ࡱ> c .wjbjb(p(p +BB a: npFFF8~b<9CL:00 Ze\B^B^B^B^B^B^B, ER_GBi  BS 00BS S S 00\BS NTbT\BS S RX?A fFL@Al C09Cj@CHS CH<AS FF Nenad Smokrovi, PhD, Full Professor University of Rijeka Faculty of Economics Ivana Filipovia 4 51000 Rijeka Phone: +385 51 355 144 Mobile: +385 91 560 44 47 E-mail: nenad@efri.hr Ivana Ilijaai Verai, BA University of Rijeka Faculty of Humanities and Social Sciences Slavka Krautzeka bb 51000 Rijeka Phone: +385 51 265 600 Mobile: +385 99 211 65 85 E-Mail: iilijasic@ffri.hr Administrative Europeanization and Institutional Change: the Case of Croatia Keywords: convergence, administration, enlargement, challenges Abstract Preparing for EU membership requires changes across a wide range of sectors in many of the institutions and organisations involved in the public governance and legislative enforcement processes. Criteria that every candidate country has to undertake in the process of accession, known as Copenhagen criteria, can be summed down to political, economical and administrative requirements in order to fully adopt, implement and comply with the Community acquis. The administrative criteria (also known as Madrid criteria) requires from the candidate country to be able to create conditions for adjustment of national governance structure to the EU public governance mechanisms. This requires modernisation of their administrations taking into account the principles of professionalism and neutrality. Transition and EU enlargement deeply rely on capacities and quality of common and national institutions responsible for enforcement and conduct of development policies. In the very core of this adaptation process lays the institutional change and convergence. Institutions create motivational structures for individuals and organisations, and coordinate their activities and behaviour. Although institutions have to provide envisaged and coherent rules, sometimes there is a need for institutions to change and adapt to social preferences, technology, political and socio-economic structures and external factors. Many challenges in Croatian public administration rise from inadequate education, insufficient monitoring of employees performance, and high level of political impact, lack of organisational culture, true values, paternalism (?) and no orientation toward a citizen (is it cause of the problem or its effect?). There is no defined development strategy in public governance. The number of state officials is extremely high. Nevertheless, the government has foreseen seize of public administration growth, horizontal decentralisation, rationality and sound economic behaviour in the accession to EU. It is highly important because public administration is the one to carry the burden of legislative reform within the country (this should be mention first, as a motivation for the paper). European Commission objects Croatia the weakness of its institutions indebted for efficient cooperation with International Court of Justice and conduct of obligations from international agreements. For the past few years EU-Croatia Parliamentary Committee has adopted several Declarations and Recommendations all stating that Croatia demonstrates continuous progress and efforts in the area of judicial and public administration reform, but also has to pursue strengthening the administrative capacity, not only to implement adopted reforms, but to secure that it can benefit fully from increased financial assistance. It is also observed that Croatias improved institutional rules for the functioning European Union will facilitate the accession once all criteria have been met. INTRODUCTION: THE COPENHAGEN AND THE MADRID CRITERIA Many scholars simply define Europeanization as institution building process at the European level. But, the ongoing complex exchange and interaction between several levels of governance (supranational, national and sub national level) has to be recognized. If we accept the term Europeanization in the way Maria Green Cowles and Thomas Risse define it as the emergence and the development at the European level of distinct structure of governance (meaning the process of adaptation and reconciliation), then it is rather easy to assess the impact of given process on national formal (?) structures, in particular the national administrations. It literally means making of new layers of political practice interacting with the older ones. Political institutionalization involves creation of formal and informal rules, procedures, norms and practices representing governing politics at the European, national and subnational level. Every member state has undergone that process through a number of identifiable and distinct changes within its domestic institutional structures. Nevertheless, as the authors suggest, none of the states has completed the process in the terms of full compliance or convergence of its national structures; it was and still is a continuous process of adaptation in a particular national manner (this is trivial and empty). In the early 1990s the political changes in Europe (e.g. the fall of the Berlin wall in 1989.) created a new situation for the European Union. The Community was overwhelmed with applications for membership from various Central and Eastern European countries. Since in previous enlargement rounds, the Community had never accepted more than three new members at once, therefore a fundamental decision had to be made. This important decision was reached by the Copenhagen European Council in June 1993. The European