RJEA iulie 2005 FINALrjea.ier.gov.ro/wp-content/uploads/revista/RJEA_Vol5_No2_July2005.pdf · Andrei Plesu - Rector of New Europe College, Bucharest, former Minister of Foreign Affairs,

DirectorNicolae Idu

Editor-in-ChiefOana Mocanu

Associate EditorsIrina RâmniceanuGilda Truicã

Editorial Board

Farhad Analoui - Professor in International Development and Human Resource Management, the Center for International Development, University of Bradford, UK

Daniel Dãianu - Professor, Academy of Economic Studies, Bucharest, former Minister of Finance

Eugen Dijmãrescu - Vice Governor of the National Bank of Romania

Nicolae Idu - Director General of the European Institute of Romania

Andras Inotai - Professor, Director of the Institute for World Economics, Budapest

Mugur Isãrescu - Governor of the National Bank of Romania

Alan Mayhew - Jean Monnet Professor, Sussex European Institute

Costea Munteanu - Professor, Academy of Economic Studies, Bucharest

Jacques Pelkmans - Jan Tinbergen Chair, Director of the Department of European Economic Studies, College of Europe - Bruges

Andrei Plesu - Rector of New Europe College, Bucharest, former Minister of Foreign Affairs, former Minister of Culture

Cristian Popa - Vice Governor of the National Bank of Romania

Tudorel Postolache - Member of the Romanian Academy, Ambassador of Romania to the Grand Duchy of Luxembourg

Helen Wallace - Professor, Director of the Robert Schuman Centre for Advanced Studies, European University Institute, Florence

CONTENTS

TRANSATLANTIC RELATIONS UNDER STRESS: EUROPEAN AND AMERICAN ATTITUDES TOWARDS INTERVENTION AND 5 PREVENTIONFulvio Attina

POLAND AND TRANSATLANTIC SECURITY - AN ENDURING ATLANTICIST? 21Kerry Longhurst

CURRENT ISSUES OF RESEARCH, DEVELOPMENT AND INNOVATION IN ROMANIA 27Andreea Vass, Steliana Sandu

THE EUROPEAN UNION, THE ENLARGEMENT AND THE SOUTH-EASTERN EUROPE 51Malkidis Theofanis

THE NEW REGIONALISM IN LATIN AMERICA: IS THERE A CASE FOR AN EMERGENT PARADIGM OF INTEGRATION? 65German A. de la Reza

BOOK REVIEW - Philip McCann (Editor), Industrial Location Economics 81Daniela L. Constantin .

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TRANSATLANTIC RELATIONS UNDER STRESS: EUROPEAN AND AMERICAN ATTITUDES TOWARDS INTERVENTION AND PREVENTION

Fulvio Attinà *

Abstract. In this article, attention is called on the American attempt to change the international rules of intervention, and the impact this choice has on transatlantic relations. Hegemonic theory of world politics is the theoretical framework of the analysis. At the same time, the evolutionary world politics model is adopted to understand change in world politics. In the first section of the article, a set of concepts for the analysis of the structure of government of the world political system is presented. The second section is about the current phase of hegemonic politics and the state of transatlantic relations. The third section analyzes the issue of external military intervention to change domestic regimes and President Bush's prevention doctrine. In the last section of the article, the attitudes and policies of the European Union and American governments on prevention are examined and confronted.

Prevention is a tool to avoid unwanted consequences of human actions, social processes, structural conditions, and natural events. As far as the modern state becomes more complex and, hence, sensitive to unwished changes produced by unlawful and out-of-norm behavior of individuals and groups, the more it develops a variety of preventive measures and policies to deal with different kinds of problems. In politics, as in medicine, prevention is better tool to confront risks and menaces than reaction (i.e., defense, punishment and rehabilitation) when the risk of damage turns into incident. At the global level, interdependence has made the world system complex and, consequently, highly vulnerable to damages resulting from the occurrence of risks. Still, it can hardly be said that the structure of government of the world political system has appropriate measures, let alone policies, of prevention to deal with many problems that put the world at risk of disorder and serious scratches. This article deals with American and European attitude towards prevention as strategy to deal with the risk that * Fulvio Attina is Professor at Jean Monnet Center - Dept. of Political Studies, University of Catania

international disorder is created by problems of countries in conditions of economic backwardness, political violence and cultural conflict. In particular, attention is called on the European reaction to the American attempt to adopt military prevention as tool to get rid of the security risk caused by reckless governments. The argument of this article is that George W. Bush jr. has put before the world the proposal of bringing his preventive doctrine into the government strategy of the world political system. In explicit terms, the proposal of the American president is the following one: (a) military intervention to change the domestic regime of the state that seriously puts at risk the structure of government of the world political system is preventive action politically legitimate, and (b) in the case that such decision cannot be made by multilateral institutions, it is the responsibility of the state in the leading role of the world political system. The analysis of this argument is not intended to provide justification to the actions of the United States. It is aimed, instead, at investigating the current state of world politics and,

ROMANIAN JOURNAL OF EUROPEAN AFFAIRS VOL. 5, NO. 2, 2005

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especially, the present turbulent state of transatlantic relations.

The framework of the present study consists of the hegemonic theory of world politics and the model of evolutionary world pol i t i c s . In harmony wi th these perspectives, a set of concepts on the structure of government of the world political system is presented in the first part of the article. These concepts provide us with the appropriate tools for analyzing current world politics and its possible change. In the second part, the Bush's doctrine of external military intervention to get rid of irresponsible domestic regimes is confronted with changes in intervention policy that are taking place in international politics. Lastly, the contrasting views on prevention (and intervention) existing on the two sides of the Atlantic are confronted to appraise the impact of the controversy on the future of the relations between European Union and the United States.

THE STRUCTURE OF GOVERNMENT OF THE WORLD POLTICAL SYSTEM

In the hegemonic theory of 1international politics , the principal role of

authority and government in the world is held by a single state. This role (named by political scientists in different ways such as global power, world power, global leader, and hegemonic power) is undertaken by a state after a general war in which it led to victory a coalition of states. The governments of the victorious coalition share international values and political views on the government of the system. They also sustain the hegemonic country in the actions for executing the shared strategy of government in the early phase after the war when the world government structure is reconstructed. The hegemonic government of the rebuilt world system persists as far as

the global leader has the backing of important states. These states control key resources and the most important economic regimes and public policies of the system. The role of the global leader is firm on condition that it fairly respects the rules, institutions and procedures of the world system. These were either taken from the past international system and adapted to the new conditions, or agreed upon by the global leader coalition, and instituted after the global war.

It is important to bear in mind that, unlike the structure of government of state political systems, the structure of government of the world political system is not founded upon a constitutional pact formally agreed and recognized by its members. Incidentally, the domestic constitutional pact, and the laws derived from it, usually has the function of correcting to some extent, but in the case of democratic regimes to a remarkable extent, the inequality of the individual subjects of the state political system. Furthermore, the constitutional pact defines how individuals participate in the policy-making process of the state. Although not governed by a formally approved constitution, the international system does not lack a structure of government conditioned by the rule of law as far as de facto power i.e., political power founded on the unequal distribution of military, economic and political resources among the states is conditioned by international law and the norms and procedures of international organizations. In the present world system, these are, above all, the United Nations and the international organizations of the world economic regimes. To summarize, the structure of government of the world political system consists of the roles,

1 A synthetic list of the major analysts of this school includes Gilpin (1981), Kennedy (1987), Modelski (1983), Nye (1990), and Rasler and Thompson (1994).

institutions and procedures by which authoritative decisions are made and put into action to govern the world system.

Recognizing that the world system is governed by a structure of roles, institutions and procedures implies recognizing that it does not conform to what the communitarian view of international

2relations maintain . This view perceives the world as a community of peers (the nation-states) who abide to shared principles and norms of international law. Moreover, this community is destitute of any state actor with authoritative role. It attributes authoritative role only to international organizations. On this base, the doctrine of multilateralism has been developed, and it is maintained that the world is governed only in the areas in which multilateral rules of government are agreed upon by the states. The importance of multilateralism is here acknowledged, but it is also maintained that the world has been always governed by a structure that, combining de facto power and in ternat ional law, a t t r ibutes authoritative role to a state supported by an international coalition. In current world politics, this state takes into account also the multilateral framework that has been emerging in the evolution of the political institutions of the world government structure.

It is worth adding here two remarks that are obvious but make clear what is ahead of the present stage of the world political institutions. First, the structure of government of the world system has a very low level of institutional differentiation and no meaningful judicial (let alone police) institutions to take care of the international legal order. For this character, the world political system is in sharp contrast with the states that developed their political systems

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in the liberal constitutionalism tradition. On this regard, the role of warden of international order that the hegemonic power has in world politics is to remain active until a strong diversified institutional structure with judicial institutions, fully operational and independent from the states, is formed in the world system. Chapter VII of the United Nations Charter, the International Court of Justice, and the International Criminal Court notwithstan-ding, this moment is hard to be seen in nearby future. Second, the hegemonic nature of the structure of government of the world system will last until a pact on the foundation and autonomy of the supreme political authority is introduced in the world institutional structure. The organization and distribution of powers of the world government should be defined in this pact, and financial resources should be allocated to government institutions in order to make them able to produce effective policies. Up to the present time, and probably for long time ahead, instead, the global power is the greatest contributor of financial resources to the world system programs and policies. Consequently, it is able to heavily influence international organizations and the world economic regimes.

It must be borne in mind, however, that the term hegemonic structure of government points out that the leading role of government in the international system is exercised with the others' consent, although not universal and uncritical consent. In particular, in the contemporary inter-national system, the consent of the followers and the legitimacy of the authority of the global leader depend to a great extent on exercising hegemony within multilateral institutions, such as the United Nations and the most important international economic

2 On the communitarian view of international relations see, for example, Cutler (1991), Held (1995), James (1992) and Murphy (1995). Also Hedley Bull (1987) and the so-called English School support the communitarian view but recognize that great powers have authoritative role.


reg imes . F raming ac t ions wi th in multilateralism brings consent and additional resources to the global leader, and prevents its own exhaustion. Consent decreases, instead, when the global leader neglects multilateralism and violates the procedures of the world political institutions.

The United Nations is the most important international organization and multilateral institution of government of the world system. In harmony with the long-term evolutionary trend of the world political institutions, the United Nations have favored the growth of civilization of international relations, i.e. the use of non-violent means and practices to manage c o n f l i c t r e l a t i o n s . F u r t h e r m o r e , international crises and conflicts can be managed without leaving solution only to the coercive action of individual states. Therefore, United Nations rules and procedures are fundamental to the structure of government of the current world system. On the other hand, the change of the structure of government of the system entails the change of the rules and procedures of the United Nations, and might also cause the disappearance and substitution of this Organization with another one. In other words, to be functional, the United Nations and their rules and procedures have to correspond to the state of the political and social relations among states on which the structure of government of the world political system is founded. Consequently, the reform of the United Nations is possible only when great changes radically transform international relations and the world structure, eventually making the United States abandon the role of global leader. On knowledge of the past, however, it can be said that the United States have sometimes attempted and obtained to change the United Nations, informally (or de facto) and

without any explicit revision of the Charter, in order to reinforce their global role. Indeed, the Bush administration used the war in Iraq to change the structure of government of the world system by introducing the principle of intervention against destabilizing domestic regimes, and also to give to the United Nations the role of post-facto legitimizer of the preventive action of the global leader. In particular, the October 15, 2004, Security Council resolution on post-war Iraq normalization, which authorized the American-led multinational force in Iraq, is an important step towards this change.

Will the United States get the consent of a large coalition of important states on such important changes of the world government strategy? Will they be able to go through the muddle brought in transatlantic relations by their attempt? Will they be able to work out a new agreement with their 'old' allies?

TRANSATLANTIC RELATIONS IN CURRENT WORLD POLITICS

The current phase of world politics and transatlantic relations is shortly analyzed here according to the model on international hegemony known as the theory of the cycles of world leadership in order to analyze, in the next sections, the transatlantic contention on prevention. The American political scientist George Modelski, who uncovered the cyclic pattern of selection and succession of the global leader, is the proponent of this theory of hegemonic and evolutionary world politics. One cycle of world hegemony/leadership is about one hundred years long, and consists of four regular (about a generation or twenty-five years long) phases that follow each other in this order: agenda-setting, coalition-building, macrodecision, and execution phase. In each phase of the cycle, world

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politics is characterized by specific behaviors and interactions of the nation-states which cause the evolution of the world political institutions (Modelski, 1999 and 2001). In the agenda-setting phase, the global leader and its allies are increasingly opposed by other state and nonstate actors; new problems come up as potential objects of the global agenda, and new priorities are proposed by disappointed actors; existing alignments and alliances are confronted with the growing discontent of member countries; the power of the global leader progressively declines. In the coalition-building phase, power concentration decreases to a larger extent; opposition of individual states and groups of countries seriously challenges the global leader role; new powerful countries aspire to control world affairs, and change world political institutions; the existing coalitions are restructured, and new alignments give place to few organized coalitions. The subsequent macrodecision phase is a generation-long period of global warfare in which all the states form two coalitions that contrast each other with the objective of promoting their own agenda of government and global organization. Once the global warfare phase ends with the victory of a coalition, the coalition leader bears the global leader role and sets up his strategy and programs of world government in the last phase of the cycle, the execution phase, in which coalitions and alliances are organized to strengthen the post-war structure of government of the world political system.

Modelski studied the evolutionary mechanisms of global politics of the past millennium, but his analysis of the long cycles of global power competition and succession of global leaders covers only the last five centuries. During these centuries,

Portugal (1516-1609), the Dutch Republic (1609-1714), Great Britain (1714-1815 and 1815-1945) and the United States (1945-…) exercised global leadership. Each one of them was selected in the global warfare phase, and was gifted with the attributes (lead economy, open or democratic society, organization for global reach, and responsiveness to global problems) that fit to the role of the global leader for a cycle of world politics (See Table 1).

Attention is now concentrated on the contemporary phases of world politics in order to appraise the state of transatlantic relations. Around 1973, the post-war phase of the execution of the American programs of world leadership left room to the in-coming phase of agenda-setting in which various expectations of change of the world system created conflict in the existing coalitions. In this phase, transatlantic relations became difficult well beyond the level of contention of the NATO typical issue of burden sharing. In fact, in the 1970s and 1980s, the European governments decided to differentiate themselves from the United States on a range of important international issues such as the reshaping of Pan-European relations and the change of Euro-Arab relations. In such and other contentious affairs, the European allies engaged themselves in autonomous actions and initiatives. In Europe, they acted as a single actor in the framework of the Helsinki Process and, later, opposed the American confrontation policy with the Soviet Union on the substantial issue of the Siberian gas duct and the symbolic affair of the Moscow Olympic games. In the Middle East, the European Community governments developed, firstly, special relations with the PLO and, later, a full-round European common policy towards the Middle East to

3 For the sake of briefness, Modelski's theory is not further discussed here. A concise criticism of this theory can be found in Denmark (2000).

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replace the unproductive Euro-Arab dialogue. Other examples of the growing dissent between the American and European governments were the policies dealing with the Vietnam War, the problems of Central America, and international economic and financial regulations. It is worth reminding also that in 1969 the governments of the European Communities launched the common foreign policy project, known as European Political Cooperation, and in 1973 released the important declaration on the European identity in world affairs that caused the resentment of the other side of the Atlantic.

At the present time, world politics is in the gray area of transition from the agenda-setting to the coalition-building phase. This change will be appropriately described and clearly understood only in a future time. By now, however, it is apparent that governments have important choices to make in circumstances as complex as are those in which they are under pressure to assess different views of world problems and

deal with different coalitions of countries that promote competing agendas of change of the world structure of government, such as the reform of the United Nations. In these circumstances, the United States and European governments face the strain of keeping on with sharing the same vision of the world political system while they recognize different priorities in the agenda of global problems, have different strategies of solving those problems, and even prefer different changes of the existing structure of government.

In this gray time of international politics in which delegitimation of the global leader strategy, power deconcentra-tion, and political re-alignment are increasing, also social and cultural issues must be taken into account. Accordingly, adhesion to (and rejection of) the principles of democracy becomes crucial in maintaining existing alliances in the in-coming coalition-building phase. According to Modelski and Thompson (1999), the American democratic alliance, formed after

Agenda-setting (periods & problems)

Coalition- building Macrodecision (global war)

Execution (world power & challenger)

1516 PORTUGAL Spain

1540 Integration

1560 Calvinist international

1580 Dutch-Spanish wars

1606 DUTCH REPUBLIC France

1640 Political framework

1660 Anglo-Dutch alliance

1688 Wars of the Grand Alliance

1714 BRITAIN I France

1740 Industrial revolution

1760 Trading community

1792 Revolutionary/Napoleonic Wars

1815 BRITAIN II Germany

1848 Knowledge revolution

1878 Anglo-American special Relationship

1914 World Wars I &II

1945 USA

1973 Integration

2000 Democratic transition

2025 2050

Table 1.

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World War Two, is forced to deal with tensions and pressures to change. Reconfiguration concerns the countries of the nucleus of the alliance, that is United States and the states of the European Union, and involves other countries as result of the enlargement of NATO, EU, the G7 (admission of Russia) and OCDE (Mexico,

4South Korea) . Furthermore, as the world political institutions keep moving toward the condition of democratic community, as the analysis of evolutionary world politics suggests, the structure of the world government is expected to introduce a sort of stabilized system of conflict management in which stable alignments would produce something like a system of party competition. Also non-governmental movements have gained access to the mechanisms of formation of global policies, and decisions on global issues are increasingly made within multilateral contexts that are not reserved only to governmental actors. Solution of political disputes will be probably facilitated as far as these negotiations are held within international organizations, but will become difficult and tense if the traditional method of polarity and power conflict, suggested by Waltz's (1979) and Huntington's (1996) interpretations, prevails.

On this regard, it is worth reminding that, as far as the usual process of leadership change is binding, the reconfiguration of the alliance of the global leader is accompanied by the building of the opposite coalition. From this coalition, the challenger of the present global power will come out. It is also to remind that the challenger came out from the active zone of

the world system, which, since 1500 to mid-1800, was Atlantic Europe. Around 1850, the most populated countries, greatest cities, and strongest centers of the productive power moved to the Pacific, from China and Japan to the Eastern part of the United States, and this area replaced Atlantic Europe as the active zone of the world system. Accordingly, the challenger to the present global power should come out from this part of the world. On account of great industrial potentialities, power politics motives, and causes of conflict with the United States over territorial issues (like Taiwan and the control of the Southern China Sea islands), China appears today as the most probable candidate to the challenger role. However, there are not enough reasons to force this hypothesis, except the apparent analogy of these circumstances with those of the past leadership transition that took place after competition emerged between the great powers of the active zone (i.e., the European great powers) and the ascending maritime, industrial and commercial global power (i.e., the United States). In addition, in the forecast analysis of the formation of the antagonist coalition, it is worth remarking that a wide alignment of discontented actors would consist of as different actors as the countries that oppose the status quo in the Asia-Pacific, the states and non-state actors that are frustrated by the current economic globalisation process, the countries ruled by classes that fear the consequences of the current democratisation process, and all those actors that incline toward cultural clash and fundamentalism. As Modelski and Thompson (1999, 134) remark, “such a counter coalition could increasingly comprise global public or even secret

4 “...we might imagine the French state serving as a focus for issue-coalitions contesting the merits of policies sponsored by the

United States, and as a source of alternative proposals or policy agendas. In the EU/NATO context, such an oppositional stance might find favor, for example, in Germany.... In the global/UN context, it might attract support from governments in Africa or the Middle East, for example, or from others responsive to arguments about “Anglo-Saxon” dominance” (Modelski and Thompson, 1999, 132).


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organizations focused on aspects of global politics, such as antiforeign movements or groups attacking the American position in world affairs. A confrontation between such forces involving East Asia, Southeast Asia, or the Middle East could conceivably spark a larger conflict and a wider conflagration, especially if and when linked to a major power challenger.”

PREVENTION, INTERVENTION AND O V E R T H R O W O F R U L E R S A N D DOMESTIC REGIMES

Taking the above interpretation of the recent phases of world politics into account, the issue of prevention and military intervention to overthrow rulers and change political regimes is now analyzed to assess the transatlantic contention on prevention in the world political system.

In almost two hundred years, from1815-2003, change of regime and/or ruler by external military intervention has been carried out 40 times (See Table 2). The figure is taken from the research by Tanisha Fazal (2001) on the period 1815-1992, and the analysis of the author of this article on the last ten years. In these years, only three cases are found: in 2000, the intervention of NATO forces in Kosovo/Serbia which caused the fall of the Milosevic regime; in 2001, the intervention of the United Nations forces in Afghanistan under the American command that cut off the Taliban regime; and in 2003, the war in Iraq that overthrew Saddam. Twenty cases occurred in the 48 years after World War Two; twenty in the former 131 years. It is obvious that military intervention to change the regime of a foreign country is frequently used in international politics. It is also apparent that the two great powers are responsible of the highest number of military intervention (51%) of the contemporary international system (Soviet Union intervened in Bulgaria

in 1947, Hungary in 1948, Romania in 1948, Hungary in 1956, and Afghanistan in 1978; the United States in Guatemala in 1954, Grenada in 1983, Panama in 1989, Serbia in 2000, Afghanistan in 2001, and Iraq in 2003). On this knowledge base, one comes to the conclusion that, in the contemporary international system, safeguarding domestic regimes and constitutional sovereignty of the states from external intervention can be hardly counted as strong norm of international law and well protected political rule because the numerous cases of intervention that changed domestic regimes did not provoke the appropriate reaction of the institutions of the international political system. On the contrary, in the contemporary international system, the global leader, i.e. the United States, carried out military intervention, and allowed other states to do the same in order to change the regime of a foreign country.

Unlike many cases of the past, American intervention in Iraq and the American- led UN intervent ion in Afghanistan were decided in order to react to alleged threats to international security and the stability of the structure of government of the world system. Furthermore, unlike all other cases and the intervention in Afghanistan, which was decided as reaction to the connivance of the Afghan regime with Al-Quada responsible of the 9/11 attack, intervention in Iraq was decided by the global leader just on the political reason of the need to act for the sake of preventing the weakening of the structure of government of the world political system. Preventive intervention, in other words, was justified on the assumption of direct and inverse relation between the stability of the regime of the target state and that of the structure of government of the international system. Setting end to the former is necessary to safeguarding the latter, which is

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Case no.

Year Target State Change R=regime L=leader

External Actor/s and main consequence of the intervention

1. 1821 Two Sicilies R & L Austria restores Ferdinand IV 2. 1823 Spain R & L Spanish monarchy restored by French 3. 1833 Portugal R & L Quadruple alliance restores Dom Pedro 4. 1848 Modena L Francesco V exiled after Austr-Sardinian War 5. 1849 Tuscany R & L France intervenes against Daniele Manin 6. 1849 Italy L Charles Albert exiled after Austro-Sardinian war

7. 1850 Papal states R & L France intervenes against Garibaldi

8. 1852 Argentina R & L Rosas ousted after La Plata war

9. 1870 France R & L Empire toppled after loss in Franco-Prussian war

10. 1908 Honduras R & L Nicaraguan intervention after Honduras losses war

11. 1909 Nicaragua R & L US intervenes to assure free elections

12. 1915 Greece R & L Entente allies oust King Constantine

13. 1918 Bulgaria R & L Regime toppled after WWI

14. 1918 Turkey R & L Government resigns after WWI

15. 1935 Bulgaria R & L Zveno Group deposed by Boris III

16. 1941 Iran R & L Reza Shah abdicates after Anglo-Soviet invasion

17. 1941 Iraq R & L Rashid Ali resigns after British intervention

18. 1943 Bulgaria R & L Regency council created to remain loyal to Germany

19. 1944 Romania R & L Atonescu overthrown; new regime in support of Allies

20. 1944 Finland R & L Rytu resigns in favor of Mannerhein after Soviet invasion

21. 1945 Hungary L Horthy ousted by Germany in favor of Szalasi

22. 1947 Bulgaria R & L USSR invades; establishment of communist regime

23. 1948 Hungary R & L USSR installs Communist government

24. 1948 Rumania R & L USSR establishes Communist regime

25. 1951 Nepal R & L Rebels from India restore Nepali monarchy

26. 1954 Guatemala R & L US intervenes to protect US property

27. 1956 Hungary L Nagy ousted by Soviet Union 28. 1974 Cyprus L Makarios temporarily deposed by a Greek-based coup 29. 1975 Cambodia L Lon Nol ousted by Chinese and Vietnamese forces 30. 1979 Uganda L Amin deposed after Tanzanian invasion 31. 1979 Rhodesia L Britain briefly retakes control to oversee elections 32. 1979 Afghanistan R & L Amin executed after Soviet invasion 33. 1979 Cambodia R & L Vietnamese intervention installs puppet government 34. 1982 Lebanon R & L Israel invasion to establish friendly regime 35. 1983 Grenada L US invasion to “protect medical students” 36. 1989 Panama L US invasion to oust Noriega and estradite on drug charges 37. 1990 Lebanon L Syrians force General Auoun to surrender 38. 2000 Serbia R & L NATO intervention in Kossovo ends Milosevic’s regime 39. 2001 Afghanistan R & L US-led intervention of the UN ousted Taliban regime 40. 2003 Irak R & L US intervention ends Saddam Hussein’s regime

Sources: 1.Tanisha M. Fazal, War as a selection mechanism of states, regimes, and leaders, Paper prepared for

delivery at conference on Evolutionary Approaches to International Relations Theory, Bloomington, Indiana, December 4-6, 1998 [Cases from 1-37]

2. Author [Cases from 38-40]

Table 2.

