JIS Vol.4 No3 2018

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Journal of Innovations and Sustainability Volume 4, Number 3, 2018

Innovations and Sustainability Academy 2018

Journal of Innovations and Sustainability Volume 4, Number 3, 2018 https://sites.google.com/site/journalinsust/ Editor-in-Chief: Prof. Vesela Radović, Ph.D. Managing Editor: Assoc. Prof. Ekaterina Arabska, Ph.D.

Š Innovations and Sustainability Academy 1, Lotos Str., Plovdiv 4006, Bulgaria

E-mail: insustacademy@gmail.com https://sites.google.com/site/insustacademy/

2018 ISSN 2367-8127 (CD-ROM) ISSN 2367-8151 (on-line)

ISSN 2367-8127 (CD-ROM) ISSN 2367-8151 (on-line)

Journal of Innovations and Sustainability

Volume 4 Number 3 2018

Contents ICTs and Development in Pakistan: A Review ....................................... 7 Muhammad Arif

Methodology for Assessing the Quality of Conducted Training ............ 27 Nikolay M. Petrov

Opportunities for Development of Defense Cooperation between Southeastern European Countries ...................................................... 39 Natalia Bekiarova & Marin Petkov

The Stability and Growth Pact: Pursuing Sound Public Finances and Coordinating Fiscal Policies in the EU Member States ........................ 53 Venelin Terziev, Stefcho Bankov, & Marin Georgiev

The Role of the Security Policy in Kosovo .......................................... 69 Venelin Terziev & Feim Brava

Security Dilemmas and defense Challenges in Kosovo and Western Balkans .............................................................................................. 75 Venelin Terziev, Redon Koleci, & Baki Koleci

The Change in the Approach of the Court of Justice of the European Union in the Context of Market Freedoms and Internal Situations ..... 85 Venelin Terziev, Stefcho Bankov, & Marin Georgiev

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Journal of Innovations and Sustainability

SOCIAL SCIENCES

Volume 4, Number 3, 2018

ISSN 2367-8127 (CD-ROM) ISSN 2367-8151 (on-line)

Journal of Innovations and Sustainability

Volume 4 Number 3 2018

ICTs and Development in Pakistan: A Review

Muhammad Arif* Iqra University, 5, Khayaban-e-Johar, H-9, Islamabad, 44000 Pakistan

Abstract Information and Communication Technologies (ICTs) projected as a dynamic solution for socioeconomic development are extensively utilized in the developing countries. Pakistan has witnessed a high growth of ICTs use in the last decade. This review addresses the question: How ICTs are potentially aiding the development process in Pakistan. While doing so, it reviews the key literature on Information and Communication Technologies 4 Development (ICT4D) and Information Systems (IS). The inclusive review of literature is undertaken for identifying different aspects and roles played by ICTs in social and economic development universally with a specific emphasis on Pakistan. The key finding of this review is that ICTs are enabling pivotal transformations in Pakistan by becoming a key element in economic and social development. ICTs are advancing society by improving access of millions of people to many amenities such as financial and health in Pakistan. A set of two case studies from the field of Mobile Money, and Telemedicine are used to reinforce these claims. Given the poor socio-economic and development indicators of Pakistan, a way forward is proposed. This study is an initial attempt to review the potentials as well as different roles played by ICT-led initiatives in the socio-economic development of Pakistan. It is expected to form the basis for the further investigations with regards to ICT4D projects in Pakistan. The study is primarily based on qualitative data to enforce its claims. Unfortunately, primary data on the topic is either non-existent or cannot be accessed when it comes to Pakistan. Keywords: Pakistan, ICTs, Mobile Money, Telemedicine, Socio-economic development, Case study, ICT4D, & IS.

*

Corresponding author: Muhammad Arif Email: arif.iqrau@gmail.com

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INTRODUCTION Information and Communication Technologies (ICTs) are anticipated to be panacea for many socio-economic problems in the developing countries. ICTs are widely used in the development process by both public and private organizations to support socioeconomic development initiatives. A comprehensive scholarly work in the domain of Information and Communication Technology 4 Development (ICT4D) and Information Systems (IS) sees ICTs as a set of tools which effectively tackle many socioeconomic and development problems throughout the third world (Spence & Smith, 2009; Walsham, Robey, & Sahay, 2007). Furthermore, the work of Qureshi (2008, 2010, 2011); Zheng (2010) clearly reveals not only the development potentials of ICTs but also, their current role in improving the well-being of the poor in the developing states like Pakistan. Being a resource-poor, Pakistan faces many social problems and poverty in the most critical areas (Arif, 2015). Some 29.5% of Pakistan’s population lives below national poverty line (Ministry of Finance, 2015-16). This is despite improving development indicators of the nation. For instance, on average, an individual Pakistani has US $ 1,386 of per capita income (Ministry of Finance, 2014-15b; The World Bank, 2015). While seeking potential solutions to poor development conditions, it is often proposed by many that modern ICTs enable socio-economic development through enhancing civic engagement, providing access to information, and knowledge in the development endeavors (Boas, Dunning, & Bussell, 2005; Heeks & Stanforth, 2014). Others maintain that marginalized people in the emerging South have limited access to information vital to improving their wellbeing (Bowonder & Boddu, 2005). In such a context, ICTs can improve access to basic information related to livelihoods. They can also assist people to make informed decisions which can reduce their probability of falling into poverty (Bowonder & Boddu, 2005). Alike, it is also widely argued that ICTs can help in boosting overall economic development by raising production and encouraging human capital development (Quibria, Tschang, & Macasaquit, 2010). Social penetration and the use of ICTs is widespread in Pakistan. It is self-evident from ICT-enabled initiatives such as Mobile Money (MM) and Telemedicine. The use of MM in Pakistan is relatively high and has become ever-growing phenomena. Nonetheless, to date, a little is known about the state of ICT-led development initiatives and the roles they play in advancing lives of millions in the country.

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In the given context, this study aims to contribute to this gap in the literature while reviewing existing ICT-enabled initiatives that are either directly or indirectly helping thousands of people in the country to overcome their problems. That is essentially the centrality of digital networks to increase individuals’ potentials to take part in the development processes and improve their living. More specifically, this review addresses the question: how ICTs are potentially aiding the development process in Pakistan.

PREVIOUS WORK Research in both ICT4D and IS is largely concerned with the key potentials that ICTs carry for the advancement of poor in emerging South (Zuckerman, 2010). Projects such as MM, agricultural, and e-governance have been advertised as good practices and backbones of successful ICT-led initiatives in ICT4D research (Kiringai & Fengler, 2010). Extensive scholarly work in ICT4D also advocates that ICTs truly possess the capacity to fundamentally change the lives of millions of people in the developing world (Donnera & Andres, 2008; Kottemanna & Boyer-Wright, 2009; Mas & Kumar, 2008; Prakash & De', 2007). Systematic attempts in the field also point to the use of ICTs in development for varied objectives ranging from socio-economic development to e-service delivery (Arun, Richard, & Sharon, 2006; Heeks, 2008, 2010; Heeks, Shoba, & Morgan, 2006; Kettani & Moulin, 2014). The focus of much of this research is on documenting the socio-economic changes that are led by ICTs use in the emerging states. A key point that emerges from these studies is that ICTs have the power to transforms the lives of millions of poor irrespective of their location. Thus, ICT4D research’s key promises are surrounded by countless potentials of ICTs that can be utilized to improve social and economic conditions in emerging countries (Avgerou, 2008; Walsham, Robey & Sahay, 2007). Moreover, other studies suggest that the potential contributions of ICTs in development process range from personal gains to communal benefits. For instance, while tracing the evidence for both of such benefits Jensen (2007) clearly revealed personal and social benefits of ICTs use and their welfare impacts on the selected fishery communities of South India. Most studies tracing ICTs impacts at the micro, macro, and meso level also point to a mixed set of evidence. For some, ICTs are fundamentally transforming societies in every aspect (Kiringai & Fengler, 2010) for the better. Many also argue that ICTs are answers to many questions and solutions to several developmental problems which the developing South is facing (Kodakanchi, Kuofie, Abuelyaman, & Qaddour, 2006). 9|

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At the same time, others have questioned ICTs developmental and transformative potentials (Harrisab, 2015; Heeks, 2010). Nonetheless, what becomes clear from such a varied literature is the hope that ICTs are perhaps a key component of social development and modernization. They play an essential part in the transformation of socio-economic structures. A combination of these components may increase the wealth of people in developing world. Prior research tracing evidence for this claim has documented a nexuses between ICT acceptance and increase in people income in different regions of third-world countries (Bollou & Ojelanki, 2008; Kottemanna & Boyer-Wright, 2009). Alike, the economic impact of ICTs' is also well documented in the analysis of May & Diga (2015) and The World Bank (2008, 2009). The focus of these studies is on the intersections between ICTs, income, and economic growth in the emerging world. The key lesson is that ICTs are associated with economic growth and thus help to augment individuals’ income. ICT-led socio-economic transformations taking place in some South Asian countries like India are also well-documented (Gollakota, Pick, & Sathyapriya, 2012; Huang & Umapathy, 2007). The socio-economic settings of African states and the key contributions of ICTs in aiding the development process are well-scrutinized in prior literature

(Arinloyea, Linnemannb, Hagelaara, Coulibalyc, &

Omtaa, 2015;

Bankoleac, Osei, & Irwin, 2015; Bollou & Ojelanki, 2008; Kivunike, Ekenberg, & Danielson, 2011; Mugwisia, Mosterta, & Ochollaa, 2015). A key indication that emerges from these studies is that ICTs are positively contributing in the development process of emerging African countries. Thus, it is clear from the literature discussed above that ICTs possess development potentials and their contributions are welldocumented globally. Nevertheless, there are a few studies that have slightly explored the use of ICT-led initiatives in Pakistan. A study by Jehan et al. (2014) explored Mobile phone use in the agriculture sector of a district in Pakistan and found that timely information acquired through the use of cellphones help farmers to stay up to date about the market price of their produces. The other study by Zakar & Zakar (2009) does highlight the utility of info that information centers provided to farmers in Sialkot district. However, up to what extent that info influenced the agriculture production and access to market were not explored by the study. Thus, the literature on ICT-led prominent development initiatives is sparse in Pakistan. It is this gap that the present study intends to contribute to.

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ICT/IT IN PAKISTAN The journey of ICT in Pakistan commenced somewhere in 1985 when the government of time formally publicized IT imports merely for commercial purposes (Gupta, 2006). This was also the time when the citizens of the country, for the first time, got access to the IT hardware. Time moved quickly so does the IT. In Pakistan, ICTs flourishing began when big custom burdens were reduced. The consequence of this was a massive increase in foreign direct investments due to low duties. Some suggest that in 1995, the Internet extended to 3 million homes within just a few years in Pakistan (Gupta, 2006). Realizing potential economic gains provided by a vibrant IT sector, the government of Pakistan established Pakistan Software Export Board in 1995 (Pakistan Software Export Board, 2015). The purpose of this institution is to facilitate IT industry and exports of the country and provide support to flourish the industry. However, such institutions have not produced any profound results, as they are still underfunded. For instance, the national budget for Science and Technology is just Rs. 2.172 billion as compared to 2001 when the budget was six Billions (Ministry of Finance, 2004-5). This highlights the fact that Pakistan is among nations that spend very low on ICTs as a part of their national gross domestic product. Table 1 below contrasts Pakistan’s IT sending with other major South Asian countries. Table 1. Information and Communication Technology Expenditures by South Asian State as %age of Gross Domestic Product from 2003 to 2008 Counry India Sri Lanka Pakistan Bangladesh

Year 2003 3.2 2.4 3.2 1.9

2004 3.8 2.7 3.3 2.4

2005 4.4 3.3 3.9 4.1

2006 4.1 3.8 4.2 5.9

2007 3.9 4.6 4.4 80.

2008 4.5 4.3 4.4 9.0

Source: Data composed from the World Bank’s ‘Indicators’ statistics for various periods

Knowing economic benefits of IT/ICT sector, the military government led by President General Pervez Musharraf took several policy measures to utilize ICTs potential to meet socio-economic needs of society. The authoritarian government made high investments for developing ICT infrastructure. Massive investments in this sector in late 2000’s brought huge economic benefits for the country. For example, from 20032005 Pakistan’s IT exports witnessed a massive rise around 50% which was

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unprecedented in its history and accounted to an aggregate of almost $48.5 million (Gupta, 2006). In addition to initial attempts by previous governments, current political commitments also indicate that policymakers of Pakistan are realizing the potentials of ICTs and roles they play in advancing society. A strong desire for developing a vibrant ICT infrastructure to enable socio-economic development exists in Pakistan. For instance, the last national ICT policy drafted during the Prime Minister Yousaf Raza Gallani’s tenure stated its mission as: Improve the quality of life of citizens to the highest attainable levels by ensuring availability of accessible, universal, affordable, modern and high-quality IT facilities and services within the country. Accelerate digital literacy and integration in Pakistan, built on facilitating access, awareness, security, trust and fostering research and innovation (Goverment of Pakistan, 2012). Despite all initiatives, the state of IT development in Pakistan remains highly neglected and underfinanced and so does the nation in terms of digital connectivity. To illustrate, 2016’s annual ICT Index of the International Telecommunications Union ranked Pakistan 146 on global ICT Index of 175 countries (International Telecommunications Union, 2016). As per the report, Pakistan was still among the countries ranked in the category of the least connected countries in globalized world. It is worth pointing here that only 24% (International Telecommunications Union, 2016) of Pakistan’s population are broadband Internet subscribers. Some major indicators of IT industry in Pakistan are summarized below:

•

Pakistan’s IT exports stand at $2 billion per annum. It is expected that with annual

growth rate of 35-40%, Pakistan’s IT exports will be $6 billion in 2020 (Hussain, 2015).

•

Pakistan’s IT sector is the fourth largest in the world in terms of its freelance

revenue.

•

There are over 2000 IT companies and call centers in the country with over

200 000 IT professionals (Hussain, 2015).

RESEARCH APPROACH This review intends to explore how the ICTs are aiding the development processes in Pakistan. Being a review, this article is comprehensively based on secondary sourced qualitative data. It documents some ICT initiatives and thus, is primarily based on

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the case study approach. The case study is a very popular research approach in the ICT4D research (Tibbena, 2014). The case study method best suits this study as it allows for an exploration where the object under research is best considered in its normal setting. And also, when the limits among the phenomena under study and settings are not clearly evident (Bryman, 2004; Hartley, 2004) to that this article conforms. Furthermore, why the case study approach best fits with the objective of this review is also the reason that it allows one to employ multiple data collection methods (Yin, 2009) which is what has been done for conducting this review. The reason for using existing literature from ICT4D and other related secondary data is that such data is one of the sources of evidence in case study research as listed by Yin (2003) while categorizing the key sources of evidence for a case study research.

ICTS AND DEVELOPMENT IN PAKISTAN This section does try to come up with evidence for pointing the impacts of existing ICT initiatives in Pakistan wherever possible. However, it is important to note at the outset that the qualitative accounts concerning case studies discussed here need to be scrutinized empirically for their socio-economic impacts. Unfortunately, public availability of primary data is either restricted or not accessible in the case of Pakistan when it comes to ICT-led development initiatives. ICTs in pro-poor services: The case of Branchless Banking in Pakistan According to the Consultative Group to Assist the Poor (CGAP): “Branchless banking is the delivery of financial services outside conventional bank branches, often using agents and relying on information and communications technologies to transmit transaction details – typically card-reading point-of-sale (POS) terminals or mobile phones” (Consultative Group to Assist the Poor (CGAP), 2010) Inspired by the successful implementation of M-Pisa in Kenya, the policy makers of Pakistan realized the potentials of contemporary ICTs as early as 2007 when the State Bank of Pakistan for the first time initiated a dialogue with global agencies to examine best practices in MM service delivery. Figure 1 summarizes a brief history of MM financial innovation development in Pakistan.

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Figure 1. Brief history of Mobile Money services in Pakistan Source: From “Agent Network Accelerator Research - Pakistan Country Report 2017� by Helix Institute of Digital Finance, 2017 (http://www.helix-institute.com/data-and-insights/agentnetwork-accelerator-research-pakistan-country-report-2017). Adapted with permission.

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Back then, the cellular industry of Pakistan was in its initial development stages and there were merely 34,506,557 cellular subscribers with only 22.21% of teledensity (Pakistan Telecommunication Authority, 2017). Before the launch of first MM vender, banking in Pakistan happens to be a very multifaceted business restricted only to capitalist’s class of society. Thanks to the advancements in modern ICTs, the common people in Pakistan can access many services at no or on very little charges provided by MM agents. Details of services offered by MM service providers are contrasted in Table 1 in the Annexure A. There are eight major MM retailers (see Figure 2) in Pakistan that effectively utilize ICT-enabled Mobile phone technology for providing various financial services to millions of people in Pakistan.

Figure 2. List of major Mobile Money service providers in Pakistan Source: author’s own illustration. Note: *merged into JazzCash on July 1, 2016

As of 2016, Pakistan was a leading South Asian country in terms of utilization and ownership of Mobile Money. Some 9% of men and 2% of women were regular users of Mobile Money services (Demirgüç-Kunt, Klapper, Singer, & Van Oudheusden, 2015). Similarly, social penetration of MM has become a long-lasting phenomenon in the country. The growth of MM service use can be equated with a financial revolution, a revolution that best fits the need of unbanked people. This is self-evident from the basic indicator of Mobile Money in Pakistan as shown in Table 2. 15 |

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Table 2. Key indicators of Mobile Money service in Pakistan Indicators Quater Jan-Mar 17 Number of Agents Number of Active BB Agents Number of Accounts Deposits as on Quarter end (Rs. In millions) Number of transactions during the quarter ( number in '000') Value of transactions during the quarter (Rs. In Millions) Average size of transactions (in Rs.) Average daily transactions Active Accounts

368,738 213,068 23,685,630 7,906 140,589 564,448 4,015 1,562,096 11,287,857

Source: Branchless Banking Newsletter, State Bank of Pakistan, 2017

Moreover, the centrality ICT-led MM service delivery and its widespread use can be realized by looking at financial inclusion indicators of Pakistan. Only 16% of Pakistani own bank accounts. A higher majority, 24% utilize informal channels for financial activities. Some 7% are served by other formal means. Unfortunately, as higher as 53% of Pakistan’s population is excluded from the formal financial sector (Ministry of Finance, 2017). It is in this context that ICTs are playing a vital role in the development process of Pakistan. Thus, with the present rate of MM services use and growth, one can safely conclude that MM is reducing financial exclusion in the country. However, it is worth pointing here that it is beyond the scope of this review to explore inclusion impacts of MM service use in Pakistan. ICTs in healthcare: The Telemedicine experiences of Pakistan Pakistan does not have adequate healthcare services. It is still facing the challenge of shortage of healthcare professionals. There are only 175,223 registered doctors. Unfortunately, doctor to the population ratio is also very low (i.e., 1:1,073). Table 3 indicates the state of basic healthcare facilities in Pakistan. Healthcare is highly under financed with the budget of 26.80 billion Rupee (Ministry of Finance, 2014-15a). The nation only spends 0.42% of its gross domestic product on healthcare. Thus, basic health care for the poor, especially for rural dwellers, is no more than a dream.

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Table 3. The state of healthcare development in Pakistan Health Professional

Years 2011-12

2012-13

2013-14

2014-15

Registered Doctors

152368

160880

167759

175223

Registered Dentists

11649

12692

13716

15106

Registered Nurses

77683

82119

86183

90276

Population per Doctor

1162

1123

1099

1073

Population per Dentist

15203

14238

13441

12447

1647

1616

1557

1593

Population per Bed

Source: Pakistan Economic Survey 2014-15

Given this, the country launched its first Telemedicine project in 2004. The project named ICTs for Rural Development of Remote and Mountainous Areas of Northern Pakistan was launched with the objectives of improving health care, alleviating poverty, and strengthen livelihoods of the poor people living in the Northern areas of Pakistan. It was funded by the International Development Research Centre and was executed by the Commission on Science and Technology for Sustainable Development in the South Pakistan (Commission on Science and Technology for Sustainable Development in the South, 2007). The project has been providing services to poor communities of Gilgit Baltistan (GB) in following areas:

•

Dermatology;

•

General Medicine;

•

Gastroenterology;

•

Cardiology.

Since then, the country has commenced many projects while collaborating with domestic and foreign donors. Initiatives such as Video conferencing to demonstrate Teleconsultation, Resource Mobilization Unit, and Telemedicine & e-Health Training Center at Holy Family Hospital, Rawalpindi are just a few notable examples (Hussain, 2008). Many systematic attempts have explored the key roles that ICT enabled Telemedicine is playing in an efficient service delivery to the poor of GB. For instance, Hussain (2008) has shown how Telemedicine projects have improved the access to basic health

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services to the people of GB. The author found that health services have been greatly improved by Telemedicine initiatives solely relying on ICTs. Another recent study by (Gulzar, Shariq, & Afroz, 2013) investigated experiences of common people and health professional with Telemedicine applications. The study emphasized that Telemedicine not only enhances the access of poor communities to better health care facilities, but also remarkably improves the quality of life among masses. The authors further argued that it also reduces the professional isolation of the healthcare professionals in the GB province. Other than the GB, Telemedicine initiatives are also implemented in the province of Sindh and Punjab. Telemedicine and e-Health initiatives are used in 12 remote areas of both Sindh and Punjab. By 2015, more than 20 000 patients had been treated by medical experts using Telemedicine (Daily Jang, 2015). Moreover, some government institutions are also using ICT-enabled applications for providing healthcare to vulnerable groups. A good example of this is the case of National Disaster Management Authority (NDMA). The NDMA has a collaboration with Telecare Private Limited for providing healthcare services using ICTs to flood-affected areas. Thankfully with the technical help of Telecare experts, the NDMA has Pakistan’s first Telecare facility in Badin, primarily based on digital system (Dawn News, 2011). This is how ICTs are aiding healthcare process in Pakistan.

