection

of the Rhine against Pollution (ICPR). In 1976 the European Economic Community signed the Convention of Berne.

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The diffusion of these new pollution types and the needs of proper acknowledgements on environmental protection by political authorities led to the essential difference between "territory” (of a State) and “environment” (sometimes transgressing boundaries). In the past, the borders of a national territory defined even the “environmental border” of a specific country, as the state environment – at least understood as the whole of natural resources belonging to its estate – agreed with its territory. In the 50s, and especially during the following decade, the direct relationship territory-environment was gradually called into question. In that sense, we can state that the ecological borders of European States, during the second post-war period, gradually assumed a trans-boundary extensions. The example of the Rhine, carrying chemical discharges through different countries, represented this kind of ecological border extension of each country involved.

In this kind of transformation, the Central-Eastern and Western Europe have had different times and ways. Due to belonging to the sphere of Soviet influence and to the lack of an information democratic system, in Soviet countries there was a widespread indifference toward environmental protection, as news concerning ecological damage were deliberately hidden by the Soviet control system. After the fall of the Communist system, both in Poland and in the Democratic Republic of Germany, for example, some situations of ecological disaster started to be disclosed, as the result of the environmental and health care gaps, against a forced industrialization.

On the contrary, in Western Europe the role of mass media in providing information about the increasing pollution and the subsequent strength of public opinion in relation to political power have contributed to the definition – even if gradually – of a different course in order to obtain proper acknowledgements on environmental and health protection (Dalton, 1994; Lascoumes, 1994). In particular, some Western European countries will connect their experience to the European Economic Community (EEC) framework, both concerning the economic integration and the unsought effects of development, such as environmental damage.

3. The European Economic Community: a New Perspective Since 1958, the European Economic Community has begun the process of integrating national

markets which, in 1968, reached the complete customs union, eighteen months before the expected due date. On the economic side, the creation of the common market led to a transfer of competences from the national to the community level, where some economic policies would have been ordered. Pollution and different environmental damage, resulting from industry, consequently became a community affaire, as Economic Community rules ordered a specific proportion among the Member States, starting from the observance of the competition principle, as well as from the union of ways, to make up for some possible environmental disorders. In fact, if each Member State had gone on through national rules in order to find a solution to such problems, some violations could have taken place – especially concerning the competition principle -, as the production and marketing conditions of some sectors, subject to particular environmental regulations, would have been completely different from a State to another one. Through different Community extensions, the weave between the economic formation and, at the same time, the "environmental unification" will include a growing number of European countries which, within some decades, will be incorporated in this process (Masclet, 1997).

In 1951, the creation of the European Coal and Steel Community (ECSC) already brought to the common administration not only mining resources but also some consequences concerning the production activities carried out in the Ruhr and in the Saar areas, such as the deterioration of their territories. Environmental matters strictly connected to economic, industrial and commercial activities, inside the common market framework, expressed definitively the difficulties the Member States had in managing such problems nationwide. In fact, States were assisting to a new economic model and needed new tools to face the environmental problems connected to it.

National States had obsolete tools and were inevitably addressed to cooperation, facing the rapid spread of chemical pollution, the industrial accidents that produced damage to the environmental and the health field but, first of all, the ecological matter which increased dramatically, given the trans-national pollution able to exceed the political borders of each country. In this context, the European Economic Community introduced itself as a chance to all its Member States, even to the ones basically unfavourable to the assignment of competences community-wide. The EEC was a total novelty from an institutional point of view; it was neither an international organization, nor a special inter-governmental co-operation. It had common guidelines and institutions and potentially represented a proper

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transnational context to face environmental matters. The integration of markets, on the one hand, and importance gained by the cross-national

pollution, on the other hand, have created a symmetry between Member States’ commercial and environmental borders, both having moved from a parallelism with national borders to the connection with the Community territory. In that sense, we can talk about the existence of veritable “common ecological borders”. These are the reasons why, even if there were some differences among the various countries, both with regard to public sensitivity toward the environment and the problems of management skills, EEC Member States began to denote a common guideline in the environmental field at the beginning of 70s.

Although some fortuitous measures concerning the environmental field had already been adopted, in 1972 the Paris European Summit defined the institution of the new policy and the first Environmental Action Plan (EAP) included the period 1973-1977. Since then, the Member States moved some competences community-wide so that the environmental European policy knew a gradual but continuous progress. In 1986, the Single European Act gave a formal acknowledgement to the community action in such sector which has passed, in the course of time, from an approach based exclusively or primarily on the damage correction to the achievement of prevention and precaution principles.

In the EEC experience, another consequence of common ecological borders is represented by the substitution of bilateral or cooperative relationships among some States directly involved in the management of a specific ecological problem (as in the case of Rhine river) with a common government concerning the environmental policy. By the way, it is about an irreversible process, as the European ecological borders have had further geographical and ideal extensions.

4. The European Union, the East-West Re-Union and International Context During the 90s, some formal courses have allowed the community environmental policy to

reinforce, first of all through the inclusion of the principle concerning sustainable development, introduced by the Maastricht Treaty (1992) and confirmed, then, through the Amsterdam Treaty (1997). However, from a formal point of view, such progress has not been warmly received or led to an automatic application of the community environmental regulation by the Member States. If, in some cases, the community regulation has promoted a harmonization of national environmental levels, in other cases it hasn't been equally applied, causing more or less evident differences in each Member State. Moreover, after the bipolar system fall in 1989, the Community (later the European Union) had to face the environmental matter in the cooperation field with the central-eastern European countries, especially in view of their entrance in the Community formation. In this perspective, the ecological borders of the European Community were called into question and, at the same time, implied the integration challenge from an ecological point of view.

Before expanding to the central-eastern European countries, in October 1990, Germany – that is the Federal Republic of Germany – had to face the re-unification matter with the Democratic Republic of Germany. From an environmental point of view of territory management, it has represented a great redevelopment effort of Eastern Germany whose ecological conditions were particularly serious, above all if compared to the ones of the Western part which, among other things, represented one of the most active EEC Member States in this sector. However, Germany’s positive role in the community context hasn’t been compromised, as the redevelopment of Eastern decayed areas has become one relevant aspect of the re-unification policy carried out by the German government.

With regard to the pre-agreement process of Central-Eastern countries, the European Commission had located the main purpose in the acquisition of the environmental community regulation. Most countries presented as candidates had environmental conditions which were far away from community archetypes. They were demanded, even if they were supported by the European Union, to do a veritable change by adjusting their economic systems and, at the same time, by acquiring the ecological standards the Western Europe had reached during the course of many years. Although the present process should be gradual, it has presented huge difficulties and a lot of gaps.

In 2004, once the expansion to ten new countries, of whom eight were located in the ex-socialist area, has been completed, in many cases the environmental conditions of Central-Eastern countries could have been considered a starting basis only in order to reach the application of Community policies and the fulfilment of their purposes. A similar situation happened with Romania and Bulgaria’s

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entrance in 2007. These expansions, leading the EU from fifteen to twenty-seven Member States, have revolutionized the ecological borders of the European formation (Rupnik, 2007:299-315; Vollaard, 2007:317-332). It is about a transformation not only in geographical terms of a territory expansion which is included in the European Union’s regulation, policy and action in the environmental field, but generally of a deep change in the sector concerning community strategies; in that sense, the "new borders" are represented even by the "new challenges".

Furthermore, since the 90s, the European Union has reinforced its international effort in the environmental sector (Revesz et al., 2000). It’s about an aspect which has characterized the European action since the origins of the common environmental policy which, at the beginning of the 70s, has moved harmoniously its first steps quite at the same time with the Stockholm Conference in 1972, the first summit of the United Nations, dedicated to human environment. After the inclusion of the sustainable development among its purposes and, in particular, after the Rio Summit on environment and development, organized by the United Nations in 1992, which has connected the ecological problems to the economic ones, the EU has adopted an international mission in the environmental field, which has become a relevant element of its external relationships. In fact, one of the important aspects of such new direction is represented by the acceptance of an imbalance in the world distribution of natural resources (between the so-called North and South of the world) and by the need to direct the economic models toward eco-efficient systems, both in industrialised and in developing countries.

In that sense, one of the examples is represented by the diplomatic pressure exercised by the EU when the Kyoto Protocol became effective, aiming to the reduction of greenhouse emissions; an operative agreement which was approved by Europe, not only for environmental reasons, but also because the bonds ordered by the Protocol are in compliance with the economic-energy community purposes, starting from the reduction of fossil energy sources depending strongly, in the EU, on exportations. Although sometimes there was a gap between this international commitment will and its real accomplishment, the “green diplomacy” proposed by EU – as defined by the European Commission – represents a new ecological border. Facing worldwide problems, first of all the global warming, the environment and the geographical limit of the environmental action have taken a planetary importance.

5. Conclusions During the course of more than fifty years, the concept of ecological border in Europe has been

deeply changed on the basis of two active factors. First of all, there was a transformation in the territory perception and management. The extension and the types of territory protection have been gradually changed. This change has known an important censorship period after the growth of chemical industries and of the harmful effect of some kinds of production in the environment. Another important moment has been represented by the perception of the nuclear danger which, in the European experience, identified with Chernobyl accident in 1986, drawing attention upon the matter concerning the “insistence” of ecological borders in the nuclear age5.

Then, as a consequence of the process concerning the despondency of territory borders (to be protected), even the borders of political action have fallen in the environmental, field which has been based more and more on the political transnational policy, on the common management skills provided by the EEC/EU in the European example and on the need for an international cooperation. With regard to the European Union’s example, both factors – territory on the one hand and governance on the other hand – have led to the extension of its ecological borders from a geographical and political point of view until the attribution of a basically “no-limits” dimension toward the environment understood as the most important primary resource to manage in a global perspective (Paehke, 2003; Pirages and Degeest, 2003).

The international EU environmental mission potentially produces even another “border expansion” (Winkler, 2007:249-274). The world cooperation represents a key purpose to face the problems of the contemporary ecological crisis. Hand in hand, the green diplomacy promoted by the Community Europe assumes the strong importance of a virtually efficient operative tool. Moreover, the external EU action in the environmental field is one of the main components of the so-called civil

5 AA. VV., Chernobyl Nuclear Disaster, 1986: the Global Impact of Chernobyl Reactor Accident. The Lessons of

Chernobyl, Paris, Tristan Mage, 1994

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power carried out in the world background through a series of policies in the intervention area, such as the support to development and promotion of human rights (Telò, 2004). In that sense, the challenge represented by a political strategy, able to face the global environmental matters from a supranational point of view, represents the last ecological border – from an ideal point of view - of the united Europe.

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Edition), London-New York, Routledge Dalton, R. J. (1994), The Green Rainbow: Environmental Groups in Western Europe, New Haven, Yale

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Documentation Française Miur, J. (1986), The Yosemite, Madison, University of Wisconsin Press Miur, J. (1998), Our National Parks, Nelson, Callicott Oelschlaeger, M. (1991), The Idea of Wilderness, New Haven Paehke, R. C. (2003), Democracy’s Dilemma. Environment, Social Equity and the Global Economy,

Cambridge, MIT Press Pirages, D. C., T. M. Degeest (2003), Ecological Security. An Evolutionary Perspective on

Globalization, Oxford, Rowman & Littlefield Publishers Revesz, R. L., P. Sands, R. B. Stewart (2000), Environmental Law, the Economy, and Sustainable

Development. The United States, the European Union and the International Community, Cambridge, Cambridge University Press

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1998), Bologna, Il Mulino Turner, B. L. (edited by) (1990), The Earth as Transformed by Human Action, Cambridge, Cambridge

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Odile Jacob Vollaard, H. (2007), „L’état de la question: frontières et limits de l’intégration européenne”, in B.

Geremek, R. Picht, Visions d’Europe, Paris, Odile Jacob Winkler, H. A. (2007), „Suffit-il d’étendre indéfiniment ses frontières pour devenir une puissance

globale? Plaidoyer pour un réalisme européen”, in B. Geremek, R. Picht, Visions d’Europe, Paris, Odile Jacob

Aspects of sustainable development in Romania and its neighboring countries

Florica ŞTEFĂNESCU, Andrea BRAD

Abstract: The aim of this study is to convey an image of the way in which sustainable development objectives have been undertaken and pursued by the former Communist bloc countries (Romania and its neighbors), over the last 20 years. The paper draws on studies that compare data from a series of countries and on its underlying project - Romania, towards a sustainable society (May 2008). By comparing the scores for these countries, obtained through a secondary analysis of data, the hypothesis that the situation in these countries is quite homogenous, as they have continued to be undermined by their similar communist past, was confirmed. We believe that these countries have understood the need for sustainable development, but they still lack the means to achieve it, as they are still trying to meet more severe challenges and priorities.

Keywords: sustainable development, indicators, Romania and its neighbors

Introduction It is considered by many economists and politicians that the traditional model of growth is

currently undergoing a notable crisis (Peter F. Druker, Post-capitalist Society, 1999, Lester C. Thurow, The Future of Capitalism, How Today's Economic Forces Shape Tomorrow's World, 1996 G. Soros, global capitalist crisis, in 1999, Lester Brown, Plan B, 2006, etc.). Therefore, an urgent need “to re-plan theory and practice of economic growth/ development, by developing new strategies for the two processes” (Popescu et al., 2005:125) has been identified.

One of the main concerns in contemporary economic theory is undoubtedly the concept of sustainable development, taken in the broader context of theories on economic growth and development. To some experts this concept seems to be more like an intangible goal rather than as a real opportunity: “the concept is utopian, but it is worth fighting for” (King and Schneider, 1993: 37-38).

By defining sustainable development (sustainable or viable) as the type of development that has a social and an environmental purpose, equitable both within a generation and between generations, thus covering the present needs without jeopardizing the solving of future ones, we undertake the task of paying “the moral obligation to properly look after our planet and leave a certain heritage for future generations” (Reilly, 1991:24).

The concept of sustainability derives from the field of forestry, where it was first used by Hans Carl von Carlowitz in Silvicultura Oeconomica in 1713. This book describes the way the exploitation of a forest was done in order to stimulate the growth of other trees, so that the forest would not be completely cleared, but could always regenerate itself. The reason for which the concept of sustainability emerged for the first time in forestry 300 years ago - and gained, in the centuries that followed, a particular importance in this field – was a greater need for wood in those days, especially in the mountain regions of central Europe. But the growing need for wood and, opposed to this, the long lasting regeneration and low growth rate of forest areas, represented a serious threat to economic development. Therefore it became inevitable to think “on the long run”.

The phrase “sustainable development” was used in the early 1980s at the International Conference on Environmental Conservation and launched in 1987, with the publication of the Brundtland Report “Our Common Future”. The report identifies a series of objectives that determine sustainable development: eradicating poverty, further economic growth while preserving natural resources, focusing on qualitative aspects of growth, controlled population growth, restructuring of economic and technological processes in order to protect the environment1.

The rediscovery of “sustainability” in the second half of the twentieth century was due to alarm signals drawn in the 70s’ by the authors of “The limits of growth” on the oil crisis and the “green” militants, when sustainable development was defined as “improving the quality of life while taking into account the support capacity that ecosystems we live in have” (Ştefănescu, 2007:41).

1 CMED, Brundtland Report, Notre avenir a tous, Ed. Fleur, Montreal, 1987

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To summarize, the transition to sustainable development means that, in the context of economic development, humans and nature have become goals and not means. Although this entails additional costs and lower productivity, these can be offset by additional benefits in terms of quality of life.

The concept of sustainable development lays at the intersection of three sectors: economic development, social development and environmental protection.

Nature has continuously provided nourishment as well as raw materials and energy for economic and technological activities, receiving in return no more than waste of materials and energy, resulting from production and consumption processes (Bran, 1991:87).

But who is to blame for pollution and environmental destruction? Some blame it on the population growth, which has overloaded the natural processes of chemical and biological recycling. Others accuse wealth – as rich countries produce most of the solid residuals – and praise poverty, which is said to give production an ecological character. Some claim innate human aggression, “the cruelest and most ruthless species that ever lived on earth”; others blame everything on the things learned by humans; some members of the clergy see the essence of evil in profit, which causes environmental violation; some historians incriminate religion as it argues that the only reason for nature to exist is to serve humanity; some politicians blame the uncontrolled technical production, which generates air pollution, water, soil; some ecologists accuse politicians who do not accept the legislation and the measures proposed by ecologists; some blame capitalism, while others accuse everyone (Commoner, 1980:10-13).

Whatever the answer(s) to questions about the causes and agents of pollution could be, this issue also entails an ethical dimension, regarding both relationships between generations and within generations, because only some produce pollution, but the entire population has to bear the effects of pollution; equal opportunity means equal chances to enjoy the purity, beauty and gifts of nature (PohoaŃă, 2003:27) .

However, countries all over the world have different priorities regarding development. Developed countries show concern for a clean economy that is compatible with a healthy environment and a high quality of life, i.e. the qualitative aspects of production and consumption, while less developed countries aim mainly at quantitative targets such as reducing disparities in relation to developed countries, even at the risk of repeating mistakes made by them, errors such as to prejudice the natural, the social, and the moral environment.

Such differences can still be observed when comparing Eastern and Western Europe and may be outlined by indicators of sustainable development. Eastern European countries have recorded maximum scores for only 8 out of the 22 indicators included in the Sustainable Development Index (SDI, see table below), while other Western European countries have recorded maximum scores for 14 indicators. In the meantime, minimum scores are assigned mainly to the Eastern countries (17) and only to 5 of the indicators in the West. Looking beyond the strictly numerical analysis, indicators with the maximum score for Eastern European countries do not show concern for ensuring sustainable development, but rather a low level of industrial development (Moldova - score 9.9 for air quality; Albania - score 8.7 for gas emissions with a greenhouse effect), low density population (Moldova, score 7.8 for ecological footprint), lack of investment capacity (Belarus, score 8.7 for debt) or even hide striking realities such as poverty (Romania, score 10 for sufficient food).

Indicators of sustainable development in Romania and in its neighboring countries. Description, comparison and analysis

Sustainable Society Index (SSI) is a new indicator that manages, for the first time, to integrate the most important aspects of life quality and sustainability of countries. The main structure of the SSI consists of 22 indicators, grouped into 5 categories; the scores for each category of indicators represent the average scores from all categories (all indicators having the same weight). In the case of Romania 5 additional indicators covering specific aspects of sustainability policy in Romania (gross domestic product, poverty rates, research and development, transportation, organic farming) have been included (these do not appear in the following table).

By analyzing the Sustainable development index, we noticed that the general score obtained by Romania in 2008 was 5,7, on a scale from 0 to 10 (while in 2006 it reached 5,5); this score places the country on the 23rd place out of 37 countries. Romania reaches low scores at 3 categories (personal development, clean environment, sustainable use of resources) and higher ones only for 2 categories

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(sustainable world, sustainable society). The total rise of the general score, as compared to 2006, relies primarily on better scores for the proper sanitation services indicator; although Romania tends to occupy a low place (30), it still reaches a very high score (9,4). Improvements have been noticed in other indicators as well: educational opportunities, equal opportunity, good governance, population growth, income distribution and use of renewable water resources, while greenhouse gas emissions scores have fallen.

Sustainable development index in Europe 37

Table 1

Indicator categories Romania’s

score Romania’s

place Max. score

Country Min. score

Country

SDI-Romania-2008 5 ,7 23 7,0 Norway 4,3 Malta Categories

I. Personal development 8,0 36 9,7 Norway 7,6 Moldova

II. Clean environment 4,3 35 8,1 Norway 3,9 Latvia III. Balanced society 6,9 11 7,6 Ukraine 3,6 Macedonia

IV. Sustainable use of resources 4,1 24 8,0 Island 0,2 Malta

V. Sustainable world 6,2 7 7,2 Albania 3,8 Island

Indicators

I.1.Healthy life 7,2 32 8,9 Sweden 6,5 Ukraine

I.2.Sufficient food 10,0 1 10,0 Romania 8,9 Moldova

I.3.Sufficient drinking water 5,7 37 10,0 Denmark 5,7 Romania

I.4. Proper sanitation services 9,4 30 10,0 Denmark 6,8 Moldova

I.5 Educational opportunities 7,7 32 10,0 Denmark 6,9 Albania

I.6 Equal opportunity 8,1 32 9,6 Island 7,0 Moldova

II.7 Air quality 6,0 11 9,9 Moldova 3,7 Malta

II.8 Surface water quality 2,9 37 9,1 Norway 2,9 Romania

II.9 Soil quality 3,9 30 9,8 Ireland 1,7 Albania

III.10 Good governance 5,2 30 8,8 Finland 2,9 Belarus

III.11 Unemployment 5,4 15 8,8 Island 0,1 Bosnia-H

III.12 Population growth 8,3 6 9,3 Ukraine 5,7 Ireland

III.13 Income distribution 7,4 16 9,3 Check Rep.

0,1 Malta

III.14 Public debt 8,3 5 8,7 Belarus 0,1 Latvia

IV.15 Waste recycling 2,1 24 9,1 Switzerland 0,0 Belarus

IV.16 Use of renewable water sources 8,9 18 10,0 Island 0,0 Malta

IV.17 Consumption of energy from renewable sources

1,3 11 7,3 Island 0,0 Malta

V.18 Condition of forests 7,0 35 10,0 Island 6,9 Bosnia

V.19 Conservation of biodiversity 4,2 22 5,9 Italy 1,1 Bosnia

V.20 Greenhouse gas emissions 5,5 7 8,7 Albania 0,0 Estonia

V.21 Ecological footprint 6,0 6 7,8 Moldova 0,0 Estonia

V.22 International cooperation 8,3 28 10,0 Norway 6,8 Bosnia-H

Source: Romania, towards a sustainable society. Sustainable development index, Romania 2008

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Source: Based on data from Romania, towards a sustainable society. Sustainable development index,

Romania 2008

By comparing radar graphs illustrating the situation of the six countries we are trying to examine (Romania, Moldova, Serbia, Hungary, Bulgaria and Ukraine), in terms of the 5 categories, we found that:

- The order by scores obtained for the categories studied for the 6 countries is: 1. Personal development 2. A balanced society 3. A sustainable world 4. A clean environment 5. Sustainable use of resources

- The category “personal development” has achieved the highest values, the highest score being recorded for Hungary and the lowest for Romania.

- The lowest scores were obtained for the categories “a clean environment” and “sustainable use of resources”, as they are secondary objectives of the countries analyzed in relation to more demanding targets as economic recovery, inflation control, providing jobs, social assistance, etc.

- The other two categories, “a balances society” and “a sustainable world”, have recorded average scores, as the indicators composing them are quite heterogeneous.

The highest value of SDI was recorded in 2008 by Hungary (5.9), followed by Romania (5.7),

Moldova (5.6), Ukraine (5.5), Bulgaria (5.3) and Serbia (5, 2), values located around the average of Europe 37.

The scores obtained for the 6 countries are very close, indicating their similar position in

several respects: the adopted development model, priorities in various aspects of economic and social development, opportunities for achieving sustainable development goals.

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I. Personal development II. Cleaner environment

III. Balanced society IV. Sustainable use of resources

V. Sustainable world

Source: based on data from Romania, towards a sustainable society. Sustainable development index, Romania 2008

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Categories Romania Bulgaria Hungary Moldova Serbia Ukraine

I. Personal development

8,0 8,8 9,1 7,6 8,6 8,7

II. Cleaner environment

4,3 5,0 4,8 6,0 4,6 5,5

III. Balanced society

6,9 6,7 6,7 5,8 4,9 7,6

IV. Sustainable use of resources

4,1 2,7 4,5 2,9 3,1 2,7

V. Sustainable world

6,2 6,1 5,8 7,1 6,1 5,5

Index SDI-2008 5,7 5,4 5,9 5,6 5,2 5,5 Max Europe 37 7,0 Min Europe 37 4,3 Average Europe 37 5,65

Source: based on Romania, towards a sustainable society. Sustainable development index, Romania 2008

Overall, the 6 countries obtained the highest scores in the “personal development" category

(including the following indicators: 1. Healthy life; 2. Sufficient food; 3. Sufficient drinking water; 4. Proper sanitation services; 5. Education opportunities; 6. Equal opportunity) and the lowest in “sustainable use of resources” (including these indicators: 1. Recycling waste; 2. Use of renewable water resources; 3. Consumption of energy from renewable sources). The explanation for this situation might be: as far as “personal development” is concerned, its high score is the result of the combined action of some indicators, except for “Proper sanitation services”, which depend to a lesser extent on economic efforts, but rather on natural conditions, or political issues. On the other hand, “sustainable use of resources” gets low scores in all six countries, for the indicators it comprises are usually pursued after the achievement of certain economic targets.

The scores obtained are similar in all 6 categories. However, the maximal score was obtained by the Ukraine for “a balanced society” (7.6) and Romania for “sufficient food” (10), (in Europe 37) and the minimum score was obtained by Moldova for "personal development" (7.6), receiving the last place for that category (in Europe 37). The forefront position of Ukraine in what concerns the mentioned category is due to unemployment and low debt, population growth and income distribution. Moldova, on the other hand, occupies the last position in that category because of sanitation services, inadequate educational opportunities and low levels of healthy life.

The best scores were achieved by Romania for the following indicators: sufficient food, adequate sanitation services, use of renewable water resources, population growth, public debt, international cooperation, and gender equality. The lowest scores were recorded for energy consumption from renewable sources, waste recycling, surface water quality, soil quality and biodiversity conservation.

Bulgaria achieved the highest scores for these indicators: sufficient drinking water (9.9) and sanitation services (9.9) and lowest scores for: energy consumption from renewable sources (0.6) and recycling waste (2.3). Hungary is a leader in sufficient food (10), sufficient drinking water, sanitation services, income distribution, use of renewable resources of water (with scores over 9) and last for energy consumption from renewable sources (0.4). Moldova recorded high scores for air quality (9.9) and sufficient drinking water (9.2) and low scores for energy consumption from renewable sources (0.2) and recycling waste (0.5). Serbia, in turn, has scores reaching values over 9 for sufficient food and drinking water and scores less than 1 for recycling waste (0.1), unemployment (0.4) and consumption of energy from renewable sources (0.9). Finally, Ukraine scored up to a maximum value for sufficient food and drinking water scores; also it had scores over 9 for sufficient drinking water and sanitation services, and scores less than 1 for energy consumption from renewable sources (0.1) and recycling waste (0.5).

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Indicators Romania Bulgaria Hungary Moldova Serbia Ukraine 1. Healthy life 7 ,2 7,5 7,5 6,6 7,3 6,5 2. Sufficient food 10,0 9,2 10,0 8,9 9,6 10,0 3. Sufficient drinking water 5 ,7 9,9 9,9 9,2 9,3 9,6 4. Proper sanitation services 9 ,4 9,9 9,5 6,8 8,7 9,6 5. Educational opportunities 7 ,7 8,2 8,9 7,0 8,1 8,7 6. Equal opportunity 8,1 8,2 8,7 7,0 8,4 7,9 7. Air quality 6,0 6,2 5,2 9,9 5,7 9,2 8. Surface water quality 2,9 4,2 4,1 3,2 3,2 3,7 9. Soil quality 3,9 4,6 5,1 4,9 4,9 3,7 10. Good governance 5,2 5,4 6,6 3,9 4,3 4,1 11. Unemployment 5,4 3,8 4,8 4,8 0,4 7,6 12. Population growth 8,3 8,8 8,1 8,0 7,8 9,3 13. Income distribution 7,4 7,8 9,0 6,9 5,9 8,7 14. Public debt 8,3 7,5 4,8 5,2 6,2 8,5 15. Waste recycling 2,1 2,3 3,8 0,5 0,1 0,5 16. Use of renewable water

sources 8,9 5,3 9,3 8,1 8,4 7,5

17. Consumption of energy from renewable sources

1,3 0,6 0,4 0,2 0,9 0,1

18. Condition of forests 7 ,0 7,9 7,5 7,0 7,4 7,9 19. Conservation of

biodiversity 4,2 4,9 4,4 4,5 5,0 4,2

20. Greenhouse gas emissions 5,5 3,8 4,3 8,3 5,1 2,8 21. Ecological footprint 6,0 4,8 4,2 7,8 6,2 4,7 22. International cooperation 8,3 8,8 8,8 7,9 6,8 8,2 ISD-2008 5,7 5,4 5,9 5,6 5,2 5,5 Max Europe 37 7,0 Min Europe 37 4,3 Europe 37Average 5,65

Source: Romania, towards a sustainable society. Sustainable development index, Romania 2008

Therefore both the strengths (sufficient potable water, sufficient food) and the weaknesses (consumption of renewable energy, recycling) of countries in this part of Europe come out quite clearly.

The sufficient drinking water indicator shows the number of people who have access to a source of drinking water as a percentage from the total population. Except for Romania, other countries have provided public access to drinking water sources for their populations, drawing benefits from the existing river system, which can meet the requirements of this indicator. Romania has obtained a very low score for this indicator due to the fact that “in rural areas, only a percentage of 33% of the inhabitants have access to public water sources and 67% of people get their drinking water from wells. Surface and ground water are often polluted with nitrates, microorganisms (bacteria, viruses, protozoa) and pesticides. Pollution is caused by poor waste management, outside latrines, wrongly designed sewage tanks and farm activities. Animal droppings are often deposited in people’s yards, causing direct infiltration of liquids into soil and water supply”2.

The indicator for enough food defines the number of undernourished people as percentage of total population. It seems that sufficient food containing calories, protein, vitamins and trace minerals is available for (almost) every citizen of the six countries. But by extending the quantitative analysis with a qualitative one, - malnutrition, it is possible that scores would decrease by taking into account dietary habits, the quality of food consumed; some factors that play an important role in choosing food are price, diet or meal time.

2 Romania toward a sustainable society. Sustainable Society Index SSI-Romania-2008, p.49

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Energy consumption from renewable sources describes renewable energy as a percentage of the total energy consumption. In countries that are rich in conventional resources, this situation justifies the low scores obtained; however, in the case of countries that lack such resources, low scores can only be explained by the incapacity of institutions to promote projects for obtaining energy from renewable sources.

Recycling waste refers to the amount of solid waste recycled as a percentage of total solid waste. Low scores indicate a poor waste management in these countries and little interest or insufficient funding from local governments for such a purpose, to which an undesirable behavior and attitude on the part of local communities can be added.

Conclusions 1. The scores obtained are the highest when the value of indicators is influenced by natural

conditions (sufficient drinking water) or low level of economic development (air quality). 2. If the values of indicators are determined by the actions and the effective economic and

social policies (renewable energy consumption, waste recycling), the scores are very low.

Source: based on data from Romania, towards a sustainable society. Sustainable development index, Romania 2008 3. The countries from the European Union must adopt the European acquis; therefore, they

obtain higher scores for indicators reflecting the level of civilization (health services, educational opportunities, good governance) than the countries outside the EU.

4. Differences between countries are considered insignificant in relation to the striking similarities between them, despite differences in size, natural conditions, EU membership. This situation allows us to believe that the communist regime that was present in all these countries before 1989 has had a very strong impact, still visible today, although inherent changes have occurred in the post-communist period.

5. We believe that these countries understand the need for sustainable development, but lack the means to achieve it, as they are still in a position to meet other, more demanding challenges and priorities.

We can say that mankind is presented with a great challenge nowadays, i.e. to build a “new economy” that sustains economic and social progress, increased productivity of labor, a new economy that simultaneously makes it possible to eradicate poverty, to stabilize population growth, to protect natural resources, to improve the quality of human life, in other words “environmental protection and

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economic development must be complementary issues” (Okita, 1992:155). “The new economy” should have certain features such as “a realistic perspective about human nature, a systematic and synergistic, critical and constructive character, dynamic labor and a predictable character” (Rojanschi et al., 2006: 28) and should be accompanied by economic policies that can assist it in acquiring a sustainable character.

As long as the relationships between human beings and the environment can not be analyzed in a given area, and these relationships have a global dimension through the effects they cause, a convergence of efforts, aimed at ensuring a better life for all inhabitants of the planet and a sustainable natural environment, must take place. A new paradigm is also needed in order to set and perceive economic objectives at an optimum rather than at a maximum level of activity (Rojanschi et al., 2006: 19).

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europene, vol. I-III, Ed. Eikon, Cluj-Napoca King,A., Schneider, B. (1993), Prima revoluŃie globală, Ed. Tehnică, Bucureşti Maynard, Herman B.Jr., Mehrtens Susan E. (1997), Al patrulea val, Ed. Antet, Bucureşti Okita, Saburo (1992), Cu faŃa spre secolul 21, Ager-Economistul-RAI, Bucureşti PohoaŃă, Ion (2003), Filosofia economică şi politica dezvoltării durabile, Ed. Economică, Bucureşti Popescu, I.A., Bondrea,A.A., Constantinescu, M.I. (2005), Dezvoltarea durabilă. O perspectivă

românească, Ed. Economică, Bucureşti Reilly, W.K. (1991), Dezvoltare economică şi câştig ecologic, în Sinteza, nr.89 Rojanschi, V., Grigore, F., Bran, F., Ioan, I. (2006), Cuantificarea dezvoltării durabile, Ed. Economică,

Bucureşti Ştefănescu, Florica (coord.) (2007), Dezvoltare durabilă şi calitatea vieŃii, Editura UniversităŃii din

Oradea, Oradea The World Bank: World Development Indicators, 2001, Washington

III. Dynamics of the economic frontiers

Angelo SANTAGOSTINO, Andrea FORNARI (Brescia) ◄► The EU’s Mediterranean policy. An assessment over a decade (1995-2005

Jaroslaw KUNDERA (Wroclaw) ◄► The Migration of Poles to the European

Single Market Lerzan OZKALE (Istanbul) ◄► Turkey and the European Union: a Never-Ending

Story or an Irrevocable Membership? Georges CONTOGEORGIS (Athens) ◄► État, marché et société. La question de

l’équilibre dans la relation entre société et politique

The EU’s Mediterranean policy. An assessment over a decade (1995-2005)

Angelo SANTAGOSTINO, Andrea FORNARI Abstract: The ultimate of the Barcelona process was that of extending certain aspects of the

European value system, such as democracy and economic integration, to the eastern and southern Mediterranean regions. After fifteen years we can say that this process has failed. In spite of efforts, including financial ones, progress has been non-existing or quite limited. The article focuses on economic aspects of the EU’s Mediterranean policy, essentially trade and investments. The conclusions are that the main constraints to the sooth working of free trade areas are of cultural and religious origins. A divide that in the future could at best be smoothed but not removed.

Keywords: Mediterranean, EU, trade, foreign investments Introduction In an article on the European Mediterranean policy, published in 2002, we drew the following

conclusions (Santagostino, 2002): Mediterranean unity has always had a hegemonic character in the ancient world. The Greek

civilisation dominated first, then the Roman one, finally the Roman – Byzantine one. This has been true from a cultural, political, economic and religious point of view. In this sense we can talk of a Mediterranean civilisation under Greek or Roman ‘world dominance’. The challenge brought by Arab expansionism disrupted that unity and caused a long period of strife between Christianity and Islam for hegemony over the Mediterranean world. Both in the Ancient and in the Modern World unity has been strictly combined with hegemony. To possess the former, the latter was indispensable. This fact has been amply demonstrated over more than a millennium.

However, The last decades of the past century have witnessed a sudden change in this scenario. The

success of the European integration was not only concerned with the creation of a space of peace and prosperity among the Member States or, on the economic side, with the creation of the Single market or of the Monetary Union. Actually it brought about a sharp rethinking of the relationship between Europe and the third countries. As a matter of fact, the newly experienced relationship of peaceful coexistence inside the European states, reinforced by the strengthening of the integration process, was accompanied by closer and closer links between Europe and the third countries, the Southern and Eastern Mediterranean ones among them. We can say that the process of mutual understanding, which forms the basis of the European integration, was transferred to external relations, determining deep transformations. The notion of hegemony has thus faded out and was substituted by the more far-reaching concept of political, economic and social “partnership”, based on a respect for each other’s culture.

Can we also talk of a Mediterranean reunification? The Barcelona process is still at an early stage, and it will take time to achieve the various and ambitious objectives of the Euro-Mediterranean Agreements, but their consequences will be of great range and to a certain extent comparable to those of the current phase of the Enlargement. The political partnership will help establish the bonds of solidarity between the EU Member States and the Mediterranean countries and will contribute to the stability and security in the region. The economic partnership will create, through the Free trade area, a space of enhanced opportunities for trade, investments, job creation, and welfare. Finally, the social and cultural partnership will boost respect for human rights and understanding and tolerance between cultures.

Seven years have passed, many things have happened and the time has come for revisiting the Mediterranean policy in order to verify to what extent its objectives have been fulfilled. In particular we will try to give an answer to the second question embodied in the above paragraph. Has the economic partnership created a space of enhanced opportunities for trade investments, job creation, and welfare? Consequently can we talk about the existence of a process of Mediterranean reunification? Finally what are the perspectives of the Union for the Mediterranean?

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The Barcelona Process is the most recent of several attempts, by the European Union, to consolidate and strengthen its economic relationship with Arab Middle Eastern and North African states. From the original members Cyprus and Malta are today full EU members, while Turkey is a EU candidate country.

The Barcelona Declaration expresses the partners’ intentions: • To establish an area of peace and stability; • To work towards a free trade area between the EU and its partners and among the

Mediterranean partners themselves; • To develop a social, cultural and human partnership.

This work will analyze and assess the second objective. Effects of a Mediterranean Free Trade Area The essence of all free trade agreements is to ensure the movement of goods, services,

companies and capital across national boundaries without hindrance or formalities. With a view to developing gradual free trade in the Mediterranean area, tariff and non-tariff

barriers to trade in manufactured products have been progressively eliminated. Taking as a starting point traditional trade flows, and as far as the various agricultural policies allow and with due respect to the results achieved within the GATT negotiations, trade in agricultural products is progressively liberalised through reciprocal preferential access among the parties. Trade in services, including the right of establishment, is also progressively liberalised having due regard to the GATS agreement.

Undoubtedly, the greatest impact of such agreements is that consumers are exposed to goods and services from across the globe. Expensive items drop radically in price and become more accessible to the public. In other words, consumers benefit from a greater choice of products at more affordable prices.

On the other hand, as trade obstacles diminish, local producers face increasing competition from their foreign rivals. The reaction generated is usually diverse: some complain and sink under the foreign pressure, others seek to influence governments to find ingenious ways to impede the access to foreign products, while the more enterprising adapt to the competition by improving the quality and marketability of their goods and services.

In order to prevent a deterioration of domestic and external balances, policy makers are advised to implement compensating fiscal policy measures and to allow the real exchange rate to depreciate in response to market forces. An adequate policy response further requires monetary policy aimed at keeping a low level of inflation.

The progressive establishment of this free-trade area is reached by: • harmonising rules and procedures in the customs field, with the introduction of rules of origin; • the harmonisation of standards; • the pursuit and the development of policies based on the principles of market economy and the

integration of economies; • the adjustment and modernisation of economic and social structures, giving priority to the

promotion and development of the private sector for a market economy; • the promotion of mechanisms to foster transfers of technology; • elimination of unwarranted technical barriers to trade in agricultural products and adoption of

relevant measures related to plant health and veterinary rules, as well as other legislation; • meetings, which will take place periodically at the level of Ministers, officials or experts, as

well as, where appropriate, by conferences or seminars involving the private sector; • co-operation among statistics organisations with a view to providing reliable data.

It is a fundamental principle of the Euro Mediterranean partnership to implement free trade among the partners themselves (the so-called “horizontal” South-South integration), beside the bilateral “vertical” trade liberalisation with the EU.

EU: the largest trading partner Over the period 2000-2005, the Mediterranean Partner Countries (MPCs) conducted most of

their total trade (imports and exports) with the EU.

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In details, imports from the EU has increased for Algeria, Jordan, Morocco, Tunisia and Turkey, while for Egypt, Israel, the Palestinian Authority and Syria the volume has declined. Lebanon seems to keep a more constant import level over the period 2000-2005.

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Chart 1: Mediterranean partners Imports from the EU (Million euro) Source: Eurostat for the present and the following graph and tables.

With regards to the export side, the total figure has increased for Algeria, Egypt, Jordan,

Morocco, the Palestinian Authority, Tunisia and Turkey, while a decrease has been registered in exports to the EU for Lebanon and Syria. Israel seems to maintain a flatter volume of exports.

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Chart 2: Mediterranean partners Exports to the EU (Million euro) Nonetheless, generally speaking, the percentage of both imports and exports from and to the

EU has gradually declined. The countries which kept a more constant rate of trade with the EU are Israel and the Maghreb ones (Algeria, Morocco and Tunisia). More significant fall are registered for the Mashrek countries, especially for Syria. Flatter seems to be the Turkey case, probably due to existing tighter agreements in view of a possible accession of this country to the EU.

These data seems to suggest how the external trade of the Mediterranean countries, though the entry in force of the Association Agreements, and later on of the Action Plans, has been diverted over

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the period from the EU to other countries, hence reducing the relative importance of the EU as origin/destination of their trade.

