JOINT STAFF WORKING DOCUMENT Accompanying the document JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS EU support for sustainable change in transition societies
Date: 2012-10-03
Institutions: European Commission, High Representative of the Union
Subjects: EU relations, Welfare State, democratisation, developing countries, development aid, foreign aid, peacekeeping, transition economy

EUROPEAN 
COMMISSION 

HIGH REPRESENTATIVE OF THE
EUROPEAN UNION FOR
FOREIGN AFFAIRS AND
SECURITY POLICY

Brussels, 3.10.2012  
SWD(2012) 282 final 

JOINT STAFF WORKING DOCUMENT 
Accompanying the document 

JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, 
THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF THE REGIONS 

EU support for sustainable change in transition societies 

{JOIN(2012) 27 final} 

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Contents 

1.  KEY CHALLENGES TO BE ADDRESSED IN TRANSITION SOCIETIES ................ 4 

1.1. 

1.2. 

1.3. 

1.4. 

Building national consensus on a new "social contract".............................................. 5 

Designing democratic institutions and processes......................................................... 5 

Security, justice and the rule of law ............................................................................. 6 

Socio-economic transformation challenges ................................................................. 7 

2.  EXAMPLES OF RELEVANT EU INSTRUMENTS AND TOOLS................................ 8 

2.1. 

Actions under geographic programmes ....................................................................... 8 

2.1.1.  Comprehensive democracy support ............................................................................. 8 

2.1.2.  EU support for economic and social transformation accompanying democratic 

transition..................................................................................................................... 10 

2.1.3.  Supporting civil society ............................................................................................. 11 

2.1.4.  Application of incentives and conditionalities........................................................... 13 

2.1.1.  Actions through innovative financial instruments and partnerships. ......................... 16 

2.2. 

Actions through various thematic instruments........................................................... 17 

2.2.1.  European Instrument for Democracy and Human Rights .......................................... 17 

2.2.2.  Humanitarian Aid....................................................................................................... 18 

2.2.3. 

Instrument for Stability .............................................................................................. 18 

2.2.4.  The thematic programme Non State Actors and Local authorities ............................ 19 

3.  RELEVANT TRANSITION EXPERIENCE OF EU MEMBER STATES.................... 19 

3.1. 

The Political Dimension of Transition....................................................................... 20 

3.1.1.  Set up of a new constitutional framework.................................................................. 20 

3.1.2.  Set up of political pluralism ....................................................................................... 20 

3.1.3.  Decentralization of power towards regional and local governments ......................... 21 

3.1.4.  Set up of a Rule of Law framework: Reform of Legal Systems and the Judiciary.... 22 

3.1.5.  Public Administration Reform ................................................................................... 23 

3.1.6.  E-governance ............................................................................................................. 24 

3.1.7.  Human Rights ............................................................................................................ 25 

3.1.8.  Gender Equality and Women's Rights ....................................................................... 26 

3.2. 

The Economic Dimension of Transition.................................................................... 27 

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3.2.1.  Private Sector Development....................................................................................... 27 

3.2.2.  Reform of Public Finances......................................................................................... 29 

3.3. 

The Social Level ........................................................................................................ 29 

3.3.1.  The development of Civil Society Organisations ...................................................... 29 

3.3.2.  Education ................................................................................................................... 30 

3.3.3.  Health ......................................................................................................................... 31 

3.3.4.  Employment ............................................................................................................... 32 

3.3.5.  Social Dialogue .......................................................................................................... 33 

3.3.6.  Reforms of Pension Systems...................................................................................... 33 

Sharing 'transition management expertise' with partner countries.................................. 33 

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This Staff Working Paper intends to provide more details on the relevant policies, instruments 
and  examples  referred  to  in  the  Communication  on  EU  Support  for  Sustainable  Change  in 
Transition Societies. It also gives a more in depth view of key challenges to be addressed in a 
context of democratic transition and collects illustrative relevant examples from the European 
Transition Compendium setting forth the transition experience of EU Member States.  

1. 

KEY CHALLENGES TO BE ADDRESSED IN TRANSITION SOCIETIES 

Shifting  away  from  authoritarian,  clientelist  and  corrupted  regimes  and  moving  towards 
democratic  and  more  equitable  systems  is  a  difficult  and  uncertain  process.  Social,  political 
and economic changes have to occur if the country is to engage irreversibly towards a more 
democratic and equitable society. A lot of challenges are at stake which all have to be tackled, 
even if at different stages, for a long lasting change in the lives of the people. 

The relative importance of the challenges faced by emerging democracies may vary according 
to the specific context that has led to the change in the political power. These include typically 
restoring  security,  building  national  consensus  on  future  values  to  which  the  country  will 
adhere,  setting  up  national  institutions  and  processes  guaranteeing  that  these  fundamental 
values  will  be  respected  and  creating  the  socio-economic  conditions  allowing  social  justice 
among  citizens.  It  can  indeed  be  assumed  that  where  the  root  causes  for  people's  calls  for 
societal  changes  concern  not  only  to  the  political  situation  but  also  the  socio-economic 
situation (lack of decent employment and economic opportunities, inequalities), the prospects 
for successful political reforms are unlikely to be good without improvements in the latter.  

These challenges are most of the time intertwined. There is no magic recipe to explain which 
one should be dealt with first or given greater importance at a certain time of the transition 
process.  The  sequencing  of  the  reforms  is  highly  context-dependent,  but  given  the  high 
expectation of the people after years of authoritarian rule, a balance has to be sought between 
quick-win reforms helping to keep the momentum and the adhesion of the people to the whole 
process and longer terms more difficult reforms. 

The European Union has longstanding experience in successfully assisting countries in their 
transition  process.  The  EU's  enlargement  policy  has  proven  to  be  a  powerful  tool  to  foster 
societal transformation. Countries that have already acceded to the EU and those on the road 

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to  join  have  undergone  impressive  changes  through  accession-driven  democratic  and 
economic reforms. Commitment, conditionality and credibility have been situated at the core 
of the accession process and its success. 

1.1. 

Building national consensus on a new "social contract" 

Transition  to  democracy  can  be  the  result  of  different  processes,  such  as  internal  mass 
revolution  (the  Arab  Spring  cases),  civil  war  (Ivory  Coast),  negotiations  processes  (South 
Africa, Indonesia). Ensuring or restoring security is essential in order for the society to be able 
to  define  its  new  governing  values  in  a  relatively  calm  situation  or  to  avoid  a  civil  war, 
unilateral  secession  etc.  The  role  of  the  police  and  of  the  army  in  these  first  phases  of 
transition is central. 

In  some  cases  there  might  be  an  urgent  need  to  strongly  focus  on  reconciliation  among 
different parts of the country or between different groups of the society in order to maintain 
national unity and build a strong national consensus on the future of the country. For instance 
in  South  Africa,  "Truth  and  Reconciliation  committees"  applying  the  principle  of  justice 
rather than revenge played an important role in the democratic transition process at the end of 
the apartheid regime. 

Engaging all parts of the society in the definition of the values that will form the base of the 
future  state  is  another  major  challenge  ahead  of  the  transitional  bodies.  This  requires  broad 
participation of all parts of the society, including political parties, civil society organisations, 
youth  and  women  movements,  trade  unions,  people  from  remote  areas,  ethnic  and  religious 
minorities etc. The more voices participate in the debate the more likely it is to receive broad 
support for reforms. Experiences from Chile, Brazil, Argentina seem to indicate that engaging 
even  the  more  reluctant  part  of  the  society  to  democratisation  (in  these  cases  the  army,  the 
police and the business community) is beneficial to the whole process. 

All  in  all,  the  transition  process  should  be  nationally  driven  and  should  be  as  inclusive  as 
possible  in  order  to  define  a  new  "social  contract"  between  the  state  and  all  parts  of  the 
society.  This  represents  a  major  challenge  as,  following  a  long  period  of  authoritarian  rule, 
political  parties  and  civil  society  organisations  may  not  be  well  organised,  citizens  may  not 
have  a  participatory  culture  and  forces  opposed  to  the  changes  might  try  to  block  the 
transformation process. 

1.2. 

Designing democratic institutions and processes  

If building a national consensus on the main values at the base of the future society is a core 
challenge of transition processes, translating these broadly agreed values into facts is another 
one. The national  "social contract" has to  materialise into  the  constitutional process and the 

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establishment  of  the  rule  of  law,  the  electoral  process,  but  also  into  the  setting  up  of 
democratic institutions, a revitalised civil society, all these elements leading in medium term 
to the development of a true democratic political culture. 

Regarding the writing of the new constitution, a key challenge is the dismantlement (partial or 
full)  of  the  previous  state  structures  and  institutions,  of  former  ruling  parties  and  vested 
economic interests. Further, it is crucial to ensure that the process is consensual and inclusive: 
from establishing a new social contract and agreeing on the broad aims, to setting up of the 
constituent assembly, to holding a nationwide and public consultation process, to subjecting 
the draft constitution to some form of democratic endorsement, for instance through a popular 
referendum. 

Linked to this, the first democratic elections represent a litmus test for the new constitutional 
order and the legitimacy of the new democratic regime. In addition to the universal problems 
of  the  influence  of  money  and  the  factionalism  of  special  interest  groups,  countries  in 
transition  often  face  low  levels  of  literacy  or  understanding  of  elections  and  insufficient 
expertise  and  funding.  A  pervasive  lack  of  trust  in  transition  can  poison  the  atmosphere  for 
credible  and  'free  and  fair'  elections,  and  result  in  low  levels  of  candidate  or  voter 
participation.  Strong  demands  of  democratic  reform  from  a  population  need  to  be  promptly 
addressed but in parallel sufficient time is needed for preparing an election allowing it to be 
sufficiently  credible  for  the  population.  Promoting  inclusiveness,  civic  participation  and 
transparency  of  the  process  is  crucial  for  its  success  and  cannot  be  improvised  and  rushed 
through.  

to  ensure  compliance  with 

The  creation  of  democratic  institutions  (or  the  reform  of  existing  ones)  is  of  paramount 
importance 
the  established  democratic  rules  and  for 
implementation. Therefore, strengthening democratic state institutions and consolidating their 
respective roles whilst ensuring their democratic legitimacy represents an additional challenge 
and  needs  to  be  addressed  at  the  very  beginning  of  a  transition.  Democratic  checks  and 
balances  allow  the  parliament  to  exercise  real  oversight  on  the  executive.  Another  equally 
important challenge  is  to ensure transparent and accountable government  through a service-
oriented  public  administration  (including  through  judiciary  reform  and  security  sector  and 
police  reform),  the  availability  of  key  economic  and  social  statistics,  capacitated  local 
authorities,  efficient  and  independent  and  effective  electoral  bodies,  court  of  auditors, 
constitutional or other courts. 

1.3. 

Security, justice and the rule of law 

Support  for  security,  justice  and  the  rule  of  law  is  of  fundamental  importance  to  establish 
stability, law and order and reinstating state authority. It is also one of the principle avenues 
for promoting democratic governance, citizen security gender equality and respect for human 
rights, and thereby socio-economic development. 

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Major challenges in the transition process are: 

–  Not  only  making  the  third  branch  of  state  independent,  but  changing  it  from  an  openly 

acknowledged arm of the government (and more particularly the ruling party); 

–  Not  only  reforming  written  laws,  but  making  them  implementable  and  respected,  so  that 

they do not merely exist on paper (addressing implementation gaps); 

–  Not  only  strengthening  juridical  institutions,  but  creating  a  culture  of  institutionalism, 
whereby independent but inter-related institutions function collectively as a justice sector; 

–  Not  only  raising  the  skills  of  judges,  lawyers,  and  prosecutors,  but  making  them  into 
dedicated professionals who understand, respect, and carry out their roles in a justice sector 
which utilises its  processes to promote respect for human rights; 

–  Not only improving the delivery of justice and justice services to the population, but also 

ensuring access to justice for ordinary citizens and disadvantaged social groups. 

