Victoria Reinhardt, University of Leipzig

The EU-assistance policy for the post-socialist Europe in transition

Evolution of the efficiency premises of the EU-assistance policy for the transition societies in Europe from 1989 to the present.

Victoria Reinhardt, University of Leipzig

Question:

How can be explained the reduced efficiency of the EU assistance policy in the post-socialist Europe?

Victoria Reinhardt, University of Leipzig

Assumptions of the theory:

1. Transformationsforschung (Alfred Kraft, Stefan Mair, Franz Nuscheler) based on the Modernization Theory: The efficiency of assistance depends primarly on the transformation capacity of the concerned countries&societies.

2. Europäisierungsforschung (Grabbe, Emerson) based on the Integration Theory: The EU is a special donor for the post-socialist societies in Europe and the efficiency of its assistance policy depends primarly on the evolution of political relations between the EU and the concerned countries.

Victoria Reinhardt, University of Leipzig

Structure:

Part one: Distinction between transition and transformation. Implications for an efficient co-operation on the recipient side

Part two: Opportunities and restrictions of the European Union in designing and implementing its assistance policy for the post-socialist Europe

Part three: Case study - EU assistance for the Republic of Moldova

Victoria Reinhardt, University of Leipzig

Part one: Distinction between transition and transformation

Holm Sundhausen (1995):

Transition means changes, evolutions without clear limitations in time.

Transformation means changes with a clear goal. Transformation has a start and a finish. The progression of transformation

depends on the evolution of modernization processes in the related country.

Victoria Reinhardt, University of Leipzig

Premises for successful transformation

Actors: clear goals and consensus among the political elite;

Resources: no collisions between the vital needs of the population and the costs of transformation processes;

Tempo: the tempo of the catch up learning processes should correspond to the absorption capacity of the society;

Institutions: necessary background

Competence level of the population

Victoria Reinhardt, University of Leipzig

Transformation and assistance tools

Before the start of transformation processes one can’t speak about a clear and feasible strategy concerning democracy, market economy and consolidation of new states.

Without a clear strategy on the recipient side assistance priorities can not be tailored to the particular needs of the respective society and the respective sources are mainly used for financial re-organization (Haushaltssanierung) or for ad-hoc measures in particular fields of the economy or society development.

Without a clear strategy of transformation no assistance for transformation can work.

Victoria Reinhardt, University of Leipzig

Part two: Opportunities and restrictions of the European Union in designing and implementing its assistance policy for the post-socialist Europe

Opportunities- Amount of assistance: The EU is the most generous donor of ODA (the EU

member states allocate yearly 0,3 % of the GDP (starting with 2007 – 0,7% of GDP) for development and transformation assistance. USA allocates 0,1 % of GDP. The European Commission manages 1/5 of the assistance resources of the EU. This corresponds to 10% of the global foreign aid (KOM (2003) 527)

- Political significance in the post-socialist Europe: The EU is the only donor that can offer the incentive of finalité politique. This is being associated by the political elite of the concerned countries with a transformation goal. Thus the conditionality of the EU assistance tools is being relatively easily accepted by the European post-socialist societies and associated with a norm transfer.

Victoria Reinhardt, University of Leipzig

Part two: Opportunities and restrictions of the European Union in designing and implementing its assistance policy for the post-socialist Europe

Restrictions - Lack of consensus among the EU member states concerning the role and the

goal of the EU assistance policy generally and particularly for the post-socialist Europe: primarily (i) instrument of diplomacy or (ii) part of the global development framework.

- First years after 1989: lack of an EU strategy for the case of collapse of the communist-regime in Europe

- Until 2003: Lack of strategy for post-socialist European countries without accession perspective.

Victoria Reinhardt, University of Leipzig

Consequences for the development of the EU –

assistance policy for post-socialist Europe.

The lack of consensus among the member states and the lack of necessary strategies towards these countries lead to a compromise solution: automatic adoption of the principles of the global development framework (IMF, WB, OECD):

1. Until 2001 – Washington Consensus (focus on neo-liberal reforms, withdrawal of the state from the economy, no focus on institutions, civil society). The influence of the principles of Washington Consensus on the EU-assistance policy lead to the ignorance of a very important aspect of transformation of these countries: state building and consolidation. This affected first of all the programs for countries without an accession perspective, that faced the biggest problems in their state and nation building processes. Recent research contributions (Klaus Esser, 2003) show two consequences of applying the principles of Washington Consensus in this category of countries: state weakness and poverty.

