Rainer Schweickert

Neighbourhood Europeanization Through ENP: The Case of Ukraine

This article contributes to the integration of Neighbourhood Europeanization in the literature on Europeanization. Based on insights from Membership and Enlargement Europeanization, we reveal important inconsistencies of Neighbourhood Europeanization through ENP as well as a lack of robust empirical support for its effectiveness. We define core dimensions and determinants of Neighbourhood Europeanization and implement this analytical framework for the case of Ukraine. The analysis clearly demonstrates substantial asymmetries in ENP policy across the three dimensions we chose – democracy promotion, economic co-operation and JHA, which clearly reflect the inconsistency of the ENP concept: top-down formulation of EU interests combined with weak conditionality. ENP inconsistencies could however be overcome through widening linkages and improving financial support to mobilize and strengthen positive local support of EU demands and rewards.

The European Union's Relations with Ukraine and Azerbaijan

Among European Neighborhood Policy countries, Azerbaijan stands out, because it leans on its resource base and sees the EU on the receiving end of bilateral relations. At the other extreme, Ukraine depends on EU cooperation. A comprehensive theoretical concept for analyzing both types of asymmetries is developed by considering Ukraines and Azerbaijans rational cost-benefit and constructivist, norm-oriented national strategies. Both national strategies are contrasted with bilateral, regional, and multilateral EU approaches to democracy promotion, economic cooperation, Justice and Home Affairs cooperation, and conflict resolution in the European neighborhood. The elements on which the EUs Neighborhood Europeanization strategy should be based for maximal effectiveness are considered.

Adjustment policies and economic growth in developing countries — Is devaluation contractionary?

ZusammenfassungAnpassungspolitik und wirtschaftliches Wachstum in Entwicklungsländern: Wirken Abwertungen kontraktiv? — Der Auffassung, daß abwertungsbedingte Substitutionseffekte ausreichend stark sind, um eine Ausweitung der Produktion zu gewährleisten, wird vielfach entgegengetreten. Eine verwirrende Vielzahl theoretischer Modelle verweist auf kontraktive Auswirkungen einer realen Abwertung. Empirische Analysen von Wechselkurseffekten auf das gesamtwirtschaftliche Wachstum fehlen jedoch weitgehend. Die vorliegende gepoolte Länderquerschnittsuntersuchung für den Zeitraum 1982—1987 soll dazu beitragen, diese Lücke zu schließen. Die Ergebnisse der Regressionsschätzungen widersprechen dem weitverbreiteten Pessimismus über die Wachstumseffekte realer Abwertungen. Die SchÄtzungen für verschiedene Ländergruppen zeigen allerdings, daß die Richtung, das Ausmaß und die zeitliche Abfolge der Wirkungen von den charakteristischen Strukturmerkmalen der untersuchten Länder abhängen. Insbesondere die Exportstruktur erweist sich als wichtig.RésuméLes politiques d’ajustement et la croissance économique dans les pays en voie de développement: Est-ce que la dévaluation empêche la croissance? — La série déconcertante des théories qui posent qu’une dévaluation empêche la croissance doute de plus en plus de l’opinion que les effets de substitution causés par une dévaluation sont suffisamment forts pour augmenter la production macroéconomique. Avec cette étude on a l’intention de diminuer le trou frappant concernant la recherche empirique sur des effets d’une dévaluation. Les résultats de cette analyse de regression faite à travers des pays pour la période de 1982 à 1987 s’opposent au pessimisme général en ce qui concerne la répercussion d’une dévaluation réelle sur la croissance économique des pays en voie de développement. Les estimations pour des groupes de pays spécifiques indiquent que la direction, le degré et la structure temporelle des effets de croissance dépendent des caractéristiques structurelles des économies, principalement des exportations prépondérantes.ResumenPoliticas de ajuste y crecimiento de países en desarrollo: ¿puede una devaluación ser contractiva? — El impresionante número de marcos teóricos que tratan la devaluación contractiva está cuestionando seriamente la noción de que los efectos substitutivos inducidos por la devaluación son suficientemente fuertes como para garantizar un impacto netamente expansivo sobre el producto. La intención de este trabajo es llenar el vacío que existe en el studio empirico de los efectos de una devaluación. Los resultados del análisis de regresión de una muestra de varios países para el periodo 1982—1987 refutan el pesimismo generalizado sobre el impacto de una devaluación del tipo de cambio real sobre el crecimiento. Sin embargo, las estimaciones para ciertos grupos de países indican que el signo, el nivel y la estructura temporal de los impactos sobre el crecimiento dependen de las características estructurales, ante todo de las exportaciones más importantes de las economías estudiadas.

Bottom‐up or top‐down: what drives the convergence of Ukraine’s institutions towards European standards?

This paper argues that in the absence of a strong membership incentive within the European Neighbourhood Policy (ENP), a top‐down institutional convergence of CIS (Commonwealth of Independent States) countries towards European standards is unlikely to be successful. However, due to enlargement fatigue within the EU, the membership incentive is off the agenda for the CIS. The ENP must therefore either initiate or hasten a bottom‐up institutional convergence by identifying bottom‐up domestic forces that are willing and able to drive the convergence in a particular country. Ukraine, whose oligarchic clans are the main bottom‐up forces behind institution‐building, is a case in point. Having supported the first wave of institutional reforms during the Orange Revolution, these bottom‐up forces are now facing great difficulties in forming sustainable coalitions for further institutional reforms. The paper shows that the EU, by providing economic incentives rather than the membership incentive, could exploit the strong business interests of the oligarchic clans in the EU markets and EU investment to motivate them to jointly drive institutional convergence from the bottom up.