USING ICTS TO FASTER DEVELOPMENT: A WAY FORWARD FOR PAKISTAN In order to develop ICT-sensitive infrastructure and utilize it for advancing society, it is essential to have a set of policies that are socially rooted and contextually fit. The following strategies are thought to be taken seriously if policy makers of Pakistan want society to progress.

•

To

make

intensive

investment

in

building

ICT/IT

industry

to

address

developmental problems;

•

Provide enabling environment that helps to utilize ICTs at wider level of society;

•

Make higher investments in ICT specific R&D to support new innovations for

economic growth;

•

Shape IT infrastructure in a way that is proficient in consolidating EG for overall

development and poverty reduction;

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•

Fully, utilize ICTs to shape connections for connecting common citizens, state

organization, and marginalized groups as the e-connectivity is very limited and even state-led institutions do not have websites that can help citizens to interact with the system.

DISCUSSION AND CONCLUSION The 21st century is a digital book, and only IT enables us to read it and advanced our societies. ICTs are helping to overcome many developmental problems in Pakistan. ICTs are utilized for various purposes and are entailing several benefits to the poor population of Pakistan. This review explored the use and developmental potentials of ICTs in two areas: 1). Mobile Money and 2). Telemedicine services in the country where a mixed set of initial evidence is available. The analysis drawn above clearly indicate that MM services powered by ICTs have changed prospectus for Pakistan’s unbanked population since 2009. The MM is delivering inclusive financial services to masses. It is well rooted in the economy of Pakistan with 11,287,857 active users. It has reduced barriers such as access, presence, and costs to basic banking services that the poor were exposed to before its emergence. Overall financial inclusion is improving and is a key consequence of the presence of ICT-enabled MM. These findings are consistent with those of McKay & Pickens (2010). A healthy and skilled labor force is one of a key component of economic growth (Bloom, Canning, & Sevilla, 2004). Inadequate health care infrastructure, lack of resources, and a limited number of healthcare professionals for the provision of basic health services in Pakistan remains a major challenge. For meeting healthcare needs of people, ICTs are being utilized in the health sector of Pakistan since 2004. Telemedicine experiences in Gilgit, Punjab and Sindh providence suggests that ICTs have a wider coverage and are improving access of the poor to basic health services. In a nutshell, the preceding literature and the case studies discussed above clearly indicate that ICTs are effectively supporting the development processes in Pakistan. Further systematic attempts in the areas discussed are highly desirable. Future studies may focus on how ICT-enabled MM is helping to achieve financial inclusion in Pakistan. They may also focus on how MM financial innovation is aiding poor in the country.

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REFERENCES Ahmed, N., Afzal, R., & Sumair, A. (2017). Quarterly Branchless Banking Newsletter. Retrieved from Karachi: http://www.sbp.org.pk/publications/acd/2017/BranchlessBanking-Jul-Sep2017.pdf Arif, M. (2015). Sustainability vs Economic Growth: A Third World Perspective. World Journal of Entrepreneurship, Management and Sustainable Development, 11 (4), 312324. doi:10.1108/WJEMSD-042015-0018 Arinloyea, D. D. A. A., Linnemannb, A. R., Hagelaara, G., Coulibalyc, O., & Omtaa, O. S. W. F. (2015). Taking Profit from the Growing Use of Mobile Phone in Benin: A Contingent Valuation Approach for Market and Quality Information Access. Information Technology for Development, 21 (1), 44-66. doi:10.1080/02681102.2013.859117 Arun, S., Richard, H., & Sharon, M. (2006). ICTs for Economic Empowerment in South India. In E. M. Trauth (Ed.), Encyclopedia of Gender and Information Technology (Vol. 2, pp. 793-797). Hershey, PA: IGI Publishing. Avgerou, C. (2008). Information systems in developing countries: a critical research review. Journal of Information Technology, 23(3), 133–146. doi:10.1057/palgrave.jit.2000136 Bankoleac, F. O., Osei, B. K.-M., & Irwin, B. (2015). The Impact of Information and Communications Technology Infrastructure and Complementary Factors on IntraAfrican Trade. Information Technology for Development, 21 (1), 12-28. doi:10.1080/02681102.2013.832128 Bloom, D. E., Canning, D., & Sevilla, J. (2004). The effect of health on economic growth: a production function approach. World Development, 32 (1), 1-13. Boas, T., Dunning, T., & Bussell, J. (2005). Will the Digital Revolution Revolutionize Development? Drawing Together the Debate. Studies in Comparative International Development, 40 (02), 64-82. doi:10.1007/BF02686294 Bollou, F., & Ojelanki, N. (2008). Are ICT investments paying off in Africa? An analysis of total factor productivity in six West African countries from 1995 to 2002. Information Technology for Development, 14 (4), 294-307. doi:10.1002/itdj.20089 Bowonder, B., & Boddu, G. (2005). Internet kiosks for rural communities: using ICT platforms for reducing digital divide. International Journal of Services Technology and Management, 6(3/4/5), 356 - 378. doi:10.1504/IJSTM.2005.007415 Bryman, A. (2004). Social Research Methods (2nd ed.). New York , NY: Oxford University Press. Commission on Science and Technology for Sustainable Development in the South. (2007). TELE-HEALTH:The Modern Face of Healthcare. Islamabad: COMSATS.

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ISSN 2367-8127 (CD-ROM) ISSN 2367-8151 (on-line) Consultative Group to Assist the Poor (CGAP). (2010). Branchless Banking Diagnostic Template. Digital Financial Services. Retrieved from http://www.cgap.org/publications/branchless-banking-diagnostictemplate Daily Jang. (2015). For Good Governance E-Governance is the necessity of time. Daily Jang Rawalpindi, p. 2. Dawn News. (2011). Tele-medicine Mobile Clinic launched for rain-hit people. Dawn News, pp. 1-2. Retrieved from http://www.dawn.com/news/663331/tele-medicine-mobilecliniclaunched-for-rain-hit-people Demirgüç-Kunt, A., Klapper, L. F., Singer, D., & Van Oudheusden, P. (2015). The global findex database 2014: Measuring financial inclusion around the world (Policy Research Working Paper no. 7255). Retrieved from Washington, D.C.: http://documents.worldbank.org/curated/en/187761468179367706/Th e-GlobalFindex-Database-2014-measuring-financial-inclusionaround-the-world Donnera, J., & Andres, T. C. (2008). Mobile banking and economic development: linking adoption, impact, and use. Asian Journal of Communication, 18 (4), 318-332. doi:10.1080/01292980802344190 Gollakota, K., Pick, J. B., & Sathyapriya, P. (2012). Using technology to alleviate poverty: use and acceptance of telecenters in rural India. Information Technology for Development, 18 (3), 181-208. doi:10.1080/02681102.2011.643195 Goverment of Pakistan. (2012). National ICT Policy. Islamabad, Pakistan: MInistry of Information Technology Retrieved from http://pasha.org.pk/wpcontent/uploads/2011/10/draft-IT-Policyrevised-July-3-2012.pdf. Gulzar, S., Shariq, K., & Afroz, S. (2013). Experience of nurses with using eHealth in GilgitBaltistan, Pakistan: a qualitative study in primary and secondary healthcare. BMC Nursing, 12 (6), 1-6. Gupta, O. (2006). Encyclopaedia of India Pakistan & Bangladesh (1 ed. Vol. 01). New Delhi: Gyan Books Pvt. Ltd. Harrisab, R. W. (2015). How ICT4D Research Fails the Poor. Information Technology for Development. doi:10.1080/02681102.2015.1018115 Hartley, J. (2004). Case study research. In C. Cassell & G. Symon (Eds.), Essential guide to qualitative methods in organizational research (pp. 323-333). London: SAGE Publications Ltd. Heeks, R. (2008). ICT4D 2.0: The Next Phase of Applying ICT for International Development. Computer, 41 (6), 26-33. doi:10.1109/MC.2008.192 Heeks, R. (2010). Do information and communication technologies (ICTs) contribute to development? Journal of International Development, 22 (5), 625–640. doi:10.1002/jid.1716

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Journal of Innovations and Sustainability (2018) Vol. 4, No 3 Heeks, R., & Stanforth, C. (2014). Technological change in developing countries: opening the black box of process using actor–network theory. Development Studies Research, 2 (1), 33-50. doi:10.1080/21665095.2015.1026610 Heeks, R., Shoba, A., & Morgan, S. (2006). Improved Livelihoods And Empowerment For Poor Women Through IT-Sector Intervention. In N. Hafkin & H. Sophia (Eds.), Cinderella or Cyberella? (pp. 141-164). Boulder: Kumarian Press. Helix Institute of Digital Finance. (2017). Agent Network Accelerator Research - Pakistan Country Report 2017. Retrieved from http://www.helix-institute.com/data-andinsights/agent-network-accelerator-research-pakistan-country-report-2017. Huang, H., & Umapathy, K. (2007). ICTs and Indian Economic Development: Economy, Work, Regulation. Information Technology & People, 20 (3), 304-305. doi:10.1108/09593840710822895 Hussain, A. S. (2015, 04 June, 2015). The promotion of information technology is necessary for the economic and social development, Special Report. Daily Jang Rawalpindi, p. 04. Hussain, T. (2008). Telehealth: A Successful Experience in the Northern Areas of Pakistan. In: H. A. Khan, M. M. Qurashi, & I. Hayee (Eds.), BETTER HEALTHCARE through TELE-HEALTH (Vol. 12, pp. 85-96). Islamabad: Commission on Science and Technology for Sustainable Development in the South (COMSATS). International Telecommunications Union. (2016). ICT Development Index 2016. Global ICT Index. Retrieved from http://www.itu.int/net4/ITUD/idi/2016/ Jehan, N., Aujla, K. M., Shahzad, M., Hussain, A., Zahoor, M., Khan, M., & Bilal, A. (2014). Use Of Mobile Phones by Farming Community and its Impact on Vegetable Productivity. Pakistan J. Agric. Res, 27 (1), 58-63. Jensen, R. (2007). The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector. Quarterly Journal of Economics, 122 (3), 879-924. doi:10.1162/qjec.122.3.879 Kettani, D., & Moulin, B. (2014). The Two Facets of ICT for Development. In E-Government for Good Governance in Developing Countries: Empirical Evidence from the eFez Project (pp. 10-16). London: Anthem Press. Kiringai, J., & Fengler, W. (2010). Kenya economic update: Kenya at the tipping point? with a special focus on the ICT revolution and mobile money (Working Paper No. 59435). Retrieved from Washington D.C: The World Bank. Kivunike, F. N., Ekenberg, L., & Danielson, M. (2011). Perceptions of the role of ICT on quality of life in rural communities in Uganda. Information Technology for Development, 17 (1), 61–80. doi:10.1080/02681102.2010.511698 Kodakanchi, V., Kuofie, M. H. S., Abuelyaman, E., & Qaddour, J. (2006). An Economic Development Model for IT in Developing Countries. Electronic Journal on Information Systems in Developing Countries, 28(7), 1-9.

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ISSN 2367-8127 (CD-ROM) ISSN 2367-8151 (on-line) Kottemanna, J. E., & Boyer-Wright, K. M. (2009). Human resource development, domains of information technology use, and levels of economic prosperity. Information Technology for Development, 15 (1), 32-42. doi:10.1002/itdj.20114 Mas, I., & Kumar, K. (2008). Banking on mobiles : why, how, for whom? (CGAP focus note: no. 48). Retrieved from Washington D.C: The World Bank. May, J., & Diga, K. (2015). Progress Towards Resolving the Measurement Link Between ICT and Poverty Reduction. In A. Chib, J. May, & R. Barrantes (Eds.), Impact of Information Society Research in the Global South (pp. 293). Singapore: Springer. McKay, C., & Pickens, M. (2010). Branchless banking 2010: Who’s served? At what price? What’s next? (CGAP focus note ; no. 66). Retrieved from Washington, DC http://documents.worldbank.org/curated/en/641141468159325589/Br anchlessBanking-2010-who-8217-s-served-at-what-price-what-8217s-next Ministry of Finance. (2004-5). Highlights of pakistan economic survey 20045. Islamabad, Pakistan: Ministry of Finance. Ministry of Finance. (2014-15a). Health and Nutrition. In Ministry of Finance (Ed.), Pakistan Economic Survey. Islamabad: Ministry of Finance. Ministry of Finance. (2014-15b). Pakistan Economic Survey 2014-15: Overview of the Economy. Islamabad: Ministry of Finance. Ministry of Finance. (2015-16). Poverty: Annexure 3. Islamabad: Government of Pakistan Retrieved from http://www.finance.gov.pk/survey/chapters_16/Annexure_III_Poverty.pdf. Ministry of Finance. (2017). National Financial Inclusion Strategy. In Ministry of Finance (Ed.), Pakistan Economic Survey 2016-17. Islamabad: Government of Pakistan. Mugwisia, T., Mosterta, J., & Ochollaa, D. N. (2015). Access to and Utilization of Information and Communication Technologies by Agricultural Researchers and Extension Workers in Zimbabwe. Information Technology for Development, 21 (1), 67-84. doi:10.1080/02681102.2013.874317 Pakistan Software Export Board. (2015). History. Retrieved from http://www.pseb.org.pk/about-us/pseb-history.html Pakistan Telecommunication Authority. (2017). Telecom Indicators. Pakistan Telecom Industry Report. Retrieved from http://www.pta.gov.pk/index.php?Itemid=599 Prakash, A., & De', R. (2007). Importance of development context in ICT4D projects: A study of computerization of land records in India. Information Technology & People, 20(3), 262-281. doi:http://dx.doi.org/10.1108/09593840710822868 Quibria, M. G., Tschang, T., & Macasaquit, M.-L. R. (2010). New Information and Communication Technologies and Poverty: Some evidence from developing Asia. Journal of the Asia Pacific Economy, 7 (3), 285-309. doi:10.1080/1354786022000007852

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Journal of Innovations and Sustainability (2018) Vol. 4, No 3 Qureshi, S. (2008). Assessing the Effects of Information and Communication Technologies on Development. Information Technology for Development, 14 (4), 259-261. doi:10.1002/itdj.20111 Qureshi, S. (2010). Extending Human Capabilities through Information Technology Applications and Infrastructures. Information Technology for Development, 16 (1), 1-3. doi:10.1080/02681101003704374 Qureshi, S. (2011). Information technology for development in expanding capabilities. Information Technology for Development, 17 (2), 91-94. doi:10.1080/02681102.2011.569355 Spence, R., & Smith, M. (2009). Information and Communication Technologies, Human Development, Growth and Poverty Reduction: A Background Paper. Retrieved from Ottawa: http://web.idrc.ca/uploads/userS/12412058391HF2_Background_Paper_28-04-09.pdf The World Bank. (2008). Global economic prospects 2008 : technology diffusion in the developing world. Retrieved from Washington DC: http://documents.worldbank.org/curated/en/2008/01/9013126/globaleconomicprospects-technology-diffusion-developing-world-2008 The World Bank. (2009). Information and Communications for Development: Extending Reach and increasing impact Washington DC The World Bank. The World Bank. (2015). GDP per capita (current US$). Retrieved 03 March, 2015, from The World Bank http://data.worldbank.org/indicator/NY.GDP.PCAP.CD Tibbena, W. J. (2014). Theory Building for ICT4D: Systemizing Case Study Research Using Theory Triangulation. Information Technology for Development. doi:10.1080/02681102.2014.910635 Walsham, G., Robey, D., & Sahay, S. (2007). Special issue on information systems in developing countries. MIS Quarterly, 31(2), 317-326. Yin, R. K. (2003). Case Study Research: Design and Methods (R. K. Yin Ed. 3rd ed.). Thousand Oaks, CA: SAGE Publications Inc. Yin, R. K. (2009). Case Study Research: Design and Methods. Thousand Oaks, CA: SAGE Publications Inc. Zakar, M. Z., & Zakar, R. (2009). Diffusion of Information Technology for Agricultural Development in the Rural Punjab: Challenges and Opportunities. Pakistan Vision, 9 (2), 136-174. Zheng, Y. (2010). Different spaces for e-development: What can we learn from the capability approach? Information Technology for Development, 15 (2), 66-82. doi:10.1002/itdj.20115 Zuckerman, E. (2010). Decentralizing the mobile phone: a second ICT4D revolution. Information Technologies & International Development, 6 Special Edition 2010 (Harvard Forum II Essays), 99–103.

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Annexure A Table 1. List major Branchless Banking services with suppliers in Pakistan Major BB Services Mobile Bill payment Mobile Donations & Zakat Mobile Easyload/Top Up Mobile ATM Card Health insurance Ticketing Solution Online Shopping Mobile Payment mode for Merchants NFC Payments Money Transfer to others Bank Accounts using Mobile Account International Home Transfer Life Insurance Personal Savings Mobile Account Mobile Money Transfer Mobile account to Bank Money Transfer Corporate solutions i.e. fund transfer, loan payment etc.

Easy Paisa Y* Y Y Y Y Y Y Y Y

Omni

Timepey

Jazcas h

Y Y Y N N N Y N N

Y N Y N N N N N N

Y Y Y Y N N N N N

HBL Express Y N N N N N N N N

UPais a

MCB Lite

Y Y Y Y N Y N N N

Y Y Y N N N Y N N

Mobile Paisa*** Y N Y N N N N N N

Y

Y

N

Y

N

N

N

N

Y Y Y Y Y

N N N Y Y

N N N Y Y

N Y N Y Y

N N N N Y

N N N N N

N N N N N

N N N Y Y

N**

Y

N

N

N

N

N

N

Y

N

Y

Y

N

N

N

N

Source: Data collected from websites of the BB suppliers and compiled by author Note: * represents ‘Yes’ and ** signifies ‘No’; *** merged into JazzCash on July 1, 2016

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Journal of Innovations and Sustainability

Volume 4 Number 3 2018

Methodology for Assessing the Quality of Conducted Training

Nikolay M. Petrov* Vasil Levski National Military University, General Military Faculty, Bulgaria

Abstract The quality of a training course can be assessed by the level of the professional training and the possessed professional competencies of the trainees who have completed it, and if they meet the needs and expectations of the users of qualified personnel, then these users will be satisfied. By considering the level of customer satisfaction from the training of the qualified personnel and the manner in which they cope with their tasks at their workplace applying the professional competences which they have acquired, it can be established to what extent the conducted training corresponds to the set state requirements and whether it is adequate to the labour market needs, i.e. what its quality is. Keywords: quality of education, customer satisfaction, professional qualities and competencies.

INTRODUCTION The modern public requirements and expectations to the quality of the training conducted in the higher educational institutions are very high. This is related to the requirements for competitiveness of the “generated� qualified personnel at the primary labour market. The strong dependence on acquired knowledge and skills and the opportunities to finding suitable jobs becomes more and more sensible. The pressure coming from the labour market is enormous and it is growing, and one of *

Corresponding author: Nikolay M. Petrov Email: nmpetrov@nvu.bg

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the opportunities for adequate reaction is to offer quality workforce with the required qualitative and quantitative characteristics. These and a number of other objective circumstances have led to the search for suitable and adequate approaches for solving the problems which have arisen in the society as a whole and more specifically on the labour market. Considering the dependency of the level of the acquired competences on the quality of training, and also by defining the relation between the level of professional competences and the customer satisfaction, by analysing the level of satisfaction on the part of the users of qualified personnel by their routine activities at their workplaces, the following can be established with relative probability: - the level of professional competences acquired by the trainees who have competed the respective training course, with follow-up information about the level of their professional training; - the quality of the training process conducted by the higher educational institution. The environment in which a particular training course is conducted shall be considered as system because the following distinguishing features of systems are present (Stoyanov, 1993): - presence of interrelated and jointly functioning elements; - presence of goals which determine the purpose and functioning; - presence of management which the efficiency and the functioning of the system depend on; - presence of hierarchical structure; - interaction with the external environment and dynamics. The presented assessment of the quality of training is based on indicators for the quality of the system in which it is conducted. The indicators of the quality of systems are external and internal. The external ones characterize a system from the perspective of the requirements to it set by hierarchically superior systems which determine the external properties of the system. Generally each system has got a particular number of external indicators. The systematic approach requires the comparison of systems to be done by a combination of these, and not by separately taken ones. Therefore, in the examination and analysis of the training system a generalized quality indicator (Q) has to be introduced, which represents a combination of indicators describing the examined system (Stoyanov, 1993; Trendafilov, 1995). Thus the generalized quality indicator can be presented as a function of n external indicators of the quality of the system P, where i = 1, 2, ‌n.