The process  is  complicated,  politicised, context-specific,  and  not fully suited to reaping full 
benefits from technical assistance provided by outside parties. Legal and institutional reforms 
require  time  and  must  overcome  resistance  to  change.  Weak  States,  fragile  countries,  post-
conflict  situations,  impunity,  insufficient  financial  and  human  resources,  and  limited 
information resources pose inter-connected challenges. 

1.4. 

Socio-economic transformation challenges 

Over the longer run, the legitimacy of democracy needs to be rooted in its capacity to produce 
an  outcome  responding  to  the  needs  of  the  citizens  and  to  enhance  their  welfare.  One 
important  risk  facing  nascent  democracies  is  that  democratisation  is  limited  to  a  rotation  of 
the elite in power without enhancing the effectiveness of public decisions. When institutions 
fail to enhance growth, employment and welfare prospects the democratisation process is put 
at risk and its legitimacy eroded. 

There is no one-to-one relation between democratisation and economic success. Furthermore, 
economic policy challenges differ widely between countries in democratic transition. In some 
cases, the authorities may have to conduct substantial reforms to enhance the efficiency and 
sustainability  of  the  economic  system.  This  may  result  in  some  people  loosing  and  other 
winning and impose substantial transition costs on citizens and the production system. Both 
phenomena  generate  stress  on  the  political,  economic  and  financial  system.  In  other  cases, 
authorities  may  have  to  reorient  some  public  policies  or  launch  some  new  one  to  meet  the 
expectations of the newly empowered citizens.  

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There are two key features that need to be addressed by any country in transition: stabilisation 
of expectations and adapting institutions to new challenges. 

Stabilising  expectations  is  needed  for  building  up  trust  and  improving  incentives  to 
investments,  entrepreneurship  and  SME  development.  Such  a  stabilisation  depends  in  the 
building  up  of  a  consensus  on  the  fundamental  orientation  of  the  economic  policy  and  the 
social contract of the country. Furthermore, property right issues that may legitimately arise 
after a regime change should be sorted out in a way perceived as fair and transparent by the 
vast  majority  part  of  the  population.  Institutions  protecting  equal  opportunities  and  private 
initiatives  are  equally  necessary  as  well  as  stability  oriented  macro  economic  policy  and 
credible macroeconomic institutions. 

institutions.  Exogenous  shocks,  economic 

The  second  feature  is  to  ensure  that  political  decision  mechanisms  and  administrative 
capacities  exist  to  legitimately  and  effectively  decide  on  institutional  changes  and  new 
policies. This supposes that demand for public goods, for equity and social inclusion by the 
citizens  and  the  economic  sector  can  be  effectively  expressed  and  taken  on  board  trough 
political 
technological 
innovation  change  the  nature  of  economic  institutions  and  of  policies  that  are  required  and 
demanded:  no  economic  policy  and  only  few  economic  institutions  are  adequate  for  ever. 
Political institutions that are responsive to bottom-up signals and able to create compromises 
are therefore needed. Such institutions can be best sustained in democracies. The same is true 
for the democratically legitimate capacity to mobilise the resources needed for implementing 
policies, in particular domestic revenues (taxation and natural resources). 

transformation  and 

Conciliating these seemingly contradictory objectives, the stabilisation of expectations and the 
imperative of change, is challenging. The fact that more than ever, economic transformation 
does not occur in isolation and is shaped by globalisation provides an opportunity and a risk. 
The opportunity is that aligning economic reforms on requirements provided by multilateral 
rules or a regional integration project defines and makes visible the broad direction taken. The 
risk  is  that  changes  required  by  international  commitments  or  objectives  of  regional 
integration are not possible or are too slow because they cannot build up on a broad political 
consensus or are opposed by vested particular interests.  

Moreover, it is important to address citizens' aspirations for more equity, social inclusion and 
social protection in three dimensions: political - the social contract between the state and its 
citizens legitimizes political authority;  economic – social protection can contribute to growth 
and  jobs  by  facilitating  entrepreneurship  and  productive  investment  in  a  risky  market 
environment; and social – it reduces inequalities and improves economic opportunities. 

This is where the European Union can play a key role. It can reinforce the attractiveness of 
the  international  or  regional  anchorage  of  the  economic  and  social  transformation  of  its 

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partners  taking  account  of  their  proximity,  their  development  needs  and  aspirations.  And  it 
can support this transformation through various cooperation instruments, making it politically 
and socially sustainable. 

2. 

EXAMPLES OF RELEVANT EU INSTRUMENTS AND TOOLS 

The  EU  has  at  its  disposal  a  great  variety  of  tools  that  can  be  used  alternatively  or  in 
combination  in  order  to  support  transition  processes.  While  this  is  not  necessarily  an 
exhaustive  list  of  all  such  tools,    the  examples  provided  below  represent  good  samples  of 
different  modalities  that  can  be  used  in  various  cases:  projects,  programme  approaches, 
budget support, conditionalities, incentives, innovative financing mechanisms etc. 

2.1. 

Actions under geographic programmes 

2.1.1.  Comprehensive democracy support 

In the past, the EU addressed some of these multiple challenges by a comprehensive approach 
to  democracy  support  based  on  a  broad  and  long-term  support  package,  which  aims  at 
assisting  home-grown  democratic  transition  processes  by  strengthening  the  capacity  of 
governments,  parliaments  and  other  state  institutions,  political  actors,  civil  society 
organisations  and  other  actors  and  by  accompanying  constitutional  and  electoral  processes. 
The  2009  EU  Council  Conclusions  on  Democracy  Support1  in  the  EU's  External  Relations 
and  its  Agenda  for  Action  provide  the  framework  for  such  a  comprehensive  approach.  The 
aim is to remain tailored to the needs of each country or society in transition and to encourage 
local  ownership  of  the  democratic  process.  It  is  also  based  on  a  strengthened  coordination 
with  EU  MS  and  on  increased  coherence  and  mainstreaming  of  democracy  support  in  the 
delivery of EU external assistance policies. 

The  comprehensive  EU  democracy  support  is  based  on  a  number  of  key  principles:  it  is 
process-driven,  it  takes  a  long-term  approach,  it  supports  the  demand-side  of  democracy,  it 
involves all actors in the institutional reform process and the EU keeps to playing the role of 
facilitator  of  home-grown  process.  In  doing  so,  the  EU  contributes  to  sustainable 
development,  respect  for  human  rights,  democratic  governance,  security,  poverty  reduction 
and  gender  equality.  The  challenges  that  the  EU's  support  to  democracy  and  human  rights 
faces in societies in transition are centred in the following four main areas: 

1. the establishment of constitutional and electoral processes;  

2. the strengthening of democratic institutions;  

1 EU Council Conclusions on Democracy Support in the EU's External Relations, Brussels, 17 November 2009. 

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3. the strengthening of political and civil society; 

4. the gradual development of a democratic political culture. 

Example of support to the Parliament and to democratic constitution:  

Kyrgyzstan: The European Union has supported parliament through three projects beginning in 
2007 and continuing through to 2012. All three projects worth € 2 million, have been delivered 
by  the  United  Nations  Development  Programme  (UNDP)  and  focused  on  (i)  strengthening 
parliament’s  legislative  capacities,  on  public  understanding  of  parliament’s  work,  and  in 
enhancing parliament’s use of ICT; (ii) helping parliament meet its responsibilities outlined in 
the revised 2007 Constitution, and covering legislation, oversight, and representation functions; 
and  (iii)  supporting  the  institutionalization  of  the  legal  framework  underpinning  the  country’s 
new democratic Constitution. 

EU  support  to  the  Kyrgyz  parliament  has  resulted  in  positive  outcomes  in  terms  of  enhanced 
capacity  of parliamentarians and  parliamentary  administration which  in  turn has  improved  the 
effectiveness and stature of the institution. It has supported critically important revisions to the 
Constitution and is now helping to institutionalize the new democratic order. While Kyrgyzstan 
continues  to  face  many  challenges  in  its  democratic  transition,  EU  support  has  helped  to 
strengthen parliament as a central democratic institution, enabling the country to preserve and 
extend democratic freedoms which stand out in a regional neighbourhood often characterized by 
authoritarian governance. 

The  EU  support  for  democratic  processes  for  instance  in  Tunisia  and  Bolivia  illustrate  the 
comprehensive approach to democracy support that relies on an effective complementary use 
of  all  existing  EU  instruments  and  programmes,  as  well  as  on  political  dialogue  and 
strengthened coordination with EU Member States. 

Tunisia:  the  EU  is  supporting  the  transition  with  a  broad  democracy  package,  including  support  to 
constitutional  and  electoral  reform,  the  promotion  of  freedom  of  expression  and  democratic  values, 
civic education, civil society, political parties, media, the electoral process and . Electoral experts were 
funded through EIDHR and the Instrument for Stability.  EIDHR was also used to train local election 
observers  and  to  strengthen  the  capacity  of  political  parties  in  a  non-partisan  manner.  EU  budget 
support is part of this broad package to assist Tunisia in its democratic transition process in line with the 
Council Conclusions on the Future Approach to EU budget support to third countries, ,thus providing 
financial assistance to overcome immediate economic challenges (including social safety nets), jointly 
with other major donors while the country goes through the political transition.       

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Bolivia: the EU action has included, among others, support to institutional development and capacity 
building  of  organizations  and  social  movements,  inclusion  of  marginalized  groups  (e.g.  indigenous 
peoples and women), and the decentralization process, as well as support to civil society organisations 
and democracy projects based on the Instrument for Stability and the EIDHR.  

The EU and Member States are working towards greater coherence based on the Agenda for Action of 
EU  democracy  support,  a  framework  on  which  to  build  a  common  understanding,  approach  and 
programming  with  regard  to  the  complex  challenges  of  Bolivian  democracy.  The  value-added  of  this 
process  lies  on  the  potential  to  achieve  greater  impact  by  increasing  coherence  of  EU  and  Member 
States support to democracy through joint analysis (democracy profile, mapping, gaps), approach and 
division of labour.  

2.1.2.  EU  support  for  economic  and  social  transformation  accompanying  democratic 

transition 

Supporting  evolutions  in  the  field  of  governance  and  democracy  has  to  be  coupled  with 
support  to  the  economic  and  social  sectors,  in  order  to  increase  social  justice  within  the 
country.  This  support  can  take  the  form  of  projects/programmes  or  be  achieved  through 
budget support. One key element of decision regarding the modality best suited to convey EU 
aid, should be the length of the procedures, keeping in mind that economic and social quick 
wins for the population needs to materialise to anchor democratic evolution. 

Ivory Coast: Total EU aid to Ivory Coast for the period 2008 to 2013 now stands at over €600 million. 
Since the end of the political crisis a year ago, the EU has doubled its aid to Ivory Coast, allocating first 
an additional €180 million and then projected budgetary support of €115 million. This aid will take the 
form  of  a  ‘contract  for  rebuilding  the  state  apparatus’  and  will  aim  to  strengthen  essential  public 
services  for  the  population,  targeting  in  particular  the  police,  the  judicial  system  and  education.  The 
European  Union  is  supporting  Ivory  Coast’s  economic  recovery  and  the  process  of  national 
reconciliation.  Five  new  programmes  worth  a  total  of  €125  million  were  launched  in  2011,  aimed  at 
improving  the  transport  sector,  vocational  education,  economic  governance,  health  and  civil  society. 
Since 2011, the EU has also provided €80 million in humanitarian aid in response to the crisis in Ivory 
Coast.  