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Chart 4: Weight of single country in total Mediterranean Exports to the EU (%) By reflecting imports and exports in the Trade Balance between the Mediterranean countries

and the EU, the result has always been in favour of the EU, with the only exception of Algeria and Syria, which have had a positive balance all over the period 2000-2005. A reduction in the deficit can anyhow be observed for Egypt, Israel, the Palestinian Authority, Tunisia and Turkey, while the negative result has worsened for Jordan and Morocco, while Lebanon remained quite constant. The introduction of the Association Agreements seems to have an initial positive effect on the trade balance in bettering the position of the Mediterranean partners.

Of the countries in the group, it is the Maghreb countries (Algeria, Morocco and Tunisia), besides Israel and Turkey, which trade most with the EU. The Palestinian Authority and Syria are the two Mediterranean partner countries which trade least with the EU. The importance of Israel and Turkey as trading partners is attributed to the tighter relations existing with these two countries (namely, the Turkish candidate status). This relative importance is amplified by the fact that there is no import of energy from these two countries, energy being the main imports from the area.

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Turkey, Israel and Morocco were the three most important Mediterranean trading partners for the EU over the period 1999-2006. Among the Member States, Germany, France and Italy are traditionally the main partners for the MPCs (due to colonial backgrounds).

With regards to EU imports from the Mediterranean partners, the composition results are very focused on raw materials, mainly hydrocarbons for energy, which counts for half of the total imports. Besides this, a growing role is played by textiles (10%), usually coming from finishing activities due to delocalisation of some production phases.

Between 1999 and 2006 EU imports from the Mediterranean countries grew for Algeria and Turkey, and decreased for all of the other partners. The reduction in imports from these countries has registered anyhow lower rates than the ones from Hong Kong, Taiwan, Japan and the United States. The only imports which increased have been from China and, at a lower rate, from India, demonstrating on the one hand the intention for the EU to be as independent as possible, and on the other hand to concentrate imports from countries with much lower labour cost.

Extra-EU trade by main partner countries, share in total extra-EU imports (%) Table 1

1999 2000 2001 2002 2003 2004 2005 2006 Algeria 1.1 1,7 1,7 1,5 1,6 1,5 1,8 1,8 Israel 1.1 1,1 1,0 1,0 0,9 0,9 0,8 0,7 Libya 0.9 1,3 1,2 1,0 1,2 1,3 1,7 1,9 Morocco 0,8 0,6 0,7 0,7 0,7 0,6 0,8 0,5 Syria 0,3 0,4 0,4 0,5 0,3 0,2 0,3 0,3 Tunisia 0,7 0,6 0,6 0,7 0,7 0,7 0,6 0,6 Turkey 2,1 1,9 2,3 2,6 2,9 3,2 3,1 3,1 China (excluding Hong Kong)

7,1 7,5 8,4 9,6 11,4 12,5 13,6 14,4

Hong Kong 1,5 1,2 1,1 1,1 1,1 1,0 0,9 0,9 Taiwan 2,9 2,9 2,7 2,5 2,4 2,3 2,0 2,0 Japan 10,1 9,3 8,3 7,9 7,7 7,3 6,3 5,7 India 1,4 1,3 1,4 1,5 1,5 1,6 1,6 1,7 United States 22,3 20,8 20,8 19,5 16,9 15,5 13,9 13,2 Extra EU-27 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0

Extra-EU trade, by main partner countries, share in total extra-EU exports (%) Table 2

1999 2000 2001 2002 2003 2004 2005 2006 Algeria 0,8 0,7 0,9 0,9 0,9 1,0 1,0 0,9 Israel 1,9 1,9 1,7 1,6 1,4 1,4 1,3 1,2 Libya 0,3 0,3 0,3 0,4 0,4 0,4 0,3 0,3 Morocco 1,0 0,9 0,9 0,9 0,9 0,9 1,1 0,9 Syria 0,3 0,2 0,3 0,3 0,3 0,3 0,3 0,3 Tunisia 0,9 0,9 0,9 0,9 0,8 0,8 0,8 0,8 Turkey 3,2 3,8 2,5 3,0 3,5 4,2 4,2 4,3 China (excluding Hong Kong)

2,9 3,0 3,5 3,9 4,8 5,1 4,9 5,5

Hong Kong 2,3 2,4 2,5 2,3 2,1 2,0 1,9 1,9 Taiwan 1,8 1,8 1,5 1,3 1,3 1,4 1,2 1,1 Japan 5,2 5,4 5,1 4,9 4,7 4,6 4,2 3,9 India 1,6 1,6 1,5 1,6 1,7 1,8 2,0 2,1 United States 27,4 28,0 27,8 27,8 26,1 24,7 24,0 23,2 Extra EU-27 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0

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As far as EU export to the Mediterranean region is concerned, the leading sector is the machinery and mechanical apparel (26% of the total), followed by chemical products, electrical machines and textiles (each one counting for around 9% of the total export).

As for volume, EU exports remained more constant, with the exception of Israel where it fell, possibly because of the crisis in the Israeli economy, and Turkey where it increased (possibly because of tighter negotiations on possible accession). This is noticeable when exports to other extra EU countries such as Hong Kong, Taiwan, Japan and the United States registered a continuous decline.

This seems to support the thesis of a diversion of the trade flows from Asia and America to the closer countries of the Mediterranean basin.

Regional trade In the more recent years there has been a significant contradiction in the direction of

international trade for MPCs. In spite of all the above-mentioned negotiations and agreements between the EU and its Mediterranean partners, international trade flows between the two parties don’t seem to have had such an increase effect. On the other hand, most of the partner countries experienced an increase in the regional trade, mainly with regards to the export side. This can be the result of the ENP, stressing the importance of the regional co-operation through local agreements, such as the Agadir one.

Egypt international trade (%)

Table 3 IMPORTS EXPORTS 1995 2000 2003 1995 2000 2003 Algeria 0.06 0.20 2.87 China 2.52 4.59 4.92 0.17 0.58 1.62 France 5.84 4.14 4.12 4.18 6.38 2.71 Germany 8.90 8.84 6.57 6.01 2.00 1.96 Italy 6.23 6.66 4.94 13.33 11.50 12.30 Jordan 0.90 0.33 1.57 Lebanon 1.25 1.70 1.70 Libia 1.54 0.97 1.77 Middle East 3.01 9.60 4.86 Saudi Arabia 2.12 7.40 2.32 3.28 2.78 3.00 Spain 4.56 2.75 4.67 Turkey 1.53 1.43 1.57 2.41 2.08 2.30 UE25 40.23 36.60 29.00 United Arab Emirates 1.19 1.22 1.88

Source: ICE, Sistema Informativo Nazionale per il Commercio Estero.

Taking the example of the Agadir Agreement countries, over the period 1995-2005, there has been a contraction in the trade flows with the EU, generally in both imports and exports, in favour of an increase in the regional trade, that is, flows from and to other Mediterranean countries or Middle East and Arab countries.

Nonetheless, recent meetings held in Tunis, among the four members of the Agadir Agreement, concluded that there are many things to be done yet. Deeper attention will be paid to industry shortcomings, to improve the information about the offers available in these countries, and to fill technology lags, especially in the textile and auto sectors.

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Morocco international trade (%) Table 4

IMPORTS EXPORTS

1996 2000 2004 2005 1996 2000 2004 2005

Algeria 1.24 1.65 0.91 1.70

China 1.77 2.32 4.18 5.21

France 20.85 24.03 18.46 18.22 28.34 33.52 33.62 30.33

Germany 6.08 4.88 5.91 4.74 3.90 4.97 3.42 3.01

Iran 0.70 3.10 1.55 2.78

Italy 7.15 4.74 6.52 6.12 6.31 7.13 4.67 5.19

Middle East 7.17 12.68 8.16 10.93

Pakistan 1.12 0.42 0.80 0.97

Saudi Arabia 5.95 4.97 5.36 6.77 1.31 0.81 0.59 0.80

Spain 8.76 9.87 12.19 11.00 9.89 12.97 17.48 17.99

Turkey 0.69 0.87 2.04 1.96 1.62 0.70 0.65 0.85

UE25 55.31 58.74 56.14 52.14 United Kingdom

2.81 6.17 3.30 2.27 3.86 9.59 7.63 6.21

United States 7.42 5.58 4.13 3.37 3.46 3.42 3.89 2.64

WORLD 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Source: ICE, Sistema Informativo Nazionale per il Commercio Estero

Tunisia international trade (%) Table 5

IMPORTS EXPORTS

1996 2000 2004 2005 1996 2000 2004 2005

Algeria 1.65 1.02 0.59 1.03 1.74 0.72 1.13 1.74

Bangladesh NA 0.15 0.11 0.38

China 0.79 1.18 2.29 2.89

Egypt 0.49 0.60 0.32 0.46

France 24.4 26.31 25.04 23.47 25.74 26.84 33.09 32.91

Germany 12.69 9.60 8.44 8.24 15.62 12.51 9.17 8.43

Italy 18.86 19.12 18.99 20.93 20.72 23.01 25.31 23.96

Libia 3.05 3.73 3.32 3.87 3.55 3.61 3.59 4.51

Middle East 1.43 1.81 1.56 1.86

Morocco 0.69 0.62 0.76 1.04

Saudi Arabia 0.45 0.70 0.89 0.82 0.42 0.41 0.25 0.49

Spain 3.61 5.42 6.05 5.49

Turkey 1.30 1.83 2.53 2.26 0.89 1.09 0.89 1.02

UE25 73.44 71.29 69.77 69.00

United Kingdom 1.88 2.42 2.18 2.19 1.92 2.19 2.87 2.66

United States 4.16 4.61 2.83 2.50 1.36 0.72 1.19 0.91

WORLD 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Source: ICE, Sistema Informativo Nazionale per i Commercio Estero

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Turkey international trade (%)

Table 6 IMPORTS EXPORTS

1996 2000 2004 2005 1996 2000 2004 2005

Algeria 1.7 2.19 0.79 1.45

China 1.28 2.44 4.76 5.90

France 6.38 6.49 6.59 5.04 4.52 6.01 5.85 5.18

Germany 9.89 7.98 7.3 6.48 22.35 18.81 13.97 12.87

Iran 1.88 1.5 1.54 2.97 1.28 0.85 1.23 1.24

Iraq 0.82 NA 2.91 3.74

Israel 1.10 2.26 2.09 2.00

Italy 17.66 13.23 13.3 11.68 6.24 6.39 7.34 7.65

Libia 1.11 1.45 1.61 1.70

Middle East 7.70 6.20 5.39 6.82

Saudi Arabia 3.97 1.76 1.31 1.62 1.87 1.36 1.21 1.31

Spain 2.30 3.08 3.46 3.04 1.46 2.56 4.12 4.10

UE25 53.81 50.29 48.31 42.19 United Arab Emirates

0.92 1.13 1.82 2.28

United Kingdom 5.79 4.99 4.59 4.02 5.41 7.36 8.85 8.05

United States 7.66 7.18 4.96 4.60 7.02 11.18 7.67 6.68

WORLD 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Source: ICE, Sistema Informativo Nazionale per il Commercio Estero

Application of a Hub-and-Spoke Model to the EU-MPCs relation By studying the impact of the Central European Free Trade Agreement (CEFTA) and the

Baltic Free Trade Agreement (BFTA) on intra-European trade, Luca De Benedictis, Roberta De Santis and Claudio Vicarelli showed how they effectively reduce the influence of the European Association Agreements (AA) in shaping the European trade structure, which has a hub-and-spoke system (De Benedictis, De Santis, Vicarelli, 2005).

According to the hub-and-spoke model, the benefit of any central agreement (such as the AA) is more concentrated on the centre of the system (the hub) than on the extremes (the spokes), hence reducing the positive impact of the agreement on the single member. Empirical studies show how the development of an intra trade organisation among the countries previously named as the spokes has a better result on their economy.

EU Trade Commissioner, Peter Mandelson suggested for the EU and its regional partners a ‘truly integrated regional approach’ to a ‘hub-and-spoke network of bilateral agreements’1. But in spite of this statement, the EU is greatly involved in bilateral and multi-bilateral preferential pacts producing a hub-and-spoke trade system.

In the case of the Central and Eastern European Countries (CEECs) and being the then EU15 a large and rich market, it would naturally attract, as a gravitational pole, the flows of goods and services originated by the opening up of the Eastern European economies. A hub-and-spoke trade structure would therefore naturally emerge.

In the meantime, several CEECs have also signed free trade agreements among themselves. More precisely, the CEFTA system has two components: multilateral and bilateral. A multilateral component comprises commonly agreed preferences, whereas a bilateral one includes those negotiated bilaterally and not extended to all CEFTA members. BFTA works the same way.

1 Mandelson, P. on 19th May 2005, Speech on EU trade policy and the stability of the Middle-East, Jerusalem,

Hebrew University.

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Adam, Kosma and McHugh (2003) explore the effectiveness of CEFTA and BFTA. They support the view that regional agreements helped both expand regional trade and limit the emergence of a hub-and-spoke relationship between CEECs and the EU. The authors conclude that the bulk of the increase in EU-CEECs trade was due to a return to normal trading pattern rather than to specific trade advantages offered by the AA.

On one side, FTAs that have been put in place to prepare transition countries for accession to EU (such as included in the AA) have promoted substantial growth in EU-CEECs trade flows.

On the other hand, CEFTA and BFTA increased CEECs intra-regional trade by around 16 percent, on average. With the start of the integration process with the EU15, the hub has had an undeniable gravitational pole, and trade flows were directed towards the European market. Now the AA are not anymore reinforcing the hub-and-spoke structure of intra-EU trade: the establishment of CEFTA and BFTA indeed restored and developed trade flows between the CEECs. From this perspective, FTA among spokes limited the reinforcement of a hub-and-spoke relationship.

Southern Mediterranean Countries should move towards a regional free-trade area – as exemplified by the CEFTA and the BFTA – to promote intra-regional trade and to prevent contrast the emergence of a hub-and-spoke structure in regional trade flows.

The importance of the Mediterranean region for emerging markets. The share of EU Foreign Direct Investment (FDI) outflows to emerging markets in total EU

external FDI flows increased between 2001 and 2005, rising from 34% in 2001 to 45% in 2004, but fell to 36% in 2005. Far East Asia is still attracting the majority of the flow, but its relative importance is decreasing, whereas the importance of closer region, such as the CEECR and, for a smaller amount, the Mediterranean partner countries, is growing.

Share of emerging markets in total extra-EU FDI outflows (%)

Table 7 2001 2002 2003 2004 2005

Emerging Markets 34 29 26 45 36

Far East Asia 21 14 11 19 15

Latin America 10 8 4 14 4

MPC 1 3 3 3 3

CEECR 2 4 8 8 13

Other extra-EU countries 66 71 74 55 64

Source: from European Union foreign Direct investment yearbook 2007, Eurostat, European Commission, 2007.

Note: MPCs = Israel, Turkey, the Maghreb and Mashrek countries; CEECR = Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, the former Yugoslav Republic of, Romania, Serbia and Montenegro, Russia, Belarus, Ukraine. Over the period 2001-06, EU FDI flows to Mediterranean partner countries (MPCs) increased

from 4.883 to 15.435 million €, with a steady increase in 2006 from the previous year. Over this period, Turkey has always been the main host country, probably due to the negotiation in

course for a possible integration into the EU and government process in favour of FDI. Only in 2002 it was overtaken by Egypt (0,98% of EU FDI flows versus 0,60% for Turkey) and in 2003, when the situation was for the first time in favour of Morocco (with 1,26% of EU FDI flows against the 0,86% for Turkey). 2004 was the year when Egypt, together with Turkey, shared the principal host country position with around 0,81% each.

The steady increase in EU FDI flows in 2006 to MPCs was mainly due to Turkey, with 11.860 million €, counting for the 4,56% of total EU outflows, and secondly to Egypt, with 2.740 million €, counting for the 1,05% of total EU outflows. In 2006 the MPCs as a whole received the 5,94% of the total EU FDI.

Reasons for this strong increase in the inflow for Turkey can be found in the entry into force of a new legal system favouring foreign investors. The new FDI law was enacted with a view to eliminate a variety of problems relating to the foreign investors concerned about their ownership rights in host countries

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and to the worries of host countries’ public with regard to the probable decrease in employment and loss of independence. According to the Prime Minister Erdogan, by 2009, Turkey aims to complete projects to privatise electricity and power generation, Turkish Airlines, Halkbank and other public banks, roads, and other companies including sugar and tobacco.

EU direct investment outward flows by extra EU country of destination (million €)

Table 8 1995 2000 2001 2002 2003 2004 2005 2006

Extra-EU-15 62,407 437,044 323,663 140,787 140,444 163,308 273,313 NA

Extra EU-25 NA NA 306,140 133,897 135,873 145,922 240,063 268,907

Extra EU-27 NA NA NA NA NA 142,219 234,473 259,944

Turkey 350 2,149 2,940 802 1,164 1,146 4,984 11,860

Israel 118 723 309 204 131 165 674 -216

Maghreb countries 100 907 781 833 1,731 1,714 1,149 1,141 Morocco 33 213 209 227 1,707 166 1,090 1,171 Mashrek countries 169 2,839 555 2,001 1,229 1,181 798 2,644

Egypt 97 1,872 523 1,306 995 1,172 786 2,740 Mediterranean partner countries

NA NA 4,883 2,543 4,513 4,201 7,610 15,435

Central and Eastern Europe

NA NA NA NA 8,382 8,557 5,675 19,147

Community of Independent States

314 3,336 3,915 3,663 8,477 9,444 17,008 13,599

United States 33,138 186,368 158,706 2,704 51,394 15,494 28,887 71,895

Latin America 3,566 46,188 29,644 11,244 5,220 19,720 11,354 9,222 China (excl. Hong Kong)

787 2,428 2,293 3,103 3,190 3,868 6,241 6,000

Hong Kong 1,393 -3,364 49,115 3,314 3,769 11,334 3,886 2,893

Japan 1,378 5,458 -8,875 10,193 5,585 5,814 11,920 491

Taiwan 381 2,258 1,182 435 116 1,182 2,916 1,031

South Korea 365 3,182 1,143 1,642 2,103 1,953 4,538 4,034 Association of South-East Asia

1,852 2,220 9,535 7,641 4,476 4,726 4,658 6,138

Source: Eurostat, Economy and Finance, Balance of payments - International transactions The case of Egypt, though not so significant if compared with the Turkish one, is also quite

important in the region. The increase registered in foreign investments found its basis in the government of Prime Minister Ahmed Nazif which has passed a raft of legislation since coming to office in 2004, aimed at streamlining investment procedures, opening up the economy and instilling confidence. Though the process is nowhere near complete, the increase in FDI indicates that overseas investors are taking notice.

The worst performing country has been Israel, which shifted from 118 in 1995 to –216 million € in 2006. This was due to the economic slowdown in the US. It is expected more of a drop-off in 2008-2010 as it is thought that the US economy will go through further recessions and the impact on the incoming flow of funds will be strong as 60-70% of FDI in Israel is from North America.

Out of North Africa and Middle East, the only countries where an increase in the volume of FDI flows was registered have been China and South Korea. Other countries and regions, like the US and Latin America, Hong Kong and Taiwan, Japan and South East Asia, recorded a negative trend throughout the period 1995-2006.

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-1.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

1995 2000 2001 2002 2003 2004 2005 2006

Egypt

Israel

Morocco

Turkey

Maghreb

Chart 5: EU direct investment outward flows towards MPCs (%). With regards to FDI stocks accumulated by the EU in extra EU countries and referring to the

Mediterranean region, there has been a quite constant increase over the period 1995-2006. Best performing countries were once again Egypt, Morocco and Turkey.

0,00

0,50

1,00

1,50

2,00

2,50

3,00

1995 2000 2001 2002 2003 2004 2005 2006

Egypt

Israel

Morocco

Turkey

Maghreb countries

Mashrek countries

Mediterranean partner

countries

Chart 6: EU direct investment outward stocks towards MPCs. Comparing the MPCs with other extra EU countries and regions, a decrease in FDI stocks was

registered for the US, Latin America and South East Asia, while the Far East recorded an increase. In terms of stocks, there are clear differences between member states in the destination of their

investments. At the end of 1999, France was the main EU investor in the area, with two-thirds of its assets invested in Maghreb countries. The other larger investors, the UK and the Netherlands, held around half of their investments in Mashrek countries, while Germany held same part in Turkey.

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EU direct investment outward stocks by extra EU country of destination (million €) Table 9

1995 2000 2001 2002 2003 2004 2005 2006 Extra-EU-15 471,912 1,738,046 2,125,902 2,024,323 2,143,380 2,203,292 2,666,602 NA Extra EU-25 NA NA 2,017,386 1,904,845 2,011,069 2,036,444 2,458,023 2,737,508 Extra EU-27 NA NA NA NA NA 2,023,531 2,435,106 2,705,729 Turkey 2,270 8,056 10,223 8,462 11,482 12,931 25,116 40,416 Israel 258 2,815 2,735 2,040 2,368 2,337 3,716 2,990 Maghreb countries

1,906 5,585 5,802 7,046 12,247 14,012 16,893 18,894

Morocco 1,109 2,392 2,879 3,149 7,630 9,432 11,395 12,947 Mashrek countries

1,422 8,578 7,418 6,997 7,262 8,758 11,506 13,079

Egypt 552 6,322 4,684 5,102 5,366 6,939 8,856 11,201 Mediterranean partner countries

NA 29,437 32,677 33,418 41,036 38,041 57,231 75,377

Central and Eastern Europe

NA NA NA NA 142,598 22,952 39,492 60,151

Community of Independent States

1,033 12,960 17,364 16,761 21,707 29,243 50,584 66,775

United States 207,181 751,521 915,251 760,153 747,548 731,759 849,328 933,001 Latin America 40,120 189,442 195,158 126,379 173,916 189,822 221,669 226,881 China (excl. Hong Kong)

2,322 15,294 19,309 19,969 18,705 21,348 28,170 32,714

Hong Kong 7,170 24,311 77,705 65,009 85,326 86,341 85,415 83,417 Japan 11,047 44,025 36,340 52,025 68,738 76,004 90,161 75,516 Taiwan 1,626 5,955 6,919 6,274 5,158 6,573 10,397 9,031 South Korea 2,316 10,032 12,442 14,438 16,050 19,859 24,058 25,805

Association of South-East Asia

20,576 55,922 67,745 61,394 72,206 68,555 83,122 91,144

Source: Eurostat, Economy and Finance, Balance of payments - International transactions. Note: Data are for EU15 until 2000 and for EU25 as from 2001.

Governments resistance to FDI Political uncertainty, security risks and weak economic competitiveness continue to weigh on

investors’ sentiment about the region and foreign direct investment flows remain quite low, after a peak in 2001 and following the September 11 events.

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Mergers and acquisitions, by country and region (number of deals) Table 10

ECONOMY FLOW 1995 2000 2001 2002 2003 2004 2005 2006 Sale 4,247 7,894 6,035 4,493 4,562 5,113 6,134 6,974

World Purchase 4,247 7,894 6,035 4,493 4,562 5,113 6,134 6,974

Sale 2,102 3,606 2,839 2,069 1,920 2,055 2,544 2,832 EU 25

Purchase 1,947 4,098 3,219 2,106 1,866 1,951 2,442 2,833 Sale 0 3 3 0 1 4 1 5

Algeria Purchase 0 0 1 1 0 0 1 1

Sale 4 13 9 4 4 7 8 21 Egypt

Purchase 0 7 4 2 1 2 4 8 Sale 19 44 29 15 15 18 29 37

Israel Purchase 9 54 31 22 13 29 29 37

Sale 3 3 2 0 6 0 5 9 Jordan

Purchase 0 2 0 2 0 1 5 4 Sale 0 8 2 0 2 0 3 0

Lebanon Purchase 1 1 0 1 4 1 0 2

Sale 0 0 1 0 0 0 2 1 Libia

Purchase 1 0 1 1 1 2 1 0 Sale 1 5 5 5 2 4 5 4

Morocco Purchase 1 2 2 0 0 1 2 1

Sale 0 1 0 1 0 1 1 2 Syria

Purchase 0 0 0 0 0 0 0 1 Sale 0 9 3 5 0 1 5 3

Tunisia Purchase 1 0 2 3 0 0 0 0

Sale 9 19 36 14 11 18 23 43 Turkey

Purchase 1 10 3 9 3 4 8 7 Sale 34 109 78 88 80 42 114 131 Southeast

Europe Purchase 3 12 11 16 26 5 19 27 Sale 50 96 67 79 109 79 124 179

CIS Purchase 4 30 34 28 48 36 59 80

Sale 668 1,388 1,010 746 722 840 1,035 1,162 United States

Purchase 1,172 1,830 1,252 956 1,054 1,301 1,421 1,602 Sale 340 687 582 520 699 859 1,018 1,047

Asia Purchase 298 451 338 383 538 623 792 799

Sale 58 94 79 107 214 217 255 247 China

Purchase 13 35 22 35 73 59 58 61 Sale 63 121 80 94 108 143 182 162

Hong Kong Purchase 52 114 85 91 114 128 172 149

Sale 24 107 85 78 83 82 86 65 Japan

Purchase 75 130 115 97 111 111 158 120 Sale 10 28 39 19 26 23 26 31

Taiwan Purchase 10 19 10 12 15 15 17 15

Sale 9 53 28 30 37 55 36 38 South Korea

Purchase 17 12 24 13 28 18 26 15 Sale 45 111 84 66 83 80 126 163

India Purchase 14 55 35 35 57 64 91 133

Sale 324 640 520 494 668 819 960 966 South, East and South-East Asia Purchase 285 418 310 352 506 598 735 716

Source: Eurostat

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But the reduction in the volume of FDI flows to the region is due not only to external factors. Indeed, restrictive domestic economic policies also affected investors’ feeling towards the MPCs. The major regulatory restrictions imposed by the governments of most of these countries are:

• entirely or partially closing certain industries for foreign investment; • local agent restriction; • local sponsor restriction. Assessments of the business climate in the Mediterranean show that the level of EU FDI

remains significantly below that in the new EU Member States (including Malta and Cyprus, which joined the EU in 2004), except for Israel, Jordan and Tunisia.

According to Svitlana Khyeda (Khyeda, 2007), free capital movements raise concerns about the loss of national sovereignty and other possible adverse consequences. And even more for foreign direct investment. For this reason, governments have sometimes imposed restrictions on inward FDI. Supporting this argument, the modernist movement in Islam used extremist religious and cultural factors to profess the closure of the national economy to non Muslim countries, stating that the law cannot be changed by man. The main characteristic of Islamic law (or Muslim law as used by some scholars) is, indeed, its religious nature and the Shari’a, the basic body of Islamic law set forth in the Koran.

Nonetheless, the common feature of the analysed countries is the growing interest of the governments in the attraction of FDI, accompanied far-reaching economic reforms.

Foreign as well as domestic investment will indeed have to increase significantly to meet the requirements of growth, and the institutional and regulatory environment will need further adaptations to create the right conditions for sustainable development.

Looking at the number of mergers and acquisitions made by foreign investors, the countries

hosting the majority of them have been Israel and Turkey. In the Turkish case, the number of sales has been much higher than the one of purchases, showing the effect of the privatisation program. An increase in the number of transnational operations have been registered over the period 1995-2006 in all Mediterranean countries, showing once again an increasing interest of investors to move their capital and assets to this area.

UNCTAD Performances Indexes An interesting indicator of a country’s capacity to attract FDI is represented by the Performance

Indexes calculated by UNCTAD. These cover three-year periods to offset annual fluctuations in the data and cover 141 economies (excluding tax heavens, which for tax rather than productive reasons tend to have massive FDI inflows in relation to their economic size).

INWARD FDI PERFORMANCE INDEX The Inward Performance Index ranks countries by the FDI they receive relative to their

economic size. It is the ratio of a country’s share in global FDI inflows to its share in global GDP. A value greater than one indicates that the country receives more FDI than its relative economic size, a value below one shows that it receives less (a negative value means that foreign investors disinvest in that period).

The index thus captures the influence on FDI of factors other than market size, assuming that, other things being equal, size is the “base line” for attracting investment. These other factors can be diverse, ranging from the business climate, economic and political stability, the presence of natural resources, infrastructure, skills and technologies, to opportunities for participating in privatization or the effectiveness of FDI promotion.

Over the period 1995-2006, the Inward FDI Performance Index improved for all the Mediterranean countries.

Countries such as China, India, Taiwan, Korea and the US saw their position worsening, showing how not the size but other factors than the size can influence the decision to invest in the country.

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Performance Index Table 11

1995-1997 1998-2000 2001-2003 2004-2006

ranking value ranking value ranking value ranking value

Algeria 119 0.287 109 0.195 91 0.563 110 0.398

China 20 3.678 51 1.198 37 1.969 69 1.472

Cyprus 52 1.771 26 1.875 24 3.227 22 3.428

Egypt 99 0.769 102 0.252 123 0.184 33 2.765

Hong Kong 15 4.460 2 6.033 9 4.822 2 9.630

India 105 0.534 119 0.108 114 0.248 113 0.394

Israel 73 1.276 72 0.631 60 1.374 42 2.476

Japan 133 0.018 130 0.053 132 0.087 137 0.014

Jordan 66 1.360 37 1.483 84 0.653 8 6.357

Korea, Republic of 114 0.345 91 0.408 120 0.218 123 0.284

Lebanon 107 0.502 99 0.306 90 0.572 14 5.362

Libya 137 -0.247 135 -0.124 116 0.244 81 1.246

Malta 21 3.643 5 4.572 81 1.006 6 7.401

Morocco 70 1.320 90 0.427 32 2.413 55 2.003

Syria 109 0.500 103 0.246 121 0.208 98 0.544

Taiwan 108 0.502 110 0.188 117 0.243 119 0.341

Tunisia 74 1.265 74 0.606 58 1.417 41 2.480

Turkey 115 0.328 123 0.093 110 0.290 73 1.413

United States 98 0.780 78 0.559 112 0.275 117 0.351

Source: UNCTAD

Potential Index Table 12

1997-1999 2000-2002 2003-2005 ranking value ranking value ranking value Algeria 91 0.110 75 0.122 61 0.203 China 42 0.178 39 0.190 30 0.307 Cyprus 41 0.178 43 0.178 43 0.257 Egypt 71 0.133 70 0.126 81 0.166

Hong Kong 13 0.294 12 0.287 11 0.399

India 87 0.115 89 0.110 85 0.159

Israel 21 0.263 23 0.246 26 0.334 Japan 11 0.307 16 0.270 24 0.353 Jordan 65 0.142 45 0.178 59 0.204 Korea, Republic of 17 0.285 18 0.269 17 0.372 Lebanon 50 0.161 60 0.142 75 0.178 Libya 47 0.167 46 0.176 40 0.269 Malta 38 0.183 34 0.201 54 0.227 Morocco 92 0.110 93 0.109 92 0.144 Syria 88 0.114 100 0.101 93 0.144 Taiwan 20 0.267 21 0.262 20 0.367 Tunisia 72 0.132 71 0.126 68 0.190 Turkey 81 0.124 72 0.126 69 1.850 United States 1 0.494 1 0.458 1 0.623

Source: UNCTAD

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INWARD FDI POTENTIAL INDEX The Inward FDI Potential Index captures several factors (apart from market size) expected to

affect an economy’s attractiveness to foreign investors. It is an average of the values (normalized to yield a score between zero, for the lowest scoring country, to one, for the highest) of 12 variables.

Over the period 1995-2006, the Inward FDI Potential Index has had different trends for the MPC. In the case of Algeria, Jordan, Libya, Tunisia and Turkey it improved, while it worsened for Egypt, Israel, Lebanon, Morocco and Syria. The index for Cyprus and Malta (which have joined the EU in 2004) has worsened, especially in the Maltese case, no matter the accession to the EU in 2004.

Conclusions The Barcelona process is no more, as it was at the beginning of the present century, in an early

stage. In 2008 it has been transformed into the Mediterranean Union, a sort of reduced version of the Barcelona process, limited to economic integration through the implementation of a free trade area. This transformation, or better limitation to the economic field, is undoubtedly linked to the poor results of the Barcelona process, as far as its first objective is concerned. Fifteen years after 1995, non significant improvement in the condition of democracy, freedom of thought, respect of human rights, and equal opportunities for the woman and so on can actually be detected in the eastern and southern shores of the Mediterranean Sea, the only exceptions being Israel and Turkey. As we have seen in this article the economy represents a partial exception, as the developments in trade and investments have been fairly positive. However, as we have pointed out in the previous sections, these developments have been of secondary importance when compared with those occurring between the EU and China or India, or more generally with Eastern Asia, regions with which no free trade area agreements have been signed. At the same time, Mediterranean countries have developed their economic relations rather with Arab and Middle Easter countries than with the EU. Again the enforcement of a free trade agreement has not been the decisive factor for the development trade and investments relations. We are convinced that cultural factors have been decisive in shaping these results. The lack of a strong modernisation process has affected negatively the capacity of Mediterranean countries to set up a credible and sustainable process of integration among themselves. Actually in spite of a huge number of bilateral agreements, signed in the recent and less recent years, these economies are still relatively isolated among them. The lack of horizontal integration, as we have seen, is a strong limiting factor for the creation of an area of shared prosperity, as indicated in the Barcelona Charter. Why intra-Mediterranean integration has been a failure? The first answer is the usual one: because developing economies are competitive and not complementary, as they produce similar products, essentially labour-intensive goods. This leads us to the second question: what caused the failure to go beyond this incipient stage of development? Why, while Asian development indicates that a quick transformation is possible, the Mediterranean countries have missed this opportunity? We think that the value system, articulated around Islamic religion, has played and is still playing a fundamental role. Islam, as it is well known, is an overall religion, not limited to the spiritual sphere, but including the civil, economic and political ones. This is a crucial point, which cannot be developed here, but is of resounding importance. The fact the Islamic principles confine women to an ancillary positions has deprived, just to give an example, the labour force and human capital of three countries of an important dynamic element. Turkey, to give another example, is a modern economy just because under the Ataturk modernization has managed to separate the religion from the civil, economic and political life of the country (however these achievements are today challenges by the re-islamization policy of the Erdogan government). At the same time, as we have seen, the external projection of these countries is strongly biased towards other Islamic countries.

In the Introduction of the present work we raised the question whether or not a process of Mediterranean reunification is under way. Unfortunately the answer is negative. The EU’s so called soft power has failed to deliver democracy, modernity and economic prosperity to the Mediterranean partners. Nor we can say that the huge immigration process has produced any movement to transfer any element of the European value system or cultural element into these countries. A cultural curtain is still dividing longitudinally the Mediterranean. No more (or not only) in the terms of the ancient confrontation between Christianity and Islam, but more generally as a confrontation between secularity and integralism. Such a divide that can at best be smoothed, but not removed.

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De Benedictis, L., De Santis, R., Vicarelli, C. (2005), “Hub-and-Spoke or else? Free Trade Agreements in the ‘enlarged’ European Union”, Rome, University of Macerata – Institute for Studies and Economic Analyses.

Eurostat (2007), European Union Foreign Direct Investment yearbook 2007, European Commission Hatipoglu, E. (2003), The EU in the Middle East, Turkish Review of Middle East Studies, 14, Istanbul:

Bigart. Khyeda, S. (2007), “Foreign Direct Investment in the Middle East: Major Regulatory Restrictions”, in

Insight Turkey, Vol. 9, No.2, April 2007. Mandelson, P. on 19th May 2005, Speech on EU trade policy and the stability of the Middle-East,

Jerusalem, Hebrew University. Santagostino, A. (2004), “The EU trade and investment policy towards Mediterranean countries”,

Turkish Review of Middle East Studies, 14, Istanbul: Bigart. Santagostino, A. (2002), “Towards a new Mediterranean unity: the case of EMA”, Marmara Journal of

European Studies, Vol.10, no.1, 2002. Ye’Or, B. (2006), Eurabia, the Euro-Arab Axis. BAT, Fairleigh Dickinson University Press, sixth

printing. http://ec.europa.eu/external_relations/euromed/bd.htm http://epp.eurostat.ec.europa.eu/

The Migration of Poles to the European Single Market

Jarosław KUNDERA

Abstract: After accession to the EU, we observed strong wave of emigration of Polish workers to the EU partners. Polish emigration rose from about 1 million before accession to a peak of 2.2- 2.5 million emigrants. The EU member states, which were among the most important destinations for Polish emigrants, included: the UK (690 thousands), Germany (490 thousands), Ireland (200 thousands), the Netherlands (98 thousands). Contrary to the popular opinion, the Poles are not the most mobile people among the European nations: in Poland emigration represents about 2% of the working population, less than in Lithuania (3,1%), in Cyprus (3%), in Romania 2,5% and, in the long run, much less than in Portugal (9%) and in Ireland (8,2%). Polish emigrants were mainly young, energetic and well educated people, who found jobs especially in the construction sector, in agriculture, in the simple services field - in the restaurants and the hotels of the host country. The main reason for emigration was an economic one: lower wages in Poland than in the EU-15 member states and lack of jobs in Poland. Although these waves of emigration had some negative consequences upon the Polish economy (for example the brain drain in the field of medicine and computer science, while some branches of industry and services started to complain about the lack of adequate labour force on the local market), the yearly transfer of money from emigrants to their mother country was higher than 2 billion euro, and even reached 4,1 billion in 2007, which benefited the Polish economy. After the financial crisis in 2008, more and more Polish people lost their jobs abroad and began to return to Poland. Among the Polish emigrants in UK, one third declared their willingness to come back to Poland.

Keywords: emigration, Polish workers, the European single market The free movement of persons is one of the fundamental freedoms of the European Single

Market. In the world economy, the EU is a unique integrative group which has guaranteed completely the free migration of citizens among the member states. The freedom of migration represented a crucial change for Poland after its accession to the EU, as barriers to trade and capital movements had already been largely removed in the run-up to enlargement. According to article 39 of the Treaty on the European Union:

1. Freedom of movement for workers shall be secured within the Community. 2. Freedom of movement shall entail the abolition of any discrimination based on nationality

as regards employment, remuneration and other conditions of work and employment. 3. It shall entail the right, subject to limitation, justified on grounds of public policy, public

security or public health: a) to accept offers of employment actually made; b) to move freely within the territory of member states for this purpose; c) to stay in a member state for this purpose, in accordance with the provisions

governing the employment of nationals of that state as laid down by law, regulation and administration action;

d) to continue to stay within the territory of a member state after having been employed in that state, subject to conditions which shall be embodied in implementing regulations to be drawn up by the Commission

It is worth adding here that the provision mentioned above does not apply to employment in the public service. Moreover the free movement of workers must be legally distinguished from the self-employed’ freedom of establishment (art. 43 on European Union) and the freedom to provide services, which are not subject to the transition arrangements of the Accession Treaty.

Additionally, in accordance with the 40th article of the Treaty on European Union, the Council, after consulting the Economic and Social Committee, shall issue directives or make regulations setting out measures which would in particular bring about the workers’ freedom of movement:

a) by ensuring close cooperation between national employment services;

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b) by abolishing those administrative procedures and practices (national or international) and those qualifying periods with regards to eligibility for available employment, the maintenance of which would form an obstacle in the liberalization of workers’ movement;

c) by abolishing all such qualifying periods and other restrictions (national or international) regarding the free choice of employment, other than those imposed on the workers of the state concerned;

d) by setting up appropriate machinery to connect offers of employment with applications for employment and to facilitate the achievement of a balance between supply and demand in the employment market, so as to avoid serious threats to the standard of living and the level of employment in the various regions and industries1.

According to economic theories, migrants face two alternatives when making a decision related to their job: to work either at home or abroad. The decision to move abroad depends mainly on the employment/unemployment situation in the two countries and the wage differences between the country of emigration and the host country. Migrants may decide to move if they cannot find jobs at home and there are jobs vacancies abroad. They also move if they expect to get a better salary abroad than at home. J.E Meade explains potential migrants will be interested to move if the difference between the earnings at the place of immigration and that of emigration is greater than the sum of: a) the direct cost of migration; b) the intangible costs of migration. The direct cost of migration includes travel expenses (train, plane, and bus ticket), telecommunication costs, and visas. A greater distance to the host country would of course increase the direct transportation costs. The intangible cost of migration includes various factors, among which one can mention: lack of information about job prospects, inadequate housing facilities, social, cultural, language differences between the country of emigration and the host country, uncertainty about job security, differences in educational systems, cooking habits, climate, worry for the possible loss of seniority, loss of the accustomed environment, lack of sufficient knowledge about the possibilities of assimilation, fears related to the reduction of wages in the case of migration, and even irrational motives: propensity to stick to the birth place, national, religious, racial prejudices (Meade, 1955:358). If direct migration costs and intangible costs increase, they will diminish the flows of migration. Assuming constant direct and intangible costs of migration, a wage difference seems to be a driving force inducing workers to migrate: an increase in the foreign wage or a decrease in the home wage will increase migration.

According to human capital theory, migration is some kind of investment in human capital. For a while migrants sacrifice foregone earnings at home to obtain new skills, learn foreign languages, and get the knowledge and the experience that a worker can acquire abroad. This theory is especially adequate to the new member countries of the EU, where young emigrants look for new language and professional experience by leaving a mother country and taking up job in UK, Germany, France or Ireland.

