The Bulgaria 2010 Review: Bulgaria in EU

Politics » BULGARIA IN EU | Author: Ivan Dikov |January 6, 2011, Thursday // 22:48
Bulgaria: The Bulgaria 2010 Review: Bulgaria in EU Bulgarian PM Borisov with other EU leaders at an EU Council Summit in Brussels. Photo by EPA/BGNES

Schengen: Will Bulgaria's 2011 Hopes Be Frustrated?

Bulgaria's accession to the borderless Schengen Agreement in March 2011 has been a priority for the Borisov Cabinet to which it dedicated much effort in 2010.

As 2010 drew to a close, however, some of the most influential EU countries – France, Germany, the Netherlands, Sweden, Denmark – made clear their opposition to Bulgaria's Schengen accession over various concerns – ranging from the technical security of the external borders all the way to issues which are not directly related to the Schengen mechanism.

In addition to various statements by French European Affairs Minister Laurent Wauquiez and other European officials, in December in a letter to EU Commissioner for Home Affairs, Cecilia Malmstrom, the French Interior Minister, Brice Hortefeux, and his German counterpart, Thomas de Maiziere, stated the March 11, 2011 joining date is too premature, pointing out the two countries have not fulfilled all requirements.

The letter mentions flaws in the areas of security, justice, fight against corruption and organized crime, which absolutely must been taken into account over their possible serious negative effects on the EU security related to its external borders and access to the Schengen database.

The two ministers, however, admit that from a technological viewpoint the process of Bulgaria and Romania's joining of the Schengen zone can be assessed as positive.

At the end of November the authorities in France and the Netherlands dealt a blow to Bulgaria and Romania Schengen aspirations by tying the date for accession with the so-called Co-operation and Verification Mechanism (CVM), through which Brussels monitors the progress the two countries are making in justice and home affairs.

Unlike Romanian President Basescu, who called the letter of the Interior Ministers of France and Germany to the EC "discriminatory", the Bulgarian Prime Minister Boyko Borisov described the French and German criticism of Bulgaria and Romania as "fully justified." Borisov, Foreign Minister Mladenov and Interior Minister Tsvetanov have made it clear that the country will seek to implement fully all technical requirements for Schengen entry by March 2011, and that it will be eager to fix any matter of criticism.

At the same time, at the end of December, the European Commission confirmed its position against tying Bulgaria and Romania's Schengen zone entry with additional clauses and with the post-accession progress monitoring mechanism known as the Cooperation and Verification Mechanism.

The decision on Bulgaria and Romania's Schengen entry will be made by the countries that are members of the Schengen Area with unanimity based on an EC experts' report expected around January 20, 2011.

At the beginning of December, experts from the European Commission were on a mission in Sofia to assess Bulgaria's Schengen readiness, stating that Bulgaria and Romania's entry to the Schengen Agreement depends on the assessment of technical criteria. This was the seventh consecutive visit of Schengen experts in Bulgaria.

On December 20, EP Vice President Rayner Wieland said in Sofia the decision on Bulgaria and Romania potential Schengen entry is to be made on March 27 2011.

On December 30, Romanian media published unverified reports that Bulgaria had failed the final EC inspection for Schengen readiness over technical and staff issues at the Kapitan Andreevo crossing point on the Bulgarian-Turkish border.

According to the Bulgarian government, Bulgaria will have met fully all technical criteria for Schengen Entry by March 2011. Analysts have commented for Novinite.com (Sofia News Agency) that Bulgaria and Romania are more likely to be allowed in the Schengen Area towards the end of 2011, rather than in March.

In December, Interior Minister Tsvetanov said Bulgarian government is yet to spend a total of BGN 56 M (about EUR 28 M) state budget money on improving the country's border control as a part of Bulgaria's bid to join Schengen agreement.

In November and December, Hungarian PM Orban and Hungarian ministers made it clear that Bulgaria and Romania's accession to Schengen will be one of the top priorities of the Hungarian EU Presidency, scheduled for the first half of 2011.

When Bulgaria and Romania joined the EU, in 2007, persistent corruption and insufficient reforms of their jutice systems determined the set-up of an unprecedented monitoring mechanism, the so called CVM. The CVM is technically unrelated to the Schengen criteria but apparently countries such as France and Germany believe that the EC reports under the mechanism contain indicators that can also be used to judge elements of Bulgaria and Romania's Schengen preparedness – a suggestion rejected by the EC.

In the fall of 2010, Bulgaria also started working with the Schengen Information System (SIS). On October 22, the Bulgarian Interior Minister, Tsvetan Tsvetanov, opened the National SIRENE Bureau (Supplementary Information Request at the National Entry), which is a system for exchange of additional or supplementary information on alerts between the Schengen States.

According to the EU requirements, every Schengen state must create a SIRENE Bureau, working 24/7 and exchanging information with the other bureaux. About 30,000 employees from different units of the Interior Ministry were trained to work with the Schengen Information System, which has done 33 million records of wanted or missing people, people, who are banned from entering the Schengen zone, investigated or missing vehicles, lost and fake documents, weapons. Once entered in the system, the information could reach all end users within 3 minutes.

Bulgaria's government has been keeping a low profile over France's Roma crackdown, apparently fearing that tension with Paris might put at risk its Schengen accession.

Bulgaria submitted its formal declaration of readiness in September 2007 and sent European authorities follow-up reports, penning in March 2011 as the target date for accession to the Schengen zone. The estimates turned meaningless due to a delay in the award of a tender to produce biometric passports and lack of progress on the second generation of the EU's Schengen Information System, more commonly known as SISII.

The 1985 Schengen Agreement is an agreement among most Western and Central European countries which allows for the abolition of systematic border controls between the participating countries. By the Treaty of Amsterdam, the agreement itself and all decisions having been enacted on its basis had been implemented into the law of the European Union.

Bulgaria Appoints EU Funds Minister

After in the summer of 2009, the Borisov Cabinet decided to shed the post of Minister for EU Affairs, in the spring of 2010, the Prime Minister partly reversed his decision by appointing a special Minister in charge of the coordination of the absorption of EU funds. The then mayor of the city of Gabrovo Tomislav Donchev assumed the position.

Bulgaria's EU Funds Absorption – Still in the Bright Future

Even though in September, Bulgaria's EU Funds Minister Tomislav Donchev claimed the speed of absorption of EU money increased seven times since the cabinet came into office last summer, Bulgaria still awaits to see the tangible effect of the billions of EUR slated for the country in EU's 2007-2013 framework.

Donchev believes that by 2013 Bulgaria might have absorbed 70% to 90% of the EUR 7 B allocated to it under the EU operational programs for new railways, highways, purifying stations, waste treatment facilities, kindergartens. He also said he hoped the absorption of the funds under the already expired pre-accession ISPA program to reach 75%. According to the minister, Bulgaria has so far negotiated 35% of the funding under EU programs, with 8%, or about EUR 628 M already having reached their Bulgarian beneficiaries.