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a public good of the world political system and assure the security of all the states. Was Bush's resolve to act in Iraq an unprecedented decision deprived of legal foundation and significant approval to its political legitimacy, or does it take into account recent changes in world politics and anticipates new approaches to critical problems of the incoming phase of world politics?

In the recent past, different forms of intervention have been practiced in world politics and different attitudes have been expressed by states on the acceptability and legitimacy of intervention. Here, it is proposed the argument that these attitudes signal inclination towards policy innovation in the practice of intervention. It is also maintained that the Bush doctrine of armed intervention against rogue regimes is an attempt to forward this innovation.

Three dif ferent reasons for practicing intervention in contemporary world politics are put under observation here. First, intervention for humanitarian purposes, that is, for either containing the consequences of civil wars and violent clashes between domestic groups or restraining the action of governments responsible for humanitarian crises. Consent on this form of intervention has been increasing over the recent past. International law experts have agreed rather quickly on the new doctrine of intervention for humanitarian purposes, and military intervention for humanitarian purposes has been rapidly accepted as legitimate international action on condition that it is multilateral action.

Second, concern for international action to contain the external, beside the internal, consequences of the policies of inefficient and reckless governments has been expressed in recent past. Corruption, poverty and repression that result from

actions (or inaction) of inefficient and irresponsible governments provoke problems, such as mass migration and transnational crime, that destabilize other countries and the whole system of international relations. Countries like Colombia (drug and crime), Albania (crime), Somalia, Serbia of the times of Milosevic, and Liberia in the recent past, are examples of countries that have been target of this form of external intervention. Undoubtedly, this view of the risk of international destabilization derives from the concept of interdependence among the states of the contemporary world as well as from the view that the principle of solidarity is increasingly essential in international society (Buzan, 2004). Putting an end to domestic humanitarian crises and preventing the external diffusion of related problems pushed groups of countries and international organizations, in different parts of the world such as Europe (the Balkans) and Africa (Liberia and Congo are recent examples), to intervene with actions of different nature such as economic assistance programs, technical support programs (as, for instance, assistance to local police) and also military operations, in countries in which repressive, inefficient and corrupt regimes were responsible of the explosion of local and trans-border problems. These actions are carried out by means of bilateral and multilateral agreements that usually involve the government of the target state. This condition notwithstanding, all these actions are forms of intervention in the domestic affairs of the target state that de facto or jure, occasionally or systematically, contractually or compulsorily reduce the authority of the government of the target state. It must be acknowledged also that these actions are interventive and preventive actions at the same time. Although protectorates and other

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forms of external assistance and interference were used by states in the past, the double nature (prevention and intervention) of these actions is specific of contemporary world politics, and does not raise strong opposition but is supported by wide approval.

Third, the rise of global terrorism that culminated in the 9/11 attack on the United States (and later in the 11/3 attacks in Madrid) put on the agenda of the world political system the issue of robust reaction to terrorist movements (such as Al-Quada) and regimes (such as the Afghan regime of the Talibanis), which deliberately put international security under threat, and menace the stability of the structure of government of the world political system. Opposite to large consent on intervention for humanitarian purposes, and the increasing consent on actions to prevent the spread of problems from inefficient states to the international system, consent on carrying out military actions of prevention against the state that puts at serious risk the stability of the world political system is small and hesitant. The United States want wider and stronger approval also of these preventive actions, including military actions against rogue states.

After the United States governments have been declaring for many years their resolve to act against rogue states, the American president George W. Bush jr. decided to wage war against Saddam Hussein declaring that Iraq fitted to the figure of the country that doesn't accept the structure of government of the world political system and wants to change it by unconventional means, including terrorism and mass destruction. It is worth noting, however, that the American doctrine of prevention implies that, whatever the rogue state domestic characteristics (such as

dictatorship, repression, and inefficiency) and external behavior (such as sponsoring terrorism, conspicuous flouting of international law, and accumulating weapons of mass destruction), the decisive condition for preventive intervention is that the ruler of the rogue state menaces the stability of the world political system because irresponsibly, deceitfully and violently obstruct the dominant state of the system.

Given for granted that the Iraqi government aimed at building an over-sized military force but not armaments of mass destruction, available knowledge does not sustain the argument that this behavior was preparation to making aggression of other states. At the same time, it is worth reminding that scientific knowledge is ambiguous on the issue of over-armed dictatorial regimes such as the Saddam Hussein's regime. On one side, political science research data demonstrate that dictators are used to build up armed forces to make their regime stronger in order to deal with threats coming from the domestic environment rather than prepare the country to external military aggression. On the other side, as the democratic peace theory demonstrates, dictators are less predictable and controlled by domestic institutions than democratic leaders are. They can easily divert military strength from domestic targets to external aggression. States that perpetrate systematic repression internally are likely to exhibit aggression and violence internationally (see, for example, Caprioli and Trumbore, 2003). Indeed, the Iraqi regime is example of this proposition since, in the recent past, it waged war twice, on Iran and Kuwait.

Furthermore, when governments signed the UN Charter, they defined the condition in which military intervention and

15


war are legal acts. This condition, at the exception of self-defense, is the positive vote of the Security Council to respond to security threats against a state, member and non-

member of the Organization. This condition does not apply to threats set to the structure of government of the system. For this reason, Bush looked in vain for the approval of the Security Council on intervention in Iraq without uncontroversial demonstration of the violation, by the Iraqi regime, of the Security Council resolutions on the mass destruction disarmament of the country.

U n d o u b t e d l y , t h e B u s h ' s preventive doctrine maintains something different from the international law doctrine of preventive war. It doesn't care for the explicit preparation of war against a foreign country. According to Bush's preventive doctrine, it is necessary and legitimate to destroy the military capabilities, and change the ruler, of the state that seriously and recklessly puts at risk vital functions of the structure of government of the world political system. In the view of Ronald Reagan and succeeding American presidents, these states are armed with weapons of mass destruction, are ruled by aggressive and unpredictable leaders, and set up links with terrorist organizations that want to overturn the structure of government of the world system. For all these attributes, rogue states are much more dangerous than Cold War revolutionary states which opposed the existing international order largely by mobilizing social movements, and acting through conventional violence.

Active opposition to states that refuse to obey to the world political rules and institutions that give to the United States the principal role of government has been normal policy of the American governments of the current world system. Bush reacted to

Saddam's policy by waging a war but had also other means at his disposal to choose from as effective as, or more effective than, war. Bush's preference for war can be explained by the expected efficacy of this action against Saddam, but his preference is better explained by the expected utility of this action to the world strategy of government of the United States. After two American-led operations that, in the past few years, caused the change of the local regime i.e. the American-led NATO intervention in Kosovo that caused the fall of the Milosevic's regime, and the American-led UN intervention in Afghanistan that caused the fall of the Taliban regime - Bush wanted the United Nations to legitimate also the US-led multilateral action of war to eliminate the regime of Saddam Hussein to promote the principle that all regimes recklessly defiant to the world political structure must be evicted. Bush was unable to get multilateral legitimating, as in the Kosovo and Afghanistan cases, but decided to go ahead with the support of an ad hoc coalition that he presented as the needed political legitimating of his action. Undoubtedly, the Iraqi case is a lesson also to the American ruling establishment. However, the American resolve to innovate i n t e r v e n t i o n p o l i c y t a k i n g i n t o consideration the preventive character that some forms of international intervention have been taken in the recent past, as it has been reminded here above, has brought this issue on the agenda of the world political system. Forwarding this innovation successfully and making this form of prevention a principle and practice of the world political system depends on conditions that include the consent of the most important states and the approval of the countries that follow the United States as allies.

16

FULVIO ATTINÀ

EUROPE AND PREVENTION

It can be said that Europe is divided on the matter of the political legitimacy of the doctrine of prevention but, generally speaking, European governments remain faithful to the legal concept of preventive war. According to this concept, recourse to armed intervention is illegitimate action when urgency to protect a country from an explicit threat of aggression is missing. In the last years, although a common rapid intervention force to use also against aggressive regimes has been created by the European governments with the ESDP, they have not been enthusiastic about the rogue states doctrine mainly because they have developed different preferences towards react ion to threats coming f rom irresponsible dictatorial governments. Indeed, dissent between the United States and Europe is on the best strategy to cope with governments ruling countries in serious conditions of economic backwardness, political repression and social unrest. Americans prefer the strategy of bilateral relations and the use of specific-problem measures. For instance, eradication of drug traffic through strengthening the local police and army, as in the case of Colombia, or improving economic conditions by changing bilateral trade agreements, as in the case of Mexico. The Europeans, instead, prefer multilateral agreements and regional programs of economic cooperation accompanied by the clause of political conditionality. The debate on prevention after the invasion of Iraq demonstrates that the Europeans are not ready to abandon their preferred strategy. Even to cope with irresponsible dictators and rogues states, they prefer maintaining the existing economic, political and social regimes until cooperation programs (as, for instance, the Euro-Mediterranean Partnership project of

free trade in the Mediterranean area) bring economic development and, subsequently, relaxation of political and social tensions to a group of countries. To the Americans, instead, when the situation doesn't allow waiting cooperation programs defuse regional instability and make rogue governments harmless, turning to military intervention is immediately necessary.

With regard to security, in particular, the European states have built a security co-management system or regional security partnership, which is largely founded on multilateral institutions and mechanisms inspired by the concepts of cooperative and comprehensive security (Adler and Barnett, 1998; Attinà, 2005). Accordingly, regional security agreements are the preferential road to security problem solving, and the Europeans believe that the European security model is to export to other regions. The United States, instead, considers regional security arrangements as subsidiary to their world role interests.

CONCLUDING REMARKS

In conclusion, the difference of role in the government structure of the world political system is to take into great consideration to account for all the differences between Europe and the United States. Further research is needed to assess the impact of terrorism and the Iraqi war on transatlantic relations and the change of the agenda and government structure of the world system. Contention between the United States and Europe as voiced by governments, such as the French and Spanish government, and also the European Commission that from time to time expresses concern on differences regarding issues such as the International Criminal Court, the ban on anti-personnel land mines, actions against biological weapons, the

17


18

Comprehensive Test Ban Treaty, and the ratification of the Kyoto Protocol (see more in Monte leone, 2003) has been conspicuous over the last years. However, transatlantic cooperation keeps on being meaningful. For example, cooperation on the issue of the fight against terrorism is particularly important. Cooperation is strong in Afghanistan, where EU commitment to reconstruction represents more than 50% of total pledges for the 2002-2006 period. Further cooperation is developed on issues not directly related to terrorism and confrontation with reckless countries such as in South-Western Asia, where the European Union joined the United States in working towards the reduction of tension between India and Pakistan. Cooperation has been strengthe-

ned also in the Balkans, where the European Union has taken a more active role with the full backing and support of the United States. Although recurring clashes occur in this phase along with these forms of cooperation, the argument developed in this article has been that the present state and the future of transatlantic relations are clearly understood only taking into account their different values and interests in the context of the structure of government of the world political system. Americans and Europeans are different actors in world politics but they are under the pressure of taking side on the major issues of the global agenda, and the reasons for sharing the same alignment still look prevalent on the reasons for making coalition opposing one another.

FULVIO ATTINÀ

REFERENCES

• Adler Emanuel and Barnett Michael, eds. (1998), Security communities, Cambridge, Cambridge University Press.

• Attinà, Fulvio (2005), The building of regional security partnership and the security culture divide in the Mediterranean region, in Emanuel Adler and Beverly Crawford (eds), The Convergence of Civilizations? Constructing a Mediterranean Region, Toronto, University of Toronto Press.

• Buzan Barry (2004), From international to world society? English School theory and the social structure of globalisation, Cambridge, Cambridge University Press.

• Bull Hedley (1977), The Anarchical Society. A Study of Order in International Society, New York, Columbia University Press.

• Caprioli Mary and Trumbore Peter F. (2003), Identifying `Rogue' States and Testing their Interstate Conflict Behavior, in EJIR, 9, 3, 377-406.

• Cutler A.C. (1991), The 'Grotian Tradition' in International Relations, in "Review of International Studies", 17, 1, 41-65.

• Denmark Robert A. (2000), Cumulation and direction in world system theory, in Denmark Robert A. et als., eds. (2000), World system history. The social science of long-term change, London, Routledge, 299-312.

• Fazal Tanisha M. (2001), born to lose and doomed to survive: state death and survival in the international system, Stanford University, Phd Dissertation.

• Gilpin Robert (1981), War and Change in World Politics, Cambridge, Cambridge University Press.

• Held David (1995), Democracy and the global order, Cambridge, Polity.

• Huntington Samuel P. (1996), The Clash of Civilizations and the remaking of world order,

• James A. (1992), The Equality of States: Contemporary Manifestations of an Ancient Doctrine, in "Review of International Studies", 18, 4, 377-392.

• Kennedy Paul (1987), The rise and fall of the great powers. Economic change and military conflict from 1500 to 2000, New York, Random House.

• Modelski George (1983), Long Cycles of World Leadership, in Thompson W.R. (ed), Contending Approaches to World System Analysis, London, Sage, 115-140.

• Modelski George (1999), From leadership to organization: the evolution of global politics, in Bornschier V. and Chase-Dunn C. eds., The future of global conflict, London, Sage, 11-39.

• Modelski George (2001), Evolutionary World Politics: Problems of Scope and Method, in Thompson W.R., ed., Evolutionary interpretations of world politics, London, Routledge, 16-29.

• Modelski George and Thompson William R. (1999), The long and the short of global politics in the Twenty-first century: an evolutionary approach, in “International Studies Review”, I, 2, 109-140.

• Monteleone Carla (2003), The New Transatlantic Agenda: Transatlantic Security Relations between Post-Hegemonic Cooperation and Interdependence, in “Journal of Transatlantic Studies”, 1, 1, 87-107.

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• Murphy C.F. (1985), The Search for World Order. A Study of Thought and Action, Dordrecht, Martinus Nijhoff.

• Nye Joseph S. (1990), Bound to Lead: The Changing Nature of American Power, New York, Basic Books.

• Rasler Karen and Thompson William R. (1994), The great powers and global struggle 1490-1990, Lexington, Kentucky University Press.

• Waltz Kenneth (1979), Theory of International Politics, Reading, Addison Wesley.

20

FULVIO ATTINÀ

POLAND AND TRANSATLANTIC SECURITY - AN ENDURING ATLANTICIST?

*Kerry Longhurst

Abstract. Throughout the 1990's Poland pursued a security policy steered by Atlanticism and a close bond with the United States. Atlanticism shaped Warsaw's choices on all key security issues during the past decade, but became particularly apparent after 9/11 when Poland lent its full support to the US-led war on terror. Whilst membership in the EU will affect the priorities and conduct of Polish security policy, it is argued here that the deep-seated nature of Atlanticism in Polish strategic culture, together with the broader implications of enlargement upon the EU's foreign policy ambitions will ensure that Poland will remain a keen Atlanticist in the New Europe.

Since the early 1990s Poland has emerged as one of the US's closest allies, arguably its protégé, in Central and Eastern Europe (CEE). After Washington became dedicated to pursuing the eastern enlargement of NATO, America became the security guarantor that the Poles had craved since the late 18th century. For America, Poland represents a middle-sized power, whose successes with building democracy and market reforms after 1990 mark it out from its regional peers. The US has also seen eye to eye with the Poles on a whole range of foreign policy issues, illustrated when Warsaw readily contributed troops to Kosovo, Afghanistan and more recently Iraq. As a result, especially since 9/11, Poland appears to be closer to the US than many of its long-standing West European allies. Poland has been praised and branded in the US as a 'new European,' in contrast to France and Germany who opposed the US's policy on Iraq. This feeling is clearly reciprocated in Poland where President

George W. Bush, by no means a popular figure in Western Europe, is the 'most liked'

1foreign politician. Consequently, whilst thAmerican leadership post-September 11

prompted the departure of Paris and Berlin from the inner circle of America's associates, Poland has keenly filled this gap and aspires to become one of the US's closest allies.

It was always easy to see that Poland, by virtue of its large population and geographical location, was destined to be a key player in NATO and once accession was secured in the European Union too. However, recent developments in relations between Europe and the United States suggest that Poland's role as a regional power in Europe will be of even greater consequence. Divergences over the US stance on Iraq within Europe have served to expose the weakness of the French and German vision of Europe's role in the world, as seen in their relative isolation. In turn, it is possible to hypothesise that Poland, as one of the most vociferous and consistent

* Kerry Longhurst is Lecturer and Assistant Director of the European Research Institute, The University of Birmingham. Her research focuses on issues in European Security, especially ESDP, the effects of enlargement upon CFSP and strategic culture. More details of publications can be found at www.igs.bham.ac.uk.This paper is based on an article in the October 2003 issue of International Affairs.1 According to the polls conducted in July 2002 73% had a positive and only 8% negative view of George Bush, which out him at the top of the most liked foreign politicians in Poland. See: 'Stosunek Polakow do wybranych postaci ze swiata polityki zagranicznej' in Komunikat z badan BS/112/2002, Centrum Badan Opinii Spolecznej www.cbos.pl

21


supporters of American foreign policy and of solidarity between the US and Europe, is likely to be among the group of states shaping the new Europe and its foreign policy.

POLAND'S WEAKNESS AND AMERICA'S POWER

The reasons behind this intimacy in Polish-American relations are based predominantly on strategic considerations. For Poland, the US presence in Europe provides reassurance against its powerful neighbours, whilst for the US, Poland is a friendly state located at the strategic boundary between Eastern and Western Europe. Having said this, these strategic considerations are bolstered if not underpinned by cultural and historical factors shared by both US and Polish elites. Summing this up, the American Ambassador to Poland, Christopher R. Hill argued that 'the Poles and Americans have similar attitudes towards security and foreign policy in general, which is a consequence of our

2 particular historical experiences'. True, recent policy developments demonstrate the affinity of perspectives between Washington and Warsaw on defining security policy issues. Polish elites, like their US counter-parts are sceptical towards multilateralism and are not afraid to use armed force (or at least threaten to use it). Consequently, although both states subscribe to the rule of UN law, they held a similar view with regards to Iraq, arguing that a UN resolution to go to war was not necessarily needed. However, the sources of this concord are quite different for each of these two states. In the case of America they result from its power and in the case of Poland they are rooted in its relative weakness. This assertion

will be explained using the prism of Robert Kagan's notions of Power and Weakness and Transatlantic disputes between the US

3and Europe.

The thrust of Kagan's argument is that whilst Europe needs multilateral institutions to compensate for its relative weakness, America sees multilateral organisations as constraining rather than empowering. Whilst it is not intended to refute this thesis at length here, it is argued that the case of Poland, and many other countries in Europe, does not fit with Kagan's reading. Kagan has not understood that there is a diversity of perspectives in Europe, rather what he takes as Europe is a

4 description of French and German policies.Whilst it is true that Franco-German views vis a vis the US position on Iraq are shared by some other European states, such views are far from universal both within and outside of the European Union. An obvious consequence of this, again not apparent in Kagan's argument, is that the current Franco-German collusion of views is not an accurate nor legitimate account of current European foreign policy. Crucially, a more unified position emanating from European capital cities, East and West, was that expressed in the letter signed by eight European Prime Ministers (UK, Denmark, Italy, Spain, Portugal, Poland, Czech Republic, Hungary) who signalled their support for the US's Iraqi policy and, by implication, their opposition to the Franco-German position.

It is no surprise that Poland supported the pro-American initiative. The reasons why these states have pursued this line are partially the same as for states like Britain and Italy, namely that they do not

2 Interview with Christopher Hill in Gazeta Wyborcza, 22.12.20023 Robert Kagan (2002) Power and Weakness Policy Review, June 20024 For an illuminating critique of Kagan's argument see an article by Timothy Garton Ash 'The Great Divide', Prospect, March 2003

KERRY LONGHURST

22

share the Franco-German view of the world. But they are also specific to the region and need further exploration. Kagan's dichotomy of America's power and Europe's (France's and Germany's) weakness is in fact quite useful here in as much as it is clear that the Atlanticism of Poland and other ex-communist states is largely a result of their 'weakness' being even greater than those states in Western Europe. The region's weakness derives from its geopolitical vulnerability, its recent history of being part of the Soviet sphere of influence as well as the fact that the states of Central and Eastern Europe remain outside the European Union and have yet to become influential members of NATO. Consequently, unlike Western European states, Poland does not seek to constrain American hegemony, in fact, Warsaw conceives as its interest that the US maintains and pursues its position of power. The Poles, as well as many other Central European nations, are reconciled with the notion that they are unable to provide for their own security, consequently, they accept a hegemonic international system, so long as the hegemon is not a nearby state. Whilst for western Europe an omnipotent America may also be preferred to a too powerful Germany or Russia, it is clear that American power is living proof of western Europe's lack of effectiveness as a collective entity in security matters, or as Kagan argues its actual decline. Contrary to this, for the Poles to become America's protégé is an improvement both in terms of security and status.

POLAND'S STRATEGIC CULTURE

To understand this difference it is necessary to grasp the essence of Poland's strategic culture as rooted in its geopolitical history. Poland's position between Germany and Russia/the Soviet Union was

in the past a source of threat to the Polish state and a major reason for its collapse in

ththe late 18 century and again in 1939. This turbulent history marked by inherent insecurity and vulnerability to external aggression, coupled with its current position as a state bordering the former Soviet Union, means that Poland's security policies remain strongly concerned, if not fixated with the issue of territorial defence. Consequently, Warsaw decided to apply for NATO membership as early as 1992 - a policy which quickly became underpinned by a broad political consensus, including the

5former communists. Unsurprisingly, there remains a strong preference in Poland for an American-led NATO, which is able to execute Article 5.

Warsaw's eastern policies are also shaped by historical experience and thus on occasion appear quite distinct from the policies of its West European partners. In particular, Poland's policy towards the east is characterised by strong support for the newly independent states between Poland and Russia. Poland has been the major advocate of efforts to anchor Ukraine and Lithuania in the West; it supported the pro-independence movement in Belarus and promoted NATO's enlargement beyond its eastern borders. On all of these issues Poland was supported by Washington. A further defining tenet of Polish strategic culture, which gels with current American security thinking, is a disposition towards favouring pro-active engagement when confronted with the threat of regional instability. This derives from an enduring facet of Polish identity as being victims of West European pacifism - in the French and British appeasement policy towards Hitler and the subsequent failure of France and Britain to actively defend Poland in September 1939. This disposition translates

5 See: St. Croft et al The Enlargement of NATO in The Enlargement of Europe (MUP: Manchester and New York, 1999).


23

directly into current Polish policy and public opinion which unambiguously supported NATO's engagement in Kosovo and the

6US's operation in Afghanistan. The Polish view on military action in Iraq is admittedly more split (as is opinion in the US), though as noted earlier, elite support in Poland for Washington's policy on the issue and the role of the UN was strong.

A third characteristic of Polish strategic culture already alluded to earlier is a rather ambivalent position towards multilateral security institutions (with the notable exception of NATO), which are perceived in Poland with an amount of ambivalence and utilitarianism, not dissimilar to the US perspective. Institutions such as the interwar League of Nations and the present United Nations are often charged with being ineffective in preventing conflicts and serving as a smoke-screen for states enticing conflict and hiding against the formula of international law. A particularly critical assessment is directed against the League of Nations, which, in the Polish view, proved unable to prevent the outbreak of the Second World War and e f f ec t i ve ly s t r eng thened German revisionism in Central Europe. The UN is perceived in more favourable terms but is charged with being unable to prevent the emergence of the Cold War status quo which left Poland on, what is widely believed, the wrong side of the iron curtain. This Polish scepticism towards the primacy of international law and the UN was clearly demonstrated during the NATO operation in Kosovo. Unlike in Germany or France a debate about the illegality of NATO action - which did not have a UN mandate - did not seriously emerge in Poland. It was simply assumed in Warsaw that though it would be

better to act with a UN mandate, international law was less important than preventing the spread of instability in the

7Balkans. Since Poland joined NATO in 1999

these strategic cultural predispositions; a preference for a strong US-led Alliance; a commitment to reforms in Ukraine and Belarus and in turn a further eastwards enlargement of NATO; a lack of faith in multilateral security institutions save for NATO and a proclivity to use force pro-actively have rendered Warsaw a firm member of the Atlanticist wing of the alliance and a feisty adherent of the US position on almost all recent foreign policy issues.