Victoria Reinhardt, University of Leipzig

Consequences for the development of the EU –assistance policy for post-socialist Europe.

1. Starting with 2001-2002 – Monterrey Consensus (focus on good governance and ownership of reforms, institutional development and poverty reduction).

The recognition of the role of state instead “Let the market rule!” Unclear how to deal with weak states?

Victoria Reinhardt, University of Leipzig

Part three: The EU assistance for the Republic of Moldova. Transition or transformation

Late start of transformation (1999-2000). Before 1999 –no strategy of reforms, no clear goals of economic and political transformation, deep economic crisis and state weakness.

Serious problems in all the three fields of transformation: state building, market economy and democracy.

Victoria Reinhardt, University of Leipzig

Part threeProblems and needs of the country

State building:- Fragmentation immediately after the declaration of

independence (Transdniestria) - Problematic institutions- Weak political elite- Underdeveloped civil society

Victoria Reinhardt, University of Leipzig

Part threeProblems and needs of the country

Market economy:- Reform strategy- Ownership of reforms (role of political elite)- Conversion of the economy (from defense to microelectronic)- Reforms of the agrarian sector (about 30% of employment) and

safeguard of markets- Accompanying social measures

Victoria Reinhardt, University of Leipzig

Part threeProblems and needs of the country

Democracy

- Justice reform- Corruption- Civil society - Free media

Victoria Reinhardt, University of Leipzig

Part threeEU in the context of the international donor community in the Republic of Moldova.

The most important donors: USA (40 – 53 %), EU and the EU member states (the Netherlands, Germany, UK, France, etc.)

The EU is the second important donor in terms of amount of assistance an the only donor that has as a goal to assist the country in its entire transformation process. All the other donors focus on some particular fields: USA – agriculture, Germany- justice reform, France – cultural ties, etc..

Victoria Reinhardt, University of Leipzig

Part three:The impact of the EU assistance programs on the transformation of the Republic of Moldova

State building: Focus on regions and not on the state No institutional support until 2001, excepting capacity building for

implementing the Partnership and Cooperation Agreement (EU expertise costs – up to 75 %)

Until 2001 – no projects for supporting institution building, civil society development, no support for the settlement of Transdniestria conflict

Starting with 2001 – focus on institutional development, state as a partner, focus on development of civil society, etc.

Victoria Reinhardt, University of Leipzig

Part three:The impact of the EU assistance programs on the transformation of the Republic of Moldova

Market economy- Focus on restrictive monetary policy, privatization and private

sector development (regardless the social consequences, the lack of ownership of reforms, the lack of a strategy of the Mold. Government, the lack of feasibility studies for macroeeconomic reforms, etc.)

- Generous support for reforms in the field of agriculture, but no strategy and no continuity.

Victoria Reinhardt, University of Leipzig

Part three:The impact of the EU assistance programs on the transformation of the Republic of Moldova

Democracy- Delay (until 2001) in supporting development of free media,

civil society

- Focus on regional projects (i) in supporting justice reform and (ii) Southeastern Europe in combating corruption.

Victoria Reinhardt, University of Leipzig

Part threeConclusions

The EU assistance couldn’t be tailored on the state of political and economic development and transformation of the Republic of Moldova and as a result could only marginally achieve its goal to support the country in its threefold transformation: state building and consolidation, market economy and democracy.

Reasons: 1. On the recipient side - late start of the transformation process : no

clear goal, no strategy of reforms, no ownership of reforms, problematic institutions, weak political elite, etc.

2. On the donor side – big amounts, but problematic priorities (no consensus among the member states and lack of EU expertise for specifics of transformation processes in the post-socialist Europe), high administrative costs (overhead and expertise – up to 75 %).

Victoria Reinhardt, University of Leipzig

Future prospects

Better premises and important learning processes on both sides:- Start of the transformation processes on the recipient side- Reforms of the EU assistance policy. Placement of the assistance policy for the

post-socialist Europe in the field of the EU Common Foreign and Security Policy (GASP).

More EU – expertise in this field is needed. More empirical research in this field, as well as theoretical contributions

concerning the specifics of the thresfold transformation in the post-socialist Europe, as well as the specification of some terms (weak state, poverty, etc.) related to Europe, is needed.

Victoria Reinhardt, University of Leipzig

Thank you for your attention!