UNITED STATES EUROPEAN COMMAND -GEORGE C. MARSHALL

EUROPEAN CENTER FOR SECURITY STUDIES conference

NATO and EU future Roles in South Eastern Europe

The speech of Mr. Goran Svilanovic, Chair WT I of The Stability Pact for SEE,
Panel EU’s current and future roles in South East Europe

Don’t just ask what EU can do for SEE, think what SEE can do for EU

Berlin, 3 May 2006

The more I participate in events that deal with SEE –EU-NATO issues, the more am I confused by titles, topics and standpoints from which this issues should be discussed. SEE already has NATO founders, NATO members, PfP members, EU member country, EU candidates, countries that will most likely become EU members in a less than a year, old adversaries emerging into new axes of stabilization like Greece and Turkey, ongoing unresolved status issues of Cyprus and…and Western Balkans. Can these integrations level diversities within the SEE, with the common ground of endowment of modern Western values that is a unique case in the developing world, with its comparative advantage of finding itself more flexible in coping with globalization challenges be a foundation for emerging of a new SEE dimension of Europe? A multy leveled SEE, integrated in a new fashion of increased flexibility that avoids some of the EU’s current obstacles caused by over-regulation that is not in compliance with globalization, can serve the EU, NATO and IOs as a role model in their democracy promotion, as a tool of long-lasting stabilization and development, throughout the world.    Both, the EU and the SEE are at a crossroads and need time to hit new directions. Hopefully they will be tuned under the German presidency. German councilor Angela Merkle will in on May 11 give government’s expose on Germany EU presidency. It will be of a great importance for both, people of SEE but the EU voters too, if we hear some more concrete plans for SEE.

The EU has a twofold role in relation to the SEE in the forthcoming period: a) to serve as a historic role-model for stabilization and development and b) to re-assure the SEE countries in regard to their EU perspectives.

In short-term, the EU has a crucial role of helping WB, most diverse and dynamic part of SEE, to continue to overcome remaining challenges on its path from war torn region to stabilization and integration. 2007 will be the key year in which WB can, under Germany EU Presidency, one of the strongholds of trans-Atlantic cooperation, be profoundly integrated into SEE and move ahead toward EU-Atlantic integration. Both the WB within the SEE and the EU should hit the same track of a security sector reform (SSR). The EU has a right to be stringent in its demands and rigorous in monitoring performance in the SSR field, precisely because, in the WB, it is engaging not just with ‘third countries’ but states to which it is holding out the prospect of EU membership. But I see no other way of reforming security sector of SEE, but through NATO accession and cooperation.

The EU must terminate the glooming trend of isolation   of the WB in the middle of its process of opening to the global economy. Opening has been induced predominantly from the outside by IFI requirements and foreign investors’ interests, and heavily politically and financially supported by them. The EU will - with forthcoming addition of Bulgaria and Romania - going to encircle WB geographically, and that is good news. Bad news is that the EU, in a response to its own turmoil and attempts to preserve itself from some of the global challenges, is in an enlargement fatigue. Lets make no mistakes, that trend was clearly expressed in Salzburg by unclear EU perspective for the WB, and continues by the EU’s incapability to deliver on its promises for encompassing visa facilitation that would lead to general liberalization. This situation, that is obviously going to last, is putting people and companies as well as investors in WB and SEE in a frustrating situation that is by all   means in contradiction with progress being made and level of aid allocated by USA, EU and IOs into the region so far.  Prospect of isolation challenges investments made so far and increasingly impede region’s potential for transformation from a zone of stabilization and integration to the zone of growth. In a meantime, capsulated region has to cope with unavoidable damping and outsourcing economical effects of globalization, as well as with security threats. The outlook is that, within a few years, citizens of the Russian federation will enjoy a more generous visa regime than people from potential EU candidates in the Balkans. The EU should send messages on clear EU perspectives despite the swinging moods of its electorate. This is because it turns out that problem in fact shared both by the SEE and the EU is caused by globalization processes, rather than by the enlargement ones.

The EU should work together with the SEE in handling the challenges pertaining to globalization, because they are, in fact, the same structural impediments, only on different scales.

More to the point, with continuous outsourcing, even the EU, as we have seen in France, faces problems to adjust itself to newly emerging circumstances caused by inflexibility to meet global challenges rapidly and effectively on a long period of time.

For more than a decade, citizens in middle-income countries of the WB, SEE, CE, and EE have been told by international financial institutions and by their own governments that opening to the global economy will bring large and widely shared benefits. But all too often the troubling reality has been persistently high unemployment and stagnant income. The stark disjuncture between lofty rhetoric and grim reality has proved fertile ground for populist backlash against global markets and their perceived Western masters in countries without clear EU-Atlantic prospect. The world leaders, politicians and financiers, must find ways to empower middle – income countries and low to middle income workers in developed countries so that they can enjoy the fruits of globalization, too.