POLAND, AMERICA'S PROTÉGÉ IN THE EAST

The US's leadership in the western world was extended eastwards after 1990

thand through the events of September 11 a strong normative dimension was added to its mission. A consequence of this is that American leadership is becoming an open hegemony in which the lines of amity and enmity are drawn on the basis of states being either 'with' or 'against' the US. The effects of this upon the transatlantic relationship have been uneven and quite unexpected. Whereas, despite their differences over Iraq, Russia and the US became allies in the war on terror, with Moscow and Washington holding common positions on a range of issues. Elsewhere, the radicalisation of America's foreign policy has led to a great diversification of responses and a growing sense of unease on the part of some European states, most notably France and Germany. In short, the transatlantic security community has become far larger but also more internally divided.

6 See: Olaf Osica, 'In Search of New Role. Poland vis-à-vis Euro-Atlantic Relations' in M. Zaborowski and D. Dunn, Poland A NewAtlanticist in Europe, a special edition of Defence Studies, Vol.2, No.2, Summer 2002, pp. 21-39.7 Ibid.

KERRY LONGHURST

24

In this divided Europe, it is clear that Poland belongs to Rumsfeld's 'new Europe', a fact seemingly confirmed by Warsaw's participation in the letter of eight European Prime Ministers in support of the US's policy and its subsequent military involvement in Iraq. Arguably and considering Poland's history no other policy stance was likely to emerge from Warsaw. Whilst Britain, Spain and other west Europeans could have been guided primarily in their support for the US by a genuine concern about the danger posed by Iraq, this factor was arguably only a secondary variable shaping Poland's strategy. Warsaw's policy on the Iraq issue, as well as Poland's ambivalent attitude towards EU's Security and Defence Policy and its unequivocal support for the US Missile Defence programme have all been consistent with the key underlying dogma of the Polish foreign policy - the continuation of the US's involvement in Europe. This being the case, Poland will undoubtedly continue to aspire to be included in the 'inner circle' of America's closest allies and will openly support US hegemony.

A question arising here relates to the likely effects of Poland's EU membership. Clearly, now in the EU Poland's status has changed, with one of the major rationales for Poland's atlanticism - its exclusion from west European decision-making bodies disappearing. Only time will tell as to whether EU membership will weaken Poland's pro-American foreign policy, but there are at least three reasons that suggest a contrary development. First, Poland's eastern frontier will remain the ultimate border of the EU for the foreseeable future, consequently Warsaw's specific security concerns relating to territorial defence will persist, a fact, which will ensure that NATO remains the most valuable security institution for Poland. The

experience of the late 1990s and of the early st21 century show clearly that the EU is not

so interested in developing an active policy towards the European parts of the former Soviet Union, whilst the US has been more involved in the region and has often acted in co-operation with Poland. Second, the EU itself remains grossly divided over foreign and security policy issues. In this case, it is extremely unlikely that Poland would join forces with those states that seek to build a truly independent ESDP, not only because the Franco-German alliance in the EU continues to be exclusive, but also because Poland sees the French policy of turning the EU into a counterweight for NATO as undesirable. Finally, the role the US played in bringing about the end of the Cold War and nurturing Poland's transition to democracy in the 1990s instilled into Polish elites a great sense of gratitude and loyalty, which has not been instantaneously swept aside now that Poland is inside the EU.

A further factor casting doubt upon any diminishing of Poland's Atlanticism is that the EU is itself changing. One of the key arguments outlined at the start of this paper was that the Franco-German core has, certainly in the field of foreign policy, been challenged by a contending European foreign policy towards the US and Iraq, shared by a far larger grouping of both EU and Non-EU states. The notion of who speaks for Europe is subsequently no longer

8the domain of the Paris-Berlin axis. The likely outcome for European foreign policy of the EU's enlargement is not difficult to forecast considering these recent developments. The realities of EU enlarge-ment are likely to bring about a far more Atlanticist flavour to any future EU foreign and security policy, which will guard against its development into an entity based on current French and German designs.

8 'Who Speaks for Europe' The Economist February 8-14 2003


25

Whilst EU membership is unlikely to undermine Poland's Atlanticism, what could challenge Poland's role as the US's protégé in the East would be a failure on behalf of Warsaw to effectively exercise its regional role. If Warsaw fails to become a meaningful actor in this part of the world its usefulness would sooner or later be questioned by the US and may lead to a reassessment of America's involvement in the region. A second source of weakness that may undercut Poland's position vis a vis the US would be if Warsaw failed to enact the necessary defence sector reforms to modernise its armed forces.

CONCLUSION

This paper has argued that Poland is fast emerging as the US's key ally and its protégé in the East. The 'instinctive' atlanticism inherent in Polish strategic culture has meant that Poland's foreign policies have always been in close proximity to those of the US over the past decade. Developments since September

th11 have only enhanced this closeness between Warsaw and Washington as in a Europe much divided, Poland has showed

9itself as a hawk. Furthermore, in the unfolding context of contending perspecti-ves on the war with Iraq, a close fit has emerged between American and Polish standpoints. The endurance of this affinity and the success of Poland's graduation to the status of regional power remain, however, still undetermined and cannot be taken as a given.

A protégé is dependent, loyal and reliant upon a leader or 'tutor', whilst a tutor seeks to mould its pupil according to its own ideals and values. So far this typifies, the relationship that has transpired between the US and Poland. Unconditionality as the substance that cements relations between protégé and tutor, cannot however be

thassured in the complex post-September 11 security environment. The ties that bind Poland to the US are based upon the American security guarantee to Europe maintained via NATO, whilst for the United States, it is Warsaw's loyalty and support for US foreign policy goals, twinned with its willingness to become a 'provider of security' that encouraged Washington to invest in its Polish protégé. If these factors change then the fabric of the Polish-US relationship may alter.

9 European Leaders Divide Between Hawks and Doves The New York Times January 31 2003

KERRY LONGHURST

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CURRENT ISSUES OF RESEARCH, DEVELOPMENT AND INNOVATION *IN ROMANIA

**Andreea Vass, Steliana Sandu

* This study has been developed within a NATO research grant program, held at IKU - Budapest, 2004.** Andreea Vass is a scientific researcher at the Institute of National Economy and expert at the Romanian Presidential Administration, within the Department of Economic and Social Analysis and Strategies.

Steliana Sandu is scientific researcher at the Institute of National Economy.

27

Abstract. The research, development and innovation system (RDI) represents a key segment of activity, both in theory and in international practice, as an engine of social and economic progress. For Romania, the transition period has represented a major transformation step in a structural, institutional and functional perspective in association with networking with other components, so that the present configuration of the R&D system in Romania differs substantially from that of the early 1990s.

The present standing of the RDI system, according to Romania's main aims to stimulate development and integration into the EU, enables highlighting the way the R&D system plays a crucial role in boosting economic growth and social progress. It also highlights the compatibility with the structures, overseas trends and demands of the European integration process. In this approach, the present EU context must be taken into account; the restructuring of the R&D system and increasing its performance aiming at reducing productivity and competitive gaps between the EU and other international competitors, especially the USA, are priority objectives on its agenda.

From the broad RDI arena, the present study focuses on three aspects that define the current features and potential of configuration:

Ø First, we provide a brief profile of the current S&T system, where we highlight the main institutional characteristics and the magnitude of inputs and outputs from the functionality point of view.

Ø Second, we assess the selection and implementation of RDI priorities in Romania, aiming at highlighting the degree of compliance between:

o breakthroughs in science and technology, o technical and scientific changes in the economy and society,o and globalization tendencies of markets for goods and services, including the

technical-scientific field. Ø Third, Romanian integration into the European Research Area will be tackled.

Romania is engaged in preparation for the integration process, the chapter on R&D being one of the 31 negotiation chapters. Within this framework special attention is granted to the National Innovation System as a key point for economic benefit and securing the necessary premises for reducing competitive gaps between Romania and EU countries.

1. BRIEF S&T PROFILE OF ROMANIA

Institutions. The main bodies coordinating S&T policy-making and innovation activities are the Romanian Ministry of Education and Research and the


Romanian Academy. In Spring 2003, the Ministry of National Education was reorganized as the Ministry of Education, Research and Youth, and in March 2004 it became the Ministry of Education and

Romanian Ministry of Education, and Research

Romanian Academy

Other ministries

Inter-Ministerial Council for Science, Technology and

Innovation (CISTI)

CORE NATIONAL RESEARCH PROJECTS

THREE

NATIONAL

PROGRAMS

RESEARCH IN

HIGHER

EDUCATION

INSTITUTIONS

NGOs National Council for Scientific Research in Higher Education

Figure 1: Institutional Linkages and Capacity for S&T Policy-making in Romania (2004)

Source: Authors' compilation

Presently, the national programs for research and development are coordinated by the Ministry of Education and Research through the Research Department, and will be presented in more detail in the second and third part of this

study: ØThe National Plan for Research-Deve-

lopment;ØThe Horizon 2000 Research-Deve-

lopment program;ØThe Grants Programs for Scientific

Research.The principal research programs

coordinated by the Romanian Academy include: Ø national priority projects (for high

complexity scientific and cultural matters, with great impact at national level);Ø program of grants for scientific

research (GAR - Romanian Academy Grants Program).

R&D funding comes from at least three sources: Ø state budget (Ministry of Education

and Research, Romanian Academy and other ministries);

ANDREEA VASS, STELIANA SANDU

28

Research. Previously, in 2001, it had also taken over the responsibilities of the former National Agency for Science, Technology and Innovation (NASTI), with a view to establishing closer links between higher education and research. The Inter-minis ter ia l Counci l for Science, Technology and Innovation (CISTI) was reorganized in December 2001 and in August 2002, and was given the responsibility for drawing up and implementing strategies and programs for research, development and innovation. CISTI also advises on proposals for updating the National Plan.

Ø economic unit co-financing; Ø EU funding.

The major national research pro-grams coordinated by the Romanian Academy are complex projects approaching important issues for Romania from a multidisciplinary point of view and involving in their design the research institutes and centres, as well as the most competent persons in both the humanities and the exact sciences within and outside the Romanian Academy system (including the Diaspora). A few significant examples of projects relating to the Romanian cultural patrimony are as follows: Thesaurus Dictionary of the Romanian Language; General Dictionary of the Romanian Literature; Romanian History Treaty. In order to evaluate Romania within the current political, social-economic and cultural context the Romania 2020 and Informational society - Society of Knowledge projects are running within the Romanian Academy. The latter has involved more than 40 specialists (including 7 members of the Romanian Academy) and 10 institutes of the Romanian Academy (economic, social and legal sciences, information techniques, philosophy, psychology, and genomics). In order to develop a knowledge-based economy in Romania, the set of policy measures and actions is concentrated on the following three main objectives: stimulation of R&D investments in enterprises, attracting and training more human resources for R&D, and innovation activities.

NGOs are important players in academic research and policy design in Romania. A few examples are worth mentioning here:

ØThe Romanian Cent re fo r Economic Policies (CERP) has organized, as part of a PHARE financed project, a team of young economists advising the Office of the

Prime Minister. CERP has also maintained close research-policy interaction with the Ministry of Integration, the Ministry of Finance and the National Bank of Romania. Ø Romanian Academic Society has

worked with the UNDP office in Romania to issue regular Early Warning Reports under the eye of the Romanian Ministry of Foreign Affairs. Ø The Centre for Policy Studies and

Comparative Analysis, the Romanian Centre for Economic Modelling, the New Europe College and numerous other NGOs cooperate in numerous foreign-financed projects of policy-relevant research.

Not an NGO, but also a policy-influencing institute, is the European Institute of Romania. This is a public institution that completed during 2001-2005 the task of preparing, with independent experts, a collection of three series of pre-accession impact studies (dealing with the chapters of negotiations with the EU and their implications).

According to the statistics of MER Research Department (2003), the number of units developing research-development activities in 2002 was 590, grouped in the following way:Ø 3 4 n a t i o n a l r e s e a r c h -

development institutes, under the coordination of the central public administration;Ø 2 2 7 p u b l i c i n s t i t u t i o n s ,

subordinated to MER, other ministries, the Romanian Academy and the Academy for Agricultural and Forestry Sciences (AAFS);Ø 15 research-development insti-

tutes operating on the basis of the GD No. 100 of 1991 and which are in the process of re-organization in legal forms according to the norms in force;Ø 310 joint-stock companies, public

or private companies, that have research-development as their main object of

CURRENT ISSUES OF RESEARCH, DEVELOPMENT AND INNOVATION IN ROMANIA

29

activity, of which there are:o 70 private limited companies;o 67 companies included in the

APAPS portfolio.Inputs: R&D investment and

human resources in S&T. In 2001 the gross domestic expenditure on R&D (GERD) was 0.39% of the national GDP, much lower than in the EU-25 (1.93%) or the other countries taken for benchmarking (see Table 1). Due to the economic crisis at the

end of the 1990s GERD was declining by 9.2% per year during 1997-2001. Nevertheless the share of the business sector in financing GERD (61.6%) is relatively high compared to other EU candidate countries (e.g. Bulgaria 21.4%) and close to the EU-25 average (65.3%). Moreover, the share of business-financed R&D in the value added in industry was higher in Romania than in the EU-25 average, in 2001. The overall picture of the level of commitment to the

Romania

(A)

Bulgaria Greece Portugal EU-25

EU-15 (B)

Gap: EU-15 and

Romania (B – A)

R&D Intensity (GERD as % of GDP), 2001 (1)

0.39 0.47 0.67 0.77 1.93 1.98 1.59

R&D Intensity average annual real growth rate (%) in 1997 – 2001 (2)

-9.2 -9.2 15.3 4.4 1.3 1.5 10.7

R&D Investment average annual real growth rate (%) in 1997–2001(3)

-8.8 -4.9 16.7 7.3 4.5 4.5 13.3

Government budget allocated to R&D (GBAORD as % of GDP), 2003 (4)

0.17 n.a. 0.28 0.66 0.76 0.77 0.6

Government R&D budgets (average annual real growth rate, %), in 1997 – 2003 (5)

-6.0 n.a. 2.1 12.3 3.2 3.2 9.2

Business expenditure share of R&D (BERD as % of GERD), in 2001 (6)

61.6 21.4 28.5 40.5 65.3 65.6 4.0

Business expenditure share of R&D budgets (average annual real growth rate (%), in 1997 – 2001 (7)

-6.7 3.9 5.6 12.5 0.8 0.9 7.6

Business-financed R&D (BERD as % of VAI - value added of industry), in 2001 (8)

0.24 n.a. 0.24 0.51 1.56 1.61 1.37

Industry-financed R&D average annual growth rate, in 1997 - 2001 (9)

-11.2 3.6 23.5 22.4 1.7 5.6 16.8

Share of SMEs in publicly funded R&D executed by the business sector (%), in 2001 (10)

48.1 75.7 71.1 70.8 n.a. n.a. n.a.

Publicly funded R&D in the SME sector, average annual growth rate, in 1997 - 2001 (11)

0.6 -54.8 4.0 -10.4 n.a. n.a. n.a.

Table 1. R&D Investment in 1997-2003

(1) EU-15 and EU-25 does not include Malta; Greece: 1999; Portugal: 2002; (2) EU-15 and EU-25 does not include Luxembourg and Malta; Bulgaria: 1999 – 2001; Greece: 1997-1999; (3) EU-15 does not include Luxembourg and values were estimated for 2001; EU-25 does not include Luxembourg and Malta

and values were estimated for 1997 and 2001; Bulgaria: 1999 – 2001; Greece: 1997-1999;


30

(4) EU-25 does not include Czech Republic, Cyprus, Hungary and Malta; EU-15 and EU-25: 2001; (5) EU-15 does not include Luxembourg; EU-25 does not include Luxembourg, Czech Republic, Cyprus, Greece, Hungary and

Malta; EU-15 and EU-25: 1997 – 2001; (6) EU-15 does not include Luxembourg; EU-25 does not include Luxembourg and Malta; EU-15 and EU-25: 1997 – 2001;

Portugal: 2002; Bulgaria: 2000; Greece: 1999; (7) EU-15 does not include Luxembourg; EU-25 does not include Luxembourg and Malta; Portugal: 1997 - 2002; Bulgaria:

1999 - 2000; Greece: 1997 – 1999; (8) EU-15 and EU-25 does not include Luxembourg, Estonia, Lithuania, Latvia, Malta; Greece: 1999; Portugal: 2002; (9) EU-15 and EU-25 does not include Luxembourg, Lithuania and Malta; Greece: 1997 - 1999; Portugal: 1997 - 2002;

Bulgaria: 1999 – 2001; (10) Greece: 1999; Portugal 2002. (11) Greece: 1997 - 1999; Portugal: 1997 - 2002; Bulgaria: 1999 – 2001; Romania: 2000 - 2001

Source: EUROSTAT, European Commission DG Research – Key Figures, 2003-2004

Business enterprise Government Other national sources Abroad Romania 47.6 43.0 1.2 8.2 Bulgaria 24.4 69.2 1.1 5.3 Greece 24.2 48.7 2.5 24.7 Portugal 32.4 61.2 2.1 4.4 EU-25(1) 55.8 34.4 2.2 7.6 EU-15(2) 56.1 34.0 2.2 7.7

Table 2. R&D Expenditure by main sources of funds (%), in 2001

(1) EU-25 does not include Luxembourg, Malta and Lithuania; (2) EU-15 does not include Luxembourg.

Source: EUROSTAT, European Commission DG Research – Key Figures, 2003-2004

creation of new knowledge and to the exploitation of research results is unfavourable for Romania, in both comparative and dynamic perspectives. Innovation capacity, estimated with the R&D investment indicator as a proxy, declined at an average rate of 8.8% during 1997-2001. Industry-financed R&D declined even more in the same period, by 11.2% per annum.

According to the structure of

financing, government is a relatively more important source of funds in the national R&D system (Table 2), but the gap between the government budget's share in GDP allocated (in 2003) in Romania and the EU-15 (in 2001) was still 0.6 percentage points (Table 1).

A key determinant of the future competitiveness of the Romanian economy is the level and intensity of private expenditure on R&D. The business sector in Romania spends less than 0.25% of its value added on R&D, being seven times lower than the EU-15 average. The business sector, in relative terms, was not catching up with

the EU during 1997-2001 (see Table 1), despite its high share in national R&D expenditure during this period.

Larger gaps in venture capital investments are ever present in Romania relative to the EU: 5.5 times lower early-stage venture capital as percent of GDP in 2002 (see Table 3). Despite the fact that a very high number of start-ups have been created, early stage venture capital was only half that allocated for expansion, in 2002.

The relatively high importance of the expansion phase is a common feature of all the member and acceding EU countries. Actually, the venture capital investments are oriented towards high-tech and knowledge-intensive sectors, with very high risk new companies. An important issue in Romania, and the acceding countries as well, is that the exit markets for venture capital investments are not yet well developed. The crisis of the new economy is negatively influencing investments in venture capital, as can be seen in the very strong decline between 2001 and 2002.

Total R&D full-time equivalent


31

Romania Greece Portugal EU-25 EU-15 Venture capital investments (m. EURO) in 2002, total

8.329 45.384 61.565 9 212.560 9 106.929

1- seed 0.000 1.301 0.013 292.647 292.430 2- start - up 2.443 11.658 10.248 2 325.375 2 312.154 3- expansion 5.885 32.425 51.304 6 594.538 6 502.346 Relative change (%) in 2001 - 2002 -51.3 -50.4 -15.7 -55.7 -21.7 4- seed 0.0 37.4 85.7 -134.0 -41.5 5- start - up 54.6 -61.8 -35.9 -105.7 -33.7 6- expansion -62.1 -45.9 -10.1 -31.0 -14.9 Venture capital investments in early stages per m GDP (%), 2002

51 92 79 275 285

Venture capital investments in early stages average annual real growth (%), 2000 - 2002

26.5 15.5 -44.8 -38.2 -37.8

Seed + Start-up = Early Stage. EU-15 does not include Luxembourg; EU-25 does not include Luxembourg, Czech Rep., Estonia, Lithuania, Latvia, Malta;

Source: EUROSTAT, European Commission DG Research Key Figures, 2003-2004

Table 3. Venture Capital Investments in 2001-2002

personnel in Romania was 19,726 people in 2001, which represented 1.71 per 1000 of the labour force. This represents the lowest share of researchers in the labour force of all the member and acceding countries, excepting only Cyprus. The share of researchers employed in the business sector is relatively high in Romania: with 57.2% of researchers employed there, Romania has the highest proportion among the EU candidate countries and higher than in some of the current EU member states (see Table 4). Human Resources in S&T provide the capacity to produce scientific and technological knowledge. In Romania the capacity to produce and absorb knowledge is highest in the business sector, which is a promising indicator of the potential future development of the production of knowledge. In terms of gender balance Romania performs better than the EU-15 (27.2%) average with 42.8% of female researchers (in FTEs).

Nevertheless there is significant potential of human resources and distribution of human resources in Romania (see Table 4) if proper measures are taken and sufficient resources invested. According to the European Trend Chart on Innovation 2002, relative weaknesses of Romania are in

the fields of current lifelong learning, public expenditure on R&D, and patents applied for at the European Patent Office. On the other hand, major strengths in innovation are in the trend for lifelong learning.

Outputs: S&T and economic performance for the knowledge-based economy. The significant disparities in R&D system inputs are reflected in the output gaps between Romania and the EU, and the macroeconomic dynamics as well. In the field of S&T and performance in the knowledge-based economy, Romania is behind the current EU-15 level (as were all the acceding and candidate countries in 2001), and behind the average of the EU acceding and candidate countries. This was especially pronounced for technological performance (patents), relative to the scienti f ic performance or overall productivity, where the picture is less negative (see Table 5). Romania is doing well in the speed of closing the gap in the number of publications and in the world market share of exports of high-tech products. Low gaps are also recorded in the employment in high-tech and medium high-tech industries as percentages of total employment (5% for Romania, relative to 6.2% in the EU-15, in 2001).


32

Table 4. Human Resources in S&T in Romania, in 1996-2001

FTE = full-time equivalent researchers. (1) Greece: 1999; EU-15 and EU-25: 2000;

(2) Greece: 1995 1999; EU-15 and EU-25: 1996 2000; (3) EU-15 and EU-25 does not include Luxembourg and Malta. In % by sector, EU-25 does not

include Luxembourg, Cyprus, Estonia, Lithuania, Latvia and Malta;(4) Portugal: 2002; Greece: 1999;(5) Portugal: 1996 - 2002; Greece: 1997 - 1999; Bulgaria: 2000 2001; Romania: 1997 2001;(6) Portugal and Greece: 1999;(7) EU-15 and EU-25: 2000; Greece: 1999;



33

Romania Bulgaria Greece Portugal EU-25(3) EU-15(3) Total number of researchers (FTE) (1)

19 726 9 217 14 748 17 584 1 084 726 972 448

% by sector: business enterprises (%) 57.2 n.a. 15.2 15.5 47.3 49.7 government (%) 28.4 n.a. 13.6 21.0 14.5 13.4 higher-education (%) 14.4 n.a. 71.0 50.3 36.0 34.5

Average annual growth rates of researchers (FTE), %, in 1996 – 2001 (2)

-8.23 -8.98 11.03 6.55 3.68 3.90

Number of researchers (FTE) per 1000 labour force, in 2001 (4)

1.71 2.68 3.30 3.51 n.a. 5.58

Number of researchers (FTE) per 1000 labour force, average annual growth rates (%), in 1996 – 2001 (5)

-8.2 -3.0 13.3 4.9 n.a. 2.6

Female researchers as % of all researchers (in HC), in 2001 (6)

42.8 45.5 40.9 46.6 n.a. 27.2

R&D expenditures per researcher (FTE) (in thousands of EURO), in 2001 (7)

9 8 54 58 156 171

By sector (000 EURO): business enterprises 10 13 101 121 214 225 government 9 8 86 59 147 170 higher-education 7 4 38 41 90 103

Romania

(A)

Bulgaria Greece Portugal EU-25

EU-15

(B)

Gap: EU-15 and

Romania (B – A)

Scientific performance (1): 1- Number of publications per

million population, in 2002 84 182 458 339 n.a. 673 589

2- Growth rates of publications (%), in 1995 - 2002

4.9 -1.6 7.8 12.7 n.a. 2.1 -2.8

Technological Performance: 3- Shares EPO (patent

applications), in 2000 0.01 0.01 0.04 0.03 47.06 46.79 46.78

4- Shares USPTO (granted patents), in 2002

0.00 0.00 0.01 0.01 16.26 16.17 16.17

5- Patent applications at the European Patent Office per million population, 2000

0.3 1.0 2.9 4.2 107.7 128.4 128.1

6- Patent applications at the US Patent Office per million population, 2002

0.2 0.8 2.0 1.3 59.9 71.2 71

7- High-tech exports as a % of total exports, in 2001

5.0 1.6 5.5 6.8 n.a. 19.8 14.8

8- World market share of exports of high-tech products (%), in 2001(2)

0.05 n.a. 0.05 0.15 n.a. 37.51 37.46

9- World market share of exports of high-tech products – average annual growth rates (%), in 1996 - 2001(2)

29.01 n.a. 2.69 6.42 n.a. 0.62 -28.39

10- Technology balance of payments receipts as % of GDP, in 2001(3)

0.05 n.a. n.a. 0.31 n.a. n.a. n.a.

