REPORT FROM THE COMMISSION TO THE COUNCIL on European Union cooperation with the Central European Initiative (CEI)
Date: 1996-12-04
Institutions: European Commission
Subjects: CIS countries, Central and Eastern Europe, EU programme, European integration, regional cooperation

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  04.12.1996 
COM(96) 601  final 

REPORT  FROM THE COMMISSION  TO THE COUNCIL 

on European  Union cooperation  with the 
Central  European  Initiative  (CEI) 

Commission report to the Council 
on European Union cooperation with the 
Central European Initiative (CEI) 

Summary 

The  Commission  is  presenting  this  report  in  response  to  a  request  by  the  Florence 
European  Council.  The  Commission  seeks  to  promote  regional  cooperation  among 
partner countries, notably,  in the present context among those forming  part of the Central 
European  Initiative.  By  fostering  good-neighbourly  relations,  encouraging  political 
stability,  strengthening  human  rights  and  democracy,  inter  alia  in  the  social  field,  and 
boosting  economic  and  trade  cooperation,  the  Commission  wishes  not  only  to  forge 
closer  ties  between  the  European  Union  and  the  CEI  but  also  to  encourage  closer 
relations among those countries. 

Support  from  existing  Community  programmes  such  as  PHARE,  TACIS  and 
INTERREG  could  be  envisaged  to  complement  projects  presented  and  financed  in  the 
CEI  context.  There  are  a  number  of fields of  particular  interest,  including  activities  to 
strengthen democracy  and stability, boost economic development and free  trade, underpin 
the development  of  the trans-European  networks  and  the  protection  of  the  environment, 
their 
foster  closer 
representative professional  bodies, guarantee  individual  and collective rights in the social 
field,  enable  cooperation  to  take  place  on  justice  and  home  affairs  and  extend  cross-
border  cooperation,  especially  between  local  and  regional  institutions  in  the  various 
countries. 

links  between  economic  operators, 

in  particular  SMEs  and 

INTRODUCTION 

1. 
In  accordance  with  the  conclusions  of  the  Florence  European  Council,  the 
Commission  is  presenting  a  report  on  appropriate  initiatives  to  take  with  a  view  to 
stepping up cooperation  with the Central  European  Initiative  (CEI).  In keeping  with the 
spirit of the conclusions  of the Essen European Council,  the objective  of this exercise  is 
to  pinpoint  areas  of  common  interest  between  the  EU  and  the  CEI  to  put  forward  an 
initial  overall  analysis  of  the  possible  fields  of  cooperation  and  to  identify  the  means 
available to foster  practical forms of cooperation. 

The  Commission  considers  that  it  will  be  useful 

2. 
to  encourage  regional 
cooperation schemes in this part of Europe as it sees them as a way of bolstering  stability 
between the countries concerned.  Through its Baltic initiative drawn up for the summit of 
Heads of Government of the Council of Baltic Sea States held  in Visby  in May  1996, the 
Commission  has  already  proposed  measures  to  strengthen  cooperation  in  this  northern 
part  of  Europe.  The Commission believes that the Black  Sea constitutes,  in the  south of 
the  continent,  another  strategic  area  of  major  importance  for  the  EU  and  would  like  to 
see increased regional cooperation between the Black Sea states. 

3. 
The  advantages  from  the  creation  of  such  organizations  and  from  the  decisions 
taken  and  projects  adopted  under  these  regional  cooperation  instruments  should  be  the 
main  yardstick  for  gauging  the  usefulness  of  any  additional  action  by  the  EU.  The 
Commission's  intends  to  assess  these  groupings  in  terms  of  the  geographical  and 
economic  homogeneity  of  the  area concerned,  the political  support  for  such cooperation, 
both  within  the  region  and  within  the  EU,  and  existing  or  potential  achievements.  The 
active  involvement  of  the  countries  concerned  in  this  machinery,  inter  alia  through 
financing, is a key factor  in demonstrating  their commitment to it. 