In November, a European Commission report has revealed that the amount of EU funding lost in fraud and "irregular payments" in 2009 almost doubled to reach EUR 1.3 B. A staggering two-thirds of alleged EU fraud concerns just six countries: Bulgaria, Romania, Greece, Italy, Poland and Spain.

In July 2010, for the first time Bulgaria started actually absorbing more money from the EU in grants than it is contributing to the joint budget of the Union. The new data of the central indicates a reversal of the situation until the end of 2009 when Bulgaria was actually a net contributor to the EU budget because of its troubles with the absorption of the EU funds, especially in mid 2008 when the European Commission froze some EUR 825 M in aid for the country from the pre-accession programs over detected irregularities (which were mostly unblocked later).

In September, Switzerland, under the EEA mechanism announcing BGN 107 M in grants to Bulgaria.

In December, the European Commission has requested from Bulgarian an urgent action plan for reform in the water infrastructure sector. The absorption of over EUR 1,5 B of EU funds on water project by 2013 depends on the reform of the water sector.

Also in December, the EC approved Bulgaria's application for EUR 250 M from operational programs for the construction of the Trakiya Highway.

Bulgarian Govt Reads Encouragement into Barroso's Criticism

Even though in September World Bank President Robert Zoellick sent a special laudatory letter dedicated to Bulgaria to the European Commission President Jose Manuel Barroso, claiming the Bulgarian government is making substantial progress in fighting corruption and organized crime, and the World Bank is determined to back the Borisov Cabinet with expertise, in December, Barroso send a devastatingly critical letter to the government in Sofia in which he outlined the facts about Bulgaria's absorbing to date only about 6% of the EU funds allocated to it under the EU Structural and Cohesion Funds.

The Borisov Cabinet, however, saw a silver lining in the recognition of its will to improve and described the letter as "encouraging" and "the best we ever got". The Cabinet has agreed to take on Barroso's suggestions for joint actions of the Bulgarian government, the EC, and interested international financial institutions.

JESSICA and JEREMIE in Bulgaria

In 2010, Bulgaria saw the launch of the Joint European Support for Sustainable Investment in City Areas (JESSICA), an EU tool for financing urban development projects.

The EU JEREMIE initiative has been launched in Bulgaria with the registration of a Holding Fund with a capital of EUR 199 M. JEREMIE, Joint European Resources for Micro to medium Enterprises, is an initiative of the European Commission (Operational Program "Sustainable Development and Competitiveness" ) together with the European Investment Bank (EIB) and the European Investment Fund (EIF) in order to promote increased access to finance for the development of micro, small and medium-sized enterprises in the regions of the EU.

Bulgaria Hopes Barroso Is Right: EU Danube Strategy to Obliterate Economic Imbalances

As the EU has moved ahead with political and administrative support for the launch of its "Danube Strategy," much of Bulgaria is looking towards it with hope. This is especially true Northern Bulgaria, which at the recognition of Bulgarian Cabinet members, has been neglected, and even more so - Northwestern Bulgaria ("Severozapaden"), which is EU's poorest region.

EC President Barroso confirmed EU's political support for the Danube region strategy at a special summit in Bucharest in November.

One of the strategy's main aims is to reduce the differences and ease the communication between the 14 nations included: Germany (Baden-W?rttemberg and Bavaria), Austria, the Slovak Republic, the Czech Republic, Hungary, Slovenia, Croatia, Serbia, Bosnia and Herzegovina, Montenegro, Romania, Bulgaria, Moldova and Ukraine (the regions along the Danube). Eight are Member States of the EU and six are not.

Together, the Danube region accounts for as much as 20% of the total EU territory and has 115 million citizens. It includes the poorest countries in EU (Bulgaria and Romania) as wealth some of the wealthiest parts in Austria and Germany. The Danube Strategy will focus on tourism, transport, environment, economical and social development.

In the fall of 2010, highest-ranking Bulgarian government officials made it clear that Bulgaria is going to be proactive in the EU Danube Strategy.

In December, the EC unveiled a draft action plan for the Danube Strategy, with a final version to be approved by the June 2011 summit meeting of the European Council.

Bulgarian President Parvanov and Romanian President Basescu at a meeting in September, and Bulgaria PM Borisov and Romanian PM Boc in November all declared they want more Danube bridges and other infrastructure projects as part of the Danube Strategy of the EU.

The second Bulgaria-Romania Danube bridge (Danube Bridge 2) at Vidin-Calafat, after years of delays, is set to be completed by the end of 2011 or start of 2012.

The only existing bridge on the Danube between Bulgaria and Romania at present is the one between Ruse and Giurgiu, the so called "Friendship Bridge" completed by the Soviet Union in 1954 under the auspices of Soviet dictator Joseph Stalin.

 

EU Enlargement: Bulgaria Backs All Possible Candidates

In November, the EC adopted its progress reports on nine EU hopefuls – Croatia, Serbia, Montenegro, Macedonia, Albania, Kosovo, Bosnia and Herzegovina, Turkey, and Iceland - making it clear that only Croatia and Iceland are tangibly close to joining the Union.

Iceland began its accession talks in July 2010, after securing fast approvals on all levels – despite reported doubts by its own citizens, and in December, the EC made it clear that Croatia, which had been negotiating for some time, should be able to complete its negotiations by mid 2011, and join in 2013, after all existing members grant ratification to its accession.

Turkey and the other Western Balkans states appear to be facing grave issues in their bids to join the EU, as outline by the progress reports.

Bulgaria's immediate neighbor Macedonia is set back in its EU efforts by its "name dispute" with EU member Greece. Macedonia is found to have fulfilled "the political criteria" for EU membership but dialogue among political actors, judiciary and public administration reform, the fight against corruption, freedom of expression, and improving the business environment remain issues of criticism.

In December, Montenegro formally received candidate status coupled with demands for further progress.

Serbia has been found to be in a good position to bid for EU membership but is urged for further judicial and administration reforms, and efforts against organized crime and corruption. What is more, Serbia faces political setbacks with respect to the recognition of Kosovo, and the search for two war crimes suspects demanded by the Hague Tribunal.

In September, EU High Representative for Foreign and Security Policy, Catherine Ashton, has urged Serbia and Kosovo to "start dialogue as soon as possible. Serbia's status as an EU candidate country still has not been recognized even though it submitted its application for accession in December 2009.

After in July 2010, the International Court of Justice ruled that Kosovo's declaration of independence was not contrary to international law, at the beginning of September Serbia agreed to tone down a draft resolution on Kosovo that it submitted to the UN General Assembly.

The "thaw" was achieved by heavy EU pressure but was accompanied with statements of senior Serbian officials that Serbia in no way intended to recognize Kosovo. EU officials have repeatedly urged Serbia to quit trying to restore its sovereignty over Kosovo in exchange for a green light to its EU membership.

While encouraging the efforts of other Western Balkans nations – Albania, Bosnia and Herzegovina and Kosovo – the progress reports have made it clear that they are far from coming closer to membership in the foreseeable future.

