PARADIPLOMACY AND
BULGARIAN SUB-NATIONAL AUTHORITIES ON THE ROAD TO THE EU[1]
Pavlina NIKOLOVA[2]
FINAL DRAFT: about 6185 words (09.11.06)
Introduction
Bulgaria’s journey back to Europe formally began in December 1995 when the Government submitted to the European Council in Madrid an application for European Union (EU) membership. On 25 April 2005 Bulgaria signed a Treaty of Accession and the date of membership was set for 1 January 2007. But it was only in September 2006 that Bulgarian membership received a formal go-ahead after a thorough evaluation of how far it had gone in implementing reform promises assumed during accession negotiations. Bulgarian sub-national authorities were largely excluded from the negotiation process because talks with the Commission and the EU member states were conducted exclusively by the central government. Yet sub-national authorities were expected to share the burden of fulfilling the obligations assumed by the central government during accession negotiations. A clear asymmetry thus arose between rights and obligations of Bulgarian sub-national actors. Chapter 21 Regional Policy and Structural Instruments of the accession negotiations gave them the opportunity to address this asymmetry by promoting the principles of programming and partnership. Furthermore, the need to implement the pre-accession funds PHARE, ISPA and SAPARD as well as the prospect of transfers from the structural funds highlighted the need to obtain know-how on EU matters and to ensure co-funding for projects. To this end Bulgarian sub-national authorities could engage in dialogue and co-operation with sub-national authorities of EU member states. They could also directly or by means of participating in trans-national organisations engage in lobbying the EU institutions and promote the principle of partnership in policy-making among different territorial levels.
This paper seeks to answer whether the asymmetry of rights and obligations and the prospects of EU funding have prompted Bulgarian sub-national actors to establish channels for direct contact with EU institutions and trans-national actors that circumvent and surpass the national government. To put it differently, the paper asks whether Bulgarian sub-national authorities have sought to get involved in paradiplomacy in the framework of Bulgaria’s preparations for EU membership, for EU regional policy in particular. Keating (1999: 1) defined paradiplomacy as a phenomenon of ‘an increasing involvement of regional governments in the international arena’. The ‘international arena’ in this study is qualified to mean the ‘EU arena’. A key term in the definition is ‘regional government’; in reality it is more than ambiguous. Its substance varies across EU member states depending on national constitutional arrangements and specific domestic factors (Jones and Keating 1994). It is therefore appropriate to explain first why the term ‘sub-national authorities’ is preferred here to ‘regional government’ and how it should be understood in the Bulgarian context. The paper then proceeds by examining the motivations for sub-national authorities to conduct paradiplomacy. Then, it presents evidence of their increased involvement with the EU Committee of the Regions and with networks of sub-national authorities from individual member states or from across the EU. Finally, it evaluates the opportunities for and obstacles to paradiplomacy in the context of EU enlargement by examining, first, how the approach of the European Commission to sub-national authorities matters, and second, by assessing the importance of constitutional powers, financial resources and administrative capacity.
What is the theoretical background to this paper? With regard to ‘old’ EU member states, the concept of multi-level governance (MLG) has suggested that interdependencies exist among three sets of actors at different territorial levels: the EU institutions, the national government and the sub-national and non-state actors. According to MLG, the European Commission sought to encourage the involvement of sub-national and non-state actors in policy-making both at the EU and the national level. MLG was first developed with reference to EU regional policy, narrowly defined here as Community interventions to reduce the gaps of economic development among regions rather than among member states. Hooghe and Marks (2001) have identified three stages in EU regional policy: agreement of a budgetary envelope, institutional design, and structural programming. They argue that each phase involves and is dominated by nested actors situated at different territorial tiers: national, supranational, regional and local. The setting of the EU budget and the financial envelope for regional policy is clearly dominated by member states (Laffan and Shackleton 2000). The Commission is not a passive bystander because it proposes the budgetary framework, but intergovernmental bargaining over dividing the pie tends to ‘drown out’ supranational influence (Hooghe and Marks 2001: 95). Similarly, agreement on budgetary matters between Bulgaria and the EU in the accession negotiations framework depended on a prior agreement among member states. At the stage of designing the rules for implementation of EU aid, as opposed to budget set-up, nation-states are only one actor among others. According to Marks (1993: 392), ‘[b]eyond and beneath the highly visible politics of member state bargaining lies a dimly lit process of institutional formation, and here the Commission has played a vital role’. Sub-national levels of decision making are increasingly important and form a ‘myriad of connections’ with other territorial levels, national and supranational, and form inter-regional organisations. Many sub-national authorities opened representations in Brussels and trans-national networks such as the Assembly of the European Regions were formed to lobby the Commission or national governments (Mazey and Richardson 1998). The Committee of the Regions and Local Authorities was established by the Maastricht Treaty as the main institutional meeting place for the Commission and sub-national authorities. Mény (2001: 38-40) observed a territorial separation of decision-making, almost entirely dominated by member states, and representation of concerned interests, through the ‘creation of new modes of consultation and participation that have short-circuited traditional networks’ and national governments (Mény 2001: 35).