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Qi = f(P1, P2, P3‌Pi‌Pn)

(1)

When calculating the generalized quality indicator of the training system (TS) it has to be considered that each of the external indicators which describe the system have different influence on the final result which leads to the necessity to set the weight (rank) of the indicators based on their importance by setting weight coefficients. The values of the weight coefficients are determined by the method of experts’ valuations. Consistent with the weights coefficients of the indicators, the expression of the generalized quality indicator of TS looks as follows: đ?‘„đ?‘– = ∑đ?‘›đ?‘–=1 đ?‘˜đ?‘– . đ?‘ƒđ?‘–

(2)

where: Pi – importance of the ith external indicator; ki – the weight coefficient showing the importance of the indicators. When calculating Qi the requirement for limits shall be observed and it imposes the following limitations:

0 ď‚Ł Pi ď‚Ł 1;

0 ď‚Ł Qi ď‚Ł 1

(3)

The quality of functioning complex systems, as training systems are, is assessed through their efficiency because the most complete and objective assessment of the quality of such systems may be determined based on the extent to which they correspond to their target purpose. The efficient functioning of a particular training system (TS) will guarantee the ability to achieve the respective quality of training, and thus efficiency will be the measuring unit which characterises both the process of functioning of its elements and the general functioning of the system. The efficiency of the conducted training process in this case appears as a degree to which the planned activities are accomplished, and the set goals – achieved, therefore, efficiency should be considered as a synonym of the concept of quality, because through it the nature of the training and its results are assessed. The efficiency reflects the achievement of the goals of the training that have been set as expected final result of the functioning of the system, and namely – the achievement of particular quality of training delivering competitiveness and labour market prospects of the trainees who have completed it. The introduction of the concept “efficiency of the training� is necessary in order to determine the efficiency of the examined TS. “Efficiency of the training� means the level of conformity of its target purpose at set conditions of functioning; therefore efficiency will appear to be that measure of quality and will be possible to be defined as a measurable criterion of the quality of the

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conducted training. Determining the efficiency of the training will provide the opportunity to assess relatively precisely to what extent the quality of the training will satisfy the customer requirements and expectations and it will be used as a benchmark for selection of architecture of TS. In order for a quantitative assessment to be made of the efficiency of the training it is necessary to acquire a numeral characteristics or a combination of characteristics which represent the degree of suitability of TS to fulfil the set goals. The numeral measure defining the degree of suitability of TS to fulfil the set goals will be called “indicator for efficiency of the trainingâ€?. Quantitatively the efficiency may be assessed as the extent to which the quality of a real training system is approximated to such a system which best satisfies the requirements for the training, called “benchmarkâ€?. Therefore, the indicator for efficiency Đ•i is represented as follows:

Ei 

Qi ď‚Ł1 Qe

(4)

where: Đ•i – indicator for efficiency of the real training system; Qi – generalized indicator of the quality of the real training system; Qe – generalized indicator of the quality of the benchmark training system. Considering formula (2) for Đ•i, we will have: ∑đ?‘› đ?‘˜ .đ?‘ƒ

đ?‘– đ?‘– đ??¸đ?‘– = ∑đ?‘–=1 đ?‘› đ?‘˜ .đ?‘ƒ đ?‘–=1 đ?‘–

đ?‘–

(5)

Where in this case Pei is the ith indicator of quality of the benchmark system. In compliance with the above indicated requirement for limitations (3) each of the external indicators for quality of the benchmark training system fulfils the condition Pei = 1, therefore for Đ•i we have: đ??¸đ?‘– = ∑đ?‘›đ?‘–=1 đ?‘˜đ?‘– . đ?‘ƒđ?‘–

(6)

The resulting indicator of efficiency of the training Đ•i is then compared to a particular limit value determining to what extent the quality of the training satisfies or does not satisfy the customer requirements. This methodology envisages the determination of the efficiency indicator Đ•i to be determined in the following sequence: 1. Selection of the external indicators describing the examined TS. 2. Ranking of indicators and determining their weight coefficients. 3. Calculating the values of the external indicators. 4. Calculating the efficiency indicator of the training.

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The general conclusion for the quality of the training in TS is done based on the following limits for the acquired value of the indicator: - if Еi ≥ 0.876 – the quality of the conducted training is very high and the customers will be fully satisfied by it; - if Еi is in the interval 0.626÷0.875, the quality is high and the customers are satisfied, however they have recommendations and remarks to the training; - if Еi is in the interval 0.376÷0.625, the quality is low, therefore the customer satisfaction will be low; - if Еi < 0.375, the quality is very low, and the customers are fully dissatisfied by the conducted training. If the calculated value of the efficiency indicator of the training is Еi < Еlim =0.626, then follows the conclusion that the examined training system does not fulfil fully its purpose to ensure high quality training which satisfies the users of qualified personnel. If the resulting value of Еi is below the indicated limit, then this will require change in the TS aiming at raising its efficiency which will lead to improving the training conducted in this system.

SELECTION

OF

THE

EXTERNAL

INDICATORS

DESCRIBING

THE

EXAMINED TS The external indicators of quality are quantitative characteristics of the properties of the system and comprise its quality (Yordanov, 2014). As the indicators of quality reflect the public need in particular conditions, so in this case they have to be chosen in such a way as to describe best the requirements of the users of qualified personnel to the competences acquired through the conducted training. The indicator is defined as characteristics which can be measured in order to assess a particular action, which may be related to measuring a set goal, achieved effect, degree of quality or a variable related to this. With regards to quality, the use of indicators has to be part of quality cycle, comprising the following main steps: planning, monitoring, assessment and modification in accordance with the performed analysis on the basis of the results acquired from the assessment, and thus quality should be improved (Seyfried, 2007). The external quality indicators of training system may be selected indicators which take account of the level of competences built through this system. This is so because by assessing the level of the built competences of the trainees who have completed the training, the current state of TS may be established and a starting point may be 31 |

Journal of Innovations and Sustainability (2018) Vol. 4, No 3

set from which onwards to begin a process for raising the quality of training as well as to provide information to what extent the goals of the training have been achieved. The setting of indicators for assessing the level of professional competences suggests clarifying the goals that have to be achieved for raising the quality and satisfying the requirements of users of qualified personnel, and the condition for the selected indicators to allow monitoring and assessment, i.e. to be sufficiently specific, has to be observed. It should be also taken into account that each of the indicators will have a different role for the general assessment of the quality, which on its part leads to determining and using importance coefficients of the indicators themselves. The following major requirements have to be observed when selecting indicators: - to have central importance for the activities (competences) which will be assessed; - to be exhaustive, reflecting the most important dimensions of the activities in question; - to be clear and easy to understand; - to use as few as possible indicators. The proposed methodology provides opportunity for establishing the level of possessed professional competences of the trainees who have completed a training course and it can be successfully applied if a particular number of indicators yi is set, which, following the experts’ assessment, to be ordered by their importance (significance) and to assign them numeric mark related to the satisfaction from them. A successful method for collection of primary data about the satisfaction may be direct interviews in the form of a standardized questionnaire (standardized interview) through which to be performed an integrated assessment of the level of satisfaction of the users of qualified personnel from the quality indicators determining the level of professional competences taking account of their priorities. In order for this assessment to be applicable the beneficiaries, in their capacity of experts in their area, have to fill out particular information, which may be in tabular form – a table consisting of three columns, the first column containing the selected indicators in random order without numbers before them, the second column containing those indicators which have to be arranged in the order of their importance by the interviewed people, and in the third column the interviewed have to indicate the level of satisfaction from each indicator according to a five-point Likert scale.

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RANKING

OF

INDICATORS

AND

CALCULATING

THEIR

WEIGHT

COEFFICIENTS In the framework of each system its quality indicators almost always have different importance for its general assessment. In most general sense, the importance of the indicators for the general assessment is determined by the importance of the properties which these indicators characterize. In the assessment process weight coefficients have to be used for each of them. The methodology for determining the importance and the weight coefficients of each indicator is as follows (Kendall & Gibbons, 1990; Stoyanov, 1993): Creation of ranking matrix The results acquired from the assessment card are written down in a weight matrix (Table 1). Each numeral in the matrix Đ°ij determines the weight (rank) which the expert R assigns to the indicator j. Table 1. Ranking matrix for quality indicators Indicator đ?’šđ?&#x;?

‌

đ??˛đ?’‹

‌

đ??˛đ?’Ž

1

đ?‘Ž11

‌

đ?‘Ž1đ?‘—

‌

đ?‘Ž1đ?‘š

‌

‌

‌

‌

‌

‌

đ?‘–

đ?‘Žđ?‘–1

‌

đ?‘Žđ?‘–đ?‘—

‌

đ?‘Žđ?‘–đ?‘š

‌

‌

‌

‌

‌

‌

đ?‘…

đ?‘Žđ?‘…1

‌

đ?‘Žđ?‘…đ?‘—

‌

đ?‘Žđ?‘…đ?‘š

Expert

R

R

∑ đ?‘Žđ?‘–đ?‘—

∑ đ?‘Žđ?‘–1

đ?‘–=1

đ?‘–=1

R

‌

∑ đ?‘Žđ?‘–đ?‘— đ?‘–=1

R

‌

∑ đ?‘Žđ?‘–đ?‘š đ?‘–=1

∆đ?‘— Vđ?‘— đ?‘˜đ?‘—

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Journal of Innovations and Sustainability (2018) Vol. 4, No 3

Calculating the concordance coefficient (concordance) among the interviewed The concordance in the experts’ opinions is calculated by verifying the concordance coefficient ωc following the methods of rank correlation (Kendall & Gibbons, 1990): đ?œ”đ?‘? =

2 12.∑đ?‘š đ?‘—=1 ∆đ?‘–

đ?‘…2 .(đ?‘š3 −đ?‘š)

(7)

where: m is the number of the indicators for assessing the level of professional competences; R is the number of experts; Δj is the deviation of the sum of the ranks for each indicator from the mean sum; R

ď „ j  ďƒĽ a ij  S mean

(8)

i 1

Smean is the mean sum from all ranks;

S mean 

R.( m  1) 2

(9)

R

ďƒĽ a ij

i 1

j = 1, 2, ‌, m – the sum of the ranks for each indicator.

Verification of the concordance coefficient for importance The concordance coefficient may acquire values from 0 in cases of total inconformity in the experts’ opinions to +1 in cases of full agreement. The assessment of the importance of the derived coefficient ωc in accordance with the used methodology will be verified through the Pearson’s criterion χ2, as the number of indicators m ≼ 7 (Stoyanov, 1993).

ď Ł 2 calc  R.(m  1).ď ˇc

(10)

The concordance coefficient is important under the condition that: χ2calc > χ2table (ι,υ)

(11)

The value of χ2table is taken from a table (Chi-square Distribution Table) with indicated level of importance ι and degrees of freedom υ = m -1. Calculating the weight coefficients for each indicator If there is agreement in the experts’ opinions the weight coefficients are calculated (Stoyanov, 1993):

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k j = ∑đ?‘š đ?‘— đ?‘‰ ; j = 1,2, ‌, m đ?‘—=1

đ?‘—

(12)

where: Vj =

R.m−∑R i=1 aij

(13)

R.m−R

Upon calculation of the coefficients the following condition has to be fulfilled: ∑đ?‘š đ?‘—=1 đ?‘˜đ?‘— = 1

(14)

Calculating the mean value of the satisfaction of all experts for each one of the indicators For calculation of the mean value of the satisfaction representing the level of satisfaction of experts from each indicator of the professional competences, the method of the simple assessment has been used, which is based on analysis of data acquired from interviews. The data from all respondents is processed and the marks of the mean values from all interviewed are calculated. An indicator of the general experts’ opinion may be one of the measures of the central tendency – mode, median and mean. The most popular model of experts’ assessment is the additive one, through which the average value is derived. The average value of satisfaction �̅� from each quality indicator is determined through the formula: �̅� =

∑đ?‘… đ?‘–=1 đ?‘Śđ?‘–đ?‘—

(15)

đ?‘…

where: yij are the values of satisfaction for each of the indicators indicated by the experts; R is the number of interviewed people.

CALCULATING THE VALUES OF THE INDICATORS In order for the requirement for limitations (3) to be observed, the values Ńƒđ?‘– , which reflect the customer satisfaction, will be scaled to the interval in which đ?‘ƒđ?‘– has to change, i.e. from 0 to 1. The transition from Ńƒ đ?‘– to đ?‘ƒđ?‘– is used: đ?‘ƒđ?‘– = đ?‘Ś

đ?‘ŚĚ…đ?‘– −đ?‘Śđ?‘– đ?‘šđ?‘–đ?‘›

đ?‘– đ?‘šđ?‘Žđ?‘Ľ −đ?‘Śđ?‘– đ?‘šđ?‘–đ?‘›

. |đ?‘ƒđ?‘– đ?‘šđ?‘Žđ?‘Ľ |

(16)

where: Pi – importance of the ith external indicator; yi – the value of satisfaction derived from the examination of the respective indicator (1,5). 35 |

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CALCULATING THE INDICATOR OF EFFICIENCY OF THE TRAINING ЕI AND COMPARISON WITH THE LIMIT VALUE The efficiency indicator Еi is derived after substituting the calculated values for weight coefficients of the quality indicators ci and the importance of the indicators Pi in formula (6). The next step is to compare Еi with the determined above limit value determining satisfaction or dissatisfaction of the consumers of the training (Figure 1).

Figure 1. Comparing the efficiency indicator of the training If the calculated value for Еi is above the limit for the value Еlimit, where consumers are fully satisfied with the built competences in the trainees, there will not be any need for improving the conducted training. However, if Еi is lower than Еlimit this will mean that the quality of the training is dissatisfactory, consumers are dissatisfied, and therefore, improvement is needed. Raising the efficiency of the training system, and respectively of the quality of training can be achieved by improving several aspects: change in the organizational processes expressed in change of the organization of the training process (syllabi, ratio between the types of classes in the curricula, change in the set of studied disciplines, change in the content of the curricula, hours of training classes – increase or reduction of them), raising the qualification of trainers, updating the teaching and equipment resources and a combination of the above.

CONCLUSION The quality in the functioning of complex systems, to which each training system belongs, may be assessed through the results of their activity and the level of conformity of their target purpose in set conditions of functioning. This allows,

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through examination of the results from the conducted training, to assess the extent to which the quality of the system satisfies its purpose. The proposed methodology for assessment of the quality of the conducted training allows the system in which it is implemented to be analysed, and the application thereof may be used for establishing the manner in which the examined system functions, and if necessary, the respective actions for improvement to be undertaken. The creation of a system for objective analysis and assessment of the conducted training process in higher educational institutions will provide the opportunity for taking the necessary actions for raising its quality, and this is directly related to the labour market prospects of the trainees. The more precise the developed technologies and methodologies for analysis of the conducted training are, the more accurate will be the picture which they create for the managers of the training courses regarding the drawbacks in its conducting, and the ways for solving the bottlenecks will be more effective.

REFERENCES Kendall, M., J. D. Gibbons. Rank Correlation Methods. New York, Oxford University Press, 1990. Seyfried, Erwin. Indicators for Quality in VET. To Enhance European Cooperation. Luxemburg, 2007. Stoyanov, S. Optimization of Technological Processes. Sofia, Tehnika, 1993. Trendafilov, S. Efficiency and Structural Reliability of Liaison Systems. Sofia, G.S. Rakovski Military Academy, 1995. Trendafilov, S. Methodology for Assessing the Efficiency of Liaison Systems. Sofia, G.S. Rakovski Military Academy, 1995. Yordanov, P. Quality Control. Teaching memos. Sofia, 2014.

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Journal of Innovations and Sustainability

Volume 4 Number 3 2018

Opportunities for Development of Defense Cooperation between Southeastern European Countries

Natalia Bekiarova Georgi Rakovski Military Academy, Sofia, Bulgaria

Marin Petkov Vasil Levski National Military University, Veliko Tarnovo, Bulgaria

Abstract The article considers the multilayer military cooperation between the SEE countries over the past 20 years. The need exists to enhance cooperation from mere "interaction" to the possibility of joint acquisition and sharing of arms and equipment and a real increase in military capabilities in the countries of the region. The Bulgarian initiative SEEDEFCO (Southeastern Europe Defense Cooperation) is introduced. The challenges that stimulate or hinder the implementation of this policy are reviewed. The conclusion is that the Balkan countries are not yet ready to transform their synergy into modern regional military cooperation. Keywords: multinational military cooperation, military capabilities, regional cooperation, challenges.

INTRODUCTION Military cooperation between countries is a proven form of interaction that carries enormous economic and political benefits. For NATO and European Union member states, it stems from the NATO concept of Smart Defense, as well as from the

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EU Pooling & Sharing policy of the European Defense Agency. Encouraged by these policies, more and more countries are turning to new regional forms and formats of defense cooperation. The need for multinational defense cooperation is most noticeable under the conditions of permanent lack of financial resources, the low technological level of military and combat equipment, as well as the limited materiel and human resources of the countries. Since the beginning of the 2008 economic crisis, defense cooperation among European countries has been rapidly intensifying. A good example in this regard is the NORDEFCO (Nordic Defense Cooperation) Platform, created in 2009, bringing together five Scandinavian countries. Benelux countries are also developing similar relations. The Visegrad Group has had valuable experience in the field of defense cooperation and so have the Baltic States recently. Against this background, it is logical to raise the question how far defense cooperation between the Balkan countries extends, and is there a chance that it will be equal to regional cooperation between the countries mentioned?

MILITARY COOPERATION BETWEEN THE BALKAN COUNTRIES Over the years, military cooperation has overtaken other forms of cooperation in the Balkans. This is very important in the period following the wars in former Yugoslavia, when the Balkans were most troubled. After signing the Dayton Accords and the Paris Peace Treaty at the end of 1995, with the active participation of the United States and NATO, military cooperation and the Process of SEE defense ministerial meetings was launched in Tirana in the spring of 1996. Political initiatives started with the adoption of the Sofia Declaration on "good neighborly relations, stability, security and co-operation" in the summer of 1996, which laid the foundations for the Southeast European Cooperation Process (SEECP)1. It was expanded and enriched with the Thessaloniki Declaration on good neighborly relations, stability, security and cooperation in the Balkans, adopted by the SEECP Foreign Ministers in 1997, the 1998 Istanbul Declaration, the Goodneighborly Relations, Stability, Security and Cooperation Charter in Southeast Europe in 2000, and other political documents. However, the military component was the engine of regional cooperation. The Process of defense ministerial meetings was institutionalized and held annually by the defense

SEECP – 20 years key to regional cooperation. https://m.president.bg/bg/static848/seecp-20-years-key-toregional-cooperation 1

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ministers of Albania, Bosnia and Herzegovina, Bulgaria, Greece, Italy, Macedonia, Romania, USA, Slovenia, Serbia, Turkey, Croatia, Ukraine, Montenegro 2. Over the years, the goals of this process, enshrined in the "Coordination Committee of the Southeast Europe Defense Ministerial Meeting Process", have been reaffirmed. These include striving for better understanding, enhancing trust and transparency in the relationship between the parties; promoting Euro-Atlantic integration; creating defense capabilities in participating countries, according to NATO standards; building capabilities to engage in peacekeeping and humanitarian relief operations, cooperation with various international security organizations, etc. Over the years, military cooperation has been enriched with new formats and initiatives. At the Third Meeting of Defense Ministers of the Southeast European Countries in Skopje, Albania, Bulgaria, Greece, Italy, Macedonia, Romania and Turkey signed a Framework Agreement on the Establishment of the Multinational Peace Force Southeastern Europe (MPFSEE), which due to their organizational structure are known as the Southeastern Europe Brigade (SEEBRIG) (Agreement on Multinational Peace Force in Southeast Europe, 2004). Under the signed agreements, these forces may be involved in operations under the auspices of the United Nations and the Organization for Security and Cooperation in Europe (OSCE), their engagement in conflict prevention and resolution operations ranging from peacemaking and peacekeeping operations to participation in humanitarian operations. In this context, the multinational brigade was used only once - from February to August 2006, when under Bulgarian command it joined NATO operation in Afghanistan. Later on, its activities were mainly related to training without real participation in missions and operations, which questioned its effectiveness. In 2003, the Western Balkan countries formed the so-called "Adriatic Charter" between the US, Albania, Macedonia, and Croatia. The aim was to accelerate democratic reforms and the processes of Euro-Atlantic integration of the participating countries. On May 10, 2007, the Chiefs of Defense of Albania, Bosnia and Herzegovina, Bulgaria, Greece, Montenegro, Romania, Serbia, Macedonia and Turkey signed a document known as "Scope of Responsibilities of Balkan CHOD Conference on Military Cooperation" committing themselves to cooperate to improve relations for the sake of stability in the region, to timely and effectively counter asymmetric threats and Multinational initiatives and preparation to support regional cooperation in the field of defense. http://cio.bg/4754_mnogonacionalni_iniciativi_i_podgotovka_v_podkrepa_na_regionalnoto_satrudnichestvo_v_obla stta_na_otbranata 2

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improve military cooperation in the area of military exercises and training. The conference had three working groups - coordination of common work, asymmetric threats and training and military exercises. Work in this format was also performed on annual basis and was of significance for the mutual familiarization and addressing of specific training issues. In 2007 in Dubrovnik, another independent forum was launched - the Defense Policy Directors of the Western Balkan Ministries of Defense. As a result of this multifaceted activity in the framework of military cooperation, in the course of 20 years dozens of projects were implemented, which had an important role to play in peace, understanding and stability in Southeast Europe. It is becoming increasingly clear, however, that they are exhausting their potential. There is some duplication of initiatives, mandates and memberships in different formats, which gives the impression of low efficiency and insignificant contribution to the security of the region against the backdrop of growing instability. Defense cooperation is primarily understood as an interaction between countries. However, this is not enough because there is no decisive change in the defense capabilities of the countries. One reason is that countries such as Albania, Bulgaria, Romania, Croatia, and lately Montenegro have achieved their goals and are part of NATO, some of them are also European Union members. This seems to have exhausted their initial energy because new priorities are being set. There is a growing need to optimize defense cooperation for the purpose of tangible results, to create real capabilities for maintaining peace and security in the region, to enhance capabilities for interaction during various missions and operations. This means that interaction shall grow into opportunities for joint acquisition and sharing of defense capabilities.