The  partnership  for  transition  programme  is  being  set  up.  Its  aim  is  to  provide  basic  services  to  the 
population.  Key sectors of intervention are food security, health and refugee and IDP resettlement. This 
partnership involves the government, humanitarian and development agencies signing up to an agreed 
strategy  to  allow  time  for  the  phasing  in  of  public  services  as  humanitarian  agencies  phase  out  in  an 
orderly  manner.    A  technical  secretariat  (ECHO  experts)  identifies  good  operations  and  partners  for 
funding and provide field monitoring controls 

In  addition,  the  European  Union  is  financing  the  reconstruction  of  infrastructure  destroyed  in  the 
conflict, and contributing to governance, the judicial system, rural development and social policies. In 
2012 water supply and sanitation programmes worth a total of €25 million are being put into effect, and 
the banana sector is receiving support totalling €44 million. 

Morocco:  The EU supports the implementation of the Agenda for the Equality between Women and 
Men  adopted  by  the  Moroccan  government  in  2011  through  a  EUR  35  million  sector  budget 
programme.  The  programme  is  part  of  broader  EU  support  to  the  consolidation  of  democratic 

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governance in the Mediterranean. One of its main objectives is the strengthening the capacities of the 
national  institutions  in  charge  of  implementing  the  Agenda  for  Equality.  Support  to  the  Ministry  of 
Finance and line ministries to institutionalise gender responsive budgeting tools is also foreseen. 

2.1.3. 

Supporting civil society 

Supporting the development of a vibrant local civil society should be given an important place 
in EU action in transition countries context. According to its extensive definition (NGO, trade 
unions,  academics,  private  sector  etc),  civil  society  is  indeed  an  actor  involved  both  in 
democracy, good governance and human rights and an economic and social actor which might 
play a catalysing  role in achieving a sustainable and inclusive growth. 

The  European  Commission  has  at  its  disposal  a  wide  range  of  instruments  to  support  civil 
society.   

Support can be provided through geographic national programmes (for instance in Cameroun 
the  PASOC  programme)  and/or  through  regional  programmes  (Civil  Society  Facilities  for 
enlargement or neighbourhood countries). 

Within  the  EU  response  to  the  Arab  Spring,  a  specific  Civil  Society  Facility  for  the 
neighbourhood  (both  Southern  and  Eastern)  was  created,  with  an  overall  budget  of  €26.4 
million for 2011. This facility aims to strengthen the capacity of civil society organizations in 
all  its  components  (NGOs,  universities,  think  tanks,  media)  to  promote  reform  and  increase 
public accountability in their countries. 

Specific  thematic  programmes  such  as  the  European  Initiative  for  Democracy  and  Human 
Rights  or  the  thematic  programme  Non  State  Actors  and  Local  Authorities  complement 
actions undertaken within the scope of geographic cooperation (See also point 2.2.1 and 2.2.3)  

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Empowerment and participation through Women’s Resource Centres in Afghanistan 

In response to the structure of the Afghan society which often segregates and prevents women 
from  being  direct  beneficiaries  of  development  projects,  the  EU-funded  action  supports 
women by organizing them into community-based Women’s Resource Centres (WRCs). The 
centres  provide  a  comprehensive  training  programme  aiming  at  empowering  women  and 
strengthening the civil society. 

 The  objective  is  to  include  women  in  the  democratisation  process,  both  in  the  exercise  of 
power and in creating public institutions responsive to women’s needs. 

EESC role 

Other  EU  institutions  may  also  contribute  to  the  strengthening  of  partner  countries  civil 
society. As part of its mandate in the external relation field, the EESC may play an important 
role as facilitator in the setting up or consolidation of structures for civil society participation 
in different partner countries and regions.  

Latin America: 

The CC-SICA is the consultative body for Central American civil society within the Central 
American  Integration  System  (SICA).  The  EESC  established  a  regular  working  relationship 
with it from the time of its creation and formalised those meetings through a memorandum of 
understanding in 2006. 

Since then, the EESC has worked to enhance the profile and recognition of the CC-SICA and 
to develop its capabilities, with very positive results. This was done by offering its expertise 
in  how  to  implement  consultation  mechanisms,  following  up  jointly  with  CC-SICA  the 
negotiations for an EU-Central America Association Agreement, and facilitating contacts with 
political authorities both in Central America and in the EU. One of the most significant results 
came  in  2010  when  the  Association  Agreement  between  the  EU  and  Central  America 
provided for the creation of a Joint Consultative Committee of the EESC and the CC-SICA, 
the  civil  society  consultative  bodies  of  the  two  signatories  to  the  Agreement,  as  part  of  the 
institutional set up of the Agreement. The Agreement should enter into force in late 2012 and 
should  allow  for  an  enhanced  internal  visibility  and  permanent  participation  of  Central 
American civil society in the monitoring of an international agreement, thus setting the path 
for other opportunities for involvement in the Central American region. 

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Euromed: 

Based  on  its  mandate  under  the  Barcelona  declaration  of  1995,  the  EESC  has  established 
close  ties  with  partner  Economic  and  Social  Councils  (ESCs)  from  the  southern 
Mediterranean,  integrating  them  in  a  network  of  national  ESCs  from  the  EU  and  the  south, 
and  holding  an  annual  summit  of  all  Euromed  ESCs.  In  partner  countries  with  no  ESC  the 
EESC has established contacts with individual civil society organisations such as employers, 
trade unions, socio-occupational associations and NGOs, and, taking a longer-term view, has 
been helping these organisations to set up ESCs as platforms for social and civil dialogue with 
the respective national authorities.  

Specifically  in  Jordan,  from  2005  onwards  the  EESC  cooperated  closely  with  the  ILO  to 
promote a "tripartite +" model of an ESC, in other words an ESC which is engaged not just in 
classical social dialogue (tripartite dialogue between the social partners and the government), 
but which also draws in the other sectors of civil society, such as NGOs, socio-occupational 
organisations  and  consumers  organisations.  Besides  providing  support  to  the  ESC  with 
expertise it also lobbied the Jordanian government to support the creation of the ESC in close 
cooperation  with  the  EU  delegation  in  Jordan.  The  ESC  was  finally  set  up  in  2009  and  got 
access to some EU funds through the EU delegation. The EESC has recently visited Jordan to 
support the role of the ESC in the current transition period in Jordan and is planning to hold it 
as annual summit in Amman in October 2012. 

2.1.4.  Application of incentives and conditionalities 

Once initial financial support has been provided by the EU in response to urgent needs, the 
incentive based approach can sometimes prove to be a useful approach to sustain, in the long 
run, the democratic evolution of a given country. 

All  EU  external  policy  frameworks  contain  incentives  and  apply  conditionality  to  varying 
extents to encourage reforms in partner countries. Incentives can be financial (e.g. assistance), 
economic or political (e.g. imposing or lifting sanctions); conditions relate to the nature and 
extent of reforms undertaken. These vary according to the policy framework: 

The EU’s Enlargement policy, as enshrined in the Treaty on European Union1, is the response 
to  the  legitimate  aspiration  of  people  of  our  continent  to  join  the  endeavour  of  a  unified 
Europe. The integration of the countries of Central and Eastern Europe over the past decade 
has shown that enlargement benefits the EU as a whole and allows it to be better positioned to 
address  global  challenges.  The  future  prospect  of  accessionto  the  EU  can  be  seen  as  an 
overarching incentive throughout the process. Enlargement policy is based on the principle of 
compliance  with  a  key  number  of  political,  economic  and  acquis-related  criteria  (known  as 
the Copenhagen criteria) before a membership application can be seriously considered. This 
framework  of  conditionalities,  combined  with  technical  and  financial  support,  accompanies 
all  stages  of  the  accession  process,  from  the  granting  of  candidate  status  to  opening  of 
accession  negotiations,  open  and  closing  of  individual  chapters  and  the  final  accession. 
Examples  of  conditionality  range  from  reforms  of  the  judiciary  and  the  fight  against 
corruption and  organised  crime  to the need to ensure full cooperation with the International 
Criminal Tribunal for the former Yugoslavia (arrest and transfer of indictees to The Hague) 

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and  meeting  the  requirements  of  the  internal  market.  With  the  new  approach  on  the  rule  of 
law  negotiating  chapters  23  and  24,  the  Commission  further  developed  its  approach  by 
extending the timeframe for negotiations and supporting the candidate countries in developing 
concrete  Action  Plans,  that  will  concretely  guide  the  reform  process  until  accession. 
Conditionality  has  also  been  successfully  linked  to  progress  along  successive  stages  of  the 
pre-accession  process  –  signature/entry  into  force  of  Association  Agreements,  awarding  of 
candidate status, opening/closing of negotiations and (to a lesser degree) financial assistance.  

In European Neighbourhood Policy conditionalities exist in the field of political and security 
dialogue but also in economic and sector policies dialogue (market access, migration, energy 
cooperation,  education,  etc.).  It  follows  an  incentive-based  approach,  as  outlined  in 
Communications “Partnership for Democracy and Shared Prosperity” and "A New Response 
to  a  Changing  Neighbourhood".  The  principle  of  "more-for-more"  is  applied  upon 
achievements  and  based  on  differentiation:  those  that  go  further  and  faster  with  specific, 
measurable reforms will receive greater support from the EU in terms of financial assistance, 
enhanced  mobility,  market  access  and  access  to  the  EU  Single  Market.  Support  will  be 
reallocated or refocused for those who stall or retrench on agreed reform plans.  

More concretely, closer political co-operation means advancing towards higher standards of 
human  rights  and  governance,  based  on  a  set  of  minimum  benchmarks  against  which 
performance will be assessed. A commitment to adequately monitored, free and fair elections 
should  be  the  entry  qualification  for  the  Partnership.  Partner  countries  carrying  out  the 
necessary reforms can expect to resume negotiations on or to update the existing Association 
Agreements  with  the  aim  of  allowing  for  significantly  strengthened  political  dialogue  and 
increased links between the partner country and EU institutions. This will encompass deeper 
engagement on mobility and improved market access to the EU.  

A programme on Support for Partnership Reform and Inclusive Growth (SPRING) was set up 
with a budget of €350 million in additional funds for 2011 and 2012 primarily for initiatives 
relating  to  democratic  reform  and  socio-economic  development.  It  is  a  multi-country 
programme with an umbrella approach that provides flexibility for modulating the assistance 
swiftly on a "more for more" basis to partner countries showing sustained commitment to, and 
progress in, democratic reforms. 

So  far  Tunisia  has  benefitted  from  a  concrete  expression  of  the  EU's  "more-for-more" 
approach  through  the  EU  SPRING  support  package  of  over  €  350  million  addressed  to  the 
EU's Southern neighbours. In the post-election period, the full implementation of the “more 
for more” principle is expected to take the form of a continuous dialogue with the government 
and the civil society to monitor and support reforms. 

Tunisia:  

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Since the Revolution, Tunisia has engaged into significant reforms: freedom of expression, freedom of 
association, agreeing international conventions promoting respect of human rights, holding the first free 
elections  including  the  presence  of  an  EU  electoral  observation  mission  during  the  elections, 
maintaining the economic situation of the country despite the crisis and the consequences of the war in 
Libya. With the setting-up of the Constituent Assembly responsible for drafting the new Constitution, 
Tunisia entered into a new phase of democratic transition. Recognising the substantial reform progress 
made by the Tunisia since the Revolution, the EU responded fast the challenge of adapting its support 
to  meet  the  needs  of  Tunisia.  The  EU  increased  its  funding  earmarked  for  bilateral  cooperation  with 
Tunisia  from  the  ENPI  from  €240  million  to  €390  million  for  the  period  2011-2013.  The  EU  also 
decided that Tunisia should be the first beneficiary of financial support from SPRING. An initial €20 
million was made available to Tunisia in 2011. Half of this was used to increase the EU contribution to 
the economic recovery support programme to €100 million, while the remaining €10 million was used 
for a programme of support to the implementation of the Association Agreement and to the Transition. 

