Eastern partnership and economic development

I am very pleased to address you today on behalf of the Euronest parliamentary assembly and to present general views of our institution on economic and innovation issues.

First, I would like to thank president Markkula for hosting the fourth workshop that CORLEAP and Euronest jointly organise. Let me also congratulate you, dear president, for the achievements of CORLEAP and the success of the recent annual meeting, showing the vibrant cooperation between local and regional communities under the Eastern partnership.

On the Euronest side, the last weeks were marked by a resolution adopted by the Milli Mejlis – the Azerbaijani parliament – reversing its decision of last year to start the process of Azerbaijan’s withdrawal from the assembly. For one year, co-president Dolidze and myself have engaged in diplomatic efforts and maintained a constant dialogue with the authorities of Azerbaijan. I therefore much welcome the positive decision of Azerbaijani parliamentarians to return as active players in the work of Euronest.

In the short history of Euronest, we have so experienced our first major crisis and we have drawn lessons from it. On this basis, we are now thinking of a series of organisational changes in our structure, in order to make Euronest more dynamic, inclusive and audible. In parallel, the Euronest Committees are preparing their reports that members will discuss at the next plenary session in the spring of next year. Out of the four reports, two are dedicated to socio-economic issues, namely the role of women in entrepreneurship and labour market and the crucial problem of youth unemployment in the partner countries.

The Eastern partnership’s objective of advancing economic integration

This leads me to the topic of today’s event. Since the foundation of the Eastern partnership, advancing economic integration and stimulating growth have been one of the key objectives of the EU and its partners. It is also clear since the very beginning that without economic and social progress, encouraging democratic progress and maintaining stability, peace and security are much more difficult to achieve.

So far, the EU has economically supported its partners by privileging the economic integration approach, the opening of markets to foreign trade and the legal approximation of partners to EU’s world class norms and standards. In addition, the EU macro-financial assistance to some partners and the financial instruments of the European neighbourhood policy have obviously helped to sustain economic development.

The most significant achievement of this strategy is the development of free trade areas between the EU and Moldova, Georgia and Ukraine, following the entry into force of DCFTA agreements for Moldova and Georgia and the provisional application of a similar agreement for Ukraine. Statistical figures already show that the exports of those countries have increased since the agreements came into force, while the EU has reinforced its position as the biggest trading partner for the three associated countries. However, many enterprises, in particular the smallest ones have not yet drawn large benefits from the association agendas. Indeed, they are often not aware of the new opportunities and lack the necessary business development services, which could help them to incorporate all major advantages of the DCFTAs in their activities.

As for Armenia, Azerbaijan and Belarus, the EU has also progressed towards developing meaningful economic cooperation with them reflecting each partner’s ambitions and choices.

More generally, along the objectives of the Eastern partnership, the EU has devoted resources not only to the trade part but also to key areas such as energy, transport, interconnectivity and the regulatory frameworks which all have an  impact on the EU’s and partners’ economy.

The challenges of economic development and innovation

However, the EU and its partners cannot fully harness the advantages of further economic integration yet, due to a number of external factors and challenges, which remain to overcome. I have singled out four of those elements that I would like to highlight.

First, the security situation, whereas five out of six partner countries are involved in regional conflicts and territorial disputes, is a factor of economic turbulence and uncertainty, which are a deterrent for investors.

Second, the building up or the restoration of business links which have been damaged or lost due to conflicts, for instance between Armenia and Azerbaijan or between Ukraine and Russia, is a necessity given the proximity of these countries to one another and their interest to diversify the destinations for their exports and trade. Unfortunately, the last two years have not shown any progress in that direction. How the EU, its partners and Russia could make room for new agreements or practical arrangements under the trade frameworks of the EU and the Eurasian economic union remains an open question.

Third, there are still many challenges that partners are facing to establish a legal framework compatible with European standards and a more predictable business environment, which are both naturally conducive to higher domestic and foreign investment. The modernisation of public administration is also key to ensure the good functioning of services directly linked to the economy, such as the public procurement offices. Overall, our partners need a new professional culture of transparency, the strengthening of the judiciary and the availability of modern oversight instruments in order to deter economic agents from falling into corruption.

Fourth, the economic structures of partner countries are too much dependent on big businesses, often in the hands of a small number of shareholders. There are also business monopolies controlled by states, especially in the field of energy. Learning from my experience of minister for state ownership steering in Finland, I know the importance of strategically protecting key economic sectors or business linked to natural resources for national economies. However, in the absence of competition, there is no chance to open up business for further growth nor to contribute to lower prices for consumers. The challenge is therefore to rebalance the economy away from state monopolies, cartels or market concentration.

The role of parliamentarians, local and regional executive and legislative powers

I would now like to say a few words about how our institutions can contribute to the creation of more favourable conditions for advancing the economy.

First, as legislators and members of Euronest, we support each other in terms of sharing experience and knowledge on economic law. For instance, the parliaments of Georgia, Moldova and Ukraine steadily work on the reforms along the roadmap provided by the association agreements. They are, in this context, putting in place new cooperation mechanisms. Furthermore, in the frame of the parliamentary association committees and the Euronest parliamentary assembly, members of the European Parliament have engaged in assisting their Georgian, Moldovan and Ukrainian fellows to transpose the EU acquis into national legislations, wherever the provisions of the association agreements foresee it.

I also want to highlight the valuable role of CORLEAP in networking, sharing knowledge and experience gained through the implementation of regional and local policies in the field of economy. Regional and local policy-makers are indeed the best placed to understand and improve the dynamics surrounding the economic actors in terms of entrepreneurship and innovation and channel them towards boosting regional economy. They also can do a lot by linking better the worlds of academia and the productive sector in order to draw economic and social benefits for their territories.

I hope that today’s workshop and the open days will raise public awareness about cooperation achievements and positive experiences on entrepreneurial and innovation activities, especially with reference to the Eastern partnership.

I look forward to learning from the country experiences on regional economic and innovation policies and I wish you fruitful discussions and profitable networking.

Heidi’s opening speech at the Open Days workshop on “Eastern partnership territorial and parliamentary cooperation: advancing economic development, entrepreneurship and innovation” on 11 October 2016