The Central  European Initiative brings together  16  countries  (see  map).  Some  of 
4. 
them  belong  to  the  European  Union  (Austria  and  Italy),  some  have  signed  Europe 
Agreements  and  are  applicants  for  accession  (Bulgaria,  Czech  Republic,  Hungary, 
Poland,  Romania,  Slovakia  and  Slovenia)  while  others  either  have  contractual  ties  with 
the  European  Community  through  varying  arrangements  (Albania:  the  trade  and 
cooperation  agreement  of  1992,  the  Former  Yugoslav  Republic  of  Macedonia: 
cooperation  agreement 
in  June this  year,  Belarus,  Moldavia,  Ukraine: 
partnership  and cooperation  agreements)  or have  no  agreement  at all  with  the  European 
Community  (Bosnia  and  Herzegovina,  Croatia).  The  European  Community  thus  has 
multifarious  contractual  relations  with  the  CEI  countries.  The  Central  European 
countries  receive  assistance  under  the  PHARE  programme  while  countries  belonging  to 
the Commonwealth  of  Independent  States are eligible  for  TACIS assistance.  Some  of  the 
countries formerly  part of Yugoslavia receive special  funding. 

initialled 

The  Central  European  Initiative  is  a  broad-based  regional  cooperation  instrument 
covering  the  political,  cultural  and  economic  fields.  Its  activities  embrace  a  variety  of 
sectors  (see  annex).  In  the  consultation  structures,  political  and  institutional  aspects  are 
intertwined  with  issues  of  a more  economic  and operational  nature.  The  European Bank 
for  Reconstruction  and Development  (EBRD)  provides  a  secretariat  for  the  projects.  So 
in the space  of  a few  years the CEI has created a complex  regional  cooperation  structure 
and put  in place  arrangements  to  implement  practical  operations  on  the  basis  of  serious 
proposals  in  fields  such  as  agriculture,  fisheries,  forestry,  trade,  tourism,  social  and 
community  services,  construction,  energy,  extractive 
industry, 
telecommunications,  transport and storage. 

industries,  finance, 

The  European  Community  has  no  permanent  institutional  relations  with  the 
5. 
Central  European Initiative.  The Commission  is  invited to take part in meetings  that deal 
with  a  Community  area  of  competence.  A  number  of  regional  cooperation  projects 
supported  by  the  Community  budget  have  a  purpose  akin  to  those  drawn  up  by  CEI 
working groups. 

6. 
Each  year  the  Central  European  Initiative  holds  a  summit  of  heads  of 
government.  At  the  last  summit,  which  took  place  under  the  Austrian  presidency  at 
Graz  on  8-9  November  1996,  the  heads  of  government  authorised  the  troika  of  the 
Central  European  Initiative  to  establish  contacts  as  appropriate  with  the  Federal 
Republic  of  Yugoslavia  with  a  view  to  participating  in  the  Initiative,  as  one  of  the 
successor  States  of  the  Socialist  Federal  Republic  of  Yugoslavia.  The  Commission 

welcomes  this  decision  which  strengthens  stability  in the  region  and  corresponds  with 
the regional approach that the Union is developing based on specific  conditions. 

7. 

The Commission considers the CEI a useful  framework to: 

foster good-neighbourly relations, 

- 
-  encourage political stability, 
- 
-  boost economic and trade co-operation. 

strengthen human rights and democracy,  in the social field among others, 

GUIDING PRINCIPLES FOR ACTION 

8. 
The Central  European  Initiative encompasses  a large  number  of countries  spread 
over  a  sizeable  area  of  the  European  continent  with  around  200 million  inhabitants.  As 
the  CEI  cannot  involve  the  whole  population  in each  project  it  is  not  necessary  for  all 
member  countries  to  be  involved  in  each  type  of  activity.  These  sub-regional  measures 
should,  however,  be  approved  by  the  CEI  through  its  customary  decision-making 
machinery.  The  Commission  favours  cross-border  co-operation  schemes  and  wants 
special attention to be paid to projects submitted by operators on the ground. 