In the post-election period, the full implementation of the “more for more” principle is expected to take 
the  form  of  a  continuous  dialogue  with  the  government  and  the  civil  society  to  monitor  and  support 
reforms. To date an Action Plan for a "privileged partnership" is under negotiation. 

Furthermore, a Dialogue on migration, mobility and security has been launched in October 2011. The 
negotiations leading to the conclusion of a Mobility Partnership are on-going and well advanced with 
Tunisian authorities. 

The Cotonou Agreement with the ACP countries is also based on political conditionality and 
there is an in-built mechanism (Articles 96 and 97) whereby a serious breach of human rights 
in a partner country can lead to the suspension of the Agreement with that country. 

Some financial instruments developed to implement the Cotonou Agreement are building on 
an  incentive-based  approach.  This  is  for  instance  the  case  of  the  10th  EDF  Governance 
Initiative. A recent evaluation2 suggested that this process was more effective where multiple 
stakeholders were involved and where joint funding for governance issues from EU Member 
States  existed.  It  also  showed  a  need  for  more  in  depth  analysis  of  the  dynamics  in  the 
country,  context  specific  approaches  as  well  as  strategic  use  of  different  incentives  and  the 
need  for  continuous  dialogue  on  governance  including  also  other  partners  than  the 
government. 

Lessons  learned  in  cases  such  as  Benin  illustrate  that  successful  results  could  be  achieved 
where regular monitoring, with exposure to relevant stakeholders including civil society, took 
place.  This  served  as  a  strong  incentive  for  the  government  to  keep  the  promises  made  and 
brought about credibility to the process in the eyes of the general public. 

2 "European Commission, "Support Study on the EU Governance Initiative in view of the preparation of a Report 
by the Commission to the Council in 2012 – Annexes to the Final Report", December 2011, p. 4. 

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Benin:  The  EU  Delegation updated  the Governance Profile  and  the  status  of  Governance 
Action  Plan  implementation  on  a  yearly  basis,  i.e.,  not  only  at  the  time  of  the  midterm 
review. The documents were shared with the partners (the government in Benin, especially 
the relevant ministries, and EU Member States) and finalised with their input. The updated 
tools  were  then  distributed  to  national  actors  such  as  civil  society,  the  private  sector  and 
other  development  partners.  This  took  place  during  public  workshops at  which  the media 
was present; three such workshops have been held to date. 

The  Governance  Initiative  process  has  allowed  a  more  traditional  form  of  development 
cooperation to morph into a more regular multi-stakeholder dialogue. Documents that used 
to  be  restricted  to  donors  and  the  government  and  that  laid  bare  the  national  governance 
process were made public in open consultations. A wide audience was made aware of the 
existing  problems  and  witnessed  the  commitments  taken  by  government  to  improve  the 
governance of their country. 

Moreover, these annual reviews ensured that regular follow-up took place. This has served 
as  a  strong  incentive  for  the  government  to  keep  a  number  of  its  promises  and  brought 
credibility to the process in the eyes of the general public. Finally, it shows to all partners 
(national  and  international)  where  the  country  stands  with  the  governance  situation,  what 
progress  has  been  achieved  and  what  has  not  moved  on.  The  whole  process  has  thus 
resulted  in  a  benchmarking  of  the  governance  situation  and  of  the  government 
commitments over a period of five years. 

Source:  European  Commission,  "Support  Study  on  the  EU  Governance  Initiative", 
November 2011. 

In the context of the European Development Policy, the Agenda for Change recently further 
highlights  the  EU's  commitment  to  ensuring  that  a  country’s  record  and  ability  to  conduct 
reforms concerning human rights, democracy and other key elements of good governance has 
a direct bearing on the mix and level of aid towards the EU's partners worldwide.  

In  addition,  in  line  with  the  Commission  Communication  on  the  Future  approach  to  EU 
Budget  Support  to  third  countries,  the  EU,  when  granting  general  budget  support  in  the 
framework  of  its  Good  Governance  and  Development  Contracts,  will  require  specific 
conditions to be met in the field of democracy and human rights. 

Trade Policy - while this is not its policy objective, given inter alia that trade instruments have 
to be consistent with WTO rules - may also indirectly provide incentives for partner countries' 
democratic  transition.    The  EU's  Generalised  System  of  Preferences  (GSP)  provides  for 
reduced  tariffs  for  the  goods  of  developing  countries  when  entering  the  EU.  Within  this 
framework,  a  special  incentive  arrangement  for  sustainable  development  and  good 
governance  ("GSP+")  offers  further  advantages  (wider  product  coverage  and  increased 
preferential margin) to vulnerable developing countries that ratify and effectively implement 
core international standards in the fields of human, social and labour rights, environment and 
good  governance.  Any  of  the  GSP  arrangements  may  be  temporarily  withdrawn  for  the 
serious and systematic violation of principles laid down in the core international conventions 

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on human, social and labour rights and on a number of other grounds. For instance Belarus 
and  Myanmar  have  seen  their  general  GSP  preferences  withdrawn  for  violations  of  labour 
rights  and  Sri  Lanka  lost  its  GSP+  benefits  for  non-implementation  of  certain  human  rights 
conventions. The preferences should be re-established when the situation changes, which acts 
as an incentive for relevant reforms. This worked efficiently in the case of El Salvador which 
introduced  the  necessary  reforms  to  remove  obstacles  to  ILO  core  labour  standards  and 
thereby avoided withdrawal of its GSP+ status. 

2.1.1.  Actions through innovative financial instruments and partnerships. 

The  Commission  supports  innovative  financial  instruments  and  partnerships  using  grant 
resources to unlock financing and expertise from the private sector. These instruments serve 
to support various sectors (e.g. SME finance, infrastructure finance) and may come in various 
forms. The paramount objective of these instruments is to use a grant element strategically in 
order  to  make  projects  and  initiatives  by  public  or  commercial  financiers  financially  viable 
and thereby exerts a leveraged development policy impact. 

Such instruments may help to alleviate market failures hampering private sector development 
in  partner  countries  and  address  risks  that  prevent  investments  with  a  strong  developmental 
impact from materialising. 

One  main  set-up  used  successfully  are  the  EU  regional  blending  facilities,  which  combine 
grants  with  additional  flows  (such  as  loans  and  risk  capital)  from  European  Finance 
Institutions (e.g. EIB, EBRD) to gain financial and qualitative leverage and thereby increase 
EU development policy impact. Since 2007, four regional blending facilities have been set up: 
the EU-Africa Infrastructure Trust Fund (ITF), the Neighbourhood investment facility (NIF), 
the  Latin  America  investment  facility  (LAIF)  and  the  Investment  facility  for  Central  Asia 
(IFCA). With Investment Facilities for Asia, the Pacific and the Caribbean established in early 
2012, global coverage has been reached. The regional level is necessary to ensure ownership 
of the instruments by the beneficiary countries and increase their visibility. 

For instance, the SANAD fund for micro, small and medium-size enterprises (MSME) project 
for  the  MENA  region,  itself  modelled  after  the  successful  European  Fund  for  Southeast 
Europe (EFSE), is a good example of pooled funding by public and commercial investors. It 
promotes  self-employment  and  income  generation  through  microfinance  and  helps  to  create 
employment  through  support  to  MSMEs.  The  NIF  furthermore  supports  the  SME  Finance 
Facility,  aimed  at  Increasing  the  availability  of  long-term  funding  and  financial  services  to 
SMEs  in  the  Eastern  Neighbourhood  by  providing  loans  and  partial  loan  guarantees  to 
participating financial intermediaries for on-lending to SMEs.  

These  types  of  tools  should  be  taken  into  consideration  when  identifying  the  right  mix  of 
instruments to be used in support to a democratic transition. These instruments are aiming at 
mobilising  additional  funding  to  cover  investments  needs  in  partner  countries  and  support 
infrastructure  projects  in  various  central  sectors  such  as  energy,  environment,  transport  and 
social  issues  and  provide  support  to  the  private  sector  targeting  Small  and  Medium  Size 
Enterprises. 

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2.2. 

Actions through various thematic instruments 

In  addition  to  funds  available  within  the  framework  of  geographic  cooperation,  other  tools 
exist with a worldwide scope that could be usefully resorted to in transition contexts. 

2.2.1.  European Instrument for Democracy and Human Rights 
The  European  Instrument  for  Democracy  and  Human  Rights  (EIDHR)3  is  a  self-standing 
financing instrument that complements and reinforces actions on human rights and democracy 
within the framework of relevant EU policies, by primarily empowering local civil society to 
strengthen home-grown democratic processes. One of its main strengths is that it may be used  
without  the  consent  of  partner-governments  and  even  where  no  established  development 
cooperation exists with the country in question. The EIDHR has made considerable provisions 
for country specific small scale projects (Country Based Support Schemes - CBSS) in order to 
further enhance local ownership and improve access by national civil society organisations.  

EU support in this area through the European Instrument for Democracy and Human Rights 
(EIDHR) has led to results such as, among others, legislative changes, reinforced parliaments, 
increased  participation  of  under-represented  groups  in  political  life,  a  free  press,  trust  in 
electoral  processes  and  better  transparency  of  political  activity.  As  part  of  the  increasing 
efforts  to  support  democracy  worldwide  the  EU  has  also  for  the  first  time  launched  a 
dedicated global call for proposals through the EIDHR in June 2011 with a specific focus on 
democracy. 

In the context of the discussions on the new multi-annual financial framework 2014-2020, the 
Commission has proposed to render the EIDHR more effective, flexible and responsive and to 
strengthen  its  'democracy'  component.  For  instance,  the  Commission  proposes  to  integrate 
into  the  EIDHR  some  of  the  elements  existing  in  the  Instrument  for  Stability,  such  as  the 
modality  of  awarding  direct  grants  to  address  even  better  any  sudden  needs  arising  from 
situations of transition (such as the democratic uprisings in the Arab world). 

2.2.2. 

 Humanitarian Aid 

The humanitarian Aid instrument is not as such an instrument aiming at promoting democratic 
governance. But, addressing immediate needs of affected populations in particular in terms of 
furniture  of  basic  social  services  it  contributes  to  stabilisation.  Humanitarian  interventions 
promoting  communities  participation  play  an 
terms  of 
empowerment of local communities.  

important  contribution 

in 

3 Regulation (EC) No. 1889/2006 of 20 December 2006. 

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In  transition  contexts,  humanitarian  interventions  are  as  far  as  possible  designed  in  order  to 
support local capacities development (building on existing systems) rather than duplicating or 
substituting national structures and maintaining dependence on emergency aid. 

Humanitarian  interventions  in  South  Sudan  as  well  as  in  Ivory  Coast  have  explicitly 
integrated  those  concerns  at  the  level  of  the  humanitarian  strategies  as  well  as  in  terms  of 
implementation with the partners (part of the grant agreements). 

2.2.3. 