11- Technology balance of payments – average annual growth rates (%), in 1996 - 2001(3)

105.2 n.a. n.a. 7.1 n.a. n.a. n.a.

Productivity Performance:

12- Value added of high-tech and medium high-tech industries as % of total gross value added, 2001(4)

4.82 4.15 1.64 4.45 8.38 8.44 3.62

13- Employment in high-tech and medium high-tech industries as % of total employment, 2001(4)

5.01 5.07 1.13 3.21 6.18 6.23 1.22

Table 5. S&T and economic performance, 1995-2002

EPO European Patent Office; USPTO US Patent and Trademark Office (1) Population in 2001;(2) Includes intra-EU trade. If we exclude it, the EU-15 share drops to 20.11 %;(3) Portugal: 2002, respectively: 1997 - 2002(4) EU-25 does not include Luxembourg; Bulgaria and Romania: 2000;



34

In terms of growth in overall 1performance during 2000-2001, Romania

(5%) is a member of the group that is catching up with the EU-25 average (along with Lithuania 13%, Latvia, Hungary, the Czech Republic, Malta almost 6%, and to a lesser extent Poland 3%), in contrast with the group that has a lower growth rate than the EU-25 average (Bulgaria, Turkey, Cyprus, Estonia, and to a lesser extent Slovakia and Slovenia). But the performance level was still lower in 2001 than in all the other acceding and candidate countries, except Turkey and Bulgaria which are very close to Romania.

2. SCIENCE AND INNOVATION POLICY AND STRATEGY ASSESSMENT: FOCUS ON PRIORITY SETTING AND IMPLEMENTATION

Identification and selection of priorities in R&D constitute an especially

complex process, which requires the existence of some dedicated institutions and following some procedures validated by international practice. Taking into consideration those premises is a key issue for Romania, whose economic and social system is undergoing a stage of many difficulties and uncertainties.

Despite the diversity of the decision-making mechanisms of different countries, a series of criteria and common features of the process of selecting scientific priorities can be identified, as follows:

Ø the interaction between the purposes of the scientific and technological community and those of political factors;

Ø the impact of the greater balance of science and technology cycles, compared to those from administration and politics, on the time period for making priorities, for the

1 The composite index of performance in the transition to the knowledge-based economy takes into account four most important elements: overall labour productivity, scientific and technological performance, usage of the information infrastructure, and effectiveness of the education system (EC DG Research, 2004).


35

Figure 1. Macroeconomic performance dynamics: Romania vs. EU

-5 -4 -3 -2 -1 0 1 2 3 4

GDP av. an nual g rowth r ates (% ), 1997 - 2002

Pop ulation av. an nual g rowth r ates (% ), 1997 - 2002

Yo ung po pulatio n (25 - 34) av. annual growth rates

(%), 1997 - 2002

Empl oymen t av. an nual g rowth r ates (% ), 1997 - 2002

Un employment av. ann ual gro wth rates (%), 1997 -

2002

R oman ia EU-2 5 E U-15

Unemployment av. annual growth rates (%) 1997-2002

Source: Authors’ computations

ratesrates

financing method for implementing them, and for training the research personnel, requiring a long-term vision;Ø the existence of special dedicated

institutions for setting R&D priorities, generally known as “councils of research” or “national committees for science and technology”, as non-political organizations, based on teams of objective experts, who also decide over the allocation targets of R&D funds; Ø there is periodical control of the

priority-setting system taking into account the fact that the most steady priorities are in wider scientific fields and in fundamental research compared to technological research;Ø in the advanced S&T countries

there are consulting systems, as general mechanisms for setting R&D priorities, where scientists, together with firms, government, union representatives and experts in different fields participate, and the consulting procedures are flexible, in order to rapidly adjust to changes in the social and economic environment;Ø users of R&D outputs play a key

role in setting priorities especially for applicable research;Ø priorities once settled are invoked

in long-term programs or strategic plans, and are correlated with the political, social and economic frameworks on one hand, and with the state-of-the-art in science and technology on the other hand.

In the successful implementation of priorities, international practice, especially the European one, reveals a series of key features that this process depends upon:Ø taking into consideration, to a greater

extent, the strategic role of science and technology in tackling some pressing social and economic issues, like environmental protection and sustainable development, within the frame of increasing tension

between available resources and the needs of operational actors for R&D activity;Ø the strengthening of the relationships

between science, technology, economy and society in accordance with the increasing cost of research and innovation, the increasing speed of scientific and technological breakthroughs, and the growing need for fast data and technology transfer from research to the economy and society; Ø the powerful sway of political and

regional factors over the S&T system;Ø the international framework has a

powerful influence on selecting and implementing priorities in S&T, following the increasing globalization process, to which the R&D itself contributes.

Stages in the Process of Selecting Priorities for the R&D System. Since 1990 selecting priorities has been influenced by the new and changing economic, social and political framework. Due to the specific transition conditions it can be stated that, until quite recently in Romania, the matter of priorities was not a major concern of the political actors. We can distinguish four stages of R&D system transformations that influenced the priority-setting system to a great extent.

From 1990 to 1992, the lack of demand for applicable research and of funding resources created a state of confusion, leading to changing most of the technological research institutes into commercial companies; the Romanian Academy's research was reorganized on the basis of budget allowances, leading to a greater security and steadiness. In this period, the economic priorities issue, and even more those in science, were not a concern for the policy-makers.

From 1992 to 1994, a structural priority was set of preserving the technological research resources and


36

potential, more as a consequence of the pressures from the scientific community in industrial research, and less as an effect of the awareness among policy-makers of the role of this field in reviving economic growth. For implementing this priority the Special Fund for R&D was designed, financed by a 1% contribution of the turnover of public, and later private, business people. Without a direct interest of the firms in supporting R&D, this system has drawbacks, working on a short time limit. In this period, thematic and structural priorities were not selected, but a large number of funding requests for wide thematic areas of research were financed (every year they financed over 4000 projects, most of them without any direct connection to the needs of financing economic agents).

Starting from 1994 to 1995 the idea of selecting priorities in R&D came to be stated. The National R&D “ 2000 Horizon” Program was used for this purpose, being initially managed by the Ministry of Research and Technology (MRT), later on by the National Agency for Science Technology and Innovation (NASTI), and finally by the Ministry of Education and Research (MER). The program was launched with the purpose of “fund allocation on priority objectives and programs, having a inter-disciplinary and inter-sectoral approach to promote partnerships for managing complex issues”.

A step forward in designing priorities in accordance with the major objectives of economic and social development was made in 1999, when the national priority programs, RELANSIN, CALIST, INFRAS and CORINT were launched, as a part of the RDI National Plan.

Through these programs the following structural priorities of R&D were set:

Ø increasing the impact of R&D activities on the economy and society,

following the view of economic revival and sustainable development,Ø speeding and intensifying the innovation processes and their transformation into direct support to i n c r e a s i n g t h e q u a l i t y a n d competitiveness of products and services of fered by Romanian c o m p a n i e s i n d o m e s t i c a n d international markets;Ø the focusing of competencies and resources in science and technology with the purposes of extending the national heritage of scientific, technological and innovation;Ø the compliance with the legislation and ins t i tut ional sys tems and proceedings of the EU, to a rapid and efficient implementation of the partnership for accession.

These objectives expressed somewhat too general intentions, without being applied in target sub-programs, which led to accepting offers over a wide thematic range, and consequently to wasting Romanian R&D resources.

The National R&D Plan was updated from 2001 to 2005, through launching in September 2001 other priority programs: AGRAL, MENER, ANTRANS, BIOTECH, MANNANTECH, AEROSPA-TIAL, CERES. According to the perceptions of the European Commission in the Country Report in 2001: “The New Plan shifted from actions focused on offers to those focused on demand, to better answer the needs of economy and society. The Cooperation with companies was put on a solid basis” (The EU Commission: 2001 Regular Report on Romanian Progress towards Accession, Brussels 13/11/2001, pp. 71-72)

These favourable trends were still insufficient for really meeting R&D priorities and for their efficient implementation. According to European Commission


37

Box 1: Development objectives of Romania: priority national programs in 2001 - 2005 Ø Agriculture and food (AGRAL);

statements in the same evaluation report, “The National Plan was only partially implemented, due to lack of funds. The funding of R&D activities in Romania is very low (0.41% from GDP in 1999) compared to many European countries, falling much under the European average (1.92% in 1999).” For realizing the scale of under-financing of the R&D area in Romania, we must mention that this percentage applies to Romanian GDP, which is ten times lower than in the advanced European countries. In the latter, the R&D share has already reached 3% in some countries. The difficulties the R&D field has to meet due to under-financing, as well as the assessment of the European Commission concerning the “efforts that must be made for ensuring a proper level of financing the R&D sector” must keep making the decision actors responsible for public funds allocation, as well as finding new financing

resources and incentives for the expenditure on R&D to reach at least 1% of GDP.

The National R&D “2000 Horizon” Program an important stage of setting and

2implementing priorities. The program was designed to combine the structural and thematic priorities for economic and social development, on the following criteria: Ø the alignment with the priority

areas for economic and social development, in conformity with the sectoral and national government strategies and with the thematic criteria of the EU's Fourth R&D Framework Program;Ø dealing with inter-disciplinary

research areas;Ø preservation of R&D capacity;Ø sustaining R&D programs through

support actions.From a structural perspective, this

program aims at the following objectives:

2The “2000 Horizon” Program was constructed from 1994 to 1995 and adopted through the Government Decision nr.1095/1995 as a national version of the Fourth EU Framework Program.


38

Ø building an efficient and secure infrastructureØ increase of industrial competiti-

veness and technological and industrial integration into European standards and regulations;Ø environmental protection and

quality;Ø increase of the degree of Romania's

participation in international scientific and technical activities.

The selected thematic directions, starting with the provisions of the government strategies and in the view of the Fourth EU Framework Program, are the following:Ø infrastructure, communication and

information technology networks - making infrastructure networks

compatible with European and world standards and tendencies;

- dealing with components of the future information society;Ø energy and resources

- discovering new sources and technologies;

- national capitalization of the natu-ral resources;Ø food and agriculture

- better capitalization of agricultu-ral, wood and fish natural resources to ensure the food security of population;Ø environment and environmental and

monitoring technologies, the Black Sea- environmental protection and

monitoring methods and techniquesØ health and biotechnologies

- improving conditions of health; - new diagnostic techniques and

methods;- treatment and prevention.

The “2000 Horizon” Program started in 1996 and was designed to end in 2002. It was launched through an open competition system, allowing all public and private, as well as university, academic and

industrial units to access the research programs, elaborated and coordinated by the 22 R&D commissions. The financing of this program was obtained from the state budget, through the responsible govern-mental authority (MCT, ANSTI, MEC).

Regarding the selection of thematic priorities, it could be appreciated that there was certain concern at the public authorities' level, which created 22 commi-ssions to direct the R&D activity on priority areas. However, due to a series of drawbacks and opposing patterns (the disappearance of some research institutes and the appearance of others, the obvious tendency of researchers to migrate to other better-paid fields or to other countries) or to the way of working of consultative commissions for research functioning, in practice there were identified several divergences in priority selection from the perspective of the National Program provisions.

Among the factors which contribu-ted to the “non-priority” funds allocation, the following can be mentioned: the expert commissions where the thematic offers were selected for financing included representatives of the main funding beneficiaries; the evaluation system was not always based on scientific awards criteria and met difficulties in dealing with the, sometimes, partial evaluators; the small numbers relative to the wide choice of offers and extreme thematic variety; the restrictions enforced by the Ministry of Finance in allocation of funds to different destinations; the granting of only a small amount of the needed funds for most of the projects, therefore under-financing them. In fact in the opinion of one of the ANSTI presidents, the “2000 Horizon” National Plan aimed at financing “all that Romanian science could offer”. For instance, in 1998, there were financed 8286 themes, operational programs, zoning and various


39

subject programs, carried out in hundreds of national institutes, the Romanian Academy, higher education units, nongovernmental organizations, as well as public and private commercial companies, leading to multiplying thematic priorities to the limit of granting financing to extremely reduced shares compared to the need for quality research of an important part of the funds demands.

Data analysis from 1997 to 1999 referring to the “2000 Horizon” Program, the main instrument of promoting R&D policy in Romania, allows evaluation of the way of establishing and implementing priorities through funds allocation towards scientific commissions (structural priorities) and towards thematic directions as well.

The allocation of funds within this program towards scientific commissions chiefly reveals a phenomenon of inertia about scientific concerns inherited from the former period, and on a different scale a similar industrial and economic structure and R&D. Thus, from 1997 to 1999, with a background of substantial cutbacks on allocated funds on commissions within the “2000 Horizon” Program, the expenditure structure actually remained the same. The most important part of the funds was allocated to financing projects from the following fields: mechanical engineering (Commission 4), agriculture, food and wood industry (Commission 12), electro-technical, electronics, and mechanics (Commission 6), physics, mathematics ( commiss ion 15 ) , and chemis t ry (Commission 7). In 1999, the projects financed within those five above-mentioned commissions represented almost 60% of the total of funds allocated to this program.

Analysis of priorities within Scientific Commissions that absorbed most of the funds from 1997-1999 allows the observation that the priorities in applied research fields, relevant for economic fields,

were too general in character, without a channelling of funds to real priority fields for the development stages being undergone in this period in Romania.

The high degree of generality of “thematic priorities” is revealed by the great similarity between their formulation and the name of the commissions and even by defining programs established within each thematic direction. On the other hand, over the three years of data analyzed here, the thematic structure of funds remained almost unchanged. In other words:Ø 37% of the total funds were given to

projects on industrial products and technologies, Ø 14% on agriculture, wood and food

industry, Ø 13% on basic sciences, Ø 5% on town planning, construc-

tion and construction materials.

The relationship between the R&D priorities and social and economic develop-ment. The slow progress of the selection of priorities in R&D in Romania was determined by many factors, generated by inertia regarding legacy models and by the meanders and risks of the evolution of the whole economic, social and political transition process. Furthermore, the priority selection mechanism was influenced by a series of elements specific to the R&D system, under pressure after 1990 to search for new paths. In the absence of a new strategy for selecting viable priority fields, the industrial research system went bankrupt through an inability to be self-sustaining financially, following the cutting of funds from 1990 and breaking the links with the economic system, in an uncertain context. Worthy teams of researchers, trained over decades in Romania, fell apart after 1990; some of them emigrated and established themselves as researchers abroad and others migrated to fields of


40

activity capable of providing a decent life. However, even now, a market for industrial research has not been built and the demand for this activity has not been formulated yet, which has led to defining “priorities” by the supply, with policy-makers not giving enough signals related to the long-term economic development strategy. As a result, R&D activity could define priorities in the light of worldwide tendencies in science and technology, because of the present situation and especially the perspectives of the Romanian economy.

This lack of compatibility between the evolution of the R&D and the industrial system is revealed by comparative analysis of the structure of the allocated research funds for the main branches of manufacturing, and of importance of the branches of industrial production in overall exports. It is noticeable that “priorities” in the allocation of funds for R&D do not match with the tendencies of present development of Romanian industry. Thus, in branches making an important contribution to industrial production and exports, a reduced research activity was registered, for instance in textiles or leather footwear. The fields absorbing most of the research funds instead, like metallic construction, machinery and equipment, contribute only 8.8% to industrial production and 8.3% to exports. The latter activities together with a few others such as chemistry and metallurgy absorb 90% of the expenditures on R&D (allocated to the sector of processing industry), while having only 28.7% of total production and 23.4% of exports.

In this context, there arises the question of defining the priorities for Romanian industry for the next period, and whether they will be those of the first 14 years of transition or other new basic priorities both in industry and in research and development.

In conclusion, establishing priori-ties in R&D is at a preliminary stage, taking into account that only after 1999 was this problem was seriously raised within the context of approaches to European integration. The issue of setting priorities, although extremely important and pressing, under the conditions of serious cuts in R&D expenditure in GDP over the last 5 years, is tackled at present only at a formal level, without institutions, mechanisms or even resources for implementing selected priori-ties. Extreme thematic and institutional loss, lack of participation of branch ministries, and of users of the research outputs, all constitute a barrier blocking the setting of priorities on key scientific, technical, social and economic fields of interest. Building on these, there has been confusion existing over a long period of time regarding the restructuring directions of the main branches of the economy.

Through the project of the new Law of Scientific Research and Technological Development there appeared a series of favourable premises through setting up a National Council for Science and Technology Policy, having as its role that of setting viable priorities within the National R&D Strategy. There were also set out initiatives for building consultative committees for Research, Development and Innovation, having a large representation of the scientific community, of ministries and of relevant economic agents.

3. PRESENT KEY CHALLENGES: S&T POLICY-MAKING IN ROMANIA IN A EUROPEAN CONTEXT

R&D Priorities in government documents:

Ø The National Strategy of Romanian Medium-Term Economic Development: 2000-2004. The issue of establishing priori-ties in R&D was given new significance in


41

December 1999, once Romania was invited to start negotiations to join the EU. The preparation of Romania for integration into the EU is a complex process aiming at promoting a coherent policy, compatible with the EU mechanisms in R&D. In the National Strategy for Economic Develop-ment of Romania in the medium term, comprising the main objectives and policy needed for Romania to meet the main requirements to accede to the EU in 2007, policy-making in science and technology takes a special place. It contains the priority objectives of RDI referring to:

o the development of the capacity for producing scientific and technological knowledge;

o the increase of the R&D units' quality and efficiency through developing specific infrastructure, improving management and pay, and increasing the capacity of absorption of the research outputs;

o the development of the R&D and innovation potential at the firm level through conducting joint projects with the institutions and the expert centres and using co-financing incentive schemes;

o the gradual increase of R&D and innovation expenditure shares in GDP, to levels compatible with the EU member countries.

As can be noticed, the formulation of these objectives is quite general and does not allow the revealing of specific strategic priorities in the field for the next period.Ø Priorities of RDI in the Govern-

ment Program from 2001 to 2004 (The Official Monitor of Romania nr. 700, 2000, Dec. 28). From the government program the following priorities for the RDI field can be drawn:

o the restructuring of the national system of scientific research through defining the strategic fields and financing of research in these areas; the diversification of funding sources; a better capitalization of

the research outputs and Romanian inventions;

o the adjusting of the national system of RDI to the requirements of the process of EU integration;

o the endowment and informatization of a research unit system providing better compatibility with EU levels;

o the strengthening of networks between research and industry at a national and regional level through developing specific institutions;

o the increase of interest in science through a specific training and incentive system;

o the provision of a legislative framework (the research law and the researcher regulations) needed for efficient functioning and development of the national system of research, development and innovation.

In the years following the launching of this program, there have been slight concerns to apply a series of measures aiming at meeting the targeted objectives. Thus, a package of laws to deal with the unsettled issues was forwarded to the parliament for debate in 2001-2004. These concern: the Law Project of Scientific Research and Technological Development; the Law Project referring to Regulations affecting R&D Personnel; the Law Project referring to establishing the way of Approving the Budgets of Incomes and Expenses of national institutions of research and development; the Law Project for completion of the Government Decision nr. 25/1995 regarding the regulations for organizing and financing research and development activity; the Law regarding the organization and functioning of the Ministry of Education and Research; the Law dealing with ethical concerns in developing technological research and innovation. The provisions of these laws constitute a


42

favourable basis for meeting the above objectives. There has been increasing concern recently related to the capitaliza-tion of research outputs, especially in technological terms, through creating industrial and scientific parks (starting from 2002).

In this context, there are some examples of achievements that indicate the reliability of measures undertaken in 2001-2002, mentioned in the RDI between 2001-2002 Report drafted by the Ministry of Education and Research (January 2003), such as:Ø 5 times increase of the amount of

funds from the economy that went to the R&D units in 2001 compared to 2000.Ø 9 times more funds from the

European Union granted to the R&D units through participation in the Fifth Framework Program of technological research and development.Ø In 2001 and 2002, a new positive

t rend was inaugurated, target ing stabilization and increase in the number of employees in the research-development-innovation field. The younger generation (students, young researchers) has become more motivated and involved in national RDI projects. More than 2,800 new young researchers entered the doors of institutes and units that have research, development, design and innovation as their main activity. The Romanian scientific community is thus relatively protected, being ensured of the regeneration of the specialist groups.Ø For the first time in the history of

Romanian scientific research, the country won first place in 2001 and 2002 in international inventions showrooms, the majority with gold medals (awards for acknowledgement at a global level).

The Romanian RDI integration into the European Research Area. By 2001, the focus on setting objectives and priorities

in RDI came almost exclusively to be put on European integration, within the framework of creating the European Research Area (ERA) as its main direction. This concern for complying with EU directions and priorities is expected to result in boosting scientific research and technological development in Romania. It must be taken into account that the European RDI system itself is undergoing a new stage of restructuring for closing the performance gaps relative to its main overseas competitor, the USA.

The European Research Area is a long-term strategy of the EU. In the medium term, from 2002 to 2006, the priorities were defined through the document “Making a Reality of the European Research Area”, where the practical actions and instruments of the ERA that would be implemented through the Fourth to Sixth Framework Programs were mentioned.

The Romanian standpoint regar-ding integration into the ERA was sustained through a series of documents reflecting the acceptance of acquis communitaire regarding science and research. In these documents, a series of general priorities are recorded, for instance:Ø developing the legislative, financial

and organizational support for assuring the participation in the EC Framework Programs;Ø the general preparation of the field

for accession, and for integration into the ERA;Ø the correlation of national research

programs, building networks of excellence and specific large research projects.

Romania aims at permanently meeting the needs of the national RDI with the EU, of building the ERA and the priority actions for creating it as a similar framework. Nonetheless, the priorities of scientific research and Romanian technological development formulated in the documents regarding integration into the European


43

Research Area involve national specificities, coming from the restructuring and re-engineering of the needs of some structural components of the R&D system, having a higher degree of inertia, and meeting the present and future needs of the country.

Thus, promoting the training and development of the centres of excellence and ensuring some domestic professional competency and expert sources in state-of-the-art science and technology in priority economic fields is considered a key priority for Romania, too. Starting with the present situation, and taking into account the future possibilities and needs in this field, the responsible actors consider that this intent is applicable through evaluation and sy s t ema t i c acc red i t a t i on o f RDI organizations, using European criteria to allow selecting expert RDI and therefore a better allocation of public funds for R&D. To meet this objective in the Project of the Research Law that was discussed and approved by the parliament, there is provision for creating an institution of expert evaluation, as a key to setting priorities in expert and applicable R&D fields and to a better allocation of R&D public funds. Ensuring competence and high scientific and technological expertise will be realized through cooperation with the European countries in science and technology as well as developing a network system to include the RDI organization of the EU member states and candidate countries.

The gap between infrastructure development in Romania compared to other European developed countries is rather alarming. Within the context of low and decreasing investment funds over the last few years and of slight concern for improving the facilities of some institutes with state-of-the-art equipment, up-to-date research work and the building of modern, applicable partnerships to allow the access

of Romanian researchers to European programs are difficult to foresee. In 1996, the capital expenditure share in total R&D expenditure was about 7.2% and in 2001 this indicator reached 11.9% (from an extremely reduced volume of R&D expenditure representing only 0.39% of GDP, even if the nominal dynamics in 2001-2002 were favourable as stated earlier). Therefore, an important objective that Romania must have in view to approach compatibility with the EU level proposals is the development of the research infra-structure.

To improve its existing standing, Romania aims at developing some centres providing facilities and work conditions at the European level, supporting the access of Romanian researchers to important EU research facilities, developing information and communication infrastructure in R&D

units, creating a national network of computers for research and a rapid communication environment, having high capacity networks to include both the RDI units of the EU member states and Romania.

The creative potential of a country, in producing and using knowledge, can be seen in the indicator “the share of researchers in the total workforce”. Having 1.71 full-time researchers per 1000 employees, Romania is under the average of EU (5.5/1000 employees) and well under some developed EU countries: Finland, Sweden, Denmark, France, Germany, Great Britain (see Table 4 for more details). Romania has a human research potential expressed in a small number of researchers per 1000 inhabitants, far less than other European country, and there have been important cuts in recorded researchers lately. Thus, in 2001, the recorded researchers represented a third less than in 1995. This decrease in the number of researchers must be evaluated in connection


44

with the research personnel flows, considering the fact that a series of valuable young researchers have left this field for better-paid workplaces throughout the country or abroad. The share of young researchers under 30 was in 2001 only 14.3% of the total researchers.

Taking into consideration the above-mentioned facts, another priority in the Governmental Programs of Integration into the European Research Area is the development of human resources in the scientific, technical and innovation area. With this purpose in mind, there are planned actions of recruiting and training young researchers following the European model of scientific careers and making and promoting a legislative framework for researchers.

