The impact of the EU on governance reforms in post-communist Europe: a comparison between first and second-wave candidates.

• Author: Mendelski, Martin
• Position: Report

1. Introduction

   Transition from communism to capitalism had an uneven development. A short glimpse at some institutional and economic indicators (e.g. from World Bank, the EBRD etc.) at the end of the 1990s reveals a more or less clear variation between "first-wave" and "second wave" EU candidate countries. The former, also labeled as the "Luxembourg group" (Czech Repub-lic, Estonia, Hungary, Slovenia, Poland) started accession negotiations two years earlier be-cause they were in general more advanced than the latter, the less developed "Helsinki group"(Bulgaria, Latvia, Lithuania, Slovak Republic, Romania) (2). Why did the Luxembourg group until recently have for many years a higher institutional (governance) quality than the Helsinki group? What explains variation in governance quality among post-communist transition countries and what explains the recent catch-up of the laggards?

   Several authors try to explain variation by emphasizing the difference in historical and institutional legacies. They point to the incompatibility of Western-type institutions with pre-communist institutions and claim that this incompatibility increases transaction costs and makes the enforcement of the new laws more difficult, resulting in a slower institutional change (3). Their argument is basically that the German or Habsburg legacy is more beneficial for economic and institutional performance than the legacies of the Ottoman or Russian Empires. It is, however, hard to prove such claims because it is difficult to tell whether pre-communist legacies persisted, especially when we additionally consider communist legacy (4) or post-communist developments. Because institutional quality is a complex and interrelated process, monocausal explanations which focus only on historical legacies and ignore the recent history or future developments are not sufficient to provide the answer. The recent catch-up of the less advanced Helsinki group (which had the "less beneficial", mainly Russian or Ottoman historical legacy) speaks clearly for the importance of recent factors, for instance the impact of the European Union.

   In this article I argue that that the recent improvement of judicial and administrative quality (or governance) was driven by EU membership, which was conditioned on the fulfillment of democratic, economic and institutional (administrative) requirements. The argument of EU-driven governance reforms is less convincing for first-wave countries, which to a great extent reformed their institutional framework already in the early 1990's and had a sufficient gover-nance quality already by the mid 1990s. Since the involvement of the EU the less advanced countries from the Helsinki group caught-up and developed faster than the advanced Luxembourg group countries. I compare the recent governance development of both groups and demonstrate that EU conditionality had on average a stronger impact on the former laggards from the Helsinki group. I also demonstrate that the impact on governance (and especially administrative) reforms was limited as improvement concerned more formal and efficiency-related aspects and less structural power-related aspects. My comparative and historical grounded analysis contributes to the debate on institutional change during transition by highlighting the importance of a more differentiated approach which includes the interplay of different factors (e.g. structural legacies, domestic factors and the EU as an external actor) and different levels of analysis (formal and informal institutions). This analysis shows that communist legacies played a role mostly at the beginning of post-communist transition. It equally shows that the effect of EU conditionality is diffused and depends on the domestic conditions of each country, as well as of the subsector in focus.

   The paper is structured as follows. The second section discusses the role of pre-communist legacies for governance quality and shows how pre-communist institutions and actors, de-spite certain continuities in some countries, were to a great extent replaced by imported institutions from the West (before World War I) and especially by communist institutions (after World War II). These two institutional ruptures at critical junctures produced distinct communist legacies which produced different starting conditions at the beginning of transition. Due to the "positive" (i.e. modernizing, capacity increasing) and negative effects (i.e. politicization) of communism these initial conditions were not always worse for Ottoman successor countries. The third section argues for the need to include the EU as an external and non-historical driver of governance reforms in recent years. It answers how (mechanisms of Europeanization) and under which conditions the EU generates institutional change in candidate countries and reveals empirically when and where (i.e. in which candidate countries and on which dimensions on governance) reforms were successful. The last section concludes.

2. The role of historical legacies for governance quality

   With regard to pre-communist institutional legacies, different types of legislative and administrative systems can be identified in pre-communist Central and Eastern Europe (CEE). A more favorable Habsburg judicial and administrative system--in general relative efficient, and less corrupt, based on an effective legal system (5)--was present in the Czech Republic, Slovakia, Hungary, Slovenia and parts of Romania (Transylvania, Banat, Bukovina) and Poland (Galicia). Additionally, the favorable Prussian-German administrative system was installed in the Western parts of Poland. In contrast, the Baltic States were under the influence of the Russian administrative system, which despite the importance of the law, was characterized by close relations between politics and civil service, strong centralisation and hierarchy (6).

   After independence from Russia in 1918/1920, the Baltic States borrowed legislative and administrative institutions from Western Europe, particularly from Germany (7). Bulgaria and parts of Romania (Moldavia, Wallachia) inherited the less favorable administrative and judicial system from the Ottoman Empire which in its final centuries was characterized by a huge, badly paid and inefficient bureaucracy, corruption, and low enforcement of legislation (8). Briefly and simplistically stated, one could argue that the differences in historical legacies reflect the variation during transition. Such an argument, which was used until recently (9), was facilitated by the inferior institutional and economic development of non-Habsburg successor countries. Can the different pre-communist institutional legacies account for the diverse institutional performance of first and second-wave countries during the last two decades?

   The answer on the importance of pre-communist legacies depends upon the degree of institutional break with the Ottoman, Russian and Habsburg institutions and the subsequent penetration of the following ones. In this regard, we have to consider that already at the turn of the 19th century a formal institutional break from the former Empires had occurred, which can be considered a critical juncture (10), especially for formal institutional development. This transition was accompanied partly by changes in personal structures but in general less by a deep and structural modernization. Central and Eastern European Countries (CEECs) had become independent nation states and had to build up new independent structures (legal system, administrative system). During this transition process native civil servants replaced the former Russian judicial and administrative officials in Poland and the Muslim ones in Bulgaria (11). In contrast to Ottoman successors, Habsburg countries did not have to replace so many civil servants and judges as they had mainly employed native personal. This fact con-tributed to a more pronounced elite and personal continuity in Habsburg territories (12) and indicates a less pronounced break with the pre-communist legacy.

   However, in all countries a formal institutional change occurred, which implied the trans-plantation of institutions and practices from more advanced Western Europe. In order to strengthen national unity and power, the newly established states (e.g. Bulgaria, Romania, partly also Poland) were centralized and bureaucratized (13). The formal institutional change was however weaker in the countries with Habsburg legacy. In Hungary, for instance, legal continuity could be upheld until 1945. (14) Although CEECs succeeded often to copy Western legal systems and import formal institutions, they were not able to fully catch up with regard to economic development and informal institutions. This is why some scholars claim that only forms without content were imported (15). In general, institutional reforms were more successful in former Habsburg states than in Ottoman successor states (16). Especially Bulgaria and Romania had to deal with difficult structural and economic conditions and lack of quali-fied staff (17) which lead to an insufficient implementation of newly imported institutions and superficial modernization (18). Such a formal institutional change of a small group of elites makes it probable, that informal institutions and former administrative practices (especially at the countryside) could persist during the first decades after the breakdown of the two Em-pires (19).

   The second and much more intensive institutional and structural break occurred in 1945. The introduction of communism after World War II can be seen as a significant critical juncture which changed both the formal institutions (e.g. new constitutions) and the informal institu-tions (e.g. habits, attitudes and behavior of citizens) (20). Changes of informal institutions oc-curred through the transformation of society structure, triggered by the emphasis on indu-strialization and education. Inefficient...