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There Must Be No Shortcuts on Serbia's Path to the EU

The challenge presented by Serbia's accession is symptomatic of a larger problem that has become apparent as the EU's frontiers have expanded. Almost all European countries outside the EU want the rights and opportunities that come with full membership.

After the disappointment of last month's Vilnius summit and the failure to conclude an association agreement with Ukraine, the official start of EU accession negotiations with Serbia tomorrow might be welcomed as an opportunity to breathe life back into the enlargement process and the idea of a Europe whole and free. Unfortunately, serious questions about corruption, judicial independence and business environment mean that Serbia's path to EU membership is unlikely to be quick or smooth. Seeing it through is going to require a great deal of patience on both sides.

The challenge presented by Serbia's accession is symptomatic of a larger problem that has become apparent as the EU's frontiers have expanded. Almost all European countries outside the EU want the rights and opportunities that come with full membership. But as those best placed to take on the obligations of membership have joined first, the countries that remain are those with the most severe and persistent shortfalls in the political and economic standards set out in the so-called Copenhagen criteria for EU membership.

This law of diminishing returns presents the EU with a dilemma. Should it slow the enlargement process to a virtual standstill by insisting on the kind of change that normally takes a generation or risk importing major problems of governance and law by giving candidate countries the benefit of the doubt in order to bring them in sooner? Experience shows that the moment of maximum leverage comes before accession and there is a strong case for arguing that the EU has already leaned too far in the direction of flexibility in its most recent rounds of enlargement.

The good news on Serbia is that significant progress has been made on what was expected to be the most difficult issue - relations with Kosovo, the former Serbian territory now recognised as an independent state by 23 out of 28 EU member states. The conclusion of the Brussels Agreement last April, which normalised relations between Serbia and Kosovo, was a notable achievement of European diplomacy, not least because it was negotiated with a Serbian government comprised of nationalist parties that until recently were firmly in the rejectionist camp. Clearly the lure of EU membership retains some of its old power as an instrument of change.

Welcome as it is, the breakthrough on Kosovo holds its own dangers. The instinct of EU governments is to reward the Serbia for taking a difficult step in the interests of regional security, hence the decision to open negotiations. But the temptation to maintain good will by finding shortcuts as the negotiations unfold will need to be resisted if the EU's integrity is to be maintained. There have already been serious problems with Hungary over media freedom and the rule of law. Another member state, Croatia, was admitted to membership last year despite significant doubts about corruption and judicial independence. Within a few weeks it was embroiled in a row with the EU over new extradition laws. These exceptions threaten to become the rule if high standards are not maintained in future enlargements.

Many of the concerns about the most recent accession states apply even in the case of Serbia. One of the most significant identified by the European Parliament and others relates to provisions in Serbia's criminal code, carried over from the communist era, that give the authorities broad scope to selectively prosecute business owners for "abuse of office" for engaging in profit-making commercial activities that are perfectly legal in any normal market economy.

In one on-going case Miroslav Mišković, one of the country's leading investors, was charged and detained for seven months after making a profit on a commercial loan to a privatised construction company. The loan was offered at a reasonable rate of interest and had been approved by the National Bank of Serbia. Another businessman with dual British nationality, Nick Djivanovic, was detained and held for more than a year on charges of prejudicing the rights of minority shareholders in a property deal despite the fact that none of the shareholders complained.

It is alleged that these and hundreds of other similar cases have been brought as acts of political and commercial score settling in the interests of the ruling elite and its business allies. The suspicion is only increased by clear evidence of judicial interference. One judge who ruled in favour of returning Miroslav Mišković's passport claimed that his superiors pressured him to reverse his decision. When he complained, he was dismissed from a key judicial appointment. Nor have recent amendments to the criminal code, prompted by EU criticism, made any difference. Despite the fact that the revised code is meant to exclude company owners as "responsible persons" and restrict its provisions to "unlawful material gain", all of the cases brought under the old code have been carried forward as if nothing has changed.

This is about much more than legal standards and human rights. It also affects Serbia's economic compatibility with the EU. With growth stagnant, living standards flat-lining at 35% of the EU average and almost a quarter of the working-age population unemployed, the climate of fear created by the arbitrary prosecution of business owners deters investment and renders the country economically dysfunctional. Considering all the other pressures caused by low growth, the sovereign debt crisis and the movement of labour from poorer to richer member states, the last thing the EU wants is another weak and faltering economy to add to the mix.

Appropriately enough, the first item on the agenda when talks open tomorrow will be the rule of law. That is certainly the area where Serbia has the most work to do in meeting the standards expected of an EU member state. It is also the area where EU negotiators will need to be most demanding, because the rule of law and Serbia's economic health are inextricably intertwined. The sooner the Serbian authorities grasp that fact and start to implement the necessary reforms, the sooner we can say that EU enlargement truly is back on track.

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