SEEDEFCO Initiative In this context, we should consider the Bulgarian initiative launched at an annual meeting on 16 October 2014 in Montenegro in the framework of the Process of the SEE Defense Ministerial Meetings. The non-official document distributed by the Bulgarian side to the participating countries proposes a project under the provisional name SEEDEFCO (Southeastern Europe Defense Cooperation). The objectives of this initiative are to improve mechanisms for cooperation in the name of enhancing defense capabilities and interoperability. This requires a critical review of all known forms of regional cooperation3. To this end, a special working group of representatives of all 3

Agreement on Multinational Peace Force in Southeast Europe. (2004). State Gazette, issue 15, 22.04.2004.

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countries was set up to assess the achievements and to propose new ideas for more effective cooperation. The ambition is to strive for pragmatism, simplification of multilevel military co-operation, and the creation of a single regional forum with clear and achievable goals supported by real military capabilities. Special emphasis is placed on the growing role of NATO and the EU, which is of particular importance to all SEE countries. This initiative calls for surpassing the existing level of political and military dialogue in the name of confidence-building and security-building measures and focusing on a joint response to common challenges. It particularly emphasizes that the acquisition of qualitatively new military capabilities by the Balkan countries is possible not through competition but rather through flexibility and pragmatism. Real results can be achieved through joint NATO and EU projects for equipment and armament procurement. It is assumed that this approach will enable individual countries to offer projects tailored to their needs. Depending on their national priorities, countries have an opportunity to indicate which projects they want to join. It is recommended that they use the experience gained by Scandinavian countries, Baltic countries and the Visegrad group. The optimization of military cooperation shall be based on past experience and the implementation of the well-known inclusive approach to all countries in the region. Specifically, it is about cooperation on projects where traditions have already been established. These are education, training, exercises and drills; joint participation in operations; joint defense industry projects and all initiatives and projects of wider regional significance. These include: SEEBRIG; The Medical Cooperation Initiative IMIHO; Building institutional integrity in SEE within NATO - BI; The role of women in security and defense - FLSD; Common Air Defense Initiative – BRAAD, and others. The Bulgarian proposal has been welcomed, but the practical implementation of the desired change is not yet happening.

What are the challenges to SEEDEFCO? The challenges, considered as objective trends or events, depend on the response they receive and they can lead to positive changes or serious risks and threats. We can divide challenges into global, regional and domestic. We need to highlight the main

We offer effective military cooperation. http://armymedia.bg/archives/12667

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objective that stimulates multinational cooperation. Above all, these are the new trends in the development of Europe and the world. According to a number of world think tanks, after nearly 60 years on the global economic and political scene, neo-liberal globalization has gradually exhausted the possibilities of capital to multiply and gain profits and gives way to de-globalization (Prodanov, 2010, p. 15-16) The World Economic Forum in Davos in 2009 first noticed this trend and made an attempt to explain it. In fact, starting with the bankruptcy of Lehman Brothers in 2008 and growing into a global financial and economic crisis, de-globalization is gaining momentum and so are the attempts to return capital under national control, the rise of economic nationalism, the drive to curb liberal trade freedoms, the rise of protectionist barriers, attempts to halt immigration flows, and the construction of walls and facilities in both the US and Central and Southeast Europe. For example, 539 government initiatives worldwide have been registered in the first ten months of 2015 that limit the freedom of international trade and investment and attempt to impose national economic interests. "Deglobalization is already in full swing," commented the famous American magazine Market Watch4. Exactly in the context of de-globalization is interpreted the choice of the 45th American President, Donald Trump, who generously promised to return the greatness of the United States by multiplying the wealth of the country and speeding up economic development by introducing punitive taxes for foreign and US companies producing their goods outside USA. Brexit, the nationalist wave in France, Germany, Austria, the Netherlands, Poland, Hungary, Bulgaria and other countries, clearly outline the new phenomenon in the world. De-globalization shows that opportunities are being sought for the creation of smaller inter-state unions in the name of pragmatic goals. Particularly important for Southeast European countries is the policy of the new US administration towards NATO, its place and role in Europe. Recently, US President Donald Trump has drawn attention to the fact that Alliance members should make their "fair contribution" to maintaining security in Europe (2017). According to Trump, it is extremely unfair that over the last eight years the United States have doubled its military spending and other NATO countries have not. For all member states, especially those in the Balkans, this means to decisively improve their military capabilities, investing primarily in new technologies that respond to the current risks

Deglobalization is already in full swing. http://www.marketwatch.com/story/deglobalization-is-already-in-fullswing-2016-08-31 4

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and threats. A new generation of wars has been waged for years worldwide, without a defined battlefield or fronts, and where the boundary between civilian and military spheres is increasingly erased. The acquisition of new aircraft, ships and armored vehicles will not be sufficient, and skills to deal with cyber-attacks and all forms of "hybrid" warfare should also be developed. This requires not only the spending of huge, unbearable for small states financial resources, but also the mandatory search for ways of combining efforts in defense co-operation. A serious challenge for Southeast European countries is the weakening of the transforming role of the European Union, postponing European integration for part of the countries, as well as the existing ambiguity regarding the future of the Union. All of this gives grounds for some Bulgarian experts to introduce the term "syndrome of acquired European insufficiency"5 and to predict that if Europe overthrows the Balkans "there will be integration or nationalism." At the end of 2016, the European Commission announced that EU enlargement would not happen in the foreseeable future. The enlargement process has been particularly affected by the migratory wave, Brexit, the coup attempt in Turkey and the consequences for Erdogan's policy. All this further discourages EU candidates from the Western Balkans and aggravates the political crisis in Macedonia and Bosnia and Herzegovina. The EU has an open position on the development of the Union at different speeds. Such a policy will radically change the political, economic and social map of Europe. It is a real opportunity for the wealthy EU countries to become an elite club, and for the others, and in particular the Balkan countries, to remain a European periphery. Against the background of the EU crisis, attempts to discuss and adopt the new EU security strategy in the summer of 2016 did not materialize. Nonetheless, the new document urges states to synchronize and pool their efforts and defense capabilities. A special focus is on increasing defense spending, coping with cybercrime, terrorism, strategic communications and energy security issues. An important challenge with a positive sign on Balkan cooperation is the experience of existing formats of cooperation. It is worth paying particular attention to NORDEFCO. It includes the 5 Scandinavian countries Denmark, Sweden, Norway, Finland and Iceland. Two of them, Finland and Sweden, are not part of NATO, but this does not hinder joint action. It is difficult to say when their joint activities started,

If Europe forsakes the Balkans, there will be "integration or nationalism". http://www.glas.bg/19637/ako-evropazagrbi-balkanite-she-ima-integraciya-ili-nacional.html 5

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but what is known for sure is that people on the Scandinavian Peninsula first built political cooperation. It dates back to the 14th century with the famous Calmar Union. In the early 20th century, those countries established their own Parliamentary Union, while in the years of the Second World War and after it they formed a Scandinavian Military Union (Ovanezova, 2013, p. 83-88). Practically, these countries are successfully syncing their defense potential and building forms of political integration whose only analogue is integration within the European Union. We are talking about the Northern Council of Ministers, coordinating the common policies of the countries, building joint diplomatic missions around the world and, of course, deep and multilateral defense cooperation. For a short time, NORDEFCO became a true alliance of the North, where countries successfully interact in international operations, both within the EU Northern Battle Group and in joint missions and operations around the world. They set up a system for maritime surveillance and early warning in the northern seas; formed their own system to deal with major disasters and accidents; jointly carry out surveillance and patrol in the airspace over Iceland; organize joint coastguard and patrol rescue services, as well as a joint satellite monitoring system. Scandinavian countries have common educational programs and joint training for their staff. They jointly acquire combat aircraft, various types of equipment and armaments. These countries share a common vision on the implementation of military reforms; organize joint military productions and many others. The parties adopted a common Scandinavian Declaration on Solidarity, which, similar to NATO, provides for mutual defense in case of an attack. These new forms of regional defense cooperation are mainly focused on preserving existing national military capabilities. The attempt to create more comprehensive but balanced forms of cooperation to improve the cost-benefit ratio, while maintaining national autonomy at the operational level, is an excellent example for the countries in Southeastern Europe. Balkan countries face common threats that have the potential to speed up military cooperation. These are, above all, terrorism, Islamization, radicalization, and, more recently, the refugee crisis. The first ones were concealed and only recently we have learned that all major terrorist acts in Europe over the last 15 years have a "Balkan connection". According to foreign intelligence centers, extremists control over 150 mosques and prayer homes only in Albania, Bosnia and Kosovo. Similar is the situation in the Serbian region of Sandzak, as well as in Macedonia (Bardos, 2017, p. 20-26). In these countries the process of Islamization is going deeper.

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According to Gordon Bardos, author of the article "The Balkan Crossroad of Terror", training camps in Albania prepare volunteers for the jihadist groups in Iraq and Syria. In Bosnia and Herzegovina there are areas where Islamic extremists have imposed their own order and act completely independently of the central state power. This proves that the Western Balkans have become a place to recruit terrorists. Per capita data shows that most fighters for "Islamic state" come precisely from that part of Europe. We should not neglect the fact that these people will sooner or later return to their homes. According to Almir Jouvo, Head of Bosnia and Herzegovina's intelligence agency (OSA), there are three thousand potential terrorists in the country, while former Al-Qaeda activist Ali Hamadi claims his organization has recruited 800 Bosnians not listed in the databases of the Western Special Services, i.e. they can easily enter any European country. The issue of leadership and the qualities of the political elites is also important for multinational cooperation in the Balkans. It is hard to identify reputable leaders with comprehensive knowledge of the processes in the region, a clear vision of the future, and charisma to persuade, engage and motivate cooperation among Balkan nations. Some of the most important challenges that hinder cooperation also include political instability in some of the Western Balkan countries. For over 20 years since the end of the war, Bosnia and Herzegovina has not delivered stability. Deep political, economic and social problems, as well as the insurmountable mutual hatred between the three main ethnic communities (Bosniaks, Serbs, and Croats) are the reason for some local politicians and authoritative analysts to predict the breakup of the state6. The Serb district of Sandzak, mostly populated with Bosniaks, is increasingly threatening to become the new "Kosovo" for Serbia7. Irredentism is rising in the Balkans once again bringing up the issue of Greater Albania and assembling the fragmented parts of the Albanian people. The relations between the Republic of Serbia and the Republic of Kosovo are complicated, while the southern Serbian regions in the Presevo valley (with the towns of Presevo, Bujanovac and Medvedja) are increasingly detached from Belgrade and converging with Pristina. The current crisis in Macedonia is extremely dangerous and threatens to escalate. This crisis has the potential to grow into a new military conflict that will involve all neighboring countries and blow up the Balkan peace. Dodik, M. Bosnia and Herzegovina will not exist as a state. http://www.focusnews.net/news/2017/01/09/2351948/milorad-dodik-bosna-i-hertsegovina-nyama-da-prosashtestvuva-katodarzhava 7 Sandzak: "The New Kosovo" for Serbia? http://www.cross.bg/sandzhak-surbiya-bosna1276715.html#.WRtMsTrsYdU 6

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Meanwhile, the geopolitical vacuum created by the weak European Union's activity in the Western Balkans has re-energized the appetites of other geopolitical players, such as Turkey and Russia. Recently, China has also expressed interest in the region. Moscow clearly declared its desire to regain its lost positions among Slavic and Christian states and has succeeded in Republika Srpska (in Bosnia and Herzegovina), Macedonia and Serbia. On the other hand, Ankara is increasingly active in Bosnia, Kosovo, Macedonia, in other areas of the Western Balkans with predominantly Muslim population, following the idea of the "Islamic arc" and its neo-Ottoman vision. This picture of instability and changes in the configuration of geopolitical players in the Balkans does not contribute to the development of the idea of defense cooperation between the Balkan countries. Now it seems to be a utopia. Such considerations bring us back to an undesirable division in the Balkans. In recent years, the idea of establishing Visegrad in the Balkans has become popular. The idea is also known as Balkans - 5 or (B-5) and includes the countries that are both NATO and European Union members, i.e. Bulgaria, Greece, Romania, Slovenia and Croatia8. It is envisaged that any subsequent country that becomes a member of NATO and the EU will automatically be included in the group. Such a format would probably be very effective in a number of areas of regional cooperation, especially in the fields of energy, transport and infrastructure projects, ecology, culture, education and politics, because it is supposed that all countries share common democratic values and principles. In defense cooperation, however, much more is needed - a high level of trust (both between political elites and between the military), awareness of each other, experience, and traditions. We must not forget that multinational cooperation implies reasonable compromises on the most sensitive issue - national sovereignty. In this sense, the B-5 idea would hardly be constructive in the defense sphere. The isolation of any country or group of countries from this cooperation could alienate them and complicate relations in the Balkans. The first item on the agenda is, however, that each country should be able to develop and multiply its own defense capabilities (Terziev, Petkov, Krastev, 2018a-j).

CONCLUSION Summing up the achievements in the field of multinational cooperation in the Balkans, we should conclude that putting military cooperation at the center of events

Kyuchukov, L. Vishegrad in the Balkans, or why we need group B5. http://bnr.bg/radiobulgaria/post/100436232 8

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is not the best policy. For the time being, it is most important to the peace and stability of the region. To a large extent, this cooperation is brought from outside, from NATO and the EU, which does not downplay it, but creates high standards in relations between states. Unfortunately, this cooperation is not followed by a powerful political and, of course, economic cooperation. Because of the slow pace of socioeconomic development, countries and people in the Balkans have an acute need for major infrastructure projects, a common work to share, get rich and get to know each other better. This would also greatly facilitate their military cooperation, because in sharing common democratic values and in accepting the principles of good neighborhood relations, understanding and mutual respect of interests, defense cooperation can be a natural continuation of goodwill, trust, peace and security. Contemporary political reality in the countries of Southeastern Europe eloquently shows that they have not yet overcome their complex historical burden, have not solved part of their fundamental economic and political problems, have not achieved the necessary degree of trust among themselves, and for now will not be able to build effective defense cooperation. The idea of SEEDEFCO is a step in the right direction that should be strengthened, but it should not be overwhelmed. Most likely, the formats of military cooperation in Southeast Europe will be simplified in the near future. It is realistic to increase the number of multinational projects requiring NATO and EU funding, which will give the countries in the region a chance to cope with common challenges.

REFERENCES Agreement on Multinational Peace Force in Southeast Europe (2004). State Gazette, issue 15, 22.04.2004. Bardos, G. (2017). The Balkan Crossroad of Terror, Geopolitics, issue 1, 2017. pp. 20-26. Deglobalization is already in full swing. http://www.marketwatch.com/story/deglobalization-is-already-in-full-swing-201608-31. Dodik, M. Bosnia and Herzegovina will not exist as a state. http://www.focusnews.net/news/2017/01/09/2351948/milorad-dodik-bosna-i-hertsegovina-nyamada-prosashtestvuva-kato-darzhava. If

Europe

forsakes

the

Balkans,

there

will

be

"integration

or

nationalism".

http://www.glas.bg/19637/ako-evropa-zagrbi-balkanite-she-ima-integraciya-ilinacional.html.

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L.

Vishegrad

in

the

Balkans,

or

why

we

need

group

B5.

http://bnr.bg/radiobulgaria/post/100436232. Multinational initiatives and preparation to support regional cooperation in the field of defense. http://cio.bg/4754_mnogonacionalni_iniciativi_i_podgotovka_v_podkrepa_na_regional noto_satrudnichestvo_v_oblastta_na_otbranata. Ovanezova, E. (2013). The New Military Union of the North, Military Journal, issue 1, 2013, pp. 83-88. Prodanov, V. (2010).Ten global trends that will determine the fate of Bulgaria in the 21st century. Global Changes and the Fate of Bulgaria in the 21st Century. С., BISFRIM. С.15-16.; Hillebrand, Evan E. Deglobalization Scenarios: Who Wins? Who Loses? http://www.uky.edu/~ehill2/dynpage_upload/files/DeglobalizationScenarios.pdf. Sandzak: "The New Kosovo" for Serbia? http://www.cross.bg/sandzhak-surbiya-bosna1276715.html#.WRtMsTrsYdU. SEECP – 20 years key to regional cooperation. https://m.president.bg/bg/static848/seecp20-years-key-to-regional-cooperation. Terziev, V., Petkov, M., Krastev, D. (2018a). Concept of joint investigation teams. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018- Dubai, U.A.E, International Organization Center of Academic Research, pp. 492-496. Terziev, V., Petkov, M., Krastev, D. (2018b). Eurojust casework on mafia-type criminal organisations. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018- Dubai, U.A.E, International Organization Center of Academic Research, pp. 487-491. Terziev, V., Petkov, M., Krastev, D. (2018c). European arrest warrant: appearance and preferences for fulfillment. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 477-481. Terziev, V., Petkov, M., Krastev, D. (2018d). European arrest warrant and human rights of the accused. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018- Dubai, U.A.E, International Organization Center of Academic Research, pp. 501-504. Terziev, V., Petkov, M., Krastev, D. (2018e). Operative mode for police cooperation between the member states of the European Union. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018Dubai, U.A.E, International Organization Center of Academic Research, pp. 473-476. Terziev, V., Petkov, M., Krastev, D. (2018f). Organization on the European Union in the sphere of penal preparation. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018- Dubai, U.A.E, International Organization Center of Academic Research, pp. 482-486.

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ISSN 2367-8127 (CD-ROM) ISSN 2367-8151 (on-line) Terziev, V., Petkov, M., Krastev, D. (2018g). Pumps for the action on the European Union in the scope of the European agenda on security. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018Dubai, U.A.E, International Organization Center of Academic Research, pp. 497-500. Terziev, V., Petkov, M., Krastev, D. (2018h). Sources of European Union law. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018- Dubai, U.A.E, International Organization Center of Academic Research, pp. 511-516. Terziev, V., Petkov, M., Krastev, D. (2018i). The “Source of law� category. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018- Dubai, U.A.E, International Organization Center of Academic Research, pp. 517-521. Terziev, V., Petkov, M., Krastev, D. (2018j). The process of forming a criminal policy of the European Union. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018- Dubai, U.A.E, International Organization Center of Academic Research, pp. 505-510. Trump: NATO countries will pay for their security. http://www.economic.bg/bg/news/8/tramp-stranite-ot-nato-shte-plashtat-zasigurnostta-si.html. We offer effective military cooperation. http://armymedia.bg/archives/12667.

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Journal of Innovations and Sustainability

Volume 4 Number 3 2018

The Stability and Growth Pact: Pursuing Sound Public Finances and Coordinating Fiscal Policies in the EU Member States

Venelin Terziev, Stefcho Bankov, Marin Georgiev Vasil Levski National Military University, Veliko Tarnovo, Bulgaria

Abstract The so-called Stability and Growth pact was created in the 1990s with the idea of imposing upon member states (MS) which were already part of the Eurozone budgetary requirements. The Eurozone countries were initially complying with said budgetary requirements, but once they were granted admission into the “euro club�, they no longer had any incentives to maintain budgetary prudency. Hence, many countries started having excessive budgetary deficits which ultimately led, inevitably, to the accrual of higher debts. This was in violation of the current Article 126 TFEU which prohibits MS from having excessive government deficits, where deficit was to be assessed based on: the ratio of the planned/actual government deficit to gross domestic product, and the ratio of government debt to gross domestic product. The exact reference values of the acceptable levels of deficit and of debt are currently found in Protocol No 12 annexed to the Treaties, which puts the bar at 3% for deficit and 60% for debt. Keywords: EU, stability, growth, sovereign debt.

INTRODUCTION Back in the 1990s however the EU wished to prevent this process of excessive spending from developing further and so the heads of state/government of the MS agreed in the form of a Council Resolution that a Stability and Growth Pact needs to be prepared so that countries are held responsible for their domestic budgetary

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policies. At the foundation of the Stability and Growth Pact laid the idea that it needs to consist of two main elements: prevention and deterrence. Thus, two Council Regulations were agreed upon, each implementing one of those two elements: Regulation 1466/97 represented the “preventive arm” of the Pact, while Regulation 1467/97 – “the deterrent/corrective arm”. Through the Council Resolution MS committed themselves to achieve a medium-term budgetary objective of close to balance or in surplus, and to fulfill a corrective budgetary program in case they spend more than they make. The Commission, on the other hand, had the right of initiative under the Pact, i.e. it could trigger the preventive or the corrective arm against a MS, whereas the Council was the organ which could enforce it due to the sensitive nature of fiscal policy. The Council could impose sanctions in case of the most serious violations where MS were warned, but had not taken any action within the period allowed. Further detail on the aforesaid was provided in the two Regulations which are to be analyzed.

THE PACT FROM 1997 Regulation 1466 – the “preventive arm” Starting chronologically based on the evolution of the procedure, Regulation 1466 needs to be mentioned first. It is an implementation of what is now Article 121(6) TFEU. The latter article speaks about the multilateral surveillance procedure, where MS transmit information about their budgetary plans to the Commission and to the Council, which must inspect whether this data is in accordance with the prescribed norms, and sanction where necessary. The Regulation however complemented the multilateral surveillance procedure from the Treaty by setting up the “early warning system” which in effect represents the preventive arm of the Pact. Under this system, Eurozone MS have to submit medium-term programmes, known as “stability programmes” whereas non-eurozone MS had to submit “convergence programmes”, which although with a different title, had essentially the same content: the mediumterm objective for the budgetary position of close to balance or in surplus and the adjustment path towards that objective, the main assumptions about expected economic developments, the budgetary and economic policy measures being undertaken, and an analysis of how a change in the main economic assumptions would affect the budgetary and debt position. The latter information was to be provided for the preceding, and current year, as well as for the next three years. Under the Regulation, the Commission makes an assessment on the content of the

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programme, and the Council examines whether the MS is likely to avoid having an excessive deficit, whether the economic assumptions made are realistic, and whether the measures undertaken will be sufficient to achieve the targeted adjustment path. The Council has two months to carry out this assessment and if it considers that improvements need to be made by the MS, it will invite the MS to do so. Thereafter, the Council monitors the implementation of the programmes and in case it identifies a significant divergence from the medium-term budgetary objective (or the adjustment path towards it), it issues a recommendation to the MS to make the necessary adjustments. The latter constitutes the early warning mechanism which aims at tackling fiscal issues in the MS before an excessive deficit is reached. Furthermore, in case the MS does not comply with the recommendations of the Council, the only thing the latter can do is to issue new recommendations, but this time making them public, thus, putting public pressure on the MS to abide. It is worth mentioning that the only difference between the content of programmes which are to be submitted by Eurozone MS and by non-participating MS under the Regulation is that the latter must submit information on their monetary policy. This is due to the fact that they are still in the process of applying for Eurozone membership.