Before the enlargement of the EU in 2004, the total number of non-nationals living in the EU was around 25 million, just below 5,5% of the total population. As Table 1 indicates, in absolute terms most foreign citizens resided in Germany, France, Spain, the United Kingdom and Italy. According to official national statistics and Eurostat estimates, the non-national population varied from less than 1% from the total population in Slovakia to 39% in Luxemburg, but in most countries the proportion was between 2% and 8 %. A non-national proportion, above 8%, existed in such countries as: Latvia, Estonia, Austria, Cyprus, Germany, Belgium and Greece, but below 2% in Lithuania, Hungary and Poland. It is worth noticing here that in all EU member states, except Luxemburg, Belgium, Ireland and Cyprus, the majority of foreigners were citizens of non-EU 25 members countries The composition of the non-national population in each EU country strongly reflected the immigrants’ historical links and recent political development. For example, the largest non-national groups included Turkish citizens in Germany, Denmark and the Netherlands, citizens of former colonies in Portugal (Cape Verde) and Spain (Ecuadorians), migrants from Albania in Greece, citizens from the former Soviet Union in Estonia, Latvia and Lithuania. Statistically two–thirds of the migration flows to the European single market was made up of non-national citizens and only one third from the EU citizens. Taking in consideration the less than 2% emigration flow of citizens from the member countries in their total population, one can say that before enlargement, European citizens were not very mobile internationally among partner countries. This process was developing intensively only in some segments of the labor market, namely senior executives, high-level professionals, graduate students and

1 Traktat ustanawiający Wspólnotę Europejską, Tekst ujednolicony, Warszawa 2005

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young professionals. Moreover, the Europeans moved little not only internationally, but also across regions within their own countries. Baldwin and Wyplosz conclude that the Europeans move only half as often as the US citizens, mainly for personal reason, since professional reasons account for only 5% of the moves (Baldwin and Wyplosz, 2006: 364-365).

The non–national population in the EU member states in 2004

Table 1 Non-nationals

in 1000 Non-nationals in % Largest group of non-nationals

1. Belgium 869 8.3 Italy 2. Czech Republic 195 1.9 Ukraine 3. Denmark 271 5.0 Turkey 4. Germany 7342 8.9 Turkey 5. Estonia 274 20.0 Russia 6. Greece 891 8.1 Albania 7. Spain 2772 6.6 Ecuador 8. France 3263 5.6 Portugal 9. Ireland 274 7.1 United Kingdom 10. Italy 1990 3.4 Albania 11. Cyprus 65 9.4 Greece 12. Latvia 515 22.2 Russia 13. Lithuania 34 1.0 Russia 14. Luxemburg 174 38.6 Portugal 15. Hungary 130 1.3 Romania 16. Malta 11 2.8 United Kingdom 17. Netherlands 702 4.3 Turkey 18. Austria 765 9.4 Serbia and Montenegro 19. Poland 700 1.8 Germany 20. Portugal 239 2.3 Cape Verde 21. Slovenia 45 2.3 Bosnia and Herzegovina 22. Slovakia 30 0.6 Czech Republic 23. Finland 107 2.0 Russia 24. Sweden 476 5.3 Finland 25. United Kingdom 2760 4.7 Ireland

Source: Statistics in focus, Population and Social Conditions, European Communities, Eurostat, Luxemburg 2006/8

Although in 2004 the number of citizens from 10 new EU member countries-15 was very small, around 0,2% of their total population, the issue of migration has become prominent in the accession negotiation and preceding discussions among economists. There were public concerns in the EU- 15 member countries about the possibility of large scale migration of workers from Poland and other new member states to the EU. From the standpoint of Polish interests, the freedom of migration and employment in the EU might relax tensions on the Polish labor market. From the standpoint of the EU 15 member countries, the possible mass migration would have a negative impact upon their labor market and the wage level. For such reasons, before the full liberalization of the labor movement, the accession Treaty introduced the intermediate period of 2+ 3+ 2 years. That meant that the EU partner countries might preserve their emigration controls during the first two years of transitory period or enlarge that period to five years or even seven years depending on their situation on their labor market. In first years following accession, the majority of current Members States adopted national measures or bilateral agreements to regulate the access of workers from Poland to their labor markets. At the beginning, Great Britain, Sweden, Denmark, Ireland, Spain, the Netherlands declared their intention to eliminate the obstacles for the emigration of Polish citizens with the date of accession but later, except the UK, Ireland, Sweden, they withdrew their promises. Since 1 May 2006 Spain, Portugal Greece, Finland, and partly

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France and Belgium opened their labor market to the emigration from 10 new EU member countries. As a ninth country of the EU-15, the Netherlands made the decision to open its labor market to Polish emigration at the third anniversary years of enlargement. Since November 1, 2007 Luxemburg lifted restrictions regarding the emigration from new member countries and since July 1 2008 France abolished further restrictions against Polish immigration. Germany and Austria decided that they will keep the control of immigration from new member states during the whole seven years period. The transitional period did not apply to the flow between the new 12 member states of the EU.

As to the end of 2008 Polish citizens enjoyed: - Free access to the labor markets of Bulgaria, Cyprus, the Czech Republic, Estonia, Finland,

Greece, Hungary, Ireland, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Romania, the Slovak Republic, Slovenia, Sweden and the United Kingdom

- Easy access to the labor market, though subject to the relevant domestic legislation, in Denmark, France, Liechtenstein and Norway. In these countries, the liberalization of restriction concerning immigration took forms such as: introduction of labor quotas; unrestricted access to the labor market within certain sectors, checking of the work permit application.

- Access to the labor market in accordance with the terms of domestic legislations similar to those prior to the enlargement of May the 1st 2004 in Austria, Belgium, Germany. According to the accession treaty these countries were allowed to maintain their transitional arrangements until 2009 and even until 2011, in case of severe distortions, as an effect of immigration flows within their labor markets or the unavoidable risk of such distortion. However, the restrictions of free flow of person could not be more stringent than those applied before accession to the EU.

As a result of the economic transformation there had already been considerable waves of emigrants from Poland in the 1990. Before accession, about one million Polish citizens worked abroad. Additionally, the number of Polish citizens willing to work in the EU countries was estimated to 350 000 – 390 000 (Borkowska, 2003: 27-28). In the 1990- more than 70% of the emigrants moving from Poland to the European countries preferred to settle down in Germany. One reason of this “low propensity to migrate” was the lack of demand in the EU countries for foreign labor force because of the slowness of economic growth. The migrants also had to face adjustment costs. Results of the majority of forecasts (Polish, German, Austria and forecasts presented in the Report of the European Commission), concerning the movement of labor force in the context of eastern enlargement of the EU, indicated that there were no reasons to fear about a great migration wave. Even after abolishing the formal barriers in migration between Poland and the EU there were a lot of non administrative barriers which restricted the migration of Polish workers to the European Single Market. Among these barriers one can distinguish divergent professional qualifications, lacking linguistic abilities, geographical distance, and psychological factors. The experience of previous enlargement has shown that migration depends not only on income differences between countries but also on prospects related to jobs. However, in the period immediately following enlargement, the job prospect on the European Single Market was mostly gloomy. One expects that emigration from Poland to the EU countries might as well diminish, as the level of living standard in Poland progressively becomes higher and as the Polish zloty would appreciate in relation to the Euro.

There are some analysts who argue that not even one million and half people will emigrate from Poland, which means that an additional migration potential (a rise above the current level of seasonal economic migration) can amount in range from 33 000 to 150 000 thousand persons migrating annually during the interval of 10-12 years after accession (see Table 2). For the Viseghrad countries the migratory potential was estimated from 340 000 to 721 000 a year. It was thought that the absorption of this migration flows by the EU labor market would be entirely possible, taking into account the demographic processes in the members countries. Boeri and Bruecker estimated that the peak of the migration process will be reached within 30 years from the elimination of barriers inside the European single market. This new flows of immigrants would represent no more than 1,1% of EU – 15 population (Boeri and Brueker, 2000: 23-54). The European Integration Consortium’s estimated that, after enlargement, the number of migrants from new member states to the EU would be of 335 000, which accounts for 0,1% of the current EU population. They will be rising slowly over the following 30 years to reach a peak of 1,1% from the whole the EU’ population. More “alarming” about possible emigration flows were analyses carried out by the Economic Research Institute in Munich, which estimated that, in the first year after the EU enlargement, 283 000 immigrants will come from Poland,

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then 500 000 during the period of five years and around 1,3 million within the decade. The opening of the European labor markets would mostly benefit persons undertaking employment in agriculture, hotel or the construction industry. According to the Sapir Report, elaborated for the Commission of the EU, the full liberalization of cross boarder labor movement would produce an annual flows of migrants from eight members countries of the Central and East Europe, approximately between 250 000 and 400 000 during the first two years of membership. In the beginning, these quite important flows would decrease to some 100 000 – 200 000 afterwards. Summing up, over the decade the cumulative number of migrants from Central and Eastern European countries to the European Single Market might have amounted to figures between 1,5 and 4 million people.

Estimation of the migratory potential in Central and Eastern European countries

Table 2

Author/Institution Scale Methodology of estimation

DIW (Bruecker, Franzmeyer 1997)

340 000- 680 000 a year from the Vyshehrad Group countries and Slovenia to the EU

Econometric model with varying incomes between countries of birth and countries of arrivals as Parameters

Fassman, Hinterman 1997

721 000 from the Czech Republic, Poland, Slovakia and Hungary; 393 000 from Poland – in the most moderate variant called realistic

Estimates based on surveys of migrants conducted by the Gallup Institute

Bauer, Zimmermann

200 000 people a year from the Czech Republic, Poland, Slovakia, Slovenia, Hungary, Romania and Bulgaria

Projecting the 1950-1970 rates of migration from southern Europe to northern Europe

Orłowski, Zienkowski (1999)

400 000 – 1,5 mln. from Poland during a period of 10 - 12 years; 33 000 - 150 000 a year

Gravitation model allowing for the rate of economic growth in countries of emigration and countries of immigration

Salt et al. (1999)

At the most 41 000 a year from countries applying to the EU in the first group: the Czech Republic, Estonia, Poland, Hungary and Slovenia

Projection based on the rate of migration to the EU years 1985 - 1996

The Sapir Report

From 250 000 to 400 000 emigrants from eight Eastern- Central European countries during the first two years of membership and 100 000 – 200 000 afterwards. Over the decade a cumulative amount of emigration between 1,5 and 4 million

Source: Golinowska, Potential of Migration from Poland. Facts and Myths, Polityka Społeczna, Warsaw, no 5-6, An Agenda for a Growing Europe. The Sapir Report, Oxford, 2004, p. 131

These flows would be connected with the reduction of the actual number of their populations

by 2.5 – 4,5%. Study results indicated that the majority of Poles would move to the European Union core member countries (Germany, UK, France, Italy, Benelux countries) Research suggests that cumulative net migration from the new member states would amount, after 15-20 years, to 2-3% of the

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population of Germany and this migration flow would be made up mainly of Polish citizens2. As indicated in Table 2, which is based on various analyses, the labor migration from Poland to the EU should have been expected to come up to noticeable figures. The Sapir Report speaks of a rise from 1,5 million and 4 million cumulative amount of emigration from eight Eastern-Central European countries to the EU -15 members states over the decade, but this flows is made up chiefly of Polish citizens. Orłowski and Zienkowski, starting from the gravitation model, indicate figures ranging from 400 000 to 1,5 million emigrants from Poland, during a period of 10-12 years.

Worries related to large-scale migrations from Poland to the EU, as expressed by the citizens of partner countries, are partly based on facts. After the accession of Poland to the EU we witnessed a strong wave of emigration of Polish workers to the EU partner countries. The emigration phenomenon was associated with Polish citizens aged 15 and over, who have been abroad for at least 3 months. Emigration included mostly the young, the most energetic and the best qualified people (doctors, nurses, dentists, computer programmers, workers in the construction domain, mechanics). It didn’t include chiefly people who were unemployed in Poland (with low qualifications, law mobile, lacking proficiency in foreign language speaking). In the first 6 months after accession at least 64 000 Poles took up legal jobs in the three member states of the EU, which opened their labor market for emigration from new members countries (Great Britain, Ireland and Sweden). Among them there were 25 000 doctors and nurses leaving Polish hospitals, who went to the EU countries in search of better wages and job perspectives. In this period the greatest emigration flows from eastern-southern EU member countries to the 15 EU member states went to Great Britain, where 91 000 emigrants found jobs; Polish workers were about half of them - 50 000. By comparison, only 1600 workers from Poland were able to find job in Sweden during that period.

Great Britain was the greatest country that opened access to its labor market to workers from Eastern Europe. According to European Citizen Action Service, at the end of 2005 some 175 000 Poles went to work in the UK, some 85 000 went to Ireland and 22 000 to Sweden. It is worth mentioning here that the ambassador of Great Britain to Poland, Charles Crawford, emphasized positive, rather than negative effects in relation to the opening of the EU labor market. According to his opinion, the opportunities to work legally in Great Britain made it possible to decrease number of illegal workers from Eastern and Southern EU member states. Due to their work, the GNP of the UK increased with 150 million pounds and income taxes increased with 20 million pounds. As a result of this “open door policy” London had been the most important beneficiary among the European cities. One may say that at the beginning of 21st century the UK capital embodied the ideas of the founding fathers of the European Community to create a place based on free initiative. There foreigners could live and work freely without feeling discriminated against, in places where talent was more important than nationality. At the beginning of the enlargement process, fears that cheap workers from the East would drive out local workers had proved unfounded in the case of Great Britain. At start there was a rather genuinely welcoming atmosphere there. With unemployment at 4.6% in 2005 of the workforce in the UK, local businesses welcomed the influx of emigrants from Eastern European countries as a means of curbing wage inflation. It became true that the emigrants from Central Europe who arrived in Great Britain didn’t come to claim mainly social benefits. Polish people came to the UK only to work and learn the English language. They were not interested in the possibility to merely get benefits and allowances. Their first priority was to find jobs to earn a living.

By contrast France issued only 1 600 permits to Poles in the 11 months after enlargement. During the constitution referendum the Polish plumber became a “demonized figure”, a symbol of how free migration of labor in the European Single Market posed threats to the French job market. Overall, because there had been an inflow from Central and Eastern European countries that joined the EU on May 1st into Western Europe some expected that free labor migration to some EU partners would resolve the painful unemployment problems on the market of new member states (especially Poland and Slovakia). The emigration of doctors and nurses from Poland, which attracted much publicity in Poland, stressed the losses for economy, associated with the “brain drain” phenomenon. This quite massive scale exodus brought about a shortage of staff in Polish hospitals. According to the evaluation done by the Polish Office of the Committee for European Integration, one year after the accession to the EU, 100 000 Polish employees undertook jobs in the

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other member states. If we add to this number the 450 – 500 thousand Polish employees who were working legally in the EU before accession, one can speak of about 600 000 Poles employed legally in the EU partner countries while at the same time residing in Poland.3 At the beginning of accession processes the number of emigrants seemed to be small in comparison with the 3 million. Turkish emigrants to Germany and the 5 million Muslim emigrants to France, therefore we may conclude that emigration from Poland didn’t disturb the labor market of any EU partner country.

Polish workers legally employed in the EU countries in 2006 Table 3

1. Germany 354 000 2. Great Britain 260 000 3. Ireland 100 000 4. Italy 62 000 5. Sweden 35 000 6. Norway 30 000 7. Spain 28 000 8. Holland 20 200 9. Czech Republic 8 800 10. France 8 300 11. Austria 7 900 12. Greece 4 200 13. Belgium 4 000 14. Denmark 600

Source: Assessment of Ministry of Economy and Labor, Rzeczpospolita nr 266, 15

listopada 2005r. Latest newspaper news According to the assessment of the Polish Ministry of Economy and Labor, Germany provided

the largest labor market for Polish emigrants. In 2006, 354 000 Polish emigrants worked legally in Germany, more than in Great Britain - 280 000, Ireland - 100 000, Italy - 62 000, Sweden - 35 000, Norway - 30 000, Spain - 28 000, and Holland - 20 200. The legal Polish emigration to France 8300, Austria, 7900, Sweden 35 000, (countries which opened the labor market for Polish laborers), was surprisingly limited. However, migration from Poland to the UK has been not decreasing. Until November 2005 132 000 workers from Poland legally took up jobs in Great Britain. At the beginning of 2006 - according to Poland Monthly – Poles top the list of work applications in Britain with 170 000 officially applying to work in the UK. Every month few new thousands of new emigrants come from Poland to the UK. At the mid 2006 the total number of Polish emigration in Great Britain was assessed to about 260 000. The Poles’ emigration to Great Britain was far more intensive then tan in the case of other new member countries (from Lithuania 33 000, from Slovakia 24 000). The emigrants to Great Britain, who came from Central European countries, were mostly young people: 82% of them were less then 34 years old, 43% of them were women. In most cases they were well educated, could speak and understand English and had signed a contract before leaving their home country. However, according to the British Home Office statistics, around 80 % of Polish emigrants occupied low-paid, manual jobs in warehousing, packing, and kitchen or factory work. Despite the stereotypes of Poles, only 110 gave their profession as “plumber”. Less than one-fifth of them settled in the capital. In July 2006, British Official statistics indicated that 228 000 Poles had applied to live and work in the UK, since Poland had joined the EU. Other estimates suggested that the real figures were between 350 00 and 500 000. In the first month of 2007 – some said – there were about 600 000 Poles living in the UK. Some 83% of them were under 34. The Polish magazine Polityka even suggested that 1 million Poles had moved to Great Britain but these numbers included temporary emigration and short time visitors. In 2007 not only the UK and Ireland, but the Netherlands too were becoming attractive place to move for emigrants. In the Netherlands there were 225 000 free job places and about 120 000 Polish people had moved to that country and 56 000 gained job permission. The benign emigration of

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eager and biddable young Poles had – as it is generally believed – positive effects on the British economy. Many analyses show that Polish and other new member countries in the EU had positive, but moderate, effects on the British economy in the short two years period to increase its GDP by 04% in comparison with the situation before enlargement (Barysch, 2006). The Office of the Committee for European Integration assessed that in 2006 there were 800- 900 000 Polish citizens working in the various the EU and EEA countries During the three years following joining of the EU, the number of Polish citizens working in the EU countries had been increasing steadily: from 650 000 in 2004, to 700 000 -800 000 in 2005 and some 800 000 – 900 000 in 2006. The member countries with significant numbers of legally employed Polish citizens included: Germany, Great Britain Ireland, Netherlands, Spain, and Italy. From the EEA we can mention: Norway and Iceland. The analyses showed that the first argument for taking up jab abroad was the availability of jobs, the existence of migrant networks and the level of wages. The most important was the so-called “pull factor”: demand expressed by employers from the host country for the labor force from foreign countries, directly linked to the growing economy situation in Great Britain, Ireland, Iceland, or Denmark. The openness of the host-country labor market, and geographic proximity constituted less important secondary factors.4 In two years after accession to the EU, 5000 doctors left Poland. In two years in Lower Silesia Region a quarter of all anesthetists had left for work abroad (national figure was 14%). After the three years of accession, the patterns of migration from Poland to the European Single Market have changed dramatically in comparison with previous situations. The Report produced by the Office of the Committee for European Integration distinguished three types of destination countries: countries with substantial numbers of legally employed Polish citizens; 2. countries with moderate numbers of legally employed Polish citizens; 3. countries with small numbers of legally employed Polish citizens (see Table 3). In the first group one could include Germany, Ireland, Italy, the Netherlands, Norway, Spain, the United Kingdom. The UK, Ireland, the Netherlands and Norway were distinguished as the most popular destinations for Polish emigration in the first three years period after joining the EU. The attractiveness of the markets in the United Kingdom and Ireland grew proportionally, while that of Germany dropped in importance with the same number of permanent legally employed Polish citizens in all three years between 2004- 2006. Although in March 2005, the majority of Poles interested in taking up jobs abroad indicated Germany as their most favorite destination, by the end of 2006 the United Kingdom was chosen as country of emigration by 39% of respondents, in comparison with Germany 20% and Ireland, chosen by 15% of the emigrants.

Countries with substantial numbers of legally employed Polish citizens Table 4

Member state 2004 2005 2006

Germany 250 000 250 000 250 000 Ireland 60 000 80 000 – 90 000 100 000 – 120 000 Italy 40 000 40 000 50 000 Netherlands 21000 26 000 31 000 Norway 15 000 20 000 40.000 Spain 13 800 25 000 30 000 United Kingdom 76 000 160 000 220 000

Source: Three Years of Poland’s Membership in the European Union. Office of the Committee fro European Integration, Warsaw 2007, p.61

In the second group Austria, the Czech Republic, France, Iceland and Sweden were distinguished as countries with moderate numbers of legally employed Polish citizens. The position of France and Sweden had diminished in importance as destination countries for Polish emigrants looking for jobs, especially when comparing it with the huge scale of emigration into the UK and Ireland. Austria preserved control and allowed to the same number of legal emigration during first three years of accession. On the other hand the Polish migration to Iceland and the Czech Republic was systematically

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gathering momentum. At the beginning, Iceland was a particularly attractive country, being considered by the international opinion a “pull”, or as the world leader in terms of stimulating the development of human capital, but this situation has changed with the advent of financial crises. Many Polish emigrants decided to quit Iceland in favor of other foreign countries or to come back to Poland. The Czech Republic, as well as the other new member countries, opened their labor marker for the Poland and the other partners the day it joined the EU – 1st of May 2004. According to Polish Consulate in Prague, in 2006 some 13 500 Poles worked legally in the Czech Republic. It was a quite new emigration flow: nearly twice as many emigrants as two years before, when there had been only about 7 500 Polish workers.5 Even the Czech, who didn’t adopt many restrictions before their joining of the EU, started to worry afterwards about what had happened. If the migrants from Poland, Slovakia, and other eastern countries took away their jobs, especially in some of the regional cities, then the low Czech unemployment rate (7, 5% of the labor force) would drive up. However the idea of the alleged “flocks” of Polish migrants entering the Czech Republic didn’t materialize. It represented only 68% to 2,7% of the EU migration flows. It is worth pointing out here that these new waves of Polish migration gained a good reputation. An increasing number of Polish migrants leaving the country were skilled laborers. Many of them had a university education and came to work in big international companies. Many Poles moved to Prague, the most dynamic of the Czech cities. The Ostrava region, lying near the Polish border, also attracted many Polish emigrants, mainly cool miners who had taken up jobs in the local pits. Given the cultural similarity between the two countries, the Poles living in the Czech Republic managed to adapt and were adopted very quickly. The language and culture of the two countries, being quite close, helped the emigration process. Economists argued that the Czech economy, with its aging population and declining birthrate, had much to gain from the influx of Polish migrant workers after EU enlargement.

Countries with moderate numbers of legally employed Polish citizens

Table 5 Member state 2004 2005 2006 Austria 8500 10000 10000 Czech Republic 10000 10000 13000 France 10000 10000 9500 Iceland 2000 5000 8000 Sweden 2500 4000 5000

Source: Three Years of Poland’s Membership in the European Union, Office of the Committee for European Integration, Warsaw 2007, p.61

After enlargement, Belgium, Denmark, Finland, Greece and Portugal were the group of

countries with the smallest numbers of legally employed Polish citizens. It is not easy to understand the position of France, Belgium and Denmark as regards the migration flows of Poles on the European Single Market. Theses three very rich countries, offering attractive wages, seemed to present good prospects for the ones interested in taking up jobs. Polish emigration to France had got a long tradition, but the low economic growth of the French economy and the high unemployment rate discouraged Polish emigrants from looking after a job prospects on that market. Polish emigration in Brussels was visible but it may be partially not reflected by official registration. Unemployment in Denmark was very low, and in some domains the demand for laborers was greater than the supply, so Denmark need foreign workers, but one of the obstacles for immigration flows was the lack of information about local conditions and the difficulty, on the part of potential Polish emigrants, to learn the language.

According to the GUS assessment, at the end of 2007, the total number of Poles staying temporarily abroad, for a period of more than 3 months, grew up to 2 270 thousands, from the number of 1, 860 people who emigrated to EU countries. In this year, the emigration from Poland to the EU countries indicated a tendency towards stability - reaching the level of about 300 000 people annually. As we see in table no 35, the member countries with significant numbers of employed Polish citizens included: the United Kingdom (690 thousands), Germany (490 thousands), Ireland (200 thousands), the Netherlands (98 thousands), Spain (80 thousands) and Italy (87 thousands). In terms of

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volume of arrivals, Polish citizens accounted to 25% of all intra-EU movers who took residence in other member countries of the EU, followed by the Romanians (19%), the Germans (7%), the British (6%) and the French (5%).

Countries with small numbers of legally employed Polish citizens Table 6

Member state 2004 2005 2006 Belgium 3000 3000 4000 Denmark 4100 4300 4500 Finland 3000 3000 4000 Greece 4500 4500 5000 Portugal 500 500 500

Source: Three Years of Poland’s Membership in the European Union, Office of the Committee for European Integration, Warsaw, 2007, p. 61

For Polish emigrants, the United Kingdom became the most important destination among the

EU member countries, before Germany, Ireland, the Netherlands, Spain and Italy. After Poland’s joining of the EU, the number of Polish citizens leaving for the UK increased by thirty times, and for Ireland – by a hundred times. British economists suggested that the real figure related to the Polish emigrants amounted to even more then 690 thousands in 2008, while some newspapers reported about 800 000 – 1000000 Poles living in the UK, but this number also included temporary emigrants. Poles integrated easily in Britain. It is generally assumed that there were a lot of things that make Polish and British workers similar, and that motivation to work effectively was even higher at Polish than at British workers. As a result of intensive immigration, Polish nationals had become the fourth largest national group in the United Kingdom. Migration from Poland to the UK, after the EU enlargement, was definitely the most rapid and intense flow in contemporary Europe. In 2003/4 Poles applied for 11,2 thousands of national insurance number in the UK, the ninth position among foreigners, after India – 31,3 thousands, South Africa – 18,4 thousands, Australia – 17,1 thousands, Pakistan- 16,8 thousands, Portugal 14 thousands, China – 13,3 thousands, France- 13,1 thousands, Spain – 11,9 thousands, but in 2004/2005 they became the most numerous nationality in this respect, with 62,6 thousands applicants, ahead of India – 32,7 thousands and Pakistan – 20,3 thousands, as well as in 2005/6 with 171,1 thousands applicants ahead of India – 46 thousands and Lithuania – 30,5 thousands and in 2006/7 with 222,8 applicants, ahead of India – 49,3 thousands and Slovakia – 28, 8 thousands6.

After a culminating point of Polish migration in 2008, the emigration at the end of this year started to weaken, due to the financial crises in global economy. Poles lost their jobs abroad and started to come back home. It should be emphasized, however, that it is impossible to determine and forecast precisely the scale of this phenomenon, given the absence of statistical data registering the departures of the Poles from host countries and their return to the mother country. This weakening and even reversal emigration flows also reflected the increase in wages in Poland, which was making the incomes the Poles earned abroad less attractive. In 2008-2009 the main destination countries, especially the United Kingdom and Ireland, were undergoing an economic slowdown, which was weakening their demand for foreign labor. The crises also affected the sectors that employed a lot of Polish emigrants, for example the boom in the construction domain was coming to the end in 2008. Estimates based on the BAEL survey indicate an increase in the scale of return migration: as far as the number of return migrants had been constant in the period 2000- 2003, at the level of 30–40 thousands annually, it increased to 60 thousands in 2005 and to 213 thousands in 2007. As recession has an impact upon the EU member countries, it is expected that 500 000 Poles are going to return to Poland in the next few years. In 2008 only 100 000 Polish emigrants decided to come back to Poland from abroad and in 2009 about 300 000 returned to Poland. At the same time a survey concerning the Polish migrants who have returned from the UK shows that a third of them intend to live outside Poland again in future. In Ireland one third of the 200 000 Polish emigrants also declared their intention to leave this country as the

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economic crisis is long-lasting. In connection with these new flows of workers one can observe a rise in the number of applicants willing to work in 2/5 of the 500 biggest Polish firms.

Temporary Migration from Poland in 2007 (in thousands, end of year stock)

Table 7

1. United Kingdom 690 2. Germany 490 3. Ireland 200 4. Netherlands 98 5. Spain 80 6. Italy 87 7. France 55 8. Austria 39 9. Belgium 31 10. Sweden 27 11. Greece 20 12. Denmark 17 13. The Czech Republic 8 14. Cyprus 4

Source: EU 10 October 2008. In Focus: An Update on Labor Migration from Poland, p.18

However, according to a poll organized among their managers, these additional flows of

workers didn’t have an influential impact upon the elasticity of labor markets and the wage levels in the short time period. Some of Polish emigrants are not going to come back directly to Poland, but they may choose the other foreign countries of migration (like USA, Australia, Denmark, Norway), where they might take up jobs. That means that, due to the European integration, a new segment of Polish workers has been created: highly mobile workers, ready to supplement each single labor market, anywhere where demand is present7. On the one hand, the return of Polish emigrants to Poland may positively influence the national economy. Additionally, a well qualified labor force, capable and willing to work effectively, will contribute to a faster economic growth. Some emigrants coming back to Poland are trying to set up their own business. In the long run, the new influx of workers would ease wage inflation and improve Poland’s competitiveness. On the other hand, remittances coming from emigrant workers during the past years will stop as emigrant workers repatriate and their savings will dry up. New workers on the Polish market will affect wages and give rise to deflationary pressure. The question whether there will be enough jobs to accommodate the Polish workers coming back home and avoid increasing unemployment rates on the home job market also arises.

After the enlargement of the EU, the profile of Polish migrant workers is defined by the following elements: firstly, Polish migration was made up mainly of young people: 84% were relatively young individuals, between 18 and 34 years old, without dependants. The average age of Polish emigrants in the UK was 26, but in Germany it was 34. The outflow from Poland was dominated by persons of 20-29, who accounted for 52% of all emigration flows after 2004; secondly, they found jobs in sectors of the economy of the host country that were not technically advanced, such as constructions, agriculture, simple services in restaurants and hotels. Migrants from the EU-10 new member countries were able to find jobs in the construction sector of the EU – 15 member states two times more often than citizen of the local member states. In the United Kingdom the emigrants from new EU member countries were employed mainly in the construction sector, hotels, restaurants and catering; in the Netherlands Polish emigrants were employed mainly in gardening, butchery, farm working, inland sailing; in Austria in constructions, agriculture, the health services, the social welfare sector; thirdly, the emigration flow came mainly from the small towns and villages in Poland. Most migrants from Poland were recruited from rural areas and small cities (67%), while the number of people coming from large cities was more reduced than in the case of small cities (24%). People living in small towns, with less than 100 000 inhabitants, were among the most eager to migrate to another country. Moreover more

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migrants were recruited from less developed Southern and Eastern parts of Poland and the better developed Western Provinces; fourthly, Polish emigrants were well educated: some 57% had finished high school, every fifth post-accession migrants had graduated from university and about one third of students declared their desire to make efforts to migrate. Among the Polish emigration in the UK one-fourth held a higher education degree, as compared to the situation of highly educated emigrants to Germany - only one-tenth8; fifthly, Polish emigrants were mostly men (57% of all migrants), as compared to women, in nearly all the EU members countries, except Italy where one can observe the predominance of Polish women as part of the emigration flow from the beginning of adhesion to the EU.

One of the basic motives for Polish emigration was the presence of lower wages in Poland then in the EU -15 member states. Of course emigrants usually didn’t expect to get the most attractive local wages in the host countries, which were accessible only to the experienced local workers, able to speak fluently the national language. It seems that differences in terms of minimal wages had been the essential motivational factor in making the decision to take up migration because potential emigrants were mostly able to get wages around the level of minimal wages in the host country. Minimal wages were applied nearly in all countries of the EU: in 18 member countries, excepting Germany, Austria, Italy, Cyprus and the Scandinavian countries. As one can see in Table no. 8, in 2006 there were great differences in the level of minimal wages between countries, especially between new members and the 15 countries of so called old EU. According to statistics, in 2006, the minimal wages in Poland were more then 5 times lower then in France, Belgium, Great Britain, Holland and almost 7 times lower than in Luxemburg. When taking into consideration the differences in terms of prices (purchasing power parity) minimal wages per one month was three times less in Poland (379) then in Ireland (1050). Therefore, it was not curious that the low qualified Polish workers tried to move to the EU partners countries, even if they would get there the same simple job, because emigration enabled them to improve their living standard at least more then three times.

Minimal wages, expressed in Euro, in the EU member countries per one month in 2006 Table 8

Country Minimal wage 1. Latvia 129 2. Lithuania 159 3. Slovakia 183 4. Estonia 192 5. Poland 234 6. Hungary 247 7. Czech Republic 261 8. Portugal 437 9. Slovenia 512 10. Spain 631 11. Greece 668 12. France 1218 13. Belgium 1234 14. Great Britain 1269 15. Holland 1273 16. Ireland 1293 17. Luxembourg 1503 18. Bulgaria 82 19. Romania 90 20. Turkey 331

Source: Rzeczposplita, 18 July 2006, Warsaw, Poland

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On the average, in the period around accession to the EU, Polish employees used to earn at least three times less then the workers in the old EU-15 member states. About 80% of the Polish citizens left their mother country due to economic reasons. According to a survey conducted by HRK, the best paying EU countries in 2006 were Germany and the UK, where average salaries varied from 21 000 Polish zloty a month for managers and from 6000 to 9000 zloty for blue-collar workers. The average salary of Polish workers amounted to 13 000 for managers and 2500- 3000 for blue collar workers - these were far behind the situation of not only the UK and Germany, but also Spain, Ireland and Italy. Van-drivers in the UK got wages four times higher than the ones in Poland. Because in Great Britain the living costs were about only twice as expensive as in Poland, there was still a double difference in real wages. Moreover, differences between top and bottom salaries were more tangible in Poland than in the EU 15 member’s states, where salaries were more homogeneous. In the last transformation processes the growth of manager’s salaries in Poland has been faster than in the case of blue collar workers. There are also important regional differences in terms of wage levels in Poland: for example in the eastern part workers have wages 40% lower than in Warsaw.

Benefits related to migration can be related to the fact that immigrants from Poland were able to earn much more abroad than in Poland for the same job, due to the higher pension. Poland’s employment costs were among the lowest in the EU: while labor costs in the wealthier member states were from 25 to 30 Euro per hour, in Poland they were less than 5 euro. For example, for a simple job in a Mac Donald’s restaurant, a waiter might earn 1200 zl per month in Poland in 2005, but in the Great Britain the sum amounted to about 5200 zloty, which means it was more than four times higher. Moreover the migrants’ families have guaranteed social security at the level of the country where the migrants wages which were significantly higher than those in Poland. In this country, high qualified doctors also got low wages. In 2005, an anaesthesist earned as little as 1400 zloty- 200 pounds in Poland, but top specialist might get the highest 10 000 zloty – 1600 pounds. Such salaries spectacularly differ from those provided by Great Britain’s National Health Services, where anaesthesists earned 45 000 – 110 000 pounds a year (3750 – 9100 pounds a month). Moreover they had far greater opportunities for professional development in the UK than in Poland. Wages were also important parameters for investment decision. In 2004-2008, the expected important salary convergence had not taken place essentially between Poland and the EU -15 in the public sectors (especially schools, hospitals, post offices, transportation) given the high budgetary deficit and the high unemployment level on Polish market hampered the opportunities to raise salaries. However, it was estimated that the wage situation in Poland would reverse in the upcoming years and the gaps between the situation of this country and the EU 15 member states were going to shrink. Many economists argued that the opening of the European labor market for Eastern-European emigration would force employers to pay workers more in order to keep them in the mother country. For example, in the first half of 2006, the real wages in Poland grew by 4, 1%, pensions by 5, 5%. In March 2007 the wages in firms that employed more than 10 workers grew even with 9, 1 % the year by the year basis. Before the financial crisis, it was predicted that in a couple of years, probably until 2010, wages in Poland would grow much faster than inflation rates, with about 5% each year.

Poland’s current labor force amounts to about 17 million people, of which 16,1% are involved in agriculture, 29% in industry and 54,9% in services. By the end of the 2002, there were 3, 5 million unemployed people in Poland. The unemployment reached the rate of 19, 8% and in this time it was well above the EU average of 7,7%. As compared to 1997, the unemployment in Poland increased by 8% percentage points. In 2006 the unemployment in Poland dropped to the level of 16% of all the labor force, only in June by 0, 5%. In July 2006 the Polish labor office registered 2 million 488 thousand unemployed persons. This was 340 thousands less than in 2005. Employment in firms doing business on the Polish market grew from July 2005 to July 2006 to about 150 thousands people. The unemployment rate in Poland stood at 12, 2% (2.076 million individuals) at the end of 2007. It was lower by 4.5% compared to the previous year and by 5, 8% as compared to that by the end of 2004. By the end of 2007 there were 14,911 million employees in Poland, a number indicating an increase with 853 000 as compared to 2004. To such statistics one should add the growth of employment in the so called shadow economy (about 200 thousands people). According to the Polish ministry of labor, unemployment in Poland dropped to 14.4% in March 2007. Official statistics indicate that the rate of registered unemployment in Poland stood to 12 % in 2007. In 2008 employment in Poland indicated a growing tendency as compared to the beginning of the year. In the summer of 2008, unemployment in

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Poland dropped even below 8% and the state labor office had registered only 1 130 000 people. At the end of 2008 state labor offices had 1 130 000 registered unemployed, while one year earlier it was 1 600 000. However, the number remained below the level of 10% only during the three quarters of this year, as it started to grow at the beginning of 2009 to reach 10% in January and to overpass 11% in April 2009. If this growth in unemployment is going to continue, the number of Poles out of work at the end of 2010 may even grow to as much as 2 million people (Fidel et al., 2009:24). Unemployment increased in the other UE countries as well, for example in Spain, Ireland and the Baltic States, where it reached levels between 11% and 17% in 2009, more than double the rate in 2007.

The temporary improvement on the labor market was of course mainly due to the good economic situation in Poland in 2006-2007 and the fast economic growth, which created new labor opportunities. It was also due to the lower intensity of restructuring in companies, and to the increased inflow of foreign investments and structural funds to Poland. The improvement in the situation of employment did not differ in terms of gender, both in rural areas and in cities and towns. But it was also due to the strong emigration wave of Poles taking up jobs on the markets of the EU partners. In 2006- 2007 the foreign emigration caused a drop in the rate of registered unemployment in Poland - by 190 000, as these people were taken out of the list of people looking for a job. On average in the years 2006 to 2008 unemployment was reduced in Poland by 0,4%, due to emigration flows to the European Single Market. It should be added here that some people who were registered in Poland as unemployed persons actually worked in other countries. Of course, if employed in the “shadow economy” sector, they didn’t deliver notice of this fact to the Polish Labor Office. Therefore the statistical data about the level of unemployment in Poland might have overestimated this phenomenon

Two years after accession to the EU, in the context of the labor migration, Poland faced temporary problems of labor shortage. Emigration was most frequently reported as the principal cause of shortage in the domestic labor market. It is a fact that many unemployed or potentially unemployed persons decided to take up jobs abroad. At the end of 2006, the Polish Association of Employers in Constructions reported vacancies for about 150 000 employees. Every third company encountered situations when a potential employee refused to sign a contract, choosing instead to migrate. According to the Polish Confederation of Private, in 2006 14% of Polish entrepreneurs reported that they were confronted with labor shortages. The sectors strongly affected by labor shortages were: the construction industry (20% of companies looking without success for employees; the furniture industry – 25% and the lumber industry – 30%). At the same time such shortages were less noticeable in trading and services, and the energy or fuel sectors. On the contrary, in some branches of industry and services, Polish enterprises started to complain about lacking labor forces on the local market. Some sectors seriously affected by a shortage of suitable workers were the construction industry, the furniture industry and the lumber industry. The technical labor shortage was also conspicuous in the case of plumbers, welders, metalworking specialist, machine operators, roofers, turners, plumbers, automatics engineers, wiremen, electricians, carpenters, and lorry, coach and bus drivers. One could also observe a shortage of highly qualified technical specialists such, as computer scientists as well as specialists in finance, insurance, marketing and logistics. Significant changes were taking place both in services and in the industrial sector. The most acute problem was present in the case of medical services. According to the information supplied by the Ministry of Labor and Social policy, the highest growth of employment had been seen after adhesion of Poland to the EU in sectors such as commerce, constructions, hotel and catering industry. Evidently strong growth in employment has taken place in the construction sector. Towards the end of 2007 more then 50% of those operating in the construction and installation sectors reported labor shortages. The best situation with respect to unemployment rates was observed in Poland in Warszawskie i Łódzkie regions, the worst in Warmińsko Mazurskie and Świętokrzyskie provinces.

