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Budapest Business School
FOREIGN TRADE COLLEGE FACULTY
Foreign Language Business Correspondence Studies Department

College level professional education

History of the European Union with special attention to the
development of relations with central and Eastern European
countries and institutional reforms

Prepared by: Tamás Ábrahám

BUDAPEST, 2005

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Contents

Introduction .......................................................................................................................... 4
1. Short history and evolution of the European Union ........................................................ 6
2. Institutions of the EU ....................................................................................................... 9
3. Development of relations of Central and Eastern European Countries. ........................ 13
3.1

System of conditions for joining Central and Eastern European Countries to EU 14

3.2. The procedure of admittance of new member states .................................................. 14
3.3. Evolution of relations between EU and Hungary (the PHARE Program) .................. 15
3.4. General issues of process of enlargement .................................................................. 16
3.5. Process of enlargement and accessation negotiations ( AGENDA 2000) .................. 17
3.6. Challenges of eastern enlargement ............................................................................. 18
3.7. Problems of operability and functionality of EU institutional system....................... 21
3.8. The institutional reform .............................................................................................. 23
4. Summary ........................................................................................................................ 28
5. Used references: ............................................................................................................. 29

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Introduction
The idea of the united Europe has already brought up before the Second World War,
which mainly based on French conceptions. After the Second World War there had been a
British, and then at the early ’50s a French proposal prepared for the break down of the
political and economic borders.
The first steps could be connected to the French Foreign Affairs Minister Robert
Schuman in the early ’50s, which aim was to unite the German and French coal mining
and steel industry under a common main authority. As a result of this effort, the
MontanUnion has been established in 1951 (European Coal and Steel Community
(ECSC)). The Benelux States and Italy joined to this community. In the year 1957 the
community has been expanded and set up the European Economic Community (EEC) and
the European Atomic Energy Community (Euratom), and the main goal is to achieve the
total economic integration.
However the markets of the member states have not been opened in the desired
proportion. For which the solution was the creation of the Single European Act in the year
1986. The main aim of this act was the establishment of the free movement of goods,
capital and workforce for the year 1993. There were granted extensions in several areas
(e.g. Finance, etc.)
Before the deadline of the establishment of the single market the 12 member states have
decided on the further integration.

With the signing of the Treaty of Maastricht in 1992 the European Union (EU) has been
founded, which has three pillars: Action for Cooperation in the field of Economics, the
Common Foreign and Security Policy, and in the area of justice and home affairs.
Certainly the execution and the implementation of the above mentioned principles have
not been without problems. There were difficulties with the coordination of the actions
for justice and home affairs, and in the implementation of the Treaty of Schengen, which
aim was to attain the free movement within the EU.

The idea of the creation of an economic and financial union also caused difficulties, as a
result of this the European Monetary System (EMS) has been created in 1979, which
linked the currencies of the member states and the ECU created as the basket of these
currencies.
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As a main economic task for the member states the Treaty of Maastricht pointed the
establishment of an economical and financial union in order to reach the full integration
of the member states. For this reason the members states founded in 1st January 1999 the
European Central Bank and the single c
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urrency the EURO has been created.

As a result of these measures the citizens of the EU have used the EURO as a legal tender
since 2002. One outstanding event was in the last period the assembly of the European
Council held in Nice on the 7-11 December 2000, which closed down the French
Presidency and the Intergovernmental Conference (IGC). The IGC’s task was to find
solutions, develop proposals and submit to the Council for the key institutional problems
not regulated in the Treaty of Amsterdam and necessary for the further operation of the
EU. The stake was great for the countries, who wanted to join to the EU on the
Conference held in Nice: the agreement on the functionality of the institutions of the EU
was the prerequisite for the enlargement of the EU, in fact the stake was the enlargement
within a reasonable period.

On the Conference held in Nice the participants had made decisions on the main
institutional questions, in this way the EU fulfilled those undertaken tasks till the end of
2002, which were necessary for the acceptance of the new member states
The 15 member states accepted the strategy and the schedule of the enlargement
developed by the European Commission, in which the deadline of the discussion and
closing of the individual sections had to be discussed for the joining countries, was the
end of 2002.