Regulation 1467 – the “corrective arm� Moving on to the second Regulation, the one on speeding up and clarifying the implementation of the excessive deficit procedure, it is a transposition of Article 126(14) TFEU. The latter lays down the general legal framework of the excessive deficit procedure which is further specified in, as said, Protocol No 12, and the Regulation. According to the wording of the Treaty, whenever a government exceeds its deficit and/or debt level requirement, the Commission prepares a report and issues an opinion to the MS in case it considers that an excessive deficit exists or is likely to occur. The formal decision of whether an excessive deficit really exists however is made by the Council which may issue recommendations, in complete confidentiality, to the MS at stake to bring the situation to a hold within a prescribed timeframe. In case the MS does not act upon the recommendations within the timeline, then the Council can make its recommendations public and, subsequently, issue a notice on measures which the MS has to take to rectify the situation, but from here onwards the procedure applies only for participating MS whereas no further enforcement measures are put in place for non-participating. As a matter of sanctions

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in case attempts by participating MS at solving the issue fail, the Council can require the MS to publish additional information before issuing bonds and securities, invite the European Investment Bank to reconsider its policy towards the MS, require the MS to submit a non-interest bearing deposit which is to be returned upon compliance with the notice, and, as a measure of last resort, impose fines. Importantly, all of the aforementioned actions by the Council need to be superseded by a recommendation by the Commission which traditionally has the right of initiative in the field. Under the Regulation, the process just described was substantiated and enforced so that better action could be taken against non-compliant MS. The Regulation clarified that an excessive deficit could be considered as exceptional and temporary, subject to Article 104c(2)(a) of the Maastricht Treaty, whenever it results from an unusual event outside the control of the MS and which has a major impact on its financial position, or originates from a severe economic downturn. An additional requirement for an excessive deficit to be qualified as temporary is that the excess over the reference value should fall following the end of the event, according to the forecasts of the Commission. In addition, the Regulation provides for the dead-lines of the procedure which were otherwise not laid down in the Maastricht Treaty. As a result, for example, MS have four months to comply with the recommendations of the Council to take action against the excessive deficit and one year from the moment of its identification for the full elimination of the excessive deficit. Moreover, an element of automaticity was added in making the Council recommendations public upon noncompliance with the 4-month dead-line. Apart from specifying further dead-lines for the variety of decisions to be taken, the Regulation also provides for an expedited procedure in case of a deliberately planned deficit by the MS. Furthermore, the Regulation spells out the fact that the procedure is to be held in abeyance if the MS has acted either in compliance with the recommendations of the Council, or, subsequently in the procedure, with the notice. The added value of this abeyance is that, although it does not constitute an official abrogation of the procedure, the amount of time in abeyance is not taken into account when deciding whether a sanction should be imposed due to the prolonged misbehavior of the MS. In addition, a development in the sanctioning mechanism itself is that under the Regulation the Council has to, as a rule, impose a non-interest-bearing deposit, whereas under the Treaty it could choose from either of four options. The exact amount of the deposit was also defined, while an additional deposit can be imposed by the Council in case of further non-compliance. The deposit(s) are converted into a fine if two years after the decision to require a non-interest-bearing deposit from the MS, the latter has still

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not corrected its excessive deficit. Finally, Article 14 of the Regulation dictates that the Council can abrogate the sanctions “depending on the significance of the progress made� by the MS in default. The latter is quite vague in its wording and affords a high degree of leeway to the Council. If the decision on the existence of an excessive deficit itself is abrogated however, which can be more objectively assessed by looking at the reference value and the current budget of the MS, then all of the sanctions are lifted automatically. The money accrued from fines and the interest on the deposits is sent to the participating MS which were in compliance with the budgetary requirements. Lastly, it is worth recalling once again that the provisions of the Regulation apply to non-participating MS only until the stage of the Council making its recommendations public. Any provisions governing the procedure following that step, and any deadlines contained therein, are only valid for eurozone countries.

AMENDMENTS TO THE PACT FROM 2005 Following the initial experience with the Stability and Growth Pact, MS agreed to amend the two Regulations in 2005 and to make budgetary surveillance much more flexible. The main aim of this was to allow MS to actively invest and innovate rather than being held down by the strict numerical requirements. One of the major innovations under the budgetary surveillance mechanism (the preventive arm) was the fact that the medium-term objective was decided to be different for the different MS because of their divergent status quo. The EU institutions agreed to take into account major structural reforms which would have a long-term cost-savings effect in the MS when examining whether the latter are meeting their medium-term objective or the adjustment path towards it. Essentially, this meant that MS could spend more and all at once, as long as this guaranteed the future sustainability of their budget. The most notorious example of such a reform would be the pension reform which demands a huge deal of one-off costs. MS were generally allowed to do less in economic bad times, and more in economic good times, but had to always keep a safety margin with regards to the 3% deficit rule. Furthermore, MS had to annually improve their budget by 0.5% of their GDP as a benchmark in order to reach their medium-term objective or the adjustment path towards it. Finally, the EU legislature agreed to extend the dead-lines of the Council for the assessment of the stability and convergence programmes. The corrective arm of the Pact was also amended in order to make the excessive deficit procedure more simple, transparent and equitable. More specifically, the concept of 57 |

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exceptional excess of deficit was broadened to include negative annual GDP volume growth rate. Furthermore, economic factors such as potential growth, the implementation of policies in the context of the Lisbon agenda, R&D policies, and budgetary factors such as public investment and debt sustainability were to be taken into account by the Commission when drafting its report on non-fulfilment of the budgetary requirements. All in all, the MS were allowed a long list of factors they could justify their budgetary misbehavior with. In line with the preventive arm, the dead-lines in the corrective arm of the Pact were also increased. For instance, MS had six instead of four months to take effective corrective action based on the recommendation of the Council. On the other hand, MS had now to abide by a strict condition in their corrective action – they had to make an improvement of at least 0.5% GDP annually, both following the recommendation and the notice. Furthermore, the possibility of a revised recommendation/notice by the Council was allowed in case of the occurrence of unexpected adverse economic events which could lead to an increase of the dead-line for correction of the deficit by one year. Finally, a paragraph was also added which allowed the Commission to inform the Council about its opinion on whether the MS had achieved sufficient progress towards rectifying its deficit upon expiration of the dead-line for effective action and that for imposition of sanctions. This allowed the Commission to take the initiative, something which was absent before where this part of the procedure was fully in the hands of the Council.

AMENDMENTS TO THE PACT FROM 2011 – “SIX-PACK” Following the financial crisis of 2008 which in many countries in Europe led also to a fiscal crisis, the EU decided to enhance the Stability and Growth Pact. It did so by amending the founding Regulations constituting the preventive and corrective arm of the pact, introducing a Regulation on the enforcement of budgetary surveillance, two Regulations on macroeconomic imbalances (a substantive one and one on enforcement), and a Directive on the requirements for budgetary frameworks of the MS. All of this was entitled the “Six-Pack” and was drafted as a result of the need to take immediate action for fiscal recovery. Each legal act forming part of the Six-Pack will now be shortly discussed.

The new “preventive arm” of the Pact First of all, Regulation 1466 from 1997 was amended through Regulation 1175. The first major difference between the two Regulations is in Article 1, where the new

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Regulation speaks about the procedure as forming part of the overall Union objective of achieving growth and employment. This relates to the EU 2020 strategy which aims at increasing the rates of employment in the EU and was laid down because the EU would like MS to retain still some flexibility with regards to expenditure which would have long-term growth effects. Another addition is the creation of the European Semester for economic policy coordination which is basically a six-month cycle of economic and fiscal policy coordination within the EU starting from January and lasting until June. MS have to align their policies on structural reforms (relating to growth and employment), prevention of macroeconomic imbalances and fiscal policies with the targets set by the EU. The EU Semester starts by the issuance by the Commission of an annual growth survey (November-December) which presents the institution’s views about the policy priorities of the EU for the next year, and of a proposal for a Council recommendation of the economic policy of the euro area (identifies policy priorities specific for the Eurozone). Thereafter, the Council sets out overall policy guidelines and adopts its conclusion, while also adopting the recommendation on Eurozone countries based on the Commission’s proposal. The work of the Council on the overall policy guidelines results in the adoption by the European Council of policy orientations which the MS have to take into account when drafting then stability and convergence programmes. After having submitted the latter by the end of April, the Commission evaluates them and prepares countryspecific

recommendations

(CSRs),

which

are

presented

in

the

form

of

recommendations by the Council and finally endorsed by the EU Council. MS have to bear in mind the CSRs throughout the second six-month cycle of the year when drawing up their budget for the next one, while Eurozone countries have to submit their draft budgets by mid-October. Compliance by the MS with the CSRs is assessed by the Commission when preparing the next annual growth survey. In case MS do not comply, the Council may issue recommendations to them, the Commission may issue a warning, etc. Another innovation in the Regulation is the fact that the Parliament is now much more involved in the procedure of budgetary surveillance. More specifically, any competent Committee of the Parliament can invite the Presidents of the Commission, Council, EU Council or Eurogroup to discuss any of the findings made throughout the procedure. Any MS which is subject to a Council recommendation can also be invited to such an exchange of views. Clearly, this innovation tries to increase the

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transparency, democratic accountability and legitimacy of the whole procedure, which is otherwise very political. Moreover, the country-specific medium-term objective is now to be revised every three years, instead of the amended provision where four years was the requirement. Furthermore, the scope of the content of the stability/convergence programmes was enlarged to include factors such as information on implicit and contingent liabilities, and information on the consistency of the stability programme with the broad economic policy guidelines. Any budgetary and macroeconomic forecasts have to be compared with those of the Commission and any differences must be explained. Strict requirements were also devised regarding the status of the programmes in the context of national procedures. The Regulation also puts much more emphasis on the debt ratio than before, by stating that the accompanying path for the debt ratio shall also be examined by the Council in addition with the adjustment path towards the medium-term budgetary objective. MS with a debt level over 60% of GDP or whose debt sustainability is at risk have to now make more effort than the generally required annual improvement of 0,5% GDP. Previously, all MS regardless of their debt level had to make the same effort. In addition, under the new Regulation MS are to be judged on whether they achieve sufficient progress towards the medium-term budgetary objective based on their structural balance. This means that, as a general rule, MS who have achieved their objective cannot have a higher annual expenditure growth than the mediumterm rate of potential GDP growth while MS who have not must have a lower annual expenditure growth than potential GDP growth. Deviations from this are however exceptionally allowed if there is an unusual event outside of the control of the MS which has a major impact on its financial position or in periods of severe economic downturn for the euro area or for the EU as a whole, provided that this does not endanger fiscal sustainability in the medium term. The latter is an addition in the Regulation, but is however quite vaguely defined. To add on, the Council and the Commission now have three instead of two months to actually carry out the assessment of the programmes. Now, if there is a significant deviation from the adjustment path, the Commission can issue a warning to the MS concerned on its own motion and without the involvement of the Council. Subsequently, the Council shall issue a recommendation to the MS setting out the necessary policy measures to be implemented. This recommendation, although being the first warning signal from the Council, can also be already made public on the basis of a proposal of the Commission – something which previously would happen

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only once no action had been taken following a first recommendation. Noteworthy is also the fact that this first recommendation also contains dead-lines which the MS has to comply with. In case the MS does not comply with the recommendation, the Commission shall propose to the Council to adopt a decision that no effective action has been taken. If the Council does not act and once one month has passed while no effective action has yet been done, then the Commission shall propose the same decision to be adopted by the Council. Then however the decision is deemed to be adopted unless the Council opposes by simple majority i.e. it is now the rule rather than the exception that the decision would be adopted. Also important is the fact that a definition of what constitutes a significant deviation from the MTO or the adjustment path towards it is provided. The difference between the stability and the convergence programme is once again in the fact that the convergence programmes are assessed on whether they comply with the five convergence criteria. Finally, the Regulation has added a new provision on the principle of statistical independence. This aims at ensuring the independence of national statistical authorities entailing transparency in the recruitment, annual or multiannual budgetary allocations, etc. In addition, the Commission can now carry out enhanced surveillance missions in the MS which are subject of recommendations with the aim of on-site monitoring of the relevant domestic authorities and procedures. When the MS in question is of the Eurozone or part of ERMII, then ECB representatives can also be invited.

The new “corrective arm� of the Pact Second of all, Regulation 1467 on speeding up and clarifying the excessive deficit procedure was amended by Regulation 1177. The new Regulation emphasizes that initiation of an excessive deficit procedure should be done following an analysis of compliance with both the deficit, and the debt criterion. Such a reference was not present in the previous versions of the instrument. In addition, the Regulation explains that when the debt criterion exceeds the reference value, this would be considered to be diminishing at a satisfactory pace if the amount of debt over the reference value has been decreasing over the previous three years at an average rate of 1/20 per year. Moreover, much more factors are now taken into account by the Commission when it prepares its report on the existence of an excessive deficit, such as the implementation of policies in the context of the common growth strategy of the

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Union and of the prevention and correction of macroeconomic imbalances; and as a whole developments in the medium-term government debt position (the maturity structure and currency denomination of the debt, accumulated reserves, implicit liabilities, etc.). In addition, whenever the Commission assesses compliance with the deficit criterion and if the MS has exceeded its debt level over the reference value, factors that the MS has mentioned as being necessary to assess compliance with the debt and deficit criteria will only be taken into account if the double condition of the overarching principle is fully met. Previously, the level of government debt had no impact on the aforementioned procedure. To add on, the new Regulation also introduced the economic dialogue as a forum for discussion of decisions taken throughout the excessive deficit procedure, similarly to the Regulation on budgetary surveillance. The dead-lines for dealing with the excessive deficit for MS were not changed, but an option for a shorter dead-line for compliance with the recommendation by the Council was included in case of serious situations (3 instead of 6 months). Within that deadline, the MS must report to the Council and the Commission on any action taken thereof. The same type of reporting requirement is applied once the Council issues the notice, a bit later in the procedure. Previously, no such reporting requirement existed. The dead-line for compliance with the recommendation can however now be extended not only when there are unexpected adverse economic events for government finances, but also when there is a severe economic downturn in the euroarea or in the EU as a whole. This provides for an additional exception to the general rule. The time-limit for imposition of sanctions is now four instead of two months past the date of issuance of the notice. Importantly, now whenever the Council decides to impose a sanction – that shall be a fine as a rule, which can be complemented with any other sanction. This applies only to participating MS. There is also a special provision for the calculation of the fine. If the violation of the MS persists, then an additional fine can be imposed. Now, however, the money accrued from fines will go not the MS who were compliant, but to the European Financial Stability Facility. The latter’s function was however later on taken over by the European Stability Mechanism so nowadays the interests and fines deriving from the excessive deficit procedure are sent there.

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The enforcement Regulations – preventive and corrective arm Next, what needs to be discussed is Regulation 1173 on the effective enforcement of budgetary surveillance in the euro area. This Regulation lays down the sanctions for the enforcement of both the preventive and the corrective arm of the Stability and Growth Pact and applies only to Eurozone countries. Firstly, regarding the preventive arm the MS is required to submit an interest-bearing deposit equal to 0,2% of its GDP in the preceding year in case it does not abide by the Council recommendation setting out an early warning that it is significantly deviating from the adjustment path towards its MTO. This deposit is set out in a decision of the Council, recommended by the Commission, which is deemed to be adopted unless a qualified majority opposes that recommendation. The Commission may recommend that the amount of the deposit be lowered or that it be cancelled as a whole as a result of a reasoned request by

the

MS at

stake. The

Council

may nonetheless

amend the

recommendation of the Commission by qualified majority and adopt the amended version of the recommendation as its decision. Once it is deemed that the MS has rectified its divergence in accordance with the recommendation of the Council, it will have its deposit and the interest attached returned. Secondly, with regards to the corrective arm it is said that if the MS is found to have an excessive deficit and it has already submitted an interest-bearing deposit subject to the early warning mechanism, or when there is a particularly serious violation of the budgetary rules, then that MS is required to submit a non-interest-bearing deposit amounting to 0.2% of its GDP. Once again, the decision to require this deposit is deemed adopted by the Council unless a qualified majority opposes the Commission’s recommendation. Whenever, on the other hand, a MS is found to have not complied with a recommendation by the Council it will be subject to a fine amounting to 0.2% of its GDP. The procedure for adopting the decision to impose that fine is the same as the ones previously described. In both the case of a NIBD and a fine, the Commission may on grounds of exceptional economic circumstances or based on a reasoned request by the MS recommend to the Council that the amount be lowered or cancelled. When the Council decides to abrogate some or all of its decision, then the NIBD is returned. What is also interesting in this Regulation is that there are provisions for sanctioning the misrepresentation of statistics by MS. The amount shall not exceed the value of the previous sanctions, but shall depend on the seriousness of the violation. The Commission can conduct all of the investigations

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necessary in this regard, but shall in any case give the MS concerned the right to be heard. Most importantly, the imposition of a fine with respect to misrepresentation of data is the only area of the SGP where the CJEU has unlimited jurisdiction to review the decisions of the Council.

The Directive on requirements for budgetary frameworks Having discussed the preventive and corrective arm of the SGP, now it is time to turn to a more technical act – this is the only Directive in the Six-Pack: the Directive on requirements for budgetary frameworks of the MS. No detailed analysis of said instrument is required. Suffice is to say that this Directive harmonizes the set of arrangements, rules, procedures and institutions that underlie the conduct of budgetary policies of the MS’s governments. This includes the systems of budgetary accounting and reporting, the preparation of forecasts, country-specific numerical fiscal rules, etc. The main requirement for MS is that they have in place public accounting systems which cover all sub-sectors of the general government and which can generate data in order to prepare “ESA 95 standard” data. MS must ensure public availability of fiscal data for all sub-sectors of the general government, and must ensure that fiscal planning is based on realistic macroeconomic and budgetary forecasts. MS shall also establish a credible medium-term budgetary framework so that fiscal planning can be made for at least three years. Their annual budget must be consistent with the medium-term budgetary framework. Finally, MS must also present which general government bodies’ and funds’ budgets do not form part of the regular budgets at sub-sectoral level.

The new addition to the scope of the Pact – macroeconomics Now it is time to turn to the new addition of the Stability and Growth Pact which is the area of macroeconomics. This area was not governed before the crisis, but the EU decided that such an intrusion into the competences of the MS is justified so as to avoid its future repetition. Two Regulations were devised for that purpose – Regulation 1176 on the prevention and correction of macroeconomic imbalances, and Regulation 1174 on enforcement measures to correct excessive macroeconomic imbalances, which applies only to the euro area however. The first Regulation tackles macroeconomic imbalances through an alert mechanism where the Commission prepares a report indicating the level of compliance with a scoreboard by the MS. Those MS which are affected or may be at risk from excessive imbalances are subject

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to an in-depth review where their country-specific circumstances shall be duly considered. Thereafter, depending on whether the MS is detected as experiencing mere imbalances or excessive imbalances, the Council shall either issue a recommendation setting out how those imbalances need to be fixed with which the procedure ends, or an excessive imbalance procedure will be opened. In case of the latter the MS at stake has to prepare itself a corrective action plan based on the recommendations of the Council which needs to be approved by it. If the plan is endorsed, then the Commission will monitor implementation of it through reports which the MS in question sends. For that purpose, the Commission may carry out enhanced surveillance missions in the MS concerned. In the end, the Commission draws up a report on whether the MS has complied with the plan and the Council assesses the MS’s actions based on that report. If not, then a decision establishing non-compliance is adopted and new dead-lines are set. The procedure is held in abeyance when the MS takes the corrective action needed, while it is abrogated when it no longer experiences excessive macroeconomic imbalances. Finally, the possibility of undertaking an “economic dialogue” is also envisaged in the context of the excessive imbalance procedure. The second Regulation governs the enforcement regime of the first one only as far as euro-zone MS are concerned. It lays down the requirement that MS which do not comply with the recommendation of the Council to take corrective action need to submit an interest-bearing deposit which can later on be converted into an annual fine if the MS continues its disobedience. An annual fine can also be imposed where on three occasions in the same imbalance procedure the Council does not consider the corrective action plans submitted by the MS under examination as being sufficient. It is important to state that on exceptional economic grounds or based on a reasoned request by the MS, the Commission can reduce or cancel the deposit/fine. Finally, in case the MS complies with the corrective action plan in the course of the year, it will have its deposit along with the interest or the fine returned pro rata temporis.