After few years after accession to the EU, the improvement in the situation of the labor market in Poland was mainly attributable to the opportunities connected with the European single market and growing production and export by companies selling their products and services to partner countries. However, the Centre for Migration Studies has indicated that 47% of the Polish emigrants had been employed at home previously, but only 22% were unemployed before emigration and 5% were professionally inactive (Kaczmarczyk, 2008). That means that the decision to migrate was not caused mainly from lack of employment at home, but from the expectation of better work and remuneration conditions in the host country. Many people believe that the fears of a brain drain might not become a

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reality in Poland. In most cases it is false and substituted by a phenomenon called labor circulation, which referred to the returning of former emigrants with human capital accumulation into the mother country. The example of Ireland, Portugal and Spain, which joined the EU earlier than Poland, indicated that the outflow of specialists didn’t last for a long time. Large proportions of emigrants, with new gained qualifications and saved capital, had returned to their native country. After the beginning of the financial crisis, one can see that the same scenario having occurred in countries that joined the EU earlier may apply in the case of central European countries, including Poland.

Among the benefits of emigration one can mention the pay transfers from abroad: Polish data indicated that a single migrant worker helped to maintain 1,5 jobs at home, due to transfer of savings and the related investments and consumption expenditures. Every Polish emigrant working in the UK was able to send back to Poland, on a monthly basis, an average of 100 to 500 pounds. The costs for the Polish economy was the migration of highly qualified people from Poland. Another type of cost, of far less value, was associated with the need to guarantee appropriate social security benefits to employees from current member states. It is assessed that, in 2007, the Polish economy received 15 billion zloty (4,1 milliards euro) - remittances from Poles working abroad. It is quite a big sum of money, 19,4 % more than in 2006, only minimally less than foreign direct investment flows to Poland in these years. The transfer of money from emigrants to Poland rose systematically from 2,3 milliards Euro in 2004, 2, 9 milliards euro in 2005, 3,5 milliards euro in 2006 to 4,1 milliards euro in 2007 (see Table 9). In 2007 35% of all remittances from Ireland were sent to Poland, while 34% of all from UK were also sent to Poland. In the first half of 2008, the Poles working in UK and Ireland sent back to Poland 2,6 billion euros. Before 2008, it was assessed that Polish seasonal workers sent back to Poland about 7 billions US dollars after the summer vacation period9. These transfers ensured the families of emigrants a decent living and boosted the consumer spending on the local market. Economists calculated that the money remittances from abroad accounted for 1,5% of Poland’s economic growth in 2006, although this number seems to be a little exaggerated. Remittances payments increased household income, consumption and GDP in emigration countries like Poland, the Baltic countries, Slovakia, Romania, and Bulgaria, but the effects on incomes in the EU- 15 host countries were relatively small. In Ireland nearly 60% of the 43,6 thousands unemployed from new members states were Poles, in Iceland Poles constituted 65% of unemployed persons, in the UK one estimated that one third of all Polish new emigrants were in danger of loosing their jobs. Growth of unemployment among Polish emigrants is connected of course with the reduction of their remittances for their families at home. According to the estimates by Invest Bank and Polish Business Council, the level of remittances from Polish emigrants would drop from 5,7 billion euro in 2008, to 4,15 billion euro or even 2 billion euro in 2009, which can negatively influence the level of the country’s consumption, investment and paying back real estates credits.10

Remittances of Polish emigrants for their families in Poland Table 9

Year Billions Euros 2004 2.3 2005 2.9 2006 3.5 2007 4.1

1.06.2008 2.6 It is no doubt that emigration is a hard test for the integrity of a marriage and staying abroad

for a long time might offer opportunities to dissolve it. Although the money earned abroad were meant to support families left at home, unfortunately there were many cases when spouses left their families not only temporary, but for ever during their staying in the EU partner countries. After accession to the EU, the statistics of divorce in Poland grew substantially to 70 000 in 2004, from 56 000 in 2003. In Lower Silesia province, the judges noticed that the number of divorces grew progressively, most of

9 Rzeczpospolita, 7 April 2009 10 Regional Data Bank of the Central Statistical Office, 25.02.2009

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them being caused by the fact that one of the two spouses went to the UK or to other UE countries. This is one of the costs of emigration that is difficult to avoid.

Of course, the choice of migrants to leave Poland caused substantial damage to national and regional economies, decreasing the potential rate of their economic growth. They were the country’s well educated people, potentially highly productive. The Polish taxpayers had paid for their earlier education. They usually took a job abroad which was below their qualification. They were very well trained persons, but who worked abroad as waiters, drivers, building workers. According to figures presented by the British Home Office, at least two-thirds of Polish immigrants in Great Britain took that society’s lower paid work. Even if Poland does manage to train more engineers, doctors, economists, specialists in computer science, managers and so on, it is highly probable that many of them will end up their professional carriers in partner countries on the European Single Market. The emigration phenomenon and its related costs and benefits were characteristic of all regions in Poland, but its intensity differed to some extent between “voivodeships”. In 2007, the highest rate of emigration and the renouncement (changing the address) of permanent residence was in: Śląskie voivodeship (6861), Opolskie (3414), Pomorskie (1867), Dolnośląskie (1691), Warmińsko- Mazurskie (1130), Podkarpackie (1122), Małopolskie (1264), while less intensive emigration was observed in the following regions: Świętokrzyski (128) Lubelski (327), Mazowiecki (408), Łódzki (513), Podlaski (565), Wielkopolski (578), Kujawasko- Pomorski (754)11.

When talking about emigration, the following question is always raised: will the emigrants return to their mother country? The answer to this question is not simple because it is connected with a lot of factors. Traditionally some emigration ended with remigration flows, applying the principle of adopting the best practices from abroad and then come back home. Just after adhesion, about 55-65% of the emigrants were only temporary (stayed abroad less than 12 months) but later on the number of long term emigrants kept growing. Because the emigrants came back with new ideas, energy, money, experiences, they became an engine of economic growth in the mother country. Many Poles left country in order to improve their education, invest in human capital and obtain skills and professional qualifications. In the case where returnees came back to the mother country with enhanced productivity, the negative effect of emigration on GDP from the reduction in the labor force would eventually reverse as the stock of more productive workers was gradually built up. Therefore to regain this human capital the emigration countries should do their best to determine emigrants give up emigration. However it seems that personal reasons are the most important for the emigrants returning to Poland. It was estimated that after 1989, about half a million emigrants, who had left the country earlier for political and economical reasons, returned to Poland. They came back not only from the European countries, but also from the US: remigration from the US accounted for 8% of all flows. This phenomenon was not exceptional: in 1970, after the oil crisis, Italians started to come back massively from the markets of partner countries of the European Communities. In 1990 there were also important remigration flows to Ireland, with a peak 27 000 Irish coming back home in 2002.The question arises weather the remigration flows will be repeated in the case of Polish emigrating to the EU.

The main reasons determining the return of Polish emigrants to Poland Table 10

1. Missing the partners 36 % 2. Willingness to invest their own saving 28,5 % 3. Better jobs in Poland than in foreign countries 21,4 % 4. The problems of adaptation in a foreign country 16,6 % 5. Missing Poland as a country 4,1 %

A lot of Polish emigrants declare that their staying in the UK and the other EU member countries is not going to be permanent. Since the late 1990 to 2006 only 4000 Poles returned to Poland each year. But after the financial crisis in 2008, the remigration flow became more and more prominent. According to the CSO, 38% of Polish emigrants, who returned home in 2004-2008, had not planned to stay longer abroad, because they had done only seasonal or temporary work there. The motives for their coming back were identified by the Institute of Public Affairs, which showed that the most important

11 Biuletyn Migracyjny No 12, December 2006 , www.pk.gov.pl

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factors determining the decision to return to Poland were: missing life partners; willingness to invest their own savings; better jobs in Poland than in foreign countries. The missing the partner was 9 times more frequent among the factors mentioned in the inquiry by the Polish emigrants, followed by the feeling of missing Poland, their a country. The important reason influencing the decision to return to Poland was also a factor that is difficult to quantify – the so-called “good atmosphere in the mother country”. Emigrants felt than is better to live and work at home than in countries where they have emigrated.

After the financial crisis in 2008, more and more Polish people lost their jobs abroad and were willing to coming back to Poland. A according to Financial Times, at the beginning of 2009, 200 000 Poles are expected to return to Poland due to rising unemployment in the wake of the financial crisis, standing for about one third of our emigration flow in the United Kingdom. It is of course only a potential stream of emigrants coming back, which may settle down in Poland permanently, or chose to stay here only temporarily and leave again Poland after a while. In the view of change in the economic outlook in Poland and abroad, it is very difficult to assess how many Poles will decide to come back to their mother country for good. In connection with the situation on the labor market, the question is weather these remigration flows would contribute to the increase or the decrease of unemployment at home. It is thought that emigrants came back and, given their new ideas, energy, money and experiences, they became an engine of economic growth in their mother country. Migrations contributed to the increase and accumulation of human capital. Poles working in an international environment became familiar with new management and organization methods, new models of professional careers, so the emigrant’s country should do their best to attract the emigrant citizens and therefore boost the country’s economic development. In the EU overall mobility remains low, at about 4,8% of the all population. Enlargement was generally expected to contribute to the acceleration of migration within the EU. However, the impact of the accession to the EU upon the employment in Poland was very difficult, even impossible to assess. In the years immediately following the accession, Poland faced some adjustment problems and our labor market showed some structural unemployment. By and large, taking into account the Spanish example, it was predicted that the unemployment situation Poland would not improve in the short run. It was even thought that the competition pressure and the modernization of industry might maintain it at high levels. Before accession to the EU unemployment in Poland reached the level of nearly 20%. After the enlargement of the EU, the threat of significant lack of balance on the Polish labor market appeared, which would increase further pressure for labor reallocation in Poland between industries and regions, particularly those close to the German frontier. However, just after the accession to the EU, the opposite happened: consumption and business optimism improved the economic outlook. In 2004- 2008 unemployment in Poland dropped by more then 10 points, from 19,1% and in 2005 to less then 9% in 2008. However in 2009 the unemployment rate in Poland grew again to almost 11%. Although this trend was blurred by temporary seasonal disturbances, and in terms of employment Poland temporarily occupied the first position among the EU countries, one should keep in mind that from the point of view of the labor market, the situation in the first five years after accession was the best for Poland since 1997.

It is thought that labor mobility is a key factor in handling the adjustment processes to the European Single Market exigencies. In facilitating that change, assistance in the search for new jobs is also recommended as a more effective method of unemployment absorption than employment protection12. However, gradually and on the long run, integration can create new jobs, due to the intensification of trade and increasing specialization, as well as the improvement of economic growth in Poland. The EU helps Poland to combat unemployment problems by means of Social Funds, by financing for example training and retraining courses. It is assessed that the EU Funds contributed to the availability of 123 000 – 320 000 jobs in Poland, more exactly 15% - 20% of all new jobs on the Polish market in 2004-2007. On the other hand the EU labor market has also gained profit from the growth of export and the liberalization of the Polish market. According to the calculations done by the German Institute for Research in Germany, the trade with the CEEC countries increased employment opportunities in Germany with 60 000 workplaces13. It is worth mentioning here that internal mobility in Poland differed from external mobility. According to a Eurostat Report, only a minimal number of

12 Five years of Poland in the EU, Warsaw 2009, p. 248 13 Five years of an enlarged EU. Economic achievements and challenges, European Economy 1/2009, p.131-132

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Poles moved to work in their own country. Internal mobility does take place in Poland in the following two directions: 1. from country to the city; there are places in the country like Warsaw, Wrocław, Poznań, Grańsk or Kraków, where the Poles are more willing to go; 2. from the eastern parts of the country to the western regions.

Moreover, as time goes by, we can observe a declining scale of worker emigration form Poland to the EU, especially after the financial crises in 2008. Despite the popular opinion, the Poles are not the most mobile people among the European nations. The highest mobility rate of new members states is found in Lithuania, with 3,1% of Lithuanians having moved to the European Single Market, followed by Cyprus (3%) and Romania ( 2,5%). Poland, with 2% working population in the other states of the EU, can be placed at the same level of mobility with Slovakia. Considering the long term perspective, Portugal (9%) and Ireland (8,2%) show the higher share of citizens living in the other EU members states than Poland. Hence it is hard to say that emigration from Poland has seriously disturbed the home market or any host market the EU member countries14. At the same time, some authors from the EU countries point out that the migration from the new member countries did not have a negative impact upon the labor market in the EU for the following reasons: the European population is aging and the maintenance of work supply on the same level in the Member States will require new emigrant inflows, of approximately half a million people to 1,6 million people annually. Moreover, the full opening of the markets and the additional inflow of capital into Poland had a positive result, determining the acceleration of rate growth; as a result of additional inflow of the EU capital, the number of jobs created in Poland by EU enterprises would absorb a large portion of the Polish labor force, considered to be a potential migration group. It is said that large economic migration from Poland may not have a permanent character, but following the example of other countries, in the long run one may expect of strong reversal tendency and a return of former migrants to their mother country.

On the other hand, on the 1st of May 2006, Poland opened the labor market for 12 the EU member countries; for Great Britain, Ireland and Sweden, Poland had already opened it two years before. According to specific migration registration systems applied in Poland, the emigrant is considered as the person who gave up the permanent residence in Poland and declared an intention to leave for another country, whereas the immigrant is the person who registers as a permanent resident coming from abroad. The Germans were supposed to gain mostly from the new Polish regulations. It is assessed that several thousands French citizens, a little fewer Italian and even 40 000 Germans work legally in Poland today. They are mostly the owners of enterprises or managers of international firms. As you can see from Table 11 below, in the first half of 2005, Poland issued the permit for taking up jobs on the Polish market for 1189 Ukraine citizens, 996 British, 756 Vietnamese, 444 Swedish, 387 Belarus, 236 Czechs,234 Russian, 236 Indians, 226 Slovaks. The employment of people coming from Poland’s neighboring countries has been facilitated by the renunciation to working permits for the citizens of Ukraine, Belarus, and Russia, who nevertheless still need visas. They are allowed to work without a permit up to 3 months in a period of 6 months in agriculture, cultivation, breading or on the boards of companies. As for the end of 2006, the number of foreigners in Poland was as high as 54,9 thousands (only 0,14% of the total population) and the number of temporary foreigners was assessed to 37,6 thousands (Ukrainians – 28%, Germans – 8%). However this data did not show the scale of illegal emigration, which has had some importance in Poland, especially since in 2006, over 1,3 million visas were issued in Poland, most of them (over 600 thousand) for Ukraine citizens. The 2004 enlargement constituted one of the most important stimuli for emigration to the European Singe Market, as compared to the Italian emigration in the common market in 1960. In a few years before the accession of Poland to the EU, the number of Polish emigrants was broadly stable and grew relatively slowly. However, after the adhesion to the EU, we observed a dynamic growth of Polish emigration, rising to nearly 2 million people, who migrated mainly to the EU member countries, so we may reasonably accept the positive effects of the integration on the net Polish migration against no enlargement scenario. It is worth mentioning here that the European single market has brought not only about the creation of new flows of worker migration, in which Poland participated intensively together with Baltic countries, Romania, Bulgaria and Slovakia. Sticking to migration restrictions by some the EU countries may also result in the diversion of Polish migration from traditional destination countries

14 Three Years of Poland’s Membership in the European Union. Analysis of the Social and Economic Costs and

Benefits Attributable to Accession to the European Union-Poland and other Countries of the Region. Office of the Committee for European Integration. Warsaw, June 2007, p 54-74

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like Germany, Austria, to the countries with more liberal immigration policies, like the UK and Ireland. We also observe a relatively moderate impact of the EU enlargement upon the Polish immigration to Scandinavian countries, in comparison with the two English speaking countries. According to the analysis of J. Gerald, R. Riley, based on the National Institute Global Econometric Model (NIGEM), emigration flows after 2004 were likely to have modest economic consequences in all member states of the EU (Barrel et al., 2007: 13-15).

Permits for work legally issued for foreigners workers in first half of 2005 Table 11

1. Ukraine 1189 2. Great Britain 996 3. Vietnam 756 4. Sweden 444 5. Lithuania 387 6. Belarus 248 7. Czech Republic 236 8. Russia 234 9. India 236 10. Slovakia 226 11. USA 216 12. Turkey 206 13. France 193 14. Japan 160 15. Italy 153

On the one hand emigration contributed to the decrease of the GDP of the emigrants’

countries, which was assessed at the level of – 2,23% for all adhesion countries, but on the other hand it increased their production, intensified capital and productivity and the knowledge capital, reduced unemployment, determined economic growth, consumption and investments by remittances, starting up new business by emigrants coming back home. Practically all the evidence suggests that benefits outweighed the costs of emigration and that post-accession new emigration flows didn’t lead to serious market disturbances in any home or host EU member country. As in the case of other countries that have recently joined the EU, the macroeconomic impact of the Poles’ migration appeared to have little influence upon the Polish economy, taking into consideration remittances for families, growth of productivity, reduction of unemployment, pushing up wages and adding to skill shortages. Remittances from abroad reached their highest level in 2007 - with only 4,5% of income from Polish export, it is also doubtful if emigration constituted a serious labor market relief in terms of unemployment for the rapidly growing Polish economy able to increase the number of employed from 13,7 million to 15,2 million in the post accession period. In the case of Poland, due to emigration reduction of the working population, the GDP decreased in 2005 by 0,16% GDP, in 2006 by 0,25%, in 2007 by 0,24% GDP, in 2008 by 0,23% GDP and in 2009 by 0,31% GDP, decreased unemployment by 0,29% in 2005, 0,45% in 2006, 0,41% in 2007, 0,32% in 2008, 0,21% in 2009. The substitution of labor by capital, starting up the building of the capital stock and stepping up investment lead to the increased productivity of Polish workers by 0,16% in 2005, 0,33% in 2006, 0,47% in 2007, 0,58 in 2008 and 0,63% in 2009. Remittance payments increased household income, consumption; together with growing productivity, these tended to offset the downward effect of emigration on GDP in Poland with positive impact netto per capita growth by 0,28% in 2005, 0,51% in 2006, 0,58% in 2007, 0,58% in 2008 and 0,51% in 2009.

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Borkowska, S. (2003), Labour market in the context of Poland’s integration into the European Union. Singposts for Poland, Warszawa

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Kaczmarczyk, P. (editor) (2008), Współczesne tendencje migracyjne Polaków. Aspekty lokalne i regionalne. Contemporary emigration of Poles: Local and regional aspects. Centra of Migration Research. Warsaw

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arrangements, VC/2007/0293, CMP, University of Warsaw, p.16-17 October 2008 In Focus: An update on labor migration from Poland, p. 20 Dziennik, Dwa miliony ludzi bez pracy? MoŜe być gorzej, 3 luty 2009 Rzeczpospolita, 7 April 2009 Regional Data Bank of the Central Statistical Office, 25.02.2009 Biuletyn Migracyjny No 12, December 2006, www.pk.gov.pl Five years of Poland in the EU, Warsaw 2009 Five years of an enlarged EU. Economic achievements and challenges, European Economy 1/2009 Three Years of Poland’s Membership in the European Union. Analysis of the Social and Economic

Costs and Benefits Attributable to Accession to the European Union- Poland and other Countries of the Region. Office of the Committee for European Integration, Warsaw, June 2007

Turkey and the European Union: a Never-Ending Story or an Irrevocable Membership?

Lerzan OZKALE

Abstract: This paper aims to demonstrate that, given the actual level of advanced economic

integration established between Turkey and the European Union, questioning the full membership and trying to discuss other alternatives represent futile attempts. Membership should be considered irrevocable by the European Union leaders if they want to adopt a model for the rule of law, by respecting the principle of pacta sunt servanda. On the other hand, the Turkish government should also put rapidly into practice the necessary reforms, in order to accept the acquis communautaire and be able to assume the requirements of full membership.

Keywords: Association agreement, customs union, final stage, accession negotiations, enlargement, European Union, Turkey

Introduction Turkey’s long history with the European Union (EU) is now perceived as exhausting and

disheartening, even by the most fervent advocates of the EU membership in Turkey. In the autumn of 2008, the Eurobarometer public opinion survey found that the ratio of Turks thinking of the EU membership as a “good thing” was down to 42 percent, from its highest level of 70 percent in 2001. This is a clear reflection of the Turkish population’s standpoint vis-à-vis the negative attitudes and policies of the European leaders, which are largely felt as unfair and against the fundamental European principle of pacta sunt servanda, since agreements are to be honoured. Having the oldest and closest relationship, since 1963, based on an Association Agreement, and a Customs Union (CU) since 1996, Turkey aims full membership to the EU and achieves its commitments towards that end, although with a weakening stance during the last three years.

The purpose of this article is, first, to summarise the situation of the negotiations, which advance much slower than the previous or the actual talks with other accessing countries. In the second section, the impact of the Customs Union on the Turkish trade will be investigated, in order to illustrate the degree of integration. Those two sections are essential to the analysis of an actual problem that Turkey is facing, due to the long and undetermined situation in which it finds itself: the free trade agreements that the EU is actually negotiating with different countries or groups of countries, which create a serious breach of the Customs Union until a separate and similar agreement is signed between Turkey and the related country or group of countries. This problem will be used as an example to show that at the stage of deep integration, reached between Turkey and the EU, delaying Turkish membership, is and will be creating different types of difficulties that are not thought about or could not be solved without membership.

I. Actual Situation of EU Negotiations Turkey has been an associate member of the EU for 42 years when the EU accession

negotiations started in October 3, 2005. The eleven out of thirty three negotiation chapters that have been opened so far can be seen in the Table 1, together with the provisionally closed one. As the table shows, negotiations are making slow progress. In addition, a large number of chapters are momentarily suspended, either because of the problem of extending the EU/Turkey customs union to Cyprus, which the Turkish government refuses by keeping its ports and airports closed to Cypriots, or because of specific problems with member states (with Cyprus but also with France, which does not allow the negotiation of chapters directly relating to accession). Opening benchmarks have been set as conditions for opening negotiations on 13 chapters1.

1 Free movement of capital, public procurement, competition policy, agriculture, taxation, employment and social

policy, customs union, free movement of services, food safety, free movement of goods, environment, financial services.

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Actual Situation of Turkey’s Accession Negotiations with the EU

Table 1

The Cyprus issue is one of the main problematic areas, which slows down the ongoing

accession negotiations of Turkey with the EU; it will be dealt with in this section in order to explain the background.

According to Morelli and Migdalovitz (2009), some observers believe that 2009 will be a decisive year in the EU-Turkey accession negotiations, due to the refusal of Turkey to open its ports and airspace to the Republic of Cyprus, in accordance with its Protocol agreement. Nevertheless, the EU Commissioner for enlargement, Olli Rehn, who, in 2006, has warned Ankara that the resolution of the Cyprus issue was a central stumbling block in the accession talks and that a “train crash” was risked by not fulfilling the Protocol, declared in October 2009 that the end of 2009 was not the deadline for Turkey to open its ports to Greek Cypriot administration. It is particularly interesting that such a declaration took place just after a mild Progress Report had been issued on Turkey by the European Commission, despite the almost non-advancing reforms that Turkey should accomplish in view of accession. One can think that this is to balance another approach that the Commission has for Croatia, about the border issue with Slovenia. In the Croatia Progress Report 2009 the Commission states that “Bilateral issues should not hold back the accession negotiations” which is a totally opposite way of dealing with a similar problem (COM (2009), 5). This is another example of the double standards applied to Turkey, concerning membership issues with the European Union.

Almost simultaneously, during a debate at the European Policy Centre (EPC) in Brussels on Friday October 2, after stating that Turkey wants to be “at the core of the EU, not on the outside edge”, the Turkish Foreign Minister Davutoğlu repeated not only the commitment but also the request of Turkey for a fair treatment from the EU. In the same debate with journalists, he explained that Turkey will not change its position on the ports/airports dossier in order to unblock at least the eight chapters “frozen” by the EU. The fact that EU member states did not keep their promises with regard to lifting the embargo against the northern part of the island of Cyprus and the decision to take Cyprus in before it had settled its territorial dispute, are issues which are heavily seen as breaches to EU’s own principles in Turkey. Reminding that “European leaders” had “promised” Turkish Cypriots that there would be an end to their international isolation if they voted for the Annan Plan (on reunification of the island) in 2004, the Foreign Minister thinks the EU is due to review the suspension placed on the eight chapters in question and expects it will be done in December 2009 to allow accession talks to move forward (Agence Europe 9990, 03.10.2009).

The issue of Cyprus is far from being solved as this overview of events shows and it will certainly be on the agenda of the EU summit of December 2009. Still, neither a solution, nor a suspension of the negotiations with Turkey is to be expected.

2 The Council decision of December 2006 sets out that negotiations will not be opened on eight chapters relevant to

Turkey's restrictions regarding the Republic of Cyprus and no chapter will be provisionally closed until the Commission confirms that Turkey has fully implemented the Additional Protocol to the Association Agreement.

Closed Chapters Opened Chapters Suspended Chapters2 • Science and

Research • Enterprise and Industrial Policy • Financial Control • Statistics • Consumer and Health Protection • Trans-European Networks • Company Law • Intellectual Property Law • Free Movement of Capital • Information Society and Media • Taxation

• Free Movement of Goods • Right of Establishment and

Freedom to Provide Services • Financial Services • Agriculture and Rural

Development • Fisheries • Transport Policy • Customs Union • External Relations

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II. The impact of the Customs Union on Turkey’s Trade There is a growing interest in the form of empirical studies on the impact of the CU on Turkish

manufacturing industry. Among the very first ones is the investigation by Harrison, Rutherford and Tarr (1996) in which, using a computable general equilibrium (CGE) model, they analyse the potential overall impact of the CU on welfare. Their findings suggest that improved access to third country markets would be the biggest gain from the customs union. Using a comparative static CGE model, they estimate a gain between 1 and 1.5 percent of GDP annually, together with a loss of 1.4 percent of GDP due to lost tariff revenues and propose the use of the VAT as a replacement tax.

CU Mercenier and Yeldan (1997: 871–880), using applied inter-temporal general equilibrium analysis, show that, in order to improve welfare, the trade reform would have to be pursued further and nontariff barriers on European trade should be removed. They conclude that failure to do so could be more detrimental to domestic welfare than no reform at all.

Akkoyunlu - Wigley at al. (2006), using panel data estimation methods to capture the effects of manufacturing industry imports from EU countries on the productivity of the same industry, conclude that import increase has productivity enlarging effects, though associated with current account deficits. Their study includes the period 1994-2001 and shows how the customs union increased the amount of imports and how the increased imports determined the increase of factor efficiency, leading to high rates of economic growth.

In an earlier study, after stating that Turkey’s customs union with the European Union increased considerably the import penetration in manufacturing, while not significantly affecting the share of EU in Turkey’s trade, Erzan, et al. (2002) analysed whether this impetus had a distinct impact on the competitiveness of Turkish manufacturing industry for the period 1980-1998. Although their data includes only the first four years of the CU, it is still interesting to point out their finding that imports work as market discipline, but need to be complemented with competition policy.

In their recent article on the impact of the CU on Turkey, Neyapti, et al. (2007: 2121–2132) conclude that the CUA has contributed significantly to the increasing volume of trade of Turkey, coupled with a decline in income elasticity of trade over the CU period. They also find that during the CU period Turkish exports to the EU have become more responsive to the RER misalignments, in contrast with the non responsiveness of the imports. Those two findings are in parallel with the ones of an earlier study by Özkale and Karaman (1996).

After this overview of the existing literature on the impact of the CU with EU, on Turkish economy and more precisely on Turkey’s foreign trade, a closer look will be given to the evolution of trade figures.

Turkey’s export and import figures are provided in the annexed Table A, for a number of selected years since 1950. The trade figures since 1993 are plotted in Figure 1, in order to show the pre and post period of the CU. It should be stated that the CU dismantling of custom duties has a reduction effect of the nominal rate of protection of approximately 10 percent towards EU countries. The acceptance of the Common External Tariff (CET) to be applied to third countries brought down the overall rate from approximately 16 percent to 4.2 percent. Consequently, the CU liberalised Turkey’s trade both with the EU and non-EU countries through the application of CET, increasing the trade deficit very rapidly. Nevertheless, it should be noted that, especially in the period following the 2001 crisis, Turkey has experienced a growth performance of 7 percent, thus rising imports of investment and intermediate goods. The lowering effect of the 1999 and 2001 crises can be seen both in Figure 1 and Table A. When national income experiences substantial declines, imports decrease significantly. Hence, the role of the internal and external economic factors can not be ignored while evaluating the effect of the Customs Union.

Both Table A and Figure 1 show Turkey’s continuous trade deficit problem, independent of the different trade and industrial policies applied or the entering into force of the CU. This creates a continuous problem of financing the current account deficit which seems to be solved by the high inflows of foreign capital, both short and long term, since 2001. Nevertheless the rise of the ratio of current account deficit over the GDP from 0.3 percent in 2002 to 5.6 percent in 2008 represents a serious risk, which is once again emphasised by the sharp drop of foreign investment, due to the actual economic and financial crisis affecting the world economy. The discussion of the sustainability of Turkish current account deficit and financing is more relevant than ever. One should not forget the effect of high interest rates resulting from the rollover needs of the considerable Turkish foreign debt,

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which attracts the hot money. This is certainly not a reliable financing method and it is extremely costly. This is where EU membership becomes much more important by stimulating long term capital investment, as it was the case with all the previous enlargements.

0

50 000 000

100 000 000

150 000 000

200 000 000

250 000 000

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Exports Imports

Figure 1. Export and Import Trends of Turkey (thousand US dollar) Source: Undersecretariat for Foreign Trade

At that point another indicator regarding the foreign trade should be considered: it is the

exports over imports ratio. For the period considered, from 1993 onwards, Turkey’s exports over imports ratio fluctuated around 60 percent, except the two crises of 1994 and 2001 of severe devaluation (Figure 2). The years of over-valuation of the Turkish Lira, this ratio goes down to 51-52 percent and otherwise it stays over or below the level of 60 percent, within a band of 10 percentage points. Enlarging the period considered to the year of trade liberalisation in 1980 does not change the situation, apart the crisis years again.

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

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EX/IMP 52,1 77,8 60,6 53,2 54,1 58,7 65,4 51,0 75,7 69,9 68,1 64,8 62,9 61,3 63,1 65,4

EX/IMP EU 54,8 79,1 65,7 49,9 49,2 56,1 67,0 54,5 88,2 79,2 77,2 75,8 78,0 81,6 88,0 84,7

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Figure 2. Exports over Imports Ratio (%) Source: Undersecretariat for Foreign Trade

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The ratio of exports over the imports with the EU is plotted separately on the same figure. As it can be expected, the Customs Union with the EU did influence it considerably, changing from 65.7 percent in 1995 to 49.9 percent in 1996. Still this is not much sharper than the one in the 1994 crisis, rising from 54.8 percent in 1993 to 79.1 percent in 1994, before falling to 65.7 percent in 1995 and following closely the fluctuation of the overall ratio. This is particularly interesting when considering the fact that the entering into force of the CU did only affect the imports of Turkey (with the abolition of the custom duties applied to the industrial and processed agricultural goods imported from the EU) as Turkish industrial goods had a free access to the EU market since the Additional Protocol in 1971. CU did only affect the ratio of overall exports over imports temporarily and returned to its usual level very rapidly. As for the ratio of Turkey’s trade with the EU, it increased considerably since 2001 and fluctuated around 80 percent, reaching even 88 percent in 2007. The almost parallel fluctuations of the overall and the EU export/import ratios seem to be changed since 2000, with a drop of the former and a rise of the latter, largely due to the oil price increase.

0,0

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% s

hare

Exports 49,5 47,7 51,2 49,7 46,6 50,0 54,0 52,2 51,4 51,2 51,8 54,6 52,3 51,6 56,3 48,0

Imports 47,1 46,9 47,2 53,0 51,2 52,4 52,6 48,8 44,2 45,2 45,7 46,7 42,1 39,3 40,3 37,0

Volume 48,0 47,3 48,7 51,9 49,6 51,5 53,2 50,0 47,3 47,7 48,2 49,8 46,1 44,0 46,5 41,4

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Figure 3. EU’s Share in Turkey’s Trade (%) Source: Undersecretariat for Foreign Trade

EU’s share in Turkey’s trade is another indicator showing the integration between the two

parties. Again for the period from 1993 onwards including the CU, figures are around 50 percent. They are plotted in Figure 3 and the attached table shows clearly a fall in the share of imports from the EU since the year 2000. This is basically due to the increase of oil prices since 2002, after the turbulence created by the most severe economic crisis of the Turkish economy in 2001, shrinking sharply overall imports and thus changing its composition. Except for this type of changes, Turkey’s foreign trade is stabilised with half of it with the EU, which makes the country susceptible to the changes of its market conditions.

Following this general evaluation of the trade figures, with the EU and the rest of the world, a closer look to what is happening in the EU trade is necessary, in order to assess the probable effect of the Customs Union.

Table 2 compares the first 10 chapters of the overall exports in 2008 to their ranking in 1995, the last year before the CU. The exports of those first ten commodities constitute 66 percent of the total exports in 2008.

Except for the relatively stable ranking of the iron and steel sector (3rd in 1995 and 2nd in 2008), the table shows a substantial change in the composition of Turkish exports during the period considered. This is mostly due to the high increase of the exports from the top 4 sectors registering a boost of 9 to 20 times, between the pre-CU year of 1995 and 2008. The industry of vehicles other than the railway or the tramway is the first exporting sector since 2004. Around 80 percent of the exports of

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this industry are realised to the EU. Another important change is the loss of the relative importance of the usual top Turkish exporting sectors of apparel and clothing, knitted and not-knitted, changing from the 1st place in 1995 to the 5th for the former and from the 2nd to the 9th place for the latter. The table shows also 4 new sectors among the top ten exporting industries. Table 2 indicates that Turkish exports evolve towards higher value-added products since the entering into force of the CU.

Exports: First Ten Chapters - a comparison between 2008 and 1995 - Table 2

Exports by Chapters -first 10- 2008 versus 1995 (000$)

2008 Rank 1995 Rank

Vehicles other than railway or tramway rolling stock (hs 87)

18.326.711 1 626.719 7

Iron & Steel (hs 72) 14.946.358 2 1.734.433 3

Nuclear reactors, boilers, machinery & mechanical appliances, computers (hs 84)

10.258.590 3 690.987 7

Electrical machinery & equip. & parts, telecommunications equip., sound recorders, television recorders (hs 85)

7.971.713 4 853.381 6

Articles of apparel & clothing accessories-knitted or crocheted (hs 61)

7.826.732 5 3.445.899 1

Mineral fuels, oils, waxes & bituminous sub (hs 27)

7.531.776 6 *

Articles of iron or steel (hs 73) 5.742.363 7 *

Pearls, stones, prec. metals, imitation jewelry, coins (hs 71)

5.383.129 8 *

Articles of apparel & clothing accessories-not knitted or croc. (hs 62)

5.326.729 9 2.202.679 2

Plastics & articles thereof (hs 39) 3.563.148 10 *

Source: Our own arrangement for comparison using data from Undersecretariat for Foreign Trade *not among the first 10.

A similar evaluation of the first ten commodities of imports shows quite a different situation.

The first dissimilarity is about the share of 73 percent in the total imports compared to the share of 66 percent of the top 10 exporting sectors in total exports, in 2008.

This is mainly due to the high share of the first importing sector constituting 33 percent of the imports by the top ten sectors, compared to a much lower relative importance of the first exporting sector with only a share of 21 percent among the top ten. The highest rise can again be noticed for the first importing sector of mineral oils, where once again the effect of price increase should be kept in mind for the last 5-6 years. When the ranking of the first 10 importing sectors is compared to what they were in 1995, only a slight change can be observed for eight sectors out of ten. Only two new sectors appear among the top ten, compared to the four in the exports.

Both the literature survey and the trade figures emphasize the considerable increase of Turkey’s overall imports by the effect of the CU, but not specifically from the EU. As the theory suggests, Turkey’s trade liberalisation started in 1980 and accentuated by the CU in 1996 led to a much rapid increase of imports as compared to its exports, due to other structural problems of the economy, the main reason being the high inflation-high interest rate environment, discouraging new green field investments both by local and foreign companies. This is where the reason of accepting such a burden created by the import liberalisation and particularly emphasised by the CU should be discussed.

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Imports: First Ten Chapters - a comparison between 2008 and 1995 –

Table 3

Imports by Chapters -first 10- 2008 versus 1995 (000$)

2008 Rank 1995 Rank

Mineral fuels, oils, waxes & bituminous sub (hs 27) 48.281.193 1 4.619.271 2

Iron & steel (hs 72) 23.160.241 2 2.855.600 3

Nuclear reactors, boilers, machinery & mechanical appl., computers (hs 84)

22.539.348 3 5.736.429 1

Electr. machinery & equip. & parts, telecom. equip., sound recorders, television recorders (hs 85)

13.892.260 4 2.167.232 4

Vehicles other than railway or tramway rolling stock (hs 87)

12.789.716 5 1.538.157 6

Plastics & articles thereof (hs 39) 9.385.517 6 1.366.752 8

Pearls, stones, prec. metals, imitation jewelry, coins (hs 71)

5.653.782 7 *

Organic chemicals (hs 29) 4.421.328 8 1.714.371 5

Pharmaceutical products (hs 30) 4.360.581 9 *

Optical, photogr., cinematogr., meas., checking, precision, med. surgical instr& acces (hs 90)

3.444.912 10 746.506 10

Source: Our own arrangement for comparison using data from Undersecretariat for Foreign Trade *not among the first 10.

III. A Customs Union Breaching the MFN Principle with a Member State: Is it Possible? As it has been briefly described earlier, Turkey has an ongoing association agreement with the

EU towards full membership. The utmost aim of the membership has been emphasised on many occasions at the European summits, in addition to the existing acquis. Suggestions of any other form of relationship resulting from the political ambitions of some European leaders are irrelevant if the EU respects the rule of law. In this section an example will be used to underline the irrevocability of Turkey’s full membership.

In accordance with the article 16 of the Association Council Decision of 1/95 on the Customs Union, Turkey has signed bilateral Free Trade Agreements with Albania, EFTA, Israel, The Former Yugoslav Republic of Macedonia, Croatia, Bosnia and Herzegovina, Morocco, Palestine, Syria, Tunisia, Egypt and Georgia and continues to negotiate FTAs with Jordan, Lebanon, Faroe Islands, Albania, South Africa, Mexico and Chile, in parallel with the ongoing FTA negotiations of the EU with those countries. Nevertheless, ongoing FTA negotiations of the EU with countries such as ASEAN, India, Korea, Canada create a major concern for Turkey.

Turkey is in a Customs Union with the European Union, but can not participate to those negotiations where only full members of the EU are represented by the European Commission. This creates a more than unfair result for Turkey: being member of a CU, permitted by the GATT Article XXIV, Turkey becomes subject to a breach of the most favoured nation (MFN) principle of GATT (Article I) which guarantees that when a country grants a concession to another country, it must automatically grant the same concession to all other WTO members. In order to avoid such an unfair situation for a CU member, European Commission includes a special clause for Turkey, requiring the signature of a similar FTA with this country. Still as it was the case with some previous examples, countries which are in a close competition with Turkey in the European market show serious reluctance to sign such agreements. This represents a threat of trade diversion against Turkish exports to the EU, especially with regard to the agreements of South Korea and India in the near future.

The difficulty encountered in the field of FTAs is a serious breach not only of the CU but also of the GATT rules permitting its formation. This was used to illustrate the possible problems which can arise from the non fulfilment of the requirements of the Ankara Association agreement, where article 28

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aims Turkey’s full membership. The Transitory Phase being achieved with the entering into force of the Customs Union in 1996, the Final Phase is clearly organised towards full membership and such a deep integration including the application of the CET together with the Common Commercial Policy of the EU seems to be irrevocable from full membership. Any other relationship will seriously affect Turkish economy. This is why the pacta sunt servanda principle is more than ever underlined regarding Turkey-EU relations.

Conclusion Still, both the Turkish government and the EU show great hesitation concerning negotiations.

On the Turkish side, the government, captivated by the euphoria of the 7 percent growth rate of the economy since 2002, seems to fail noticing the probable devastating effects of a draw back in Turkey- EU relations. This is particularly surprising, after the sharp economic decline that the economy registered in 2009 which is by far the highest, compared to the new member states of the EU.

On the other hand, the EU is not facilitating the reform process in Turkey by giving negative and contradictory signals. After the last enlargement to Bulgaria and Romania, for which a target date was fixed and created an obligation to enlargement without the fulfilment of the membership conditions by the accessing countries, the European Union decided that the same mistake will not be repeated again. Although this decision has been made clear to Turkey on various occasions as a general rule for future enlargements, the “standard” was again changed for Croatia in 2009, with the declaration of the EC Commissioner Olli Rehn that “Croatia could complete EU talks in 2010” while addressing the European Parliament in September 8, 2009. This is a new example of the continuously changing conditions of the EU membership for Turkey and is not in line with the Helsinki European Council decision of 1999, stating that “Turkey is a candidate State destined to join the Union on the basis of the same criteria as applied to the other candidate States.”

It will be appropriate to finish with the concluding remarks of the Independent Commission established by outstanding European politicians for the purpose of analysing some of the most pressing aspects of Turkey’s accession to the EU, which are completely in parallel with the author’s opinion. In its second report (2009), the Independent Commission attracts the attention upon the urgency of breaking the vicious circle created, in the interest of both Turkey and the European Union, underlining the requirement of a change of attitude of both European and Turkish leaderships. The Commission invites the European governments to honour their commitments and treat Turkey with fairness and the respect it deserves. The Commission calls also Turkey, including both its government and opposition, to encourage its many supporters in Europe by undertaking a dynamic, broad-based reform process, thus confirming its ambition to join the EU.