Knowing the condition system of the enlargement the parties are take into consideration
the newly accepted countries during the development and agreement on the institutional
reforms. In the closing speech of the Conference held in Nice the head of the states and
the prime ministers give voice to their expectations –which meant a reasonable time
period for the accession-, that the newly accepted countries could be participate in the
European Parliamentary election will be held in 2004. As it known, on the conference
held in Copenhagen on the date of 12-13 December 2002, the EU has closed the
acceptance negotiations with the ten newly joining states. The member states declared
that they are ready for the acceptance for the newly joined countries from the 1st May
2004.
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The ceremonial signing of the acceptance agreement took place in Athens on the 16th
April 2003. After that according to the constitutional requirements all contracting
countries, actual member states and joining countries had to ratify the agreement. After
the closing of the successful ratification process the countries candidate for membership
had become the member of the EU with full power on the 1st May 2004.

1. Short history and evolution of the European Union
After the Second World War it was essential to establish an organization based on
common institutions, which make the further wars impossible and resolve the centuriesold conflict between France and Germany, restore and improve the competitiveness of the
European countries in the world by the improvement of the economic cooperation, and
represent a counterweight against the socialist countries.
For these reasons in the ’50s the 6 West-European countries established the three
Communities, the predecessor organizations of the modern European Union. On the 18th
April 1951 the six European countries (Belgium, France, Germany, Italy, Luxembourg,
Netherlands) signed the Treaty of Paris and established the European Coal and Steel
Community (ECSC), and the Treaties as of today they will be referred to as the "Treaties
of Rome" establishing the European Economic Community (EEC) and the European
Atomic Energy Community (Euratom) are signed in Rome on the 25th March 1957.
Later on the above mentioned three organization of the Communities had been merged
and the European Communities (EC) naming used. The main goal of the EC was the
creation of the customs union and the single market. The customs union means the
elimination of the trade restrictions (customs duty, quotas) and pursues a common foreign
commercial policy towards the outer countries. The European Single Market such an area,
where the free movement of the goods, services, capital and workforce is ensured.
In 1973 Denmark, Ireland and the United Kingdom, in 1981 Greece and in 1986 Portugal
and Spain join to the European Communities. The number of the member states increased
to 12.
The customs union within the EC has been already established for the year 1968. The
single market i.e. the free movement of goods, services, capital and workforce could not
be realized completely till the eighties. For this reason the member states motivated by the
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enhancement of their competitiveness to strengthen their integration, ann
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ounce the
program for the Single European Market with the signing of the Single European Act ont
he 18th February 1986. The single market, which meant a higher level of the common
market has been built up to the 1st January 1993 by the elimination of the existing
obstacles, the harmonization of the national jurisdiction. In order to ensure the flawless
operation and the improvement of the market, the harmonization of the individual
national rules is stayed a continuous objective after the legal foundation of the market.
After the successful realization of the single market, the member states decided on the
further integration towards to the economic, financial and political union. On the 7th
February 1992 by the signing of the Treaty of Maastricht the European integration is
became stronger, and the European Union as a new name of the communities had been
presented. With the foundation of the European Union and continuing the activities of the
EC, the member states decided to start an economic and financial union, and to introduce
of a single currency, which was necessary for this kind of integration. Furthermore, as a
starting point of the political union the organization of the common foreign and security
policy and the cooperation in home affairs and criminal matters has been started. In
relation to the political union the Treaty of Maastricht introduced the institution of the
European Union citizenship, which main right is to provide free movement and residence
on the territory of any member states. The achievements of the Treaty of Maastricht have
been confirmed and improved by the signing of the Treaty of Amsterdam on the 2nd
October 1997.
The stronger integration became very popular for other European countries, and in 1995
another 3 countries joined to the EU: Austria, Finland and Sweden. The number of the
member states has been increased to 15.