As far as Turkey is concerned, the Commission progress report has criticized its political reforms in addition to the problems in the relations between EU member Cyprus and the Turkish government.

In November, the European Union decided to lift the visa regime for citizens of Albania and Bosnia and Herzegovina but warned that the measure could be suspended if it is abused. The decision was made despite the concerns of France, Germany and the Netherlands that there could be an increase of unfounded asylum claims from the two countries.

Bulgaria, Greece: Serbia Must Be EU Member by 2018

At a trilateral foreign ministers' summit in December, Bulgaria and Greece declared that Serbia should become an EU member by 2018.

Bulgaria has been eager to promote Serbia's EU prospects, with a formal Parliament declaration in July, despite protests in downtown Sofia by the Bulgarian minority in Serbia demanding protection of its rights. On the same issue, the nationalist party Ataka has demanding that the Borisov Cabinet should be more exacting with respect to Serbia, especially after in November Serbia's border authorities refused to let into the country members and supporters of Ataka party, traveling by buses to Bosilegrad to mark the ninety-first anniversary since the signing of the Treaty of Neuilly-sur-Seine in 1919 which made Bulgaria cede some of its own territories to Serbia.

Throughout 2010, Bulgaria has been especially active in backing the membership prospects of all Western Balkan states, with Foreign Minister Nikolay Mladenov visiting each one of themseveral times.

Bulgaria, Poland: EU Should Focus on Ties with Ukraine, Belarus, Western Balkans

Bulgaria has backed Poland its insistence the EU needs to solidify its ties with its neighbors to the east and south - Ukraine, Belarus and Moldova as well as with the countries from the Western Balkans.

At the 14th EU-Ukraine Summit in November, the EU made it clear it deemed likely to sign an Association Agreement with Ukraine 2011. This was the first such summit since Yanukovich was elected President of Ukraine in February 2010. While his pro-Russian course has ruled out a NATO membership for Ukraine, Yanukovich has stated explicitly that his country will seek integration with the EU.

In July, the EU started talks for association agreements with Georgia and Armenia.

Bulgarian Govt Backs Turkey for EU amidst Rising Domestic, EU-Wide Opposition

In 2010, Turkey's EU membership appeared to be growing more and more distant amidst various concerns on part of EU member states and their citizens. Since starting accession talks in 2005, Turkey has closed only one of the 33 chapters; only 13 chapters have been opened altogether, and those have subsequently been frozen.

As far as Bulgaria is concerned, the formal declarations of the Borisov government have been in favor of Turkey's EU bid but powerful social factors led by nationalist and far right circles such as the Ataka party and the VMRO party have been firmly opposed and have demanded a nation-wide referendum. Others have insisted that Turkey should provide Bulgaria with a sizable compensation (up to USD 10 B for properties of Bulgarian refugees who fled Turkey in 1913-1918, and that Bulgaria should veto Turkey's EU accession if it fails to do so. The government has renounced such a scenario and Turkey has vowed to satisfy all legitimate claims should documents be provided.

Bulgarian Parliament Balks at Turkey EU Accession Referendum

In the fall of 2010, the Bulgarian Parliament has cited legislation inadequacies as a reason not to delay the scheduling of a referendum on Turkey's EU accession. After heated debates on the referendum petition tabled by the nationalist party VMRO, which is backed by 330 000 signatures, the Parliament decided that the administrative population census directorate "GRAO" must establish the legitimacy of at least 200 000 of the submitted signatures.

If the signatures are found to be legitimate, it is still unclear when and whether the Parliament will schedule a referendum as it is required by law; it scheduled the referendum will be the first of its kind for Bulgaria under the Citizens' Participation Act.

Backing Turkey Gets Borisov in Trouble

Bulgarian PM Borisov has run into a dispute with his major allies backing his minority government – the nationalist party Ataka and its leader Volen Siderov – after in October he welcomed Turkish PM Erdogan in Sofia, and declared support for Turkey's EU membership.

Siderov and other Ataka MPs showed up in Parliament with special T-shirts saying "No to Turkey in the EU", and warned that the issue could cause problems between them and GERB. They even threatened to withdraw their support from the Cabinet, which could even mean its collapse as the ruling party GERB is 4 MPs short of an outright majority. Borisov said Bulgaria could potentially hold a referendum on Turkey's EU membership only after Turkey completes its negotiation process.

On the issue of Turkey in the EU, Borisov even slammed the outgoing Etienne de Poncins suggested that Bulgaria should declare clearly its position on whether Turkey should join the EU rather than beat about the bush.

More on the Bulgaria-Turkey relations read in The Bulgaria 2010 Review: Diplomacy and Foreign Policy.

Barroso: EC Backs Turkey's EU Accession, Member States Don't

Turkey's bid to join the European Union is becoming complicated by a number of factors, European Commission President Jose Manuel Barroso stated in September. The European Commission supports the enlargement of the Union but only if all member states meet all criteria. At the same time, there is growing concern and opposition to Turkey's accession in some of the EU 27 member states, he noted.  He pointed out that cultural differences as well as the problems with potential Turkish emigration to the rest of the EU are complicating Turkey's bid. The conflict in Cyprus as well as human and minority rights have been major issues between Turkey and the EU.

In October, right-wing parties called for an European-wide referendum on Turkey's EU membership.
While Germany's President and Foreign Minister have made it clear they can see Turkey in the EU, polls have shown a rising number of Germans opposed to such a scenario.

UK's new Conservative Prime Minister David Cameron and Spanish PM Zapatero, with Spain holding the rotating EU Presidency in the first half of 2010, have declared firm backing for Turkey's EU bid and frustrations at the slow pace of accession talks.

 

EU's Bid for Place under the Sun: European External Action Service Launched

The European External Action Service (EEAS) was launched on December 1, symbolically coinciding with the first anniversary of the entry into force of the Lisbon Treaty, which stipulated its creation.

After a year of wrangling between the European Union's institutions over its set-up and competencies, EEAS began work with just a handful of senior officials, with Pierre Vimont, until recently France's ambassador to Washington, as its Secretary-General, his two deputies, Helga Schmid and Maciej Popowski, and David O'Sullivan, the service's head of administration.

The big change for EU's foreign policy structures is expected to happen on January 1, when 1 114 officials from the European Commission and 411 officials from the secretariat of the Council of Ministers are to be transferred out of their existing institutions into the new service.

Bulgaria and Poland are the only countries from the newcomers in the European Union, which acceded in 2004 and 2007, that managed to land seats in the Union's delegations around the world.

Filip Dimitrov, former Bulgarian Prime Minister, right-wing leader and senior diplomat, will assume the post of EU ambassador to Georgia. Poland secured two representatives, with Tomasz Kozlowski to South Korea, and Joanna Wronecka to Jordan.

Two out of eighteen Bulgarian candidates – Dimitrov and career diplomat Stefan Tafrov managed to make it to the final stage of the selection process for members of the new EU External Action Service where Georgia was among the countries considered top-priority for the EU.