Bibliography

Agence Europe 9990, 03.10.2009 Akkoyunlu-Wigley, A., Mihci, S. and Arslan, H. (2006), „The Customs Union with EU and Its Impact

on Turkey’s Economic Growth”, 8th ETSG Annual Conference, September, Vienna. Commission of the European Union (2009), Croatia Progress Report (COM 533) Brussels. Erzan, R., Filiztekin, A. and Zenginobuz, U. (2002), „Turkey’s Customs Union with the European

Union: A Framework for Evaluating the Impact of Economic Integration”, ERF’S Ninth Annual Conference. October 26-28, 2002, Available at http://mpra.ub.uni-muenchen.de/382/ [Accessed 2 November 2009].

Harrison, G.W., Rutherford, T.F. and Tarr, D.G. (1996), „Economic Implications for Turkey of a Customs Union with the European Union”, Policy Research Working Paper (No. 1599), World Bank.

Mercenier, J. and Yeldan, E. (1997), „On Turkey’s trade policy: is a customs union with Europe enough?”, European Economic Review, 41.

Morelli, V. and Migdalovitz, C. (2009), European Union Enlargement: A Status Report on Turkey’s Accession Negotiations. CRS Report for Congress. Congressional Research Service (RS22517).

Neyaptı, B., Taşkın, F. and Üngör, M. (2007), „Has European Customs Union Agreement really affected Turkey’s trade?”, Applied Economics, 39.

Özkale, N.L. and Karaman, F. (2006), „Gümrük Birliği’nin Statik Etkileri”, Uluslararası Ekonomi ve Dış Ticaret Politikaları, 1 (1)

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Second Report of the Independent Commission on Turkey (2009), Turkey in Europe - Breaking the vicious circle, September.

Annex:

Exports and Imports of Turkey Table A.

(Million US dollars, selected years)

Exports Imports 1950 263 286 1960 321 468 1970 589 948 1980 2.910 7.909 1983 5.728 9.235 1984 7.134 10.757 1985 7.958 11.343 1986 7.457 11.105 1987 10.190 14.158 1988 11.662 14.335 1989 11.625 15.792 1990 12.959 22.302 1991 13.594 21.047 1992 14.715 22.871 1993 15.345 29.428 1994 18.109 23.270 1995 21.636 35.709 1996 23.225 43.627 1997 26.261 48.559 1998 26.973 45.921 1999 26.588 40.671 2000 27.775 54.503 2001 31.334 40.410 2002 36.059 50.146 2003 47.253 66.742 2004 63.167 94.042 2005 73.476 112.888 2006 85.142 133.050 2007 107.272 170.063 2008 132.027 201.964

Source: Turkish Statistical Institute

État, marché et société. La question de l’équilibre dans la relation entre société et politique

Georges CONTOGEORGIS

Abstract: The author supports the view that the financial crisis the world is going through

today is profoundly political and is due to the overturning of the balance between society, market and state in favor of the market. The market has become the dominant force not only in economy but also in the state, thus imposing the isolation of the civil society and gradually turning citizens’ labor to simple merchandise. The right to self-regulate invoked by the market has led to deregulation and ultimately to the undermining of the normative logic of the economic process itself. As for that, the restoration of the balance between society, market and state will be feasible only if the society of citizens changes from private individuals to an institutional factor of the political system. In this way, the policies of the state will harmonise with the will of society and the market will return to the sphere of serving the common well being.

Keywords: market, labor-merchandise, freedom, civil society, cosmosystem 1. La récente crise financière est présentée par les analystes spécialisés comme ayant un

caractère strictement économique, c’est-à-dire une cause autonome, sans lien avec l’environnement cosmosystémique général. Dans le même temps, on constate qu’il a soigneusement été évité que la crise de légitimité qui frappe le personnel politique et son expression institutionnelle, le parti, malgré un brutal retour en force depuis quelques décennies, ne touche à la logique du système politique, c’est à dire de l’État. Quand, en 1996, j’ai développé dans un congrès international le thème de «La partitocratie comme système politique» pour mettre en évidence l’appropriation de l’État par le parti qui était en train de s’accomplir, et même la mutation du système partisan en système politique, mon collègue français Pierre Avril m’a fait observer que la critique envers le parti devait être exercée avec toute la circonspection due parce qu’elle équivalait à une critique de la démocratie. Le collègue néerlandais, quant à lui, constatait avec satisfaction que son pays avait résolu le problème de l’appropriation partisane en faisant participer les particuliers (entrepreneurs, etc.) à la prise des décisions de l’État. Je me demandai alors si cette solution ne supprimait pas toute logique représentative du régime, fût-elle indirecte, ou si la suppression de la corruption passait soit par sa légitimation soit par l’appropriation de l’État par les forces impliquées. Je n’ai pas reçu de réponse.

Je persiste néanmoins à penser que l’appropriation partisane est inéluctable quand le système politique n’est pas blindé du point de vue de sa correspondance à la société, quand, plus concrètement, il existe un statut de déséquilibre entre société et politique. Cette correspondance est par définition affirmée dans le cas où le système est représentatif ou démocratique. Il suffit en soi de l’admettre pour conclure que le système politique de la modernité repose manifestement sur un principe pré-représentatif.

Depuis, l’appropriation de l’État a aussi changé significativement de caractère et de dynamique dans la mesure où un nouveau paramètre, le marché, a fait son apparition, avec un visage exigeant, sur le devant de la scène. En effet, l’appropriation de l’État par le parti présente aujourd’hui certaines particularités qui, en comparaison avec le passé, la différencient tant par son ampleur que par sa polysémie. Le parti semble avoir des partenaires dans l’appropriation: l’administration et, surtout, un large éventail de la sphère privée, avec pour signifiant le marché.

Dans les deux cas, l’imbrication des intérêts, l’appropriation et la corruption sont des caractéristiques inhérentes du régime, qui prouvent que l’équilibre entre État, marché et société a été rompu en bloc au détriment de la société ou, autrement dit, au profit de l’État, c’est-à-dire de ses acteurs et de leurs partenaires dans le marché. Dans les circonstances actuelles, la question n’est plus de savoir comment aura lieu la désappropriation de l’État mais comment celui-ci, avec l’appropriation comme composante acquise, pourra correspondre de quelque manière aux attentes de la société.

Je m’empresse d’annoncer dès le départ ma conclusion, à savoir que ladite modernité progressiste, pour rétablir la correspondance de l’État avec la société, introduit l’argument de la

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déontologie morale, de l’engagement moral, en l’occurrence, du pouvoir politique de veiller à la solution des problèmes de la société. Mais en aucun cas elle n’envisage l’éventualité de transformer la société en catégorie politique, et donc de modifier le système politique de sorte qu’il acquière un aspect représentatif.

2. Ces remarques donnent à penser, à mon avis, que la crise économique que traverse le monde

actuellement est la manifestation, et donc l’émanation des caractéristiques structurelles du système de la modernité, c’est-à-dire de la phase que vit notre époque.

L’opinion courante attribue la crise à l’autonomie excessive acquise par le marché, au nom de l’autorégulation. L’autorégulation a nourri l’irresponsabilité de certains de ses acteurs, entraînant l’arythmie du marché et finalement son dérèglement.

Parallèlement, les mesures prises par les gouvernements pour stabiliser les marchés ont été qualifiées de socialistes, nous rappelant que le socialisme continue à être abordé comme une tautologie de l’étatisme, de l’extension économique de la propriété de l’État. D’où le fait que d’autres se sont hâtés d’annoncer la fin du capitalisme.

Or, le dilemme soulevé à l’occasion de la crise ne concerne pas le dérèglement du marché en soi mais le fait qu’une rupture décisive de l’équilibre est intervenue dans la relation entre État et marché, en faveur du marché. Supposerons-nous alors que les gouvernements vont tirer de la crise l’enseignement nécessaire et ramener à un certain point le rôle de l’État, ou bien leur intervention consistera-t-elle simplement à sauver le système et, par là, à effectuer la transition vers le rétablissement du fonctionnement «normal» du marché ?

Je signale tout de suite que le dilemme État ou marché est lié à l’enjeu qui guide l’interprétation de la crise et la recherche de remèdes. Or, nous avons constaté l’absence, dans ce dilemme – État ou marché –, de sa motivation, à savoir du but ou de la raison de leur existence, qui est la société. Sans elle, ni l’État ni le marché n’ont de raison d’être.

J’ajouterai que l’absence de la société se combine à une autre absence significative: celle du système politique. Pour la modernité, le système politique n’existe pas en tant que tel, de manière autonome, mais est essentiellement une tautologie de l’État. C’est pourquoi on parle soit de politiques de l’État, soit de l’État en général pour se référer au système politique. Il paraît inconcevable de séparer le système politique de l’État, et donc de l’institutionnaliser différemment, au-delà de l’État, par exemple avec la société pour véhicule.

Ces approches du concept de l’État et, dirais-je, de celui de l’économie, elle aussi identifiée de manière erronée au marché, définissent le cadre de la problématique de l’organisation en général du monde d’aujourd’hui.

L’optique libérale, à laquelle a adhéré plus tard l’idéologie socialiste dans une tentative de faire face aux problèmes accumulés au cours des dernières décennies, a proposé l’idée de gouvernance, tout en invoquant la conception hégélienne de la «société civile»1.

La version (néo)libérale de la gouvernance propose l’association informelle des partenaires de l’État avec les groupes de pression/d’intérêts. En même temps, elle exige de l’État qu’il introduise comme but de la politique l’intérêt du marché et adopte comme mode de fonctionnement les lois du marché2. En conclusion de cette conception, l’économie privée est laissée à l’autorégulation pour ce qui est de son fonctionnement et de sa relation avec la société. Dans ce cadre, le citoyen est assimilé au consommateur (ou au détenteur du travail), mais n’est pas considéré comme un partenaire institutionnel de l’État, et encore moins de l’économie.

Cette notion de la gouvernance professe que la rencontre de la société avec la politique doit avoir lieu non pas directement, mais par l’intermédiaire des groupes (ladite «société civile») et des partis, c’est-à-dire par les retrouvailles de ces deux derniers au niveau du pouvoir de l’État.

En complément de cette conception, n’a pas cessé de circuler l’opinion selon laquelle l’État, pour jouer son rôle politique, doit élargir le champ de sa propriété. Cette opinion qui, comme nous l’avons vu, a été liée au projet socialiste, n’en est pas moins adoptée par la doctrine libérale, qui rattache la portée de la fonction politique de l’État à la taille de sa propriété sur les moyens de

1 Pour plus de détail, voir Georges Contogeorgis, „Bonne gouvernance et démocratie”, in F.Maron, I.Horga, R.de

la Brosse (eds), Media and the Good Governance Facing the Challenge of the EU Enlargement, Bruxelles, International Institute of Administrative Science, 2005

2 Georges Contogeorgis, op.cit.

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production. Mais tout en stigmatisant l’élargissement de la propriété de l’État sur les moyens de production en le taxant de socialiste, du moins au-delà d’une certaine mesure, elle réclame que l’État – et par conséquent la politique – soit limité à un rôle régulateur ou subsidiaire sur la propriété privée et le marché. Moins d’État est lié à moins de propriété de l’État et non pas, manifestement, à sa fonction politique en général ou à l’appartenance du système politique. Plus d’État, d’un autre côté, est considéré comme la panacée pour son attachement à l’intérêt populaire.

Certains dirigeants européens ont mis en avant la nécessité de refonder le système économique. De créer, ont-ils dit, un capitalisme au service des citoyens. Mais comme on le constate, les mesures prônées pour atteindre ce but ne vont pas dans le sens d’un dépassement du système par l’installation de l’État dans un rôle ne serait-ce que d’arbitre entre l’intérêt public et l’intérêt privé. Elles se focalisent exclusivement sur les excès dont on estime qu’ils ont nourri la rupture de l’équilibre au sein du marché et, par conséquent, son dérèglement.

3. Cependant, la question soulevée est de savoir si l’État (c’est-à-dire la classe politique) est en mesure de remplir désormais le rôle régulateur qu’il avait à l’époque de sa souveraineté politique, et cela dans un contexte de mondialisation où il ne contrôle pas les rapports de force internes et où ses fonctions dépendent largement du facteur international.

Cette question est liée à l’autre paramètre évoqué plus haut: la contestation sans cesse croissante, par la société, des détenteurs de l’État, et notamment du personnel politique et du système partisan. En effet, la société reproche aux détenteurs de l’État, au lieu d’être au service de la société, de se mêler à des intérêts ou des groupes économiques ou communicationnels puissants, subordonnant l’espace public à leurs propres priorités et à celles de leurs associés. Ainsi l’État devient-il la proie du système partisan et du marché, bradant sa vocation.

Mais pourquoi en est-il ainsi, puisque les dirigeants politiques sont élus par le peuple et non par les intérêts impliqués ? Une première réponse est que le poids du suffrage n’arrive pas à équilibrer celui des intérêts impliqués, notamment des bailleurs de fonds ou de communication. Cela ne signifie pas que la volonté de ces derniers se substitue au suffrage, mais que le résultat du scrutin dépend de la capacité économique et de l’image communicationnelle que le parti et l’homme politique vont tisser devant l’électeur. Même si nous oublions un instant le mobile que peut être l’enrichissement pour l’homme politique, il est évident que son image et sa communication avec le peuple ne sont pas directs, c’est-à-dire sans intermédiaire.

Le reproche se focalise donc sur le déficit de représentation/démocratie. Mais le mobile de ce déficit a à faire avec l’efficacité de l’État, c’est-à-dire de ses politiques, dans les domaines d’intérêt de la société. Plus précisément, il concerne des questions telles que la redistribution du produit économique, la protection du travail et en général la prévoyance sociale, tout autant que ledit «État de droit». Par conséquent, le paramètre de la dimension structurelle du système, que susciterait manifestement le passage de la société de la liberté individuelle à la liberté politique, n’intervient pas. Car dans ce cas, la liberté serait définie dans le domaine de la politique de la même façon qu’elle est conçue dans la sphère privée, c’est-à-dire comme autonomie et non comme droit.

Malgré cela, on ne saurait ignorer qu’un changement essentiel est intervenu dans la relation entre société et politique. Autrefois, l’homme politique envoyait à la société un message salvateur, c’est-à-dire de libération. Il promettait aux masses de leur apporter la liberté individuelle ou, plus tard, de la leur garantir face au despotisme finissant et à la classe bourgeoise montante. Il s’engageait aussi à créer, à travers l’État, les conditions (travaux d’infrastructure, protection contre les classes bourgeoises étrangères, etc.) qui faciliteraient au mieux la «maturation» de la classe bourgeoise.

L’État apportait une protection tant au peuple qu’aux bourgeois. Mais la rencontre de la société avec le système partisan (et le personnel politique) avait lieu, en tout état de cause, extra-institutionnellement, c’est-à-dire par l’entremise de l’idéologie ou de sa référence de classe. Les bourgeois/libéraux votaient pour les partis libéraux, et ceux qui détenaient le travail et dépendaient de l’emploi votaient plus ou moins socialiste. Aussi longtemps que la relation entre société et politique maintint un équilibre élémentaire au niveau des politiques de l’État, l’enjeu concernant le caractère (non représentatif) du système politique n’eut pas de raisons de troubler le narcissisme proto-anthropocentrique de la modernité.

Ce schéma resta valable et fut efficace jusqu’à un certain point à l’époque de la transition du despotisme à l’anthropocentrisme (le social fondé sur la liberté). Aujourd’hui, la société s’est libérée de

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son passé despotique, le peuple s’est émancipé politiquement en un certain sens, il a fini par acquérir une expérience de vie anthropocentrique. Par conséquent, il ne cherche pas à se libérer des liens sociaux de la féodalité – laquelle a disparu –, mais à maintenir sa dépendance de travail, à ne pas être rejeté du processus économique. Enfin, le bourgeois, s’étant lui aussi émancipé face à l’État, revendique désormais la chute des obstacles étatiques pour pouvoir évoluer à l’aise (ses capitaux, le potentiel de travail, etc.) dans le cosmosystème global. En d’autres termes, il cherche à reconfigurer la logique qui régit le fonctionnement de l’État et, en même temps, à établir un nouvel équilibre qui prendra en compte le poids de son avis dans ses choix. La logique de la classe bourgeoise est que ce qui est bon pour elle est bon pour la société. Donc, le but du marché doit en soi être aussi le but de l’État.

Parmi les paramètres qui rendent possible un réaménagement véritable de la relation entre société et politique, le nouvel environnement communicationnel électronique émergeant occupe une place signifiante. À court terme, cet environnement a fait que le marché a profité plus facilement du «vide de pouvoir» et l’a rempli sur le terrain tant intraétatique qu’interétatique / cosmosystémique. Mais à moyen terme, il est destiné à créer les conditions objectives de l’installation de la nouvelle rencontre de la société avec la politique et, finalement, du fonctionnement du système politique au niveau de la grande échelle cosmosystémique.

La mutation, déjà, du comportement politique des citoyens est une manifestation de ce phénomène. Après la politisation de masse du passé récent, nous allons manifestement vers l’individualité politique. Nous constatons que la relation du citoyen avec l’homme politique devient de plus en plus dialectique, s’effectue en termes de négociation, alors que c’était auparavant une relation de délégation, grégaire et salvatrice. Dans ce cadre, le citoyen n’agit pas collectivement. Il négocie à part son suffrage avec l’homme politique, devient son client. Il convient d’attribuer e comportement non pas à l’individualisme prétendument pur qui le distinguerait, mais à l’absence de soubassement institutionnel nécessaire qui rendrait possible la synthèse de la volonté des membres de la société et, par extension, la soumission du personnel politique à celle-ci.

Dans le même temps, cette combinaison du système de la modernité – qui correspond à sa phase proto-anthropocentrique – avec l’environnement communicationnel technologique émergent a contribué à ce que la gestion du champ de la politique soit déplacée pour l’essentiel vers les acteurs des «moyens d’information». Déplacement qui crée à lui seul une déformation d’importance majeure du système politique, puisqu’il transforme les médias, de vecteurs de la politique en producteurs primaires de celle-ci. Dans ce cadre, la politique, naguère phénomène constituant et faisant fonctionner la société, devient un produit de consommation, et les citoyens sont réduits au statut de simples consommateurs du produit de la politique.

Nous concluons que le parti, dès qu’il a réussi à occuper et contrôler l’État en termes de monopole, a constaté que cela n’était pas suffisant pour monopoliser aussi son fonctionnement politique. Il s’est trouvé posséder un pouvoir d’une force explosive, institutionnellement autonomisée et essentiellement non contrôlée, sans disposer des conditions pour le gérer sous l’angle de l’intérêt public. Conditions qui auraient pourtant été l’argument compensatoire face à ceux qui revendiquent la volonté politique de l’État. Suspendu entre la nécessité du vote et la tentation de l’appropriation, le parti s’est adapté aux mutations de l’économie, de l’environnement communicationnel et, finalement, des rapports de force au niveau de l’État. Le personnel politique s’est éloigné du champ social, si bien que le système de la souveraineté politique de l’État s’est transformé en un système de souveraineté partisane sur l’État et, à travers lui, sur la société. La question, pour le personnel politique, sera désormais de savoir comment combiner le fonctionnement de l’État en tant que mécanisme de clientèle à travers lequel il espère manipuler la société, et en tant que bien public qu’il négociera avec les partenaires impliqués pour acquérir la surface économique et communicationnelle nécessaire. Ainsi le principe de l’autonomie de l’État, qui passe par le fondement non représentatif du système politique, est-il responsable de sa dégénérescence en mécanisme d’appropriation de la sphère publique et surtout du processus politique.

4. Les observations faites jusqu’ici confirment mon hypothèse initiale, que la contestation et la

critique qui s’adressent au personnel politique ou aux cadres des entreprises qui ont nourri l’arythmie du marché ne touchent pas le système. Il n’est pas exclu que le débat se focalise parfois sur la manière de savoir comment le système existant de la politique et de l’économie fonctionnera de manière profitable aussi pour la société. Mais la société des citoyens ou du travail ne s’insinue pas en facteur

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constituant de ce système. Et la société ne semble pas non plus contester la dialectique univoque de la relation (État / politique contre économie / marché et inversement) ou y revendiquer un discours institutionnel.

Ce que la société reproche à l’État, c’est la non-correspondance des politiques publiques à ses attentes et à son intérêt. En réalité, par cette demande, la société pose le déficit de représentation, comme je l’ai déjà suggéré, sur des bases morales. Mais cette demande, vu la façon dont elle est posée, est en contradiction avec la logique du régime. Elle exige du personnel politique qu’il viole la Charte fondamentale et se comporte en représentant de la société, alors que la Charte elle-même prévoit expressément qu’elle ne souhaite pas que le système soit représentatif, ni institutionnellement ni quant à son but.

J’insisterai, afin d’être plus clair, sur cette question parce que j’estime qu’elle est au cœur du problème actuel, qui a conduit d’ailleurs à la rupture de l’équilibre entre État, marché et société. La sémiologie non représentative de l’État résulte de plusieurs facteurs. Je n’invoquerai que trois éléments qui suppriment le principe représentatif:

a) L’État actuel, en tant que détenteur de la souveraineté politique, possède de manière indivisible à la fois la qualité de mandataire et celle de mandant.

b) La société est rangée dans la sphère privée, avec pour seul rôle politique la légitimation par son vote du personnel politique au pouvoir de l’État. En d’autres termes, la société n’est pas une catégorie politique et, par conséquent, n’a pas la substance institutionnelle suffisante pour élaborer sa propre volonté politique.

c) Le but de l’État est censé être la promotion de l’intérêt général, qui va de pair avec l’intérêt public ou national, mais non avec l’intérêt commun de la société. En outre, l’intérêt général, national ou public est défini de manière authentique, au premier et dernier degré, pour ce qui est de son contenu, par l’État. Toutes les Constitutions prévoient qu’à partir de son élection, l’homme politique s’autonomise par rapport à la société, agit à sa volonté, «représente la nation»3 ; mais elles prennent soin que la nation soit interprétée comme une «construction» de l’État. Ainsi, son caractère inhérent à la société anthropocentrique n’est-il pas reconnu, de sorte qu’il soit défini comme l’effet identitaire de la conscience sociale. Et cela parce que c’est la seule façon de justifier l’exigence de l’État d’incarner le système politique.

Cela est évident quand on observe que le parti, exposé aux élections, propose à la société des programmes d’action qu’il abandonne après les élections avec la même facilité qu’il les a imaginés. Le discours officiel de la modernité interprète cette inconséquence comme la suite naturelle de l’incompatibilité des choix / besoins de la société avec l’intérêt général / national, lui-même spécifié comme le résultat de l’incapacité de la société à concevoir la complexité de l’enjeu politique et d’y harmoniser ses désirs particuliers. Mais la raison véritable, c’est la sémiologie oligarchique de la classe dirigeante, qui souhaite ardemment que les politiques de l’État soient élaborées en liaison avec le poids spécifique de son propre intérêt. Cette raison est cependant liée à la remarque que la mesure de la contestation ou non de l’État réside dans ses politiques et non pas, manifestement, dans la structure du système politique, c’est-à-dire la liberté. Dans la mesure où le cosmosystème global ne connaît actuellement que le système politique qui convient à sa phrase proto-anthropocentrique, on constate l’universalité du phénomène. Quand l’actuel vice-président américain, Dick Cheney, s’est entendu demander pourquoi il soutenait la guerre en Irak puisque la majorité ne l’approuvait pas, il a répondu: «Et alors ?».

Le fait que la contestation du fonctionnement non représentatif du système politique actuel ne s’accompagne pas d’une reconsidération de la liberté – qui entraînerait sa définition comme autonomie et non comme droit – explique d’un autre côté pourquoi toute la question est posée en termes moraux / déontologiques. Sinon, elle s’accompagnerait de l’acceptation évidente que pour qu’un système politique acquière un aspect représentatif, il doit céder la qualité de mandant à la société. La société doit être constituée en dèmos, c’est-à-dire en corps politéien partenaire de l’État, puisque c’est le seul moyen pour elle d’acquérir une volonté politique et d’assumer elle-même la définition des politiques, qui seront ainsi en harmonie avec l’intérêt commun.

Il n’est pas lieu ici de s’arrêter davantage sur la motivation du rejet du principe représentatif par la modernité. Je dirai simplement que toutes les théories à ce propos (faisant valoir la «complexité»,

3 ou selon le cas le roi.

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la «division du travail», la compétence des «spécialistes» qui possèdent l’objet, la grande échelle du monde actuel, etc.) dissimulent une ignorance gnoséologique et une tentative de déplacer le problème. En effet, on constate un accord universel à appeler démocratique un système politique pré-représentatif dans son fondement, tel le système actuel, parce que c’est la seule manière de justifier l’inscription de tous dans le chœur des tenants de la démocratie. La gauche elle-même, qui invoque son identification avec le peuple, cherche à le mettre sous tutelle et non à le libérer. Elle ressent la même répugnance que le libéralisme envers l’idée d’accorder au corps de la société des citoyens ne serait-ce que la simple qualité de mandant. C’est pourquoi elle considère que c’est la nation – la conscience identitaire de la société – et non l’État souverain / système qui est l’ennemi de la liberté. Dit plus simplement, à l’instar du libéralisme, la gauche ne sort pas du schéma politicien que lui a légué dans le monde postféodal «l’ancien régime» du continent européen.

5. Ce qu’il importe de souligner ici, c’est que le système politique pré-représentatif et le

système partisan homologue ont reflété et, par conséquent, servi avec conséquence la phase de la transition de la féodalité/du despotisme à l’anthropocentrisme. Le principe fondamental de ce projet a été d’admettre qu’aussi bien le système politique que le système économique étaient constitués sous le signe de la propriété. Le propriétaire (la fiction juridique de l’État ou le détenteur des moyens de production) possède également le système de la politique ou de l’économie, et non pas les citoyens ou les travailleurs4. En réalité, l’appartenance du système (économico-social et politique) à la propriété est ce que la modernité a hérité du despotisme antérieur et qu’elle a été appelée à harmoniser avec la nouvelle société, dont les membres ont acquis désormais une substance anthropocentrique, à savoir qu’ils sont devenus libres dans la sphère privée.

Le système de la propriété n’accepte comme interlocuteurs que les propriétaires: le marché et l’État. À l’ère de la transition, l’État est souvent entré en conflit avec la sphère privée. Au départ, avec l’ancien régime despotique, puis avec le marché privé (proto-anthropocentrique). Cela peut être attribué au fait que pendant cette période, la société rencontrait la politique au niveau de l’idéologie ou de l’affinité de classe, et que le marché était encore délimité nationalement et se trouvait dans l’incapacité manifeste de contester directement la primauté de l’État.

Mais de nos jours, État et marché vont de concert dans une admirable collaboration qui, malgré les fluctuations conjoncturelles ou les oppositions de leurs agents, a pour objet leur intérêt commun: le cloisonnement de la société dans la sphère privée, c’est-à-dire son exclusion de l’administration du système (économique et politique), pour qu’ils se le partagent sans être dérangés. Le fait que tant le marché que l’État soient d’accord pour se rencontrer à travers leurs agents – c’est-à-dire le personnel politique / partisan et les groupes d’intérêts – loin de la société, révèle la nature et la profondeur du problème actuel, mais aussi le sens de l’évolution.

Cette direction n’est manifestement pas celle qu’ont proposée les hommes politiques appelés au chevet du système –c’est-à-dire l’intervention de l’État– pour rétablir l’équilibre interne du marché. Cet équilibre sera récupéré d’une manière ou d’une autre. Mais le coût, c’est inévitablement le corps social, au premier chef, qui sera appelé à le payer. En tout état de cause, l’insistance sur la constitution du système en termes de propriété –notamment pour ce qui est de l’appartenance du système politique à l’État– ne pourra qu’accroître les inégalités et la contestation et, en tout état de cause, préparer le terrain pour la crise suivante. Car dans les conditions actuelles, l’équilibre du pouvoir de l’État et de la force du marché est impossible. 6. Y parvenir et, au-delà, harmoniser la gouvernance publique avec l’intérêt de la société présuppose le changement des rapports de force politiques qui ont été dramatiquement inversés en faveur des détenteurs du système économique et de l’État. En cela, le rétablissement des rapports de force en faveur de la société ne peut plus passer par l’État autonome (y compris le parti politique qui lui correspond), puisque, comme nous l’avons vu, dans les circonstances actuelles, leur rencontre extra-institutionnelle est contraire à la logique des choses.

4 La distinction entre la propriété sur les moyens de production (sur le capital, par exemple) et la propriété sur le

système de production, bien que d’importance capitale, à mon avis, est ignorée par l’ensemble de la science sociale moderne. Pour plus de détails, voir G. Contogeorgis, „Les systèmes économiques et la modernité”, dans la revue Taseis [Tendances], 2/2008 (en grec).

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Cette rencontre ne serait possible qu’à l’intérieur du système politique, mais elle suppose la substantialisation représentative de celui-ci. La transformation de la société en démos par la prise en charge par celle-ci de la qualité de mandant est seule capable de remédier au déficit de représentation et de remodeler du même coup la structure et le fonctionnement du système partisan. Dans ce cadre, le parti, qui incarne la souveraineté politique de l’État et est le grand acteur de son appropriation, deviendra conciliant et mandataire formel de la volonté sociale.

La relation entre État et marché sera, elle aussi, radicalement redessinée, puisque le dèmos de la société des citoyens s’intercalera comme régulateur direct du marché, c’est-à-dire comme le facteur constitutif qui élabore le contexte réglementaire et les conditions de fonctionnement de l’économie. Dans ce cadre, la question ne sera donc pas l’élargissement de la propriété de l’État, mais l’harmonisation de l’État et du marché avec l’intérêt de la société/dèmos. Non pas la nationalisation de l’économie, mais la socialisation du système politique, qui interviendra quand la société revêtira la qualité de dèmos/mandant. Il est cependant manifeste que cette évolution, bien qu’elle ne mette pas en avant – nous l’avons vu – comme hypothèse la reconsidération de la liberté du point de vue de la société, mettra sur le tapis son enjeu. Car c’est la seule manière de garantir le blindage idéologique du projet représentatif.

Cette mutation de la relation entre système politique et État sera, d’un autre point de vue, la réponse à l’enjeu de la «mondialisation», où le marché devient de plus en plus universel alors que la politique reste nationale, ce qui fait que le cadre réglementaire du cosmosystème global échappe à la compétence de l’État et est laissé aux mains des relations interétatiques d’hégémonie. Ces relations, avec pour pivots ladite «société civile» et le projet de «gouvernance», pénètrent sur le terrain intérieur de l’État, grevant à leur tour le caractère réglementaire du processus politique et, au-delà, l’éloignement de l’État par rapport à la société.

En d’autres termes, le rétablissement de l’équilibre sur le marché sera d’un ordre différent selon qu’il aura lieu sur la base du produit de sa relation avec l’État / le système ou qu’il passera par la constitution politéienne et, par extension, l’émancipation de la volonté de la société. L’insinuation de la société dans le processus politique aura pour effet de remettre les politiques de l’État sur une orbite d’indépendance par rapport au marché et, par conséquent, de réorienter le but de la politique selon l’intérêt commun. Ainsi, par la constitution politéienne de la société des citoyens, la responsabilité de la définition de la notion et de l’intérêt de la nation lui reviendra, au moins partiellement, au lieu de relever de la compétence exclusive de l’État / du système.

7. On pourrait opposer le caractère objectivement impossible d’une telle évolution, les risques

qu’entraîne le fait que la politique dépende de la société «non éduquée» ou, à tout le moins, l’incertitude sur la manière dont la société pourra se muer en dèmos. Je m’empresse de souligner qu’en effet, cette évolution n’est pas possible de nos jours. Elle n’est pas possible, non pas pour les raisons invoquées par la modernité (l’échelle, la complexité, la division du travail, la non-émancipation sociale, etc.), mais parce que le stade proto-anthropocentrique que vit le monde actuellement ne permet pas même l’adoption gnoséologique et, au-delà, l’attribution à la société de cette demande comme projet. La représentation en tant que système politique n’est pas de nos jours une demande de la société. Je dirais même qu’elle n’entre pas comme question dans le champ du raisonnement de la pensée moderne. La modernité se berce de l’illusion d’avoir réussi l’impossible: concentrer dans son système deux politéias incompatibles par nature, la représentative et la démocratique, au moment où il est simplement pré-représentatif.

D’un autre côté, il ne faut pas croire que pour renverser la rencontre harmonieuse de l’État avec le marché et rétablir la correspondance du pouvoir politique avec l’intérêt commun, le transfert complet de la qualité de mandant à la société des citoyens soit nécessaire et, par conséquent, la constitution directe de celle-ci en dèmos. On pourrait évoquer certaines formes bénignes de dépendance institutionnelle de la politique à la société, qui comporteraient une assimilation représentative et non pas la mutation du système politique.

Je cite à titre indicatif quelques exemples: a) la consécration d’un contrôle périodique, semestriel, des activités du personnel politique par

un «échantillon de dèmos» composé d’un certain nombre de représentants tirés au sort dans la circonscription électorale. Il serait opportun que ce dèmos ait aussi la compétence de déférer l’homme

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politique ou de le renvoyer devant le corps électoral dans le cas où il jugerait son œuvre non satisfaisante.

b) La création d’un «dèmos internaute» (il suffit d’un échantillon représentatif de 3 000 citoyens), qui sera choisi parmi les citoyens de l’ensemble du territoire et qui «délibérera» et se prononcera sur les questions de l’ordre du jour du gouvernement et de la Chambre, soulèvera des questions ou contrôlera les acteurs du pouvoir étatique et leurs politiques. Il est jugé nécessaire que cette prévision couvre aussi les partis pour ce qui est des programmes qu’ils soumettent lors des élections et de leurs positions ou propositions pendant la période de gouvernance. En même temps, il serait opportun d’obliger les partis et, en tout état de cause, le gouvernement à soumettre des bilans d’activité au «dèmos internaute» et bien entendu d’obliger le gouvernement à faire part de son intention de s’écarter de ses engagements, pour que ce dèmos formule un avis. Certes, il n’est pas besoin au stade actuel que l’avis du «dèmos internaute» soit obligatoire. Il est manifeste cependant que l’enjeu politique et moral de son avis aura un poids extrême sur le processus politique.

c) La reconnaissance au citoyen d’un intérêt légitime concernant la politique et, par extension, d’un droit de s’adresser à la justice pour les politiques qui le lèsent.

d) La suppression totale de l’immunité, qui introduit en fait l’irresponsabilité de l’homme politique pour ses actes au-delà de l’action politique, et la soumission de la fonction politique à la justice pour ce qui est de sa correspondance avec l’intérêt commun.

e) Enfin, l’exception des médias du principe de l’appartenance du système à la propriété, par l’introduction dans leur fonctionnement de règles de légitimité démocratique.

La surprise qui, j’en suis sûr, accompagnera la découverte par le lecteur de ces idées, même s’il peut être d’accord avec l’explication des causes de la crise que traverse le monde actuel, laisse augurer que les sociétés modernes continueront à moyen terme à vivre l’ancien régime et à chercher des solutions qui ne feront que recycler le problème. La solution viendra donc quand l’homme moderne comprendra qu’est utopique le projet qui ne correspond pas à la typologie cosmosystémique, et non celui qui s’inscrit simplement dans la perspective de l’évolution.

Bibliographie Bernardi, Bruno (1999), La démocratie, Flamarion, Paris Colas, Dominique (2004), Citoyenneté et nationalité, Gallimard, Paris Colletis, Gabriel, Paulré, Bernard (ed.) (2008), Le nouveaux horizons du capitalisme, Economica, Paris Dacheux, Eric (ed.) (2008), L’espace public, CNRS Editions, Paris David, Catherine, De Tonnac, J.-P. (1996), L’Occident en quête de sens, Maisonneuve et Larose, Paris Déloye, Yves (2007), Sociologie historique du politique, La Découverte, Paris Ferry, Jean-Marc (2000), La question de l’Etat européen, Gallimard, Paris Fukuyama, Francis (1995), Trust: The Social Virtues and the Creation of Prosperity, The Free Press,

N.Y. Gilpin, Robert (2000), The Challenge of Global Capitalism: The World Economy in the 21st, Century,

PUP Princeton Held, David, Anthony McGrew, David Goldblatt and Jonathan Perraton (1999), Global

Transformations: Politics, Economics and Culture. Stanford: Stanford University Press Holton, R.J. (1998), Globalization and the Nation-State, Macmillan, London Kristeva, Julia (1988), Étrangers à nous-même, Gallimard, Paris Kupchan, Charles A. (2002), The End of the American Era, Knopf, NY Le Coadic, Rorald (Ed.) (2003), Identités et démocratie. Diversité culturelle et mondialisation:

repenser la démocratie, Presses universitaires de Rennes, Rennes Maffesoli, Michel (2008), Après la modernité? La logique de la domination, la violence totalitaire, la

conquete du present, CNRS Editions, Paris Mairesse, Jacques (ed.) (1982), Emploi et chomage, Presses de la Fondation nationale des sciences po,

Paris Noiriel, Gérard (2001), État, nation et immigration, Gallimard, Paris Nugent, Neil (2006), The Government and Politics of the European Union, Duke University Press,

N.Y.

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Polanyi, Karl (1957), The Great Transformation: The Political and Economic Origins of Our Times, Beacon Press, Boston

Rosanvallon, Pierre (1995), La nouvelle question sociale. Repenser l’État-providence, Seuil, Paris Rifkin, Jeremy (1995), The End of Work, Tarcher/Putnam Savage, Mike; Warde, Alan (1993), Companies and representatives throughout the world, Houndmills,

Basingstoke, Hampshire, NY Sassen, Saskia and Kwame Anthony Appiah (eds) (1999), Globalization and Its Discontents: Essays on

the New Mobility of People and Money, New Press, New York Wallerstein, Immanuel (2004), World-Systems Analysis: An Introduction, Durham, Duke University

Press, NY

FOCUS

Andrei MARGA (Cluj Napoca) ◄► Democracy as Form of Life

Democracy as Form of Life

Andrei MARGA

Abstract: The challenges of democracy have changed continuously since the emergence of the concept in the Ancient Greece. The end of 20th century and the beginning of the 21st century has found the international society in the position to manage democracy and democratical life under the constraints of the impact of globalization. The political transformations in Europe in the past twenty years have brought, in different debates, the inventory of democracy and the resources for democratic accountability. The main argument promoted in this article is that the contemporary changes accompanies the liberal democracy, proceduralist in its essence, and requests the democracies themselves the transition from the democracy understood as a technique of periodical choice of leaders to the democracy as form of life.

Keywords: democracy, reform, culture, education, communication In 1993, Larry Diamond and Marc F. Plattner published the book entitled The Global

Resurgence of Democracy, in which different authors shared, with unconcealed satisfaction, the diagnosis according to which “democracy’s third wave” takes place worldwide (Diamond and Plattner, 1993). It is well-known that, at the beginning of the ‘90s, in the euphoria generated by the expansion of free elections, a firm belief, concerning the “end of history” in the law of liberalizations that took place in economy and politics, started to emerge (Fukuyama, 1995:42). During the fifteen years since that day, the perception of democracy has been differentiated. After a few years, people talked about “the changing nature of democracy”, by supplementing the mechanism of free elections with a “culture of civic competence and of democratic capacity” (Inoguchi et al., 1998:185). A new inventory has been made, an inventory of perspectives on democracy, from the point of view of “challenges” to which it has been exposed during the late modernity (Schmidt, 2000). In the Habermas-Ratzinger debate, the most important representative of the enlightenment noticed that the proceduralist democracy, no matter how developed it was, needed cultural resources that it could not produce by itself; the necessary resources came from elsewhere. The famous theologian argued in favour of a new osmosis of power, law and ethics (Habermas, Ratzinger, 2005). Closer to our time, in democracies, the replacement of visions guided by values with the brief ideology of relativism is generally blamed and a the return to a “sens commun” as reference point (Boudon, 2006:12) is suggested instead, and the theme of the “fragility of democracy” is raised again for discussion with an important remark: it is not the democracy that is brought forward, but the “liberal democracy” (Manent, 2007:16).

Very recently, a discussion about “l'épuisement de la démocratie” has began in Europe, under the multiple challenges (“celui, interne, d’avoir à gérer des sociétés de plus en plus ouvertes et donc porteuse d’un risque d’anomie de plus en plus fort ; et celui, externe, d’avoir à gérer la triple évolution contemporaine: économique, numérique, génétique”) from today’s society, the understanding of “exhaustion (épuisement)” being the dissolution of normativity from the conceiving of democracy. In relation to the “classic normative scheme” of law, defended by Kelsen (on the first level the juridical organisation that is the Constitution, on the second level the laws as general regulations, and on the third level the singular decisions), a “profound mutation of the normative chain (“une profonde mutation de la chaîne normative”)” is produced. The “mutation” has its quantitative indicator in the “legal inflation” (for instance, there is a request for legal regulations in bioethics, at the edge of science), in the “constant pollution of the constitutional norm through decisions”, in the multiplication of “private” laws, in the increase of the jurisprudential function from the “bottom” and the qualitative indication in the “passage from an upper general normativity – the parliamentary law as a place of the general will – to a lower particular normativity” (Chálvidan, 2007:39). Once with the “interference (brouillage)” of the components of the state, subject to the law and the exercise of the political power, democracy loses its coherence and practically reaches a “normativity of facts reinforced by moral statistics (“la normativité des faits alimentée par la statistique morale”)”, as Arthur Rich formulated.