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As a result of the decisions made by the Treaty of Maastricht on the economic and
political union in 1999 the EU introduced the EURO as the single currency of the EU.
With the exception of Denmark, United Kingdom, and Sweden all of the member states
joined to the EURO-zone. However the real single currency has been introduced on the
1st January 2002, when the EURO coins and banknotes appeared became the legal tender
within the 12 EU member states after a two month transitional period.
According to the political union described in the Treaty of Maastricht the member states
had made efforts to create the common foreign and security policy since the early ’90s. In
the spirit of this, nowadays the member states coordinate not just their foreign policy
attitude, measures and collectively represent the viewpoints of the EU in international
issues, but they are started to organize a common army, which will be ready for 2003, and
its task will be to deal with the crises related to Europe. Another achievement of the
political union is the strong cooperation in the area of justice and home affairs of the
member states. In the framework of this, especially to ensure the free movement of people
within the member states, cancelled the border control between the member states, and
the defence of the borders transferred to the outer borders. The member states built up a
common visa-, refugee- and immigration policy, and organize a strong cooperation
between the police and judiciary authorities of the member states.
In the late nineties the accession to the European Union is became the main goal for the
Central and Eastern European Countries, that liberated from the communist systems at
this time. Until 1996 there were ten Central and Eastern European Countries (Bulgaria,
Czech Republic, Estonia, Poland, Latvia, Lithuania, Hungary, Romania, Slovakia,
Slovenia), and three Southern-European countries (Cyprus, Malta and Turkey) declared
their intention to accession. With the exception of Turkey the EU has started the
accession negotiations all of the above mentioned countries until 2000.
For the enlargement the EU – besides the successful negotiations – has to create the
conditions of the enlargement within the EU. Therefore the member states after a long
discussion on 26th February 2001 signed the Treaty of Nice, which made possible with
the reconstruction of the EU institutions for the candidate countries to join to the EU. On
the Conference held in Gothenburg in June 2001 the member states confirmed, that the
accession negotiations with the mostly prepared candidates – placed among Hungary too-

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could be finished till the end of 2002 and in this way the EU could be access new
members in the y
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ear 2004.
After this short introduction and the overview of the history of the EU I would like to
introduce the institutions of the European Union.
2. Institutions of the EU
The European Union, which means the integration of a large group of European nations,
is a particular subject of international relations and the general international law,
regulating these legal relations.

Firstly, the European Community, which is forming the first pillar of the EU, is a
community established by an international agreement concluded between the member
states and based on law. The Community has external and internal scope of authority, and
within its scope it can legislate and make obligatory force decisions.

On the other hand, the European Union is such an international organization, where the
member states makes the mostly important decisions, rules according to rules and
procedures stipulated in the foundation treaties in the name of the European Union and/or
the European Community. In this case, we can speak about the Union as an
intergovernmental cooperation, which assert the fact that the EU is the „Europe of
Nations”.

These specialities, and the dual nature of the European Union and the European
Community is reflected by the three pillars and unified permanent institutional system of
the EU.(The fact that there is no scope of authority and their activities are greatly limited
in relation to the second and third pillars of unity, does not injure the unity.)
The three pillars of the European Union is shown on Figure 1.
Source: The ABC of Community Law, Dr. Klaus Dieter Borchardt, 1999
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Figure 1. Three pillars of the EU

European Union

First Pillar
European
Community

European Community:
• Customs union and
single market
• Agricultural policy
• Structural policy
• Commercial policy
New or changed
regulations:

Second Pillar
Common Foreign and
Security Policy

Foreign Policy:
• Cooperation,
common viewpoints
and intervention
• Preservation of peace
• Democracy
• Grants for nonmember states
Security Policy

• Union citizenship
• Education and culture
• Trans -European
networks
• Consumer protection
• Public health
• Research and
environment
protection
• Social policy
• Refugee policy
• External borders
• Immigration policy

• Taking advantage of
the Western
European Union
(WEU ), questions
related to the
security of the EU
• Disband
• Financial issues of
defense
• Long-term: European
security system

ECSC
EURATOM

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Third pillar
Police and judicial
cooperation in
criminal matters

• Cooperation
between the
authorities on the
area of civil and
criminal law
• Police
cooperation
• Fight against
racism and antiSemitism
• Fight against the
trade of
prohibited drugs
and arms
• Fight against
terrorism
• Crimes against
childrens
• Trade of humans

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There are EU institutions, which are independent from the member states in their, place
under the Community Law and the interests of the EU (Parliament, Court, Commission)
however the Council the main decision making institution consist of the ministers of the
member states (and in case of the European Council, which has two session in a year
consist of the head of the states and the prime ministers).
In connection with the accession process the institutional issues has been raised in two
areas:
-

Issues related to the main or in other words the constitutional institutions (Council,

