Opening Lecture in the Cicero Foundation Great Debate seminar on "Enlargement of the EU: Preparing for the Accession of the First Wave", PARIS, 11 October 2001

Ladies and Gentlemen,

I am pleased to be here in Paris, invited by Cicero Foundation to open the International Seminar, which I am sure will contribute a lot to the debate about the process of EU enlargement, the process which I believe, will change for better the Europe of today.

In a heated period of preparing Poland's positions for negotiations with the the European Union, at one point two eminent Polish politicians came together to discuss the way to deal with agriculture. One was a specialist in the sector; the other was an excellent economist. The latter said that he would be much happier if the EU Common Agriculture Policy had never existed as it distorts the markets. The first one agreed, but added that since it exists, we need - whether we like it or not - to get ready for it because the CAP will remain more or less the same for a foreseeable amount of time.

This short anecdote recapitulates nicely one of the key dilemmas facing the candidate countries in many aspects. Namely, while the EU may not represent the perfect solution for a country in transition, it exists at our borders and strongly influences our lives and policies. It is not possible to oppose it. At the political level, it represents perhaps the best answer to post-war Europe where co-operation replaced the sword as a method for solving disputes. On a larger scale, European integration means the process of building and shaping the common house of all Europeans. It is a must. The preparations for EU membership constitute - by and large - the single most important political issue over the period of time starting from D-day to the beginning of the membership negotiations. It is sometimes difficult to judge the effect and influence of the prospect of EU membership on the applicant countries during the last decade. This, however, can be much easier traced from the beginning of the negotiations. The association agreement (the so called Europe Agreement) laid down the opening of a free trade area between Poland and the EU. Foodstuffs were excluded, of course. It invited countries to progressively open their borders for trade in industrial goods, services and finances. With the time - as the Europe Agreement was perceived as a tool of accession only by the candidate countries, but not by the EU itself - it invited the EU to reform itself. Once the prospect of enlargement became more palpable, the change of the EU institutional machinery was progressively seen as a precondition to a good functioning of the EU after accepting 12 countries as future members. This, however, not always was a sufficient precondition for the EU to change its modus operandi. The first attempt of the institutional reform failed at Amsterdam in June 1996. As the time horizon for enlargement was not close enough at that moment, the EU leaders decided to postpone the difficult choices of redistribution of power in the EU. Later, at Nice, the compromise proved difficult and cumbersome.

Public Opinion in Poland

Traditionally, public acceptance for EU membership was quite wide in Poland. Perhaps the main reason was that the EU is instinctively regarded in Poland as also a security driven arrangement, on the top of the economic engine of the integration. Since the security vacuum in Poland was perceived strongly after the collapse of the communism, public support for both EU and NATO membership was relatively high and stable. Yet, the support experienced a significant drop in 1998-9, then it bounced back to more secure levels. There are different reasons for that, but the first and perhaps the most important one was that in early 1998 Poland entered into the accession negotiations with the EU. Although these negotiations are not a classic hostile bargaining, its very logic provokes sometimes to underline the necessity to 'defend' the interests of the parties involved. As a consequence the same logic pushes both sides to stress the weak sides of the 'opponent'. Confronted with such a picture of EU-Polish relations, it is not surprising that the support for enlargement has dropped on both sides of the 'fence'. The second reason was connected to a particular political situation in Poland after the elections of 1997. The third one was of more structural nature and it was directly connected to the Polish farmers' opinion on the EU integration.