Last Euro barometer survey shows that the economic and social concerns are on top of people's agendas for the future of Europe.   The special Euro barometer on the "future of Europe" has also revealed that citizens view the union as modern and democratic (by 67%), but almost half of the respondents think it is technocratic (49%) and inefficient (43%). While a high number of people praise peace among the member states (60%) and free movement (56%) as the EU's greatest achievements, the bloc is not seen as performing well in curbing unemployment which is the single most crucial issue for Europeans, according to the survey. That sentiment is also portrayed in opinions about what the EU should focus on in future. Similarly, the "European social welfare system" would be the key element to strengthen people's feeling "about being a European citizen" for 32% respondents, with six in ten citizens favoring harmonization of the bloc's welfare systems, mainly in central and eastern Europe, such as Poland (86%), Latvia (82%) and Hungary (81%). On the other hand, several western European countries feature as the most pessimistic on globalization with 72 percent of the French and Greeks viewing it as a "threat," followed by Belgians (64%) and Germans (59%). Although the fear of globalization is associated with competition from low labor cost countries - highlighted as key outcomes of the latest EU's enlargement - a majority of Europeans (55%) still consider the bloc's expansion as "something positive.” However, 63% of respondents fear that further enlargement would increase problems on their national job market and only a minority (34%) believes that product prices fell due to the enlargement.

The SEE leaders are to employ exactly the said economic arguments, in order to win the battle for the hearts and minds of the EU politicians and electorates. The case for SEE inclusion is to be strengthened by demonstration of socio-economic benefits of the joint approach to globalization challenges.

In today’s global markets there are only two ways to go ahead. People and countries, regions or politically and economically integrated entities, must be competitive in either knowledge economy, which rewards skills or institutions that promote cutting-edge technological innovations, or the low wage economy, which uses widely available technology to do routine tasks at the lowest possible cost. In fact middle-income countries, as SEE countries in average are, have not done nearly as well under globalize markets as either richer or poorer countries. According to global economies experts, they have been forced into unwinable battles with China for market share in standardized manufacturing and, increasingly with India for low-wage services-sector export. In USA and EU the challenge of helping disaffected middle class “tech up” rather than “dumb down” is well understood. People must be given access to the education and training that can transform them into successful knowledge workers. Likewise, middle-income countries must be helped up to the global skill chain. It is fitting into EU’s Lisbon agenda of transforming the EU into knowledge-based economy too, which numerous pre-accession programs have blissfully already bean offered to the WB and SEE countries.  Middle – income countries of SEE need broad and deep institutional reforms in government, banking, and law to transform economies that stifle innovation into ones that foster it with strong property-rights regimes, effective financial systems and good governance. In other words, into functional states. EU member countries, short of UK and Sweden, should consider structural reforms along with the short-term remedies – like the French Employment laws.

But, not only have the socio-economic reasons fortified the case for the SEE inclusion. The security and energy concerns of the post cold-war era, undeniably global, call for an increased role of aligning along the structures of NATO. Once again, the SEE reaffirms its geo-strategic importance.

SEE needs another spotlight of focused and coordinated involvement of the IC, which would help both sides to preserve the investments and the already achieved accomplishments. Further measures should mean less conditionality and more supportive engagements. By doing so, the IC, EU and NATO in particular, along with SEE leaders and people can transform SEE into a market and investment opportunity and energy and security partner. In the long run, NATO has a huge potential of overcoming functionality problems, which are imposed by different EU accession geometries of the SEE. An enhanced  NATO focus on the SEE  would  correspond into the Alliance’s  initiative to  create  closer military ties with countries like Sweden, Finland, Australia, New Zealand or even Japan and South Korea.

Above all, the SEE with a clear EU-Atlantic perspective – will serve as a role-model to payoffs to democracy promotion, the key foreign policy goal of both the EU and the US.

Dropping the WB now, which would impede the formation of the SEE identity, would be a bad sign for other pro-democratic forces, supported by trans-Atlantic partners. Democracy promotion has faced several harsh backlashes recently, not only from China and Russia, but also from Africa, South America, and Middle East. It needs serious rethinking and re-branding.  Contrary to other regions where it has its ups and evident downs, democracy promotion has rooted deep into all layers of otherwise very incoherent societies of the WB. The region has a comparative advantage of being settled in SEE, surrounded with EU members and candidates and NATO founders, in proximity of countries that already benefited from the EU enlargement. It is the best EU foreign policy approach so far, with obvious success stories of 10 new EU member states. More to the point, the WB is not polluted with harsh anti-westernization, as is the case in some other parts of the world, where democracy promotion is pending. It has inherited and to a certain level preserved a lot of ex-Yugoslavia positive sides like social inclusion, certain liberties, modernization, desecularization, good education and welfare services and freedom of movement notion. It would be unreasonable to let the WB down, once it is just a few more steps towards full democratization. If the WB, via SEE new identity, does complete its transition by full fledge membership to EU and NATO, it would be a case study of promotion of a long process of democratization working at its best. That would also prove that the regionalization is not an obstacle, but rather an efficient response to back lashing globalization. The freedom fighters throughout the world would be given a signal that their efforts pay off and that longing and sacrificing for stable, functional, integrated societies with sustained economical development can turn into palpable reality.

Therefore, dear colleagues do not just think what the EU and NATO are to do for the SEE, but rather consider the benefits for the EU and NATO, possibly stemming from the SEE full inclusion.