The 28th Member State? Croatia and the EU two years into the negotiations

10 October 2007

Vladimir Drobnjak, Croatia’s Chief Negotiator for the accession negotiations with the EU, reminded the audience that negotiations on his country’s entry into the Union had begun two years ago. Fixing a date for actual accession would be like “leaving the tunnel with the Central Station clearly in sight”, and while this has not yet been agreed, Croatia has set itself 2009 as an internal target and timeframe for reforms.

Croatia is in the throes of negotiating on the 35 chapters of the acquis communautaire. Twelve chapters have so far opened and two provisionally closed. A further seven are being processed and two more will be opened “within days”. The whole process is being supported by all the political parties in the Croatian Parliament and a specific body - the National Committee - has been formed, chaired by the key opposition leader, to oversee the negotiations.

Considerable progress had been achieved, said Mr Drobnjak, and the accession negotiations have picked up speed, with the government focusing on the opening and closing benchmarks.

Negotiations are taking place against a changing political atmosphere within the Union. Enthusiasm for enlargement has waned, or as one EU foreign minister put it, is “somewhat less than total”. Member States are instead concentrating their attention on constitutional and institutional reform.

Mr Drobnjak said Croatia would welcome an agreement on the Reform Treaty, believing that setting the EU on a firm basis paves the way for its future membership of the club.

Croatia’s membership is also tied up with the question of the Union’s “final frontiers”, and how far its borders should extend. While Croatia and Turkey opened accession negotiations on the same day, and Croatia supports Turkey’s membership, Mr Drobnjak said Croatia was moving forward at its own speed.

Benchmarks - “important novelties”

Croatia has had to fulfil the Copenhagen criteria for EU membership, but there are some additional “important novelties”, said Mr Drobnjak. The government must now meet opening and closing ‘benchmarks’ set by the European Commission. While these are very “rigorous”, they give Croatia useful, clearly defined targets.

At the same time, the acquis communautaire has grown, and the country has to negotiate with almost double the number of Member States previous candidates had to deal with, which requires considerable administrative capacity.

Both inside and outside the country, Croatia’s membership bid is seen in a positive light and in this climate, EU membership is not a question of ‘if’, but of ‘when’, Mr Drobnjak stressed. Croatia sees itself as “an ice breaker”, charting a course for those who will follow, sharing experience and giving advice.

Mr Drobnjak outlined some positive results of the negotiations already: Croatia’s foreign direct investment has doubled since 2005 and reached a record €1.2 billion in the first quarter of 2007; GDP has grown annually by 4.8% and GDP per capita stood at €7,700 in 2006. At the same time, unemployment has decreased to a record low of 11.2%.

Negotiating - “running a marathon”

Christian Danielsson, Acting Director for Croatia, the Former Yugoslav Republic of Macedonia and Turkey, Directorate-General for Enlargement, European Commission, compared membership negotiations “to running a marathon”: you start out feeling fine and feel good at the finish, but find the race in between very tough.

He felt that Croatia had made substantial progress in a complicated and complex process, in already closing two chapters and working on opening others. Nevertheless, much remained to be done “in the mid-term of the race”, he said, and a number of issues must be resolved.

Mr Danielsson said the system of benchmarks had grown out of lessons learned from previous enlargements, particularly Bulgaria and Romania. They help the country to set up a structure, and see what resources are needed to fulfil the membership criteria, and how and when it will take on the responsibilities that come with membership.

So far, Croatia has negotiated the non-contentious issues, but it is now reaching the more difficult ones.

‘Horizontal’ reforms are needed in areas such as the public sector and the judiciary, so that the acquis can be fully implemented. Stamping out corruption and establishing public trust in the law, and environmental reforms such as ratifying the Kyoto Treaty, are also key.

Other issues to be addressed include agriculture, public procurement, competition and state aid, and the need to restructure industries such as the ship-building sector. Reforms are needed in relation to justice, freedom and security matters, such as establishing clear borders so that Croatia can join the Schengen passport-free zone. Mr Danielsson was in no doubt that all this could be achieved, but said it called for substantial effort and for political capital to be invested in the process.

Turning to the issue of “enlargement fatigue”, he felt that this already existed when the ten countries which joined the EU in 2004 were negotiating the terms of their accession. One way to overcome this was to ensure that the membership process was rigorous, so it is clear that a country is ready by the time it joins.

Mr Danielsson believed that the EU-Croatia negotiations should be seen in a broader context. It is a positive experience that will provide a good example to the other Western Balkan countries which wish to join the Union and bring positive results for the region as a whole.

There is “no magic formula” for successful negotiations, he said in conclusion, reiterating that Croatia needs to work on horizontal reform and cross-cutting issues, and bring about political reforms, engage positively in the region and ensure that all citizens and business are involved.

Difficulties still lie ahead

Franz-Lothar Altmann, Head of the Balkan Research section at the German Institution for International and Security Affairs (SWP), said difficulties still lie ahead for Croatia, as it begins to negotiate on the difficult issues.

While unanimously supporting the progress that has been made, the European Parliament has raised several questions. These include:

·         Concerns about local hostility to the International Criminal Tribunal for the Former Yugoslavia (Mr Altmann noted that posters celebrating the Croatian General Ante Gotovina, an indicted war-criminal, are still displayed locally.);

·         the dispute with Slovenia over fishing rights in Piran Bay;

·         the need for Croatia to ratify the Kyoto Protocol to reduce greenhouse gas emissions;

·         the need for Croatia to improve its public administration to make it more transparent and reform the judicial system.

Mr Altmann said reforming the public procurement system would be difficult in a country where the market is protected, and up to 50% of businesses are in state ownership. The Freedom House index currently places Croatia 109 out of 157 in terms of how easy it is do business there.

Croatia needs to improve the capacity and quality of its public administration, and to embark on a strategy for building administrative capacity. It also needs to improve its communications and foreign language skills, and improve its way of doing business.

To achieve EU membership, the country also needs to liberalise its economy, reduce ship-building subsidies and increase privatisation, as the state still holds a large share in particular industries.

However, the economy is already reasonably advanced, said Mr Altmann, with a purchasing power of €13,200 per capita, compared to Bosnia’s €5,500. Despite this, it has a trade deficit of €10 billion (28% of GDP), and higher levels of unemployment than Bulgaria and Romania. Its outside earnings currently come mainly from tourism, so it will need to prepare for the customs union with the EU and open up its markets.