Accession Preparations and Transformation

Perhaps the most specific pattern of Poland's efforts to achieve EU membership is that the relatively biggest problems (Poland is the biggest country in the region) appear to be at the same time combined with the relative greatest perseverance in tackling them. Hence it is important to underline the synergy, if not equivalence, of both the systemic transformation the country is undergoing and the process of its preparation for EU membership. This path may be called an 'oriented transformation', where the future EU membership gives an overall direction for the transformation.
Poland has sometimes been accused of being a late runner in the preparation for EU membership. Particularly during the two first years of the outgoing government the opinion of the EU was that Poland was not doing enough to get itself ready for accession. However, in 2000-2001 the government adopted a total of 142 draft harmonising legal acts, 136 out of which were passed by the Parliament by the end of August 2001. The dynamics of the undertaken action is better illustrated if compared to 1997-1999, when the parliament adopted 'only' 69 EU-related acts. In total, the last Parliament passed 200 legal acts during its four-year term. Bearing in mind the necessity to efficiently implement the developed acts, in the second half of this year the government focused its legislative efforts on adoption of about 200 implementing acts. The swift pace of legal adjustments was most clearly visible in such areas as: environment, free movement of goods, fisheries, competition policy, veterinary issues or Justice and Home Affairs. As you might know, Poland had embarked on four major reforms: regional self-government, pension system, health care and education. These kinds of reforms was never 'demanded' by the EU, although it mentioned on numerous occasions the structural deficiencies of the country. The fact is that there is no acquis communautaire on how the regional structure should look like, how the pensions should be paid, or how the health services should be delivered, not to mention how young people should be educated. Yet the one thing that the reforms are all about is a healthy, strong and modern state.

One may wonder why those reforms - seemingly not needed from the point of view of European integration - were at all necessary. And the answer is simple: because both the transformation and EU membership have to serve the interests of the country first. Since the European integration provides for a set of good and healthy tools and policies (even if sometimes not perfect, as it was mentioned before), it serves the country to pursue it. The same applies for the four mentioned reforms. Happily enough there is an obvious synergy between them. Apart of the need for a modern state where the decisions are taken close to the citizens and are efficiently applied, the creation of 16 powerful regions (instead of 49 in the past) makes the country much better prepared for participation in the EU regional policy, where one third of its budget is spent. Changes in the health care system - apart of providing modern services required by the citizens - will stop draining the state budget. This should allow for finding in the future appropriate amounts of money for necessary investments in the three most difficult areas: infrastructure, agriculture (also in its social sense) and environment. The new pensions system will operate on a rational market logic and have already generated necessary domestic savings for investment. Since privatization of state owned assets will end one day, domestic savings will match the inflow of foreign direct investment and contribute to a steady long term growth of the country. EU enlargement will happen one day. The new members will settle within a larger framework of political and economic co-operation and will be embedded in a mutual security arrangement of Europe and NATO. The time has come now for a grand debate on the future of integration. On several occasions Polish leaders took the opportunity and joined the debate on the institutions of European Union. Their main worry was that the current debate took away the attention from EU enlargement.

A Few Words on the Public Finances of Poland

There is a general impression of a worsening of the economic situation in Poland, which is exemplified by a decreased economic growth, down from about 5.5% in the years 1993-1998 to 4% in the years 1999-2000 and the forecaste for this year is 3%, together with an increase in unemployment up to 15%. Inflation, however, is falling rapidly. Several facts contributed to this situation. As I mentioned before, Poland was exposed to the shock caused by the crisis in the East and thus lost a part of the Eastern markets. An increase in oil prices resulted in a worsening of the current account and a decline in economic growth. However, one can say that Poland coped well with achieving stability in face of those external shocks. The economic growth of 3% is low only by recent Polish standards, but considered to be satisfactory elsewhere. The current account has strengthened.

The IMF assesses that, if the strong economic policy is maintained, the output could grow on average by about 5% annually, the current account deficit could be sustained at about 5% of GDP, and inflation can fall below 4% from 2003. In our situation, co-ordination policies require determination and important changes in numerous areas, but the prospects for long-term growth and stability are very promising. We do not know whether the tragic developments in the USA will influence our economic situation, but preliminary assessments by economists suggest that there should be no important negative impact on Poland's economy.
Problems related to finances do not change this situation much, since trade and payment balance have not been threatened. Neither the competitiveness of the Polish market for investments is threatened, as assessed by international economists. Far-reaching budgetary reforms will have to be made, but each crisis - while posing a danger - also opens up an opportunity to carry through necessary changes. The government committed itself to do its best to avoid any adverse impact of this crisis upon the process of harmonisation with the acquis. The budgetary situation makes it clear that the period of "easy" growth came to an end. In order to continue the swift economic growth we need changes within the system of social welfare and systemic support to sectors with largest growth-related impact. In my opinion our budgetary situation can actually inspire those changes.