Instrument for Stability 

The Instrument for Stability (IfS)4 is a strategic tool designed to address a number of global 
security and development challenges, and is complementary to the geographic instruments. It 
encompasses  two  main  components.  The  first  component  is  designed  to  allow  short  terms 
actions.  These  actions  should  be  aiming  at  preventing  conflict,  supporting  post-conflict 
political stabilisation and ensuring early recovery after a natural disaster. It can only be used 
in a situation of crisis or emerging crisis, in order to re-establish the conditions necessary to 
the  implementation  of  the  Community's  development  assistance  under  other  long-term 
instruments. Through this short term component actions can be undertaken in various fields: 
development of democratic and pluralistic state institutions, support for international criminal 
tribunals, promotion of independent and pluralist media, etc. 

The  second  component  of  the  instrument  is  aiming  at  implementing  longer  term  actions.  It 
should  mainly  contribute  to  fighting  trafficking  of  people,  drugs,  firearms  and  explosive 
materials,  addressing  cross  borders  threats  (terrorism,  organised  crime  etc)  and  enhancing 
preparedness to pre and post conflict situations. 

The IfS has a budget of €2.062 billion for 2007-20135, of which €484 million are allocated for 
the long-term component (23% of the total). This allocation reflects the intention that the IfS 
should primarily be an instrument for crisis response, and that long-term measures under this 
Instrument  should  not  be  a  substitute  for  those  that  could  be  delivered  under  country  or 
regional strategies funded from the main geographic financing instruments. 

4 

Regulation  (EC)  No  1717/2006  of  the  European  Parliament  and  of  the  Council  of  15  November  2006 
establishing an Instrument for Stability 

5 According to the Commission Communication  "A budget for Europe 2020", COM (2011) 500 final part 1, it is 

envisaged to maintain this programme with an allocation of 2.51 billion over the 2014-2020period.  

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2.2.4.  The thematic programme Non State Actors and Local authorities 

The  thematic  programme  for  Non-State  Actors  and  Local  Authorities  in  the  Development 
Cooperation  Instrument  is  one  of  the  few  "actor-oriented"  thematic  programmes,  giving  a 
wide  range  of  civil  society  actors  and  local  authorities  the  exclusive  opportunity  (right  of 
initiative)  to  propose  actions  and  promoting  an  inclusive  and  empowered  local  society.  The 
actions  implemented  do  not  necessarily  have  the  backing  of  the  host  country  government. 
This thematic  programme strives to  strengthen civil  society  in  development  in  all its  forms, 
both in Europe and partner countries alike. 

The  programme  has  a  budget  of  €  702  million  for  2011-2013  and  the  Commission  has 
proposed to renew it under the 2014-2020 financial framework. 

3. 

TRANSITION EXPERIENCE OF EU MEMBER STATES 

Within the EU, the specific experiences of Member States may also provide useful examples 
on  transition  management.6  The  European  Consensus  on  Development  explicitly  states 
(Article 33) that the "EU will capitalize on New Member States' experience (such as transition 
management) and help strengthen the role of these countries as new donors." 

It was within this context that the European Commission decided to embark on a compilation 
of such transition management experiences that were still very fresh in the minds of the public 
administrations concerned for knowledge-sharing purposes. 

There is no one-size-fits all recipe, as the causes and context of transition processes and the 
countries'  needs  vary  significantly  from  one  country  to  another,  not  the  least  because  some 
other  countries  may  experience  complex  challenges  of  social  cohesion  and  governance 
relating  to  ethnic,  religious,  ideological  or  other  socio-political  divisions  that  have  not  been 
relevant  in  Member  States.  With  these  caveats,  there  may,  however,  be  useful  insights  that 
could be drawn from this wealth of experience for other countries elsewhere in the world. 

The following are some excerpts of transition management experiences out of the myriad of 
experiences  outlined  in  the  European  Transition  Compendium  (ETC).  They  are  purely 

6  Support  to  'emerging  democracies'  in  a  state  of  transition  from  a  one-party  regime  to  a  pluralistic  liberal 
democracy requires a whole process of support that spans the political, economic and social spheres.  It entails 
also the creation and implementation of a comprehensive set of legislative and regulatory reforms, the upgrading 
and modernisation of administrative capacities and a better and more transparent service-orientated public sector 
vis-à-vis  its  citizens.  This  process  can  be  coined  into  the  phrase  'transition  management'  and  is  inextricably 
intertwined with sowing the seeds for good (or better) governance, as an essential element in any development 
cooperation policy.   

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illustrative and only intended to give an example of reforms in each Member State covered in 
the ETC. 

3.1. 

The Political Dimension of Transition 

3.1.1. 

Set up of a new constitutional framework 

Fundamental  changes  were  needed  at  constitutional  level  in  order  to  ensure  a  successful 
transition  to  democracy  and  to  a  market  economy  in  Central  and  Eastern  Europe  and  the 
Baltic States.  Some countries held their very first elections under their original constitutional 
framework which was later totally superseded, whereas others undertook this process in two 
stages:  firstly, the adoption of the most basic and urgent constitutional changes in the form of 
amendments  to  the  existing  constitution  and  secondly,  the  adoption  of  a  totally  new 
constitution. 

The diverse approach with  which    a  new constitutional framework was established in all of 
these  newly  emerging  democracies  shows  that  countries  going  through  a  political  transition 
need to find their own way and solutions how to go about such a process. 

3.1.2. 

Set up of political pluralism 

The set up of political pluralism is a cornerstone for a healthy democracy. 

Poland7  was  one  of  the  first  countries  in  Central  and  Eastern  Europe  to  re-establish 
democracy  after  44  years  of  Communist  rule.    Transition  was  inevitable  when  Poland  was 
experiencing  deep  political  and  economic  crises  in  the  1980s  which  led  to  the  rise  of 
Solidarność (Solidarity).  In the late 1980’s, a broad democratic coalition developed  around 
this movement which eventually negotiated political and economic reforms with the leaders 
of the Communist Party. 

One  of  the  very  first  steps  undertaken  during  Poland's  transition  period  as  an  emerging 
democracy was to re-establish the freedom of expression and association and the freedom to 
form  political  parties  which  would  lead  to  the  immediate  organisation  of  free  and  fair 
elections  aimed  at  opening  up 
to  democratically  elected 
representatives  of  the  population.    The  Solidarność-led  movement  set  up  a  Citizens’ 
Committee made up of opposition representatives and managed to get the State to accept them 
as  a  political  partner  with  whom  reforms  had  to  be  discussed  and  agreed.    This  movement 
later participated in the elections held in June 1989 and obtained a resounding victory, which 
forced  the  democratic  movement  to  take  on  the  responsibility  of  leading  the  Government.  
These parliamentary elections were held in 1991 under a new electoral law. 

the  national  Parliament 

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The newly elected Polish Parliament passed a first Constitutional Act in 1992 reflecting the 
changes  that  had  occurred  in  Poland  since  1989  (the  so-called  "small  constitution"),  but  an 
entirely new constitution was finally adopted in 1997. 

The Polish experience clearly shows the efforts undertaken to establish political pluralism as 
a necessary first step in an emerging democracy and how a stable political party system can 
be consolidated in spite of various country-specific challenges. 

3.1.3.  Decentralization of power towards regional and local governments 

With  the  support  of  international  donors,  Hungary,  in  its  transition  period  towards 
democracy,  put  strong  efforts  to  revitalize  local  communities.8  Different  local  communities 
throughout  the  country  took  part  in  the  EU's  LEADER  program.  Transnational  cooperation 
was  strongly  supported  via  cross-border  cooperation  and  the  establishment  of  various 
Euroregions. 

During the change of regime in the 1990’s, the emphasis was put on the democratic operation, 
the  autonomy  and  the  construction  of  guarantees  preventing  the  overgrowth  of  power  when 
forming the system of local governments. The system was established fast, the country did not 
have enough time and experience for the development of a civil public administration. 

Significant laws serving as the bases of the operation of local governments were passed in the 
first  four  years  following  the  change  of  regime.  More  and  more  tasks  were  decentralized 
towards local governments through various legislative acts.   

As Hungary developed with the new system setup, improvements were looked for through the 
creation of a special consultative body established in 2002 by the Ministry of the Interior. 

Based on the recommendations of this working group, the Hungarian Government proposed 
the  bill  of  the  multi-purposed  micro-regional  associations  of  the  local  governments,  which 
was adopted by the Parliament in 2004. The bill regulated the facultative associations instead 
of the mandatory ones proposed in the first version of the bill 

The  adaptation  of  the  bill  to  the  evolving  Hungarian  situation  continued  with  discussions 
being  held  within  the  Forum  of  the  Government  and  the  Local  Self-governments  (KOEF).  
This Forum could work beside the Government as a preparatory and consultative body with a 
coordinating  role.    As  the  name  suggests,  this  forum  hosts  both  representatives  of  the 
Government  and  representatives  of  the  Local-Governments.    A  major  breakthrough  came 

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about  with  a  consensus  on  very  important  reforms  that  enabled  the  Government  to  adopt  a 
proposal of amendments of the acts on local-governments. 

Over  the  years,  the  political  and  financial  landscape  of  regional  and  local  governments  in 
Hungary faced challenges.  However, a renewed effort to view these challenges with a new 
perspective  led  to  the  set-up  of  micro-regional  associations.  These  associations  increased 
considerably the standards of service provision in terms of efficiency and also helped bridge 
social and territorial differences. 

In  Hungary  the  choice  to  have  the  devolution  of  power  away  from  the  centre  helped  to 
improve transparency and accountability and to eventually assist the Central Government in 
getting closer to its citizen. 

3.1.4. 

Set up of a Rule of Law framework: Reform of Legal Systems and the Judiciary 

The establishment of the rule of law with an independent legal and judiciary system is another 
fundamental aspect that needs to be considered in young emerging democracies.  The Czech 
Republic9 provides an interesting case study in this regard.   

In December 1989, the Judiciary in the Czechoslovak Socialist Republic was in deep crisis at 
all levels and very few politicians or legal experts had a clear idea how the judiciary could be 
reformed  to  suit  the  demands  and  needs  of  the  country.  The  judiciary  lacked  facilities,  was 
poorly funded and judges had inadequate low salaries.  Judges were ideologically involved in 
the previous coercive system of justice based on political classes and all of them were to some 
degree  compromised  and  contaminated  by  every  day  contact  with  representatives  of  the 
totalitarian system. 

In  early  1990,  the  transition  Government  and  the  Parliament  decided  to  “clean  up”  the 
judiciary. It was therefore decided to shorten the mandate of existing judges to approximately 
one year so as to allow for the screening of judges against whom objections had been raised 
due  to  their  politically-driven  decisions  during  Communist  rule.    The  next  logical  step  was 
then to proceed with new appointments for a new mandate. 

New opportunities to practise law as independent freelance professionals or employed by an 
emerging private sector that offered better employment conditions led to an exodus of legal 
professionals from the Government.  In addition, other challenges also had to be dealt with.  
This  was,  for  example,  the  increased  workload  for  the  judiciary  on  a  daily  basis.    Conflicts 
regarding the powers of the judiciary and their specific duties, an increased number of petty 
crimes,  the  building  of  a  totally  new  commercial  register  that  would  provide  for  the  legal 
existence of tens of thousands of companies under very primitive conditions had to be dealt 

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with.  In short, therefore, the Court was facing increased number of cases to be resolved with 
the  exception  of  family  law.    The  human  resource  gap  had  to  be  addressed  and  appropriate 
training given. 

All these efforts proved futile following the break up of the federation.  It was only at the end 
of the 1990s that both the legislation and the judiciary had to be remodelled in line with the 
pre-requisites of membership of the European Union that acted as a true catalyst for change. 
The process of preparations for acceding the EU defined the next steps in the transformation 
process of the Czech Judiciary, which again required further reviews of repeatedly amended 
laws  and  regulations.  However,  despite  gradual  improvements,  the  status  of  judges  and  the 
basic organisational structure of the Czech judiciary remained unchanged, as defined in 1991. 