9. 
In  the  geographical  area  covered  by  the  Central  European  Initiative,  the 
Community  budget  is  already  supporting  regional  projects  through  the  structural  funds, 
multidisciplinary  and  multi-country  funds  under  the  PHARE  and  TACIS  programmes. 
Co-operation  between  the  European  Community  and  the  CEI  can  therefore  be  built  up 
using  existing  means and  instruments.  The development  of this co-operation  should  not 
affect  Community  actions  and  initiatives  which  are  already  underway  in  the  area  and 
should avoid the duplication of  effort. 

10.  With  a view  to ensuring  that the projects  put  forward  are  of the highest calibre, 
any  Community  funding  should  supplement  the  project  promoters'  own  resources.  The 
CEI's  operational  secretariat  (provided  by  the  EBRD)  can  play  an  important  role  in 
putting together the financial  arrangements and ensuring the sustainability of the projects. 

FIELDS OF ACTIVITY 

Certain  fields  seem  to  be  especially  interesting,  in  particular  those  concerning 

11. 
activities designed to: 

bolster democracy and stability in the region, 
foster economic development and free trade, 
underpin the development of the trans-European networks, 
promote  links  between  economic  operators,  in  particular  SMEs  and  their 
representative professional bodies, 
guarantee  individual  and  collective  rights  in  the  social  field  and  the  rights  of 
consumers, 

ease cooperation in the field of justice and home  affairs, 
extend  cross-border  cooperation, 
institutions in the different  countries. 

in  particular  between  local  and  regional 

12. 
Support  for  democracy  and  stability  in  the  region  and  the  protection  of  human 
rights  are  essential  facets  of  Community  action  and  the  EU's  objective  should  be  to 
strengthen  them  in  this  region.  Protection  of  minorities,  their  economic  and  social 
integration,  the development of civil society through support for  NGOs and their regional 
and  sub-regional  groupings,  the  establishment  of  direct  contact  between  public  and 
private  institutions  and  dialogue between different  levels  of the administration  in several 
countries are examples of the kind of policy guidelines the Union could promote. 

The Commission believes that more trade between the countries of the region will 
13. 
foster  economic  integration  and  benefit  each  individual  country,  the  region  as  a  whole 
and  the  European  Union  itself.  Trade  between  Central  European  countries  in  transition 
fell  at an annual average rate of over 20% between  1990 and  1993. This trend now seems 
to  have  been  reversed,  also  with  the  countries  of  the  Commonwealth  of  Independent 
States,  and  there  are  signs  of  a  resumption  of  trade  relations  between  countries  of  the 
region. Trade has been expanding at over 30% per annum since  1994 in the case of some 
CEI  countries.  The  positive  effects  of  the  economic  transition  under  way  in  those 
countries  are  starting  to  make  themselves  felt  with  renewed  growth  in  several  CEI 
member countries and the resultant upsurge in foreign trade. 

The  trans-European  networks  are  developing  in  Central  Europe.  They  require 
14. 
close  cooperation  between  different  partners  and  are  a  key  factor  in  strengthening 
regional  cooperation  and  fostering  the  development  of  the  related  infrastructure.  Given 
the scale of funding  needed to implement projects  forming  part of the networks,  an input 
from  the  international  financial  institutions  (IFI) and the private  sector  is necessary.  The 
Central European Initiative is an important consultation instrument for promoting  projects 
that  make  up  those  networks  with  the  support  of  other  partners,  first  and  foremost  the 
IFIs.  Protection of the environment  is a priority both for  the EU and CEI.  The regional 
dimension  of  these  activities  is  important,  as  it  promotes  cross-border  cooperation  on 
schemes of common interest. 