AMENDMENTS TO THE PACT FROM 2013 – THE “TWO PACK” After having created the Six Pack, the EU decided that further legislative action is necessary two years later so it developed the so-called “Two Pack”. The first legal act forming part of it is Regulation 473. This Regulation applies only to euro-zone countries. Its aim is to increase budgetary coordination and surveillance building on 65 |

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what was achieved with the Six-Pack. In accordance with the Regulation, a MS has to submit their draft budget to the Commission before the 15th October and then it has to wait for the opinion of the Commission before voting on the budget. MS subject to an excessive deficit procedure, on the other hand, have to submit status reports every six months on their compliance with the Council recommendation, or even more frequently in case they have been subject to a Council notice. The second Regulation is 472 which is on the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability. The latter applies to euro-zone MS which are subject to an excessive imbalance procedure, or are receiving funds from the ESM/IMF, or on a bilateral basis. They have to submit quarterly reports for corrective action. The Regulation applies to the MS having received a macroeconomic financial assistance program at least until they have paid back more than 25% of the borrowed money.

THE FISCAL COMPACT Finally, the last part of the SGP is the Treaty on Stability, Coordination and Governance

which

is

also

known

as

the

“Fiscal

Compact�.

This

is

an

intergovernmental treaty concluded outside the framework of EU law, but to which almost all EU countries are signatories. It was introduced to reinforce the requirements in the SGP and make them stricter. The Compact applies to all eurozone countries and those non-euro-zone MS which explicitly agree to abide by its provisions. The general rule in the Treaty is that MS’s annual structural balance must be at its medium-term objective, where the lower limit of the structural deficit is 0.5% GDP. In case MS do not abide, they are subject to a correction mechanism. On the other hand, in case a MS has a debt level of the above 60% margin, then it has to reduce it at an average rate of 1/20 per year. Finally, as a measure of last resort a MS is put subject to a budgetary and economic partnership programme in case it enters into an excessive deficit procedure. The Compact also obliges MS to inform the Commission and the Council of their public debt issuance plans, while major economic policy reforms may be discussed by all of the MS and EU institutions together. A problem is however that the difference in the pace of integration between euro-zone and non-euro-zone countries is growing, which inevitably leads to political/societal division of the MS in Europe. Nevertheless, only time and another crisis could tell

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whether all that had to be done was indeed achieved (Terziev, Stoyanov, Georgiev, 2017a-d).

CONCLUSION In conclusion, the Stability and Growth Pact has been a very long and ambitious project which started in the end of the 1990s, but is surely to continue developing and adapting to the changing economic world. The Pact could not serve its purpose when the global financial crisis hit Europe, eventually becoming a European sovereign debt crisis, but the amendments made in 2011 and 2013 are definitely a step forward into the realm of budgetary supervision and accountability. There are still a lot of aspects in the legislation which are not clearly enough defined or which the MS still enjoy a huge deal of control over, but this is justified due to sensitive nature of budgetary competences. The most positive development in the post-2009 legislation is perhaps the intrusion of the EU into the field of macroeconomics. Although still limited, this competence would allow the EU to act on time in case some

aspect

in

a

MS’s

economy

needs

to

be

addressed,

prior

to

the

occurrence/increase of debt and/or deficit.

REFERENCES Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States. Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies. Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure. Regulation (EU) No 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the euro area. Regulation (EU) No 1175/2011 of the European Parliament and of the Council of 16 November 2011 amending Council Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies. Regulation (EU) No 472/2013 of the European Parliament and of the Council of 21 May 2013 on the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability.

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Journal of Innovations and Sustainability (2018) Vol. 4, No 3 Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area. Regulation 1176 on the prevention and correction of macroeconomic imbalances, and Regulation 1174 on enforcement measures to correct excessive macroeconomic imbalances. Stability and Growth Pact. https://ec.europa.eu/info/business-economy-euro/economicand-fiscal-policy-coordination/eu-economic-governance-monitoring-preventioncorrection/stability-and-growth-pact_en/. Terziev, V., Stoyanov, E., Georgiev, M. (2017a). Accountable regulation of foreign exchange operations. Scientific journal “Economics and finance”. Current scientific research, Collection of scientific articles, Montreal, Canada, 2017, pp. 66-71. Terziev, V., Stoyanov, E., Georgiev, M. (2017b). Institutional team work – opportunity for improvement of financial control. Scientific journal “Economics and finance”. Current scientific research, Collection of scientific articles, Montreal, Canada, 2017, pp. 76-80. Terziev, V., Stoyanov, E., Georgiev, M. (201c7). One solution for costs mini-manization in the banking sector. Scientific journal “Economics and finance”. Current scientific research, Collection of scientific articles, Montreal, Canada, 2017, pp. 62-66. Terziev, V., Stoyanov, E., Georgiev, M. (2017d). Specifics of control in operations with precious metals and precious stones. Scientific journal “Economics and finance”. Current scientific research, Collection of scientific articles, Montreal, Canada, 2017, pp. 71-76. Terziev, V., Stoyanov, E., Georgiev, M. (2017e). The factor information in the making of “the right” decision. Scientific journal “Economics and finance”. Current scientific research, Collection of scientific articles, Montreal, Canada, 2017, pp. 26-32. The Treaty on Stability, Coordination and Governance (TSCG).

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Journal of Innovations and Sustainability

Volume 4 Number 3 2018

The Role of the Security Policy in Kosovo

Venelin Terziev Vasil Levski National Military University, Veliko Tarnovo, Bulgaria Feim Brava University for Business and Technology (UBT), Pristina, Kosovo

Abstract Writing for security and security policies in Kosovo is a special pleasure. As it is well known, the Republic of Kosovo is one of the newest states in the world since it was separated from the Republic of Serbia in 1999 after the NATO military intervention, internationally recognized as an independent state from 116 countries around the world it should be noted that only 23 European Union countries have been recognized as independent states by 28 as the EU has. Kosovo as a new country with about 1.8 million people has had great achievements in the field of national security. A serious problem is the non-recognition of Kosovo as an independent state from five European countries (Spain, Greece, Slovakia, Cyprus and Romania), problems which continue to this day because of Kosovo's need for support from these countries around the membership in International Security Organizations, where their vote is very important. Another challenge is the consequence of the first problem and not having the opportunity for the new state to join international security organizations (such as Europol, Interpol), mainly due to nonrecognition by the five European countries, which mentioned above. A very important element is the control of Kosovo's territory by Kosovo's security forces, which is a constant challenge but with many achievements. It is worth pointing out that Kosovo's security organs are very well formed. The socio-economic situation and the global crisis that has affected especially Balkan countries, Kosovo is still in the process of pursuing its goals for its citizens and high security for foreign visitors. Keywords: security, politics, Kosovo, territories.

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INTRODUCTION Why is the problem of not recognizing Kosovo from five European countries is very evident when we consider the fact that no contractual agreement almost does not have a state with the EU, given the legal and functional complexities that need to be passed up to membership, within the EU. This leads to lack of coordination and lack of access to any security organization within the European Union, which is a major handicap in terms of policy coordination in terms of security in the broader sense, taking into account also the cross-border cooperation and deeper. As it is well known, in Kosovo on June 12 the last war in which the country has passed has ended. On this date, NATO troops, called KFOR, have been established in the territory of Kosovo, an international military force that still operates within the territory of the state and is responsible for the security of the Republic of Kosovo, in accordance with United Nations Resolution 1244 United States and based on Kumanovo's technical-military agreement. This military force has the mandate to create and maintain the security of Kosovo's citizens and at the same time to control and oversee Kosovo's borders. It should be noted that this military force has a mandate to operate within the territory of Kosovo, but we must bear in mind that today Kosovo needs immediate access to international security organizations such as Europol and Interpol for reasons of growth (terrorism, human trafficking, international trafficking in narcotics, etc.), as well as in terms of nationality and problems that threaten the globe. Control of the entire territory of Kosovo is a challenge in itself. The creation of the Kosovo Police, immediately after the war in 1999, gave Kosovo the opportunity for the first time after liberation, to have the first security institution, consisting of a multiethnic force well trained by the Nation's Mission United, familiar with the abbreviation UNMIK (United Nations Mission in Kosovo), installed as a mission, which was tasked with creating a complete new administration, including security. Kosovo Police today has a mission, maintaining order and peace, in the entire territory of Kosovo. One of the next challenges is the establishment of the newest state of the Armed Forces, which we must mention. The Kosovo Security Force, which was created on January 21, 2009, after the dissolution of the KPC (Kosovo Protection Corps) resulting from the Kosovo Liberation Army (after demilitarization of the latter). This force counts 4000 active soldiers and 2500 backups. This well-trained and armed force is trained and continues to be trained by NATO experts, and in the future will have a key role in maintaining peace in the region and quick NATO membership. 70 |

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The role of the KSF today is also a role of primarily humanitarian mission and response to humanitarian catastrophes that can hit Kosovo, but also for the role it is called, that is Kosovo's security. It is worth mentioning that Kosovo police together with Kosovo's intelligence agency have done extremely good work, making these groups less and that today we can conclude that Kosovo is a security guard and security supporter in the region. At this point, again we come to the conclusion that Kosovo must necessarily be included within international security organizations, through which opportunities for information exchange, coordination and communication would constitute an important element in the field of risk not only by the phenomenon of terrorism but also even in the prevention of many phenomena that affect the security aspect at the global level. Let's not forget that in Kosovo, there is also a European Union Mission called EULEX since 2008. This EU mission has the mandate to support relevant rule-of-law institutions in Kosovo in their path towards increasing effectiveness, sustainability, multi-ethnicity and accountability, free from political interference and in full compliance with most the EU's best. EULEX Kosovo implements its mandate, through the monitoring pillar and the Operational Pillar. In the monitoring pillar, EULEX supports the Kosovo Correctional Service, while in the EULEX operational functions as the second security reporter, provides continuous support to increase and assist the Kosovo Police in controlling the turmoil in the event of a riot.

THE ROLE OF THE SECURITY POLICY IN KOSOVO We must bear in mind that security policies should be a priority for each government. Important in this area are the National Security and Human Security. Only in common, both National Security and Human Security, can build a desired stability and security. Of course, we still have to mention the establishment of the Kosovo Army as a necessity to have stability in Kosovo and the region, but the main goal should be to improve and promote "soft security", which above all has the main security objective of the individual, economic security, health safety, food safety, environmental safety, public safety, education security, privacy on the individual, professional security, civil liberties, human rights and other areas, all these key issues for every state is key and that Kosovo has made amazing strides. Kosovo, as can be seen above, has political stability, and between it institutions and people in general have a sense of genuine security for the citizens and all those who 71 |

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visit Kosovo that are amazed at this phenomenon. In this sense, Kosovo's institutions and society in general, all focus on security issues, point to security in relevant institutions such as the Kosovo Police, the Army and the Kosovo Intelligence Agency.

HUMAN SECURITY There are a number of factors that fall within human security, including economic, health, food, political, environmental, and personal security. Kofi Annan (2001), says: "Human security, in its wider sense, embraces much more than the absence of violent conflict. It includes human rights, good governance, access to education and health care, and ensuring that each individual has the opportunity and choice to fulfill his or her potential. Every step in this direction is also a major step towards reducing poverty, achieving economic growth and preventing conflict. Freedom from will, freedom from fear and freedom of future generations to inherit a healthy natural environment - these are the interconnected blocks that build human security - and consequently the national one�. So, we conclude, that although the focus of human security differs from that of national security, both are closely related. Human security is very important not only for the country's well-being, but also for national security, stability and overall development, and ultimately to have a healthy population and a stable well-being. The whole political and social focus, as far as the security issue is concerned, was above all focused on the creation of an Armed Forces of Kosovo (perhaps due to the fact that Kosovo society has passed two decades earlier). Focusing on these two issues, both politics and society in general, with regard to human security, which, if not analyzed and dealt with well as strategies in the past, always aligned with NATO and the European Union can make up serious threat to national security as a whole. National security and the approach to countering violent terrorism has so far managed to address one of the key potential issues for Kosovo, the identity crisis of a largely new population that is in the process of European integration. While the goal of a new country like Kosovo must be to make a state capable and willing to fulfill its duties and obligations towards its citizens, Kosovo still has great work in various socio-economic areas. These tasks make Kosovar citizens even more determined, especially in an environment where political stability is at a satisfactory level, making Kosovo with the help of its European friends and American assistants having a bright future in the European family. So our recommendation is that politics and political responsibilities in this country must make progress, advance in creating

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new policies, as well as history, to go to high security stability for Kosovo itself, as well as helping its neighbors to maintain security in the region (Terziev, Petkov, Krastev, 2018a-j).

CONCLUSION In order to overcome the conventional definitions of security, I would like to emphasize that the fact that the citizens of the country feel safe against risks and threats that are assessed with probability and impact in our country, also shows the level of security in the country. This can not only be related to the conventional nature of the security of a country's security system but also too many phenomena and asymmetric character developments in different areas of society development. This includes education, health, economic development, political stability, phenomena such as corruption, organized crime, and lack of professional scientific knowledge and other phenomena. Post-war Kosovo in the first decade of its independence has gone through a challenging security environment that is extremely fragile and vulnerable but successfully captured. This frailty was not the only result of the lack of local capacity to counter the dangers and threats that hurt the security environment as well as state policies that have overtaken the international constellation in which it built its identity the country itself, the political sovereignty, the territorial identity and the positioning of countries that have not recognized Kosovo's independence, international security mechanisms such as NATO, the EU, the UN and the International Military Presence in Kosovo.

REFERENCES EULEX Kosovo. http://www.eulex-kosovo.eu/ Definitions of human security. https://www.gdrc.org/sustdev/husec/Definitions.pdf/. Kosovo Security Force. https://www.mksf-ks.org/?page=2,7#.W8NJl3szbIU/. Security Council resolution 1244 (1999) [on the deployment of international civil and security presences in Kosovo]. Terziev, V., Petkov, M., Krastev, D. (2018a). Concept of joint investigation teams. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 492-496.

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Journal of Innovations and Sustainability (2018) Vol. 4, No 3 Terziev, V., Petkov, M., Krastev, D. (2018b). Eurojust casework on mafia-type criminal organisations. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 487-491. Terziev, V., Petkov, M., Krastev, D. (2018c). European arrest warrant: appearance and preferences for fulfillment. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 477-481. Terziev, V., Petkov, M., Krastev, D. (2018d). European arrest warrant and human rights of the accused. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 501-504. Terziev, V., Petkov, M., Krastev, D. (2018e). Operative mode for police cooperation between the member states of the European Union. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp.473-476. Terziev, V., Petkov, M., Krastev, D. (2018f). Organization on the European Union in the sphere of penal preparation. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 482-486. Terziev, V., Petkov, M., Krastev, D. (2018g). Pumps for the action on the European Union in the scope of the European agenda on security. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp.497- 500. Terziev, V., Petkov, M., Krastev, D. (2018h). Sources of European Union law. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 511-516. Terziev, V., Petkov, M., Krastev, D. (2018i). The “Source of law� category. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 517-521. Terziev, V., Petkov, M., Krastev, D. (2018j). The process of forming a criminal policy of the European Union. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 505-510. United Nations Mission in Kosovo. https://unmik.unmissions.org/.

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Journal of Innovations and Sustainability

Volume 4 Number 3 2018

Security Dilemmas and Defense Challenges in Kosovo and Western Balkans

Venelin Terziev Vasil Levski National Military University, Veliko Tarnovo, Bulgaria Redon Koleci Vasil Levski National Military University, Veliko Tarnovo, Bulgaria, PhD student Baki Koleci University Hadzi Zeka, Peya, Kosovo

Abstract Western Balkan countries have made great progress in reforming their security and defense policies in accordance with NATO membership requirements and the Partnership for Peace Program. However, based on the security and national security documents of these countries, there are some key risks that could destabilize the region and cause re-emergence of armed conflicts, including conventional reactions. Among them most important are the threats of political - nationalistic / ethnic and religious nature, those of statehood, as well as of the controversial / indefinite borders. In essence, in spite of the formal commitment of all Western Balkan countries to good neighbourly relations and to make a contribution to regional stability and security, within them still predominates a certain visible level of anxiety due to a lack of clarity of confidence in the future behaviour of some of the other states in the region. Also, the creation of the Kosovo Army will have a significant impact on changing the regional balance of power. NATO's involvement in the Balkans has had four main results. First, its military involvement as a repressive and stabilizing force has discouraged armed conflicts and has transformed the Western Balkans from a region of war-torn societies and hostile neighbourly relations to a relatively stable one. Second, NATO exerted a decisive influence on changing solid balance structures and doctrines of mass armies based on territorial defense and rejection; this,

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Journal of Innovations and Sustainability (2018) Vol. 4, No 3 the national armed forces became a professional army, and their offensive capabilities against their neighbours diminished in a meaningful way. Third, NATO's enlargement to the Western Balkans played an essential role in the final conclusion of the country's individual borders in the region. Fourthly, the Partnership for Peace put all hope for any bilateral or regional countervailing cooperation in the field of defense, transforming cooperation exclusively through Brussels at a price to be paid for membership. Keywords: security, defense, the Western Balkans, NATO, security policies, and military capabilities.

INTRODUCTION The Western Balkans is the only sub-region of Europe that, instead of taking the path of transition to democracy after the end of the Cold War, entered the wars and the atrocities that ended with the disintegration of its predominant power in Yugoslavia and the emergence of followed by seven new states. As a region that is not fully integrated into NATO and the EU, it is still prone to domestic and national-level disputes and conflicts of a nationalist nature. Because of the current asymmetry of power between actors in and around the Western Balkans, it is up to the outside powers (NATO and/or EU) to "push" the region towards an inseparable European security complex as a consequence, will disable any potential for the reopening of open conflicts. The recent crisis in Ukraine, and not so recent in Georgia, are good lessons to be learned from Brussels - and, indeed, quite difficult - for what any kind of cooperation, without full membership in NATO and the EU, can’t guarantee protection against external aggression and/or interstate conflicts. This paper aims to investigate the security and defense environment of Kosovo in the framework of the Western Balkans. To this end, it first analyzes the national security and defense policies of the countries of the region, their military capabilities and defense spending, exports and military imports, as well as the distribution of military bases, independently of the influence of the actor the external security and defense key - the North Atlantic Alliance. Also, this analysis contains a wide range of official data on these issues. Second, it analyzes the effect of NATO involvement on regional security, and this is done through analyzes of military involvement, co-operation, and membership mechanisms. Third, it examines the security dilemmas and challenges of Kosovo's defense, including those with Serbia, as well as prospects for possible official cooperation with NATO. Finally, the scientific paper offers a set of recommendations on modalities of possible dialogue between Kosovo and Serbia on

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the normalization of defense relations, components of the NATO structured dialogue with Kosovo, on the content of Russia's hostile targets in the Western Balkans, as well as for the strict regulation of the fight against terrorism by the military forces of the countries of the region. Over the last 15 years, the Western Balkans have experienced a dramatic transformation of geopolitical, security and defense circumstances, ranging from NATO intervention against the former Yugoslavia (1995, 1999), and continuing, with the Treaty of Ohrid (2001), independence of Montenegro (2006) and Kosovo (2008), Albania and Croatia's NATO membership (2009), and Croatia's EU membership. As a consequence, the countries of the region have moved from war to peace, from peace to detachment, and from detachment to bilateral and multilateral cooperation. The relations between Kosovo and Serbia, which are in the last stages of the detachment, are an exception to this general tendency. The change of these circumstances has had a major impact on the security sector reform and the subsequent review and acquisition of new documents related to the national security of individual countries in the region. The purpose of these documents in democratic countries is to institutionalize leadership at the national level of national security issues, present at an unclassified level in front of the national public, and, in some cases, even before foreign publications. In order to assess the security of the region in an independent manner by the key foreign security and defense actor - NATO - this section will analyze the core roles of national security policies - assessments of security threats, and the interests and national security objectives of individual Western Balkan countries from the perspective of the outside public. This analysis is fundamental to assessing Kosovo's security in the context of its immediate neighborhood as well as prospects for a lasting peace and security in the region (Simon, 1999).

GLOBAL

TRENDS

AND

FINANCIAL

CHALLENGES

OF

REGIONAL

SECURITY According to the Global Trends 2030, published in the US National Intelligence Council's publication in December 2012, some unpredictable new directions are expected that will position citizens in a relationship and dependence on the political world, the European strategy and geopolitical analysis of the force ratio. If we add to the above, the analysis of the UN Declaration on Global Climate Change, their implications and the most pressing challenges to the world and the region, it is evident that no one can be overlooked by new global trends. The same can have an 77 |

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impact on the political, technological, economic, human dimension as well as on the trends of the development of the environment. With the fact that major changes in global trends are expected in terms of potential fragmentation of the links, alliances and challenges of international law, unsustainable phenomena towards NATO borders, multiple risk perceptions, increased impact of anti-governmental actors on the other hand, would bring challenges to NATO's relevance, enhance co-operation and rebalancing capabilities of the global military force, and lead to increased support for the security organization of private security agencies. Technological trends, on the one hand, position or give priority to computer networks and the divergent use of technology. This, on the one hand, creates the potential for cyber fraud and the spread of dangerous technology, and on the other hand it will test the suitability of any institution, alliance, and link, as well as the NATO alliance, and will discourage the designation of a the largest number of states to continue with what global armaments and armament control in general. World economic crises, as was the case with 2008, proved that economic trends also have their own arguments, especially in that respect where resource implications directly or indirectly create opportunities and moments of crisis or geopolitical competition. Trends and environments, or otherwise referred to as human trends, are focused on the future of interactions of demographic composition changes, urbanization and uncertainty caused by "minimizing national identity", as well as potential social trends by provinces then reducing or decreasing human potential (capital) in Western societies as well as increasing citizens' influence over decision-making. In this way, alliances, ties and NATO will have to elaborate new strategies for inclusion and action in urban districts of all challenges, while the region will definitely have to follow them. With this transparency will be imposed as a response to social change, while security and economy will be conditioned by the need for understanding human interaction (Stolberg, 2012).