This  case  study  clearly  shows  the  short-term  and  long-term  challenges  that  a  complete 
overhaul  of  a  legal  and  judicial  system  based  on  the  rule  of  law  would  entail.  Some  of  the 
challenges mentioned here are definitely not new to those being faced by young democracies. 

Another aspect that emerges is the fact that a regional institution (which was the EU in this 
case)  can  provide  a  good  boost  to  the  transformation  process  that  is  required  if  it  has  the 
necessary knowledge and expertise to provide guidance and support of the kind required 

 It also needs to be taken into account that any clean-up exercise in the judiciary faces the risk 
of  strong  politicisation,  which  could  potentially  influence  the  judiciary  for  decades.  It  is 
therefore particularly important – if a country decides to carry out such a process – to apply 
full transparency and ensure the application of objective criteria. 

3.1.5.  Public Administration Reform 

Public  Administrations  are  the  supporting  arms  and  legs  of  a  well-functioning  Government.  
The  countries  of  Central  and  Eastern  Europe  and  the  Baltic  States  provide  an  interesting 
insight  into  how  the  Government  was  finally  put  on  centre  stage  in  decision-making,  rather 
than  have  it  subordinated  to  a  political-party.    The  reform  of  public  administration  –  from 
internal organisation to staffing – is necessary to improve transparency, accountability, policy 
effectiveness and efficiency. 

With  its  independence,  Latvia  needed  to  develop  a  new  public  administration  system  to 
operate  efficiently  and  transparently.10  During  the  very  first  phase  of  reform,  Latvian 
politicians and civil servants had to design an entirely new system to manage the transition to 
a democratic system as well as the transition to a market economy. 

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During the Soviet period, political and executive powers were merged.  This meant that every 
high-ranking employee in public administration was also a member of the Communist Party. 
The decision-making process was one of a top-down approach and the public had no say in 
policy-making,  nor  could  it  influence  decisions.    During  the  period  of  transition,  the  public 
administration consisted mainly of two categories of officials: experienced officials who had 
previously  worked  under  the  old  public  administration  system;  inexperienced  people  who 
wanted to start off a career in the new public administration.  A main bone of contention was 
therefore the training of staff in a very short time. 

The newly elected Government created the Ministry for State Reform (1993-1995) developed 
the Public Administration Reform Policy Paper, the first Law on Civil Service (April 1994), 
the School of Public Administration and the Civil Service Administration (established under 
the Prime Minister). 

The prospect of Latvia becoming a European Union member acted as a catalyst for change.  
The  Public  Administration  Reform  Bureau  (1997-1999)  and  the  Secretariat  of  the  Special 
Assignment’s  Minister  for  Public  Reform  Affairs  (1999-2002)  worked  on  the  Law  on  the 
Public Administration System and improved administrative systems. The Ministry of Finance 
developed  an  internal  audit  system  and  the  Ministry  of  Justice  created  an  Administrative 
Procedure  system.  A  new  Law  on  Civil  Service  came  into  force  in  2001,  involving  a  move 
from the “career” system  introduced by the 1994 Law to a “post” system, and reducing  the 
scope of the Civil Service to central government Ministries and subordinated institutions and 
a certain number of special groups of public servants (police, firefighters, border-guards, state 
revenue  service,  the  diplomatic  and  consular  service).  Since  2003  the  State  Chancellery, 
which is the state organisation responsible for managing the Centre of Government (including 
policy planning and coordination) has also been responsible for public administration reforms. 
It also oversees in-service training for the public administration. 

Interesting to note as best practice is the fact that in 2000, the State  Chancellery started  the 
development  and  implementation  of  a  uniform  policy  planning  and  coordination  system. 
''Policy Planning Guidelines'', which prescribe the basic principles for the policy development, 
types of policy planning documents and their hierarchy, were established.  This was a basis 
for adoption of Cabinet Regulations No.111 ''Rules of Procedure of the Cabinet of Ministers'' 
of 12 March 2002. 

Amendments  to  the  ''Rules  of  Procedure  of  the  Cabinet  of  Ministers''  adopted  in  2005 
stipulate  that  the  state  budget  of  2007  should  be  drafted  in  accordance  with  the  structure 
included in the programme part of ministries’ strategic plans. This would ensure integration of 
sectoral  policies  used  for  annual  budget  application  of  the  respective  direct  administration 
institution. 

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The  case  of  Latvia  shows  what  efforts  needed  to  be  undertaken  to  put  up  a  Public 
Administration composed of members of the civil service that executed their duties according 
to a clearly established code of ethics and policy planning guidelines, irrelevant of political 
beliefs. It also shows the sequencing of how such reforms took place. 

3.1.6.  E-governance 

Estonia11 gave Public Administration Reform a slightly different twist .  From the very initial 
stages of its reform reflection process, Estonia understood that the State and the information 
system  of  the  State  must  be  developed  hand-in-hand,  that  ICT  must  support  the  everyday 
functioning  of  the  State  in  the  best  possible  manner  to  provide  better  public  services  to 
citizens  and  businesses.  ICT  solutions  made  the  provision  of  public  services  and  the 
communication  between  the  State  and  the  citizens  as  well  as  enterprises  easier  and  more 
efficient.  Estonia  therefore  used  ICT  solutions  to  manage  information  flows  and  facilitate 
institution  building.    Although  it  goes  without  saying  that  nowadays,  a  modern  Public 
Administration  and  ICT  tools  go  hand-in-hand,  Estonia’s  example  was  ground-breaking  for 
the simple reason that a 'poor' country still managed to successfully penetrate the use of ICT 
across all levels of society, starting off with Public Administration level.  In fact, Estonia is 
now one of the leaders in integrating new technologies into the public sector reform process 
An  important  step  towards  open  and  transparent  governance  was  taken  with  the  Public 
Information Act of 2001 and the opening of a Direct democracy portal TOM (Today I decide) 
in the same year, giving every citizen the possibility to present their ideas to the Government, 
debate  over  them,  and  get  an  official  response.    Just  last  year,  the  information  system  for 
legislative  proceedings  was  opened  and  it  is  now  possible  to  follow  the  birth  of  legislative 
proceedings  until  their  actual  date  of  implementation  all  on  one  'window'.  Estonia  was  also 
the first country worldwide to implement nation-wide remote internet voting since 2005. 

This  case  study  proves  that  the  early  investment  in  ICT,  albeit  seemingly  expensive  at  the 
beginning, is worth the effort and the financial resources.  The spread of the use of ICT has 
not  only  contributed  to  more  efficiency  but  also  to  more  government  transparency  and 
accountability and hence more direct involvement of citizens in a participatory democracy. 

At  the  same  time,  it  is  important  to  note  that  the  introduction  of  ICT  needs  to  be  based  on 
effective  administrative  procedures.  ICT  is  only  a  tool  to  implement  such  procedures,  but 
cannot replace them.  

3.1.7.  Human Rights12 

One of the core aspects of the process of political reforms carried out in Central and Eastern 
Europe was to incorporate into the legal system and to make effective the full enjoyment and 
free  exercise  of  the  human,  political,  social,  economic  and  cultural  rights  recognised  in 
international  instruments  adopted  at  world-wide  and  European  level  after  the  end  of  the  II 
World  War.  Many  of  these  rights  were  already  enshrined  in  the  national  legislations  (with 
notable  exceptions,  such  as  the  right  to  private  property  but  they  were  not  effectively 
respected  and  protected.  Lack  of  appropriate  institutional  mechanisms,  both  general  (an 
independent Judiciary) and specific (such as Ombudsmen) and, even more importantly, lack 

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of public awareness of these rights  was a common feature in  the countries belonging to the 
former Communist block. 

Signature  and  ratification  of  the  international  instruments  and  conventions  on  human  rights 
and their incorporation into the national legal systems was one of the first steps undertaken in 
many of these countries in the beginning of their political transitions.  This was followed by 
the  building  of  the  necessary  institutional  mechanisms  to  ensure  protection  of  such  rights  
with the support of international organisations. 

As a country emerging  from the splitting up of the former Yugoslavia, Slovenia13 aimed to 
have a strong institutional framework in place in this field as soon as it gained independence 
but there was a certain gap between legislation on one hand and practice on the other hand.  
Besides ratifying specific human rights conventions, it went about to create some institutional 
bodies to oversee the protection of human rights, such as the Human Rights Ombudsperson, 
the  Information  Commissioner,  the  Advocate  of  the  Principle  of  Equality  and  the 
Parliamentary  Commission  for  Petitions,  Human  Rights  and  Equal  Opportunities,  each  of 
which perform specific functions. 

Slovenia's case study, shows how government institution-building is a necessary first-step to 
safeguard human rights. 

3.1.8. 

 Gender Equality and Women's Rights 

During  its  years  of  transition,  Lithuania14  took  steps  to  ensure  that  its  legislation  and  all 
economic  and  social  policies  would  support  equal  opportunities  for  men  and  women  in  the 
labour market. A Law on Equal Opportunities for Men and Women was passed in 1998, the 
Office  of  Equal  Opportunities  Ombudsman  was  established  in  1999  and  an  Equal 
Opportunities’ Commission was established in 2000 with representatives from 16 ministries 
and government agencies. 

Women’s  rights  in  the  labour  market  were  included  in  the  Law  on  Support  of  the 
Unemployed, the Law on Employment Contract and the Law on Safety and Health at Work. 
The cumulative impact of these laws was to have employers legally obliged to apply the same 
selection  criteria  for  men  and  women  and  to  also  provide  equal  working  conditions  and 
opportunities.  A Programme for Advancement of Women was adopted in 1998, together with 
a detailed action plan for its implementation over the years 1998-2000. 

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In spite of all these efforts during this transition period, the Lithuanian authorities realized that 
gender inequalities in the labour market persisted and new measures had to be introduced to 
refine  further  the  labour  legislation  in  terms  of  equality  of  treatment,  provide  more  training 
and  information  especially  for  women  and  provide  more  childcare  services  to  encourage 
women to join the labour market.  EU membership spurred further reforms and improvements 
in this regard. 

Whilst  the  case  of  Lithuania  gives  an  insight  into  what  kind  of  laws  were  necessary  to 
promote  gender  equality  and  ensure  the  protection  of  women's  rights,  the  case  of  Cyprus 
provides insight into the institutional 'machinery'.  In 1994, the Council of Minister of Cyprus 
set up the National Machinery for Women's Rights which is made up of representatives from 
major  women's  organisations  in  Cyprus,15  trade  unions  and  government  departments  and  is 
composed of four entities that fall under the auspices of the Cypriot Ministery of Justice and 
Public Order.  The National Machinery for Women's Rights tackles all women-related matters 
and focuses on the elimination of gender inequality and gender-related discrimination.  It also 
has  an  advisory  role  to  the  Council  of  Ministers  on  any  policies,  programmes  and  laws 
promoting women's rights across all levels of society, sensitizes government departments on 
equality issues, monitors and evaluates the effectiveness and implementation of laws in this 
context  and  acts  as  a  direct  link  between  the  government  and  NGOs.    Through  the 
multidisciplinary role of the National Machinery for Women's Rights, Cyprus has sought to 
strengthen  women's  political  participation  in  the  transitional  and  post-transitional  process  at 
all levels of decision-making.16 

As  can  be  seen  from  the  case  of  Lithuania,  it  is  important  to  consider  gender  equality  and 
women's  rights  issues  from  the  very  early  stages  of  transition  and  to  pursue  with  ongoing 
efforts to make subsequent adjustments and improvements in the years thereafter, especially 
to increase the number of women in the labour market.  The case of Cyprus gives an idea how 
mainstreaming  of  gender-related  issues  and  sensitization  to  women's  rights  can  be  pushed 
ahead. 