PART 1:
Sub-national authorities in Bulgaria
Bulgaria traditionally has been a highly centralised state. During communism there were 28 local territorial entities (districts) which served mainly administrative purposes. In 1987, they were merged into nine administrative units that remained in place until 1999. At no point during communism was there local or regional self-government. The 1991 democratic constitution established Bulgaria as a unitary state with local self-government and no autonomous territorial formations. Chapter Seven of the Constitution provided for the division of Bulgaria’s territory into municipalities with elected self-government and districts. In the early 1990s priority was given to municipal decentralisation (see Box 1).
Box 1 The local level in Bulgaria[3]
A Local Self-Government and Local Administration Act adopted in 1991 set the reform of the local level in motion. By 1999 ,a reasonable level of decentralisation was achieved and local democracy was established, with directly elected mayors (the local arm of the executive) and municipal councils (local parliaments). There were also attempts to introduce the principles and mechanisms of public administration reform at the local level and to achieve financial decentralisation but they were delayed by the severe economic crisis in the winter of 1996-7 (Djildjov 2002: 78-79). In the run-up to EU accession municipalities were given a number of key competences in the areas of social inclusion, environmental protection, preservation of cultural and historic heritage, healthcare, education, territorial development, as well as management of municipal properties, revenues and taxes. At the same time this decentralisation of competences was not matched by significant financial decentralisation. A strategy paper adopted by the Saxe-Cobourg Government (2001-2005) to that end was not fully implemented. In 2002, only 24 per cent of the municipal budget was funded by own revenues. The rest came from the state budget, in the form of shared taxes (39 per cent) and direct transfers (31 per cent) (NAMRB 2006). There was some unwillingness on the part of the central government to devolve human and financial resources to the local level.
While local self-government reform advanced substantially, little progress was made with regard to the development of an intermediate tier of government. It was only in 1999 that a new Law on Administrative-Territorial Division of Bulgaria was adopted, establishing 28 districts (oblasti) corresponding to NUTS 3 statistical units. The oblasti are territorial units where state authority is deconcentrated but no directly elected bodies exist. District governors are appointed by the Council of Ministers and their work is co-ordinated by the Regional Development Ministry. District administrations have no own sources of revenue and are entirely dependent on transfers from the state budget.
Box 2 Planning (macro-) regions, their administrative centres and constituent districts[4]
In June 1999, a Council of Ministers Decree combined the 28 districts into six planning macro-regions (rayoni za planirane) corresponding to NUTS 2 units (see Box 2). They were established as administrative and statistical entities for the purposes of planning and programming regional policy. At this macro-regional level Regional Development Councils were created (Commissions for Economic and Social Cohesion under the 1999 RDA) as consultative bodies to the Minister of Regional Development. Rather than being permanent or self-governing entities, they represented a meeting venue of all levels of governance. They comprised all district governors, one municipal representative per district, a Deputy-Minister for Regional Development, as well as representatives of the Ministries of Finance, Environment, Agriculture, Economy, Labour and Social Policy and Transport. Economic and social partners and NGOs were not formally represented at meetings of Regional Development Councils but could be invited as observers by the Council’s chair. The chair was a District Governor from the respective macro-region selected on a rotation basis for one year. The only permanent institution at the macro-regional level was a unit established within the district administration of the regional centre to assist the relevant Regional Development Council by ensuring the drafting and co-ordination of programming documents and providing technical assistance and expertise to beneficiaries and applicants for funding.