In the summer of 2010, the European Parliament approved recommendations on the organization and working methods of the European External Action Service (EEAS) stipulating that on Common Foreign and Security Policy issues, EU High Representative Ashton will have as deputies the EU commissioners for enlargement, development, or humanitarian aid (Bulgarian Kristalina Georgieva) or the Foreign Minister of the country holding the EU Presidency.

Bulgaria's Ex PM Filip Dimitrov First EU Ambassador in Office

On December 1, 2010, former Bulgarian Prime Minister Filip Dimitrov became the first officially appointed EU ambassador after passing with flying colours a discussion at the European Parliament. He will serve as EU's Ambassador to Georgia.

Dimitrov's appearance was the first in a series agreed between the EP foreign affairs committee and Catherine Ashton, the EU's foreign policy chief.

According to Dimitrov the main challenge that EEAS faces will be building up a common European policy. According to media reports Dimitrov has made a "brilliant" showing during the interviews for the top job.

Filip Dimitrov, a lawyer by profession, chaired 1990-1994 the Union of Democratic Forces, the main rightist political movement in Bulgaria in the 90s. 1992-3 he was Bulgaria's first rightist PM after the end of the communist regime in 1989. 1997-8 Dimitrov was Bulgaria's envoy to the UN, and then 1998-2001 he served as the country's ambassador to the US.

 

The Wretched of Europe: France's Deportations of Roma EU Citizens

Over the summer and fall of 2010 France under President Nicolas Sarkozy intensified a campaign to expel Roma Bulgarians and Romanians that had set up squatter camps around the country, and whom it considered a public safety hazard. The campaign, often seen by critics as racially motivated, drew much criticism by the European Commission, the European Parliament, the UN, and NGOs such as Amnesty International. Romania was vocally critical of France, while the Bulgarian Cabinet – though not the President – sought to keep a low profile of the entire development for fear of jeopardizing its relations with France ahead of crucial EU and Schengen decisions.

The one thing France's controversial campaign – with some similar instances in other EU countries such as Italy and Denmark – achieved for certain is underscoring the plight of the Roma people across Europe.

France Says 1600 Bulgarians Deported since Jan 2010

In November, data showed French authorities deported more than 21 000 people (mostly Roma), since the beginning of the year and nearly 1 600 were Bulgarian citizens, according to official figures. According to figures presented by Immigration Minister Eric Besson to the National Assembly Wednesday, of the 21,384 people deported from France in the first nine months of 2010, some 13,000 were Romanian and Bulgarian.15 455 of these were forcefully deported, including 6562 Romanian and 910 Bulgarian nationals.

Of the 5,929 "assisted returns" in 2010, those who were given a plane ticket and 300 euros in cash – 5,086 were Romanian and 683 were Bulgarian. In 2009 there were 9,875 Romanians and Bulgarians deported.

Bulgaria's Foreign Ministry had announced that fewer than 100 Bulgarian nationals have returned voluntarily from France since the beginning of the year after being given a plane ticket and 300 euros in cash.

Roma from Romania and Bulgaria are allowed free passage into France if they are European Union citizens. After that, however, they must find work, start studies, or find some other way of becoming established in France or risk deportation. French officials have said the deportations are part of a broader crackdown on illegal immigration, but they have sparked major criticism at home and abroad.

EU Cancels Charges against France over Roma Expulsion

After threatening an infringement procedure against France on the Roma issue, in October, the European Commission officially canceled its intention after the former agreed to amend its legislation in order to comply with the EU law.

EU Justice Commissioner Reding has defined France's controversial policy as "disgrace" and has compared it with the expulsions during the Second World War.

Although France's President Nicolas Sarkozy has stated there were no proofs for launching of anti-discrimination case, the EC ordered France to amend its laws and fully incorporate the EU's 2004 directive on free movement of people.

As the crisis in Paris-Brussels relations unraveled in September, Sarkozy said at one point Commissioner Reding should take the Roma to her native Luxembourg if she is so fond of them; Sarkozy and EC President Barroso even got in a huge fight over the issue during an EU Council summit in Brussels in September – an incident leaked to the media by Bulgarian Prime Minister Boyko Borisov, which led French media to dub Bulgaria "informal EU reporter".

Protesting Bulgarian Roma: We Have Europe's Support!

Not just Bulgaria but much of Europe saw rallies protesting the French expulsion of Roma – including France itself. The protests were intensified as a French Ministry of Interior circular specifying Roma as 'priority' targets for removal leaked to the public.

Hungarian EU Presidency to Focus on Roma Issues

In November, Hungary, a country with a sizable Roma minority, said it will make the Roma issue a priority of the Hungarian EU Presidency in the first half of 2010. Meanwhile, the Visegrad Group – Hungary, Poland, the Czech Republic and Slovakia – urged a common EU policy on the Roma. Poland, which will hold the EU Presidency in the second half of 2011, is likely to take up the same priority.

 

Bulgaria's Post-Accession Monitoring: Strong Reform Momentum but Is It Enough?

The crucial EC monitoring reports under the Cooperation and Verification Mechanism – a tool for checking Bulgaria and Romania's post-2007 accession progress on problem issues – in July 2010 was laudatory of Bulgaria and more critical of Romania, unlike past editions.

Bulgaria has established "a strong reform momentum" in judicial reforms and combat against corruption and organized crime, still too few cases are concluded in court, said the report of the European Commission. The conclusions in the fourth annual report the Commission has produced under the mechanism say there is a need for improvements of the professional practice within the police, prosecution and courts. For the first time, special attention was paid to the public procurement procedures, which suffer conflicts of interest, according to the EC. The report recommended that Bulgarian authorities strengthen the training efforts for officials of the competent authorities in order to identify and prevent conflict of interest and other important irregularities in public procurement.

The report pointed out that Bulgaria strengthened the capacity of the joint team dealing with EU fraud and cites the sentence for imprisonment of Mario Nikolov in an emblematic case regarding fraud with EU funds and money laundering.

The Commission makes it clear that it will continue to monitor the activities of Bulgaria's Commission for the establishment of property acquired through criminal activity (CEPACA).

In the interim progress report in March 2010, the EC lauded Bulgaria's efforts to reform in the field of justice and home affairs but said its judicial system had failed to produce satisfactory results during the monitored six-month period.

The EC points out that the Bulgarian government made several specific steps for reform corresponding to recommendations in the previous monitoring reports. These include revisions of the Penal Procedure Code, the Criminal Assets Forfeiture Act, and the Conflicts of Interest Act.

EC Monitoring of Bulgaria, Romania Here to Stay

The so-called Co-operation and Verification Mechanism for Bulgaria and Romania must stay in place, suggested the Council of the EU and the European Commision amid criticism of persistingly inadequate anti-crime and anti-corruption practices in the two member states.

This is the conclusion of an ad hoc Working Party on the Cooperation and Verification Mechanism, which was voted at the General Affairs Council and welcomed by the Commission in September.

The document praised both Bulgaria and Romania for successful efforts and steps in the right direction, such as the introduction of more adequate legislation and the carrying out of some successful "emblematic" trials. It nevertheless stated that reform processes need to be quickly stepped up.