3.2. 

The Economic Dimension of Transition 

The  economic  dimension  of  transition  has  multiple  facets,  especially  when  considering  the 
shift  from  a  centrally-planned  economy  to  a  market-based  economy,  as  was  the  case  for 
countries belonging to the former Soviet bloc.  Each country had to find its own way through 
this process and therefore, as for the political dimension of transition, there was / is no one-
size-fits-all.  In fact, the various experiences in the European Transition Compendium (ETC) 
show  that  whilst  each  country  had  its  own  way  of  sequencing  and  pacing  of  economic 

15 http://www.cyprus.gov.cy/portal/portal.nsf/All/640AA32E298C2742C2257036003F90A5?OpenDocument 

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reforms, there was a common underlying objective: membership in a regional or supranational 
organization – in this case the European Union17. 

Economic transition reforms undertaken by the Central and Eastern European Countries and 
the  Baltic  States  were,  inter  alia,  the  liberalisation  of  prices,  trade  and  foreign  exchange, 
macro-economic  stabilisation  to  deal  with  hyper-inflation,  restoration  of  private  property, 
creating  an  enabling  environment  for  economic  activity  based  on  private  ownership  of 
enterprises and businesses, reform of the banking and financial sectors as well as of overall 
fiscal  policy.      Some  countries  chose  a  "shock  therapy"  approach  to  these  reforms  (Poland, 
Czech  Republic,  Estonia)  whereas  others  referred  a  "gradualist  approach"  (Hungary  and 
Slovenia).  Private Sector Development was a key element in their economic transformation 
process18. 

3.2.1.  Private Sector Development 

One  of  the  most  crucial  aspects  to  ensure  the  successful  transition  to  a  market  economy  is 
private sector development.19 It is interesting to note that in the case of the former Soviet bloc, 
in some countries (for example, in Poland), there was already a limited private sector before 
the actual change started in late 1980s; and in others (Slovenia) there was a system that, while 
not  including  private  ownership,  was  already  operating  under  quasi-market  conditions. 
However, in most countries of the Soviet bloc, the private sector was absolutely non-existent 
before the political change happened. 

At  the  very  beginning  of  the  transition  process,  it  was  necessary  to  change  the  legal 
framework  to  make  way  for  the  creation  of  private  companies  and  company  registers.  New 
private companies emerged to fill in the gap where the State had withdrawn its functions.  The 
new element of 'competition', both domestically and internationally required companies to be 
innovative.    In  the  case  of  Small  and  Medium-Sized  Enterprises  (SMEs),  support  measures 
had to be introduced through specific public policies. 

Another major objective of the economic policies undertaken by these countries in transition 
was  the  attraction  of  Foreign  Direct  Investment  (FDI).  Capital  was  needed  to  allow  for  the 
privatisation of state companies. This, in turn, required further investment in human resource 
training of how to manage a private enterprise. 

In  the  case  of  the  Czech  Republic,20  the  beginning  of  the  transformation  process  was 
dominated by large state-owned companies which were then gradually replaced by Small and 
Medium-Sized Enterprises (SMEs).  The fast  growth  of  SMEs  was  a  characteristic  aspect  of 

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the economic transformation that the Czech Republic was experiencing and which needed to 
be  supported  through  a  legal  framework  which  gave  rise  to  Act  No.  299/1998  Coll.  on  the 
state  support  of  SMEs.    The  support  of  the  Government  to  SMEs  was  targeted  on  capital 
consolidation  of  firms,  capacity  building,  consultancy,  data  acquisition,  applied  research, 
technological  development  and  the  creation  of  new  job  opportunities.  The  support  was 
provided by the Ministry of Industry and Trade (and its predecessors), the Ministry of Finance 
and  since  1997  by  the  Ministry  for  Regional  Development  as  well.  Through  the  design  and 
implementation  of  the  START  programme,  for  example,  favourable  conditions  for  the 
establishment and development of SMEs were created and they were assisted with designing 
and implementing business plans. 

This example shows that the fast growth of SMEs leads to economic transformation and that 
both processes need to be supported with specific government measures that create the right 
policy framework for a business enabling environment. 

When  the  Slovak  Republic  gained  independence,21  its  economic  activities  concentrated  on 
large state-owned enterprises, its industrial production relied on the heavy industries with high 
consumption of energy and raw materials.  It also had a low level of finalization of production 
as well as low involvement in foreign trade and it had to convert its armaments industry. 

The development of the Slovak enterprise sector as of 1993 took place in a context of reforms 
in  the  business  environment  (banking  sector  reforms,  labor  market  reforms,  tax  and  public 
finance reforms, bankruptcy reforms and streamlining procedures in registration of business). 
Challenges that had to be overcome were weak enforcement of law (insufficient quality and 
lack of stability of legislation, long duration of resolving disputes), significant administrative 
burdens, high financial burdens for employers (social security payments), a non-functioning 
capital market and lack of skilled labour force in some sectors. 

The  set-up  of  the  National  Agency  for  Development  of  Small  and  Medium  Enterprises 
(NADSME)  founded  in  1993  was  crucial  to  support  development  and  growth  of  small  and 
medium-sized  enterprises  (SMEs)  in  the  Slovak  Republic  with  the  aim  to  improve  the 
competitiveness of the sector within the single EU market and the markets of third countries. 

The Slovak case shows that the strengthening of the rule of law, particularly in the field of law 
enforcement, contributes to a better business environment. 

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3.2.2.  Reform of Public Finances 

Bulgaria22  kicked  off  a  comprehensive  stabilization  and  economic  reform  process  in  1997 
with  the  set  up  of  the  Currency  Board  Arrangement  (CBA).   This was considered to be the 
best cure to deal with the circumstances of soft budget constraints, commercial bank financing 
of  loss-making  enterprises  and  hyperinflation.    A  conservative  fiscal  policy  approach  was 
adopted  together  with  sound  macroeconomic  management  and  the  acceleration  of  structural 
reforms in order to restore growth, reduce inflation and reassure public investors. 

In  1999  and  2000  major  improvements  were  made  towards  effective  budget  execution. 
Central  government  funds  were  centralized  in  a  single  treasury  account  at  the  Bulgarian 
National  Bank  (Central  Bank)  and  major  reforms  were  also  undertaken  in  the  area  of 
intergovernmental relations concerning municipal finances.  In 2002, the Council of Ministers 
approved  a  programme  for  implementation  of  fiscal  decentralization.  This  set  a  clear 
framework  of  intergovernmental  responsibilities,  standards  for  service  delivery,  matching 
revenue  collection  with  expenditure  needs,  maintenance  of  fiscal  discipline  and  a  greater 
participation  of  citizens  in  the  planning  and  execution  of  municipal  budgets.  Within  the 
Ministry  of  Finance,  a  Public  Finance  School  was  inaugurated  in  2004  having  the  special 
responsibility  to  build  capacity  inside  the  Government  system  on  budgetary  and  Public 
Finance Management (PFM) issues. 

The  case  of  Bulgaria  gives  one  example  on  how  reform  in  public  finance  was  conducted  to 
bring  about  economic  transition  and  how  it  was  reinforced  and  accompanied  by  capacity-
building of personnel within government services. 

3.3. 

The Social Level 

At the social level, one supportive element of political transition to democracy is surely that 
of  civic  education  and  civic  engagement  for  citizens  that  can  effectively  understand  and 
participate in the building and reinforcing of an active democratic culture, well aware of their 
rights and duties, able to think critically and to learn how to effectively participate in political 
life as a citizen by exercising their civic rights. 

3.3.1. 

 The development of Civil Society Organisations 

The development of an organized civil society is a must for democracy to take roots because 
they  cater  for  a  change  in  mentality  and  attitude  in  society  at  large  vis-à-vis  a  ruling 
government.    The  aim  of  civil  society  organisations  is  usually  to  empower  individuals  to 
speak up for their individual and collective rights and this in turn influences policy-making at 
the highest levels.  The building from scratch of civil society organisations is shown by the 
experience  of  the  former  Central  and  Eastern  European  Countries  and  the  Baltic  States.23  
While under former regime "civil society organisations" were part of the power and control 
system of the single party regime, with no freedom of association, the democratic transition 
experienced  by  these  countries  put  in  place  an  enabling  legal  environment  for  CSOs  to 

22 http://www.minfin.bg/en/ 
23 http://www.eutransition.eu/#node:1050 

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officially  register  and  start  freely  their  activities.  Such  a  process  was  supported  by 
international  donors  throughout.  Nowadays,  CSOs  influence  general  policy-making  and 
decision-making in these countries. 

In the particular case of Estonia24, two laws to regulate non-governmental organisations were 
adopted:  the Law of Non-profit Associations and the Law of Foundations – both of which set 
clear guidelines for operation. 

Estonia  was  in  fact  the  first  country  in  the  region  to  develop  a  policy  framework  for 
cooperation  between  government  and  civil  society.  The  EKAK  (Estonian  Civil  Society 
Development  Concept)  was  drafted  between  1999  –  2002  (adopted  by  the  Estonian 
Parliament  in  December  12,  2002).    It  sets  out  the  tasks  of  the  public  sector  and  citizens' 
initiatives and establishes principles of their cooperation with each other in politics and public 
administration.  It also elaborates on the complementarity between public authorities and civic 
initiatives,  establishes  principles  for  cooperation  to  help  strengthen  overall  civil  society  in 
Estonia.  The Tartu Volunteer Centre, with the help of various local NGOs, was involved in 
the  development  of  a  Strategy  for  Volunteering  in  Estonia  which  was  later  adopted  by  the 
Joint Committee for implementation of the Estonian Civil Society Development Concept. 

The case of Estonia is a good example of the transition process, where government built and 
established  a  good  working  relationship  with  civil  society  organisations  from  the  very 
beginning and whereby both parts considered each other's work as complementary. 

3.3.2.  Education 

Economic growth and job creation does not happen overnight.  It requires adequate support 
and  investment  in  the  human  resources  of  the  country.  Hence,  education  at  all  levels  of 
society is an essential ingredient to sustain and support economic development. 

Malta  offers  a  different  experience  because  of  the  particularity  and  challenges  of  being  a 
small island state with a localised and geographically-confined economy. Firstly, every single 
raw  material  and  most  of  its  produce  are  generally  imported,  with  the  exception  of  some 
agricultural  and  fishery  products.  This  automatically  means  higher  costs  for  consumers. 
Secondly, small island economies have typically small local markets that challenge the notion 
of market competition and could have monopolistic tendencies, also causing higher consumer 
prices.  Thirdly,  Malta  was  extremely  dependent  on  tourism,  especially  from  the  UK  in 
particular  after  independence  in  1964.  In  the  90s,  Malta  therefore  had  to  find  ways  how  to 
diversify its economy and eventually, how to shift its focus from the manufacturing sector on 
textiles to nowadays more services-oriented sectors and the export of semi-finished products. 

24 http://www.eutransition.eu/#node:1252 

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For Malta, tackling economic development was inextricably intertwined to its own investment 
in  its  one  and  only  'natural  resource':  its  human  capital.  As  the  level  of  investment  in 
education increased over the years, a radical reform in professional and vocational education 
and training25 was designed and kicked off in 2001 when the Malta College of Arts, Science 
and  Technology  (MCAST)  was  established.    This  type  of  educational  investment  has 
substantially contributed to the building of a now dynamic and competitive knowledge-based 
economy.  It  also  increased  the  number  of  opportunities  for  lifelong  learning,  particularly  in 
the  upgrading,  upskilling  and  reskilling  of  workers  to  face  the  challenge  of  an  ongoing 
changing technology. 