If growth  is to be sustained  in the long term it needs to be nurtured  by  concerted 
15. 
action  on  the  part  of  the  authorities  -  via  their  economic  policy  -  and  by  the  private 
sector.  A  dynamic  economy  requires,  in  particular,  a  sound  and  active  small-business 
sector.  If  SMEs  are  to create jobs  and  add  value  they  need  a  stable  economic  and  legal 
environment  plus  the  support  of  the  administration  and  their  own  representative 
professional  bodies.  The Commission  favours  the enactment  of economic  legislation  that 
is consistent from one CEI country  to the next,  thus making  it easy  for  businesses  to set 
up  and  expand  and  cooperate  with  each  other,  affording  SMEs  access  to  a  banking 
system  geared  to  their  needs,  encouraging  the  dissemination  of  economic,  legal  and 
commercial  information  and developing  commercial  links, cross-border  partnerships  and 
SME representation.  . 

16. 
The CEI countries are at different  stages of economic and social development. By 
availing  themselves  of  cooperation  schemes  designed  to  strengthen  the  role  of  law  and 
social protection they could exchange experience thereby promoting  democratization  and 
cohesion in their different  societies. 

Justice  and  home  affairs  is  an  area  in  which  States  tend  to  be  reluctant  to 
17. 
cooperate  among  each other  as they  concern  areas  of  national jurisdiction.  The  relevant 
experience  acquired  by  the  European  Union  could,  however,  be  useful  for  the  Central 
European  Initiative  countries  and  promote  the  emergence  of  regional  cooperation.  The 
Commission believes that the exchange of information  and experience on border control, 
drugs  trafficking  and  organized  crime  is  effective  and  will  keep  a  watchful  eye  on 
developments  in  this  field  which  will  be  taken  into  account  in  framing  cooperation 
programmes for these countries and in the context of the structured dialogue. 

18. 
Regional cooperation  should not be the sole preserve  of the central  authorities of 
the  participating  countries  but  should  involve  all  decision-making  levels  within  each 
State.  The  benefits  of  such  cooperation  will  be  enhanced  if  regional  and  local 
administrations  are  closely  involved  in drawing  up  projects.  Special  attention  should  be 
paid  to  cross-border  cooperation  with  a  view  to  fostering  closer  relations  between 
communities  separated by frontiers and contacts between individuals  in the  same region. 
By easing  trade  and  contacts,  by  making  frontiers  easier  to cross,  by  making  rules  and 
procedures  more  transparent  and  by  helping  to  extend  cross-border  infrastructure,  the 
Central  European  Initiative  will  promote  sub-regional  cooperation  involving  different 
players  in  the  areas  concerned.  The  Commission  believes  that  Community  action  can 
only  be  effective  if  the  CEI  can  involve  the  largest  possible  number  of  players  in  its 
machinery and in its projects. 

INSTRUMENTS 

Community  financing  comes chiefly  from  the  PHARE  and  TACIS programmes, 
19. 
in particular the horizontal, cross-border  and multi-country programmes.  Over and above 
the  funds  earmarked  for  each  country  under  PHARE,  TACIS  and  "Cooperation  with 
former  Yugoslavia",  the  countries  eligible  for  these  programmes  can  thus  benefit  from 
significant  resources  which  can be  complemented  by  funding  from  sectoral  Community 
programmes such as SYNERGY. 

As two EU Member States are members of the Central European Initiative, the structural 
funds,  notably  the  INTERREG  programme,  cofinance  cross-frontier  programmes  with 
PHARE.  They  could  participate  in  transnational  cooperation  programmes,  for  instance 
under  the  new  INTERREG  IIC  initiative  on regional  planning.  These  operations  would 
be  instrumental  in  supporting  cooperation  schemes  between  CEI  regions  as  part  of  an 
overall  plan  that  the  CEI  could  draw  up.  The  new  PHARE  programme,  CREDO,  will 
finance  cross-border  projects  put  forward  by  Central  European  countries  in  regions 
bordering  on  another  Central  European  country  or  a member  of  the  Commonwealth  of 
Independent States. The European Community thus has instruments capable of  supporting 
the various projects drawn up by the CEI. 