 

European People's Party: Love and Support for Bulgaria's Borisov Cabinet

The rightist EU party family, currently the largest in Europe, the European People's Party, has been backing firmly the Bulgarian Cabinet of PM Boyko Borisov and his Citizens for European Development of Bulgaria (GERB).

In March, EPP Chair Wilfred Martens said in Sofia GERB has managed to reinstate European trust in Bulgaria after the rule of a Socialist-led coalition.

In November, the EPP asked its other Bulgarian members – the Union of Democratic Forces and the Democrats for Strong Bulgaria – forming together the Blue Coalition – to avoid confronting GERB and PM Borisov, and to stick by him.

This came in response to a written request by Kostov and Dimitrov, asking EPP to scorn the ruling, center-right Citizens for European Development of Bulgaria (GERB) party over statements of its leader and Prime Minister, Boyko Borisov, deemed an exculpation of the Communist regime in Bulgaria and of Communist dictator, Todor Zhivkov.

 

Rocking Barroso's Boat: Bulgaria's Jeleva Fiasco

Bulgaria's Borisov government started 2010 on the wrong foot as then Foreign Minister Rumiana Jeleva failed miserably as the country's EU Commissioner-designate at her European Parliament hearing as a result of what appeared to be poor competence in some areas related to the humanitarian aid portfolio and concerns over involvement in conflict of interest on her part during her term as MEP in 2007-2009, and on part of her husband.

Jeleva withdrew from all offices even though the EP office of legal affairs accepted her documentation as being truthful and accurate, finding no wrongdoing on her end.

The center-right European People's Party, the largest group within the legislature, continued to back Jeleva. But a coalition of Socialists, Liberals and Greens remained opposed, questioning her professional skills and knowledge about the dossier she would be in charge of - humanitarian aid.

The German paper Die Welt had published an article asking if Bulgaria's Foreign Minister and EU Commissioner Designate Rumiana Jeleva was a "gangster's bride for the EU". The article cited anonymous rumors that Jeleva's husband, banker Krasimir Jelev, had been involved with the Russian mafia along the Black Sea coast, and that he had worked for the murky business group TIM. Until the summer of 2009 Jelev had been the head of the Central Cooperative Bank branch in Burgas.

The EP had to arrange a new hearing for the new Bulgarian EC designate, Kristalina Georgieva, which delayed the entering into office of the entire Second Barroso Commission by three weeks.

After Georgieva passed the test, on February 9, 2010, the EP approved the 27-member-strong new European Commission led for a second term by Jose Manuel Barroso for a five-year term.

 

Kristalina Georgieva: From Late Start to Commissioner of the Year

In spite of the Jeleva fiasco, Kristalina Georgieva, managed to mend the political fences for the Borisov Cabinet on the EU front by passing her EP hearing with flying colors. To start with, Georgieva appeared to be Borisov's last trump card as she agreed to quit prematurely her job as Vice President of the World Bank with the special permission of WB head Zoellick in order to switch from Washington to Brussels in her new role as a member of the EC.

Georgieva became the EU's first ever Commissioner for International Cooperation, Humanitarian Aid and Crisis Response, a new, innovative portfolio in the foreign policy realm, which has provided her with the chance to be much of a pioneer, a role that she certainly lived up to in 2010, perhaps even surpassing the expectations of many.

Georgieva has been all over the place, i.e. the world, spearheading EU's humanitarian efforts in quake-hit Haiti and Chile, flood-devastated Pakistan, fire-affected Russia, drought-suffering Sahel, as well as Somalia and the Gaza strip. In December, she announced estimates that EU's efforts and contributions save some 140 million lives around the world in 2010.

On the home front, Georgieva has worked to boost the crisis response capacities of the member states by pooling together their respective resources.

In October, she suggested that the European Union should have a 24/7 Brussels-based crisis room and a list of all assets pledged by the member states for emergency situations,

In September, she initiated the first step to create a European Voluntary Humanitarian Aid Corps (EVHAC).

In December, Bulgaria's Kristalina Georgieva triumphed with the "European of the Year" and "EU Commissioner of the Year" awards of the prestigious newspaper European Voice.

Thus, the EU Commissioner on International Cooperation, Humanitarian Aid and Crisis Response, Kristalina Georgieva, became the second Bulgarian EU Commissioner after Bulgaria's Meglena Kuneva, in charge of consumer protection in the first Barroso Commission, to win the same awards.

Bulgaria has only had two EU Commissioners so far after joining the EU in January 2007; both of them - Kuneva and Georgieva - have been women, and both have apparently excelled in their fileds, winning the "European of the Year" and "EU Commissioner of the Year" awards of European Voice.

The winners in the several "European of the Year" categories of European Voice were determined after an online voting on the website of "European Voice". "European Voice" is an English language newspaper owned by The Economist group.

The other nominees that Georgieva defeated in the category EU Commissioner of the Year were Viviane Reding (justice and fundamental rights), Slim Kallas (transport) and Cecilia Malmstrom (home affairs).

 

Bulgarian Ex Commissioner Heads European Think-Tank Board

In September, Meglena Kuneva, the former European Commissioner for Consumer Protection was appointed as Chair of the Governing Board of the European Policy Center, an independent, not-for-profit think tank committed to European integration. Kuneva, who was part of the first Barroso Commission, became known for her strong criticism of European banks and the fees they impose on customers, but was also praised for her effectiveness, and particularly for her focus on online protection and revising consumer law.

Upon expiration of her Commissioner's term, Meglena Kuneva was first tipped to be the next head of the Commission's in-house think-tank, the Bureau of European Policy Advisers (BEPA), but was later reported to have been denied the appointment.

In April Kuneva, was appointed a political advisor of Vice President of EC, Siim Kalas. At the end of June the European Commission approved her appointment as a member of the Board of Directors of France's banking group BNP Paribas, which raised concerns on part of Transparency International.

 

EU Sets Up Permanent Rescue Fund, Bulgarian PM Vows to Help Prop Up States in Trouble

After the euro zone was shaken by debt crisis in Greece in the spring of 2010 and in Ireland in the fall, with potential crisis looming in Portugal, Spain, and even Italy, in December, the EU leaders agreed on limited Lisbon Treaty changes needed to allow a much anticipated permanent rescue mechanism to be set up by 2013 to stabilize the euro.

The leaders of the 27 EU member states and the EU institutions agreed at the EU Council summit in Brussels to set up a permanent mechanism to rescue EU member states from debt crises that threaten the 16-nation euro zone.

In 2013, the permanent mechanism will replace the euro zone's EUR 750 B temporary bail-out fund known as the European Financial Stability Facility (EFSF). So far, Greece and the Irish Republic have received emergency bail-out funds through it.

The amendment to the Lisbon Treaty says that "member states whose currency is the euro may establish a stability mechanism, to be activated if indispensable to safeguard the stability of the euro as a whole."

However, the countries which require the emergency aid must act to tackle their debt or deficit, the statement adds.