To comply with the EC objective of strengthening the innovation capacity of firms through scientific and technological research, Romania intends the promotion of some specific national programs, the cooperation between R&D units and high-tech firms, the design of programs to build an information network, documentation and support for SMEs oriented to new technologies, and the increased capacity of the R&D units to spread knowledge and research outputs as well as their experience. The stimulation of technological transfer, of demand for research services and of research output absorption in existing firms will be supported by setting up the National Investment Fund for Research and Development (a Risk Fund for applying R&D results).

In meeting this objective, the low level of research in Romania and the low capitalization of research outputs in industrial production must be taken into consideration. From the existing statistical data it can be stated that the share of enterprises undertaking R&D activity out of

a total of enterprises in the processing industry decreased from 10.1% in 1999 to 5.2% in 2001.The lowest rate of decrease can be observed in the traditional industry branches as follows: the processing of crude oil and coal, rubber and plastics, chemistry and synthetic and artificial fibres, and metallurgy.

Regarding the overall processing industry, the share of enterprises where new and improved products have an important share in business and exports is much reduced compared to firms that undertake R&D activities. In 1999, 2.8% of the total number of enterprises had a higher share of new and updated products than 10% of their turnover and 2% in terms of exports, but by 2001 these shares were respectively 2.1% and 2.4%. Even for enterprises in modern branches producing higher value-added goods and with strong research activity (machinery and electrical devices, radios, TVs and telecommunication equipment, medical precision instruments, optics and clock-making), there is no tight correlation between research activity and their economic performance.

At present, at the European level there is the opinion that the key to success in research is partnership and scientific collaboration.

Within this context, a condition of participation in the EU R&D Framework Programs is, on the one hand, the building of a complex multinational team, of high professional training and an openness to cooperate and integrate into international teams, and on the other hand, the capacity and the co-financing will of the governments in the participating countries. Romania, which lacks sufficient resources to develop research activity at the present level of requirements, could capitalize, to a greater extent, on the advantages offered by collaboration with European plans within


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Box 2. Success stories: Romanian Innovations of global use in the IT industry 1. Microsoft, the leading global software producer, acquired in June 2003 the Romanian owned private company GeCad – a firm started from scratch in the early 1990s by a group of students. The main product of the Romanian company was a locally developed antivirus program named RAV. Following this acquisition, Microsoft announced plans to use the RAV application in its products. 2. A local rival of Gecad, Softwin, also sells its software products abroad. Softwin is a private Romanian company that provides software solutions and services and a leading provider of data security solutions and services. Founded in 1990, Softwin was the first Romanian software company, set up entirely with Romanian capital, to be certified ISO 9001. In 2002, Softwin’s antivirus software, BitDefender™, won first prize in a competition organized by Euro-CASE with the support and sponsorship of the European Commission´s Information Society Technologies (IST) Research Programme. This was the very first time (since the competition started) that one of the awards went to an East European company. In August 2003, RAE as Internet provider of antivirus, antispam and Linux Groupware products was appointed through a distribution agreement as the US distributor of BitDefender Antivirus Solutions. 3. Another IT company of local origin, benefiting from continuous product innovation, is Flamingo – it has now become a multinational company de facto, with affiliates in seven EU member states and candidate countries.

the Fifth and Sixth Framework Programs. The capitalization of these opportunities implies both a long-term financial effort by Romania itself and the increased capacity of Romanian research to offer expert partners and to improve the quality and efficiency of participation in the European programs.

According to the assessment of the European Commission, the financial contribution of Romania to the budget of the Fifth Framework Program was significant for a limited resource country. Despite the fact that Romania increasingly supports the b u d g e t o f E u r o p e a n p r o g r a m s , unfortunately, the degree of participation of researchers in the Community programs was not in accordance with the national financial effort. Thus, in 2001, Romania registered the lowest participation rate of European countries applying for integration as well as a reduced number of signed contracts.

There are many factors explaining the low efficiency of the participation of Romania in the research activity carried out in the European programs, among which we can mention: the Romanian research isolation from the international scientific

community before 1989, leading to behaviours and constraints on collaboration with expert partners from abroad; the lack of domestic cooperation even between the research units in industrial scientific academies and universities; administrative, institutional and legislative malfunctions; the lack of proper infrastructure for outstanding research; etc. However, the European Commission appreciates that “the recent reorganization of research activities at a governmental level is an important accomplishment. Nevertheless, the intensifying of cooperation between the research centres, universities and enterprises to ensure a successful participation in the EU Framework Programs is compulsory.”

The improvement of the quality and efficiency of Romanian researchers' participation in the EU R&D programs constitutes a concern for the responsible institutions under the circumstances of being a negotiation chapter for accession to the EU. Within this context the government involvement must not curb the financial contribution to the budget of European


46

Framework Programs, but there is a need for greater concern for co-financing the winning projects and ensuring a satisfactory management of them, as well as of some specific structures for their implementation (committees, consultant groups and evaluation teams).

Another condition for developing scientific and technological activity in Romania, for its compatibility with the European level, and for increasing the international competitiveness of Romanian research, consists of ensuring its access to the facilities offered by the Internet and other communication and information technologies. “Access to the Internet at home” constitutes a key evaluation indicator of the innovative capacity of different countries. At the EU level, the share of households connected to Internet networks in the R&D field in 2000 was 28%. In the meantime, in high performance countries this indicator was over 40%: Netherlands, Sweden, Denmark, Finland, Great Britain; in the USA this share is 47%.

In Romania, the access to this infrastructure is limited at present, firstly because of extremely high cost of equipment and connection to special networks compared to the decreasing incomes of potential users. Data provided by the 2001 Human Development Report indicate the cost of connecting to the Internet in the USA, for instance, represents 1.2% of average monthly income. In our estimation, in Romania the cost of using the Internet at home was about 50% of the average net monthly salary in the economy (in March 2002).

If individual access to the internet is difficult, it must be underlined that, unfortunately, not even in the research institutes can the open access of researchers to the information offered by this infrastructure be provided; therefore this

represents a major disability both in communicating with researchers from other countries and consequently in finding partners to access European programs and for rapid information in the field of interest as well. Within this context, we must mention that the budget finance, beyond its extremely low level, imposes restrictions on the allocation of funds so that most of them are channelled into payment of salaries.

There are some favourable premises for alleviating shortcomings regarding public financing, as a conse-quence of the Romanian RDI system's integration into the ERA, as this would imply the adoption of some package of rules concerning financing from specific public European funds of RDI: minimal rates of financing from public funds of RDI; minimal rates for institutional financing from public funds (“core funding”, investments); public policies for boosting investments in RDI; and the increasing role of venture capital in financing research.

The involvement of the scientific and technological community in Romania in designing the Framework projects can be improved, both through approved actions by the public authorities aiming at developing a viable collaboration in R&D through partnership with potential participants from the EU member countries, and through stimulation of a proactive attitude towards identification and ensuring of a higher capitalization of participation opportunities and improvement of the capacity to formulate consistent and competitive proposals.

The improvement of the quality and efficiency of Romanian participation in the EU Framework Programs presupposes the harmonization and political consistency of long-term science and technology policy in the European Research Area (the formulation of objectives, planning and


47

correlation of activities and implemen-tation) through: intensifying the dialogue with representative European organisations; formulation of adequate action plans to apply and implement national policies; the development of an adequate participation framework in the Community programs in accordance with the present research deve-lopment potential, at program and project level, through launching negotiations on time; having in view a more realistic evaluation of national policy and the financing capacity of participating in large projects. Meeting these objectives and creating an adequate framework of participation in the EU programs is dependent on ensuring a proper financing of the R&D system in Romania; it is estimated that the minimum financing level allowing the implementation of the above objectives is more than 1% of the GDP (about 150 EURO/inhabitant or 300,000 EURO/resear-cher), compared to the actual figure of 0.39% in 2001.

Taking into consideration the large gap between existing and necessary resources to meet the objectives formulated by the governmental institutions in R&D, for instance: “the promoting of excellence in science and technology through a unitary system of evaluation of the R&D units of activities and personnel based on international standards; the formation and development of centres of excellence as research units that gather material and human resources of high performance in science and technology and are acknowledged worldwide; the encou-raging and supporting of training and building a researcher career and the acknowledgement of the importance and value of scientists and researchers”, these appear as being unrealistic and difficult to meet in a relatively short period of time.

Meeting the ambitious objectives included in the Action Plan for integration

into the ERA, for instance developing the R&D infrastructure in Romania at a Euro-pean level, granting adequate equipment and facilities to the institutions and universities, developing a network of research labs working in the same or similar fields and having complementary facilities, creating at a regional level an infrastructure of adequate size having a direct impact on the absorptive capacity of R&D outputs by the economic environment (parks of science and technology), developing research centres that are competitive at the European level, to attract international programs and researchers from other countries especially from Europe, and of centres or networks of services for R&D (professional training, consulting, technical assistance and information) all these imply a large volume of investments that cannot be supported from the extremely low funds allocated to the R&D field in Romania.

The increased volume of funds for R&D and especially their allocation and efficient use are even more important in view of a tight cooperation between Romania's national research area and the European one, through facilitating communication and correlation of activities between the researchers in Romania and the EU member states, the openness of the national research programs to European area researchers, the variation of forms and intensification for the mobility of researchers and professionals in the short and medium te rm be tween RDI organizations, universities and industries from member states and candidate countries.

CONCLUSION

In conclusion, the very high absolute and relative gaps between Romania and the EU indicate that we are far away from closing them. Until a few years ago, “thematic priorities” in Romanian S&T


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policy continued to be set according to traditional scientific weightings rather than to meet social and economic needs. The integration of the Romanian R&D system into the European Research Area, as a major objective of the present period, presupposes not only special financial efforts but the compatibility of information, legislation and management systems as well, and especially the volume of financing with that of the European Union. At the same time, this implies overcoming barriers of communi-

cation in R&D, on both a national and international level, that would better value the national research potential and the statement of Romanian research values, the boosting of firm-level research conditioned especially by the launching of industrial production, the increasing contribution of industry to the national effort in research and development, and last but not least, a more efficient capitalization of research outputs in the economy and society.


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REFERENCES:

! Romanian Government (2000), Strategia Nationala de Dezvoltare Economica a Romaniei pe termen mediu, Bucharest , p.31;

st! Government Program of Development in 2001-2004, Official Monitor, 1 part, no.700/28-XII-2000, chp.”Scientific Research”; ! Government of Romania, MER (2001), Romanian Position Paper on the EC Communication “Making a Reality of the European Research Area;! Government of Romania, MER ( 2003), RDI between 2001 2002 Report;! EC (1997), The European Report on Science and Tehnology Indicators 1994, Report EUR 15897, Brussels, Luxemburg;! EC (1997), Second European Report on S&T Indicators 1997, EUR 17639 EN, Brussels, Luxemburg;! EC (2000), Innovation in a knowledge-driven economy, in Innovation and Technology Transfer, Special Edition, ! EC (2000), The intangible economy impact and policy issues, RCN 15959, în CORDIS FOCUS, nr. 164/2000, p. 8! EC (2000), Commision Staff Working Paper: „Trends in European Innovation Policy and the Climate for Innovation in the Union, COM( 2000) 56;! EC (2000), 2000 Regular Report, from the Commission on Romania's progress towards Accession;! EC (2001), 2001 Regular Report from the Commission on Romania's progress towards accession; ! EC (2001), European Charter for Small Enterprises, în Innovation & Technology Transfer, nr.1/2001, p.3! EC (2001), Spain Supports ERA but with conditions, în CORDIS FOCUS, nr.165/2001, p.3! EC (2001), Report from the Commission: Research and Technology.! EC (2000), Europe needs more than the RTD Framework Programme, în CORDIS FOCUS, nr.155/2000! EC (2001),„Innovation in EU Candidate Countries: Flight simulator for Innovation pilots?” in Innovation and Technology Transfer , nr.6/2001.p.17


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! EU (2001), Special Edition-Indicators for Benchmarking of National Research Policies, Luxemburg;! EC (2001), European Innovation Scoreboard 2001, Cordis Focus Supplement Issue nr.18, september 2001;! EC (2001), Directorate General'Enterprises, The Trend Chart on Innovation, 2000 - 2001;! EC (2001), Development activities of the European Union, 2001 Annual Report, Brussels, 12/12/2001, COM92001)756 final! EC (2003), S&T Institutions and Policies in the EU Acceding Countries. Challenges for the development of the Knowledge Based Economy, Blaž GOLOB, draft;! EC (2004), Towards a European Research Area- Key Figures 2003-2004.

* Malkidis Theofanis studied economic and social sciences and is doctor of department of sociology. He has published articles about the Hellenic postwar policy and society in journals and has participated in Hellenic and international congresses, with main object, society and economy. He is teaching sociology in the Demokritus University of Thrace (Department of Language, Literature and Culture of the Countries by the Black Sea) 2 Enlargement, during the new EU period, is defined as the decision by the EU to open its gates to new members. See Stylianos, A. “The dilemma between deepening and enlarging the European Union and the future of the Euro”, Market Without Borders, Vol. 7, Issue 2, Fall 2001, p. 90-106. (In Greek).3 See. Welfens, P. J. Economic Aspects of the Eastern Enlargement of the European Union, Koln: Bericth des BIOst Nr. 7/99, 1999. H. Siebert, Reintegrating the Reform Countries into the World Economy, Kiel Working Paper No. 829, Institute of World Economics, Kiel 1997; St. Fisher, S. Ratna and C. A. Vegh, How Far Is Eastern Europe from Brussels ?, IMF Working Paper 98/53, Washington, D.C., 1998. Gligorov., V. Kaldor, Ì.- Tsoukalis, L. Balkan Reconstruction and European Integration, The Hellenic Observatory, The European Institute, LSE, The Centre for the Study of Global Governance, LSE and The Vienna Institute for International Economic Studies 1999. Specifically for the case of Kosovo, see EU special Council for General Affairs, Council Conclusions-Kosovo, Luxembourg (08-04-1999), http://europa.eu.int./news/kosovo2-en.htm.

1. INTRODUCTION

Immediately following the collapse of the political and economic system of social realism, the countries of the Balkans and Central and Eastern Europe (CEE) promoted their accession to Western European (and global) bodies of military, political and economic cooperation (NATO, Council of Europe, Organisation for Security and Cooperation in Europe, etc) and developed closed relationships with the European Union (EU). Thus, in conjunction with other factors, the new enlargement of

the EU arose, mainly aiming at transferring EU proposals for peace, stability and

2development to the Balkans and to CEE. The enlargement towards the Balkans and CEE comprises a venture of unprecedented scale, given that accession of new states to European Communities in 1973, 1981, 1986 and 1995 was not of the scale and ambition of the accession for CEE countries in 2004, nor, and especially, the one

3exclusively planned for the Balkans .More specifically, the enlargement

of the EU to the Balkans followed this

51

THE EUROPEAN UNION, THE ENLARGEMENT AND THE SOUTH-EASTERN EUROPE

*Malkidis Theofanis

Abstract. Starting 1989, the countries of South-Eastern Europe and Central Europe promoted and developed political and economic relations with the European Union (E.U). The new wave of EU enlargement was meant to transfer into the South-Eastern and Central Europe the goals of peace, stability, and economic growth. The article analyzes the course of integration of South-eastern Europe in the EU and the essential changes that are required, the transition to the free market economy, the creation of a political system that will be based on rule of law and the respect the human and minorities rights, the political plurality and the multi-party system with democratic elections. The article states that the enlargement to the South-Eastern Europe is very important for the EU, an enlargement that represents a hope for the common European region of peace, cooperation, democracy and development.


course: in June 1993, during the European Council which took place in Copenhagen, the thirteen “associated countries” (Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta and Poland, as well as the four Balkan states, Bulgaria, Romania, Turkey and Slovenia) were approved. In December 1994 (Essen Summit Meeting), the “pre-accession strategy” was drafted and foresaw the application of “European Agreements”, support by the EU during the transition period in the form of non-returnable subsidies through PHARE

4programme , the enforcement of relevant legislation for the single market and a dialogue with all associated Balkan and CEE

5countries . In December 1995, the European Commission submitted a report to the Summit Meeting in Madrid, where the advantages of enlargement-peace, stability and security, economic development and

6growth - were reported, while stressing the fact that the approval of total community legislation by all candidate countries is a necessary prerequisite condition. In July

1997, the European Commission presented “Agenda 2000”, which described the prospects for the development of the EU and its policies, the enlargement impact on the EU and the funding framework for the 2000-2006 period. One of the most fundamental issues examined and discussed within the framework of “Agenda 2000” was the reinforcement of pre-accession strategy in the agricultural sector, based on which the relevant preparation programme of

7candidate countries would be proposed . In December 1997, during the Luxembourg Summit Meeting, the negotiation framework was finalised; negotiations eventually began in March 1998 with six countries: Cyprus, the Czech Republic, Estonia, Hungary, Poland and Slovenia, while in March 1999 (Berlin Summit Meeting) financial regulations regarding the enlargement were approved. In December 1999 (Helsinki European Council), parallel discussions began with Romania, Slovakia, Latvia, Lithuania, Bulgaria and Malta, on the condition that they could cover the distance

4 PHARE programme was initiated in 1989 after the collapse of the regimes of CEE countries, aiming at helping them reconstruct their economies. Initially, it covered Poland and Hungary, but it expanded, following the decision of the Essen Council (December 1994) and, thus, PHARE became the means of EU pre-accession policy, which aims at the accession of ten Balkan and CEE countries into the EU (Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, the Czech Republic, Romania, Slovakia, Slovenia); today it also covers Albania, Bosnia-Herzegovina and Former Yugoslavian Republic of Macedonia. PHARE is the largest programme in the world that helps CEE and Balkan countries, providing technical assistance and support for investments. PHARE activities focus on two priorities: a) Reinforcement of the administration of countries to accede, so that they are in a position to apply community acquis and b) Compliance of their industries and the infrastructure of Balkan and CEE countries with community regulations through investment implementation. This effort is mainly focused on sectors where community regulations have become stricter, such as the environment, transport, product quality, working conditions, etc. The renewed PHARE, whose budget is Ä 10 billion for the 2000-2006 period, will focus on two main priorities: a) reinforcement of institutional capacities and b) investment. The following table presents financial assistance through PHARE (for the 2000-2006 period. See Malkidis, Th. The European Union and the Black Sea region. Athens: Gordios 2004, p. 78. (In Greek).Also see the following table, which presents EU financial assistance through PHARE. EU financial assistance to candidate countries from CEE and the Balkan peninsula. 2000-2006 period Category 2000 2001 2002 2003 2004 2005 2006

5 Pre-accession strategy, which had been designed and applied since 1994, aimed at providing support and promotion for investment in candidate countries, especially in the sectors of the environment, infrastructure, transport and agricultural modernisation. It also included two-way trade agreements, political dialogue and mechanisms for the convergence of their legislation and legal systems with those of the EU. The basic obligation for accession to the EU is approval of the community acquis, which entails application of community legislation, increase of administration efficiency, reinforcement of judicial systems and increase of security at the external borders of candidate countries. On their part, the 15 Member States took measures, through the Nice Treaty (1999), for the rational organisation of decision-making procedures.6 Sakkoulidis, G. Enlargement and South-East Europe, Thessaloniki: EKEPP, 2003. (In Greek).7 The agricultural sector comprised one of the most important and complex issues during negotiations for the reinforcement of pre-accession strategy, since they would have to be co-examined along the course of revision of the Common Agricultural Policy.

PHARE 1.5 1.5 1.5 1.5 1.5 1.5 1.5

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separating them from other countries, while in December 2000 (Nice), the leaders of EU Member - States reached an agreement concerning the reforms without which enlargement would not be possible. In June 2001 (Göteborg European Council), it was decided that negotiations could be completed in 2002, so that the new enlargement could take place in 2004, thus providing new Member - States with the possibility of presenting candidates in Euro-elections. In December 2001 (Laeken Summit Meeting), it was stressed that ten of the thirteen candidate countries would be ready for accession in 2004 - Slovenia among them - while the accession date for Bulgaria and Romania was set in 2007; it was mentioned that Turkish accession comprises a desirable target which will be specified during the European Council which will take place in December 2004. These decisions were confirmed in October 2002 by the European Commission and in December 2002 by the leaders of the Member-States during the Copenhagen European Council. On April 16, 2003, the accession treaty for ten CEE countries (the Czech Republic, Slovenia, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Cyprus) was signed in Athens, while relations between the EU and the Western Balkans were made official during

8the Thessaloniki Meeting (June 2003) .

2. THE ACCESSION COURSE OF BALKAN COUNTRIES

Given that Balkan (as well as CEE) countries were not members of organisa-

tions of international trade and economic cooperation (World Trade Organisation, Organisation of Economic Cooperation and Development, etc), their new economic relations with the EU had to be based on two-way agreements. The EU reacted positively to the orientation of Balkan countries immediately after the change in the political, financial and social

9environment , signing agreements for trade and economic cooperation, which were replaced by Association Agreements

10(European Agreements) . Association Agreements presuppose observance of a number of political and economic terms and each party is called upon to respect the principles of mutual interests, policy, reciprocity, economic freedom, minorities and the principles of good neighbourly relations. Furthermore, the Agreements promote the transition to a market economy, the establishment of a political system based on the rule of law and the respect of human and minority rights, political polyphony and the multiparty system with free and democratic elections. The Agreements also require the application of the principles of the Final Act of the Meeting on Security and Cooperation in Europe - CSCE (today called the Organisation for Security and Cooperation in Europe - OSCE), the establishment of a new type of relationships of trade and economic cooperation, commitment concerning free trade and its regional and sectorial diversification so as to be in harmony with the World Trade Organisation, mutual interest and non-discrimination, as well as regional

8 Of the Western Balkan countries, Croatia submitted an EU accession application in January 2003. 9 Voulgaris, G., (superv.), The day after the fall of “social realism”, Thessaloniki: Paratiritis 1992. (In Greek). Deacon, (superv.), The New Eastern Europe. Athens: Gutenberg 1996. (In Greek).Haarscher, G.Telo, (superv.), After communism. Athens: Papazissis 1997. (In Greek).Dokos, Th. Pierros, F. (superv.) The Balkans after the Kossovo war. Athens. I. Sideris Publications 2000. (In Greek).10 European Commission, Evaluation of the Phare 'Essential Aid' Programme for Bosnia-Herzegovina, Brussels 1998. See also 'Agreement Between the European Economic Community and the Republic of Albania, on Trade and Commercial and Economic Cooperation', Official Journal, No. L 343, 25-11-1992, pp. 2-9 and Cooperation Agreement between the European Community and the Former Yugoslav Republic of Macedonia', Official Journal, No. L 348, 18-12-1997, pp. 2-167.


53

cooperation. The Agreements recognise that the final goal of associated countries of the Balkan Peninsula is accession to the EU and that association contributes towards the achievement of this goal.

Participating Balkan countries, in turn, offered the EU the clause of a favoured state, except for the special case of the deregulation of imports from neighbouring countries so as to develop regional integration, and instituted the convertibility of their currency when paying for their transactions with the EU. The economic cooperation of the EU with Balkan countries concerns issues such as industry, agriculture, mining, fishing, infrastructure, economic policy, technology and technical know-how transfer, energy, transport trade, research and development, tourism, the environment, the financial sector and PHARE programme.

The EU's enlargement policy, as it developed after the 1991changes in the Balkans, pursues the following basic rules:

a) Specific and clear political and economic criteria through which candidate Balkan countries are required to respect democratic principles and apply the rules of a market economy.

b) Pre-access ion reinforcement programmes to help bridge the wealth gap between candidate countries.

c) Encouragement of institutional changes in Balkan countries so that they can apply and put into effect the entire community legislation.

d) Changes in the EU Treaty, so that the operation of EU institutions is not hindered by the large number of new Member-

11States . 12In 1993 , the Copenhagen European

Council defined for the first time specific criteria criteria, in effect, for CEE countries and one Balkan country which Balkan countries candidate for accession to the EU should meet. These criteria are:

• Political criteria: these are linked to the existence of stable institutions which guarantee democracy, the rule of law, human rights, respect for and protection of minorities.

• Economic criteria: these concern the sustainable operation of a market econo-

13my , the possibility of facing the pressure of competition and adaptation to the action of the forces of the domestic market.

• The need of a candidate country to undertake its obligations as a member of the EU, that is, successful transfer and enforcement of community acquis through the national legislation, as it was instituted

14by the Madrid Council in 1995 . At the same time, candidate countries must create the prerequisites for accession through adaptation of administrative bodies so that the national legislation, which will converge with community legislation, is applied through proper administrative and judicial bodies.

Furthermore, the accession proce-dure includes a reinforced pre-accession strategy (European Agreements, structured political dialogue, harmonisation of

11 European Convention. Draft Treaty establishing a Constitution for Europe, Luxembourg: Office for Official Publications of the European Communities, 2003. 12 In the treaty for the establishment of the EU, which came into effect in 1993, article 49 foresees that each Member-State that respects the principles of freedom, democracy, human rights and fundamental freedoms, as well as the rule of law, can submit an application to become a member of the EU. N. Maraveyas and M. I. Tsinisiselis (superv.), European Organisation. Theory and Policies, Athens: Themelio, 1995. (In Greek)13 Lavigne, M., The Economics of Transition, From Socialist Economy to Market Economy. London : MacMillan Press 1995.14 According to the conclusions of the Councils of Feira and Nice, the substantial enforcement of the acquis is a critical point for the progress of a country candidate for accession. Papastamkos G., Avgouleas, Liakouras P., Papers on International and European Affairs, International and European Economic Institutions, Athens: Sakkoulas, 2003. (In Greek).