Parliament, Commission, Court, Court of Auditors) of the unified institutional system
of the European Union, and the auxiliary institutions (e.g. Economic and Social
Committee, Committee of the Regions), which task are to help their work and other
institutions (European Investment Bank, and the institutions of the Economic and
Financial Union). The participation and the collaboration is the right and obligation
of the new member state from the date of accession.
- The effectiveness and execution of the law constituted by the institutions of the
European Union have to be ensured by the member states. In order to the national
public administration, judicial organization and the authorities applying the
Community law have to be prepared for the tasks arising from the functioning of the
institutions of EU. All these iss
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ues require state and governmental policy on the area
of legislation, administration, education.
The institutions of the European Union are under continuous reformation. It has to be take
into consideration during the accession process, because the candidates have to take the
changing rules and have to use the system in force at the given time.
The structure of the base institutions of the EU is built up according to the principles of
intergovernmentalism and „Divide et impera”. The model of the community institutes are
based on the followings: intergovernmental cooperation, decision making over the
nations, and the balance created among the institutions.

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The institutional system of the European Union is shown in Figure 2.
Figure 2. - Institutions of the EU
Source: The ABC of Community Law, Dr. Klaus Dieter, Borchardt, 1999)

The Council of the European
Union
ministers of the member states
and the president of Commision
Council of the
European
Union
The
Committee
of the
Regions
European Court
of Auditors

The
European
Parliament

Az Európai
Közösségek
Bizottsága

European
Central
Bank

Court of Justice
of the European
Communities

The European
Economic and
Social Committee

European
Investment
Bank

In the followings I would like to describe the sdevelopment of the relations between
the Central and Eastern European Countries (former socialist countries) and the EU.

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3. Development of relations of Central and Eastern European Countries.
Relation between COMECON countries – former socialist countries - ( Council for
Mutual Economic Assistance - Moscow 1949 ) and EC (European Community ) was
characterised by differentiation and mutual denegation.
There were changes started in the policy of COMECON countries from 1982 (after death
of Brezsnyev), but only after accession to power of Gorbacsov in 1985 took pace steps
on the merits, negotiations.
Hungary started negotiations on the merits with EC only in 1987 but only on 26th of
September 1988 was signed the Trade and economic cooperation agreement between the
Community and Hungary
.
The result of Agreement on Trade and economic cooperation was that EC gradually
eliminated former discriminative limitations against Hungary.
The leading economic powers (G-7) of the world in Western Economic Summit was held
in Paris, France on 14. July 1989, took decision about establishment of PHARE Program,
Poland Hungary Assistance for Restructuring the Economy.
The aim of the program was to coordinate the necessary measures to assist economic
restructuring in Poland and Hungary countries in transformation for restructuring their
transformation to market economy and establishing democratic social structure

and

preparation of joining country for admittance to EU. This program first of all provided
non refundable financial subsidy
Because of changes similar to PHARE program was launched for CIS countries
(Commonwealths of Independent States) too.
The TACIS program serving similar aims was also launched for CIS countries (Technical
Assistance to the Commonwealths of Independent States.

I would like to shortly present conditions of joining Central and Eastern European
Countries to EU, development of relations, challenges of process of enlargement in the
following sections.

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3.1. System of conditions for joining Central and Eastern European Countries to EU
Conditions for joining Central and Eastern European Countries to EU was formulated in
Summit held in Copenhagen in June of 1993.

These conditions were called as Copenhagen Criteria.
The candidate countries of Central and Eastern Europe which signed the Europe
Agreements will become full members as soon as they satisfy the following requisite
political and economic conditions
• Stability of institutions guarantying respect for human dignity, liberty, democracy,
equality, the rule of law, and human rights.
• respecting and defence of minority rights, (political criteria),
• functioning market economy, which is capable compete with competence of market
forces existing in the European Union (economical criteria),
• Ability to comply with obligations originating from membership, adaptation and
implementation of acquis communataire, including political. economical and monetary
union ( legal, institutional criteria)
• The EU added to above listed criteria a fourth crite
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ria, namely that EU shall prepare
itself to be capable (its politic, institutions) for adaptation of new member states.
The Copenhagen criteria can be considered as an political declaration, special importance
of it that firstly in history of EU was formulated the requisite conditions of admittance for
a group of countries wishing to join to the EU.