summit in Copenhagen was devoted to the Central and Eastern Europe countries, highlighting the support given to the processes of modernisation and transition to the market economy in above mentioned states. It is decided that every country, if wishing so, can become the member state of the European Union, after assuming all the obligations of a membership by satisfying the economic and political conditions required. Each candidate country has to fulfil the following obligations, namely, stability of institutions or political criteria consisting of democracy, rule of law, human rights, and respect for and protection of minorities. Functioning market economy and capacity to cope with competitive pressure and market forces within the European Union, represents the economic criterion. The adoption of the acquis communautaire is the final (legal) criterion. Since Community law is not only to be adopted, but also applied and enforced, the Madrid European Council in December 1995 added the criterion of expansion of administrative structures for effective adoption of the acquis. The prerequisites for the candidate countries are to modernise their administrations taking into account the principles of professionalism and neutrality. Preparing for EU membership requires far reaching changes across a broad range of sectors in many of the institutions and organisations involved in the public governance and legislative enforcement processes. INSTITUTIONAL CHANGE AND CONVERGENCE The process of Europeanization is important, but not the only drive of institutional change. Transition and EU enlargement deeply rely on capacities and quality of common and national institutions responsible for enforcement and conduct of development policies. Europeanization is, however, crucial in changing the state by increasing the adaptation pressure (Europeanization is changing process); in changes imposed by the accession process, the key question is weather there are compatibilities between the ongoing change and the present state at the domestic level. Risse and Green Cowles suggest that poor fit implies strong and good fit implies weak adaptation pressure (trivial). In the very core of this adaptation process lays the institutional change and convergence. What are institutions, their nature, kinds and how they affect governance on the level of public administration? North (1990.) says they are the rules of the game; formal and informal codes and norms defining mutual relations between people. In narrow sense institutions are organisational units, procedures and regulatory frame. There are externally and internally defined institutions; the first define social structure and their changes take centuries to implement. The other type changes are shorter or continuous (like governance). Institutions create motivational structures for individuals and organisations, and coordinate their activities and behaviour according to Kasper and Streit (1998). Although institutions have to provide (institutions are) envisaged and coherent rules, sometimes there is a need for institutions to change (the urge for change /institutional dynamic/ is an intrinsic feature of institution) and adapt to social preferences, technology, political and socio-economic structures and external factors (to be formulated with more precision). Transition and enlargement of the EU strongly depends on the capacities and the quality of common and national institutions responsible for development policies. In that context, one of the key issues is convergence of institutions. The basic division distinguishes exogenous institutions (external, predefined) and endogeneus institutions (internal) against the economical system. The exogenous institutions define social structure and their changes lasts for centuries. The endogeneus institutions may change in shorter period of time or continously, eg. alocation of resources or the governance. We can also obeserve institutions as normative rules or organisations. However, it is the basis for different types of analysis. Institutions as normative rules which impose boundaries to economic behaviour are studied from macroanalitical perpective. On microanalitical level are organisations which, while acting as economic institutions, structure human interactions by itselves. total confussion. Reinforcing the institutional and administrative capacity of beneficiary countries is a key requirement for enlargement if they are to be in a position to fully adopt, implement and comply with the Community acquis. Institution Building support is available to the new Member States (under the Transition Facility, a temporary instrument available till the end of 2006), the accession and candidate countries, the potential candidate countries of the Western Balkans, and the Turkish Cypriot Community in the northern part of Cyprus. Activities focus on the weaknesses identified at the central, regional and local level particularly in view of the increased emphasis given to Economic and Social Cohesion. EU AND THE INSTITUTIONALISM Kooiman (1993) defines governability is a measure of the organizations capability for effective coordination within the context of the environment within which it is nested: it corresponds to the organizations capacity to transform, its capacity to modify its structure, its process, and even its substantive guidance mechanism and orientation. A very interesting view on the process is given by Paquet, who proposes that the central thrusts of this evolving process