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The diagnosis of “the global resurgence of democracy”, emphatically coloured, had its sufficient reasons. If we are to take into consideration the history of Central and Eastern Europe after 1989, one can talk about the incomparable advantages of democracy in economy, institutions, culture, which justify the confidence in democracy. Given this background, to admit the “challenges and the problems that democracy itself has to face is not at all a ceasing in relation to the critique of democracy. In fact, John Dewey is always at a distance from Carl Schmitt in his conceiving of democracy.

On the other hand, the change on the scene of debates on democracy, that I have just signalled, also has its own sufficient reasons. My thesis is that this change accompanies the liberal democracy, proceduralist in its essence, and requests democracies themselves the transition from the democracy understood as a technique of periodical choice of leaders to the democracy as form of life. I would like to defend this thesis through a brief evaluation, based on the case of my country, Romania, of the understanding of democracy in Central and Eastern Europe (1) and a summary of the diagnoses recently given to contemporary European societies (2), so that, further on, to look upon the latest power centralisations in democratic societies (3) and upon the current “provocations” of “democracy (4), to describe the “distortion” of liberalism and to consider the need for a new understanding of democracy (5), in order to update the formula of the “democracy as form of life” (6), and in the final part, to explore the current need for leaders (7) and to indicate the importance of visions upon society, individuals and human life (8). I will not raise again for discussion here the factual analyses that I have made in previously published works1, but I will focus on the difficulties and aspects of conceptualisation of democracy, in order to configure the democracy as a form of life.

1.

Since the French Revolution, it has been thought that democracy is not only a solution, but also a pretentious institution that brings only troubles. We have observed that, in fact, democracy is not possible without democrats. The vision willing to see both the advantages and the claims of democracy is, however, different from the vision that sees democracy especially from the point of view of what is has not carried out. We have known, however, for a long time, that democracy depends on culture and, directly, on the way that those involved understand democracy. I have called forth this delineation because, for instance2, the elections that took place in Romania in 2003 justify the question: how is democracy understood? The answer, suggested by many indicators, is that we are dealing with a rather brief understanding of modern democracy. Here are some indicators. A democracy worth its name implies a debate on themes of public interest, starting from identified needs. As to the local elections 2008 in Romania, three observations can easily be made. The first is that there has not been, in the written press or in the audio-visual one, an actual debate. There have been formal presentations of objectives, by each candidate in particular, but there was not an actual debate (which claims arguments and counterarguments, the examination of the consequences of the options, projects of turning opportunities to good account etc.). The second observation is that the existing parties have prepared neither a coherent approach of the existing situations nor a conception on the local or regional development. In fact, the electoral proclamations have appealed to either extremely general reasons (“European village”, “European town”, “we do what we are supposed to do”, etc.) or to punctual objectives (“improvement of the local transportation”, “attraction of foreign investors”, etc.), but there was a lack of what is literally called “projects”. The third observation is that the essential public debate has been replaced with commercial advertisements for the candidates. The sterile agitation, thoughtlessly considered as being “electoral”, has outclassed the thematisations that would have been needed. Romania’s great problems at the local and the regional level, such as the modern organisation of transportation, the effective regional development, the attempt to draw small towns out of isolation, the increase of the qualification level in every profession, another health system, the

1 See the volumes Andrei Marga, Explorări în actualitate, Apostrof, Cluj, 1995; Andrei Marga, Die Kulturelle

Wende. Philosophische Konsequenzen der Transformation, Cluj, University Press, 2004; Andrei Marga, Bildung und Modernisierung, Cluj University Press, 2005; Andrei Marga, University Reform Today, Cluj University Press, 2005; Andrei Marga, Diagnoze. Studii şi articole, Eikon, Cluj, 2008.

2 See more detailed analyses made on the evolution in Romania in Andrei Marga, Philosophy in the Eastern Transition, Apostrof, Cluj, 1995, p. 201-240; 263-280; Andrei Marga, SperanŃa raŃiunii. Interviuri, EFES, Cluj, p. 213-215; 238-244; 273-276; 398-400; Andrei Marga, Diagnoze. Articole şi eseuri, pp.279-324.

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increase of the production and exportation capacity of the town etc. have not been in the European Union’s charge or they have been only in its charge. Democracy is not possible without parties configured through their staff conceiving, and capacity to elaborate projects. Are the parties from Romania profiled as such? In many regions of the world, idea that there is no longer a need for conceiving (which is illegally mistaken with “ideology”, as the wish lists are currently mistaken with projects) is prematurely disseminated. The people of good morality and professional quality avoid joining parties, the leaders of which, on the one hand, do not hesitate to use again the practice of appointing persons with poor experience in public functions, in order not to compete for the highest positions. Functional democracy is not possible without civil participation. Even though the voting in the local elections in Romania can be compared to that of other European countries, one should not ignore the fact that this participation is far too unique for a young democracy. The apathy has too soon intervened here. Participation is not an aim itself, but, we must say, there is a need to overcome the confusion between “legality” and “legitimacy”. We should reach a level where to distinctly set the problem of legitimacy. Under no circumstances the legitimacy needed is achieved when the participation to voting is the one in the local elections or when leaders (such as the Presidents of Local Councils) are chosen with just one vote in advance of their competitors. The recent local elections already ask the political body of our society to clarify the mechanisms of legitimacy. Each party has proclaimed its victory, in spite of the arithmetic of the results. There is no place where one can eliminate the subjectivism of the party visions, but democracy needs not only the competition of those visions, but also honesty. In fact, the result of the local elections has not given a single univocal winner, as the electoral body has distributed the power to several political parties. The certain winner is the political pluralism and this winner has to be welcomed, as in the case of Romania the superpower of a party, whichever it may be, would rather be prejudicial. A competent and efficient governmental administration is not conditioned, however, by the bold or hidden mono-favouritism. However, the quality of the staff is decisive – at least in Romania’s current situation. Its improvement remains a great problem on the political agenda of Romania.

2.

The modern societies in which we live evolve under the impact of certain historical forces of unusual magnitude: technologies, globalization, or communication means. In what kind of modern societies are we nowadays? Which are the characteristics that democracy depends on, and that the democrats should take into consideration? We see that, as today’s living generations, we are in a modern society, which has adequately been described, on the one side of the evolution, by Max Weber, and on the other side, closer to us, by Horkheimer and Adorno’s Dialektik der Aufklärung (1946). Clearer and more profound than any other of the researchers of the modern society, Max Weber has noticed the matchless force of actions oriented towards profit, based on the calculus of the means and supported by the implementation of modern sciences; he has also anticipated the triumph of the “instrumental and strategic rationality”. The unparalleled economic development and the wide social reorganisations in the last century are the convincing evidence. More sensitive than many others to problems of liberties, Max Weber has blown the alarm (Mommsen, 1974: 21-23; Radkau, 2005). In Gesammelte Aufsätze zur Religionssoziologie (1920), he claimed that the future of individual liberties, on which democracy depends, is more complicated and more prosaic than it has been thought in the liberalism of the previous centuries. For, by virtue of associating the economic marketisation with the rationalisation of activities, imposed by the competition, the institutional framework in which we move will no longer result from individual decisions, but it would rather be imposed somehow from outside and it will limit those decisions through bureaucratisation. We will enter – this is Max Weber’s diagnosis – a bureaucratised society similar to a “steel box of the obedience (ein stahlhartes Gehäuse der Hörigkeit)”. “Niemand weiß noch, wer künftig in jenem Gehäuse wohnen wird undo b am Ende dieser ungeheuren Entwicklung ganz neue Propheten oder eine mächtige Wiedergeburt alter Gedanken und Ideale stehen werden, oder aber – wenn keins von beiden – mechanisierte Versteinerung, mit einer Art von krampfhaftem Sich-wichtig-nehmen verbrämt” (Weber, 1920: 204). Fearful that the individual liberties and rights will be affected, Max Weber concentrated liberalism on procedures and, in the end, encouraged a proceduralist democracy.

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Meanwhile, we have reasons to say that Max Weber’s vision, diagnosis and recommendations have been confirmed. If we take into account the last years’ systematic efforts to characterise the current society, we have the confirmation evidence. The rapid development of computers and their usage in communications, as well as the wide use of the Internet have emphasised the contours of the “information society”. If we have in view the wide infrastructure, built in the meantime, in order to transmit information, then we may legitimately speak about the “society of communications”. However, in the meantime, Hegel’s intuition, according to which people live in communities that share concepts, has also been confirmed: if we call knowledge the production of concepts and if we take into consideration the fact that this knowledge has become the most important capital in today’s society, then we may say that we have entered the “knowledge society”. Is, on the other hand, the “society of communications” a “communication society” as well? Is the “knowledge society” also a “wisdom society”? These questions become pressing nowadays and the answers to them should not be conventional. Horkheimer and Adorno have drawn attention upon the fact that we have entered the era of the “cultural industry”, which changes public communication from its foundations and which leaves behind serious questions: isn’t it that, starting with the expansion of mass media, we can no longer speak about serving the democracy, but about its instrumentalisation? Isn’t it that the aspiration of reproducing reality has been replaced with the struggle for its creation? We must say that we have entered a “media-related society”, which brings with itself at least three things: the autonomisation of the mass media in order to become a competitor on the wide-spread markets of the globalization era; the transformation of the media networks into power centres; the dependency of reality on media coverage. We may discuss whether the “media-related society” absorbs the late modernity or whether it is just one of its manifestations. I think that the second alternative is more realistic. The “media-related society” is, however, simultaneous – at least this is what the most recent diagnoses tell us – with an “invisible society” – which is characterised by a famous Spanish thinker as being a society particularised by “complexity, contingency, non-transparency”, in which relativism dominates, and the future leaves people puzzled (Innerarity, 2004: 14-16, 65-89, 131-133) – with a “turbulence society” – dominated by the fluidity of structures, by the paralysis of the decisions, the emergence of new concentrations of power, by the weakening of the innovation energies (Greenspan, 2007:403-416) - and with an “uncertain society”, where firm values are replaced by “deconstructions”, and truths by manipulations (Marga, 2008: 61-63). Taken together, such diagnoses bring to our minds the perspective exploited in Dialektik der Aufklärung, written in 1947: the modern domination of nature through the means of science, by virtue of omissions from the modern project itself of nature domination, culminate with the reign of contingency, of the arbitrary and of powerlessness (Ohnmacht) (Horkheimer, Adorno, 1998:4).

3.

Not long ago, in Bologna (Italy), I took part to a debate on the question: is it still possible to have autonomies in today’s societies? The question was asked in the case of the oldest European institution (after the Church) – the university. Is the proclaimed academic autonomy – which means, as we know, the right of academic communities to evaluation and professional self-organization – still effective? Or is it living merely as a result of the memory of the concept? There are many reasons for asking this question again. For instance, the academic specializations are being selected by a more and more severe market, so that the autonomous decisions of universities should connect to the market requirements. The financed scientific research takes into consideration such requirements, rather than their own. Academic rankings create prestige to some universities and put others under pressure, determining them to conform to certain programs, which are rather technocratic. A university that does not become entrepreneurial – by making flexible its organisation and the procedures of autonomy – fails. The long-term policies are rare, and the administration of a university inevitably calculates everything in relation to the given situation, rather than to autonomy. And the examples could continue. I think that we do not give a realistic answer to the question referring to the autonomy of institutions (the university is not the only one in this situation; the Church is in a quite similar situation) in current societies, without taking into consideration a real fact: it is not about societies in which there are power relations (the money, the administrative power, sometimes the solidarity and, diffusely, the

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individual self-projection are the media of our lives), for power relations exist at all times in societies: it is about societies which, based on power relations, have constituted power centres. Power is exercised at any time in society, and modern society has made only the delineation between homo oeconomicus and zoon politikon, between civil society and the state. Meanwhile, however, the sphere of zoon politikon and the public sphere of the state have been occupied by new forces. My thesis is that nowadays there are new power centres, the impact of which has begun to be felt: in the era of globalization one can speak of three types of power centres – economic, political and media-related. In fact, there are concentrations of the economic power, not where there is a wealth concentration, but where the prices on the market and other conditions of the competition are established by certain companies, where the decisions of public authorities are conditioned by these companies. We have concentrations of political power where political parties are no longer exposants of the interests in society, but they form these interests themselves, where leaders are no longer a result of elections, but they organize the elections themselves, where parliaments are prisoners of the majority resulted after the elections. There are concentrations of media-related power where mass media do not restore the opinion and the interest diversity, but form the opinions themselves, where the inevitable dependence of the reality on the promotion through the media is used to ignore or to create “realities” through manipulation.

All these concentrations exist, as well as there exist, of course, entrepreneurs that fight with all their forces against monopolization, politicians who oppose themselves to the politicianism, and journalists who reject manipulation. Anyway, for universities – connected, at least in the European tradition, to the need for autonomy, as a necessary condition for performance – the following question arises. On the one hand, universities are functionally connected to a non-restrictive autonomy (universities have never been efficient when someone interfered in their decisions, and the Magna Charta Universitatum of 1988 and the Bologna Declaration of 1999 rightfully affirm that the autonomy is a condition of performance for universities!). On the other hand, universities inevitably operate within the environment of power concentrations. How will universities be able to promote the autonomy in the environment of the concentrations of economic, politic and media-related power from different monopolies, the actual subjects of social life? We do not have an answer to this question that might be considered detailed enough, but what we already know gives no results. Anyway, two paths are no longer practicable in the society of the late modernity: the proclamation of the political “abstinence”, under the antiquated form of the “intellectuals’ apoliticism”, which is neither realistic, nor true and it deceives the university as a public instance for critical examination; the blind leading to consequences in political contexts which deceive the mission of the university, i.e. to form specialists at the highest level ever attained in knowledge. In other words, nowadays, universities are challenged to find out, through their own reflections, their fertile line, in agreement with their mission and their multiple functions, between the apoliticism and the opportunism.

4.

For instance, in the 90’s, we have lived the “third wave of democracy”. Nowadays, given the life situations that we have reached, we have to ask ourselves: doesn’t the current globalization affect democracies? Is democratisation invariant to the intensification of competitions on global markets? Do globalization and continental unifications leave the gravity of the decisional processes inside the countries untouched? Does the classic civil society still maintain a prominent role in relation with the state, under the conditions of the end of democratisation? In what way does the emergency of the decisions to act, under the conditions of high complexity, leave a place for democratic survey? How can there be ensured not only the legality of legal systems, but their legitimacy as well, under those circumstances? Isn’t it that democracy itself, through its tolerance, inevitably makes room to trends that are intolerant with rival opinions? Which is in fact the impact of mass-media expansion over democracy? Does mass-media bring new chances of public control over decision-makers or does it rather bring new manipulations of those who are led? Does democracy remain the automatic solution even under the conditions of expanding the mentality of cynicism, in post-totalitarian and post-conflict societies? Is it possible to institutionalise not only the free elections, but also the mechanisms of a continuous, democratic control, in the name of public interest, on those who make the decisions? Isn’t it that democracy should be invigorated from now on, by appealing to religious beliefs regarding the civil value of the human person? Can we convert democracy into a form of life and therefore prevent the

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reduction of democracy to a technique of obtaining power? Isn’t it that we imperceptibly operate with a Eurocentric representation of democracy? These are only some of the questions to which the advocates of democracy must answer today. They are “challenged” now not only by the arguments of those who accuse the discrepancy between the democrats’ proclamations and practices (they have recently been brought together around the work of Carl Schmidt), but also by the dissolving relativism, hidden in the visions of groups that can neither create nor concur through creations, but claim everything (visibly tearing liberty from the responsibility for performance!), or hidden in the Judaism and in the infantilism that illegally pass for an emancipated intellectual approach (the “provincial post-modernism” from many countries is a good exemplification!) or just hidden in the views of those who use democracy in order to exclude others and to set up a monopoly of truth. Democracy is “caused” nowadays not only by traditional rivals, but also by its proceduralist or libertarian misrepresentations. I will not evoke the different answers to such questions. I would like to go straight back to the beginning of the democracy’s reconstruction, under the pressure of the above-mentioned “challenges” and problems, that is The Changing Nature of Democracy (UNU Press, Tokyo, New York, Paris, 1998), edited by the distinguished Japanese philosopher Takashi Inoguchi, together with Eduard Newman and John Keane. I go back to this beginning not only because it really is the beginning of reconsidering the situation of democracy, but more because of the lucidity of this reconsideration. The general premise of the approach in The Changing Nature of Democracy is that “democracy may be an obsolete idea, an atavistic instinct, and an outdated institution. Nevertheless, it seems to be the only feasible institutional arrangement to promote civil and political freedoms, social and economic rights, human dignity, and international harmony” (Inoguchi et al., 1998:18). But nowadays democracy has to find solutions for numerous problems. “While more and more countries in the developing world are moving toward democratic governance, old democracies have increasingly revealed their own deficiencies. In particular, the substance and scope of democracy appear to be thinning. As democracy prospers, so it declines” (Inoguchi et al., 1998:4). Given the situation, to continuously expand the citizens’ participation in the life of democratic institutions remains the major direction of action, even though it is more and more obvious that “democracy is not necessarily an efficient political system” (Inoguchi et al., 1998:5). Moreover, some new processes intervene. “The development of international communications and made the political leaders more vulnerable in relation to the controversies of public opinion”. In effect, CNN-style live coverage of events has eroded the traditional propaganda and the chances of political leaders to manipulate and has activated grass-roots political movements. On the other hand, the rise of global market forces has weakened the central role of the domestic body politic. Public apathy and cynicism are the visible consequences of the process. They cannot be fought against otherwise than through procedures of attracting individuals into the democratic political life, remaining conscious however that “a distinction should also be made between the institutions and procedures of democracy – such as elections, freedom of speech, the rule of law – and the content or substance of democracy. In any situation the emphasis should be not just on the institutional criteria of democracy but on the results. Does it serve to fulfil the aspirations of citizenship and does it serve peace, respect for human rights, and development?” The development of “a culture of civic competence and democratic empowerment” is essential in order to legitimately speak about democracy. Therefore, there is coverage when we say that “the issue for modern societies is not the creation of a market, but the creation of an economic society” (Inoguchi et al., 1998:185). Democracy always remains more complex than the mere marketisation, which, at its turn, is not without complications.

5.

But it is not about the obsolescence of proceduralism that I want to speak about now, but about the misrepresentations of liberalism today. It remains emblematic the stupefying invocation of the mechanical majority in order to decide who is staying and who is eliminated from one party or another. I am not going to insist upon the disqualifying conceptual confusion between majority as a rule to decide objectives and majority as evaluation mechanism. However, this confusion leads to considering the majority vote as a criterion of truth! I remind you here – only in order to understand the distance of certain current practices from the real proceduralism – Thomas Jefferson’s offensive against the “elective despotism” (in Notes of Virginia) and that of John Stuart Mill against the “tyranny of the

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majority” (in On Liberty), which remain central for the democratic culture of liberalism. But current liberalism is misrepresented by the full of sufficiency neglect of this culture! Current practices misrepresent liberalism with regards to at least three crucial aspects. I have in view, first of all, the a priori misrepresentation of liberalism. It consists in invoking doctrinaire options without taking into consideration practical situations. There are frequently pinched separate fragments from Hayek or Friedman, without observing that the genuine liberalism is not a libertarian approach, but a liberty unified with the economic, institutional and cultural construction of liberties. Further on, I have in view the economic misrepresentation of liberalism. Here we also have to notice that liberalism is not only an economic solution and it does not refer to economy only. Liberalism is a complex conception on the human nature, economy, state, knowledge and culture. One cannot have individual liberties and democracy without cultural convictions and mentalities capable of supporting them, therefore without having a liberal culture, which does not appear at all as a mere effect of proclaiming liberty and democracy. Finally, I have in view the proceduralist misrepresentation of liberalism. But the importance of procedures cannot be underestimated here. The procedural liberalism is the part continuously present in any liberalism worth its name. Except that, in the vision itself of liberalism, no institution, or the state, is merely the sum of individual wills. In other words, not only individuals have goals, but in its turn the state itself also has goals, such as equality, justice, welfare. Liberalism is not reduced to the tautological mechanical implementation of procedures; however, today it is on the other side of Rawls, Sandel or Galstone3, who have strengthened its cultural engagement. The mature liberalism is not reduced to decisional procedures, but is also a conception about society and a program for changing the society. In other words, what distinguishes liberalism is not the absence of the societal goal, but the fact that this goal is different: liberalism does not pass from the goal to constraining the citizens to accept it. It has been very well argued that liberalism is not reduced to pluribus, as it is pluribus unum, that liberalism is not only procedural, no matter what it is at stake under the mask of “neutrality”, but it is a movement energised by a goal, in which its advocates assume initiatives to project and implement changes.

6.

What Max Weber presented as postulate – the irreconcilability between the “ethics of value” and the “ethics of liability”, between “values” and “consequences of adopting values”4 – has become, in the meantime, the content of a mentality in democratic societies. Not only politicians, but also citizens, who more or less occasionally take part to the decisional process, leave democracy to procedures, which exempt from most of the worries and tend to minimise the values. During the late modernity the secular society culminates in this prevalence of procedures, to the detriment of values. Are there enough clues nowadays that this mentality would cease under a significant scale? Can we resume the question not only on the negative side, approached by Max Weber when he drew the conclusion about the irreconcilability between the “ethics of value” and the “ethics of liability”, but also about the positive side that John Dewey approached, in a prototypal manner as well. And today – or maybe today more than ever before – the reaction from The Ethics of Democracy (1896) to the reduction of democracy to a mere governance form, therefore to a technique of selecting leaders, remains not only classic, but conclusive and inspiring as well. The horizon of keeping democracy in its specific difference, as a “form of life”, continues to be valid and actual, in the conditions of late modernity. John Dewey was right to combat, without reserve, the “numerical and arithmetical conception” on democracy and to evoke the fact that the vote of a citizen is not just another number introduced into the ballot box, but something more than that: an aspiration regarding the society. “A man when he comes to vote does not put off from him, like a suit of old clothes, his character, his wealth, his social influence, his devotion the political interests, and become a naked unit. He carries with him in his voting all the influence that he should have, and if he deserves twice as much as another man, it is safe to say that he decides twice as many votes as that other man”5. Therefore, the core of

3 William Galstone, Liberal Purposes, Goolds, Virtues and Diversity in the Liberal State, Cambridge University

Press, 1991, p. 11, 76, 89, 177. For a more detailed analysis see the chapter “Liberalismul astăzi”, in Andrei Marga, Filosofia unificării europene, EFES, Cluj, 2006, p. 392-441.

4 Max Weber, Politik als Beruf (1919), in Max Weber, Schriften 1894-1922, Kroner, Stuttgart, 2002, p. 547. 5 John Dewey, „The Ethics of Democracy”, in John Dewey, The Early University Press, Carbondale and

Edwardsville, Feffer&Simons, Inc., London and Amsterdam, 1969, p. 233

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democracy is not the vote or the counting of votes, but the setting up of a majority as an emergent will from the social body, with a “social” goal such as the “public welfare”.

“Democracy, in a word, is a social, that is to say, an ethical conception, and its governmental significance is based upon its ethical significance. Democracy is a form government only because it is a form of moral and spiritual association” (Dewey, 1969: 240). It is only the democracy that continuously nourishes from an ideal, from the society, and which does not let itself reduced to procedures, that makes the difference from other governance forms and impedes the degradation of democracy itself in the ancient forms of corrupting the power that democracy wanted to overcome. John Dewey himself asked the question of democracy as “form of life” that subordinates the procedures in order to connect “secularisation”, to spiritual values. “The idea of democracy, the idea of liberty, equality and fraternity, represent a society in which the distinction between the spiritual and the secular has ceased, and as in Greek theory, as in the Christian theory of the Kingdom of God, the church and the state, the divine and the human organization of society are one” (Dewey, 1969: 248-249). Certainly, beyond the enthusiastic formulations of the young John Dewey, which went towards the re-identification of the profane with the sacred – formulations that obviously do not face the autonomy and the differentiation of values characteristic of late modernity – a question still remains: to what measure are the behaviours of democrats guided rather by moral values than limited by procedures? Max Weber has avoided an affirmative answer to such a question as he had in front of him mainly experiences related to the peace settlement after the First World War, to the activities of socialist radicals in Germany and to the attempts of rendering Europe Bolshevik. Such experiences were showing, the first ones that ethical reasons are subordinated to the aspirations for power, and the latter that the claim for politics in values leads to the exaltation of leaders and, in fact, to the destruction of democracy. However, nowadays we are confronted with the effects - not only positive - of the democratic proceduralism – the insurance of a functioning without dramatic breaches – but also with its incapacity to prevent corruption and to generate the motivations that are necessary for its own functioning. Many democracies nowadays clearly show, on both sides – the flourishing of corruption and the decrease of the democratic motivation – the consequences of reducing democracy to a technique of periodical election of leaders, partly manipulated, partly accidental. Meanwhile, due to eminently practical reasons, it the thematisation of the cultural resources of democracy and of its specific difference has become necessary. On the other side, the “religious turn”6 itself, from the last decades, represents the indicator of a relative decrease in the efficiency of the philosophical resources of democracy and of a reorganisation of the prospective cultural resources of democracy, around the perceived meaning of life, a theme that continuously is best covered by the Judeo-Christian tradition of the religion and its civil culture. In Die Entstehung des Staates als Vorgang der Säkularisierung, Böckenförde has rebuilt, with precision, the genesis of modern states in Europe, between the 13th and the 18th centuries, not only as a “historical and constitutional” process, but also under the “spiritual and religious” aspect of the dispense from legitimizations by appealing to transcendence. He assumes the idea that the state based on individual liberties always needs a “bonding force (eine Bindungskraft)”7. This bond has been ensured, since the beginning, by religion, but the advance of “secularisation” has changed the situation. Subsequently, the nation, energised by the “tradition of the Christian ethics”, has ensured the bond, under the form of the “national state”. Meanwhile, this erosion has been eroded, in its turn, under the pressure of the “individualism of human rights”. Especially after the Second World War, it has been resorted to the resettlement of the bond by adhering to “values”, but the subjectivism and positivism of their understanding always represent dangers (Böckenförde, 2006:111-113). As a consequence, the following question is asked: which could be the “bonding forces”? Böckenförde says that that the “bonding force” does not have to be looked for outside the “state based on individual liberties” and it is not going to be imposed through “coercions of legislation and authoritarian commandments”. The appeal to “ideologies of the state”, such as “reasserting the tradition of the Aristotelian state-town” or “proclaiming ‘systems of objective values’”, does not give results. The state may try to avoid the need for finding “bonding forces”, by stimulating “the eudemonic life

6 I have approached the problem in Andrei Marga, „The Religion Turn. On the new Relation between Science,

Philosophy and Religion”, in Miroslov Polzer… (eds.), Religion and European Integration. Religion as a Factor of Stability and Development in South Eastern Europe, VDG, Weimar, 2007, p. 281-292.

7 Ernst Wolfgang Böckenförde, Die Enstehung des Staates als Vorgang des Säkularisierung (1967), in Ernst Wolfgang Böckenförde, Recht, Staat, Freiheit, Suhrkamp, Frankfurt am Main, 2006, p.111.

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expectations of citizens”, but this avoidance cannot last. Böckenförde’s solution is the following: “So ware denn noch einmal – mit Hegel – zu fragen, ob nicht auch der säkularisierte weltliche Staat letztlich aus jenen inneren Antrieben und Bindungskräften leben muß, die der religiöse Glaube seiner Bürger vermittelt” (Böckenförde, 2006:113). Obviously (many other quotes confirm it as well), the distinguished jurist has brought into debate the “religious faith” as horizon of dispensing its questioning.

7.

If we accept Aristotle’s argument that the presence of the “reasoning spirit” (nous) allows an organization to reach its goal (and it is impossible not to accept it today, when organizations that let themselves be dissolved in the chaotic movement of components are not competitive), then the distinction between bosses, managers and leaders is worth being employed. It is not a mere verbal distinction; on the contrary, this distinction allows us to shed light on the critical situations within institutions, companies, corporations, where there are bosses and infighting between those who aspire to become bosses, but where there are no managers, and where leaders have not yet arrived. Today, in the research on organization, the leader is considered to be different from a boss. While the “boss” is at the top of an organization, and the actions of his/her staff depend on his/her decisions, his/her power depending on the position, the “leader” also has authority, but authority granted by the ability to understand the organization within a context, to guide it accordance to new directions, and to make these convincing for everyone else. The fact that the “manager” is something else has to be accepted. As compared to the boss, the “manager” has the advantage of having enough knowledge on the functioning of the organization and on competences, and as compared to the “leader”, the “manager” works in a given frame of strategic options. Only the “leader” can take the responsibility for changing major options. Is there a need for leaders in organizations, companies, corporations? It is a fact that there are plenty of “bosses”, and that the fight for becoming a boss is a custom, as soon as there is an open possibility. “Managers” are fewer, because the creation of a real decisive manager involves strenuous effort to learn and acquire the necessary abilities. With “leaders”, an organization is not only efficient, but also long-lasting, not just existent, but also competitive, not only conspicuous, but relevant as well. Especially in the context of globalization, in which, as Robert Reich argues (The Work of Nations, 1990), the success on the markets depends not on the “high volume” of the product, but on its “high value”, therefore, the intelligence incorporated in the product, and in production implies qualified managers and valuable leaders (who do not lead only physically, but who are “leaders in ideas, in actions”). The immediate question regards the leaders’ selection. “Bosses” are the result of one’s access to a position; but neither the “manager” nor the “leader” is created because they have leading positions. Actually, many “bosses” are lousy managers, and they will never get to be leaders. On the other hand, the passage from “boss” to “manager” or “leader” is not made through the simple effort of the person in question (“positions do not create leaders”); the wise saying “May God spare you of the ungifted hardworking person” is here a warning. So how are leaders produced? Starting from recent research, we have to make three connected observations. The first refers to the fact that the leader is not self-proclaimed, but that he/she is acknowledged, and that leadership is not primarily ceremonial, but a position of hard work. The traditional work of Cartwright and Zander (Group Dynamics: Research and Theory, 1968) rightfully considered leadership as consisting of actions of “setting group goals, moving the group towards its goal, improving the quality of interactions among members, building cohesiveness of the group, and making resources available to the group”. The second observation is that the leader is made, not born. Miraculous endowments for leadership, a type of mysterious predestination, exist only for the naïve. The leader is the result of a learning process in at least three dimensions: knowledge that can be used from the technical point of view, interaction abilities, and self-reflexivity. The third observation is that nowadays we move in the environment of deep changes regarding the image of the leader. The leader “is made” through “continuous work and study”, and he/she does not rely on the success obtained (“Talent needs to be nurtured”). Both the traditional theory of the leader (“chieftain”, “prince” etc.), as a result of special “traits” (“the trait theory”), and the modern theory of the leader, as a product of exceptional circumstances (“the great events theory”), have lost their attractiveness when compared to the conception of the leader as a result of continuous learning (“the transformational theory”).

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As those delineations and observations are well supported by the current research in the field of organization, the irrepressible question is: how about bosses, managers and leaders in everyday life? Nowadays, the show is that of a multitude of “bosses” resulted from the questionable mechanism of party lists, or their appointment, even more questionable, in public roles. Are “bosses” “managers” at the same time? A management of public interest is often in crisis. And if the simple appointment in a position can result in a “boss”, but not in a manager or a leader, if being a “leader” mean “continuous work and study” and skills of “leadership in ideas, in actions”, as today’s books tell us, then each of us can answer the question: how about “leaders”?

8.

At the beginning of 2007, the famous publishing house Seuil of Paris edited, under the title Le futur de la démocratie, three writings (L’eta dei diritti, 1997; Il future della democrazia, 1995; Stato, governo, società, 1995) by Norberto Bobbio. Having a strong legal and philosophical experience (accomplished under Croce and Gramsci), Norberto Bobbio tried to make operational the concept of democracy – that is to capture it in simple distinctive options and in univocal phrases. The “minimal definition” of democracy, given in Le futur de la démocratie, is almost “operational”. Democracy means five clear things taken together: a “group of fundamental rules” regarding “decisional procedures”; a high number of members of the “group” to make the decision (without making “omnicracy” the effective ideal); assuming the “rule of the majority”; the existence of “real alternatives” for the decision; the “fundamental rights” of those members. However, this definition has to be taken together with the initial presuppositions of democracy: contractualism, utilitarian orientation and the delimitation between homo oeconomicus and zoon politikon (Bobbio, 2007:108-113). Norberto Bobbio considers that three obstacles have intervened in the face to democracy in modern society: a) the passage from “family economy” to “market economy” increased the importance of “technicians” in decision taking; b) the continuous expansion of the “bureaucratic apparatus” created another decision than the “democratic” one (Bobbio, 2007:126-128); c) the “democratic state” led to the “emancipation of the civil society” from the “political state”. As a result of the obstacles, at least six promises of democracy were not possible to be honoured: a) if, at its beginning, democracy still ensured the “centripetal movement” of the components of society, the “centrifugal” movement gradually dominates; b) the initial “political representation” has been replaced, more or less frankly, with the “imperative mandate”; c) the “oligarchic power” was reduced, but not removed; d) democracy was not able to occupy all relevant spaces of society; e) the removal of the “occult powers” could not have succeeded; f) the “education for democratic citizenship” has remained insufficient – as a proof we have the “political apathy” in democracies (Bobbio, 2007:115-124). Therefore, it does not result that democracy might be in danger. On the one hand, anyway, democracies have remained distinct from authoritarianism; on the other hand, external powers have not removed democracies (Habermas, 1993: 366). A fact, however, must be taken into consideration: democracies cannot survive without “active citizens”, and a “citizen” cannot be “active” unless he/she is nourished by ideals. We cannot have a democracy without ideals that transcend their own functioning (it is about tolerance, non-violence, gradual modernity and fraternity); therefore, democracy depends on cultural resources that it cannot produce itself, but takes them from the cultural environment. Habermas has brought an important objection to the operationalisation of the proceduralist core of democracy undertook by Norberto Bobbio, from the perspective of the “deliberative politics”, capable of facing the inevitable “technicisation” of decisions: in The Future of Democracy, as Norberto Bobbio kept a strictly legal approach, he was not able to capture, in the definition of democracy, its orientation towards the “discourse” as a frameworks to solve problems (Corothers, 2002; Denz, 2002:105-109). We may add the observation that John Dewey has been the one who has exemplarily understood it. But the objection is still related to a more advanced level of democracy than the one conceptualised by Norberto Bobbio. No matter how many the causes of a situation might be, it definitely has remedies. Only that the remedies for the difficulties and problems of democracies today do not leave themselves reduced to a single action. So what should be done today? I believe that, at least in Central and Eastern Europe, we have to ceaselessly work on four directions, at the same time: the passage from news distribution to honest information and then to argumentative debate in public life; the passage from private and group interest, whichever they may be, to the circumscription of public interest and its promotion in

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administrative decisions; the constitutional reform that allows the passage from the “crushed democracy” and from the simple proceduralism nowadays to democracy as form of life; an education favourable to argumentations, public interest and democracy as form of life. Who can assume those directions? For any analytical view it is clear that, for instance, Romania needs a reorganisation of political forces to set its direction and, of course, new energies that come from its own society.

9.

One who would try to build an opinion about our current intellectual life is faced with two facts: on the one hand, globalization, the spreading of communication, connect people from all around the world, from different cultures, and also internationalize solutions, and, on the other hand, when people take reference points of evaluation and behaviour, they relate, first of all, to their own culture. Thus, despite the pressure of creating a global identity, a lot of people come up with particular identities (ethnical, religious, of gender etc.). In Philosophy as Cultural Politics (2007), Richard Rorty expresses, in a very coherent philosophical manner, the individual’s contextual anchorage (to their own, particular, cultural standards), and the rejection of the universal reference points. Rorty makes our entire reality dependent on our own cultural arsenal. We have become, he says quite contentedly, “commonsensical finitists” (Rorty, 2007: 88), and the only thing we have left is to promote a “tolerant conversability” (Rorty, 2007: 103), without assuming any other intrinsic nature of the reality. Thus, contextual relativism is inevitable. Even granting this intelligent philosophy the merit of expressing, better than any other one in the Modern Era, the possibility of the different conceptualization having a series of facts as its object, we cannot shun a deeper insight into the unacceptable consequences of relativism. The spokesmen of great trends, thinkers with different platforms, from Karl Popper (Popper, 1966: 369) to Habermas (Habermas, 1988) and to Joseph Ratzinger (Ratzinger, 1992), have evoked them convincingly. Relativism is quickly converted into a dogma that contradicts its principle (“all is relative”), and stimulates the destruction of the unity of humankind, with all the implications that result from it. Relativism does not adequately take into consideration the human process of learning, which does not reduce itself to information, but which means the change of thinking frames or “boxes” (Putman, 1981:8). Relativism, by its own principle, does not take into consideration the natural telos of conversation, of speaking in general – that of obtaining the understanding between different rival points of view (Habermas, 1988: 179).

Today, Relativism may be overcome if it is faced not only with arguments brought against it, but also with alternative conceptions. We have at our disposal several proposals to date: such as to re-establish the motto “unity in diversity”, to weigh in a “view from nowhere”, to exploit the new continent of “communication”, to articulate a “fallible absolutism”, to consider the unavoidable consequences of Relativism8. I believe that Relativism cannot be overcome without accepting two assumptions. The first represents the passage from the classical “universalism of norms”, which is challenged by the cultural diversification, to a “universalism of generative structures” – a universalism of those conditions that make a certain performance possible. The second assumption acknowledges the need to move from descriptions, poems, oral expression, dialogue, essay, journal, aphorism, epistle, to mathematic exposures to theories, knowledge systems and comprehensive visions (Marga, 1992: 35-45). Nowadays we need not only knowledge, in its general meaning – which, of course, remains indispensable – but also visions capable of realizing what is actually the meaning of actions, of institutions, of life, of society, of the world and what is the meaning of the knowledge inside them.

10.

Recently, a remarkable physicist reminded us that, due to several factors – the competition in research, the pressure from society to transfer scientific knowledge, the search for funds, the unstable work situation – the new generations engage in more factual research, finding solutions for problems on a short term, without committing themselves to far-reaching projects. We may add that this is the situation not only in the field of scientific research, but it is connected to a more comprehensive orientation of culture towards facts, immediate, customs, and to the predisposition towards what lies at the origin of the fact, of the immediate, of the custom, which implies a reduction of the appetite for

8 See, for details, Andrei Marga, Relativism and Its Consequences, EFES, Cluj, 2007, p. 321-329

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theory, system, project. In the 80s, Habermas identified among the consequences of this orientation the apparent “exhaustion of the Utopian energies (Erschöpfung der utopischen Energien)”9. The dominant direction in today’s culture is that of exploiting what is given, rather than asking what is possible. Moreover, a “negative futurism” is developed: “let’s leave things the way they are, because it may be not so good”. Anyway, the physicist I have quoted, Paolo Blasi, after having analyzed the application, salutary of course, of the Bologna Declaration (1999), draws this conclusion: “the challenge of the European society today is to go beyond ‘the knowledge society’, and to evolve into what could be called a ‘wisdom society’. Knowledge is a conscious use of information; ‘wisdom’ means choosing one’s behaviour based on knowledge and shared values, in order to enhance the well-being of all, and the awareness that personal actions have social consequences” (Blasi, 2006: 407).

Indeed, this is an effective and pressing problem. Let us put in motion some wisdom capable of enlightening people about their own responsibility. I believe that Blasi, a refined physicist, is too optimistic when he speaks about the “restoration of some medieval values – the quest for truth, the unity of knowledge, the openness to the unknown and to other cultures”, as simple “restoration” has grown improbable for reasons of the new situation’s complexity. Still, Paolo Blasi is right when he considers that today’s universities have the responsibility of setting a larger and greater goal than producing and transmitting knowledge, in the projection of a “developed and peaceful world”.

11.

Meanwhile, problems of the civilization we live in continue to grow worse, problems not related to “ideologies”, or the “divergence of great visions”, but that touch upon the very understanding of human life, and question not so much some specific orientation in life but life itself. In the first instance four such problems come to mind: first, the new clarification of what inevitably is “the cell of the society”, against the backdrop of the dissolution of the family, around which the culture we share has been built; second, the new explanation of “human nature”, in the context of the explanation that can prevent the foreseeable danger of enabling the human being to become the raw material for its technologies; third, the clarification of the mediating role of moral, civic, and aesthetic values in society, considering the continuous rise in the conversion of values to functions; finally, a new explanation of the meaning of human life, in circumstances in which, on the one hand, we cannot part with its uniqueness, and with meaning, as long as the human condition is a feature common to all of us; on the other hand, no substitute for the “redemption” of the Judeo-Christian tradition was found. Such problems are in no way ordinary, and they require the presence of cultural commitment and capacity to provide answers to such questions, in the new situation of humanity.