The territorial organisation was further refined by dividing the country into two NUTS 1 statistical units – Northern and Southern Bulgaria – in line with relevant EC regulations. There are no administrative structures at this particular level, this division is for purely statistical purposes. The 2005 Monitoring Report by the Commission endorsed the administrative-territorial organisation and stated that ‘Bulgaria is meeting its commitments and requirements arising from the accession negotiations in relation to territorial organisation’ (Commission 2005b: 58).
Box 3 Bulgaria’s territorial organisation according to the NUTS classification[5]
Population Min – Max / No in BGNUTS 1
/ 3 000 000 – 7 000 000 / 2 / Northern and Southern BulgariaNUTS 2 / 800 000 – 3 000 000 / 6 / Planning macro-regions (rayoni za planirane)
NUTS 3 / 150 000 – 800 000 / 28 / Districts (oblasti)
NUTS 4 / 264 / Municipalities (obshtini)
NUTS 5 / 5336 / Settlements (naseleni mesta)
NUTS – National Units for Territorial Statistics
The fact remains that Bulgaria has only one directly elected tier of government below the national – the local level. However, other levels exist and have the capacity to act both domestically and internationally. This is particularly the case with district administrations. It is therefore inappropriate to talk about ‘regional government’ in Bulgaria; the term ‘sub-national authorities’ is preferred instead as a collective for local, district and macro-regional bodies.
PART 2:
Stimuli for paradiplomacy
The task of this section is to examine to what extent preparations for EU membership and for implementing regional policy have provided stimuli for Bulgarian sub-national authorities to engage in paradiplomacy, that is in frequent interactions with EU bodies, trans-national networks and counterparts from EU member countries. Two sets of inducements are considered here: the EU requirements under Chapter 21 Regional Policy and Co-ordination of Structural Instruments of the accession negotiations and the experience of Bulgaria in implementing the pre-accession funds PHARE, ISPA, and SAPARD as a bridge to the European Regional Development Fund (ERDF).
2.1. CHAPTER 21 REGIONAL POLICY AND COORDINATION OF STRUCTURAL INSTRUMENTS
Under Chapter 21 of the accession negotiations Bulgaria needed to agree with the European Commission an appropriate classification of its territorial organisation. The main requirement was to apply the NUTS classification (National Units for Territorial Statistics) for the planning and programming of regional interventions. There were no specific requirements as to whether sub-national territorial entities had the right of self-government or simply carried out administrative functions on behalf of the central executive (deconcentration). Member states had very diverse patterns of sub-national governance (Jones and Keating 1994). However, the Commission specified implementation principles, notably programming, partnership, additionality and concentration, that member states had to follow with regard to EU funding. Beate Kohler-Koch (2002: 2) has argued that the principles of programming and partnership ‘interfere with politics and policies’ domestically and provide sub-national authorities with an argument in favour of their fuller involvement at all stages of the policy cycle.
The principle of programming implies that the EU will finance entire programmes incorporating a range of measures, rather than individual projects. Member states draft National Development Plans for the six-year programming cycle of the structural funds, which are then negotiated with the Commission in Community Support Frameworks, detailing the financial commitments of each participating institution and the private sector. The Commission’s New Partnership for Cohesion called for greater focus on impact and performance, and reasserted the principle of de-commitment of funds unused within two years (the ‘n+2’ rule). Thus, if Bulgaria is unable to identify priorities and draft projects for their achievement, money allocated to it will be lost. The 2004 Regional Development Act provided for a top-down definition of strategic priorities at national and district level, and bottom-up operational programming of mid-term actions at macro-regional and municipal level. At the basis were the Municipal Development Plans and Investment Programmes drafted by each mayor and adopted by the relevant municipal council. The Municipal Investment Programmes outlined concrete investment initiatives for sustainable local and regional development and incorporated a financial table summarising the possible financial resources for implementation of measures and projects. Thus a sort of interdependency was created between the central and the sub-national levels in Bulgaria.