3.2. The procedure of admittance of new member states
The candidate of EU membership countries shall submit application on admittance to the
Council. Then the Council will ask the Commission to prepare an County report on
country wishing to join to the EU (country assessment). On the basis of Country Report
the Council adopts decision about acceptance or rejection of admittance application.
If the decision of Council is positive, then EU starts accession negotiations with candidate
countries. Questionnaires compiled by the EU Commission were handed over to the ten

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candidate countries submitting application on admittance on 26th April 1996. This
moment was actually launch of preparation accession negotiations.
Questionnaire contained questions regarding political structure of countries, economical
life and the whole legislation related to EU functionaries. 3 months deadline was
determined for preparation of answers. Preparation of answers was task of Foreign
Ministry and governmental apparatus. On the basis of answers given on questionnaires
the Commission elaborated and compiled so called country assessment about 10
candidate Central and Eastern European Countries. This work was performed by the
Commission approximately during 1 year.
The Summit held in Amsterdam (16-17 June 1997), established that conditions of clears
the enlargement process were created.. The European Commission published the country
opinions - its opinions on the applications of 10 Central and Eastern European countries
on 16th July 1997. In this opinions the assessment of preparedness of candidate countries
were assessed, the measure was the so called Copenhagen criteria, which I have presented
in the previous chapter. The proposal of European Commission was to start accession
negotiations in the first circle with 5+1 countries. The selected countries were as follows:
Poland, Czech Republic, Hungary, Estonia, Slovenia and the plus one country was
Cyprus. From the first circle Slovakia, Latvia, Lithuania, Bulgaria and Romania were left
out. The reason for it was mainly progress made in change of their political and
economical system. After closing down the accession negotiations, before signing the
Acts of Accession after political agreement between governments of member states and
candidate states – the European Parliament approves or rejects the accession of candidate
country. After approval of European Parliament the member states and the candidate state
sign the Act of Accession. The Act of Accession must be ratified in all signing countries
in accordance with constitutional rules of each country. This will be performed in the
national Parliament. The accession is generally confirmed by referendum in the candidate
country.

3.3. Evolution of relations between EU and Hungary (the PHARE Program)
Hungary and the European Community established diplomatic relation in 1988 as part of
normalisation of east-west relations. Simultaneously with launching the PHARE-program
(1989) the EC eliminated the import restrictions against Hungary and Poland. “Europe

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Agreements" are signed with Hungary in December of 1991 created the highest level of
relation which EU could establish with a non member country. The relations of Hungary
and European Union picks up on the basis of partnership relation. The accredited
Hungarian EU Embassy was separated from embassy in Belgium from 1993. On 1st of
April 1994 Hungary submitted application of accession. The EU initiated regular ministry
level dialogue in spring of 1994 with those Central and Eastern European Countries,
among them with Hungary, which entered into partnership agreement. The accession
negotiations were started in the end of March 1998 and were continued according to
planned schedule. The accession negotiations were finished in Summit held in
Copenhagen in 12-13 December 2002.
The PHARE program (Poland Hungary Assistance for Restructuring the Economy) is a
program of European Union providing non refundable financial subsidy for Central and
Eastern European Countries. The aim of this program is assistance realisation of socialeconomical reform and subsidizing preparation for integration. The PHARE program was
launched in 1989, when the European Community adop
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ted decision about providing 300
million ECU economic aid for Hungary and Poland, and launched the program called as
PHARE.
The designation program in the PHARE system means development plan, which is
implemented during certain time and contains different projects. The financing is realised
in form of branch programs, containing medium term targets. Individual PHARE
programs in Hungary e.g. are connected with development of small enterprises and
environment protection. Financing is realised though funds, into which recourses are
placed regularly by the fiduciary country too. During utilisation of joint funds both
PHARE regulations, and rules of given country must be fulfilled.