areresilience (the capacity for the economy-polity-society nexus to recover undamaged from pressure or shock through some slight modifications that do not modify the nature of the overall system), andlearning(the capacity to transform in order to improve present performance through a redefinition of the organization's objectives, and a modification of behaviour and structures). Resilience and learning would appear to point in contradictory directions (maintaining coherence versus structural transformation), so they must be balanced because both are necessary to maintain sustainability. Given that, the European Union itself must fulfil one criterion; namely, the Copenhagen European Council stated that The Unions capacity to absorb new members, while maintaining the momentum of European integration, is also an important consideration in the general interest of both the Union and the candidate countries. Accordingly, in European context attention has to be given to the issue of institutional inertia and its effects. As Thomas Banchof argues, the European institutions have gained over time some autonomy from the states that created them; once in place, they resist reassertions of national sovereignty. Institutions are not actors in their own right, but rather arenas in which state and other social actors pursue their interests. Norms, in that context, represent the shared ideas regarding the definition of the policy area, other relevant actors and patterns of interaction. Rules and directives, backed by the state power, bind the actors. There are also practices of interaction e.g. particular policies and political coalitions around them, through which the state pursue its interests. Definition of institutions and policies is historically contingent. However, once established, they are often taken for granted and become the area for political struggle. Nevertheless, the redefinition of institutions can and does take place (e.g. the reorganisation of government ministries), although such actions must overcome resistance from those who identify with already established institutions and norms. Change requires political will or formal legislative action. Furthermore, change involves engagement of necessary actors, and management of the rules and procedures. All said can absorb the administrative energy and political capital crucial for successful reform. Institutional scientists concerned with rules often focus on the trade-off between individuals and social actors. However, Wallis argues that the real trade-off reflects the problem of acting in support of the interests of the organizations they belong to rather than acting in support of the formal rules of the larger society. He offers the answer that involves a distinction betweenanonymousrelationships between individuals who do not know each other personally, but know the organizations that the other belongs to, andimpersonalrelationships in which all individuals are treated the same. In the context of European Union, the new and unknown rules that are imposed to the candidate countries are opposing the known, some of them certainly not better, but at least well known rules which, furthermore, straighten the inertia of national institutions towards the convergence to EU institutions. Subsequently, institutional change starts to occur when the parties to an exchange become aware, in order to be better off, that they need to renegotiate the terms of their agreements by restructuring the existing set of rules. The institutional inertia often studied in the context of national institutions, is not less relevant on the EU level. There are constrictions from both sides, and adding new member states and new policies and competences only makes the whole structure of exchange more fluid and not so well defined (or case-to-case based) regarding the significant differences between the member states. However, above mentioned only leads to increased level of institutional inertia. CROATIAN PUBLIC ADMINISTRATION: THE CHALLENGES Many challenges in Croatian public administration rise from inadequate education, insufficient monitoring of employees performance, and high level of political impact, lack of organisational culture, immanent values, paternalism and no orientation toward a citizen. There is also a lack of short-term planning and political will to undertake the necessary reforms. Overall, there is no defined development strategy in public governance. Nevertheless, the government has foreseen seize of public administration growth, horizontal decentralisation, rationality and sound economic behaviour in the accession to EU. It is highly important because public administration is the one to carry the burden of legislative reform within the country. There is also a need for adequate representatives in the EU that will be able to cope with the competitiveness of other countries representatives. The number of state officials is extremely high; according to the Central register kept by the Ministry of Justice the number of state officials and administrators is around 65.380 in the state governance bodies: 51.248 in different ministries of the Government 2.962 in state governed organisations 4.487 in state governance offices in the counties 233 in professional service of Croatian Parliament 56 in professional service of Government of Republic of Croatia 247 in State revision office 11 in Ombudsman office 5.682 in other legal governance bodies The positive regulations define the politically assigned state officials