Prospective Nato or EU Membership and Institutional Change in Transition Countries

This paper quantifies the impact of incentives related to potential membership on institutional change as measured by the World Bank Governance Indicators (WBGI). Based on a panel of 25 transition countries for the period from 1996 to 2008 we show that pre-accession incentives provided by EU and NAT Oclearly matter for institutional development. In addition, path-dependency determined by cultural norms may be overcome by economic liberalization while foreign aid seems to hamper institutional development.

Now so near, and yet still so far: economic relations between Ukraine and the European Union

Kiev is not so far away from Brussels as one might expect. Ukraine already performs quite well when compared to the other countries in the queue for entry into the EU. Especially the fiscal and external debt figures are better than in other countries. On the negative side, there is a considerable backlog with respect to the development of administrative and judicial institutional capacities, and a potential for macroeconomic instability due to monetary expansion, rising inflation rates, and real exchange rate instability. From a macro perspective, the most pressing issue is to end inflationary pressures resulting from targeting the exchange rate to a weakening dollar. Among the alternative frameworks available to Ukraine, the current exchange rate anchor can be made more flexible by targeting a basket made of the US dollar and the euro. Such an exchange rate anchor framework provides a clear indication to the public about monetary policy, disciplines fiscal policy, and is relatively easy to manage. Additionally, a clearer link to the euro may be useful for a greater integration into the EU. From a micro perspective, the most pressing issues which can be targeted in the short run are taxation and competition policy. The tax system is unstable, complex, and inconsistent. A reduction of tax exemptions could broaden the tax base and allow for lower nominal tax rates. Privatization has been rather limited in the non-traded goods sectors. Additionally, the completion of privatization needs to be coupled with a more robust and consistent regulatory framework in order to attract more FDI, as was the case in the new member states of the EU. Sandwiched between the EU and Russia, Ukraine is likely to derive substantial gains from EU integration. Excluding the energy sector reveals that Ukrainian trade with the EU already outperforms its trade with Russia. In addition, EU integration is likely to attract more inflows of foreign capital if the new government is able to provide a more attractive macroeconomic and institutional environment. Ukraine should press for fast reforms and use the ?honeymoon? period of the new government to open negotiations for EU membership by submitting a formal application. This will, among other things, help to prevent vested interest groups from blocking the reform process. A pragmatic approach for an integration strategy would include four elements: identifying reform priorities; harmonizing Ukraine?s legislation with EU law; undertaking steps to get a market economy status from the EU; and, finally, signing a free trade agreement with the EU. The EU, on its side, should actively support the continuation of the reform process in the country, especially with respect to institution building. Finally, one must stress that the EU itself will gain from this enlargement, as it has gained from all the previous ones. In our view both sides are now facing a historic opportunity that should not be missed, neither by Kiev nor by Brussels.

Prospective NATO or EU membership and institutional change in transition countries1: Membership Perspective AND Institutions

This paper quantifies the impact of incentives related to potential membership on institutional change as measured by the World Bank Governance Indicators (WBGI). Based on a panel of 25 transition countries for the period from 1996 to 2008 we show that pre-accession incentives provided by EU and NATOclearly matter for institutional development. In addition, path-dependency determined by cultural norms may be overcome by economic liberalization while foreign aid seems to hamper institutional development.

Balancing National Uncertainty and Foreign Orientation: Identity Building and the Role of Political Parties in Post-Orange Ukraine

BUILDING NATIONAL IDENTITIES WAS AT THE centre of post-communist transformation but the search for the appropriate mix of ethnic and civic components of a national identity, along with the redefinition of the ‘Self’ and the ‘Others’, has been complicated by primordialism and post-colonialism (Cirtautas & Schimmelfennig 2010). While primordialism has been reflected in the plurality of regional and local identities and led to uncertainty about self-sufficiency of own national identities, a consequence of post-colonialism has been an ‘inferiority complex’, involving a willingness to attach national identities to post-imperial or modern supra-national identities. However, a comprehensive analysis, integrating both features, is still needed. In addition, the literature concerning identity building concentrates on the elite, civil society and the population as internal drivers and the EU and Russia as external drivers. Thereby, it mostly neglects political parties as drivers of identity building, although they play a central role in post-communist countries. We argue that a focus on the role of political parties allows for a more comprehensive view of the interconnections between the main features of postcommunist identity building. Parties can formulate positions on national identity and foreign orientation and influence the preferences of the population on identity issues. In turn, through voting for a particular party during elections, the population can express its preferences on identity issues. Hence political parties can be assumed to play a central role in post-communist identity building.

NATO AS AN EXTERNAL DRIVER OF INSTITUTIONAL CHANGE IN POST‐COMMUNIST COUNTRIES

So far, economic analyses of NATO enlargement have been restricted to aspects of regional security while political analyses focused on indirect peace‐building effects on democracy in the first place. Our panel regressions for 25 post‐communist countries for the period from 1996 to 2008 reveal that direct incentives provided by NATO pre‐accession are important for broad‐based institutional development. Results are even more robust than for variables measuring EU pre‐accession or NATO membership effects. This supports the argument that NATO can act as a transformative power and should strengthen its political agenda.

Institutional Convergence of CIS Towards European Benchmarks

While the transformative power of EU accession is widely accepted, there seems to be widespread pessimism concerning the potential impact on institutional convergence through ENP, i.e. for neighboring countries without a membership perspective. This chapter analyzes external determinants of institutional change measured by the WBGI. An econometric panel analysis for 25 transition countries for the period of 1996–2005 reveals a considerable element of path-dependency. However, basic agreements with the EU and NATO and economic liberalization matter most. Hence, ENP can provide incentives for better governance if inconsistencies and shortcomings in action plans can be removed.