3.4. General issues of process of enlargement
First enlargement of European Community (EC) 1973. Denmark, Ireland and the United
Kingdom joined the European Communities in the first circle (European Community was
increased to nine countries). To second circle of enlargement of European Community
belonged the Mediterranean countries, Greece in 1981, Portugal and Spain in 1986 joined
to the European Community. As a result of enlargement with Mediterranean countries

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European Community of 12 members was formed. The precondition for joining to the
European Community was acceptance of following conditions
Countries applying for accessation need to accept the Rome Treaty rules and and
decisions adopted since then by EC .
• Problems occurring in subsidizing shall be solved by temporary measures and not by
changing rules of EC.
• Temporary measures shall be mutually advantageous, therefore increase of free trade of
industrial products shall be ensured together with existing results of common agrar
market.
• The transition period in the trade shall be same for each candidate, in other areas the
transition period might be different duration and country by country or areas of
cooperation.
It can be seen that the EC endeavour was to maintain own results, while no serious
criteria system was determined towards candidates for accessation. The duration of
transition period was determined as 5 years.

3.5. Process of enlargement and accessation negotiations ( AGENDA 2000)
The European Commission issued the program called AGENDA 2000 in 16 July
1997.The document was adopted after long negotiation and dispute in the Summit held in
Berlin, on 26th March 1999, Heads of State or Government of EU. The document
described the Union entering into the XXI-st century, which gives answers to challenges,
for enlargement, globalisation and improvement of competetiveness.
The document determines expenditures related to enlargement for the period of 20002006 and basic principles of EU budget.
The European commission enclosed to Agenda 2000 document the country opinions of
candidate countries for accession. The Commission suggested to start the accession
negotiations with Cyprus, Czech Republic, Estonia, Poland, Slovenia and Hungary. The
Commission found other Central and Eastern European Countries not able for accession,
against Slovakia the complaint was incompliance with political criteria, against other
countries

(Bulgaria, Latvia, Lithuania, Romania) the compliant was because of

incompliance with economical criteria. The decision about proposal of Commission in
Summit held in Luxemburg in December 1997 was made by Heads of State or

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Government of Union adopting decision about enlargement of EU with Central and
Eastern European Countries.
According to the decision the accession negotiations were started on 31st March 1998.
with most prepared for accession 6 countries.
The accession negotiations between the candidate country and EU were multilevel
negotiations. During this negotiation it was examined how is given country complying
with accession requirements. During these negotiations it was decided what will be
included in the Act of accession, what temporary exemption is given to the particular
country. The highest level negotiation was the ministry level negotiation; the lowest level
negotiation was negotiation between experts of given country and experts of EU:
Hungary continued accession negotiation with European Union since 10th November
1998.

3.6. Challenges of eastern enlargement
There was no example of such former enlargement of EU with 10-13 countries
simultaneously applying for accession.. Because of different level of development of
(underdevelopment) candidate countries, the EU did never meet such an accession
challenge.
According to estimations if the EU will have in 2007 27 member states, then number
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of
population will reach half billion. The expected population and GNP per capita after
enlargement of EU I present in table 1.

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Table 1. showing the population and GNP per capita of EU with 27 member states

GNP per capita
EU-27= 100
2002

Austria
Belgium
Bulgaria
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Greece
Holland
Ireland
Poland
Latvia
Lithuania
Luxemburg
Hungary
Great-Britain
Germany
Italy
Portugal
Romania
Spain
Sweden
Slovakia
Slovenia
EU-15
12 EU –candidate
EU-27

population
1000 persons
2007

127
125
29
93
72
135
46
117
114
78
128
123
45
35
39
193
59
117
123
116
88
36
94
117
59
81
-

Source: : DIW Wochenbericht , 2001 /36.

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8147
10157
7803
723
10099
5311
1333
5200
60052
10357
15790
3960
39016
2252
3610
445
9708
59695
81637
55846
9770
21719
38672
8956
5440
1936
373996
104040
478036

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The future of EU depends on next wave of enlargement, the realisation of accession.
Reasons for it are as follows:
• Until now never were simultaneously 10-12 new member states accessed in the past
near half century.
• the development differences are very large
• because of postponed internal reforms, the danger of recession expected in the
beginning of 2000’s years the sacrificing ability of richer member states towards new
member states is would be less.
Because of above mentioned issues there are three groups of anxiety which were
formulated by European Union:
• how present level of integration, tenability can be ensured
• how can be preserved obtained results of EU public policy, how it can be expanded to
new member states, that it would be acceptable for old members.
• how the functionality of institution system can be maintained in case of 25-27 member
states.
The first issue among above mentioned three issues is in connection with preparedness,
maturity of candidate countries applying for accession.
The solution of second and third issues occurred as internal task of EU, as function of
political will of member states.
Preservation of common political results and operability of institutional system should be
ensured by EU itself.