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demokratischen Staates, Suhrkamp, Frankfurt am Main Habermas, Jürgen, Ratzinger, Joseph (2005), Dialektik der Säkularisierung. Über Vernunft und

Religion, Herder, Feiburg, Basel, Wien Horkheimer, Max, Adorno, Theodor W. (1998), Dialektik der Aufklärung, Fisch, Frankfurt am Main Innerarity, Daniel (2004), La sociedad invisible, Espasa, Madrid Inoguchi, Takashi, Newman, Eduard, Keave, John (eds.) (1998), The Changing Nature of Democracy,

UNU Press, Tokyo, New York, Paris Manent, Pierre (2007), Enquête sur la démocratie, Gallimard, Paris Marga, Andrei (1992), Introducere în metodologia şi argumentarea filosofică, Dacia, Cluj Marga, Andrei (1995), Explorări în actualitate, Apostrof, Cluj Marga, Andrei (1995), Philosophy in the Eastern Transition, Apostrof, Cluj Marga, Andrei (2004), Die Kulturelle Wende. Philosophische Konsequenzen der Transformation, Cluj,

University Press Marga, Andrei (2005), Bildung und Modernisierung, Cluj University Press Marga, Andrei (2005), University Reform Today, Cluj University Press Marga, Andrei (2007), Relativism and Its Consequences, EFES, Cluj Marga, Andrei (2008), Diagnoze. Studii şi articole, Eikon, Cluj Marga, Andrei, SperanŃa raŃiunii. Interviuri, EFES, Cluj Marga, Andrei (2006), “Liberalismul astăzi”, in Filosofia unificării europene, EFES, Cluj Marga, Andrei (2007), „The Religion Turn. On the new Relation between Science, Philosophy and

Religion”, in Miroslov Polzer… (eds.), Religion and European Integration. Religion as a Factor of Stability and Development in South Eastern Europe, VDG, Weimar

Mommsen, Wolfgang (1974), Max Weber. Gesellschaft, Politik und Geschichte, Suhrkamp, Frankfurt am Main

Popper, Karl (1966), The Open Society and Its Enemies, Princeton University Press, Volume 2 Putman, Hilary (1981), Reason, Truth and History, Cambridge University Press, 1981, cap. 8. Radkau, Joakim (2005), Max Weber. Die Leidenschaft des Denkens, Carol Haser, München, Wien Ratzinger, Joseph, Kardinal (1992), Wendezeit für Europa? Diagnosen und Prognosen zur Lage der

Kirche und Welt, Johannes Verlag, Einsiedeln, Freiburg Rorty, Richard (2007), „Philosophy as Cultural Politics”, in Philosophical Papers, Volume 4,

Cambridge University Press Schmidt, Manfred (2000), Demokratietheorien, Leske+Budrich, Opladen Weber, Max (1920), Gesammelte Aufsätze zur Religionsoziologie, I.C.B. Mohr (Paul Siebeck),

Tübingen Weber, Max (2002), Schriften 1894-1922, Kroner, Stuttgart

Book reviews

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Liviu VOINEA, Sfârşitul economiei iluziei. Criză si anticriză. O abordare heterodoxă (The End of Illusion’s Economy. Crisis and anti-crisis. A heterodox approach), Publica: ColecŃia de Economie, Bucureşti, 2009, ISBN 978-973-1931-20-3, 179 p.

At a time when the economic press abounds with comments and articles that tackle the issue of the crisis, many partisans, eagerly written with subjectivism and lack of scientific harshness, the economist Liviu Voinea has accomplished a truly valuable paper for the subject in matter, which offers pertinent comments and analysis about the causes and the nature of the current economical crisis, as well as a series of solutions (scientifically funded and strongly argued) which might help the authorities to accomplish a coherent strategy in order to pass this difficult period and to put the Romanian economy on an ascendant trend. Voinea’s work is a critic to the standard economic theory, which doesn’t check with the reality of the contemporary economy and inevitably leads to crisis and is at the same time, a plea for the heterodox economic theory, whose area of maximum importance is the theory of economic crisis. The author accomplishes a very clear comparative presentation of the two systems, the neoclassic economy and the heterodox economy, outlining 3 major differences between the two: if to neoclassic balance is the normal state of economy, crises are caused by extreme causes (the system is perfect), and the rational economic agents perform predictable actions, to the heterodoxies everything is the other way around: the natural state of economy is misbalance, the crises (derived from the structure of the economic system) are inevitable while the economic agents are not always rational and the future is marked by uncertainty. The author is a supporter of the idea that nowadays we are confronted with two crises: one that started in the USA and extended to the developed countries due to the toxic actives of the non-American banks and one determined by the large deficit of running account, specific to some emergent economies (amongst which we can find Romania as well), but also to some former cohesion economies (Spain, Greece, Ireland). These two types of crises have different causes, different mechanisms of conduction and therefore require different measures to exit the crises. Analyzing the international crisis, the author doesn’t stop at presenting its causes, but also looks at possible solutions for it to cease, both some chosen by particular countries as well as alternative solutions. The fundamental causes of the current crisis are thought to be: liberalization, bad regulation (insufficient regulation or lack of regulation of the banking system, hence the banks have found different methods to sell their credits), leverage (which led to the deep deterioration of the actives/debts report) and the belief in the natural adjustment of the market. Amongst the anti-crisis measures recounted by the author we remind: USA – shots of capital in private financial institutions, using public money that have in fact covered the large loss caused by their poor management (here Voinea offers his own solution, far more relevant: the necessity of the state’s selective intervention in the economy, but not just in the correction phase, but also in the prevention one); plans that stimulate aggregation request by moving from the request based economy to the offer based economy; the endowment of fiscal stimulants and to erase debt for the small enterprises; family helps. UK – investments in technologic base and in human capital and the reduction of VAT. Germany – investments in infrastructure and tax reductions. France – money for public investments and for stimulations of the private businesses. EU – the increase of the underwriting limit of the population’s deposits in banks, which helped settle the panic in Europe. The Lisboan strategy is considered to be important by the author and relevant for the exit of the crisis and for the post-crisis period, due to its social objective, to increase the employment, which otherwise represents the central element of economic growth in the heterodox economy approach. Other alternative solutions worthy to be reminded are: the more severe conditioning of the support for the financial sector, higher tax for the wealthy ones, tax for financial transactions, separation of the commercial banks from the investment banks, signaling the risky investments, approval of the innovative financial products by a regulation organism. A very interesting conclusion of the author concerning the problems connected to the international crisis refers to the necessity of the reeducation of economists, as some axioms of the standard economic theory need to be brought to discussion (auto regulation of the free market, the

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request-offer balance, rational choices of the economic agents, neutrality of money and the nature of causes of economic crises). The analysis of the internal economic crisis in Romania outlines the vulnerability of Romania’s economic growth after 2001, dependent on private short term external loans and sustained by the internal consumption based on external financing, the real estate boom and the pro cyclic fiscal and budgetary politics (single tax quota, the increase of the budget salaries). Voinea therefore calls the Romanian economy an “economy of illusion” (the illusion of the personal common wealth), based on the speculative inflows of foreign capital that have financed the imports. This has led to the transformation of need to exaggeration, which invalidates the rationality of the individual’s choices, postulated by the classic economy. The fundamental strategic error committed by the Romanian Government is therefore well outlined by the author: at a time of economic growth, the authorities have consumed all the growth and have acquired additional debts. It is also clearly proved which the role of the anti cyclic politics was in 2006-2008 in the crisis’ outset. The large budgetary deficit leads to the understanding of Romania’s difficulty in adopting anti cyclic politics in order to reduce the effects of the crisis as well as the countries in the Euro Area or in the USA. Voinea considers that the lack of a strategic vision and the postponing of the deeply needed structural reforms have led to chaotic economic development, based on consumption and debt rather than investments. Voinea’s fundamental idea, which has been brought great arguments in other occasions as well, is based on the fact that the economical crisis in Romania is an internal one, that would have appeared in the absence of the global economic crisis just as well. The Romanian crisis is in fact a typical crisis of financing of the running account deficit. According to Liviu Voinea, “anti crisis” means the recommencing of economic growth on solid base and, in the spirit of this definition, the financing of the budgetary and running account deficit is not enough. Analyzing the anti crisis programs in Eastern Europe, the author considers that all are centered on control of expenses, therefore an orthodox, monetary approach. This approach involves, at least on short term, a deepening of the economic recession – evolution which Voinea does not consider appropriate for Romania or for other countries in the region. The monetary receipt can bring the economy on the floating line, without offering it a healthy medium and long term growth, as structural misbalance remains (the issue of employment, agriculture, competition, energy consumption and health system). The author recommends pragmatism and pluralism as heterodox anti crisis solutions – in other words, implementing those politics which can function, according to the situation. Voinea reminds as anti crisis solutions: the integration of social and environment objectives in the economic politics; fair trade; growth of employment, which will lead the growth of consumption, but in a smaller rate than the growth of real income, which creates premises for the increase of savings; fiscal reform starting from the principle of solidarity and from the role of stabilization of fiscal system; multiannual budgetary programming, in order to accomplish the planning in advance of the expenses of the large multiannual investment projects; the creation of an independent fiscal counsel for the monitoring of the budgetary evolutions. The book is one of reference for the economic literature, which addresses both experts in economy, as well as outsiders who desire to learn more about the evolution of world economy and Romanian economy in the busy moment’s circumstances. Reading this book, clearly written, for anybody to understand, coherent and sustained both by axioms and economic studies, as well as practice experiences, you wonder if the governors see the same picture of the contemporary Romanian economy. Or don’t they want to see it? Can’t they understand it? Don’t they care? There are valuable people who have a heavy word to say in order to help straighten Romania’s economy, but their opinions are ignored, with negative consequences for the economy of the present and the future.

LuminiŃa Şoproni (lsoproni@uoradea.ro)

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The European Grouping of Territorial Cooperation –EGTC- State of play and prospects, Committee of the Regions of the European Union, 2009, 202 pages, ISBN: 978-92-895-0461-4

The European Grouping of Territorial Cooperation (EGTC) is a new tool, which has been presented by the European Commission on the basis of a long term political action and proposals coming, among others, from the Committee of the Regions. The aims is to provide a legal framework for territorial cooperation (interregional, cross-border and transnational), where up to now different cooperation instruments have been used. Regulation (EC) No 1082/2006 of the European Parliament and of the Council of 5 July 2006 on a European Grouping of Territorial Cooperation (EGTC) is a response by the EU to practical problems that were identified by program and projects partners in their daily work. At the same time it is a direct reaction to the pressure brought to bear by cross-border Euro-regions and similar structures, to establish a legal instrument capable of providing a strong legal foundation for cross-border cooperation. The new instrument aims to simplify administration, cooperation and financial control of the territorial cooperation in Europe. In this framework, the study follows two tracks: Part 1: The monitoring and analysis of the EGTC at national level show the progress made in adopting the provisions at Member States level. The analysis of the approved provisions highlights the most relevant differences in the overall conception, institutional placement and functional orientation of the EGTC as emerging from national rules, compared to EU Regulation. Part 2: The analysis of the EGTC case studies at Member State level takes into account already established and advanced initiatives as well as envisaged EGTC that are still in the stage of discussion between its prospective members. The collection of case studies illustrates different approaches and different types of EGTC across Europe which have answered to the next criteria: advancement of implementation of EGTC; innovation; impact (expected stimulation of significant cooperation, expected change in set-up for cooperation); transferability (into other regions and countries, into other sectors); feedback (positive feedback by the stakeholders). It had been chosen 8 case studies: EGTC Euro-metropole Lille-Kortrijk-Tournai (FR/BE); EGTC UTTS (Ung-Tisza-Tur-Sajo) (HU/RO/SK/UA); Euro-district Oberland Nadodrze (DE/PL); Hospital de Cerdanya (ES/FR), EGTC Greater Region (LU/DE/FR/BE); EGTC Euro-region Alps Mediterranean (IT/FR), EGTC Galicia-Norte de Portugal (ES/PT); EGTC Alpe-Adria-Pannonia (AT/IT/SI/HU/HR).

The authors had formulated some methodological questions for which they gives us the following answers: Q1 What are the main differences in national/regional EGTC legislation and what are the practical problems in setting up EGTC against this background?

In the current situation, EGTC deal with several issues arising from the disparate status of adopting of EGTC Regulation in the Member States and region. However, emerging EGTC in individual countries are affected differently by the absence of national/regional EGTC provisions and have developed their own coping strategies. Q2 What contextual background and experiences can be identified as favorable preconditions for the successful setting-up of the new cooperation tool?

The analysis of the contextual background and experiences of EGTC has shown that the administrative, historical and cultural background of the territories involved in EGTC initiatives varies across EU countries and region and that has a major influence on the cooperation initiative. (eg. Euro-region Alps Mediterranean has a long standing history of economic, social and cultural relation) Q3 What are the main motivations for setting up an EGTC and what is their perceived added value?

The reported motivation for stakeholders to set up an EGTC are very different and range form strategic and political motivations which can be grouping in the internal (inside the partnership for cooperation) and external issues (creating a platform for political dialogue and collecting an institutionalizing the cross-border programs). In this context the stakeholders desires to use the EGTC as a tool for lobbing for EU assistance and for a clear external dimension (EGTC can be ambassador of foreign groups of regions). Q4 What types of EGTC are currently emerging in Europe and what is their main field of activity (technical or strategic)?

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From the 8 case studies, we see that we have 4 models of EGTC: for territorial cooperation programs, projects with EU funding, project without EU funding, other projects. However, there is some evidence that EGTC set up for purpose of implementing territorial cooperation projects are largely prevalent. EGTC for program management are relatively rare. Q5 What are the differences and the similarities of EGTC stakeholders with regard to expected changes in the relationship with the EU, national, regional and sub-regional level? Are there any potential strategic synergies or conflicts?

The expected institutional positioning of the EGTC with references to the European, national, macro-regional, regional in territorial scale is a key question for municipalities regions and the member states. The expectations regarding the change of influence in this respect differ substantially. Q6 Is the EGTC an effective tool for implementing and formalizing multilevel governance in the Member States?

Changes in governance have several aspects such as the level of horizontal integration (between different sectors) and degree of vertical integration (between different administrative tiers). The set-up of an EGTC obviously facilitates direct contact between sub-national administrative levels (regions, municipalities) and Member State level and EU institutions. Q7 What are the potential benefits of EGTC for EU policy after 2013 and in which policy areas could EGTC play a major role?

Evidence suggests that current EGTC initiatives are concentrated on the provision of territorial project implementation with EU co-funding. The analysis has shown that the potential to use the new instrument to develop joint territorial strategies has not yet been fully exploited. The analyzed EGTC initiatives focus their attention on the effective implementation and administration of projects while the generation of a coherent set of projects is not sufficiently considered.

On the analyze from this study, the authors make the following recommendations: for Local and Regional Authorities (eg. Apply EGTCs with a view to establishing large, inclusive and sustainable partnership; Use EGTS as a tool to improve strategic reflection beyond pure project implementation), for Member State Authorities (eg: Promote EGTCs as laboratories of multi-level governance; Support the proliferation of EGTCs as intermediary platforms for embracing the territorial approach), for EU Institutions (promote EGTC as an intervention platform for cohesion policy an other policy areas with a view to decentralization; Encourage the use of EGTC where territorial cooperation take place against difficult historical background between two or more regions; Strategically develop EGTC as exchange platform which has wider than just implementing EU projects). In conclusion, this book is useful for all the people interested in The New Instrument for Territorial Cooperation which may have a good feedback from the implementation EGTC after Regulation 1082/2006. For more information on the EGTC and related CoR activities, you may contact: Gianluca Spinaci, Committee of the Regions, Forward Studies Unit, gianluca.spinaci@cor.europa.eu)

(Diana Gal: e-mail: dyana_rmd@yahoo.com)

Cârmaciu Diana, Csûrös Gabriela, Domocoş Carmen, Miheş Cristian, Pătrăuş Mihaela, UrsuŃa Mircea şi Zainea Mariana, Current situation of National and Community Regulations in the Field of Cross-border Cooperation, Primus, Oradea, 2009, ISBN 978-973-1975-33-7

Even if the cross-border cooperation is not a new phenomenon, the changes in the international

space determined a remarkable growth of the number of this kind of initiatives, supported also by the community programmes. Nowadays, the regions of the Eastern and Western border of the European Union are the basis of the complete European accession process. The cross-border cooperation it is seen as having an important role in emphasizing the cooperation beyond the national borders, being at the level of authorities and local or regional institutions, being on one side or another of the border. The necessity of drawing up a compendium of applicable legislation in cross-border cooperation field,

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comes first of all from the lack of such legislative instrument, thus determining the weak knowledge of national and community regulations in this field.

In an attempt of supplying this lack, the Forum Foundation in partnership with the University of Oradea, University of Debrecen and the Euro-regional Studies Institute of Oradea elaborated the legislation compendium Current situation of National and Community Regulations in the Field of Cross-border Cooperation, work appeared under the aegis of the Primus Publishing of Oradea, in September 2009.

Without trying to consume all the cross-border cooperation issue, the authors of this compendium want, first to concentrate the primary legislation point of law to which they bring pertinent explanations where the regulation way of the normative act will impose. Without having the will to elaborate a treaty concerning the cross-border cooperation, this work offers to all a practical and necessary instrument in the complicated reality of this type of community cooperation.

The main aspects aimed by this compendium are distributed in seven chapters, threw which it is tried a mainly systematization of the subject, depending on its issuing. Therefore, chapters as: European Outline Convention on Cross-border Co-operation of Territorial Communities or Authorities and its additional protocols, EU regulations affecting cross-border cooperation; Other Romanian national regulations affecting cross-border cooperation; Other Hungarian national regulations affecting cross-border cooperation are drawn starting from the legislative text, on which the pertinent observations are made, resulting from their application.

The authors of this compendium: Cârmaciu Diana, Csûrös Gabriela (Univ. Debrecen), Domocoş Carmen, Miheş Cristian, Pătrăuş Mihaela, UrsuŃa Mircea and Zainea Mariana do not only present the affecting norms in the cross-border field but also bring two news. First news is brought by the references to regulations that affect the cross-border cooperation, but not drawn up directly at the Outline – Convention in Madrid in 1980, and the second is included in the final chapter of the work, Submission of agreements between local authorities and the Euroregion Bihor - Hajdu Bihar, where are presented as examples of good practice the way in which the Romanian and Hungarian competent authorities tried to identify different methods of promoting the cross-border cooperation. Following the improvement of the local (Euro-regional) public administration capacities of the necessary promotion of the cross-border cooperation and for the regional development it was proceeded to practical appliance of legal disposals, appearing the partnerships, connections of uniting different places situated al the Romanian-Hungarian border. Also, it was tried the assurance of financial support threw which can be efficiently helped this connections.

Even if some problems indicated in the text of legislation (e.g. European Grouping of Cross-Border Cooperation) have not found, we believe due to the lack of space, a sufficient explanation, in overall, this is very useful compendium for all those studying and working to developing this area of cross-border cooperation.

Adrian Popoviciu (popoviciu@igri.ro)

Gerard Noiriel, Etat, nation et immigration, Editions Belin, 2001, ISBN: 2-07-030670-4 A 30670, 590 p.

Gerard Noiriel has been the Director of the Social Sciences High School since 1994, a member

of the “Genese et transformation des mondes sociaux” research centre (EHESS-CNRS), cofounder of the journal Geneses and author of several papers on immigration and power development, as well as on history epistemology. He is currently an associated member of the Institute for Advanced Study in Princeton and was a member of the scientific council Cité nationale de l’histoire de l’immigration. In May 2007, he quit together with other seven members of the academic staff.

A very well-known and appreciated researcher in France and abroad, Gerard Noiriel has dedicated much of his scientific activity to the French conception on state, nation and immigration.

Apparently ancient and outdated, the three concepts still belong to present state. The issue of national identity and immigration is back to the foreground. Besides several advantages, the enlargement of the European Union territorial borders to the east has entailed a lot of questions relating

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to national identity, physical borders and more, as well as on immigration, an issue all founding or recently accessing EU countries are facing.

The paper on Etat, nation et immigration represents, according to the testimonies of the author, a collection of texts previously presented and published in “different locations and situations”. „Ceux que j’ai rassemblés ici constituent, à mes yeux, les principaux jalons qui balisent mon itinéraire” Noiriel points out.

The surveys gathered here are regrouped in three parts corresponding to the “three great scientific sites I have been involved in after 1980” and is made up of 11 chapters. Each chapter represents a paper previously published separately. In order to render a certain homogeneity, some of them were slightly altered. Out of these papers, the French researcher prefers two that he considers to be special as compared to the others. It is chapter 8 made up by fusing two surveys published in 1987 that aim at carrying out a combination of communism and immigration. The two articles have been seriously altered to provide the advantage of a general homogeneity.

The other chapter important to Noiriel is chapter 3 which is dedicated to national issues. It is a “relatively new research integrating and developing my previous ponderings on the topic”.

Beyond this structure of the book, the author divides the text into two types of stakes: the former is the historiographic order and belongs to the debate on social history crisis. The latter is empirical and is dedicated to analysing the great changes influencing contemporary society. “This made me explore the two great faces of modernity step by step”: on the one hand, the industrial revolution and its involvement in human mobility; on the other hand, the political revolution triggered by the events in 1789, when one of the decisive consequences was social world nationalism.

The most recent two articles of the author illustrate a new concern with “social history of power relations”. This new notion differs from all forms of political history, as it aims at understanding the historical role played by power in social connections structure.

In the author’s opinion, the word power comprises all opportunities provided to people by history to guide the behaviour of our fellows. Noiriel is also interested in power relations as compared to the nation-state.

The opinion of the French researcher in several of the issues approached is based on a genuine retrospective reflection on sociology surveys belonging to Émile Durkheim, Max Weber, Pierre Bourdieu that he critically analyses in his writing.

A partisan of global immigration history, he includes in his research field other issues, such as the case of industrial history or administrative practices.

Another result of interdisciplinary research, his work is highly interesting for any sociologist, historian or researcher in general approaching issues relating to state, nation and immigration.

Alina Stoica (stoica@igri.ro)

Frédéric Dessberg; Frédéric Thébault, Sécurité européenne. Frontières, glacis et zones d’influence. De l’Europe des alliances à l’Europe des blocs (fin XIXe siècle - milieu XXe siècle), Presses Universitaires de Rennes, Réseau des Universités de l’Ouest Atlantique, 2007, ISBN 978-2-7535-0359-5, 260p.

According to the title, the book, coordinated by M. Dessberg and M. Thébault, deals with the

issue identifying the problems concerning the borders for European and extra-European environment. The above mentioned book consists of a number of studies assuming a spectrum of approaches. The authors of the studies are: Frédéric Dessberg; Bruno Jude de Larivière; Philippe Garraud; André-Paul Comor; Pierre Journaud; François Pernot; François Cochet; Marie Ducet-Huillard; Georges Vidal; Martin Motte; Bernard Bruneteau; Kyrillos Nikolau; Mariusz Wolos; Fabien Guillot; Magdalena Revue and Stéphanie Plouvier.

The collective volume starts with a consistent general presentation, being realized by Jean-Pierre Bois, concerning the historical evolution of the frontiers within the scope on feudality and nationality items. M. J.-P. Bois underlines some important aspects highlighting the lack of political frontiers being specific for the feudal period; also considerable attention is paid to the advancement of the political and military frontiers of the modern Europe.

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Despite its heterogenic character, the book avoids the establishment of a certain hierarchy of the studies; therefore we can distinguish some categories of topics and approaches. The following configurations can be singled out: i./ theoretical; ii./ focused on extra-European frontiers (African and Asiatic); iii./ oriented on the different European frontiers in unlike historical periods, and iv./concentrated on the imaginary and the borders. The theoretical studies belong to Bruno Jude de Larivière and of Martin Motte. The first article is a critical approach of the historical-geographic debate concerning the European frontiers, while the second study deals with the place of the frontiers in the classical geopolitical studies. On the other hand, among the three articles focused on the extra-European frontiers, two of them identify France as a principal actor, consequently in two different geopolitical spaces. The case study of one of the researches is the question of the northern African frontiers during the decolonisation process and the other concerns the frontiers of Indochina during the second world-war, a sensitive period both for France and the above mentioned eastern-Asian space. The last article, written by F. Guillot, examines a very sensitive geopolitical space, that of Israel-Palestine.

The third part of the book is the largest and the most heterogenic. The topics, being in the spotlight, are diversified according to different period and subjects. The authors represent various perspectives on the frontiers. So, Ph. Garraud approaches the subject of the Maginot line, highlighting the importance of this defence system during the Second World War. As for the other author, Fr. Pernot, is interested in the problem and the role of the little states and regions (e.g. the kingdom of Belgium and Rhine state or Walloon) during the conflict episodes. The article of M. Fr. Cochet concerns some military aspects, and approaches the problem of the frontiers and of fight camp on the eve of the Second World War. At the same time we should mention the article written by Mrs Revue analysing the concept of “Zonengrenze” and the German fight to influence the OTAN strategy. Apparently S. Plouvier in her study dwells on the problems of Austrian Alps in front of the soviet menace (i.e. 1945-1955). Also the other two articles concern the Balkan and the north-eastern European regions. K. Nikolaou put in evidence the Balkan space between the Congress of Berlin and the First World War, i.e. the disputed borders of Bosnia-Herzegovina, Bessarabia, Cyprus, Crete and South Caucasus. M. Mariusz Wolos, in his turn, is interested in the Eastern part of Europe, concentrated on the subject of the Polish Pomeranian region, the big Poland and the High Silesia as zones of German influence during the two World Wars.

The last part of the book concerning the borders in the collective contains the studies of Marie Ducet-Huillard and Bernard Bruneteau. First study refers to the French representations on the Rhin between 1945 and 1963 (a very important period for the process of the European integration). The later identifies the problem of Nazism, more precisely the transnational totalitarian imaginary.

The great heterogeneity can be observed but this should not be considered as a lack, as the book coordinated by Dessberg and Thébault can be useful both for researchers interested in the various aspects concerning the borders and for those oriented on the specific characteristics of periods highlighting the evolution of the concept and the reality actually being are the frontiers.

Cristina Maria Dogot (cmgheorghe@yahoo.co.uk)

Europe – Asia Studies, number 8, volume 61, October 2009, ©Taylor & Francis Group, ISSN 0966 - 8136

From the first appearance in 1949 until January 1993, the magazine addressed under the title

Soviet Studies, the problems of the countries listed in the so-called "Soviet bloc". After the Soviet Union at the end of 1991, the editorial team decided to change the title in Europe - Asia Studies to better reflect the former soviet countries’ tendency to become gradually more closely linked with both Europe and Asia. Since 2007 in the magazine there were also published researches connected to China and other Asian countries that are or were under communist rule.

During its six decades of existence, the European – Asia Studies, beneficiated of the researchers’ team support from the Glasgow University, becoming the most important academic journal in the world focusing on the history and current political, social and economic affairs of the countries’ of the former communist’ bloc of the Soviet Union, Eastern Europe and Asia. At the same time, the

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journal explores the economic, political and social transformation of these countries and the changing character of their relationships with the rest of Europe and Asia.

The 8th number of the 61st volume is an anniversary one, being celebrated 60 years since the magazine first appeared and contains articles that addresses vary themes: from the collaboration relations that exist between Japan and a former soviet republic in the years 1904 – 1945, ethnic identity up to economy and administrative law, citizenship, external identity and politics.

In this context, the first article it is signed by Enzo Loner and Pierangelo Peri, researchers at the Trento University, Italy, and they refer to the ethnic identity issue inside the former Soviet Union. The authors seek to ‘measure’ the concept of identification as titular in regard to the members of five ethnic groups (Bashkirs, Karels, Komis, Tatars and Yakuts) and the factors which strengthen, or conversely weaken, such identification. With the help of the multi – group confirmatory factor analysis and multi - group structural equation modeling the two researchers get to the conclusion that the identification is mainly associated with a sense of national superiority and duration of residence in the home republic. Things prove to be more complicated for Yakuts groups, and will be subject of a further detailed analyze by the authors.

The following study, proposed by Tim Haughton, from the Birmingham University, is framed in the European Studies themes, by analyzing the factors which shape the Czech Republic’s policy preferences at the EU level. The British researcher states that whilst ideology, dependency and powerful economic interest groups have explanatory power, the key to explaining national preference formation in the Czech case lies in vulnerabilities and weakness.

Once with the Yuko Adachi’s work, associated professor at the Sophia University, Tokyo, we enter into the economic issue determined by the subsoil law reform in Russia under the Putin administration. The author shows that the interaction of three major influences (the Kremlin’s shifting policy priorities in its relations with subsoil management, the activities of the relevant state bureaucratic institutions and the interests of the state – controlled mineral extracting companies) added to the complexity and delay, despite repeated promises of imminent reform. The overhaul of the main legal basis governing some of the most important sectors of the Russian economy was subjected to repeated delays during the eight years of Putin’s presidency.

Political collaboration between Caucasian national groups and Japan directed against the Soviet Union in the 1930s is the subject of the next article signed by Hiroaki Kuromiya from Indiana University at Bloomington and Georges Mamoilia from Centre d’études des mondes russe, caucasien et centre – européen. The two researchers state that the collaboration relations began at the time of 1904 – 1905 Russo – Japanese War, and continued through World War II. The Caucasian groups (Haidar Bammat’s „Caucasus Group” in particular) and Japan worked together to pursue their common goal of dismembering the Soviet Union. Their anti-soviet subversion was real yet to achieve few results in the face of extraordinary Soviet security; Stalin took no chances and terrorized anyone suspected of any possible link to the subversive activity, conclude the two researchers at the end of the article.

The number closes with the analyze made by Rafael Fernández from Complutense University, Madrid, upon the potential for Russian oil export growth through the next decade. The greater or lesser intensity of that growth will depend on the evolution of both production and internal consumption, and especially on the reaction by investors to sector changes promoted by government energy policy. From this analysis, we find three likely scenarios for Russian oil exports. The most positive envisages it will be possible to diversify exports while the most negative suggest that Russia have scant opportunity to develop an export diversification strategy.

In the section of Discussion Article, Scott Littlefield from University of Cambridge proposes a study on the role of Russian passports and citizenship in facilitating Abkhazian and South Ossetian separatism in Georgia. In the author’s opinion, the rationale for Russia state actions is placed within the desire for geostrategic gain in the former Soviet Union and the restoration of civic national pride. Russian leaders’ justification of the country’s intervention in the August 2008 South Ossetian crisis on the basis of defending co-nationals’ human rights, noting disregard the human rights among non-ethnic russkii groups both domestically and abroad.

The number ends with a series of paper reviews, that point aspects from the political, economic and social life, of ex-communist countries, an area in full transition process, where can be found nationalist accents, inter – ethnic conflicts or struggles for global and regional politic

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supremacies, but also cross – border cooperation, politics of national minorities’ protection, or the continuous approach to the international security and cooperation organisms.

Florentina Chirodea (chirodea@igri.ro)

Svitlana Mytryayeva, Jakob Hedenskog, Valeriy Vrotin, Carpathian Region and Its Role in Strengthening Security and Cooperation in Europe, Uzhgorod, Polygraphcenter “Lira”, 2008, ISBN 978-966-2195-26-2, 252 p.

This volume includes the speeches and materials of the international conference „Carpathian

Region and Its Role in Strengthening Security and Cooperation in Europe”, which took place on June 11-12, 2008 in Uzhgorod. The conference was organized by the Regional Branch of the National Institute for Strategic Studies in Uzhgorod and Swedish Defense Research Agency, with support of the Ministry of Foreign Affairs of Sweden.

The following topics were up for discussion: (1) European security structures: opportunities for Ukraine; (2) Regional security: the role of the Carpathian region member countries; (3) Border security; (4) Energy security in the context of Russia – Ukraine – Europe relations.

The highly qualified experts from Ukraine, Slovakia, Hungary, Sweden, USA and Russia, representatives of the diplomatic missions, state local authority organs, NGOs and mass media took part in the discussion of the above mentioned questions: Svitlana Mytryayeva, Valeriy Vorotin, Anatoliy Shevcov, Grigoriy Perepelytsia, Volodymyr Bogdanovych, Olexiy Yizhak, Mykola Sungurovskiy, Vadim Grechaninov, Mykola Tovt, Oleg Zuev, Sophia Glazunova, Valery Kuropata, Halyna Horohovska, Alen Panov, Vladimir Čečot, Vladimir Benč, Péter Balázs, László Póti, Jakob Hedenskog, Bernhard Bogensperger, Vladimir Socor, Alexey Khaytun.

The publication is intended for experts on international, European and national security, representatives of the diplomatic missions of European Union member countries, representatives of the State Border Guard Service of Ukraine, representatives of state bodies and local administration organs, students of the faculty of the international relations, and all those, who are interested in the issues of national, regional and international security.

An electronic version is available on http://www.niss.gov.ua/book/Uzhgorod/index.htm

Svitlana Mytryayeva (uf.niss@gmail.com)

Romanian Review on Political Geography (Revista Românǎ de Geografie Politicǎ), Year XI, No. 1, 2009, University of Oradea, ISSN 1454-2749, 94 p.

The last issue of Romanian Review on Political Geography celebrates a decade of continuous research and analysis on political geography at the University of Oradea. In the past ten years, 176 authors have published 101 scientific materials in the field of electoral systems, geopolitics, cultural identity and spatial behavior, local government and regional policy, international migrations, border dispute and cooperation, etc. The main feature of the journal consists in the multi-disciplinary approach of political and geographical issues. Multiple perspectives imply a diversified participation on the analysis and debate on the present geopolitical issues. The papers gathered in the last volume bring into our attention several contemporary issues that are under investigation and debate. Among the contributions for this last issue we noticed a paper on the electoral behavior in the first European elections in Romania in 2007. The analysis is focused on the primatial vote (the ratio between the percentages of the votes obtained by the first and second political groups) which emphasize certain spatial configurations and hierarchies by areas (urban and rural) different from other previous elections. The article signed by Mircea Brie and Ioan Horga brings into debate the external border of the EU, from a conceptual perspective. Beyond the great conceptual diversity, there is a clear-cut difference between the official border with different degrees of openness and the political, economic, social, cultural, religious or ethnic perceptions. The main conclusion is that the EU has an external

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border that can be both stiff and flexible depending on the challenges of the movement, on tensions, or social and economic, political and legal openness, as well as on the complex internal realities of the EU member states. Another contribution is questioning the issue of world affairs reconfiguration from a crisis perspective. The global system characterized by increased interdependences is vulnerable to certain crises that affect all the international actors who must reconfigure their preferences and policies according to the threats and opportunities that occur on the international stage. A very interesting paper proposes an evaluation of the geopolitical reconfigurations in the Black Sea Area at the beginning of the 21st Century. After the last EU and NATO enlargements, Black Sea region became an area where different interests meet and affect the behavior and the policies of the main actors in the area. Therefore, in terms of geopolitics, the new approaches of regional cooperation deals with a struggle for a deepen cooperation and also must provide answers in order to overpass divergences and to avoid specific threats (frozen conflicts, energy issues, terrorism, migration, organized crime). The above mentioned issues are completed by other articles on the evolution of the spatial development in Romania and the Republic of Moldavia, aspects on the phenomenon of demographic population aging in Romania and Moldova and the issue of Near Abroad Dilemma of the Russian Federation. Therefore, we salute the success of our colleagues and recommend the Romanian Review on Political Geography as a fundamental reading for those who want to have a more update comprehension of the geopolitical dynamics in the area. We also encourage your involvement with comments, questions and contributions that can add value and promote their work.

Dorin Dolghi (dolghi@igri.ro)

Gerard-Francois Dumont, Pierre Verluise, Geopolitique de l’Europe, Paris, Sedes, 2009, ISBN 978-2-301-00039-2, 320 p.

The book aims to present a further major geopolitical changes in the last fifty years on the

European continent, first from Europe to Europe extended community, and on the other hand, from a Europe united by an integrated Europe.

To achieve these parameters of European geopolitics, the authors propose in their book first part of the book to reflect on European identity, which is inseparable from historical and cultural diversity, which are the foundations of European construction. The theme of European identity involves many facets of discussion. First, the authors seek to demonstrate the content of historical identity, but without forgetting that the issue of European identity is different from one historical period to another. Takes into account to illustrate the dynamics of historical identity: heritage removed (Romanian-Greek heritage and Christian), attempts to drive European policy from Charlemagne to the modern empires; unit unifying institutional elements (religious orders, cities, universities, trans-European networks of economic exchange), attempts to drive the intellectual (the idea of perpetual peace, unity through trade, the European unit of stop solution nationalism, European unity to overcome the two "European civil war").

Secondly, the authors stop the relationship between European identity and values problem. They distinguish between the fundamentals of European identity that these values - the equality of people, promoting freedom, creativity and openness, separation of powers - is essential. As before, the authors consider that this amounts mentioned in the European identity is different from one period to another. Important issues are under discussion in the current debate on European identity: an identity built or under construction, an identity defined by comparison with other non-European societies, the issue of religion in European identity, an identity which is the sum of national identities.

Thirdly, the authors noted that overall European identity is very different and they say a loud “les Europeens ne sont pas un ensemble de clones” (p. 50). It noted that on the one hand, the diversity of its roots plunge in history for the States that make up Europe have a national old extremely variable (millennial nations, old but independent nations recently, countries with an identity in the process of clarification), on the other hand, states are distinguished by different identity features (different

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cultures, different political organization and practice, different territorial organization, states as unequal). Then Europe are then based on the great variety of linguistic diversity and the complex religious situation.

Finally, the authors bring into discussion the term of Europe itself, which seeks to explain the territorial dimension of our continent. Speaking of geographical identity, they believe that Europe is a set of core subject areas of maritime influences due to multi-peninsular geographers and numerous adjacent islands. Themes are treated and then "hot" new cutting conventional four Europe, Eastern border of Europe, Russia before voluntary geography of Europe.

In the second part of the book, the author examines the two profound changes that have occurred against the background of European Building stone. They discussed the various actions brought commune whose geopolitical features are variable, both in content and geographical scale. First, we note that in the evolution of European Community is most important you the various changes to its geographical dimension: from a small territory to a reunification of Europe, a different territorial representation in the bosom of the European Institutes. Also it is important to know, according to the book authors, construction of Europe if the EU is by people or political leaders. They ask, first, whether the subject's accession to the Community of each candidate country was not only expression of the will of political leaders and very little of people. On the other hand, they put on the same terms and the problem of legitimacy of the European Parliament following an alarming absent. All of the prospects of territorial representation of Europe is examined and the system of European Community external relations, which is seen as four circles (Western Balkans, European Neigbourhood Area, countries out of the decolonization, circle relationships with other regional organizations).

Second, the authors examine the European territory in terms of major policy foundation. After the Treaty of Rome (1957) moved on the Common Market, from which the three political foundation of movement of goods, irrespective of Agricultural and territorial cohesion. Parallel was set up a budget policy to finance these policies.

Thirdly, beyond the big political founding objective of the Community of East Europe to found a unified European nationality as a territory. This means that Europe has an essential instrument for the assertion of sovereignty: the currency. Also the desire to put in place a European citizenship involves the development of more freedom, as they are specified in the treaties: the free movement of persons, a common work space, common area services.

Finally, the Lisbon Agenda (2000) has set a major goal for the European community by 2010 to become a knowledge economy, most competitive and most dynamic in the world, capable of sustainable economic growth, accompany the quantitative improvement and quality of work and a greater social cohesion. Also an ambitious plan would translate into book authors view a common educational space, a European research area, and a space research program (alien) on the scale. But each of these points, geopolitical actor, European community, also has weaknesses and strengths.

The third part of the book is a series of mutations devoted social, economic and demographic prospects are analyzed from their participation increase or decrease the power of Community Europe. First, it analyzes the effects of EU enlargement in 2004 and 2007. Never since the foundation of European Community regional disparities have not known until after the largest enlargement. The effects of enlargement are paradoxical. On the one hand increased the number of regions likely to be eligible for funds, in terms of existence of a limited budget. On the other hand, countries on the "periphery" have become economically more dynamic than living from the old Continental. Enlargement has had an impact and socially. Reduced the number of unemployed especially in East and finding them work in the West. But the economic crisis caused the return of tens of millions of migrants, with major social impact on countries where they went.

Secondly, the authors of the book made that the euro has allowed the strengthening and deepening of European integration, favoring intra-Community trade. Beyond these internal issues, the euro is to improve the geopolitical position of the European Union. Euro is an instrument of power both at home and especially abroad. From international perspective, relations between the Euro, European Central Bank and European identity are extremely complex. From the perspective of external euro has become a mark of European power community.