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legislation, funding cooperation), accession negotiations, promotion of community legislation and monitoring process.

3. THE BALKANS AND THEIR WAY TOWARDS THE EUROPEAN UNION

The EU has underlined the importance of the Balkans for European integration, the importance of human resources for the economic development of the region and for sustainable development, regional cooperation, the need for specific and effective foreign policy in the Balkans. The EU believes that the region has natural resources, a large cultural and historical heritage, geopolitical and geoeconomic importance and, thus, its accession to the EU will provide a large advantage for Europe. Bulgaria and Romania, which, if all goes as planned, will accede in 2007, Turkey, which is expecting a date, as well as Albania, Serbia-Montenegro, the Former Yugoslav Republic of Macedonia (FYROM), Croatia and Bosnia-Herzegovina comprise important countries for the EU and the issue of its enlargement.

The relationship between Balkan countries and the EU presents certain historical characteristics and it is important to examine these from all aspects in order to comprehend their cooperation. These characteristics include:

A. Relationships of cooperation between countries of the region with Western Europe were defined and continue to be defined by international and domestic political parameters. Thus, during the period of bipolarity and the Cold War, that is, essentially during the period of the dichotomy of the European continent, special relationships of cooperation were instituted through association agreements with Greece (1961) and Turkey (1963), which evolved into accession for Greece

15and customs unification with Turkey .

B. In 1983, the Cooperation Agreement between the EEC and the then unified Yugoslavia was put into effect, foreseeing economic, technical and funding cooperation, close relations in the sector of labour force and the operation of a Cooperation Council; there were also provisions for trade exchanges (non mutual preference regime for industrial products, reduction of levies for agricultural products, etc.). However, relationships with the rest of the countries in the region (Bulgaria, Romania, Albania) were rudimentary or non-existent, since up until the '70s, many EEC countries had no diplomatic relations with these countries. As a consequence of the cold war division, relations between Balkan and EU countries were rather fragmented. The Balkan peninsula did not comprise a unified political and financial entity exercising European community policy and differences in domestic political and economic structures of the region's countries, different policy orientations, variations in their level of development and national goals defined their cooperation with the EEC.

C. The end of the Cold War and the often violent regime changes in Yugoslavia and the Balkan region in general led to the creation of new states, while new data emerged concerning the cooperation of the region's countries with the EU, as well as the economies and societies of the region's countries.

Apart from different circumstances characterising each Balkan country, the EU identifies certain common problems faced by the region as a whole, such as problems concerning democracy, economic and social reform and development, minorities and refugees, legal order and justice, lack of efficiency, meritocracy and independence in public administration stemming from the

15 G. Petrakos (superv.): Strategic Planning for the Development of the Balkans, Volos: Thessaly University Publications, 2000.


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serious crisis of the system of values, lack of political credibility, inability to design and implement policy, protection of the environment, human and social capital. Thus, following an EU proposal and the Dayton Agreement (Dayton 21.11.1995) concerning the end of the war in Yugoslavia, the World Bank and the European Bank for Reconstruction and Development examined a programme to reconstruct and rebuild this Balkan country. The Programme foresaw free-of-charge aid of $5 billion for the 1996-1999 time period; the EU contribution was $1 billion through PHARE and comprised a direct action plan aiming at providing humanitarian aid and reconstruction. At the same time, through “OBNOVA” EU initative, the reconstruction of Bosnia-Herzegovina, Croatia, Serbia-Montenegro and Former Yugoslavian Republic of Macedonia (FYROM) were goals set during

16the same period . Smaller goals of this initiative were and still are economic development, restoration and reinforcement of civic society and cooperation between the Republics of former Yugoslavia according to

the regional approach the EU implements in 17this region .

18Total EU aid to the region during the 1991-1999 period amounted to Ä7,863 million, while aid provided by Member-States on a bi-partite basis amounted to Ä7,101 million. European Investment Bank funding amounted to Ä1,991 million, while, concerning the 2000-2006 period, Ä6,2 million is expected to be provided especially to Romania and Bulgaria. Furthermore, according to “Agenda 2000” proposals, the European Council of Berlin (1999) adopted two new funding means concerning the Balkans: a) pre-accession agricultural assistance and b) structural

19assistance . In regards to pre-accession support of agriculture, its reconstruction, the adaptation of candidate countries to Common Agricultural Policy (CAP) and the

20development of the agricultural sector , Ä520 million will be provided during the 2000-2006 period, while Ä1,040 million will be provided for structural policies in the sector of the environment and transport infrastructure.

16 European Communities (EC) Regulations 1628/96, 2240/97 and 851/98.17 The European Bank for Reconstruction and Development provides direct funding for activities of the public sector, reconstruction and privatisation, as well as infrastructure necessary to support these activities. It also supports the establishment and reinforcement of institutions. Main types of funding include loans, participation and guarantees and the Bank emphasises co-funding so as to increase total investment resources, as well as technical cooperation. N. Moussis, European Community, Institutions and Policies, Athens: Papazissis, 1998. (In Greek).18 Balkan countries which are candidate for accession also participate in community programmes concerning education, training and employment, as well as small and medium size enterprises, research and development.19 The programme for agriculture is the Special Accession Programme for Agriculture and Rural Development (SAPARD) and for structural help is the Instrument for Structural Policies for Pre-Accession (ISPA) See 'Berlin European Council 24 and 25 March 1999: Presidency Conclusions', Press release, Luxembourg (25-03-99), Nr. sn 100. 33. CEPS, A System for Post-War South East Europe, Working Document No. 131, Brussels 1999, and Gros, op.cit. 34. W. Kostrzewa, P. Nunnenkamp and H. Schmieding, 'A Marshall Plan for Middle and Eastern Europe', The World Economy, Vol. 13, No. 122, pp. 27-49., from which the countries of the Western Balkans will also begin to benefit. See also the following table, which presents EU financial assistance through SAPARD and ISPA, pre-accession assistance, as well as total EU expenditure for enlargement (2000-2006 period). Malkidis, Th. The European Union and the Black Sea region. Athens, Gordios 2004, p. 78. (In Greek).

EU financial assistance towards candidate CEE and Balkan countries. 2000-2006 period.

20 European Commission, 'Structural Actions 2000-2006', pp. 126-147.

SAPARD 0.5 0.5 0.5 0.5 0.5 0.5 0.5

ISPA 1 1 1 1 1 1 1 “Post-accession” 6 8 11 13 15 Total EU expenditure for enlargement

3

3

9

11

14

16

18

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The list of subjects and aspirations for economic cooperation with Balkan countries which is included in all European Agreements is the longest included in EU association agreements with other countries. Economic cooperation is, of course, more important for Balkan countries because in the case of countries in transition, prerequisites will have to be built first (infrastructure, reform of the economy, improvement of human resources, modernisation of the state, investments, transfer of technology and technical know-how, stability and security, fight against

21organised crime and the shadow economy ) and then would the implementation of these reforms, which allow the utilisation of the advantages of financial and political integration, be allowed.

4. EUROPEAN UNION POLITICAL PHILOSOPHY CONCERNING THE ASSOCIATION OF BALKAN COUNTRIES AFTER 1999.

NATO's intervention in Kosovo in March 1999 exposed the weaknesses of policy up until then, as well as the many particularities of the region, more than in any other region of the European continent, particularities which existed even before the NATO military intervention began. The cost of the crisis for all Balkan countries and the involvement of the EU in the conflict enhanced the importance of the region for the stability, security and prosperity of the

whole of Europe. During the Emergency General Affairs Council in Luxembourg (April 1999), it was recognised that European stability and prosperity cannot be dissociated from developments in Balkan

22countries , while this new EU political philosophy was expressed by the Commissioner competent for foreign relations at Washington Convention for the Reconstruction of the Balkans (September 1999), who stated that “either Europe will export stability to the Balkans or the Balkans

23will export instability to the rest of Europe ”.

4.1. Stability Pact

When the Kosovo crisis began in 1999, the Balkan region became the focus of discussions at the level of the EU and other international organisations (International Monetary Fund, World Bank, etc.) and other mechanisms of multilateral cooperation and developmental aid (G 25 of the Organisation o f E c o n o m i c C o o p e r a t i o n a n d Development, G-8, the “Paris Club”, etc.). The General Affairs Council in Luxembourg (8.4.1999) asked the Commission to immediately examine upgrading EU relations with Albania and FYR of Macedonia, which took on an official form by signing association agreements (27.4.1999). Furthermore, during both the Informal General Affairs Council on 8.4.1999 and the General Affairs Council of

2427.4.1999 , the need for a comprehensive

21 An attempt has been made to estimate the size of shadow economy in Balkan countries, which is quite difficult a venture, because: a) certain national statistics services are making an effort to include an estimation of unofficial activity registered in the GDP and any calculation of the ratio of unofficial GDP to official GDP may be significantly underestimated, b) it is not clear which is the appropriate method to measure the shadow economy and the measuring of unofficial activity is inevitably sensitive to the method applied. For example, the rate of the shadow economy in Bulgaria in relation to the GDP in 1995 is estimated at either 34% or 56.7%, depending on the method used; in Albania, the International Monetary Fund (2003) has doubts concerning the low official estimate of non-registered activities and notes that most financial activities could possibly be taking place in the shadow economy. Despite all technical estimation difficulties, it is obvious that unofficial activities play a larger role in the West Balkan countries than in CEE countries. See Papandropoulos, A. The Shadow Economy in Southeast Europe. Southeast European Times, 08/09/03.22 See 'EU Special Council for General Affairs, Council Conclusions-Kosovo', Luxembourg (08-04-1999), http://europa.eu.int./ news/kosovo2-en.htm.23 Paten, Ch Remarks, 'Conference on Economic Reconstruction in the Balkans', Washington, D.C., Sept. 24, 1999, www.seerecon. org/Calendar/patten.html 1999.24 A. Alp, “The South East- Europe Co-operation Process: An Unspectacular, Indigenous Regional Co-operation Scheme”, Perceptions. Journal of International Affairs, Vol.5, No.3, September November 2000, p.43.


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25intervention in the form of a Stability Pact - in the region after the crisis was stressed. The International Convention on the Balkans on 27.5.1999 in Bohn, with the participation of international organisations and international banks, as well as the developed countries of the world, aiming at stability and integration of the region's countries, resulted in the submittal of the proposal of the then German presidency of the EU for a Stability Pact for

26South-Eastern Europe .The German plan recognised the

importance of stability in the Balkans for the safety of the whole of Europe, while targets defined were avoiding conflict, creating the preconditions for the construction and establishment of democracy and the market economy, cooperation, as well as accession of the Balkan countries into NATO and the EU. The adoption of the Stability Pact (SP) took place during the Cologne International Convent ion (10.6.1999) wi th the participation of all concerned countries and organisations. The SP's main aspiration was to prepare and enforce bilateral and multilateral treaties and intra-state agreements, through which the structural political and economic deficits, as well as the region's conflicts would be overcome.

Participants in the SP for South-Eastern Europe are the European Commission, the Member-States of the EU and the following countries of South-Eastern Europe: Albania, Bosnia-Herzegovina, Bulgaria, Croatia, the Czech Republic, FYR of Macedonia, Hungary, Poland, Romania, Slovakia, Slovenia, the Republic of Yugoslavia, Turkey and Moldavia. Also, non-EU G-8 countries participate (the US,

Canada, Japan and Russia), as do Norway and Switzerland. Other participants include international organisations (UN, OECD, NATO, OSCE, the UN's Agency for Refugees, UNHCR), international financial institutions (World Bank, International Monetary Fund, European Bank for Recons-truction and Development, etc) as well as regional initiatives (Organisation for Econo-mic Cooperation in the Black Sea Region, Central-European Initiative, Initiative for Cooperation in South-Eastern Europe, South East Europe Co-operation Process, etc.)

The SP comprises a political expression of commitment and a framework of international cooperation for the development of a common strategy of participants aiming at stability and development in the Balkans. It is not a new international organisation, nor does it have independent resources and programme implementation structures; its role is to coordinate and facilitate the application of all its partners' programmes. The highest political instrument of the SP is the Regional Table, over which the Special Coordinator presides and which is based in Brussels, with Thessaloniki as its alternative headquarters. The structure of SP comprises three Working Tables concerning the following issues: a) Democratisation Human Rights Return of Refugees b) Economic Reconstruction, Cooperation and Development c) Security Issues (Security and Defence Justice and Internal Affairs). During these Working Tables, the delegations of all countries and international organisations participate as equals and jointly set priorities in all activity sectors.

25 According to the announcement of the Informal Council for General Affairs on 8/4/1999, “South-Eastern Europe needs a Stability Pact which will pave the way for a long-term process of political and economic stabilisation”. Kathimerini newspaper, Athens 4/4/1999. (In Greek).26 Bierman, R. The Stability Pact for South Eastern Europe- Potential, Problems and Perspectives, Bonn: Center for European Integration Studies, Discussion Paper. C 56. 1999. Saccomanni, F. “The Stability Pact for Southeastern Europe: A New Approach to a Regional Problem”, The International Spectator. Vol.35. No.1, January- March 2000.pp.65-71.Report Submitted on behalf of the Political Committee by Durrieu and Micheloyiannis, Latest Developments in South-eastern Europe, Assembly of Western European Union, Forty- fifth Session, Document 1666, 9 November 1999. “Stability Pact for South Eastern Europe”, Eurobalkans, Spring- Summer 1999, pp. 42- 46.

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The SP is the first integrated approach for the Balkans based on an EU initiative; it aims at mobilizing and coordinating actions by the international community, it offers a forum, a dialogue and coordination framework; it reflects an expression of the new mentality for an integrated intervention in the region, merging existing support policies of states

27and international organisations .

4.2. European Agency for Reconstruction

The European Agency for Recons-28truction was founded in 2000 and it is a

body responsible for the materialisation of EU aid programmes (OBNOVA and CARDS) in the Balkans and especially in Kosovo and Serbia-Montenegro. It is an independent EU agency which submits its reports to the European Council and the European Parliament and it is supervised by its Board of Directors, which comprises members of t h e E u r o p e a n C o m m i s s i o n a n d representatives of EU Member-States. The Agency operates within the framework of EU commitment for stabilisation in the

29Balkans .

4.3. Western Balkan Stabilisation and Association Process (SAP)

SAP is an instrument exercising EU policy in the region of Western Balkans (Albania, Bosnia-Herzegovina, Croatia, FYR

of Macedonia, Serbia-Montenegro and Kosovo); its main goal is future accession of these states in European structures, an effort aiming at stabilisation and economic recovery of the region in all sectors. SAP's basic action axes are: a) to bring countries closer to the EU and b) this process should take place under conditions (eligibility) such as respect of international law, rule of law, democratic principles, human and minority rights, establishment of a free market

30economy, etc . The advantages SAP offers Balkan countries can be classified in order of significance: 1) Preferential trade regime in the form of independent trade measures. 3) Inclusion in CARDS funding programme. 3) Signing Stability and Association Agree-ments.

Basic features of the contents of the Stability and Association Agreements (SAA) are: institutionalisation of political dialogue, listing the obligations of the contracting country, eligibility, institutionalisation of regional cooperation, gradual establishment of zones of free transactions with the EU, including free circulation of employees,

31capital and services ; furthermore, there is a special chapter on cooperation in the sectors of Justice and Internal Affairs, education, the environment, tourism, investment, culture, transport, energy etc. The EU has signed

32 33SAA's with FYROM and Croatia and negotiations have begun with Albania, while there have been similar contacts with Serbia-

34Montenegro and Bosnia-Herzegovina .

27 Biermann, R. The Stability Pact for South Eastern Europe - potential, problems and perspectives, Centre for European Integration Studies, Discussion Paper, C 56, Bonn 1999.28 EC Regulation (2667/2000).29 The agency is not competent for the application of other community means such as humanitarian aid or long-term financial aid granted to Serbia, Montenegro and Kosovo.30 The eligibility has been set by the EU General Affairs Council (Conclusions of April 29, 1997 and final Zagreb bulletin, November 2000) and is a principle stating that community policy advantages will be granted as reward to Western Balkan countries provided they observe the requirements of Stability and Association Process. 31 Petrakos, G. , The New Geography of the Balkans. Cross Border Cooperation Between Albania, Bulgaria and Greece, Volos: Thessaly University Publications, 1996. (In Greek).32 Completion of the ratification process of the Stability and Association Process signed on April 9, 2001 is pending.33 On February 21, 2003, an accession application for Croatia was submitted to the EU, while the ratification process of the Stability and Association Agreements signed in October 2001 continues. 34 On January 31, 2003, negotiations for signing a Stability and Association Agreement between the EU and Albania began and are expect to last two years.


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Ever since September 2000, the EU has granted countries of the Western Balkans a regime of asymmetric trade liberalisation, that is, it has unilaterally abolished tariffs on products from the region's countries imported to the EU in order to encourage their exports to the EU market and, thus, reinforce their economy. The EU grants financial aid through “CARDS” programme amounting to Ä4.65 billion for the 2001-2006 period. Management of the aid for Serbia-Montenegro, including the aid for Kosovo and FYR of Macedonia, has been assigned to the European Organisation for Recons-truction.

Today, EU's immediate priorities concerning the Balkans are safeguarding peace and stability, establishing democracy, dealing with problems of legal order and justice, respecting minority rights, eradicating the refugee problem, fighting organised crime and problems in regards to the transition to the market economy. Specifically, the EU views the reinforcement of peace, stability and security the inviolability of borders is considered a necessary condition as a necessary prerequisite for the region's economic and social reconstruction and the establishment of democracy, which should comprise a permanent goal always to be pursued. Attaining this goal presupposes the necessary institutional framework for the development of democracy at all levels.

Regarding minorities, the EU considers it necessary to design a common policy which will support development in regions where there are minorities, which wi l l contr ibute towards avoiding discrimination, will provide minorities with the possibility of maintaining their identity and promote social, financial and political integration of minorities within a broader state framework. Regarding the issue of

refugees, the significance of the problem is stressed and the EU is encouraged to act in a specific, decisive and effective manner. In order to fight organised crime, which is considered a top priority of the highest importance, the EU, and each one of the Member-States, will have to adopt an effective policy to fight it within the EU and across its borders.

In order to deal with the common problems of the Balkans created by their transition to the free market, the EU believes that the following are necessary: encouragement of the people of the region to improve their living conditions, coordinated efforts by the UN, international organisations, attempts to structure and restructure institutions. Furthermore, other necessities comprise new structures and bodies shaping intervention programmes with goals and competencies, such as adequacy of resources for the funding of developmental actions, cooperation schemes between the public and the private sector, cooperation schemes between international funding bodies, promotion of international and inter-sectorial cooperation between institutions, organisations and bodies of the region involved in the materialisation of actions in the region. Another necessity is the creation of a developmental plan for each country including a precise programme to promote connection to Inter-European Networks, in conjunction with existing programmes for the modernisation and improvement of existing networks and the establishment of a body to transform the regional approach into a regional programme of peace, reconstruction and development.

In conclusion, the EU's main aims today for the Balkan region can be grouped as follows:

1. Additional consolidation of peace, stability and development of

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institutions of democracy and a market 35economy .

2. Promotion of the Stabilisation and Association Process in each country.

3. Upgrading of the Stabilisation and Association Process and adaptation to the enlargement process.

4. Initiation of the process for European Integration of the Balkans.

5. Cooperation on so-called “Horizontal Issues” (Organised crime, illegal transport, corruption and other matters of Justice and Internal Affairs, Refugees and marginalised persons in the interior of countries, Restoration of cultural and r e l i g i o u s m o n u m e n t s a n d s i t e s , Development of energy and transport infrastructure, Support for Investments, Collection of arms, Reinforcement of Free Trade).

6. Regional policy and Cooperation (Designation of trans-national priority plans and establishment of a Competent authority for each project, establishment of a Balkan zone of Free Transactions, institutionali-sation of regional policy measures at an EU level, institutionalisation of regional policy measures in each regional government, as well as regional and sectorial operations), close communication with the Stability Pact for South-Eastern Europe and commitment of participating countries for a specific time chart.

5. CONCLUSION

The EU's new enlargement towards the Balkans comprises a crucial and historic turning point for Europe, as this enlargement ends the dichotomy brought about by the Cold War; undoubtedly, it cannot be compared to previous enlargements as to the

scale and differentiation of candidate 36countries . From Bulgaria and Romania,

which will accede in 2007, to Turkey, which is expecting a date, and the countries of the Western Balkans which are less prepared.

The enlargement of the EU in the Balkans is considered a great challenge for the EU and a historic opportunity for the creation of a single political, financial and social area. The enlargement procedure will benefit both Member-States of the EU and candidate countries, it will improve the competitiveness of EU economy at a global level and will promote stability in the whole of Europe. The EU is an organisation with experience in economic stability, the free marke t and the deve lopment o f infrastructure; this experience is valuable for the new Balkan states. The EU has everything necessary to help Balkan countries make their own economic start and must undertake the responsibility of Balkan reconstruction if it desires a more effective policy in Europe. Today, the EU comprises the pole dominated by a nexus of principles and values, regarding democracy, social cohesion, political and social solidarity, culture, tolerance of corruption, f reedom of thought . The Balkan enlargement comprises a strategic political goal of the EU, as its enlargement will favour exchanges and financial activities, will promote development and the integration of the European economy as a whole, while the accession of new Member-States will contribute towards increasing the importance and influence of the EU on the

37world scene . The enlargement is one of the

largest challenges for EU integration from a

35 The Delegation of the EU Police Force in Bosnia-Herzegovina, which was deployed in January 2003, comprises the first operational action under the auspices of the Common European Policy for Security and Defense. 36 Opinion of the ESC. The Enlargement of the European Union Athens, October 17, 2000. (In Greek).37 See http://ue.eu.int/en/Info/eurocouncil/index.htm, and for more information concerning the enlargement and the preparation of candidate countries for accession to the EU, http://europa.eu.int/comm/enlargement/index.htm.


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political, financial and social aspect. The most important issues which must be dealt with during the enlargement process concern the democratic operation of institutions and public administration, consequences of accession for EU policies, existence of necessary resources for policy funding and, in general, necessity of proper management and development of an enlarged EU of 30-35 states, among which the Balkan states will comprise equal members.

On the other hand, the region's states consider that the political, social and economic development of the Balkans should aim at their integration within the EU, which will be a difficult, long-term course from a political, economic and social point of view.

However, the attempt to enlarge the EU towards the Balkans entails many hazards for stability, economic and social cohesion of the EU and its Member-States, if there are no preconditions for the preparation of both candidate countries and the EU and for forecasting and dealing with

38enlargement consequences . The EU enlar-gement process, with the accession of the Balkan states, comprises a harsh, difficult process, given that it entails the concession of legal and administrational competencies of each country to a single supranational authority, it presupposes a significant effort to adapt productive structures to a level of high challenges; it also involves social unrest, which could be caused by the reforms, given these countries' level in the social sector. Increased unemployment in almost all Balkan countries, delay in legislation and reduction of benefits in social

welfare, as well as labour inequalities support this position. However, facing the problems of the Balkan countries, with the exclusion of war-ravaged regions in need of humanitarian aid, does not allow for this kind of support. These countries need funding for investment in infrastructure, production and organisation of the state and public administration.

Aid granted by the EU to Balkan countries in the '90s, especially those bordering Kosovo, which are the poorest, is considered limited. For example, financial aid granted in 1999 aimed more at dulling the consequences of the Kosovo crisis and less at funding a reconstruction and develop-ment programme. The EU's experience in planning and implementing the Community Support Framework could be used as a model, the difference being that in the case of the Balkans, the aid granting terms and participation of contributing countries and organisations in fund management should be more intense. Furthermore, it should be mentioned that the aid must be scaled according to the countries' level of develop-ment and the scale of problems, so as to

39promote less developed states and regions . Funding the reconstruction and restructuring of Balkan countries should be based on a comprehensive plan so as to avoid overlapping, conflicting goals or discrimina-tory treatment, so as to avoid lack of coordination, bias, fragmentation and overlapping. In order to bear positive results, the aid must be supplemented in the interior of Balkan countries with an integrated and effective developmental policy and sound administration and must support domestic production. For this reason, the creation of

38 Giannaras, Ch., Greek Readiness for European Unification. Athens: Livani 2000. (In Greek).39 Provision of a basic “aid packet” for six Balkan countries and for a period of five years (2000-2004) is proposed. Proposed financial aid for six countries amounts to Ä21,425 million (Albania Ä1,250 million, FYR of Macedonia Ä1,825 million, Bosnia-Herzegovina Ä3,800 million, Croatia Ä3,075 million, Bulgaria Ä3,634 million and Romania Ä9,541 million). The case of Serbia-Montenegro (including Kosovo) is different due to grand scale damage. Malkidis, Th. European Union and the Black Sea Region. Athens: Gordios 2004, p. 67. (In Greek).