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3.7. Problems of operability and functionality of EU institutional system
The institutions of EU were functioning slowly already in case of 15 member countries,
and increase of 25-27 member countries operation trouble would occur.
After last enlargement there were serious debates about reorganisation of institutional
system of EU. Serious problem occurs because the EU institutional system was developed
originally for six member states, and there were operation troubles in case of 12 and 15
member states. In case of enlargement with new member states the institutional system
would reach according to some opinions its limits of operability. It is necessary to
emphasize that the problem occurred not because of accession of one-two new member
states, it could be handled without changes of institutional system, but the ever largest
volume of enlargement by 10-12 new member states cases the problem. Therefore EU
considered as precondition of further enlargement with eastern member and solving this
issue was inseparable from further enlargement after formulation of Copenhagen criteria..
In connection with enlargement reorganisation of three key institutions the Council, the
Commission and the Parliament is considered as essential precondition of enlargement.
Among institutional reforms change of decision making in Council is considered as most
important. It is hardly feasible that the EU consisting of more than 25 member states
could functioning without problem maintaining the consensus based decision making.
The member states make many important decisions with solid vote. At the same time
reaching such a consensus of 25-27 member states, which is acceptable for each member
state, would have several disadvantageous consequences. On one hand the decision
making would drag on and the EU would paralyse, on the other hand the decisions would
become abortive, content less because of sequential compromises.
In order to maintain the ability of decision making of Council further expansion and
making it g
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eneral the qualified majority decision making is suggested by most of
interested parties.
At the same time as other problem appeared that maintaining the voting weight principles
after enlargement would result in serious disproportion. The existing system favours the
small states. In some cases extreme disproportion could occur, e.g. the 80 million
population Germany has only five times more votes in the Council than the much less
Luxemburg ( 400 thousands population), which has 2 votes.

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I present the ratio of votes in the European Union in table 2.
Table 2: Distribution of number of votes held by each country based on ionnania
compromise.
Member state

Number of votes

Member state

Number of votes

Austria

3 Ireland

3

Belgium

5 Luxemburg

2

Denmark

3 Germany

United Kingdom
Finland
France

10 Italy
3 Portugal
10 Spain

Greece

5 Sweden

Holland

5 Total

10
10
5
8
4
87

The compromise contains following:
To pass a vote by Qualified Majority Voting it necessary to vote for supporting the
suggested decision submitted by the European Commission at least 62 votes.
• If the suggested decision is not originated from the European Commission then to pass
a vote also 62 votes ate necessary, but the votes must originated from at least 10
member states.
• Blocking minority is considered 25 votes against, but if against draft are 23 votes, the
Council cannot adopt decision.
As result of large enlargement problem occurred regarding number of Commission
members. Before enlargement the larger member states could delegate two – two, smaller
countries one-one commissioner into the commission.
There were similar to the Council and Commission problems occurred in the European
Parliament. In the EP similarly to the Council – although less distorted the smaller
member states are beneficiary – it means the opportunity of obtaining place of
representative is different. In a smaller country for obtaining mandate even half of
number of votes is enough as compared with a larger country.
It may cause problem the number of representatives of EP may further increase.
Operationability of a body consisting of 800-900 persons may become much harder.

I would like to present more detail the institutional reform of European Union.

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3.8. The institutional reform
One of main aim of the Intergovernmental Conference is held in Turin, Italy on 29 March
1996 was to revise the Maastricht Treaty to solve institutional problems related to
enlargement of EU, which was closed down by adopting the Treaty of Amsterdam in June
1997 after 15 months debate. The Treaty of Amsterdam signed on 2nd October 1997 did
not resolved expectations related to institutional reform. The member states could not
agree in most important issues. It became obvious that changing the system of decision
making would result in such changes in the character of Union, which was not acceptable
for several member states; therefore the more serious reforms were postponed. The Treaty
of Amsterdam resulted in considerable reform among institutional reforms only in
European Parliament. Widening the role of parliamentary codification (widening the
mutual decision right) was an important progress in decreasing the democratic deficit.