as separate category in state governance bodies. Their rights and obligations are regulated by the special Act on state officials' rights and duties. According to the qualification structure, only the third has HE diploma: around 33% of employees has high education, around 15% has higher education diplomas, nearly 49% high school diploma, and the rest of about 3% represents people with no education but primary. Qualification structure of employees in state governance bodies shows minor improvements over the past few years, but it is far from significant considering scope and importance of work done for the state governance. The Law on state officials and employees envisages professional trainings during their mandate in state governance bodies, depending on the affiliation they have. Professional trainings are organised by each governance body in the span of its jurisdiction, and dependant of needs and possibilities. It is also obliged to cooperate with other state bodies and scientific and HE institutions. Therefore, what does exist is the extremely wide range of possibilities of further education for state officials and employees (through seminars, study trips, practical training, specialist courses...etc.). To conclude with, the law on state officials and administrators foresees the permanent education. Current institutional frame offers a wide range of possibilities of education organization and conduct. Accordingly, the problem of adequate education of public administration is not in the institutional frame, some agree, but in inadequate number of state officials dealing with the problem. Ana-Maria Boromisa emphasises the weaknesses of institutions as the result of non-defined priorities and time-line of measures conduct. As it is previously mentioned, there is no defined development strategy in public governance; there are numerous changes and adaptations of the existing ones. We are witnessing the legal insecurity and the distrust in institutions. A clear need for more persistent supervision can be identified. FINAL REMARKS Croatian accession process towards the European Union requires meeting the main challenges as the other Member States. European Commission objects Croatia the weakness of its institutions indebted for efficient cooperation with International Court of Justice and conduct of obligations from international agreements. For the past few years EU-Croatia Parliamentary Committee has adopted several Declarations and Recommendations all stating that Furthermore, it is also stated that Croatia demonstrates continuous progress and efforts in the area of judicial and public administration reform, but also has to pursue strengthening the administrative capacity, not only to implement adopted reforms, but to secure that it can benefit fully from increased financial assistance. It is also observed that Croatias improved institutional rules for the functioning European Union will facilitate the accession once all criteria have been met. The Declaration and Recommendations of the Joint Parliamentary Committee EU - Croatia in Brussels on the merit-based system of promotion of civil servants, the new salaries, training and decentralisation from 2008 stressed that the present institutional rules of the European Union do not impede the accession of Croatia, for which appropriate arrangements have to be negotiated in due course and, at the earliest convenience, incorporated in the Treaties. Regarding financial management, it is further encouraged that the efforts invested by the Croatian Government to continue strengthening the administrative capacity of all relevant agencies and bodies, including those at the local level, have to be continued in order to benefit more from the pre-accession assistance programmes. It was also commended to intensify preparations for management and implementation of IPA (Pre-Accession Instrument) programme, and confidence is expressed that the EC will be in a position to confer management powers to Croatia, thus allowing the implementation of IPA funds as of 2009. Parliament had opinion that the recently revised and adopted IPA Multi-Annual Indicative Planning Document 2008-2010 duly emphasised the need of more targeted funding, within its institution building envelope, towards judiciary, public administration reforms and fight against corruption on one hand, whilst on the other hand duly emphasised the need of streamlining other IPA funds to intervention areas similar to the ones funded by various EU policies (i.e. preparation for successful participation in various EU policies upon accession). The Declaration and Recommendations of the Joint Parliamentary Committee EU - Croatia in Strasbourg from 2009 on EU-Croatia negotiations for accession to the EU and the implementation of the Stabilisation and Association Agreement welcomed Croatias continuous efforts and work to continuously address all matters related to the political criteria and in particular the ongoing reforms of the judiciary and public administration, the fight against corruption and organised crime and the sector of fundamental rights, freedom and security, in accord with EU requirements. Regarding the public administration, it was noted that important legislation (e.g. Law on General Administrative Procedure, amendments to the Civil Service Code of Ethics) and decisions, such as that on the establishment of a Ministry for Administration, for achieving a better functioning and depoliticised public administration in Croatia. The public