SITUATION IN THE REGION Characteristics of more ethnicities, BiH and its difficulties related to federal functioning, specifics of the reports Zagreb - Belgrade and Belgrade - Pristina, characteristics about identity issues, etc. The conclusions were that the impact and challenges that derive from the global trends from humanitarian security of the neighbors, or the integrity and achievements of the countries of the region however,

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cannot be examined in isolation compared to the domestic developments and in comparison to the characteristics of the region. In this context, the Republic of Kosovo, by definition, sees the region as a group of states closely related to security reports, where the impact of large factors justifies the reports at a higher level, while the interstate internal reports reflect the middle level while the activities intrinsic reflection reflect the micro security level that comes as a result of a summary of stakeholders' interactions. And while, according to the rules, the macro level is more interested in stability than for security, while the middle level will use the positive momentum of the region but unfortunately had a heavy historical burden, the micro level underwent the challenge of dealing with phenomena or forms of ethnic nationalism, with asymmetries and inadequate or wrong perceptions among ethnic communities. Under the concept of international involvement, Kosovo in practice implements a broader range of preventive diplomacy reports, the imposition of peace, humanitarian aid and the maintenance of peace to the postconflict confidence building. Consequently, responding to international actors was formed as a result of foreign and security policy options, contribution opportunities, global peace and access to collective security systems through the Partnership for Peace, the Action Plan for Membership, the Stabilization Program and Association as well as the criteria for NATO membership and the criteria for opening the EU negotiation process. With the burden of historical barriers and the sensitive impact of interethnic relations, the national strategy has been determined to meet the expectations of a better self-fulfillment, a balance between compromise and integration processes, and a fair compromise that does not enter and does not touch in the territorial affair (Washington Summit CommuniquĂŠ and Security, 1999). However, in addition to the impact and challenges that arise from humanitarian security from neighboring countries, the integrity and achievements of the countries of the region on the other hand, in particular with regard to facilitating the path towards full membership in NATO and the EU, can also benefit of other countries in the region. In this section we also talk about the complexity of the negotiation process, a process based on the criteria achieved, which as an experience and as an adequate example could affect the consolidation, overcoming the blocked processes in advancing the dialogue of the parties that have controversial perceptions. Membership is only possible if the country is persistent and determinative and contributes to the stability

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of the region, because without a stable neighborhood, regardless of membership, the neighboring country can’t be commended with such stability. This means that stability is interdependent, while good neighborly relations are not just a phrase, but a real need (Gyarmati, Stančić, 2007). We repeatedly repeat that Europe will only be a whole once it will integrate the region, but the Western world remains the issues of EU borders for which neither today's EU leaders can agree, due to lack of vision. Experience from co-operation in the field of defense and security once again proves that the lessons learned are very useful and applicable, while national exhaustion from EU policies can be overcome with pragmatism and functional determination. Within the second panel in the format of the regular business meeting, the workshop participants exchanged their experiences, lessons learned, the following activities and projections. In addition to improving co-operation and establishing a network of co-operation that should be actively activated, a situation that could lead to easier financing is regionalization of joint projects, regional planning and publication common to the model that would have been drafted by the leadership of the alumni association, and with its capabilities would support all others.

MILITARY SKILLS AND DEFENSE BUDGETS Over the past decade, the armed forces of the countries of the region have experienced a radical transformation as a result of Euro-Atlantic integrations, the changed nature of security threats, and national security ambitions. The armed forces of these countries have adopted the concept of professional armies and have renounced the recruitment and the doctrine of Cold War Territorial Defense. In addition, in accordance with their defense goals, these aim to achieve interoperability with NATO, respectively with the Partnership for Peace countries. From the aspect of military capabilities, there are enormous disputes between the countries of the region with regard to personnel, armaments and budgets (The Military Balance, 2014). In the region, Croatia and Albania have credible military capabilities in terms of defense and capacity to fight. Croatia is the only one that has military aviation and serious aircraft and ground defense forces. The air forces of Kosovo, Bosnia and Herzegovina, Macedonia and Montenegro have a modest number of military helicopters, and these have no military planes. As far as anti-aircraft protection is concerned, Albania's airspace is largely dependent on NATO, while the airspace of

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other countries are virtually unprotected. The same model can be found in the land forces of the countries of the region: Kosovo, Albania and Montenegro have the smallest capacities. As far as defense budgets are concerned, Croatia has the highest budget in the region, and plans to increase it in the next two years (from â‚Ź 609.49 to â‚Ź 624.23 million). Croatia is prevalent in the region with regard to defense spending and military capabilities. After Croatia, Macedonia is second in terms of spending on defense, and has planned the largest budget increase for the next two years (from 156.06 to 202.95 million euros). Bosnia and Herzegovina, Montenegro and Kosovo have planned small increases in their defense budgets (from 147.04 to 150.15, from 43.14 to 47.21, and from 42.03 to 45.50 million euros, respectively), while Albania plans to keep its defense budget at the same level (â‚Ź 101.75 million), despite its extremely limited military capabilities. Regarding the budget per capita, Croatia is the leading country in the region, and this is driven by Macedonia, Montenegro, Albania, Bosnia and Herzegovina and Kosovo. Against the expectations, planned defense budgets, as a per capita value, for Albania and Kosovo do not go with their defensive ambitions. The planned defense spending of Albania, as a new NATO member, is level and offers prospects for strengthening its military capabilities. Kosovo's defense spending projections are symbolic and respond to the transformation needs of the Kosovo Security Force into the Armed Forces of Kosovo, thus giving the impression of a symbolic political rather than that of building military capabilities in accordance with the interests national and country's defensive ambitions. Therefore, the creation of the Armed Forces of Kosovo will have a significant role in terms of the regional military balance, and as such it represents military stability for the preservation of regional peace (Terziev, Petkov, Krastev, 2018a-j).

CONCLUSION According to the security and national defense documents of the Western Balkan countries, the key dangers that could destabilize the region and bring about reemergence of armed conflicts, including conventional reactions, are threats of political - nationalist / ethnic and religious nature, those of state-formation, as well as those of controversial / indefinite borders. Likewise, a risk in itself is the ambiguous legal frameworks associated with the possible involvement of Western

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Balkan military forces in the fight against terrorism, due to the potential targets for minorities to project as a threat of this kind. The geopolitical changes that took place in the Western Balkans over the last 25 years created monopolar centers of Croatism, and a two-pole bipolar Albanianism. Except, it is a distinction between Croatism and Albanianism, on the one hand, and serfs, on the other. Croatia, Albania and Kosovo encourage the integration of Croats and Albanians in their countries of residence. There are huge discrepancies between the countries of the region in terms of military capabilities and their defense industries, Croatia has credible. Also, each of the defense budgets of these countries is higher than all the defense budgets of all other Balkan countries together, which makes these two countries the dominant power in the region alone counter-balance each other. Defense spending projections for Kosovo are symbolic and these can meet the transformation needs of the Kosovo Security Force in the Armed Forces of Kosovo. The creation of the Armed Forces of Kosovo will have a significant impact on the regional military equilibrium, and as such will be the guardian of regional stability. NATO's military involvement in the Western Balkans as a repressive and stabilizing force has discouraged military conflicts and has transformed the region from a region of war-torn societies, hostile neighborhood relations, to a relatively stable country, aspirational to Euro-Atlantic integrations. However, until full normalization of relations between Belgrade and Pristina is achieved, the military presence of NATO and the swift formation of Kosovo Armed Forces in Kosovo will remain crucial to the stability and security of the Western Balkans. NATO's co-operation and integration mechanisms have had a crucial impact on the radical reforms of the defense policy of the countries of the region. NATO involvement has destroyed all the dreams that the region's extremist political elites might have had right after the end of the Cold War, to turn the region back to a situation similar to that of the Balkan Wars of the beginning of the twentieth century. In addition, NATO had a decisive influence on changing solid balancing patterns and the doctrines of mass armies based on territorial defense and rejection, which were later transformed into a professional army, while significantly abolishing their skills offensive that these had against their neighbors. Most importantly, the Partnership for Peace ended all hope for bilateral or regional countervailing cooperation in the field of defense, transforming cooperation exclusively through Brussels into an accession price to the Alliance. Despite the fact that greater progress could be made in this regard, the strategic pricing of Article V remains the ultimate guarantee of stability. That is what the partnership for peace, no matter how it is built and institutionalized, fails to provide, a fact that has been

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basically proven by the annexation of parts of the Georgian (2008) and Ukrainian territories (2014) by Russia. The accession invitations made to Albania and Croatia by NATO and the 2008 Kosovo Declaration of Independence had a crucial impact on the conclusion of the borders of the Western Balkan countries. NATO membership added the ambitions of a part of the elites of Albanians in Kosovo to join Albania and a part of the Croat elites in Bosnia and Herzegovina to join Croatia. The case of the 1990 German union has given a precedent within the Alliance regarding the unification of two independent countries, in case one of them is a NATO member. First, it was up to all NATO members to give their consent to the unification of the Federal Republic of Germany with the Democratic Republic of Germany, and only after that United Nation welcomed NATO.

REFERENCES Global Trends 2030: Alternative worlds. https://globaltrends2030.files.wordpress.com/2012/11/global-trends-2030november2012.pdf/. Gyarmati, I., Stančić, D. (2007). Study on the Assessment of Regional Security Threats and Challenges in the Western Balkans, 2007. Kosovo Declaration of Independence. https://www.assemblykosova.org/common/docs/Dek_Pav_e.pdf/. Partnership for Peace Program. https://www.nato.int/cps/ra/natohq/topics_50349.htm/. Simon, J. (1999). Partnership for Peace: After the Washington Summit and Kosovo, NDU Strategic Forum, No. 167, http://www.nyu.edu./globalbeat/nato/NDU0899.htm, gusht, 1999. 18. Kipp W. J.: "From Prague ... After Paris and Madrid” [“Nga Praga. Stolberg, A. G. (2012). How Nation States Craft National Security Documents Strategic Studies Institute (SSI) of the US Army War College, Carlisle, tetor, 2012. Terziev, V., Petkov, M., Krastev, D. (2018a). Concept of joint investigation teams. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp.492-496. Terziev, V., Petkov, M., Krastev, D. (2018b). Eurojust casework on mafia-type criminal organisations. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 487-491.

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Journal of Innovations and Sustainability (2018) Vol. 4, No 3 Terziev, V., Petkov, M., Krastev, D. (2018c). European arrest warrant: appearance and preferences for fulfillment. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 477-481. Terziev, V., Petkov, M., Krastev, D. (2018d). European arrest warrant and human rights of the accused. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 501-504. Terziev, V., Petkov, M., Krastev, D. (2018e). Operative mode for police cooperation between the member states of the European Union. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 473-476. Terziev, V., Petkov, M., Krastev, D. (2018f). Organization on the European Union in the sphere of penal preparation. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 482-486. Terziev, V., Petkov, M., Krastev, D. (2018g). Pumps for the action on the European Union in the scope of the European agenda on security. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 497- 500. Terziev, V., Petkov, M., Krastev, D. (2018h). Sources of European Union law. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 511-516. Terziev, V., Petkov, M., Krastev, D. (2018i). The “Source of law” category. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 517-521. Terziev, V., Petkov, M., Krastev, D. (2018j). The process of forming a criminal policy of the European Union. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 505-510. The Military Balance (2014), International Institute for Strategic Studies, London, 2014. Washington Summit Communiqué and Security (1999). Issues Digest No 124, The US Mission to NATO, 29 qershor 1999, “Kosovo crisis defining moment in NATOBulgarian relations, Ambasadori Vershbow A., http://usa.grmbi.s19990629g.htm.

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Journal of Innovations and Sustainability

Volume 4 Number 3 2018

The Change in the Approach of the Court of Justice of the European Union in the Context of Market Freedoms and Internal Situations

Venelin Terziev, Stefcho Bankov, Marin Georgiev Vasil Levski National Military University, Veliko Tarnovo, Bulgaria

Abstract In its jurisprudence the Court of Justice of the European Union (CJEU) has changed its approach towards the purely internal situation rule applicable in the context of the market freedoms. From the 1990s onwards the Court has showed a greater leniency in accepting that certain cases fall within the scope of Union law, as compared to in the years before. This has been done in various ways, depending on the specific fundamental freedom at stake in the case, but always resulted in a relaxing of the fulfilment of the test used for determining whether a case falls within the scope of a market freedom - the linking factor test. More specifically, the Court seems to be accepting that hypothetical future scenarios are sufficient to bring a case within the scope of EU law even though the underlying facts of the case do not satisfy the test, or even to rule in cases which clearly do not fulfil some of the conditions of the test. The overall change of approach towards the purely internal rule can also be seen in an issue of jurisdiction, and not scope, which is still however relevant. This is the fact that the Court has begun issuing preliminary reference rulings in purely internal cases whereby the question referred is in reality hypothetical. It will be claimed that the CJEU does so without requiring sufficient proof by the domestic court that an EU law interpretation is required. Keywords: market freedoms, the linking factor test, preliminary reference rulings.

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INTRODUCTION These changes in the approach applied by the Court of Justice of the European Union (CJEU) have ultimately led to a considerable increase in the number of cases where EU law is deemed to be applicable. It will be claimed that there are a number of reasons for the Court's new approach, such as attempts at avoiding a strictly theoretical and restrictive method of applying the conditions for applicability of EU law, and at dealing with the long-lasting issue of reverse discrimination. The new approach has advantages, such as offering a better and more forward-looking reflection of what potential (restrictive) effects a domestic measure would have on the fundamental freedoms. It also leads to the fact that EU law interpretation is provided in assistance of the domestic court's attempts of eradicating reverse discrimination. However, the approach has also disadvantages, such as creating even new instances of reverse discrimination which are hardly justifiable, and prejudicing the principle of legal certainty. In the end, a suggestion will be made on how the CJEU should proceed in the future, namely, by retaining the new and more flexible approach towards finding a link with EU law in seemingly purely internal cases, but nevertheless putting limits on it, by, for example, relying more on the Citizenship and Charter provisions where applicable, as well as imposing more strict requirements on domestic courts in justifying referrals for preliminary rulings. First we should put forward the traditional approach of the Court in dealing with purely internal situations by assessing a few exemplary cases which depict how the scope of EU law had been framed before. On the other hand, there should be presented the new, unorthodox approach of the CJEU by analyzing cases which offer similar fact patterns to those discussed in the first section, so as to lay down the foundations for a better and more objective comparison. We will also introduce the second issue relating to jurisdiction in preliminary reference rulings by looking at one of the Court's most pertinent cases on this - the Ullens de Schooten case. Next, we will compare the old and new approach and make conclusions on the differences found, as well as suggest the reasons behind the alleged change of approach and how it could be improved in the future. We will also analyze more into depth the Court's reasoning in providing EU law interpretation when the facts of the case seem to be purely internal and, similarly, conclude how the CJEU can refine its case law.

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THE TRADITIONAL APPROACH The main aim of the creation of the European Economic Community (EEC) in 1958, which is the historical predecessor of the European Union as it is known today, was the creation of a common market between the state-signatories at that time. For a common market to function effectively however the conditions of exercising economic activities within needed to be the same so that all economic operators would be able to compete with each other on a level playing-field and reach unrestrictedly any market within the Community of states they would wish. That is why the heads of state decided to negotiate on Treaty provisions providing for four economic (fundamental) freedoms, namely, the free movement of goods, services, persons and capital. The rationale behind these four freedoms was to create a legal basis which economic actors could rely on whenever their inter-state movement was being impeded. Workers were thus encouraged to move to regions with a high level of demand in work; businesses were incentivized in exporting their products abroad, serving the needs of new markets and benefitting from economies of scale; service providers were more likely to offer their services or to relocate the core of their work outside the boundaries of their home state; and investors could more easily invest their resources in states where a higher return would ensue. Nevertheless, due to the fact that the European Union is a supranational organization to which the member states (MS) have explicitly conferred only part of their sovereignty, the EU’s competences in the area of the internal market are limited, as part of the system of multi-level governance. As a result, there are a number of “checks and balances� which are put in place in the EU legal system so as to ensure that the Union does not overstep its competences, such as the principles of conferral, subsidiarity and proportionality (Terziev, Petkov, Krastev, 2018a-j). Moreover, as a general rule on the issue of defining the line between the scopes of EU law and national law, the CJEU has also said that the provisions of Community law include within their scope those situations which are in some way connected to their aim. Such a connection can be found, for instance, whenever a certain measure impedes upon or hampers either of the aims of a specific EU law provision. In the field of internal market law, this translates into a general rule that the provisions of the four freedoms apply to a case whenever the latter concerns the economically-motivated movement of products or factors of production from one MS to another. This entails that any kind of impediment to the aforementioned movement is prohibited by virtue 87 |

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of EU law, but also that any situation not fulfilling the ratione materiae requirements falls within the domain of national law. In other words, EU law is afforded the powers to govern those cases and defend those actors which contribute to a sufficient degree to one of its main aims – the establishment of a single European market.

The concept of a purely internal situation Due to the fact that initially it was quite difficult to discern in highly complicated and factually-charged cases whether the aims of the internal market law provisions have been unlawfully touched upon, the CJEU devised a rule which would easily “filterout” those cases worthy of EU law protection and those not. This was the purely internal situation rule. The origins of the rule can be traced back to the Knoors case where it was mentioned for the first time in the Court’s obiter dictum, recognizing that the treaty provisions on establishment cannot be applied to situations which are purely internal to a MS. Not more than two months later, in the Saunders case on free movement of workers, the CJEU defined and actually applied the test for the first time. Accordingly, situations are purely (or wholly) internal whenever “there is no factor connecting them to any of the aims envisaged by Community law”. Thus, the purely internal rule was established as the mechanism through which the division of competences is being done, at least in the field of Art. 45 TFEU. The CJEU was not slow in reaffirming the rule in the workers case of Moser. The same reasoning in relation to the freedom of services was mentioned in the Debauve case, but was actually applied in Höfner. The Court concluded that the case presented no links with the situations envisaged by Union law, and that such a finding cannot be called into doubt by the fact that there is a theoretical possibility that the consultants in question might offer a foreign candidate for the job position. In relation to goods, the purely internal rule can be traced back to the Oosthoek’s uitgeversmaatschappij BV case. Finally, the purely internal rule has also been recognized in the context of the free movement of capital. This happened in the Salzmann case where the Court decided to give a preliminary ruling in a seemingly purely internal case.

The doctrine of linking factor test Having identified that the purely internal rule has indeed been proclaimed in the context of all four economic freedoms, the rule itself and the conditions for fulfilling it need to be analyzed. According to academics, the rule is an expression of the home

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state principle, namely, that it is the MS where the persons are established and where the products are made that has the competence to regulate the economic activities involving those persons and products. Another reason for the creation of the rule might be the wording of the treaty provisions themselves which makes a reference to a cross-border requirement in the text, the only exception in this regard being the workers’ provisions. With regards to the determination of whether a case is purely internal or not, the CJEU has implicitly developed a three-stage test to assess whether all of the relevant facts of the case are confined to the territory of a single MS, namely, the "linking-factor test". The test consists in asking the following three questions:  Does the situation at hand involve the exercise of inter-state movement?  Was that inter-state movement exercised for an economic purpose?  Was there an impediment to that very same inter-state movement? If the answer to all three questions is "yes", then the situation falls within the scope of the EU free movement law provisions and, thus, is not purely internal. If however the answer to either of the three is "no" then the domestic law of the state where the activities in question took place is the applicable law. It must be pointed out that the three conditions are not only cumulative, but that also there must be a logical and causal connection between them. More specifically on the conditions of the test, the first condition encompasses both the situation where an inter-state movement has been exercised in the past and the scenario where an inter-state movement is certainly going to be exercised in the future. Consequently, it follows that hypothetical scenarios where an actor might wish to exercise an inter-state movement in the future are not to be judged in light of free movement law, as the CJEU has held that such a connection is insufficient. In relation to the second condition of the test, its wording automatically excludes from the scope of EU law any situations where the inter-state movement was exercised for a non-economic purpose, which entails that moving to a MS different than the MS of origin in order to reside there would not trigger the protection of free movement law. Finally, the third condition of the test must be understood as entailing that a right enjoyed by EU law, which is necessary for the exercise of an inter-state movement with an economic purpose (such as the right to non-discrimination), has been impeded. A clear-cur example of a situation which would satisfy the linking-factor test is in the area of workers and services that of a person who moves from his home state to

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another state to work or provide services there, but is impeded from doing so by a measure of either the home or the host state, or both. In the area of goods, an exemplary case would be that of products which are to be exported from their state of origin into another state, but are prevented due to a state measure making less attractive either the respective exportation or importation. However, although the latter two are generally considered as the traditional scenarios which would infringe upon EU law, the CJEU has also accepted that not only the movement of a person or of a product from the state of origin to another MS is protected, but that also the (non-economic) movement back to the state of origin is. The more specific case where the persons or products, after having already moved to another MS, return to the home country to be engaged in an economic activity there also satisfies the linkingfactor test, and, hence, falls within the scope of Union law. Consequently, the linkingfactor test is traditionally satisfied in the aforementioned circumstances. This however has not prevented the Court from diverting from this approach and including within the scope of EU law other, seemingly "non-worthy", scenarios as well.