As a success of the Treaty of Amsterdam can be considered decision adopted about
number of members of parliament, that after further enlargement of EU number of
members of parliament cannot exceed 700 members. The Treaty of Amsterdam did not
determined how will be realised the 700 upper limit of parliament, how will be decreased
the number of representatives of existing old member states, and how will be determined
the number of representatives of new member states. There was disappointing result of
Treaty of Amsterdam regarding most important and necessary reforms of Council and
Commission. The Qualified Majority Voting was introduced in the Council in 16 new
cases, but only in case of 5 existing issues changed from requirement unanimity to
Qualified Majority Voting to pass decisions. In most areas of decision making in the
Council remained subject to unanimity. Regarding Commission the member states could
agree only that the number of members of Commission remains 20 until the number of
member states does not exceeds 20. According to this agreement the larger member states
will abandon their second commissioner places.
From the
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Treaty of Amsterdam the conclusion was that in principle the enlargement of
EU can be realised with existing institutional system up to 20 member states.

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More serious reorganisation, i.e. calling newer Intergovernmental Conference will be
necessary if more than five new member state would join to EU. At the same time it is
necessary to consider, that the aim of Intergovernmental Conference was realisation of
necessary reforms for enlargement of EU and maintain the effectiveness of operation of
institutions of EU, which was postponed. Therefore three member states, Belgium, France
and Italy attached a declaration to the Treaty, in which they expressed their
disappointment and that precondition for any enlargement of EU is realisation of
postponed institutional reforms. The importance of this declaration was strengthened by
the statement of European Parliament, in which approval of enlargement was linked with
request for realisation of institutional reforms. After the Treaty of Amsterdam it was
uncleared that for realisation of postponed reforms a newer Intergovernmental
Conference or only smaller meeting will be necessary.

Because these three above

mentioned countries definitively requested calling of newer Intergovernmental
Conference, more and more country representatives accepted that before first circle of
enlargement it is necessary to solve the most important institutional problems,
independently of number of states, to be accessed.
The decision was adopted on the annual G8 summit held in Köln, Germany. The heads of
state or government took decision about calling an IGC- Intergovernmental Conference
for beginning of 2000 for settlement of open issues of ( IGC- Intergovernmental
Conference, and decided to close the IGC until the end of 2000 year. Until this date it is
necessary to reach agreement about necessary amendments of Treaty. The heads of state
or government defined the agenda of Conference avoiding in such way the prolongation.
Following issues were determined for agenda of Intergovernmental Conference of 2000
year:


size and composition of Commission,



Weight of council votes,



possible widening of use of Qualified Majority Voting in the Council

In the closing document of summit held in Köln it was added that such issues, related to
other institutions, requiring amendment of Treaty, which occur from above mentioned
three problems or from realisation of Treaty of Amsterdam possible also will be
discussed.
The European Commission and the European Parliament and some member states, first of
all the Benelux States and Italy after summit of Köln suggested wider Intergovernmental
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Conference. The heads of state or government undertake in Helsinki that they will make
ready for accession until end of 2002 from institutional point of view, i.e. they will open
the EU for accession of new members earliest at beginning of January 2003. It means,
that they undertook that if they can close down Intergovernmental Conference in the
Summit held in Nice in December 2000, then signing the Treaty of Nice about
institutional reforms, it will be ratified until 2002.
The Intergovernmental Conference on institutional reform was opened on 14 February
2000 in Brussels, Belgium, aim of which was creating an operationable institutional
structure of European integration for the case of significant enlargement of number of
member states of EU. The task of conference was not basic reconstruction of EU
institutions, but development and adaptation of such modifications and mechanisms
which ensures fast and effective decision making in case of increasing the number of
member states from originally planned 6 to 30 members. The Intergovernmental
Conference of 2000 year was closed down after long debates in the Summit European
Council is held in Nice, France between 7-10 December by adopting Treaty of Nice.
Following the December 2000 European Council meeting held in Nice, France, a new
Treaty amending the Treaty on European Union and the Treaties establishing the
European Communities, was signed on 26th February 2001. The Treaty of Nice realised
essential institutional reforms for enlargement of EU. Signing of Treaty of Nice closed
the period of uncertainty, and made possible the further enlargement of EU.
Treaty of Nice was proven to be successful in liquidation of “Amsterdam residuals” and
solving problems prohibiting enlargement. Although the Treaty of Nice did not changed
basically the institutional and decision making system of EU, but it found the acceptable
f