"The granting of any required financial assistance under the mechanism will be made subject to strict conditionality," the text says.

At the EU Council summit in Brussels, Prime Minister Boyko Borisov declared Bulgaria's readiness to take part in any efforts to rescue euro zone states facing debt crises.

Upon taking power in the summer of 2009, the Borisov government declared hopes of joining the ERM II in 2011-2012, and adopting the euro in 2013-2014. However, the emergence of a higher than expected budget deficit for 2009 and 2010 has put off these plans, with experts commenting Bulgaria might hope to join the euro zone in 2015 at the earliest, if it is lucky.

More on Bulgaria's euro zone bid read in The Bulgaria 2010 Review: Finance

 

EFSF Chief: Zero Chance of Euro Zone Breakup

In November, the head of the European Financial Stability Fund (EFSF) Klaus Regling declared a bailout for Ireland and fears that Portugal or Spain might need help soon will not trigger the breakup of the euro zone.

"There is zero danger. It's inconceivable that the euro would collapse," says Regling, who has overseen the euro zone's EUR 440 B bailout fund since it was created last spring.

He conceded that there is some uncertainty around whether the crisis will spread to other countries, but assured that the safety umbrella is "big enough for everyone".

"Of course the situation is serious," he added, when asked about comments by German Chancellor Angela Merkel, who has said the euro is in an "exceptionally serious" situation.

Klaus Regling said it is "unimaginable" that the euro could fail and no country would leave the eurozone of its own free will. According to him for weak countries, that would be "economic suicide.

European Systemic Risk Board Established

The European Systemic Risk Board (ESRB), an independent EU body responsible for the macro-prudential oversight of the financial system within the Union, was established in December.

It is supposed to contribute to the prevention or reduction of systemic risks to financial stability in the Union that arise from developments within the financial system.

Another ESRB task is to contribute to the smooth functioning of the internal market and thereby ensure a sustainable contribution of the financial sector to economic growth, as the European Central Bank announces.

According to the European Commission's proposal on ESRB's establishment, the Board will not have any binding powers to impose measures on Member States or national authorities. It has been conceived as a "reputational" body with a high level composition that should influence the actions of policy makers and supervisors by means of its moral authority. The seat of the Board is in Frankfurt am Main in Germany.

The Chair of the ESRB is the President of the European Central Bank, Jean-Claude Trichet, as it is foreseen by the legislation on the basis of which the Board is established.

Mervyn King, Governor of the Bank of England, was elected as first Vice-Chair of the ESRB by the members of the General Council of the ECB.

The General Board of the ESRB will have its inaugural meeting on 20 January 2011. The Bulgarian National Bank (BNB) Governor Ivan Iskrov is a member of ESRB's General Council with a right to vote.

EC Launches EU-Tax, Council Cracks Down on Hedge Funds

In October, the European Commission decided to give green light to controversial proposals to introduce a tax levied at the EU level, as EU finance ministers decided to tighten regulation over hedge funds Tuesday in Brussels.

The EC decision stated the EU executive is proposing the gradual introduction of "one or several sources of funding, such as a tax on financial transactions and activities, a tax on carbon quota trade, a tax on air transportation - in addition to a new EU-level VAT." Other options include a tax on the energy sector and on companies.

On the EU Council side, Belgian finance minister Didier Reynders said that the intergovernmental body decided "with unanimity" to introduce new regulation of the hedge fund sector, which is widely seen as sharing responsibility for the global financial crisis.

This would be the first time that hedge funds will be regulated at the EU level, something that has been opposed by both the USA and the UK, which has seen the measures as endangering the City of London as a bustling financial center.

The UK apparently managed to water down the regulation and to secure a phased entry in force.

The idea for an EU-level tax was recently introduced by finance commissioner Janusz Lewandowski over the summer. He motivated it partially as contributing to diminishing the burden member states have to contribute to the EU budget.

Member states such as Austria, Belgium, Poland and Spain have supported the proposal, which has been viewed with skepticism by EU-greats such as France, Germany and the UK.

Here the procedure will take longer, for the exact nature of the new tax or taxes is yet to be determined, and the fleshed out proposal will have to go through both Council and Parliament to become EU law.

EU Sets Bulgaria under Excessive Deficit Procedure

In July, the EU Finance Ministers decided to set Bulgaria under the excessive deficit procedure, a program to reduce its budget deficit below the 3% threshold required by the Stability and Growth Pact.

ECOFIN, the Council of the EU Finance Ministers, a decision was made to press Bulgaria, Denmark, Cyprus, and Finland to cut their budget deficit gaps.

ECOFIN's statement said financial figures showed Bulgaria and Cyprus had budget deficits in 2009 surpassing the limit of 3% of the GDP, while the deficits of Denmark and Finland are also expected to exceed the 3% threshold. At the same time, in the cases of Bulgaria and Finland, ECOFIN has demanded that the two countries rectify their budget deficits according to the standard timetable

Thus, only Luxembourg, Sweden, and Estonia, that is, three out of a total of 27 EU member states were left out of the list countries that broke the 3% budget deficit requirement of the Stability and Growth Pact.

Bulgaria was first slated to be set under the EU excessive deficit procedure in early May when the convergence report of the European Commission concluded that it, together with seven other EU member states, did not meet all the conditions for the adoption of the euro.

The European Union sets a cap on budget overspends at 3% of gross domestic product, and Bulgaria reached a general government deficit of 3.9% in 2009, according to latest data revealed in April 2010. (Eurostat data in the fall set the deficit at 4.8%).

The European Commission's raising the issue of placing Bulgaria under the excessive deficit procedure came after in the spring of 2010 the European Union's official statistics agency Eurostat said the Bulgarian budget deficit in 2009 was wider than the government had estimated and exceeded the 3% ceiling.

In the first of its twice-yearly reviews of government finances in the 27-member bloc, Eurostat said the Bulgarian government's budget deficit was 3.9% of gross domestic product last year, which is up by 0.2% over the government's revised figure of 3.7%.

Bulgaria's center-right government announced earlier in April a larger than expected 2009 deficit allegedly caused by arrears and unaccounted procurement deals, signed by the previous Socialist-led cabinet. The previously undiscovered expenses increased the 2009 gap to 3.7% of gross domestic product (GDP) from an initial 1.9% under the EU rules, the cabinet said.

Prime Minister Boyko Borisov has blamed the increase on extra spending due to annexes to public procurement deals the previous government had signed with some 150 contractors at the end of its term. Borisov said his ministers were kept in the dark about the additional costs to the treasury.

Eurostat Praise Clears Bulgarian Stats of Data Cooking Doubts

In September, the Eurostat head commended the reliability of the Bulgarian statistical institute NSI practically clearing the latter of even remote data cooking doubts that arose in the spring.

Walter Radermacher, the Director-General of Eurostat, who was in Sofia for the 96th Conference of the heads of statistical offices of the European Union Member States, described Bulgaria's National Statistical Institute (NSI) as "one of the best and fastest developing under EU standards statistical services." He assessed the work of NSI with a five out of six saying that he kept the maximum grade in order to keep the Bulgarian statisticians motivated.