The establishment of MCAST managed to raise the status, accessibility and attractiveness of 
professional  and  vocational  education  and  training  (VET).    It  keeps  abreast  with  changing 
demands of the local industry and holds regular meetings with different industrial sectors, the 
Malta  Chamber  of  Commerce,  Enterprise  and  Industry,  Malta  Enterprise,  the  Employment 
Training  Corporation  (ETC)  and  other  entities.    The  MCAST  Board  of  Governors  includes 
experienced educationists in VET but also a number of leading industrialists who ensure that 
MCAST’s  policies,  strategies,  objectives  and  programmes  are  consonant  with  the  changing 
industrial, commercial and servicing highly competitive world outside.  

This  case  study  shows  that  the  transition  to  a  more  developed  nation  is  spurred  on  by 
investing in the education of the workforce and that the country's possession or lack thereof of 
natural resources does not necessarily play a role in helping the economic development of a 
country. 

3.3.3.  Health 

For  decades  Slovenia  has  been  engaged  in  a  systematic  process  of  health  care  system 
modernisation.26 Reintroduction of compulsory health insurance and introduction of voluntary 
health insurance have been among the most important reform strategies across the years for 
Slovenia. 

The Health Insurance Institute of Slovenia (”Zavod za zdravstveno zavarovanje Slovenije” - 
hereafter  ZZZS),  nowadays  a  public  institute  bound  by  Law  to  provide  compulsory  health 
insurance for all citizens and /or inhabitants of Slovenia, has established a stable and efficient 
system with the aim of containing costs on a macro level of health care whilst simultaneously 
ensuring  accessibility  and  quality  of  services.    Until  1999,  ZZZS  was  also  implementing 
voluntary health insurance which later led to the creation of an independent mutual voluntary 
health insurance organisation called "Vzajemna." 

25 http://www.eutransition.eu/#node:1474 
26 http://www.eutransition.eu/#node:1495 

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During  the  EU  integration  process,  a  lot  of  effort  was  invested  into  the  education  of  its 
healthcare  system  personnel,  including  higher  level  professional  training.  Slovenia  also 
established itself as a best practise example of sustainable financing of its health care system, 
especially with the successful launch of its Slovene Health Insurance (smart) Card project. 

This case study shows how Slovenia improved over the years its quality and accessibility of 
healthcare  services  whilst  at  the  same  time  bearing  in  mind  the  importance  of  having  a 
healthcare system that was financially sustainable in the long run. 

3.3.4.  Employment 

The  fall  of  the  Communist  Regime  under  which  everybody  was  employed  by  the  State 
obviously led to various socio-economic changes which had to be dealt with. 

In  the  case  of  Romania27,  after  1990,  the  new  Government  established  an  institution  that 
would deal with employment, vocational training and guidance for people looking for a job, 
but  would  also  make  cash  payments  for  the  unemployed  population  as  a  social  welfare 
benefit.28  

Thus, in 1999, a National Agency for Employment and Vocational Training was set up, as a 
public institution of national interest, having  legal  personality. The Agency  was  renamed in 
2000,  becoming  the  National  Agency  for  Employment  (ANOFM).    Over  the  years,  this 
agency  has  expanded  on  its  services  to  include,  for  example,  professional  job  coaching, 
vocational  training,  pre-dismissal  services,  labour  mediation,  consultancy  for  starting  a 
business  and  to  provide  subsidized  employment  for  people  in  disadvantaged  groups  of  the 
population. 

In 2006, Regional Action Plans for Employment aimed at implementing employment policy 
at  regional  level  were  elaborated.  The  regional  action  plans  were  and  still  are  managed, 
revised  and  upgraded  through  “Regional  Employment  and  Social  Inclusion  Pacts”  which 
involve  all  relevant  players  at  local,  county  and  regional  level.  The  pacts  have  3  levels  of 
operation  – 
two 
implementation levels (county level and local level - municipal or communal). The pacts are 
supported  by  a  management  structure,  permanently  providing  logistical  and  technical 
assistance, namely permanent technical secretariats. 

the  programming/planning  and  evaluation  (regional 

level)  –  and 

This case study shows how the employment strategy put in place tackled employment not only 
from  a  'central  perspective'  (i.e  through  the  establishment  of  the  National  Agency  for 
Employment and Vocational Training (ANOFM)) but also from a regional point of view with 
specific action plans and two levels of implementation to reach out as much as possible to the 
people. 

27 http://www.eutransition.eu/#node:1061 
28 http://www.eutransition.eu/#node:1518 

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3.3.5. 

Social Dialogue 

During  the  whole  process  of  transition,  Romania,  like  other  Central  and  Eastern  European 
countries  and  the  Baltic  states,  had  to  set  up  mechanisms  and  institutional  bodies  to  ensure 
dialogue  between  government  representatives,  trade  unions  and  employers’  associations  in 
matters of economic and social policy. Although mostly of a consultative nature at the outset, 
these tri-partite social dialogue mechanisms later expanded to more specific policy and public 
governance  issues  (such  as  the  management  of  active  employment  policies  at  regional  and 
local level). Therefore, social dialogue between trade unions and representatives of employers 
was  developed  right  from  the  start.    However,  collective  bargaining  was  somewhat  slow  to 
move ahead, both at sector or regional level as well as at the level of individual companies or 
enterprises.    With  the  help  of  EU-funded  projects,  this  particular  problem  was  gradually 
tackled and Romania and other countries in Central and Eastern Europe and the Baltic States 
strengthened  their  experience  in  designing  and  implementing  projects  in  support  of  social 
dialogue.29 

A lesson-learned in this case is that collective bargaining is an important element of social 
dialogue. It develops over time and should not be overlooked, especially when trade unions 
start to develop. 

3.3.6.  Reforms of Pension Systems 

During  the  era  of  the  pre-transition  period,  the  pension  system  used  by  Romania  and  other 
Central  and  Eastern  European  countries,  pension  systems  were  based  on  a  pay-as-you-go 
model, fully funded by the state budget and with very early retirement ages, different for men 
and  for  women.    With  the  economic  and  demographic  changes  rapidly  brought  about  by 
young  emerging  democracies,  the  pension  system  had  to  radically  change  because  it  was 
financially unsustainable and there was a risk of collapse of the systems in a short period of 
time unless substantial reforms were introduced.30 

Work  and  studies  on  pension  reform  started  in  the  mid-1990s,  but  it  was  only  in  the  final 
years of the decade – or in some cases in the early 2000s – that such reforms were eventually 
implemented, through the adoption of new legislation.  This was the case for Romania which 
introduced  a  three-pillar  pension  funding  system  to  include  both  state  and  private  sector 
sources:  firstly,  a  system  managed  by  the  public  sector,  based  on  mandatory  contributions; 
secondly, a mandatory savings system managed by the private sector and thirdly, an optional 
savings system based on voluntary contributions. 

From  this  example,  one  can  reflect  further  about  the  advantages  for  partner  countries  to 
develop social welfare as part of a social safety net for citizens. This, however, cannot come 
about unless there is effective domestic resource mobilization. 

29 http://www.eutransition.eu/#node:1518 
30 http://www.eutransition.eu/#node:1518 

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Sharing 'transition management expertise' with partner countries 

Member  States  that  joined  the  EU  in  the  past  decade  have  found  ways  how  to  share  their 
transition  management  expertise  with  partner  countries  across  the  world,  as  have  other 
countries before them who have gone through similar experiences.  The following are just but 
some examples: 

–  E-governance  reform  in  partner  countries  is  a  priority  for  Estonian  Development 
Cooperation within a larger framework of building democratic societies and transparent, 
accountable,  and  participatory  governments.    Areas  of  shared  expertise  include  ICTs  in 
public  sector  reform,  change  management,  development  of  E-government  technical  and 
institutional  framework,  development  of  a  legal  and  fiscal  framework  for  information 
society,  development  of  e-services,  open  governance,  e-democracy  and  e-participation, 
ICT in education, cyber security, regional and local e-governance and mobile governance.  
Projects  focussing  on  these  topics  have  been  conducted  upon  request  by  various  partner 
countries and there are others in the pipeline. 

–  The Czech Ministry of Finance developed a technical cooperation programme based on the 
Czech experience of the transition management process in relation to public finance.  This 
"Transformation Financial and Economic Cooperation"  has a specific budget allocation to 
meet  requests  for  knowledge  transfer  activities  made  by  partner  countries  for  the 
organization  of  consultations,  seminars,  workshops  and  even  internships  targeting  public 
finance issues. 

–  Romania organised a knowledge-sharing workshop on democratic transformation entitled 
"North Africa and Eastern Europe:  viewpoints and shared experiences of transition."  The 
institutions  involved  were  the  Romanian  Ministry  of  Foreign  Affairs,  UNDP,  the  United 
Nations Electoral Assistance Division and the Permanent Electoral Authority of Romania.  
The main aim was to explore whether the Eastern European democratization and transition 
processes  would  provide  a  useful  learning  process  for  Tunisia  and  Egypt  and  to  have  a 
forum  for  free  debate  between  Tunisian  and  Egyptian  officials,  civil  society 
representatives, academics, journalists and international experts in an atmosphere free from 
political and social pressure.  Amongst topics the discussed were the management of the 
electoral  process  and  the  credibility  of  elections  to  instigate  further  reflection  about 
ownership of the democratization process. 

–  Lithuania – as other enlargement countries – made use of twinning projects in support of 
its  own  institutions  since  1998.    Since  becoming  an  EU  Member  State  in  2004,  the 
Lithuanian  institutions  made  use  of  this  twinning  experience  with  partner  countries.  An 
example of one of these twinning projects is the support to the Milli Mejlis (Parliament) of 
the Republic of Azerbaijan. A second successful example was that of capacity building in 
the areas of food safety and animal welfare.  In 2011, the State Food and veterinary Service 
of  Lithuania,  together  with  Hungarian  specialists,  implemented  this  Twinning  Project  in 
Serbia.  The main objective was to provide assistance to the Veterinary Directorate of the 
Ministry  of  Agriculture,  Forestry  and  Water  Management  to  strengthen  their  capacity  to 

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enforce and implement the Serbian Food Safety Law and Animal Welfare Law which are 
already largely aligned with EU legislation. 

The experience and the expertise developed in the EU and its Member States States through 
the  accessions  in  the  past  decade  in  handling  processes  of  transition  can  be  an  important 
added-value  for  partner  countries  around  the  world,  aspiring  towards  a  successful  transition 
management  process.  Eventually,  the  specific  experience  of  the  new  Member  States    could 
provide further scope to explore untapped comparative advantages as areas of expertise within 
the EU's external action where bilateral or joint programming could be undertaken to develop 
new  partnerships,  synergize  efforts  with  those  of  more  long-standing  donors  and  attract 
resources. It would also work towards boosting the donor profile of these Member States not 
only within the EU's development cooperation sphere but also internationally. After all, it is 
an  undisputable  fact  that  a  newly  independent  state  can  get  advice  from  a  country  that  has 
itself recently experienced independence; a small island developing state can get advice from 
small  island  economies  that  have  faced  and  may  still  face  similar  challenges;  and  a  once 
centrally-planned economy can walk in the footsteps of others that have learned from painful 
reforms towards a market economy. 

Last  but  not  least,  Croatia's  accession  to  the  EU  will  open  another  facet  of  experience  and 
expertise in transition management that can be shared with partner countries. 

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