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institutions and the organisation of Balkan countries must be emphasized, while local enterprises must be preferred over enterprises of contributing countries when it comes to commissions and contracts connected to fund inflow. It should also be taken into account that Balkan countries are called upon to restructure and adapt to a financial environment with an increased free circulation of goods, services and capital. Integration of the region's countries into the

40 Foreign aid to the Balkans will continue perpetuating the regime of dependence which will alter the true image of the economy and society of many countries in this region. For example, concerning Turkey, G. Lin, the Vice-President of the World Bank, foresaw that the country will remain associated with the World Bank for at least another five to ten years. “In this country, more structural changes are necessary in almost all sector of the economy, the financial-credit system, the agricultural sector, the pension social system, the energy sector, education, public administration, while there is an important improvement in conditions and a significant rise of its developmental pace was recorded, mainly due to resuming transactions with Iraq”. Southeastern Times 10/9/2003.

new international environment entails opportunities and challenges to draw capital and attract investment, utilize advantages, import technology and challenges such as foreign trade competition, propagation of world crises and reduction of the possibility to exercise autonomous policy. All this should be taken into account during the design and application of EU policy for the

40reconstruction of the Balkan countries .


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INTRODUCTION

The promise of the new regiona-lism can be summed up in a single phrase: organizing the Latin American policies of insertion into the international economy. This objective does not exhaust the meanings of the strategy adopted by Latin America at the Cartagena Summit (1994), although it has stimulated the perception of a confusing strategy (Kuwayama 1999: 7), lacking in theory (Guerra-Borges 2002: 228) and representing “little more than a slogan” (Schiff and Winters 2004: 262). Its more directly experimental terrain has been: the free trade agreements inspired by the North American Free Trade Agreement (NAFTA); the Third Generation Agreements on Economic Complementarity (ACE); and the reforms applied to the old customs unions (created under the influence of the European model of integration), such as the Central American Common Market (CACM), the Andean Community of Nations (ACN) and the Southern Cone Common Market (MERCOSUR).

It should be noted that not all of these initiatives respond to its recommen-dations; the gap between the doctrine and the taking of decision is widened not only

* "Germán A. de la Reza is Simon Bolivar Chair at the University of Paris III" Professor of Economic Integration, Department of Economics UAM; Fellow researcher, Center of European Studies, National Autonomous University of Mexico; National Researcher (SNI). [email protected]

because of national specificities or the schemes themselves, but due to the fact that, as regionalist innovations, they also contain a number of deficiencies. This article studies the characteristics of the new Latin American regionalism from four angles: a) the conceptual fundamentals; b) the criteria of association (the country that benefits most in economic terms from integration); c) compatibility with the World Trade Organization (WTO), and d) the comparative relationship with the European model. To fac i l i t a te the exp lana t ion o f i t s particularities, this study considers the contrast with the 'old' regionalism of the 1960s and 1970s, broadly inspired by the European experience.

THE SEARCH FOR DEFINITION

To define the new strategy of integration, the literature has employed alternatively the concepts of 'new regionalism', 'open regionalism', 'outward-oriented regionalism' and 'deeper' integration. Although they refer to the same expe r i ence s , t he i r nuance s and connotations contain sufficient differences to impede a common definition. This can also be seen within the main doctrine, open

THE NEW REGIONALISM IN LATIN AMERICA: IS THERE A CASE FOR AN EMERGENT PARADIGM OF INTEGRATION?

*Germán A. de la Reza

Abstract. This article studies the characteristics of the new Latin American regionalism from four angles: the conceptual fundamentals; the criteria of association (the country that benefits most in economic terms from integration); compatibility with the WTO, and the comparative relationship with the European model. To facilitate the explanation of its particularities, this study considers the contrast with the 'old' regionalism of the 1960s and 1970s, broadly inspired by the European experience. The objective is not to establish absolute relationships; it is to identify and to analyze the meanings of this strategy as an emerging paradigm of integration.


regionalism. Reynolds, Thoumi and Wettmann (1993), identify it with a “group of dynamic markets, fully integrated into the international economy through the progressive elimination of barriers to trade, in conjunction with vigorous measures aimed at increasing social access to the market”. The Economic Commission for Latin America and the Caribbean (ECLAC, 1994: 12 and 78), for its part, proposes linking the “interdependence borne of agreements of a preferential character with that driven by market signals, resulting from trade liberalization in general”. The proposal is to make the de facto integration coincide with the objectives of the formal agreements, for which the following are recommended: economic stability via regional financial institutions; liberalization of the national markets and sectors; the adoption of clear rules and standards compatible with the WTO, and the rationalization of institutional agreements, stimulating its flexibility (Fuentes 1996: 132 et seq.). In more recent versions, this concept insists above all, on classical themes of integration, such as the manufacturing competitiveness (Bulmer-Thomas, 1998) and the creation of trade and investment (Kuwayama, 1999: 9).

Despite its variants, open regiona-lism is insufficient to deal with the combination of policies adopted in the

1 region. One concept that is increasingly utilized, new regionalism, prescribes, in turn, the need to combine the liberalization of goods, services, capital and labor, with the harmonization of the trading regimes of member countries. Following this policy, little different from that advocated by the ECLAC, it suggests: more precision in the criteria for association; the enlargement of the agreements (in terms of the number of member countries admitted); convergence between the sub-regional, regional and

hemispherical initiatives, and creation of agreements among industrialized and developing countries (Primo, 1994, and Palacios, 1995). This search for commercial coverage can be interpreted as a peremptory response to an old Latin American problem the narrowness of its markets critical in a context dominated by the promotion of non-traditional exports. Also, it represents an analytical platform for the creation of a free trade area on a continental scale, to the extent that one of the original proposals of the Free Trade Area of the Americas (FTAA) was precisely the formation of a North-South agreement compatible with the bilateral and sub-regional agreements of the continent.

Deeper integration is another con-cept that is in vogue. According to Lawrence (1996: 17), while the 'superficial' integration of the years 1950-1970 favored increasing international trade without affecting the decision-making autonomy of member countries, deeper integration promotes an interdependence ruled by the forces of globalization and a subsequent reduction of the gap between national policies. The components of this strategy number four: smaller differences in standards and production systems; governmental stability; elimination of tariff and non-tariff barriers in the important markets; and the ending of obstacles to the trade in services. Apart from elements that are common to the notions noted above, the novelty of this focus has to do with the establishment of a close linkage with globalization. In essence, it aims to bring about global reforms within the economies through the opening up and standardization of policies. The objective is not entirely unprecedented, if we consider what is implied, at least partly, in the Washington Consensus reforms and in the North American model of integration itself, a subject that we shall return to later.

1 For some of the shortcomings and the “fall of open regionalism”, see Phillips (2003).

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A final group of studies makes use of the relative interconnection of these con-cepts to work with a synthesis. In a recent study for the World Bank, Schiff and Winters (2004: 279-284) use without distinction the terms 'more open' regionalism and 'deep' integration, seeing the latter as an amplifi-

2cation of the liberalized instruments. From this definition are derived eight rules, appli-cable to “the majority of circumstances”: linking integration agreements to the promo-tion of competition; preferring North-South agreements due to their greater contribution to welfare; explicitly inscribing economic and political reforms to increase the credibility of the initiatives; making political benefits depend on the efficiency of the inte-gration process; stimulating regional cooperation through instruments different from trade discrimination; attending to the tran-saction costs of operating regional agreements; associating the fiscal effects of integration with the carrying out of reforms to the tax system; and not seeking an exclu-sive adaptation to the WTO, but putting natio-nal development criteria in the first place.

The reader will have noticed a sharply normative intention within these conceptualizations, closer to the design of policies than to the explanation of the new strategy. This aspect defines a first analytical limitation. To disregard the feedback from its postulates leads to dependence on the established premises and to concentrate on the problems of application and statistical

perfection. Another insufficiency is the elimination of the sense of the integration. Apart from brief references to the objectives of the customs unions, the new doctrine lacks any programmatic horizons, those waybills that in the past used to guide the process from a perspective of accumulating internal capacity to project itself on the world. In its place is postulated a horizontal integration, of continuing expansion and convergence with the WTO. This approach identifies itself as 'inclusive', and leads to sacrificing the profundity of the process in exchange for the expansion of thematic and geographical coverage, with the observation that these do not result from the internal dynamism of the agreements, but from the preparation of new multilateral standards. A final problem, but no less important, is the limited interest in the meanings of the break

3with the 'old regionalism'. This ahistorical approach to dealing with regional tasks presents itself as if it were making 'a fresh start', supposing the novelty of the approach to be a value in itself.

The choice of Asian regionalism as a source of inspiration illustrates this fracture. As is known, the Asia-Pacific Economic Cooperation (APEC), promotes regional interdependence through consultative authorities, non-negotiated and non-binding commitments, characterized by “the external liberalization of trading blocs” and complete consistency with the

4WTO. Clearly, this model cannot be applied

2 This study develops and updates World Bank's Trade Blocs, published in 2000 by Oxford University Press, New York.3 Among the studies that compare the old and new regionalism to stress the superiority of the second (in terms of trade creation), see Devlin and Estevadeordal (2001), and López and Soler (1998). For the meanings and the scope of the 'old' regionalism, see Hass (1958); Balassa (1961), and Hass and Schmitter (1964). For the European model, Pelkmans (1993), and Weiler, Begg and Peterson (2003), among others.4 Cf. Frankel and Wei (1998). According to Bergsten (1997), Asian regionalism is defined by five elements: 1) Access to the open market, although geographically limited to the Pacific Rim. 2) A general focus based on an unconditional MFN aimed at favoring joint liberalization and GATT-WTO negotiations (not all countries are subject to this principle, in particular the United States). 3) Promotion of a conditional MFN (or trade concessions that are extended to any country that accepts reciprocity); this is not an immediate process, above all in third countries. 4) Stimulating worldwide liberalization via unilateral and multilateral disarmament, although for now this does not go beyond the WTO's commitments. 5) Finally, facilitating trade through the reduction of border frictions and the integration of policies, without any important results, above all in the case of the less-developed countries. These and other indicators suggest that APEC's objective of constituting itself as a stepping-stone for multilateralism does not concur with the effective policies applied by partner States. For a comparison of Asian and Latin American regionalism, see Kuwayama (1999).


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to a region such as Latin America, where there are several formal economic integration agreements, and a not

5insignificant experience of half a century. The scale of the rupture with the tradition that in many senses represents a break with the European model, shares a series of aspects that are worth reviewing in detail.

NEW REGIONALISM VS. MULTILATERALISM

A first component of this rupture consists of the already-mentioned close linkage between the new regionalism and the multilateral system, reflecting in the first

6place the strengthening of the WTO. There is no doubt that the WTO has a presence today that the GATT never achieved during the classical period of Latin American integration. Until the 1970s, the Generalized System of Preferences (GSP) and its non-reciprocal commercial concessions, rather than the reciprocal commitments of the GATT, represented the principal reference for the regulation of trade between the industrialized and developing countries. After 1990, the boom in multilateral liberalization accompanying the implementation of structural reforms, granted pre-eminence to the principle of reciprocity. In that context, regionalism

5 During the XIX Century, another form of integration the confederation- was promoted in Latin America in four occasions: in 1826 (the Panama Congress); in 1847-48 (the Lima Congress); in 1856-57 (the Santiago Congress), and in 1864-65 (the Second Lima Congress). For their characteristics and achievements, see De la Reza (2001).6 The relation between regionalism and multilateralism occupies an important space in the specialist literature. For the classic version, integration is equivalent to a second-best choice. For others, who have in mind the characteristics of open regionalism with respect to the more protectionist versions of the years 1960-1970, the forces driven regionalism oblige it to be multilaterally compatible: global competition, globalization of financial markets, capital flows and consumer demand, plus cross-border mobility of technology and innovation (Mistry, 1995; Freud, 1998). A number of contributions have the same sense: a) regionalism can facilitate negotiations in areas that require high levels of coordination and permit an expanded multilateral thematic coverage (López and Soler, 1998); b) the complexity of the regional process impedes its treatment within the WTO, which implies that regionalism does not 'oppose' multilateralism (Krugman, 1993); c) the regional agreements generally adopt a WTO 'plus' focus and accept high levels of commitment in areas that prepare the multilateral agenda (Sampson, 1996); and d) regionalism constitutes an incentive for multilateral liberalization to the extent that this strengthens the capacity of the small countries to deal with the large trading blocs (Nordstrom, 1995).7 The U.S. initiative of 1949, the origin of the GATT and Article XXIV itself, gives priority to the customs union and free trade zone (reciprocal concessions), because they “eliminate obstacles to competitiveness, make possible a better allocation of resources and raise welfare”, while the preferential system (non-reciprocal concessions) “obstructs production and restricts the growth of incomes and demand” (Wilcox, 1949: 70-71). One year later, Viner (1950: 48) refutes that assumption, considering that the costs of the preferential system “can be imputed, at least potentially, to the customs unions, and inversely, since the benefits of the customs union can also be given by the preferential unions if the circumstances are adequate”. Mundell (1964) defends the same argument a few years later.

presented itself as transitory more insistently than in the past, justified in the case of Latin America by the “stop-go” multilateral negotiations (LAIA 1994).

A digression is necessary here. It should be recalled that the basic condition of Article XXIV of the GATT-WTO, the ruling that concedes international legality to regional agreements, is that these should

7form customs unions or free trade zones. Its stipulations envisage that: a) in the customs unions, the tariffs and restrictions imposed on third countries should not be greater or more restrictive than the general incidence of those applied prior to the definition of a common external tariff; b) in the free trade zones, tariffs should be eliminated with respect to trade in products of origin; c) in both, the timetables for liberalization should be subject to reasonable timetables. Finally, the Habilitation Clause guarantees differential and more favorable treatment for the least developed members of the agreement.

It should be observed that between 1948 and 1994, the life-time of the GATT, none of the 124 regional agreements notified to this body received a ruling of inconsistency. To correct what is seen as an extreme degree of flexibility, in 1994 the


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Uruguay Round approved the Understan-ding on the interpretation of Article XXIV. This agreement seeks to determine the consistency of the regional integration based on “the general incidence of the duties and other regulations of commerce applicable before and after the formation” of the scheme. Rates of duties are recognized as a basic measure, although additional information can be requested on measures, regulations, coverage of products and specific trade flows. The “reasonable length of time” can exceed ten years “only in exceptional cases”. At the same time, the arrangement empowers special WTO groups for the first time to examine not only the text of the treaties, but the policies that arise from their implementation. To resolve, in the final instance, any possible contra-dictions in the interpretation of the ruling, the Dispute Settlement Understanding (DSU) has been

8instituted. Another reinforcement foresees that the agreements are also examined in the light of Article V of the General Agreement on Trade in Services (GATS), which stipulates similar conditions to Arti-cle XXIV, this time

9with respect to trade in services. A further initiative was the crea-tion in 1996 of the Committee on Regional Trade Agreements (CRTA) aimed at making it possible to review periodically the contra-dictions or violations of the regional agreements.

Taken together, these measures and the progress made in multilateral liberalization seek to favor the design of

regionalism as a stepping-stone towards multilateralism (Mistry, 1995). Certainly, the dispositions of the WTO are not homogeneous in their efficacy nor do they impede the existence of a trend with an opposite sign. The Ministerial Meeting in Doha in 2001 took charge of the CACR's discouraging balance, motivating the request to achieve substantial progress on the compatibility of the agreements in the short term. More recently, the absence of a consensus at the Ministerial Meeting in Cancun, 2003, impeded the establishment of commitments on access to markets and trading rules, leaving in question not just the future of the WTO reforms, but also the convergent initiatives such as the FTAA, whose commissions had linked themselves to the results of the Doha Round for progress on their own agenda.

However, these difficulties should not obscure the contribution of the WTO to the relaxing of the Latin American customs unions, and their scope of creating a community of nations. These schemes preserve their identity and objectives, while the unfolding of their potentials appears to be polarized by the search for convergence with the multilateral free trade zone foreseen by the WTO for around the year

102020.

CUSTOMS UNION VS. FREE TRADE AREA

Another aspect of the rupture between the new and old regionalism has to

8 According to paragraph 12 of the document, “the provisions of Articles XXII and XXIII of the GATT 1994 as elaborated and applied by the Understanding on Rules and Procedures Governing the Settlement of Disputes may be invoked with respect to any matters arising from the application of those provisions of Article XXIV relating to customs unions, free trade areas or interim agreements leading to the formation of a customs union or free trade area.” Behind this cryptic elaboration, the text means that the problems of interpretation of any possible inconsistency in the agreements will be resolved without appeal. On the problems of applying Article XXIV, see Hudec and Southwick (1999: 51 et seq.).9 Article V of the GATS includes the following rules: 1) Countries will be able to participate in regional agreements if the sectoral coverage is substantial, considered as a function of the number of sectors, the volume of trade affected and the methods of supply. 2) All discrimination is essentially eliminated among the parties. 3) Flexibility is anticipated in the ruling in the case of the developing countries, both in general and in the case of sectors and sub-sectors. 4) The global level of obstacles to the trade in services within the respective sectors or sub-sectors will not be increased with respect to the pre-existing level.10 This year could be modified due to the standstill in the Doha Round negotiations, coincident with the APEC timetable, the most drawn-out of the regional agreements.

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do with the forms of integration. Between 1950 and 1970, both theory and practice were concerned almost exclusively with the customs unions. The effects of the free trade zones are considered to be “similar to the creation of a customs union” (Shibata 1967: 78) and to be generally lower performers than the latter. In the more specialized debate, it is accepted that the choice of one or the other scheme should take into account the characteristics of the associated economies, in particular their degree of diversification and productive complemen-tarity. Thus, in the case of a country with high levels of specialization and generally oriented towards international trade, it is recommended that it join a free trade zone, as the common external tariff could increase the price of a large number of its imports. The industrially diversified country, meanwhile, should prefer the formation of a customs union given that it is necessary to protect a greater number of industries. Nevertheless, the customs union constitutes the principal reference for regionalism in Europe and Latin America, where it is attributed with the capacity of coordinating the trade policies of the associated countries vs. the rest of the world (Wioncsek, 1964: XXV). This primacy is due in part to the perception that the customs union favors the more ambitious processes of integration, stimulated by the spill-over effect from the economic sphere into the political domain and vice versa. Its logic permits the transitional processes of regional coope-ration towards the coordination of policies and from this to the merging of sovereign authorities, where “one leads progressively to the other” (Kitamura, 1964: 28). As a con-sequence, the customs union is identified as a higher step towards the free trade zone, necessary for the creation of a common

market, followed by economic union and political integration (Balassa, 1961).

Later developments of this concept have added intermediate phases, such as the preferential agreements (prior to trade integration but higher than an absence of agreements), the imperfect customs union (a situation covering the MERCOSUR, CACM and ACN) and the unique market (Figure 1). Beneath the tasks assigned at each stage lies the premise according to which the free mobility of goods, services and labor can be realized at the same time as the integration of national policies. However, the difficulties of the Latin American customs unions in the 1980s, broadly connected to the failure of the import-substitution strategy, stimulated the creation of free trade zones and their greater conceptual

11autonomy. This change implied a revision of the meanings of the free trade zone, to which are attributed the characteristics of being more liberal, flexible and compatible with multilateralism. The argument has several versions. The first states that non-equalizing of imported goods prices incites a dynamic of competitiveness that pushes the most protected country's external tariffs downwards.The second defends the hypo-thesis according to which in the free trade zone, the country with the highest barriers tends to reduce tariffs to third parties once the political influence of its import indus-tries declines (Richardson, 1993). Another version emphasizes that the free trade zones do not increase the reprisal capacity of their members (Kennan and Riezman, 1990), in contrast with the customs unions, which stimulate the recourse to protection and make multilateralism difficult (Krugman 1991b). In all cases, the underlying idea is that the free trade zone reduces the Vinerian risks of trade deviation.

11 The regionalist basis for the import-substitution model is given by the premise that a deterioration in the terms of trade affects, above all, the primary industries, dominant in Latin America. To this is added confirmation of the limitations on productive invest-ment and the lower size of the economies of the region, leading to the adoption of a model of regional development promoted by public investment and the protection of incipient industry. For a critical study of the import substitution model, see Ground (1988).


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Standard stages

Intermediary Type Characteristics

Preferential area

Commercial

Non-reciprocal trade agreement. Does not postulate free trade.

Free trade area

Commercial Eradication of tax barriers and quantitative restrictions to trade.

Imperfect customs union

Commercial Free trade area with a partial common external tariff.

Customs union

Commercial Free trade area with a common external tariff without exceptions.

Common market

Of factors Customs union characterized by free movement of factors (goods, services, labor).

Unique market

Of factors Common market and the harmonization of fiscal and monetary policies.

Economic union

Of factors Common market with integrated economic policies including a common currency.

Political integration

Total Economic union with supranational institutions similar to a federation.

Figure 1The stages of integration (European model)

Source: Balassa (1961), and Pelkmans (1993).

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MIXED SCHEMES

As would be expected, the hypothesis of the free trade zone's economic superiority does not benefit from sufficient empirical support. Whether or not a clear link exists between the forms of integration and trade deviation, or that the growing number of agreements impedes conclusive results in continuously modifying the equilibria and economic structures, the fact is that there are no clear reasons for preferring one scheme or

12another. To this it should be added that the differences of these schemes are now less certain than in the past; in the case of agreements inspired by the North American model, the traditional functions of the free trade zones are amplified by financial liberalization, the incorporation of binding mechanisms for solving controversies and parallel agreements on environmental and labor issues. The slight difference between these schemes entails that mixed phenomena can arise. The CACM, the ACN and MERCOSUR share, to a greater or lesser extent, signs of a regressive character regarding the implementation of the common external tariff. Their imperfect customs unions fluctuate between one and the other scheme, according to the economic pressures that affect them. This situation can be illustrated by the incidents surrounding MERCOSUR's approval of a common external tariff in January, 1995. Brazil included 150 new exceptions to a list of more than 300 approved. Paraguay, meanwhile, added 200 new exceptions to its already-accepted list of around 600. To regulate the trade in products not included in the agreement, it was necessary to appeal to the rules of origin, the distinctive instrument of the free trade zones. The result was a lasting imperfect customs union.

Meanwhile, one of the problems of dealing with the idea of the mixed schemes is that we are unable to distinguish the quality of the agreements. If we state that the free trade zone favors the creation of trade simply because it brings it closer to multilateralism, does this mean that all countries are prepared for it and, above all, that this is the objective of all the agreements? The priority for the CACM, the ACN and MERCOSUR is to constitute themselves as enlarged markets capable of increasing productivity and, in the end, creating a community of nations. In these schemes, not only is multilateralism secondary to their objectives, but also the profundity of the integration process takes into consideration matters that have nothing to do with the multilateral agenda.

INSTITUTIONALISM IN INTEGRATION

The break between the new and the European-like regionalism also comprises the institutional dimension. Together with the proliferation of the free trade areas, the dense institutionality which characterized the schemes under the old strategy recedes, in the 1990s, in favor of f lexible mechanisms of an inter-governmental character. In that context, the established customs unions uncouple t a c i t l y f r o m t h e o b j e c t i v e s o f supranationality and none of the new agreements propose an advance towards the other stages of integration. The case of the NAFTA is significant for its influence on the new regionalism. Some authors accept the possibility of a spill-over effect (Hufbauer and Schott, 1994: 3), although this is absent from the Treaty and from its main medium- and long-term objectives. Undoubtedly, proposals exist for the expansion of its competences the so-called

12 A similar argument is sustained by Carlo and Perroni (1996).


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NAFTA-plus, proposes a certain degree of liberalization of the factors of production and eventually coordinating some macroeconomic policies more closely (Figure 2). However, this refers to initiatives that are external to the Treaty and have not yet benefited from any commitment by the North American governments.

This feature of the NAFTA, together with its influence on the definition of regional policies, promotes the creation of agreements of low institutionality in Latin America, which are assumed to grant more opportunities than the European “to become universally acceptable”. The argument is that they represent an alternative “consistent with the nature of a modern State” (Kozolchyk, 1996: 13). With the advantage

of hindsight, we now know that the rivalry between the European and the North American models in Latin America do not

13yet have a clear winner. But this rivalry help to explain, at least in part, a series of apparently isolated facts, such as the relative abandonment of the mechanisms to control disparities in the ACN, the relapse of

supranational institutions within the CACM and the ACN, the proliferation of bilateral agreements inspired by the North American agreement, and the close relationship between structural reforms, on the one hand, and hemispherical integration and multilateralism, on the other. Nevertheless, these changes have not eliminated the European reference in any of the Latin American imperfect customs unions. The

13 Bhagwati (1993) visualizes the successive character of influences: first the European (between 1960 and 1970), afterwards the North American (from the end of the 1980s onwards). Ten years after the NAFTA came into being, this assertion seems incomplete. The North American scheme has not yet incorporated a new member and the FTAA presents problems for its acceptance by an important number of countries in Latin America. Neither the FTA with Chile nor the CAFTA can hardly rival the dynamism of the EU, a scheme which in the same year extended its geographical spread to ten new countries and approved a pan-European constitution.