The partnership principle, first developed in the frame of the Integrated Mediterranean Programmes, was asserted by the Commission in 1988 in the ERDF regulation (Hooghe 1996: 96-100). It provided that responsibility for implementation should be shared among the Commission, the national governments and sub-national actors and established a regional policy not for the regions but ‘by the regions’ (Nanetti 1996: 64, emphasis in original). After the 1993 reform partners were designated by member states and partnership was applied according to domestic institutional arrangements and distribution of competences. Furthermore, the partnership principle was extended to non-state actors such as representatives of socio-economic interests, thus involving a wider set of public and private organisations but diluting the privileged role of sub-national authorities. In 1999, further broadening brought in social partners such as trade unions and actors promoting gender equality. The 1999 reform of the structural funds was not region-friendly but the size of the regional development budget remained ‘an important lever for sub-national mobilisation’ (Hooghe and Marks 2001: 84).
The Commission’s Partnership on Cohesion estimated that if the current rate of growth is sustained, Bulgaria’s GDP will still be well below 75 per cent of the EU27 average in 2050 and the whole country will be eligible under Objective 1 ‘Convergence’ of the structural funds (Commission 2004). For the period 2007-13 Objective 1 supports growth and job creation in the least developed member states and regions by means of the financial resources of the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund. Under this Objective member states as well as regions are eligible for funding and part of the money comes from the Cohesion Fund which does not adhere strictly to the partnership principle. However, the large amount of EU money to be made available upon accession still represents an important source of investment for sub-national authorities. But to be able to take advantage of this opportunity they need to be able to identify strategic priorities, draft projects and implement or monitor them. In other words, they need to develop the necessary administrative capacity to handle the new tasks as well as accumulate knowledge of the EU procedures and practices. It is in view of this need that Bulgarian sub-national authorities seek to co-operate with counterparts from EU member states.
Finally, the principle of additionality implies that Community contributions do not replace but only supplement national contributions for regional development. It requires applicants for funding to co-finance, that is to contribute to up to 50 per cent of the total costs of EU funded projects. Since the own financial resources of Bulgarian sub-national authorities are limited the need for ‘additionality’ constituted a major obstacle to their participation. This provided further stimuli for paradiplomacy since it encouraged sub-national authorities in Bulgaria to co-operate with EU counterparts in view of ‘burden sharing’. This co-operation related not only to sharing the financial costs but also to benefiting from the know-how of ‘old’ EU regions in drafting and implementing projects.
2.2. THE PRE-ACCESSION FUNDS PHARE, ISPA AND SAPARD
PHARE was the first programme launched by the Community in 1989 to assist economic and democratic reform in ex-communist states in central and eastern Europe. In 1997, it was re-focused on helping Bulgaria acquire the institutional and administrative ability to make good use of EU financial assistance, and apply fully and correctly the acquis communautaire. It also co-funded investments in infrastructure and economic and social cohesion projects similar to those financed by the structural funds in member states. PHARE was joined by two other financial programmes, ISPA and SAPARD, proposed by the Commission in Agenda 2000 as part of the Union’s enhanced strategy for preparing CEECs for membership. ISPA supported the development of environmental and transport infrastructure in Bulgaria in a manner similar to the Cohesion fund for less-developed member states. SAPARD helped with agricultural and rural development and the implementation of the Common Agricultural Policy. The largest of the three instruments was PHARE, which in 1992-1999 channelled to Bulgaria a total of €1 billion EU money and another €486.57 million for 2000-2003. Under ISPA, sixteen financing memoranda for a total of €908.9 million were signed between Bulgaria and the European Commission in the period 2000-2. In 2000-3 SAPARD funded projects for a total of €291.77 million, of which €72.94 million were national co-financing (Pencheva 2003: 16). In the period 2004-2006, pre-accession aid to Bulgaria increased progressively to an additional 40 per cent of the 2001-2003 base line.