Approaching the End of the Negotiations

So far Poland has opened negotiations in all 29 chapters and temporarily closed 17. Earlier this year Poland modified its positions in several difficult chapters, such as: Employment and social policy, Taxation, Transport policy, Energy and Environment. The government continues to review its positions and requests for transition periods. This process is accompanied - as I noted before - by a significant acceleration of the legislative and harmonisation work. We are ready to continue this way, but we expect the Union to offer compromises as well. This is a pre-condition for winning the support of the Polish society for membership in the EU during the referendum and before.

I would like to say a few words about the negotiation prospects during the Belgian Presidency. We expect that a number of chapters will be closed or at least will be prepared for final decisions. This concerns the following areas: Environment, Company Law, Transport Policy, Taxation, Fisheries, as well as the veterinary and phytosanitary parts of Agriculture. We also make efforts to have the chapter of Justice and Home Affairs closed. In this area Poland has made a leap forward during the last two years. However - due to the absence of objective criteria determining recognition of such a process and a lack of trust on the part of the EU Member States - prospects for the closing of this chapter this year are unfortunately slim.

Since implementation of this programme depends to a large extent upon the Presidency, we count in this respect on the enormous experience of Belgium as one of the founding countries. In the nearest future, decisions are of key importance concerning the transition period proposed by the EU with regard to the free movement of labour and the issue of real estate acquisition by foreigners in Poland. It is important to note that the results of parallel research conducted by Polish and German sociologists indicate that there is no potential threat to the stability of EU labour markets caused by inflow of workers from Poland.

Referring to the chapter of free movement of capital, I would like to underline that already now the legal situation in Poland permits real estate acquisition by foreigners on the basis of one-off authorisations issued by the Ministry of the Interior. In many cases it allows for the acquisition even without any authorisations. The current legislative regime is assessed as a liberal one. Given the historical background and having done several public opinion surveys, Poland requested quite a long transition period. The European Union has already presented its common position to Poland and a facility to achieve a compromise is now considered. A broad debate was carried out in Poland on both issues - free movement of persons and free movement of capital. Further decisions can be expected after establishment of the new Polish government. I think at the current stage of the negotiations it is not only the number of closed negotiations areas that determines the chances for a swift accession to the EU. In our opinion, the quality of Poland's membership in the EU requires compromises that take account of the Polish requests. The quality of negotiations is more important than the number of closed negotiation chapters.

As you all know, commitments of the EU countries regarding the timeline for accession by new members were confirmed at the Göteborg summit: negotiations with the best prepared countries should be completed by the end of 2002. Moreover, it was stressed that the new member states should participate in the elections for the European Parliament in 2004. Poland appreciates the above statements and expects that during the Laeken summit in December 2001 the EU will take some important decisions concerning the first wave of enlargement. The government in Poland adopted 1 January 2003 as the date on which Poland will be ready for accession. The adjustment process allows for this deadline to be met. Poland will be ready for membership in 2003 in the first group of countries acceding the EU. However, the decision concerning the date of enlargement largely depends upon the EU.

Ladies and Gentlemen,

The main subject of my lecture was to present an assessment of the last phase of the accession negotiations, seen from the Polish point of view. However, when we often talk about the progress of negotiations as the number of closed chapters or remaining problems to be solved, we cannot forget about the aim of this, sometimes, technical process. The negotiations serve only as an instrument to achieve something which is of high importance and of a political character - the unification of Europe, divided by the Second World War.

Therefore we, both the Eu and the candidate countries, have to do our utmost best to find necessary solutions that the negotiation process is completed as quickly as possible to open the door to a united Europe which offers new opportunities for all involved parties.

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