Thirdly, in Chapter demographic “L'UE demain: une maison de retraite a ciel ouvert?” draw a serious alarm over the aging European population. If enlargement of Europe in 2004 and 2007 brought a kind of economic dynamism than expected, by needs to be resolved in the East, plan demographic,

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highly complicated things. Even if the two Europe were separated for a half century, demographic behavior in the two sides moved closer to the same aging population and decreasing fertility index.

Finally, to answer the demographic problem of the European continent, the authors of the book bring the question migration. EU must engage in a community immigration policy, so Europe will find in a situation of dependency of countries that have and will have labor unoccupied.

The fourth part of the book deals with external geopolitics, particularly foreign policy and defense, that the analysis of power relations not only between EU European countries, but also with the world.

First, it must be said that Europe first community is a civil organization. Size defense appeared in the background as a political instrument. Defense for Europe and NATO have the same old same functions nor should refrain from comparing them. Lisbon Treaty stressed the strength of Europe with, but it is limited.

Secondly, Europe's geopolitical borders southeastern and southern areas are open to differentiate. First, it is Turkey, candidate and former Yugoslav Republic of Macedonia and Croatia, which have candidate status and belonging to the Western Balkan countries. For this group in May are: Bosnia-Herzegovina, Serbia-Montenegro, Serbia and Albania. For Brussels, the stabilization of these countries is key to their future integration into European Community. The southern borders, add many countries with Mediterranean vocation starting up in Morocco and Egypt, which are included in the process starting in July 2008 for the Mediterranean Union.

Finally, following the end of the Cold War (1990) and in the context of EU enlargement in 2004 and in 2007 it reached the edges of the former Soviet Union. Including Russia, Belarus, Ukraine and Moldova in the new configuration of the geography of the European Union, the countries located in the scope of the European Neighborhood Policy (ENP) is the European geopolitics not only a political opening to less frequented areas but light challenges of a new conflict.

Reading this book is very nice not only by the information received and the very didactic manner of presentation but also by analysis made on specific cases or in many comparisons. Also, the method chosen multidisciplinary ramifications can understand and analyze the challenges ahead.

Diana Gal (dyana_rmd@yahoo.com)

Nicolas Trifon, Les Aroumains un peuple qui s′en va, Acratie, 2005, ISBN 2-909899-26-8, 476 p.

Formed in the Western intellectual circle, French, this book treats a little-known theme of the

geopolitical area of the Balkans, in the Eastern world. The author’s particular interest to A-Romanians history is also due to his ethnic origins, his

father being of A-Romanian origin. The book is structured in 7 chapters preceded by classic Foreword but also by a General

Introduction to the theme proposed for analysis, the end is forming of large Conclusions, supplemented by two case studies very interesting.

The study of the Romanians in the Northern Balkans continued a series of earlier approaches, interdisciplinary research, philological-historical and ethnographic created and developed at the University of Cluj by Sextil Puscariu and Pericle Papahagi and continued in the coming decades, particularly by Theodor Capidan. After 1900, in the new political realities emerging in Romania and as a result of some objective necessities, of scientific nature, at the universities of Bucharest and Cluj were created departments specialized in the study of history and language of the South-East European peoples and of those in the Balkan Peninsula, especially of the population of Roman origin. Soon, the research activity of the Romanians in the Balkans conducted by experts in higher education was driven by setting up institutions of profile in Cluj and Bucharest. Thus, the investigation of the Balkan realities and hence implicitly of Romanians moved into a new phase, due to the institutionalization of research, setting up teams of specialists and emergence of profile magazines. Meanwhile, through the establishment in 1913, in full Balkan War, of the Institute of South-East European Studies in Bucharest, at the initiative of Nicolae Iorga, it was a step toward the institutionalized research of the South Danube

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realities. The outbreak of the Balkan wars surprised the political world from us, showing thus, the relative character of knowledge of the South Danube realities we were closely related.

The research of the Romanian population in the South of the Danube was not susceptible to controversy and disputes among experts. Whether it was the origin of this population in the Balkan Peninsula, on its original space, about the causes that have led it to leave its space of forming, etc.., the historians and linguists have reached divergent conclusions and because of interference, so damage and harmful, of the policies in the historical research. There came therefore to conclusions which present the Romanians in the Balkans or, as conquerors of the Northern-Danube space, in the sense that they moved from the South of the Danube to its North, or as a population of Roman origin that took its territory of forming somewhere between the Danube and the Balkan Mountains, where it was spread, then, influenced by the Slavs, Bulgarians, Turks in the whole Balkan Peninsula; or, that the A-Romanians and Vlachos are two important branches of the South of the Danube Roman World, the first living in the Southern Balkans, the others in the Northern Balkans. Diverse and sometimes divergent conclusions on the origin of the Romanians stated by the foreign specialists made the historian Gheorghe I. Brătianu to wonder which could be the area of forming of the Romanian people. However, the foreign researchers of the phenomenon, most of them have reached in the early twentieth century, in essential lines, to conclusions much closer to the view of the Romanian specialists, namely that the Vlachos were scattered in the Middle Ages in the Northern Balkan Peninsula; that the Slavic settlement in the South of the Danube has exercised a prime major influence on them. Some of them have retreated to the highlands of the Balkan Mountains and the others, over time, have moved to the Southern and Eastern Balkans. Shepherding became, in the new political circumstances, their basic occupation. Their assimilation was gradual, over several centuries; the language spoken by them, a dialect of the Romanian language, was retained by the Turkish invasion, when the population of Roman origin suffered another impact, which proved to be fatal. Differences remained regarding the area inhabited by Vlachos, of the period during which they lost their identity, as well as on their number. Dissenting opinions became more acute whenever political crisis appeared in the Balkans, the situation quite tense becoming complicated due to the territorial claims raised by the parties in conflict.

In addition to Romanian people-Romanian words, used by our philologists and historians to name the population of Roman origin in the states of population above mentioned, except Istria and the Dalmatian coast, until the establishment of the communist regime in Romania, also the term Vlachos is used. It is recorded as it appears the population of Roman origin in Bulgaria, Serbia, Bosnia, Herzegovina, Croatia, Albania, and Greece in the medieval sources. The Romanian specialists who call the population of Roman origin with this term are consequence of how the Byzantines and the South Slavs have called the native population. We not consider being a mistake, as long as the communion of race and language is recognized with the Romanian population from the North of the Danube. The Romanian population on the Dalmatian coast and the Istria Peninsula is known as Istro-Romanians in the Romanian historiography, but in the time documents appears as morlaci. The fact that the Istro-Romanians are entered much later in the documents of the Italian cities made the experts to consider not being native of Istria and the Dalmatian coast.

Clear that with the Vlachos or Romanians in the North of the Balkan Peninsula and with the Istro-Romanians in the North-Western Peninsula, the Romanian experts revealed the existence of the Macedo-Romanian or A-Romanian population and of the Megleno-Romanian one. There are specialists who call Vlachos all the Romanians on the South of the Danube. Without being an error, the use of the term Vlachos for the South of the Danube Romanians might cause confusion. In the scientific ranges the classification of the Romanian language dialects in: Daco-Romanian, A-Romanian, Macedo-Romanian and Istro-Romanian proposed by philologists, has become gradually also in the historical literature. As to the three branches of the Romanians one dialect corresponds, its name has also imposed to the population of Roman origin.

The investigation of the Romanian population in the Balkan Peninsula, the Balkan area in general, by historians, the positivist current spirit, demonstrated the importance of that approach for understanding the ethnogeny and glotogeny, as well the mechanisms that led to the first Romanian state creation. At the same time, the political changes produced in the Balkan Peninsula, what affected mainly the Romanians here - but that had an impact also on the destiny of Romania - once again stressed the need to know the realities of the Balkans, area of political and ethnic tension, generating

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conflicts. Here the scientific reasons, associated with the political ones, have boosted the interest of our specialists for the Romanian population in the Balkan Peninsula.

The introducing in the history of the A-Romanians is done from present, to the problems and difficulties facing them today the A-Romanians looking into the causes in the near or remote past.

Of a particular interest are the researches into the habits and traditions of the A-Romanians in their literature, an important place in the performed analysis being taken also by the linguistic particularities of each large group of Macedo-Romanians, thanks to the features that were identified in different ways by the neighboring peoples (e.g. the Serbs call them Tzintzars, the Albanians Czobans, the Romanians Macedo-Romanians, but also existing more general terms like Koutsovalahs, etc..). They perceive themselves under different names, depending on the area of origin: Grammoshtens from the Grammos Mountain area located on the border between Greece and Albania, of the Pindus, of Lake Prespa and of Kastoria; the Farsherots come mainly from the Pindus Mountains, but further Northern, from the Southern parts of present Albania, their names being taken from a locality, Frashër, now inhabited mainly by Albanians, but in the past was one of the important centers of the A-Romanians, where they kept until the twentieth century the traditions and their semi-nomadic way of living. Finally, the Moscopolitans are grouped around the town Moscopole (Voskopojë today in Albania), a leading economic and cultural center until its destruction in the second half of the eighteenth century, the decline led to the spread and establishment of the A-Romanian traders in the cities of the Central Europe.

The geographical area influenced the A-Romanians way of life, their occupations. Thus, the life of a nomad type imposed by the main occupation, grazing in the recent centuries the A-Romanians were identified with the great traders in the Central and South-Eastern Europe, in cities such as Vienna, Miscolc, etc.

While the book is written in scientific manner, respecting the norms imposed by the historical research, of its pages is always, though unwritten, a question the answer of which turns, along the way, into uncertainty. The tradition, the unwritten laws that have been a guide for them and through which they preserved their identity and singularity among the peoples that have lived to this day will it be the main responsible for the disappearance of this ethnic group from the stage of history?

Sorin Şipoş (ssipos@uoradea.ro)

Mihaela Cioca (m.cioca@yahoo.com)

Europa Ethnica, no. 3/4, 2008, Wilhelm Braumüller Universitäts – und Verlagsbuchhandlung GmbH, Wien, ISSN 0014 - 2492, 128 p.

Europa Ethnica, no. 1/2, 2009, Wilhelm Braumüller Universitäts – und Verlagsbuchhandlung GmbH, Wien, ISSN 0014 - 2492, 80 p.

From the articles of the volume 3/4, 2008 of Europa Ethnica we especially point out the

articles written by Markku Suksi, “Land rights and real property in the Nordic Countries: a tentative sketch of an argument with some Nordic examples” and Lauri Hannikainen and Anne Nuorgam, “Cross –Border Cooperation of the Northern Indigenous Saami People natural and necessary”. The first article offers real property as a solution for diminishing the conflicts appeared among ethnic groups in Nordic countries. He makes a distinction between property rights and land rights. The second article defines the Saami who “are one whole indigenous people living in four different countries which are neighbors with each other”. The four countries are Norway, Sweden, Finland and Russia. There is a Saami Parliamentary Council which creates conditions of cooperation for Saami from the above mentioned countries. There is also a Draft Nordic Saami Convention which facilitates cross-border cooperation and harmonizes the legislation related to Saami people.

Volume 1/2, 2009 of Europa Ethnica includes articles concerning the protection of minorities in Sweden, in Czech Republic, in Germany, in Austria or in Finland. The articles are presented below. Two interesting articles are “Diversity in School. Challenges for educational systems in the field of converging interests of protection of minorities and anti-discrimination” written by Katrin Wladasch, Katharina Köhler and Margit Ammer and “Minority Education in Sweden-problems and trends” written by Sia Spiliopoulou Akermark. The first article talks about religious diversity, linguistic

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diversity, equal opportunities in education for minority as well as for majority, access for minorities at all levels of education. The authors refer to the difference between us and others which they present as “an important step within the process towards de-constructing the picture of <<the others>> as a homogenous group and getting aware about the overall diversity of personal identities”. The second article talks about the situation of national minorities in Sweden which started to be improved after being for decades in a precarious situation. The author chooses the field of education because it “offers an excellent case study for the understanding of the more general attitude of the society and the state towards minorities”. The author underlines as a conclusion that minorities in Sweden are no more persecuted and they can express themselves in various ways in the framework of Swedish society.

In the article “Das Minderheitschulrecht in Österreich” written by Sarah Siller, it is emphasized the necessity of having an educational system for minorities which to prevent the total assimilation of minorities and, in consequence, the necessity to contribute to the maintenance of maternal language of these minorities. Since 1967, in educational system minorities could use the national language as well as minority languages. Since 1919, minorities were granted with the right to be educated in their maternal language. So Slovakian, Hungarian and Roma minorities have been educated in their maternal language.

In the study of Mattias Niedobitek, “Der <<Ostrava – Fall>> des Europäischen Gerichtshofs für Menschenrechte – Konventions- und gemeinschaftsrechtliche Überlegungen zur Diskriminierung von Roma – Kindern im Bildungswesen”, brings into the spotlight the decision of European Court of Justice from 13.11. 2007. It was thus deliberated in the case of Roma children from Check Republic. They were sent to special schools for children with disabilities. This article stands for the minority rights to equal education.

Tatjana Leichsering analyzes cultural and linguistic diversity in Frankfurt am Main in the article “Sprachliche und kulturelle Diversität in Schulen – Reflexionen zu einem Modellproject in Frankfurt am Main”. In Frankfurt am Main was created a project having as purpose linguistic integration of immigrant children and parents. The accent is put on multilingualism, the children being taught both maternal and German language.

Peter Hilpold brings into the spotlight the protection of minorities in Germany in the study “Der Schutz der neuen Minderheiten in Deutschland”. In Germany was elaborated a project for protection of minorities. The project militated for the preservation of ethnical, religious and linguistic identity of minorities from Germany.

In the article of Thomas Benedikter, “Die Qualität von Autonomiesystemen in Vergleich der europäischen Regionalautonomien” it is analyzed the problem of territorial autonomy with its political, legislative, linguistic ethnic, financial and structural aspects. In Finland territorial autonomy is a state right which appeared in 1921. In the same time, in Finland there is regional autonomy based on ethical and cultural diversity.

The articles elaborated in the revue Europa Ethnica have a modern character militating for the preservation of specificity of national minorities from European countries in various fields of social life and for the protection of their rights. The idea of European diversity finds in the pages of Europa Ethica a liberal and innovative expression.

Anca Oltean (olteananca@hotmail.com)

Svitlana Mytryayeva, Yaroslav Zhalilo, Transborder Cooperation on the New Eastern EU Border, Uzhgorod, Polygraphcenter “Lira”, 2009, ISBN 978-966-2195-52-1, 248 p.

This publication presents the collection of speeches and materials of the participants of the international conference „Transborder Cooperation on the New Eastern EU Border” which took place on April, 15-16, 2009 in Uzhgorod. The conference was organized by the Regional Branch of the National Institute for Strategic Studies in Uzhgorod with a support of the Friedrich Ebert Foundation. The conference had the following panels: (1) Transborder cooperation in the system of international relations; (2) Transborder cooperation within the frame of the Carpathian euroregion: review of the past

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and current cooperation, coordination and harmonization of actions with EU; (3) Instruments of the European neighbourhood and partnership.

Representatives of the diplomatic missions, local state bodies and experts from Ukraine opened the conference and made the stress on the importance of the transborder cooperation for border regions of Ukraine and EU: Yaroslav Zhalilo, Volodymyr Hoblyk, Vasyl Brenzovych, Volodymyr Prykhodko, Vilmos Sziklovari, Volodymyr Khymynets.

Within the panel “Transborder cooperation in the system of international relations” the following topics were up for discussion: Systemic changes in transborder cooperation of Ukraine with new EU member-states; Accordance of the national policy of stimulating regional development in Ukraine to EU standards; Transborder cooperation in the system of international relations. The experts from Ukraine took part in the discussion of the above mentioned issues: Eva Kish, Оlena Snihova, Ivan Art’omov, Volodymyr Lupatsy.

For the discussion within the panel “Transborder cooperation within the frame of the Carpathian euroregion: review of the past and current cooperation, coordination and harmonization of actions with EU” were suggested topics: Transborder cooperation in border regions; Transborder cooperation in conditions of the new visa policy: challenges and prospects; Economic transborder cooperation; System problems of the transborder cooperation and the Carpathian Euroregion; Development’s prospects of the transborder cooperation between Ukraine and EU. Representatives of the diplomatic missions, local state bodies, highly qualified experts from Ukraine, Slovakia and Hungary made reports and took part in discussions: Ernest Nuser, Valery Kuropata, Vladimir Benč, Iryna Sushko, Svitlana Mytryayeva, István Süli-Zakar, Brigitta Majorne-Laszlo, Olga Marhulikova, Olexiy Moldovan, Nadiya Mikula, Volodymyr Horboviy, Serhiy Fedaka, Andriy Kryzhevskyy, Olha Yehorova.

For the discussion within the panel “Instruments of the European neighbourhood and partnership” were suggested topics: Instruments of the European neighbourhood and partnership (ENPI): Results; New instruments of “East Partnership”: possibilities for Ukraine; Role of the civil society in development, implementation and monitoring ENPI. Alexandr Duleba, Grigoriy Perepelytsia, Svitlana Hutsal made presentations on above mentioned topics and Serhiy Pavlenko, Lyubov Teremova Oleh Luksha, Valentyn Voloshyn took part in the discussion.

The publication is intended for the experts on the transborder cooperation, international, European and national security, representatives of the diplomatic missions of European Union member countries, representatives of state bodies and local administration organs, students of the faculty of the international relations, and anyone, who is interested in the issues of transborder cooperation and the basic instruments of the European Neighbourhood and Partnership.

Electronic version available on http://www.niss.gov.ua/book/Mitryaeva2009/index.htm

Svitlana Mytryayeva (uf.niss@gmail.com)

Journal of Baltic Studies, Volume 40, issue 3, September 2009, Association for the Advancement of Baltic Studies, Routledge, ISSN 0162-9778, 168 p.

Journal of Baltic Studies, an academic review founded by Association for the Advancement of Baltic Studies in 1970, is published nowadays quarterly. The review approaches in multidisciplinary manner general subjects as political, social, economic, and cultural life of the Baltic States in varied historical periods, and the transitions generated by contemporary changes at the European level. The review Journal of Baltic Studies, volume 40, number 3, September 2009, appeared as a special issue entitled From Phosphate Springs to “Nordstream”: Contemporary Environmentalism in the Baltic States. The editor of this publication is David J. Smith, University of Glasgow. The review includes 8 articles, 4 book reviews, and a list with the received books to make known the other recent publications. The articles present a series of analyzes and case studies about the environmentalism development of the Baltic States in different periods. The ecological movements were constituted in the resistance against the intrusion of the administrative and political system in every day life.

In the introductory article David J. Galbreath, the guest editor of this volume, illustrates how the Baltic States face contemporary environmental challenges through transition, enlargement and

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integration into the European Union. It is well-known that Estonia, Latvia, and Lithuania were included in the Soviet Union during the WWII. In this case, the environmental movements were more than simple concerns for the ecological degradation. They were behind the nationalist movements until the end of the Cold War and the collapse of the Soviet Union, when the Baltic States gained their independence.

In each country, the ecological movements were against a specific situation. In Estonia, these movements took place against the phosphate and oil-shale mining while in Latvia the ecologists wanted to prevent another hydroelectric dam on the Daugava. In Lithuania the “greens” focused their activities on the closure of an old nuclear power plant and against the construction of a new one. Each one of these movements was planned against the inclusion in the Soviet Union centralized economy. After the changes in the Baltic society’s life generated by the independence, the environmental issues seemed to be abandoned for a while. Recently, they rise again. In Estonia, the environmentalists draw in attention the construction of the planned “Nordstream” natural gas pipeline connecting Russia and Germany. The “greens” stopped the crossing of the pipeline through the Estonian waters. In 2004, Latvia was lead by the world’s first Green prime minister, even if the Green Party sometimes preferred some other interests to the ecological ones. In Lithuania, the specialists managed to close the nuclear reactor Ignalina. With the Europenization and globalization, the attitude of these Baltic States changed and the environmentalists adhered to the international environmental orientation.

The article Where Have all the Environmentalists Gone? Baltic Greens in the Mid-1990s signed by Timofey Agarin analyses the views of the people involved in the “Green” activism and the ones who support the parties with an environmental agenda. The author writes a comparative study to find out how the changes, generated by Europenization and globalization, influenced the environmental movements. He investigated Baltic respondents who support environmental parties and members of environmental groups, comparing them with Western European models. He also studied the behavior of the Baltic voters. The researcher concluded that “Green” parties and environmental activism have a decreasing presence within the Baltic States. The social, political and economic changes forced the traditional environmentalists to focus on their needs. On the other hand, most of the environmental NGOs that began their activity under the Soviet Union regime continued their existence.

Richard Caddell signed the next article entitled Nature Conservation in Estonia: from Soviet Union to European Union, based on the case study provided by the researcher. The study is focused on the effects on the nature conservation in the country after Estonia’s entry into the European Union. The author presents the historical evolution of the nature conservation legislation in Estonia. He began with the early developments, continuing with the Tsarist era, the (first) Republic of Estonia, the period under the regime of the Soviet Union, and the post-Soviet era and the nature conservation in the EU era, and the international nature conservations commitments. After gaining its independence, Estonia tried to fix the damages caused by the economic policy of the Soviet Union. The author reveals the European intention to protect the environment in the Baltic Sea region.

The tie between environmentalism and nationalism in the Baltic States is the subject of the article Green, Black and Brown: Uncovering Latvia’s Environmental Politics written by David J. Galbreath and Daunis Auers. The authors illustrate the three sides of the environmental movement in Latvia, each of them exemplified by a color: green, brown, and black. The green color means the ecological movements, the brown is the civic and ethnic nationalism, and finally, the black means the role of the oil transit industry. There are presented the Baltic environmentalism in the late Soviet Union and post-Soviet Latvia.

Allan Sikk and Rune Holmgaard Andersen in the article Without a Tinge of Red: The Fall and Rise of the Estonian Greens are present propose three models for new party emergence in comparison with the classical model. The article points out the historical and the ideological origins of the Estonian Green Party. The place to the right of the political center, while the West European Green parties, which are left-placed, is due to the different historical origins. In present when it comes to sustain an ecological cause, the party prefers technological innovation and economic development.

In Minority Environmentalism and Eco-nationalism in the Baltics: Green Citizenship in the Making? Tove Malloy makes the difference between the ecologism and environmentalism. She operates with terms like national minorities, nationalism, Green citizenship. The author shows us what means environmentalism “in theory” – a Green ideology – and “in practice” – identities and ideology.

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Nora Mžavanadze in Sustainable Development in Lithuania: Between the Governmet Agenda and the Undiscovered Civil Society emphasizes the role of public participation in policy-making. The rewsearcher also points out the activity of the Lithuanian National Strategy for Sustainable Development

Narva-Ivangorod: Integrating and Desintegrating Transboundary Water Networks and Infrastructure is an article in which Jussi S. Jauhiainen and Tarmo Pikner set out the importance of the current water for modern urban life. They present the case of Narva-Ivangorod. Narva River is situated at the border between Estonia and Russia, and since 2004 between European Union and Russian Federation. The river divides the urban area in Narva on the western part and Ivangorod on its eastern part. In the present study the authors demonstrated how the water network can connect and disconnect places and configures social relations.

The articles published in this volume of the Journal of the Baltic Studies are focused on the contemporary environmentalism in the Baltic States. The environmentalism and nationalism were linked together due to the political issue determined by the Soviet Union regime. Under the face of environmental movements the independence ones could struggle to reach their main aim. It is showed that environmental movements were affected by the changes in social, political and economic life, especially to the insecurity of the last two. Comparing the post-Soviet environmentalism in the three above mentioned Baltic countries with the Western European one, we can observe the discrepancy between the reformist and the radical oriented discourses.

Laura Ardelean (ardelean@igri.ro)

Our European Projects

LuminiŃa ŞOPRONI (Oradea) ◄► International conference ”Identities, Citizenship and Democracy: 20 years after” (Charleroi, Belgium, 22-24 October 2009)

Constantin łOCA (Oradea) ◄► The European project ”The Law Regime of Cross-

Border Cooperation in Romanian and Hungarian Law Organisms”

International conference ”Identities, Citizenship and Democracy: 20 years after”

(Charleroi, Belgium, 22-24 October 2009)

This year, manifestations celebrating 20 years from the political changes in Central and

Eastern Europe took place in many European countries. An event of this kind was organized in Belgium, at Charleroi, by GARENP (The Group of Research and Action on the European Neighborhood Policy) near the European Commission and the Poland’s Embassy near the European Commission. The event reunited over 150 researchers and academics from all the European countries. A special place, through the number of attendants, was given to the representatives of the academic environment in Central and Eastern Europe.

The organizers, appreciating the scientific results of Oradea’s academics, invited the Euro-regional Studies Institute, the European Excellency Center “Jean Monnet” (GARENP member) to be co-organizer of the conference. Together with the University of Oradea – through the Jean Monnet European Module “Mass-Media and Intercultural Dialogue in Europe without Borders” – the International Institute of Administrative Sciences in Brussels, the University of Debrecen (Hungary), the “Jagellona” University of Cracow (Poland), the University “Matej Bel” of Banska Bistryska (Slovakia) and the “Charles” University of Prague (Czech Republic) were also co-organizers of the conference.

The discussions focused on the following main themes: Democracy in all its states: challenges and perspectives in the EU and its neighborhood (with the workshops: Democracy and Identity in EU; Democratic transitions and identities); Communication, Media and the European construction (with the workshops: Communication and cooperation, Communication, Media and European Institutions); European identities and citizenship (with the workshops: Identities and Citizenship, Universities and Cultures).

The University of Oradea was given the responsibility of managing one of the three sections of the conference, entitled “Communication, Media and the European Construction”. This proves that the organizers appreciate the results of the Oradea academics in studying the impact of mass-media upon the democratization of Eastern and Central Europe and then upon the process accession to the European Union. It is also confirmed that there is an expertise here, recognized by the European Commission, through the Jean Monnet European Module “Mass-Media and Intercultural Dialogue in Europe without Borders” of the Faculty of History, Geography and International Relations.

LuminiŃa Şoproni, Ph.D.

Academic Coordinator Jean Monnet European Module

“Mass-Media and Intercultural Dialogue in Europe without Borders”

The European project

Juridical Regime of the Cross-Border Cooperation Bodies in Romanian aad Hungarian Legal

Systems – part of the Romanian-Hungarian Cross-Border Cooperation Program (Phare CBC)

The project entitled „Juridical Regime of the Cross-Border Cooperation Bodies in Romanian and Hungarian Legal Systems”, RO – 2006/018-446.01.01.02.22, as part of the Romanian-Hungarian Cross-Border Cooperation Program (Phare CBC), during the period 10.10.2008 – 9.10.2009, had as implementation areas the following regions: Romania, Bihor County, City of Oradea and Hungary, Hajdu Bihar County, Debrecen, the beneficiary of the project being the Forum Foundation of Oradea and as partners: University of Oradea, University of Debrecen, The Association Euro-Regional Studies Institute.

The general objective aims to promote and support the Romanian-Hungarian cooperation for an efficient collaboration between institutions and organisms from Bihor-Hajdu-Bihar Euro-Region; the improvement of the knowledge level of the applicable law regulations in the cross-border cooperation field.

The specific objectives concerned: observing and identifying Romanian and Hungarian national regulations’ particularities in order to achieve compatibility between the two legal systems, as well as the communitary regulations; „people to people” activities for splitting the pieces of information referring to the legal institutions in attention; supporting the Romanian institutions in order to implement the National Strategy concerning the cross-border cooperation.

The main beneficiaries were: law counsellors/ jurists, experts that work in public institutions, master students from the „Communitary Law”, „Law and Public Administration”. „Euro-regional Studies” specializations, jurists from the Hungarian public institutions from the held institution, people from the heading structures of the local authorities from the Bihor-Hajdu-Bihar Euro-region that were placed in 3 work groups and focused on 3 main interest fields of the project: communitary law, Romanian law, Hungarian law. A series of activities, on both sides the border in the headed implementation area, also took place, which are as follows: The conference for launching the project called „The Future of the Institutional Cross-border Cooperation in Bihor-Hajdu-Bihar Euro-region”. Romanian-Hungarian bilateral meeting between the projects’ partners, which took place at the Hungarian partner, University of Debrecen and a work visit at the City Hall of Oradea.

Founding and launching the „Centre of Law Studies in the Cross-border Cooperation Field” (www.csjct.org), which will have as main activities: research activities in the cross-border legislation field; promoting the cross-border opportunities at the local authorities and institutions level; identifying the internal and external assistance and cooperation programs, that support the development of cross-border cooperation; legal database referring to regulations, laws and practices in the cross-border legislation field; collaboration with the local authorities and institutions for assuring consultancy, information and legal assistance; initiating, organizing and participating to training, improvement and retraining courses in collaboration with specific institutions; founding a point for consulting the national and the European legislation to date; cooperation with similar institutions/organizations from the country and abroad, mediating the calendar of Romanian manifestations, respectively Hungarian.

Training activities (lectures and specific seminars), the lectures were concentrated upon the themes (and based on the lectures themes, the seminars’ themes had been diversified):

a) Police Cooperation b) Aspects concerning the cross-border cooperation frame c) Considerations concerning the cross-border financials (Romania-Hungary)

During the final conference “Romanian-Hungarian Cross-border Cooperation Institutions to a

European Future”, the results obtained during the project, the final conclusions of the workshops, as well as proposals for improving the cross-border cooperation, were presented.

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The elaboration of the compendium entitled “The Actual Stage of the National and Communitary Regulations in the Cross-border Cooperation Field” represented the most important accomplishment of the project and it was launched during the final conference. The compendium is structured in 7 chapters: Part I: Cross-border cooperation in the Primary Resources of the Communitary Law Part II: The European Frame Convention Concerning the Cross-border Cooperation of Communities

or Territory Authorities and its Additional Protocols. Part III: Other Conventions and its Additional Protocols with Cross-border Cooperation incidence. Part IV: EU Regulations with Incidence upon Cross-border Cooperation. Part V: Other Romanian National Regulations with Incidence in the Cross-border Cooperation Field. Part VI: Other Hungarian National Regulations with Incidence in the Cross-border Cooperation Field. Part VII: Presenting some Concluded Agreements between the Authorities and Communities from the

Bihor-Hajdu-Bihar Euro-region whose dispositions are applicable in the cross-border cooperation field.

The compendium starts by approaching of some general issues such as:

- the way in which the cross-border cooperation forms are reflected in the European legislation; - the Madrid Frame Convention content concerning cross-border cooperation; - specific and practical aspects connected to cross-border cooperation, derived from European

documents (conventions, directives, regulations, frame decisions as well as legal documents with national character like the Law 302/2004 concerning the legal cooperation in criminal matters)

The antepenultimate chapter makes reference to the application of the financial legislation in

the cross-border cooperation field and the last chapter was reserved to the presentation of cross-border cooperation agreements concluded at the Bihor-Hajdu-Bihar Euro-region level.

Constantin łoca University of Oradea

About the authors

Jacques BOURRINET is Professor Emeritus at the University of Aix-Marseille III, director of the Center for International and Community Studies and Research between 1980 and 2003, as well as vice-president of the International Association of Economists from the French Banks. He was member of the European University Council for the Jean Monnet Action (The European Commission) between 1990 and 2001. Professor Jacques Bourrinet has published 110 works on European issues. (E-mail: secretariat.ceric@univ-cezanne.fr) Andreea BRAD. Sociologist interested in the field of communities sociology, elaboration of projects and strategies for urban and rural development; delivers the urban sociology seminar at the University of Oradea. (E-mail: andrabrad@gmail.com). Georges CONTOGEORGIS is professor of political science and former rector. He served as Director of Research at the French CNRS, holder of the Francqui chair, member of the High Council of the European University Institute of Florence, etc. He has taught at many universities around the world. He is corresponding member of the International Academy of culture of Portugal. His main works: Theory of revolutions in Aristotle, Paris, 1975; Social dynamics and political autonomy. Greek cities during the Turkish domination, Athens, 1982; History of Greece, Paris, 1992; The authoritarian phenomenon, Athens, 2003; Citizen and city. Meaning and typology of citizenship, Athens, 2003; La Grèce du politique, Montpellier, 2003; Nation and modernity, Athens, 2006; The Hellenic cosmosystem, Athens, 2006; Democracy as freedom. Democracy and representation, Athens, 2007; The Hellenic Democracy of Riga Velestinli, Athens, 2008; Youth, freedom and the state, Athens, 2009. (E-mail: gdc14247@gmail.com) Andrea FORNARI graduated in Economics at Brescia University. He has worked as manager in Spain and presently is director of a multinational enterprise in the province of Brescia. He is collaborator of the Jean Monnet Chair of the University of Brescia. (E-mail: afornari2003@libero.it) László GULYÁS (1965) PhD (history), PhD (economics/regional studies), MA (geography), MA (human resource management). Recently he is associate professor of University of Szeged. His interest focus is on history, minorities, regionalism, and regional development of Central-Europe. (E-mail: gulyas1@t-online.hu) Ioan HORGA (1956) holds the “Jean Monnet” Chair in Euroregional Studies and is Codirector of Institute for Euroregional Studies Oradea-Debrecen. He is member of the Scientific Committee of the European Master “Building of Europe” at the University of Siena (Italy) and of the Master in “Specialistes en problemes politiques, juridiques de l’Europe Centrale” at the University of Reims (France). He is the Secretary General of the Association of the Carpathian Region Universities (ACRU). He is currently concerned whth issues regarding borders, cross-borders cooperation, regional development, media and religion contribution to shaping an European awareness. He is the chief editor of Eurolimes. He is also member of the Advisory Committee of the Neighbourhood Collection, edited by Bruylant Publishing House. (E-mail: ihorga@uoradea.ro) Magdalena KĄKOL, PhD, is a lecturer at Maria Curie-Skłodowska University in Lublin (Poland), Faculty of Economics, Chair of the World Economy and European Integration. She earned two M.A. degrees: in economics and law from the same university. During her studies and scientific activity she obtained four foreign grants and scholarships. In her research work she specialises in international economics and European integration and especially in monetary integration and EU competition policy. She is the author or co-author of over thirty publications. (E-mail: mkakol@hektor.umcs.lublin.pl) Nedime Jaroslaw KUNDERA is professor of economics of the University of Wroclaw (Poland), Jean Monnet Chair and director of the Institute of Economics of the University of Wroclaw. He is member of the working group on the Agenda 2000, coordinator of Tempus program on European Studies, coordinator of post diploma French study – Public policy in Europe (DESS). He is also member of the Committee of National Research (KBN) in Warsaw, coordinator of Tempus program Euro-Regio-

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Center, Dean of the Faculty of Economics at the Higher Professional School in Lubin, adviser for Structural Funds in two operational programs: Trans frontier cooperation between Poland and the Czech Republic and Regional Operational program for Lower Silesian Voievodship (education infrastructure), national expert for Euro introduction. His field of research is in European integration: European single market, Structural Funds of the EU, Monetary integration. Andrei MARGA represents a well known public figure in the Romanian and international cultural and academic sphere. PhD in Contemporary Philosophy in 1976, he is teaching at the “Babeş-Bolyai” University of Cluj-Napoca courses on contemporary philosophy and logic. Professor Marga is currently the Rector of the “Babeş-Bolyai” University and among his contributions regarding the management of educational system we can mention that he is considered one of the forefathers of European studies in Romania and a promoter of multilinguist and multicultural educational programmes. His influence on the education reform was considerably noticed in the period of 1997-2000, when he held the position of the Minister of National Education of Romania. The scientific, teaching and managerial activity of Professor Marga is worldwide recognized and he is present in the main international and European educational forums and academic boards. To mention but a few, he is a member of the Collegium of the Magna Charta Observatory, Bologna, member of the Council of the United Nations University in Tokyo, member of the Board of the European University Association, Bruxelles, member of the Academia Europea, Salzburg and Jena. (E-mail: amarga@staff.ubbcluj.ro) Bogumiła MUCHA-LESZKO is a professor at the Faculty of Economics within Maria Curie-Skłodowska University in Lublin (Poland) where she is in charge of the Chair of the World Economy and European Integration. Her research and teaching interests lie in international economics and European integration, especially in the global economy, international trade and monetary integration. Since 1995 she is a holder of the Jean Monnet Chair in Economics of European Integration and the scientific editor of the “European Bulletin”, a book series of the Maria Curie-Skłodowska University’s Publishing House. She is the author or co-author of more than a hundred publications, published in Poland and abroad. She earned many grants and scholarships from the US and European institutions and took part in as well as coordinated several research-teaching projects, finances by the European Commission. (E-mail: mucha@hektor.umcs.lublin.pl) Lerzan OZKALE. Having obtained her PhD from Istanbul Technical University (ITU) in 1989, N. Lerzan (Kılıç) Özkale got full professorship at the same university in 2002. Apart her main field of reserach which is economic integration and customs union, she also published on competitiveness of Turkish industry, trade policies and privatization. Her more recent interest in quality and reform of higher education resulted in articles in the field. Özkale worked at the European Commission in 1986 and had the opportunity to follow the monthly meetings of the Political Committee of the European Parliament. She was appointed as an ECTS (European Credit Transfer System) Counsellor of the European Commission in 2003 and as a Bologna Expert in 2004. She assumed many administrative responsibilities in Istanbul Technical University as vice-dean, advisor to the rector, division head. Actually she is heading the department of management engineering together with her responsibility as the Institutional Erasmus Coordinator of ITU and Bologna Expert. (E-mail: ozkale@itu.edu.tr) Angelo SANTAGOSTINO is Jean Monnet professor of Economics of the European integration at the University of Brescia, Italy. He studies economics of international integration, applied both to the European and Latin American case. He is author of a book and articles related with Turkey and EU’s Mediterranean policy. He has also analyzed the relations between Europe and the Islamic world. (E-mail: santagos@eco.unibs.it) Laura SCICHILONE got a PhD degree in “Institutions, ideas and political movements in contemporary Europe” from the University of Pavia (Italy). She is Master in European Studies “The Process of Building Europe”. Presently she is researcher in History of European Integration at the Centro Interdipartimentale di Ricerca sull'Integrazione Europea, at the University of Siena (Italy). She is also member of Associazione Universitaria di Studi Europei (AUSE – ECSA). In particular she studies the history of the European Community/Union environmental policy. Among her latest

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publications: L’Europa e la sfida ecologica. Storia della politica ambientale europea (1969-1998), Bologna, Il Mulino, 2008; with F. Di Sarcina, L. Grazi (edited by), Europa vicina e lontana. Idee e percorsi dell’integrazione europea, Firenze, Centro Editoriale Toscano, 2008. (E-mail: laura.scichilone@gmail.com) Erzsébet SISÁK (1985) Bsc (management, with regional studies course), recently she is MA student of University of Gödöllı. Her interest focus is on urban competition. (E-mail: s.erzsi85@freemail.hu) LuminiŃa ŞOPRONI. Senior lecturer at the Department of European Studies and International Relations, University of Oradea, Romania (Faculty of History, Geography and International Relations), she has a DESS diploma in Administration and Management of Communication at the University of Social Sciences, Toulouse I (France). She is the academic coordinator of the Jean Monnet Module “Mass-Media and Intercultural Dialogue in Europe without Borders” (2007-1010). Her scientific interests are focused on international economics, intercultural communication and regional marketing. (E-mail: lsoproni@uoradea.ro) Florica ŞTEFĂNESCU. is senior lecturer at the University of Oradea and a specialist in the history of economic thinking and European economy, doctor in economy at “Babeş-Bolyai” University of Cluj Napoca. Representative publications: A.D. Xenopol’s Economic Thinking (2003), Combating Poverty and Promoting Social Inclusion. A Case Study in Bihor County (coord. 2009), A.D. Xenopol. The Economic Journalism (2004) (foreword and coordination Ştefănescu Florica), European Economic Politics (2005), Durable Development and the Quality of Life (coord. 2007). (E-mail: florica_stefanescu@yahoo.com) Olha YEHOROVA. Senior research fellow of the Regional Branch of the National Institute for Strategic Studies in Uzhgorod, working on scientific research on obtaining the scientific degree of a candidate of economic sciences (specialty 21.04.01- «economic security of the state») in Economic and Social Strategy Department of the National Institute for Strategic Studies. Graduated the International Relations Faculty, Uzhgorod National University (2006 р.). Author of 12 scientific articles issued in Ukraine and Hungary. (E-mail: uf.niss@gmail.com)

Eurolimes

Journal of the Institute for Euroregional Studies “Jean Monnet” European Centre of Excellence

Has published

Vol. 1/2006 Europe and its Borders: Historical Perspective Vol. 2/2006 From Smaller to Greater Europe: Border Identitary Testimonies Vol. 3/2007 Media, Intercultural Dialogue and the New Frontiers of Europe Vol. 4/2007 Europe from Exclusive Borders to Inclusive Frontiers Vol. 5/2008 Religious frontiers of Europe Vol. 6/2008 The Intercultural Dialogue and the European Frontiers Vol. 7/2009 Europe and the Neighbourhood Vol. 8/2009 Europe and its Economic Frontiers

Will publish

Vol. 9/2010 The Cultural Frontiers of Europe Vol. 10/2010 The Geopolitics of European Frontiers Vol. 11/2011 Leaders of the Borders, the Borders of the Leaders Vol. 12/2011 Communication and European Frontiers