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meeting of both tendencies suggests rather that the organizational competition on either side of the North Atlantic will give continual incentives in the south to eclecticism in the forms of integration.

CONCENTRIC INTEGRATION

Unt i l the mid -1970s , the hypothesis that the absence of critical disparities increases the economic potentials of an association had aroused a consensus among analysts and decision-makers . I t was unders tood tha t homogeneity in development levels permits each country to make concessions to imports in the hope that their growth could be compensated through greater exports (Johnson, 1965). At the same time, it was thought that there are more opportunities to coordinate policies if the member country have relatively similar objectives. This criterion of association is at the origin of the oldest Latin American schemes, the CACM and the Andean Pact, where zonal identity coincides with the medium-sized and small associated economies. Later, with the failure of development planning and the arrival of the outward-looking model this requirement is replaced by the search for integration with a natural partner i.e. the country or region with which reciprocal trade is greater than 25%. The recommendation, fashionable at the beginning of the 1990s, does not attempt to be immediate. Given that the majority of the schemes do not consist of natural partnerships, it is proposed as an alternative to create agreements with the largest possible number of countries aimed at increasing the preferential coverage of effective trade. If this was also not possible in the short term, it was recommended to wait until unilateral liberalization generates sufficient interdependence, after which

new agreements are to be created (ECLAC, 1994: 78).

A decade later, seven small economies now satisfy that requirement: Bolivia destines 30.6% of all its trade to its partner in the ACN; El Salvador, Guatemala, Honduras and Nicaragua destine to the CACM, respectively, 59.9%, 39.2%, 26.1% and 44.8%; and Paraguay and Uruguay, meanwhile, concentrate in the MERCOSUR 58.2% and 33.0% of their foreign trade (CEPAL, 2004b: A-2). These levels of cohesion enable them to deal with their integration from positions that are more favorable for regional interdependence. However, one of the more important aspects implicit in this criterion, stressed by the concentration of Latin American exports in a few external markets, is the promotion of concentric

14integration.This trend was first expressed in the

Southern Cone through its organization around the Argentine-Brazilian nucleus. The process starts with the Argentina-Brazil Integration Treaty of 1988, and continues through the bilateral agreements with the ACN countries and the creation of the South American Free Trade Area (SAFTA) itself. In a sharper way and in conjunction with the structural reforms, the following case is presented with the regionalization of the Western Hemisphere. Carried to its practical consequences, it implies the integration with the United States, begun in 1991 via the f ree t rade agreement f ramework, consolidated in 1994 with the NAFTA and later with the negotiation of the FTAA, as well as several free trade agreements with Latin American countries (Table 1).

Beyond the bilateral or multilateral character of the agreements, they generate together a hub-and-spoke system where the axis country determines the form of integration, the thematic agenda and the

14 For the particularities of the concentric integration following the creation of the NAFTA, see De la Reza (1996 and 2004).


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Year Nam e Member countries Schem e 1960 CACM Costa Rica El Salvador Guatemala

Honduras Nicaragua Customs Union

1969 ACN Bolivia Colombia Ecuador Peru Venezuela

Customs Union

1991 MERCOSUR Argentina Brazil Paraguay Uruguay Customs Union

1994 NAFTA United States Canada Mexico Free Trade Area

1994 TLC M-CR Mexico Costa Rica Free Trade Area

1994 ACE Nr. 31 Mexico Bolivia Free Trade Area

1994 ACE Nr. 33 Mexico Colombia Venezuela Free Trade Area

1995 TLC M-N Mexico Nicaragua Free Trade Area

1995 ACE Nr. 41 Mexico Chile Free Trade Area

1995 ACE Nr. 38 Chile Peru Free Trade Area

1996 C-CFTA Canada Chile Free Trade Area

1996 ACE Nr. 35 MERCOSUR Chile Free Trade Area

1996 ACE Nr. 36 MERCOSUR Bolivia Free Trade Area

1997 ACE Nr. 23 Chile Venezuela Free Trade Area

1997 ACE Nr. 32 Chile Ecuador Free Trade Area

1998 ACE Nr. 24 Chile Colombia Free Trade Area

1999 TLC CA-C CACM Chile Free Trade Area

2000 TLC M-TN Mexico El Salvador Guatemala Honduras

Free Trade Area

2001 C-CRFTA Canada Costa Rica Free Trade Area

2004 US-CAFTA United States CACM Dominican Republic

Free Trade Area

2004 US-CFTA United States Chile Free Trade Area

2005 FTAA1 W estern Hem isphere (34 countries) Free Trade Area

1 Under negotiation.

Table 1.Regional and bilateral agreements in the Americas

75


15negotiating floors. The anchors of this system are found in the dependence of practically every country of the region on U.S. investment and trade. Between 1996 and 2002, that country was the origin of about 32.5% of all investments in the six main receiving countries in Latin America: Mexico, Brazil, Argentina, Chile, Venezuela and Colombia. At the same time, it was the origin of 83% of the net productive investment flows to the region and to the Caribbean. As a consequence, 24 of the 50 largest transnationals located in Latin

16America are from the United States. For their part, the region's exports destined to the U.S. market accounted for 39.3% of the total in 1990, falling in 1996 by just under one percentage point to 38.9%, and rising again in 2002 to 40.1%.

These indicators, added to the importance of the country as the region's major creditor, have favored the adoption of U.S. legislation on matters of intellectual property, competition policies, antidumping mesures, government procurement and foreign investment. To close the circle, the substitution of parity requirements for the concentric regionalism underlies the implementation of a one-way-multilevel

17integration.

15 The main argument for this strategy contains two parts. The first states that the creation of trade with developed countries favors an upward convergence in levels of welfare. Ben-David (1993) arrives at this conclusion based on his study of European convergence, where income differentials, calculated as an annual logarithmic standard deviation for incomes, fall from 0.34 in 1947 (when the BENELUX group was created) to 0.13 in 1981. The second establishes that the total productivity of the factors for the less-developed countries responds better in the case of the North-South agreements (Schiff, Wang and Olarreaga, 2002). Of course, the components of the argument have a complex rationality and their expectations with respect to the benefits of concentric integration are not exempt from polemics.16 The subsidiaries of these companies, whose sales exceed US$ 100 million are located in Mexico, Brazil, Argentina, Chile, Colombia, Peru and Venezuela. The U.S. firms operate in the auto, autoparts, beverages, computing, electronics, agro-industry, petroleum and telecommunications segments (CEPAL, 2004c: 30 et seq.).17 An interesting case represents the trade remedy laws, in particular the antidumping measures, adopted by all Latin American countries by 1994. Although the vast majority of Western Hemisphere has adopted WTO agreements on trade remedy laws (to a large extent inspired in U.S. legislation), in most cases the legislation show operational gaps and reduced capacities of enforcement (De la Reza 2005).

CONCLUSION

Most of the studies reflecting a new regionalism view exclude historical factors as well as economic concerns about integration in disparity. Their analytical dependence on the Latin American export model adds to these limitations a certain temporary status and determines a strategy of low-quality integration. The combination of these characteristics highlights the need for reformulating the new regionalism as a function of the regional objectives and of a better administration of common markets. Having said this, the defining features of the strategy help us to answer the question presiding over this article: compared to the European model, the new regionalism represents a new approach to integration in as much as the outward looking model constitutes a change vis-à-vis the import-substitution strategy. In one or another case, the changes involve a similar intensity. However, the breakdown of the process of accumulating experience, important for the rationality of integration in Latin America makes a new analytical agenda necessary. The differences between the new regionalism and the European model should not matter because of their greater or lesser ambitions, but because of the consequences they have for the region's countries.


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! Balassa, B. (1961) The Theory of Economic Integration, Richard D. Irwin, Illinois.! Ben-David, D. (1993) “Equalizing Exchange: Trade Liberalization and Economic Convergence”, Quarterly Journal of Economics, Vol. 3, nr. 108.! Bergsten, C.F. (1997) “Open Regionalism”, Working Paper 97-3, Institute for International Economics, Washington D.F., March.! Bhagwati, J. (1993) “Regionalism and Multilateralism: An Overview”, New Dimensions in Regional Integration, Cambridge University Press, New York.! Bulmer-Thomas, V. (1998) “The Central American Common Market: From Closed to Open Regionalism”, World Development, Vol. 26, nr. 2.! Carlo, J. and W. Perroni (1996) “How Severe is Global Retaliation Risk Under Increasing Regionalism?” The American Economic Review, May, Vol. 8, nr. 2.! De la Reza, G.A. (2005) “Antidumping nas relações comerciais hemisféricas: Para uma reforma procompetitiva”, Revista Brasileira de Comércio Exterior nr. 82, February, Rio de Janeiro.! De la Reza, G.A. (2004) “The FTAA Framework: What is in it for Latin America?”, London Journal of Canadian Studies, Vol. 19.! De la Reza, G.A. (2001) “Entre l'utopie et la 'connaissance des moyes' : les premiers essais d'intégration latino-américaine”, A. Musset et al. (directeurs) ALENA-MERCOSUR. Enjeux et limites de l'intégration américaine, IHEAL-INTAM, Paris.! De la Reza, G.A. (1996) “Tides of Change: Leadership and Enlargement Agreements”, North American Journal of Economics and Finance, Vol. 7, nr. 1.! Devlin, R. and A. Estevadeordal (2001) “What's New in the New Regionalism in the Americas?”, Working Paper 6, INTAL-ITD-STA, Buenos Aires, May.! ECLAC (2004a) Panorama de la inserción internacional de América Latina y el Caribe, Edición de 2002-2003, United Nations Economic Commission for Latin America and the Caribbean, Santiago.! ECLAC (2004b) La inversión extranjera en América Latina y el Caribe, 2003, United Nations Economic Commission for Latin America and the Caribbean (L/G.2226-P), Santiago, May.! ECLAC (1994) El regionalismo abierto en América Latina y el Caribe. La integración económica al servicio de la transformación productiva con equidad, United Nations Economic Commission for Latin America and the Caribbean, (LC/G.1801-SES.25/4), Santiago, 28 January.! Frankel, J. and S. Wei (1998) “Open Regionalism in a World of Continental Blocs”, Working Paper, International Monetary Found, WP/98/10, February.! Freud, C. L. (1998) “Regionalism and Permanent Diversion”, Board of Governors of the Federal Reserve System, International Finance Discussion Papers nr. 602, January.! Fuentes, J.A. (1996), “¿Del bilateralismo al regionalismo abierto en América Latina?”, G. Couffignal and G.A. de la Reza (eds.) Los procesos de integración en América Latina: enfoques y perspectivas, Latinamerika institutet, Stockholm.! Haas, E.B. (1958), The Uniting of Europe, Stanford University Press, Stanford.! Haas, E.B. and P.C. Schmitter (1964), “Economics and Differential Patterns of Political Integration: Projections about Unity in Latin America”, International Organization, nr. 18.

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! Hudec, R. E. and J. D. Southwick (1999) “Regionalism and wto Rules: Problems in the Fine Art of Discriminating Fairly”, M. Rodriguez, P. Low and B. Kotschwar (eds.) Trade Rules in the Making. Challenges in Regional and Multilateral Negotiations, Organization of the American States and Brookings Institution Press, Washington D.C.! Hufbauer, G.C. and J.J. Schott (1994) Western Hemisphere Economic Integration, Institute for International Economics, Washington D.C., July.! Johnson, H. G. (1965) “An Economic Theory of Protectionism Tariff Bargaining and the Formation of Customs Unions”, Journal of Political Economy, Vol. 73, págs. 256-283.! Kennan, J. and R. Riezman (1990) “Optimal Tariff Equilibrium with Customs Unions”, Canadian Journal of Economics, February, Vol. 23, nr. 1.! Kitamura, H. (1964) La teoría económica y la integración económica de las regiones subdesarrolladas, Fondo de Cultura Económica, Mexico.! Kozolchyk, B. (1996) El Derecho Comercial ante el libre comercio y el desarrollo económico, McGRAW-HILL, Mexico.! Krugman, P. (1993) “Regionalism versus Multilateralism: Analytic Notes” J. de Melo and A. Panagariya (eds.) New Dimensions in Regional Integration, Cambridge University Press, Cambridge.! Krugman, P. (1991b) “The Move Toward Free Trade Zones”, Economic Review, Federal Reserve Bank of Kansas City, November-December.! Kuwayama, M. (1999) “Open Regionalism in Asia Pacific and Latin America: A Survey of the Literature”, Serie Comercio Internacional, United Nations Economic Commission for Latin America and the Caribbean , Santiago, December (LC/L.1299-P).! LAIA (1994) “Los aportes regionales a la liberalización del comercio internacional”, Latin American Integration Association, Sec/dt 358, 11 November 1993. Also in Integración latinoamericana nr. 197, January-February.! Lawrence, R.Z. (1996), Regionalism, Multilateralism and Deeper Integration, The Brookings Institution, Washington D.C..! López, C. and A. and J. Soler (1998) “Open Regionalism versus Discriminatory Trading Agreements”, ASEAN Economic Bulletin, Vol. 14, nr. 3.! Mistry, P. S. (1995) “Open Regionalism: Stepping Stone or Millstone Toward and Improved Multilateral System?”, J. J. Teunissen (Ed.) Regionalism and the Global Economy: The Case of Latin America and the Caribbean, FONDAD, The Hague.! Mundell, R. A. (1964) “Tariff Preferences and The Terms of Trade”, The Manchester School of Economic and Social Studies, Vol. 32.! Nordstrom, H. (1995) “Customs Unions, Regional Trading Blocks and Welfare”, R. Baldwin, P. Haaparanta and J. Kiander (Eds.) Expanding Membership of the European Union, Cambridge University Press, Cambridge.! Palacios, J.J. (1995) “El nuevo regionalismo latinoamericano: el futuro de los acuerdos de libre comercio”, Comercio Exterior, April.! Pelkmans, J. (1993) “Comparando las integraciones económicas: prerrequisitos, opciones e implicaciones”, Integración latinoamericana, nr. 191, July.! Phillips, N. (2003) “The Rise and Fall of Open Regionalism? Comparative Perspectives on Regional Governance in the Southern Cone of Latin America”, Third World Quarterly, Vol. 24, nr. 2.


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! Primo Braga, C.A. (1994) “The New Regionalism and Its Consequences”, IED World Bank, August.! Reynolds, C.W., F.E. Thoumi and R. Wettmann (1993) A Case for Open Regionalism in the Andes: Policy Implications of Andean Integration in a Period of Hemispheric Liberalization and Structural Adjustment, Agency for International Development (USID), Washington, D.C.! Richardson, M. (1993) “Endogenous Protection and Trade Diversion”, Journal of International Economics, Vol. 34, nr. 3-4, May.! Sampson, G. (1996) “Compatibility of Regional and Multilateral Trading Agreements: Reforming the WTO Process”, American Economic Review, Vol. 86, nr. 2.! Schiff, M. and L. A. Winters (2004) Integración regional y desarrollo, World Bank and Alfaomega, Bogota.! Schiff, M., Y. Wang and M. Olarreaga (2002) “Trade-Related Technology Diffusion and the Dynamics of North-South and South-South integration”, Document nr. 2861, World Bank, Washington D.C.! Shibata, H. (1967) “The Theory of Economic Uniones: A Comparative Analysis of Customs Unions, Free Trade Areas, and Tax Unions”, C. Shoup (ed.) Fiscal Harmonization in Common Markets, Vol. I, Columbia University Press, Washington D.C.! Viner, J. (1950) Customs Union Issue, Carnegie Endowment, Washington D.C.! Weiler, J.H.H., I. Begg and J. Peterson (2003) Integration in an Expanding European Union. Reassessing the Fundamentals, Blackwell Publishing, Oxford.! Wilcox, C. (1949) A Charte for World Trade, McMillan, New York.! Wioncsek, M. S. (1964) Condiciones de una integración viable, Fondo de Cultura Económica, Buenos Aires.

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81

Location theory is the oldest branch of regional economics and represents the substance from which regional science as a whole has subsequently rooted. It dates back into the nineteenth century, when the question about what economic activities are located where and why started getting a great importance to the production and consumption choices made by firms and households.

Loca t ion theory has been permanently developed, combining microeconomic approaches based on firm location models (e.g. W. Laundhard (1885), A. Weber (1909), H. Hotelling (1929), L.N. Moses (1958), M.L. Greenhut (1970) and so on) with macroeconomic approaches focused on spatial distribution of economic activities (e.g. J.H. von Thünen (1842), W. Christaller (1933), A. Lösch (1940 1944), W. Isard (1953), B. Chinitz (1961), R. Vernon (1966), H. Richardson (1978), P. Aydalot and D. Keeble (1988), M. Fujita and P. Krugman (1995) and so on). It has proved an extraordinary capacity to adapt to the new realities generated by the economic p rog re s s , o f f e r i ng t he adequa t e methodological framework of analysis and rational solutions to the more and more complex problems of the space economy relationship.

The book Industrial Location Economics published by Edward Elgar Publishing Limited is a highly relevant

* Daniela L. Constantin is Professor of Regional Economics at the Academy of Economic Studies of Bucharest and President of the Romanian Regional Science Association.

example in this respect. The Editor, Professor Philip McCann from the University of Reading, UK, a brilliant representative of the new generation of regional scientists, has succeeded in attracting around this subject internationally renowned scholars belonging to top universities form Austria, the Netherlands, UK, Italy, Canada, USA and Japan. They address a variety of topics concentrating on the spatial behaviour of individual firms and the growth and generation of industrial clusters and cities, offering an original, comparison and contrast-based combina-tion of classical and more recent approaches to location analysis.

As mentioned in the cover presentation, “the general theme which runs throughout the book is that successful industrial location analysis depends on both the nature of location questions to be addressed and the appropriate choice of analytical methodology”. This idea is confirmed by the content and the structure of the book, which is divided into three parts, in accordance with the types of industrial location issues considered.

Part I - “Analytical Approaches to Industrial Location”, highlights both various types of analytical questions specific to the location theory and a wide range of analytical techniques for studying these questions.

In the first chapter, concentrating

Philip McCann (Editor), Industrial Location Economics, Edward Elgar Publishing Limited, Cheltenham, UK, Northampton, MA, USA, 2002 (Hardback) - 2004 (Paperback)

*BOOK REVIEW by Daniela L. Constantin


on classical and neoclassical location-production models Philip McCann aims to present how the microeconomic production theory, almost always considered aspatial in nature, can be set within an explicitly spatial framework, pointing out the influence of changes in spatial economic costs (distance-transaction based) upon the optimum location of the firm. The author emphasizes the significance of the presented models' results to firm behaviour in reality, offering as examples the spatial behaviour of plants producing automobiles, computers, steel or chemicals as well as the location choices of multinational firms based on alternative sites for new plant investment.

In Chapter 2 John Parr focuses on the location of economic activity from the perspective of central place theory and the wider economic system. Reviewing the path-breaking works of Walter Christaller and August Lösch, which laid the foundations of central place theory, concerned with the location of economic activity as a basis of an urban system, he provides a series of reasons to explain why the central place theory was not entirely satisfactory as a general theory for understanding the urban system. A sketch of the wider urban system is also provided, pointing out two areas that require a particular attention in the future studies, namely the need for a more comprehensive economic analysis of the urban system and a deeper insight into the manner in which the urban system develops over time.

In Chapter 3 Dirk Stelder addresses the question of geographical grids in 'new economic geography' models. He starts from the major empirical shortcoming of the most 'new economic geography' models, that is the use of very abstract one-dimensional economic space (like a circle or horizontal line) and proposes the

introduction of a two-dimensional economy in the basic model. Further on, a simulation model using the real geographical shape of Europe is employed, based on a geographic information system implementation. The three-variant model results are discussed, presenting possible future evolutions of European cities map and their hierarchy.

Chapter 4 is devoted to firm migration, the authors Piet Pellenbarg, Leo van Wissen and Jouke van Dijk analysing this issue as a particular form of locational adjustment. First an overview of the theoretical approaches to firm migration is provided so as to highlight the causal factors of this phenomenon, from the locational (neoclassical approach) to behavioural and institutional ones. The authors also concentrate on the history of firm relocation studies that makes it possible to distinguish relevant patterns of firm migration in West European countries. Finally an ordered logit model is employed, in order to analyse the firms preference for migration, pointing out the importance of data availability and survey techniques.

Part II “Cities and Industrial Clusters” concentrates on the characteristics of industrial clustering and the growth and development of urban areas.

In Chapter 5 Gilles Duranton and Diego Puga present the key issues regarding diversity and specialization in cities, as resulted from the empirical literature on cities and the composition of their activities as well as the theories concerned with these issues, studying how they can contribute to the understanding of the empirical regularities. The main questions of this chapter have in view the reasons of specialization/diversification in cities, the advantages and disadvantages of urban specialization and diversity, the extent to which the structure of cities change over

DANIELA L. CONSTANTIN

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time, the influence of sectoral composition of cities on their evolution.

In Chapter 6 Ian Gordon directs reader's attention to an increasingly important real-world phenomenon, namely the 'global cities', representing a combination between the progressive internationalization (or globalization) of relationships and the reevaluation of the advantages of urban agglomeration. Putting the emphasis on issues like central places in an internationalizing economy, trade in urban services, networks and specialization in an internationalized urban system, structure, growth and volatility in world cities economies, the paper demonstrates how the economic base of these cities, of leading roles in the international urban hierarchy has been transformed over time and the gains in the competition for such positions.

Chapter 7, written by Michael Steiner, addresses the clusters and networks from institutional and strategic perspective, considering as starting point the idea that clusters and networks are nowadays keywords with strong policy implications for industrial location debate. The author discusses why clusters are so attractive to (almost) everybody, analyzing the assumptions and presumed benefits of industrial clusters and the institutional settings based on an evolutionary approach. A special place in the paper is offered to institution building in new market economies; the central question is if clusters can or should be used as a possible development strategy for countries and regions about to enter the European Union, the main conclusion pointing to the fact that regional policy for new market economies and transition countries requires “starting a learning process for the establishment of local clusters and networks” (p. 220) and a certain institutional framework.

Part II comes to an end with theories, methods and cross-metropolitan comparison of business clustering (Chapter 8), developed by Edward Feser and Stuart Sweeney. They offer a large review of literature concerned with business clusters, arguing that further advances on the theory of business clusters as well as related theories of externalities and agglomeration economies require more empirical research, exploiting new data sources and unique methodologies. A relevant case study is also presented, aiming to characterize the intra-regional clustering of selected manufac-turing value chains across several US metropolitan areas, based on a micro-level data set.

Part III “Multinational Firms and Location Behaviour” represents an insight into the factors that influence this behaviour, seeking to expla in the types o f organizational, information and decision-making issues relating to the location decision of multiplant and multinational firms.

In Chapter 9 Ram Mudambi focuses on the location decisions of the multinational enterprise (MNE), proving a 'state of the art' with respect to this process. The main conclusion of his research is that the interaction of the multinational firm and host government is a strategic game whose nature has changed over the last two decades and this has altered the strategies implemented by the two players. The author reveals that “the game has evolved into a more complex principal-agent game with the government principal able to offer the MNE agent incentives in terms of short-term and long-term availability of valuable resources, but constrained by the MNE agent's outside options in other locations” (p. 280-281).

BOOK REVIEW - Industrial Location Economics

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Chapter 10 explores the technolo-gical relationships between indigenous firms and foreign-owned multinational corporations (MNC) in the European regions. The authors, John Cantwell and Simona Iammarino concentrate on the correlation between MNC technological profile and regional technological specialization, the features of the nature of interactions between local and corporate knowledge and examine whether a hierarchy of regional centres of technolo-gical excellence can be established within and across national boundaries. A compara-tive analysis of the locational patterns of MNC innovative activities in the regions of four EU countries UK, Germany, Italy and France is also performed.

In Chapter 11 Tomokazu Arita and Philip McCann examine the relationship between the spatial and hierarchical organization of multiplant firm based on observations from the global semiconductor industry. They demonstrate that “corporate organiza-tional issues play a major role in determining the spatial behaviour of such firms, both according to parent nationality and to the host country location of plants”. A diagrammatic approach is used in order to provide comparisons between Japanese and US semiconductor firms in terms of their spatial and organizational behaviour.

As resulted from this brief presenta-tion, all chapters in each of the three parts and all the three parts are extremely well integrated in the main topic, proving unity and diversity at the same time.

A wide range of analytical techniques is employed some of them being the authors' contribution to enriching the investigation methodo-logy of industrial location, that has made it possible to address the same issues from exciting, original perspectives. The excellent combina-tion

between theoretical knowledge and empirical testing, between traditional and modern approaches to industrial location economics as well as the clarity of the ideas expressed recommend this worthwhile book to both academics and students in geography, economics, management as well as to experts in institutions involved in regional and urban planning.

In particular, for the Romanian reader the book provides many lessons to learn from the research devoted to the realworld of the developed countries and valuable ideas regarding the establishment of clusters and networks in the new market economies.

DANIELA L. CONSTANTIN

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