CONCLUSIONS 

20. 
The Commission  seeks to promote regional  co-operation  as a means to strengthen 
security  and  stability  and  to  promote  economic  growth  and  development.  Good 
neighbourly  relations form  an essential part of the wider process of European  integration. 
The Commission  is ready  to support projects  developed  in the framework  of  the Central 
European  Initiative  through  complementary  action  under  the  EU's  own  financial 
instruments,  notably  PHARE,  TACIS  and  INTERREG.  The  development  of  such  co 
operation  will  provide  an  opportunity  for  economic  operators  in  all  member  states,  if 
they  so  wish,  to  participate  fully  in  the  co-operation  projects  undertaken  through 
Community  programmes and instruments  in the framework  of the envisaged  action.  It is 
up to the countries participating  in the CEI to take the lead by developing concrete  forms 
of  co-operation,  which  could  benefit  from  complementary  support  by  the  European 
Union.  By  acting together,  the CEI  and the EU can avoid  the duplication  of  effort  and 
achieve real added  value,  which should contribute  to the overall  transition process  in the 
region. 

Annex 

The Central European Initiative in a nutshell 

Constituent  instrument 

Prime  Minister's 
18 July  1992 

decision,  Vienna, 

17 

and 

Main bodies 

Participating  states 

Additional  remarks 

levels 

national 

Committees  at  the  level  of  Prime  Ministers  (summits) 
or  ministers  (in  particular  foreign  ministers)  and  at 
technical 
project 
(including 
coordinators);  a permanent  secretariat  for  the  projects 
is  provided  by  the  EBRD.  Working  groups  meet 
regularly  in  a  number  of  fields  (agriculture,  culture, 
civil  defence,  energy,  the  environment,  information 
and 
small 
the  media,  migration,  minorities, 
businesses,  rehabilitation  of  Bosnia  and  Herzegovina, 
science 
statistics, 
telecommunications,  tourism  and  transport).  Some 
working  groups  may  be  divided 
into  sub-groups 
(project or sectoral groups). 

technology, 

and 

Albania,  Former  Yugoslav  Republic  of  Macedonia, 
Belarus,  Bosnia  and  Herzegovina,  Bulgaria,  Croatia, 
Hungary,  Moldova  (admitted 
in  November  1996), 
Poland, 
the  Czech  Republic,  Romania,  Slovakia, 
Slovenia,  Ukraine;  from  the  EU:  Austria  and  Italy, 
with  the  German  State  of  Bavaria  taking  part  in  the 
working groups'  activities as an observer. 

the  setting  up  of 

Italy  actively  supported 
the 
"Quadragonale"  in  November  1989  with  Hungary, 
Austria  and  Yugoslavia.  Extended  on 
several 
occasions,  and  in  the  wake  of  the  war  in  former 
Yugoslavia,  the  "Quadragonale"  gave  birth  to  the 
Central  European  Initiative  in  1992.  Austria  has  been 
in  the  chair  in  1996.  The  Commission  is  regularly 
invited to meetings. 

Following  recent  meetings,  the  system  of  working 
groups  should  be  gradually  altered  to take the  form  of 
project-oriented 
sessions.  The  Central  European 
Initiative  should  assign  its  label  to  concrete  projects 
embracing  at least  three participating  countries.  These 
reforms  should  help  maintain  only  those  minimum 
structures  necessary  to  achieve  the  objextives  and 
ensure continued flexibility in the working  methods of 
this regional cooperation  forum. 

ISSN 0254-1475 

COM(96) 601  final 

DOCUMENTS 

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Catalogue number  :  CB-CO-96-595-EN-C 

ISBN 92-78-11693-9 

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