Radermacher's statements have essentially cleared all doubts of "Greek-style" data cooking by the Bulgarian authorities that emerged in the spring of 2010 after the Bulgarian government had to revise its 2009 budget deficit figures.

In the spring of 2010, the Borisov Cabinet corrected the 2009 budget deficit to 3.9% of GDP (final data in the fall of 2010 placed the figure at 4.8%!) instead of the projected 1.9%; and the government blamed the change on secret public procurement contracts signed by its predecessors in 2008 and early 2009.

The more than doubling of the 2009 budget deficit figure fueled suspicions of data cooking just months after it became clear that Greek services had faked Greece's financial data, and Bulgaria's southern neighbor turned out to have much higher deficit that previously know sparking an euro-zone-wide crisis.

As a result of the revision of Bulgaria's 2009 financial figures, the country was placed under EU's excessive deficit procedure, a mechanism to reduce its deficit below the 3% threshold set by the EU Stability and Growth Pact. What is more, however, in June, EU Economy Commissioner Olli Rehn, stated Bulgaria could become the first country to be probed by Eurostat over suspicions about the statistics methodology used, triggered by the updates in the budget and in its deficit.

The Eurostat exploratory mission to Bulgaria was completed in late September.

Radermacher further said that the case of the "cooking" of budget deficit data in Greece, which moved the EC to start respective monitoring and an infringement procedure, was the result of the fact that the independence of the Greek statistical service was not properly settled legally.

The Eurostat head pointed out that the recent exploratory mission of his institution to Bulgaria was not an emergency but a regular one. He also said the statements of EU Economy Commissioner Olli Rehn about the doubts with respect to the Bulgarian financial statistics had been affected by a misunderstanding.

EU Pressures Bulgaria to Investigate Land Swaps

In September, the European Commission requested that the Prosecutor's Office in Bulgaria conduct checks of all land swaps in the country.

These swaps became notorious, since they frequently involved attractive state lands exchanged for properties of much less value. Some 111 200 acres of state land have passed into private hands since 1998. The Commission is investigating whether those constitute illegitimate state aid to private individuals and firms. Bulgarian PM Borisov has claimed instead that the land swaps approved by the previous two Cabinets were criminal and illegal acts. According to Agriculture Minister Naydenov and his deputy Kostov, Bulgaria lost anywhere from BGN 2 B to BGN 8 B from unfavorable land swaps since 2001.

Brussels has also reportedly pointed out 13 swap deals that must be annulled because of manifest breaches of legal regulations. The Ministry of Agriculture has stated that investigations and analyses of past deals are ongoing and are conducted by a Ministry commission created especially for that purpose. Dubious exchanges of state lands have led to the filing of charges against the Minister of Agriculture from the former cabinet Nihat Kabil. Some of the swaps have gained notoriety as they were in favor of well-known businessmen and involved lands promising for developing tourism.

Bulgaria's Endearing EU Embarrassment: Ex Agriculture Fund CEO's Forged Diploma

In the fall of 2010, Bulgaria made European headlines when Kalina Ilieva the already former CEO of the Bulgarian State Agriculture Fund, the agency that allocates EU funds for agriculture and rural areas, Kalina Ilieva was founded to have forged her diploma for a Master's degree from a German university.

Ilieva had just been dismissed as it became clear she had hidden her pregnancy till the last moment.

After some consideration, in December, the Prosecutor's Office in Germany suspended the investigation against former head of the Bulgarian State Agriculture Fund; it decided there were not enough evidence that Ilieva forged her diploma from the Berlin Technical Institute at German territory. The spokesperson of the Prosecutor's Office has pointed out that the only direct connection of the case with Germany was the name of the institute.

The former head of the Bulgarian Agriculture Fund was dismissed in October after it was revealed she was pregnant. Previously, she lied she had a tumor and was very ill in an attempt to conceal the pregnancy.

EU Mounts Massive Operation to Police Greece-Turkey Border, Greece Mulls Anti-Immigration Wall

In November, police from across the EU arrived in Greece to patrol its border with Turkey against illegal immigrants as part of the continued "Joint Operation Poseidon" of Frontex, EU's border control agency.

Police officers and equipment from Bulgaria, Germany, Romania, Austria, Hungary, Slovakia and Denmark will be deployed along the border with Turkey in Northeastern Greece, which is a major point of entry into the EU for illegal immigrants.

The mission is expected to last for two months and will focus on policing a previously unguarded 12-km section of a river border between the towns of Nea Vyssa and Orestiada, on the Maritsa River. This is the first time a rapid-intervention border team has been deployed to an EU member state since the Frontex teams were created in 2007.

Frontex, the EU agency based in Warsaw, coordinating the operational cooperation between member states in the field of border security under the European Patrol Network project, has agreed to place 175 police officers from across the EU after last month Greece requested from it help to cope with the growing number of refugees from African countries, Iraq and Afghanistan penetrating through its river and land border with Turkey.

A surge in the number of illegal immigrants captured in Northeastern Greece is clearly underway, as only 9000 were busted in all of 2009, compared with 34 000 in the first nine months of 2010. The surge is seen to be the result of the closure of another route for illegal immigration from Libya to Italy.

In the very last days of 2010, Greek officials announced potential plans to build a fence along the 206-km border with Turkey, or at least along the most problematic section of the border.

Bulgaria, which has a longer land border with Turkey than Greece, has not detected a substantial increase of illegal immigrants seeking to enter the EU even though the Bulgarian border police occasionally capture small groups of illegal migrants from the Middle East and Africa.

EU's Joint Operation Poseidon started in 2006 as a purely sea-based operation patrolling the coastal waters between Greece and Turkey. Since the beginning of 2010, Poseidon has also had a land-based component covering the Greek and Bulgarian land borders with Turkey — now confirmed as the dominant country of transit for irregular migration into the EU.

Europol Extends Accolades to Bulgarian Police

Throughout 2010, the European Law Enforcement Office, Europol, extended accolades to Bulgarian police on several occasions for carrying out several very successful operations on Europol's information. The operations were against heroin production, counterfeit EUR and USD bills, and credit card fraud, according to the Head of Europol's Organized Crime Networks Unit, Patrick Byrne.

The Director of EUROPOL, Rob Wainwright, who visited Bulgaria twice in 2010, has stated he is highly impressed by the results achieved by the Bulgarian police. The EUROPOL Head says Bulgaria can serve as an example to all countries in the region.

Bulgaria Gets 1 Extra MEP, Sends Die-Hard Right-Winger

In June, the European Parliament voted allow 18 new MEPs, including one Bulgarian, to take their seats during the current term of the legislature, an arrangement made by the member states prior to the 2009 EP elections, which will enter into force once a Lisbon Treaty protocol is ratified.