administration is of crucial importance. Croatia should devote particular attention to reinforcement of the civil service so as to make sure that the appropriate ministries can properly carry out the many legislative reforms they have committed themselves to. Particular importance is set on coordination, team building, motivation, accountability and internal and external control, in each and every segment of the public administration. Nevertheless, special attention should be given to the resistance to the institutional change from both sides; the national level and European level. Public pressure, unresolved issues in accession process and still open chapters certainly have to receive more attention in further actions. References: Banchoff , T.: Institutions, Inertia and EU Research Policy. JCMS, 40,1, 2002, p.1-21. Budak, J., Sumpor, M.: Nova institucionalna ekonomika i institucionalna konvergencija. EKONOMSKI PREGLED, 60 (3-4), 2009., p. 168-195. Gagliardi, F.: Institutions and economic change: A critical survey of the new institutional approaches and empirical evidence. The Journal of Socio-Economics, 37, 2008, p. 416 443. Marktler, T.: The Power of the Copenhagen Criteria. CYELP, 2, 12. North, D.C.: Institutions, Institutional change and Economic Performance. Cambridge University Press, 1990. Ott, K. (Ur.): Pridru~ivanje Hrvatske Europskoj uniji: izazovi sudjelovanja. Institut za javne financije / Zaklada Friedrich Ebert, Zagreb, 2006. Paquet, G.: The New Governance, Subsidiarity and the Strategic State. Paper prepared after the OECD Forum for the Future conference on 21stCentury Governance: Power in the Global Knowledge Economy and Society held in Hannover in the Spring of 2000. Risse, T.; Green Cowles, M.; Caporaso, J.: Europeanization and Domestic Change: Introduction. In: Transforming Europe: Europeanization and Domestic change. Green Cowels, M.; Risse-Kappen, T. (Eds.), Cornell University Press, 2001. Wallis; J.J.: Institutions, Organizations, Impersonality, and Interests: The Dynamics of Institutions. Paper presented at the The Dynamics of Institutions in Perspective: Alternative Conceptions and Future Challengesconference, October 3-4, Paris, 2008.  HYPERLINK "http://www.poslovniforum.hr/eu/eu23.asp" http://www.poslovniforum.hr/eu/eu23.asp (02.02.2011.)  HYPERLINK "http://www.sabor.hr/Default.aspx?sec=385" http://www.sabor.hr/Default.aspx?sec=385 (30.01.2011.)  HYPERLINK "http://www.sabor.hr/Default.aspx?sec=1230" http://www.sabor.hr/Default.aspx?sec=1230 (31.01.2011.)  HYPERLINK "http://www.delhrv.ec.europa.eu/?lang=en&content=1285" http://www.delhrv.ec.europa.eu/?lang=en&content=1285 (30.01.2011.) Risse, T.; Green Cowles, M.; Caporaso, J.: Europeanization and Domestic Change: Introduction. In: Transforming Europe: Europeanization and Domestic change. Green Cowels, M.; Risse-Kappen, T. (Eds.), Cornell University Press, 2001, p.1.  Ibidem, p. 3.  Marktler, T.: The Power of the Copenhagen Criteria. CYELP, 2, 12, p.2.  European Council in Copenhagen, Conclusions of the Presidency, (21-22 June 1993, SN180/1/93), REV1, p.13.  Risse, T.; Green Cowles, M.; Caporaso, J.: Europeanization and Domestic Change: Introduction. Op.cit. p. 2.  North, D.C.: Institutions, Institutional change and Economic Performance. Cambridge University Press, 1990, p.3.  Kasper, W.; Streit, M.E.: Institutional economics: social order and public policy. Edward Elgar Publishing Limited, UK, 1998, p.98.  Budak, J.; Sumpor, M.: Nova institucionalna ekonomika i institucionalna konvergencija, EKONOMSKI PREGLED, 60, 3-4, 2009, p.170.  Ibidem, p.172.   HYPERLINK "http://www.delhrv.ec.europa.eu/?lang=en&content=1285" http://www.delhrv.ec.europa.eu/?lang=en&content=1285 (30.01.2011.)  Paquet, G.: The New Governance, Subsidiary and the Strategic State. Paper prepared after the OECD Forum for the Future conference on 21st Century Governance: Power in the Global Knowledge Economy and Society held in Hannover in the spring of 2000, p.6.  Ibidem.  Ibidem.  Banchoff, T.: Institutions, Inertia and EU Research Policy. JCMS, 40,1, 2002, p.4.  Ibidem, p.5.  Ibidem.  Wallis; J.J.: Institutions, Organizations, Impersonality, and Interests: The Dynamics of Institutions. Paper presented at the The Dynamics of Institutions in Perspective: Alternative Conceptions and Future Challenges conference, October 3-4, Paris, 2008, p.2.  Gagliardi, F.: Institutions and economic change: A critical survey of the new institutional approaches and empirical evidence. The Journal of Socio-Economics, 37, 2008, p. 422.  http://www.poslovniforum.hr/eu/eu23.asp (02.02.2011.)  Ibidem.  Ibidem.  Boromisa, A.M.; Samard~ija, V.: Croatia and the Lisbon Strategy: Convergence towards goals? In Ott, K. (Ur.): Pridru~ivanje Hrvatske Europskoj uniji: izazovi sudjelovanja. Institut za javne financije / Zaklada Friedrich Ebert, Zagreb, 2006. p.227.   HYPERLINK "http://www.sabor.hr/Default.aspx?sec=385" http://www.sabor.hr/Default.aspx?sec=385 (30.01.2011.)   HYPERLINK "http://www.sabor.hr/Default.aspx?sec=1230" http://www.sabor.hr/Default.aspx?sec=1230 (30.01.2011.)  European Commission, 2003. The Stabilisation and Association Process for South East Europe, Second Annual Report (online). COM (2003), 139 final, 21.1.2011. Available at: http://europa.eu.int/comm/external_relations/see/sap/rep2/com03_139_en.pdf  Ott, K. (Ur.): Pridru~ivanje Hrvatske Europskoj uniji: izazovi sudjelovanja. Institut za javne financije / Zaklada Friedrich Ebert, Zagreb, 2006. p. 17.     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