Bulgaria's new MEP is Svetoslav Malinov from the rightist Democrats for Strong Bulgaria party of former Prime Minister Ivan Kostov. Malinov was next in line after the 17 Bulgarian MEPs that made it to the EP. As Malinov becomes the new Bulgarian MEP, this means one extra deputy for the European People's Party from Bulgaria.

The number of Members needs to be increased because the last European Parliament elections were held under the rules of the Nice Treaty, which sets the number of MEPs at 736, while the new Lisbon Treaty, which entered into force on 1st December 2009, provides for 751 seats.

The allocation of new seats was decided during the Lisbon Treaty negotiations. Twelve countries sent extra MEPs to Brussels and Strasbourg: Spain got four new seats, Austria, France and Sweden each got two, while Bulgaria, Italy, Latvia, Malta, the Netherlands, Poland, Slovenia and the United Kingdom each got one extra Member.

The only country to have fewer MEPs under the new treaty is Germany, which loses three seats, from 99 to 96. However, as all 99 current German Members will keep their seats until the end of this term, the number of MEPs will temporarily rise to 754.

Bulgaria Grants Equal Status to All EU Lawyers

In the wake of EC criticism, in June, Bulgaria's Parliament adopted legislation amendments revoking limitations imposed on lawyers from other EU states wishing to work in the country.

The amendments to the Bar Act have been initiated by the Cabinet after in the fall of 2009, the European Commission started an infringement procedure against Bulgaria for denying equal status to EU lawyers.

EC Slams Bulgaria for Meager Broadband Penetration, Costly Off-Net Calls

The European Commission has criticized of Bulgaria over several issues in the 15th Progress Report on the Single European Electronic Communications Market – 2009.

According to the Bulgaria chapter of the report released May 25, 2010, the country is lagging behind with respect to its broadband penetration and has expensive off-net calls.

Russia Set to Join WTO in 2011 after Formal EU Approval

Wrapping up lengthy talks in 2010, in December the European Union formally agreed to Russia's accession to the World Trade Organization. The EU and Russia finalized a "milestone" deal enabling Russia's accession to the WTO. The memorandum of understanding settled the issued making the EU veto Russia's WTO admission to date. Russia is now expected to join the WTO in 2011.

Russia has been bidding to join the WTO since 1993, it is the only major global economy that does not belong to the organization. Its accession requires the agreement of all 153 members of the WTO.

Earlier in 2010, EU-Russian relations were strained as the EU was alarmed over Russia's deployment of anti-aircraft missiles in Abkhazia. EU foreign policy chief Ashton said the deployment of S-300 missile complexes in the breakaway Georgian republic of Abkhazia, Ashton has made it clear that the Russian move is increasing the tension in the Caucasus.

What is more, she believes that the deployment of the missiles presents a violation on part of Russia of the six-point agreement brokered by the French EU Presidency in August 2008 in order to put an end to the Georgian-Russian War over South Ossetia earlier the same month.

EU-China Summit Collapses over Yuan Dispute

In October, the US-China dispute over the appreciation of the Chinese yuan arrived tangibly on European soil practically ruining the EU-China summit in Brussels.

The summit ended with a canceled press conference that EU leaders Jose Manuel Barroso and Herman Van Rompuy were supposed to give together with PRC Prime Minister Wen Jiabao.

"I say to Europe's leaders - don't join the chorus pressing [China] to revalue the yuan. Many of our exporting companies would have to close down, migrant workers would have to return to their villages. If China saw social and economic turbulence, then it would be a disaster for the world," Chinese Premier Wen Jiabao told a business forum taking place in the margins of the political summit in Brussels.

Not unlike the concerns in the USA, in Europe, Eurogroup President Jean Claude-Juncker has argued that China's undervaluation of the yuan might affect negatively the economic recovery of the euro zone. The EU has also demanded improved access for European companies to the Chinese market as well as progress on upholding human rights.

While the heads of the EC and the European Council have backed China's request for greater voting weight in the IMF, they have made demanded "enhanced responsibilities in global governance" in return.

Even though the joint press conference after the summer was said to have been canceled because for scheduling reasons, the differences between the Europeans and the Chinese are reported to have been the actual cause for that.

EU, South Korea Seal Free-Trade Agreement

In October, the EU and South Korea signed a much anticipated and celebrated free-trade agreement. The document requires that the EU and South Korea eliminate almost 99% of their of trade tariffs for industry and agriculture within five years, and to eliminate remaining tariffs subsequently.

It will eliminate Korean import duties worth EUR 1.6 B annually and EU duties of EUR 1.1 B, according to the EU. The pact could increase Korea's gross domestic product by as much as 5.6 percentage points over 10 years and create as many as 253,000 jobs in Asia's fourth- largest economy, according to a joint report by the country's state research institutes.

The EU-South Korea trade was worth EUR 54 B in 2009, with an EUR 10 B deficit for the EU.

The EU-Korea accord is the second-biggest such pact ever after the USD 1 T North American Free Trade Agreement (NAFTA) among the US, Canada and Mexico that began in 1994.

The EU-South Korea agreement was delayed by Italy's objections connected with the condition of its auto industry vis-a-vis the competition from South Korea car manufacturers. Italy agreed only after securing a six-month delay in its implementation; the free-trade agreement will enter into force on July 1, 2011.

Barroso: 'Moment of Truth' for EU Is Now

In September, President of the European Commission Manuel Barroso called for the EU to act out as a unified entity during his first ever "State of the Union"-style address in front of the European Parliament.

During his speech, the Commission President promised a quicker recovery and stronger growth within the EU than expected, but warned of continually high unemployment and varying degrees of success in combating the economic crisis among the Union's member states.

He stated that it is time "to modernize Europe's social market economy" and look deeply into the future. Barroso pointed out to the common internal market as the greatest asset of the European Union, but remarked that more advantage is to be taken of it.

He called for a more favorable regulatory climate for businesses and a strong support for innovations to make the EU even more competitive and creative. The Commission President also reflected on the time since the entry into force of the Lisbon Treaty December 1, 2009.

"The moment of truth has come for Europe when it will have to show that it is more than 27 nations that make decisions on their own," stated Barroso.

EU's Modified Rotating Presidency – from Spain to Divided Belgians

Even though the Lisbon Treaty introduced the post of EU Council President taken by Herman Van Rompuy, it still kept the rotating EU Presidency at member states' insistence.

In the first half of 2010, the Spanish presidency was marked by efforts to rein in economic crisis which hit hard at EU-member Greece and provoked worries about countries in central Europe, Portugal and Spain itself.

Important progress was achieved the European External Action Service – practically EU's diplomatic body that is all-important for the implementation of the EU common foreign and security policy mandated by the Treaty of Lisbon.

From July 1 the EU presidency passed over to Belgium, which at the time was amidst talks for a new government after elections in mid-June. EU's reins will be taken by acting Belgian PM Yves Leterme, who has submitted his resignation three times in the last three years. Especially after the results of the June elections, Belgium faces tough questions and decisions about its internal unity.

After in 2009 the Czech Republic became the first former communist state to chair the EU Presidency, two more are excited to follow suit in 2011 – Hungary and Poland.

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