Application of the linking factor test in the economic freedoms Having introduced the doctrine of the purely internal situation rule and the concept of the linking-factor test, the traditional approach of the Court in applying the test to the specific circumstances of a case needs to be outlined. The idea behind this is to grasp what types of cases the CJEU has considered purely internal and the kind of reasoning it has used to do so, so that this approach could be contrasted and compared with the new, unorthodox one, also discussed in this article. For this purpose, the economic freedoms will be represented by case law so that an account is taken of the specificities of each of them and so that the comparison later made is fully objective. The first freedom to be discussed is the free movement of goods comprising Articles 28-37 TFEU. Traditionally, it is deemed that a situation falls within the scope of EU law whenever goods are imported into one MS from another in the process of an economic activity, and that, a contrario, whenever goods have not moved outside the borders of a single MS they are not protected by EU law. An example of the latter is the Mathot case which concerned Belgian rules on packaging of butter which were imposed only on domestically produced goods. The Court ruled that such rules do not hamper the importation of butter from other MS i.e. the domestic law does not fall within the scope of Art. 34 TFEU. Although the CJEU did not explicitly apply the linking-factor test, it was clear that the latter was not satisfied as there was no cross90 |

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border movement of the goods at stake in the case. Another case from this field of law is 3 Glocken where the Court explicitly excluded from the scope of application of EU law, and, respectively, from the binding force of its ruling in the case, those goods which were in a purely internal situation. The case concerned a domestic law which imposed specific requirements for the production of pasta products, applicable both to domestic and to imported pasta. The law was however found to be in violation of EU law only in so far as it applied to goods which were imported. This ruling led to a case of "reverse discrimination". This concept will be mentioned throughout the article, due to its key role in the change of approach of the CJEU when dealing with purely internal cases. Another interesting case on Article 35 TFEU is Delhaize Frères which concerned domestic rules limiting the export of wine of designated origin while not restricting the sale of wine within the region where the wine was produced. The Court ruled that such a rule is in violation of EU law in so far as it relates to exports to other MS, but did not outlaw it with regards to exports to other regions of the same MS. Finally, a case needs to be mentioned in relation to Art. 30 TFEU where the traditional approach of the Court in applying the linking factor test has not been explicitly pointed out, but it can nevertheless be inferred from the wording of the ruling. This was in the SIOT case where it was said that free movement of goods implies freedom of transit for goods within the EU, which means that MS cannot impose custom duties in respect of goods which are in transit from one MS to another. The Court however did not include within its ruling those situations where goods are in transit from one region of a MS to another i.e. those goods which had not and would potentially not exercise any cross-border movement for an economic purpose. The latter are the goods which are indeed in a purely internal situation. The next freedom to be examined is the freedom of workers laid down in Articles 45-49 TFEU. The provisions clearly envisaged to include within their scope cases where a MS national moves to another MS to work there, and is being impeded to do so by measures of the home or the host state. Reversely, if a MS national works in the state of origin without having exercised any cross-border movement their case is considered

purely

internal.

A

relevant

case

where

a

clear

differentiation

(discrimination) was made between people whose situation was purely internal and those whose was not, is the Morson and Jhanjan case. There, MS nationals who had never exercised their right to free movement were claiming family reunification rights with their third-country relatives on the basis of EU law, but were denied from such an award due to the fact that their case did not come within the area to which EU law

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applies. The Court justified its ruling not only with the wording of the free movement provisions, but also with their aim, which is to allow MS nationals to seek employment in other MS. Noteworthy is however the fact that if the MS nationals could prove some kind of link with EU law their family members would be allowed to join them. A clear-cut case where the linking-factor test was satisfied is Bosman. Therein, a Belgian footballer was challenging the existence of transfer fees applicable whenever a transfer was to take place between a Belgian club and a club from another MS as a violation of free movement law. The case clearly fell within the scope of EU law as the player was definitely going to exercise cross-border movement; the movement was for an economic purpose, and the movement was being impeded, as Mr. Bosman could not be employed for his new club before the fees were settled, although his contract with the previous team had expired. Finally, it must be mentioned once again that the CJEU also deems the linking-factor test to be satisfied whenever a MS national, after having undergone education and training in another MS, moves back to the country of origin to pursue employment. Such a case is not purely internal as, in the Court's wording, "Any Community national who, irrespective of his place of residence and his nationality, has exercised the right to freedom of movement for workers‌ falls within the scope of the aforesaid provisions." Consequently, an example of the assessment of the Court through the linking-factor test needs to be given in relation to the freedom of establishment (Article 49-55 TFEU). Traditionally, the situation where a person moves from one MS to another to establish a business there falls within the scope of EU law, as well as the situation where a person moves to another MS to work or undergo a training/education and then moves back to establish a business. An example of a case which was not purely internal and, therefore, did fall within the scope of Art. 49 TFEU was Knoors. Therein, a Dutch national who had resided and worked in Belgium for a long time moved back to The Netherlands and wanted to establish himself there, but was refused. The Court held that the provisions on establishment cannot be interpreted in such a way so as to exclude from their scope EU nationals who return back to their home state upon having obtained a qualification and established a business in another MS. This is because their situation can be assimilated to that of any other EU national who is making use of the Treaty freedoms. Mr. Knoors had indeed exercised a cross-border movement (the movement back from Belgium to the Netherlands), which was for an economic purpose (to practice as a plumber), and he was being impeded to do so by Dutch legislation requiring him to obtain a qualification in the Netherlands.

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To add on, the next freedom to be discussed is the freedom to provide services (Articles 56-62 TFEU). This freedom is perhaps the one where the linking-factor test can be most easily satisfied as the cross-border movement requirement can be fulfilled by the service receiver, the service provider or by the service itself. Thus, for a situation to be purely internal, all three of these factors need to be located within the same MS. A case where the situation was not purely internal however was the Corsica Ferries case. Therein, an Italian company providing maritime transport was challenging the imposition of higher tariffs for piloting services by the port whenever companies were traveling between an Italian port and a port of another MS, as contrasted to between two Italian ports. The case was not purely internal as although an Italian undertaking was relying on the freedom to provide services against Italy its services were intended for nationals of other MS, such as, among others, French nationals. Indeed, the cross-border movement requirement was fulfilled as the providers and the recipients of the service were established in two different MS, there was an economic activity (providing transport), and the imposition of higher tariffs was an impediment to the exercise of the service. As a conclusion, on the basis of the aforementioned, it can be said that in its founding cases (until the 1990s) on the economic fundamental freedoms the Court has been consistent in the application of the linking-factor test for determining whether a situation is purely internal or not. The approach of the CJEU is to look into the facts of each case and assess whether they satisfy, one by one, the three cumulative conditions of the test. This assessment is not difficult to make so the decisions of the court are highly predictable which contributes to the fulfilment of the principle of legal certainty and leads to an accurate outcome in straight-forward cases. However, the CJEU has been criticized for its mechanical application of the test resulting in a failure to issue rulings reflecting the economic realities of cases. This is said to be the so because the Court had only one aim in mind when deciding on legal questions and issues, namely, the completion of the internal market, without taking into account other areas of law which its judgments might affect. In addition, by applying the linking-factor test only to the specific facts of the case the Court would allow domestic provisions which were clearly restricting the fundamental freedoms to be kept intact due to the fact that those were challenged in proceedings where the applicant(s) did not have the right to enjoy EU law protection (due to being in a purely internal situation). This, and the inevitable by-product of its judgments, called "reverse

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discrimination", have perhaps led the Court to change its approach starting from the end of the 1990s onwards.

THE "NEW" APPROACH In the discussion above we presented the traditional approach of the Court with regards to the concept of the purely internal situation rule. It claimed that the linkingfactor test is the method through which the CJEU decides whether a case is purely internal or not, and that this test has been applied very strictly and in a rather commercially-oriented manner. The Court has demonstrated no interest in engaging into an analysis of the nature and effects of the domestic legislation at stake outside the framework of the specific case presented before it, nor of any other aim of EU law besides the completion of the internal market. We will however prove that the CJEU has taken due account of the criticisms made and has started to adopt a more liberal approach in judging whether a case is purely internal or not. It will be claimed that the Court is still using the linking-factor test in its jurisprudence on economic fundamental freedoms, but that it is now interpreting the conditions not as strictly as before, leading to an increase of the cases deemed to fall within the scope of EU law. In some of its cases, namely those relating to goods and services, the Court has started to look beyond the circumstances of the case and to judge the essence of the domestic law, so as to capture under its net all of those national law provisions which have a restrictive effect on economic inter-state movement. The linking-factor test in those cases might not be satisfied in the specific case, but the Court does well to see the certain potential of cases arising which would satisfy the test while falling within the ambit of the domestic law provisions, and, hence, being treated unfairly. This however results in the CJEU making a priori and highly speculative rulings. In others, namely those relating to persons, the CJEU has also officially continued to apply the test, but in reality it has gone away from requiring that there be a degree of causality between the three conditions, and from requiring that much more than the first condition of the test is in reality satisfied. Finally, another, additional development in the case law of the Court which goes hand-in-hand with the more liberal application of the purely internal rule in determining the scope of the four freedoms needs to be mentioned. This development concerns the expansion of the jurisdiction of the Court in preliminary reference rulings. In general, the purely internal situation rule, put in the context of defining

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jurisdiction in preliminary rulings, entails that the Court does not answer to questions which are purely hypothetical, and/or where EU law is not applicable to the facts of the case. There has been a tendency of the CJEU however to assume jurisdiction to give a preliminary ruling in cases involving purely internal situations, leading to the result that the Court effectively deals with hypothetical scenarios as the facts of the case do not involve the application of EU law. The two groups of fundamental freedoms (goods and services, and persons) will be discussed separately throughout with a detailed analysis being made of the reasoning adopted, followed by an examination of the Court's assumption of jurisdiction in references for a preliminary ruling. We will later on compare the traditional approach of the Court with the unorthodox one, make conclusions as to the reasons behind the change of approach, and propose ways forward so as to correct the deficiencies proved to exist.

Free movement of goods and services The first group of cases to be discussed where the new approach of the Court can be seen is those relating to free movement of goods and services. The first case where the CJEU diverted from its traditional approach is the Lancry case relating to the imposition of CHEE on all goods entering the French region of Martinique, including those from France. The case was challenging the domestic law to the extent that it applied to goods originating from metropolitan France i.e. it presented a purely internal situation, as those goods would not cross any MS borders. This fact however did not prevent the Court from declaring that the unity of the customs union is undermined by the existence of such dues, regardless of where the goods subject to them originate from. Furthermore, it was held that the obstacle created by those dues to inner-state movement is in no way less serious than an obstacle to inter-state movement, and that since the concept of a customs union involves all trade in goods this demands that there is free movement of goods in general, and not only in relation to inter-state activities. The CJEU went on further to hold that the situation is not purely internal as it would be inconsistent to deem the dues CHEE when being applied to goods originating from other MS, and to declare that they do not fall within the scope of EU law when applied to goods originating from France. Finally, the Court pointed out that it would even be impractical to differentiate between the goods so as to decide whether to apply the dues or not. As a result, the CHEE were declared to

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be unlawful as a whole, and not only to the extent that they apply to foreign-sourced goods. With regards to Article 34 TFEU, the most noteworthy example of the Court's new approach can be found in the Pistre case. It concerned the fact that French nationals had unlawfully used the description "mountain" on products they sold in France without having satisfied the relevant national law conditions. The case was purely internal as all of the relevant facts were confined within the same MS - there was no cross-border movement of the products which was being impeded, as they were being sold only domestically. The Court however remarkably and controversially recognized that although the case did not fall within the ambit of Article 28 TFEU, the latter provision could not be considered inapplicable simply because all of the facts of the case are confined within one and the same MS. It held that the application of domestic legislation such as the one at hand can have effects on intra-Community free movement of goods as it facilitated the marketing of domestic goods to the disadvantage of foreign ones. This was the case as, even if the law was effectively being applied only to domestic procedures, the latter would not be able to use foreignsourced raw materials to produce their own products. Furthermore, owing to the fact that the legislation did not technically exclude from its scope foreign-sourced goods, the Court held that it is in violation of EU law. Hence, although the case was brought in relation to a challenge to the domestic law as applicable to national products, the CJEU outlawed it due to its potentially restrictive effects were it to be applied to goods from other MS. Finally, before moving on to the cases on freedom of services, a case on Article 35 TFEU needs to be mentioned where the Court was also rather “liberal” in its approach. This is the Jersey Potatoes case which concerned domestic legislation which required that potatoes exported from the island of Jersey to the United Kingdom satisfied a number of conditions. The Court somewhat recognized that the case was purely internal by saying that the legislation aims at governing export trade to the UK, and that it establishes an advantage for the island’s domestic market to the detriment of the market in the UK. The CJEU went on to state however that although the legislation applies only to potatoes dispatched to the UK, there is nothing to exclude the possibility that they might be later on exported to another MS; such a possibility is, in the Court’s view, “certainly conceivable” as almost all Jersey potatoes were exported to the UK. Hence, although the cross-border requirement was not fulfilled in the case, the mere (hypothetical) possibility of it being so was enough for the Court to bring the case within the scope of EU law.

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With regards to the Court’s approach in cases on freedom to provide services the same neo-liberal approach can be observed. In the Alpine Investment case, for example, a Dutch company was challenging a Dutch law according to which contracting people over the telephone without having their consent in writing was unlawful. Although the company had clients not only in The Netherlands, but also in other MS, no specific situation of prejudice by the domestic law was presented before the Court which would involve a foreign client. . This however was no obstacle for considering that the case is governed by EU law, as otherwise, in the Court’s wording, the freedom to provide services would be illusory. Hence, in this case the CJEU accepted a hypothetical fulfilment of the cross-border requirement, similarly to Pistre, but with the difference that here no mentioning of any certainty that such a movement will occur was mentioned. Moreover, a case in the field of public procurement also demonstrated the openness of the Court in finding a link with EU law in a seemingly purely internal situation. This was the Parking Brixen case where a public service concession in Italy was awarded without any tender having been made, which was challenged by two Italian companies. Once again, all of the relevant facts of the case were confined within one MS. The Court however did not accept this line of reasoning, as it pointed out that other companies, not based in Italy, might have been interested in providing the service in question. Hence, it found the hypothetical cross-border movement which would bring the case within the scope of EU law, without however providing any proof of the potential interest in providing the service that a foreign company might have.

Free movement of workers Having discussed a few exemplary cases in relation to the Court's new approach in the field of free movement of goods and services, the second group of case law, which is on workers, needs to be examined. A case which very well portrays the new approach is the Carpenter judgment which concerned a Philippines national, married to a UK national, who was claiming residence rights in the UK on the basis of EU law. She claimed that her case falls within the scope of EU law due to the fact that her husband provides services from the UK to clients in other MS, and he couldn't do so if she was not assisting him and taking care of his children. The case obviously involved a cross-border movement with an economic purpose: that of the service being provided between the UK and other MS, but the question was whether the act of denying Ms. Carpenter the right to reside in the UK impeded the exercise of the

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fundamental freedom. The Court ruled in this regard that the situation at hand was not purely internal as Mr. Carpenter was availing himself of the freedom to provide services, and that, by virtue of the importance of ensuring protection of family life, Ms. Carpenter's entry and residence in the UK should not be impeded so that her husband can freely pursue that freedom. Hence, the CJEU effectively concluded that there would be a direct causal link between the expulsion of Ms. Carpenter from the UK, and the hindrance of Mr. Carpenter's freedom to provide services. Whether that was the case is questionable. Consequently, another classic example of a case depicting the allegedly new approach of the CJEU going even further by including within the scope of EU law a case which satisfies only the first of the three linkingfactor test conditions is N. The case concerned a Dutch national who was a shareholder in three Dutch companies and who moved his residence from the Netherlands to the UK. He was challenging the compatibility of the Dutch taxation system with Article 49 TFEU, and, as part of his claim, the CJEU had to assess whether the case falls within the scope of that Article. The Court said that, since Mr. N was an EU national residing in one MS while holding shares in a company located in another MS, his case was governed by the freedom of establishment. This however seems to be at odds with the linking-factor test since, although there was cross-border movement (from the Netherlands to the UK), that movement was not for an economic purpose - Mr. N held shares in the companies already prior to this movement. This means that Mr. N did not in any way contribute to the establishment of an internal market; he merely changed his residence from one MS to another, but the existence of a cross-border movement was enough to grant him EU law protection. A further case where only the first condition of the linking factor test seems to have been satisfied is Ritter-Coulais. The case concerned a German couple who was working in Germany, but they were residing in their house in France. The problem was that the German tax authorities did not take into account the losses Mr. and Ms. Ritter-Coulais suffered as a result of the use of that house. The CJEU stated that the freedom of movement for workers applies to any EU national who is employed in a MS different than the one where he/she is residing, and, rather controversially, that EU law prohibits any measure which precludes MS nationals from pursuing economic activities in another MS. Hence, although Mr. and Ms. Ritter-Coulais were EU nationals who were precluded not from pursuing economic activities in Germany, but rather from pursuing residence in France, they were afforded protection by free movement law. Once again, this case shows that the first requirement relating to a cross-border movement is indeed still applied by the Court, but doubts arise as to

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the second one, as the couple did not exercise cross-border movement in order to work, but merely to reside.

The issue of jurisdiction in the preliminary reference ruling procedure Finally, the last key point in the Court's unorthodox approach in relation to the economic fundamental freedoms and the purely internal situation rule must be discussed. This is the issue of jurisdiction in preliminary reference rulings involving cases which are purely internal. Traditionally, purely hypothetical questions are not ruled upon by the CJEU as its function is "not to deliver advisory opinions on general or hypothetical questions", and an answer to such questions must only be given when the respective factual circumstances have arose. However, the CJEU has started issuing preliminary reference rulings whilst recognizing that the facts presented before it are purely internal. There are a few specific instances when an answer to the question referred is indeed given, in the Ullens de Schooten case, the Court has had the opportunity to summarize the four exceptions to the general rule. A discussion of each of the four exceptions will follow whereas a critical analysis of them will be provided below. The Ullens de Schooten case concerned a Belgian national who operated a clinical laboratory which became insolvent, and who had initiated actions for MS liability against Belgium due to the alleged incompatibility of its domestic provisions on social security funding with EU law. The ruling in the case itself is not important as the situation put before the CJEU was clearly purely internal. More importantly, the Court pointed out that the aim of the preliminary ruling procedure is to assist the domestic court in solving the case presented before it, which presupposes that the economic fundamental freedom, subject of the question referred, would be applicable to the case at hand. Nevertheless, in its reasoning the CJEU stated that it has, on a few occasions, decided to provide an interpretation even when the facts of the case were purely internal. More specifically, that was so in four types of situations: When the legislation is equally applicable both to home state and to other MS nationals, and is therefore capable of producing effects which are not confined within the MS; When the legislation is equally applicable both to home state and to other MS nationals, and is also the subject of annulment proceedings in the context of which a preliminary reference was made;

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When national law requires nationals to enjoy the same rights under domestic law as a foreign MS national would on the basis of EU law, if they were in the same situation; When national law provides for the same approach to be adopted in purely internal as in cross-border situations. Due to the fact that the domestic court had however not presented any factors proving a link with EU law under any of the four exceptions the case was deemed to fall outside its scope. Hence, the CJEU remarkably summarized the four exceptions to the general rule that providing interpretation of EU law in purely internal cases does not fall within its jurisdiction while at the same time pointing out that these exceptions will only apply when the burden of proof is satisfied by the domestic court in its order of reference. An analysis of the "founding" cases where each of the four exceptions were for the first time established will be provided for later, as well as an assessment of whether they are legally sound and warranted in the EU legal system. As a conclusion, the above discussions laid down the cases where the new approach of the Court in delimiting the scope of EU law with regards to the concept of a purely internal situation was demonstrated. It has been claimed that the CJEU has adopted a two-fold approach. First, in relation to goods and services, it has looked beyond the (purely internal) facts of the case so as to spot a potential hindering effect of the domestic legislation in question, thus, including within the scope of EU law more cases than it would have had before. Second, in relation to persons the Court has made rulings on cases where either the second and/or the third condition of the linking-factor test were clearly not satisfied on the facts. This meant that cross-border movements which had no economic purpose or which were not actually hindered by the domestic measure at stake were considered to fall within the scope of EU law, and led to the outlawing of national provisions. Finally, the new approach of the CJEU in relation to establishing jurisdiction to provide interpretation of EU law in purely internal cases was established. More specifically, the four exceptions to the general jurisdictional rule were described. A comparison of the old and new approach of the CJEU in relation to the four economic freedoms will follow below, as well as a more detailed deliberation on the Ullens de Schooten exceptions.

COMPARISON, ASSESSMENT AND REFLECTION We already analyzed the new approach of the Court in dealing with the purely internal situation rule in cases relating to the four economic freedoms. It divided the case law into two so as to reflect the difference in applying the linking-factor test in cases

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involving trade (goods and services) and those involving persons (workers, services, and establishment). What was noted in the first group of cases is that the linkingfactor test was retained in the way that it was traditionally applied with the difference that now it does not need to be satisfied on the specific facts of the case. In relation to the second group of cases, to the contrary, the second and third condition of the test seem to have been more “loosely� applied. All of this has resulted in more cases having been considered to fall within the scope of EU law. Next we will elaborate on the two groups of cases by comparing the new approach demonstrated therein with the orthodox one, presented in the first section of the article, and by reflecting on whether the outcome in those cases was desirable or not, as well as whether such an approach should be generally followed in the future. It will more specifically be argued that the new approach has led to quite a few positive changes, such as a better reflection of the economic realities of cases and a reduction in the instances of ensuing reverse discrimination, but that the Court should also not overstretch its competences and should bear in mind that some hindrance effects might be too remote or minimal so as to be considered as falling within the scope of EU law. We will also elaborate on the issue of jurisdiction in preliminary reference rulings, where the CJEU provided a list of four exceptions to the general rule that it will not provide interpretation to EU law when the matter is purely internal. Those exceptions will be analyzed by going back to the cases where they were firstly formulated, and will be compared one to another. It will be claimed that in substance the exceptions cover, more or less, the same general underpinning, and that the Court has mechanically summarized them in the Ullens de Schooten case whereas it should have laid down a general rule which could encompass all four exceptions.

Free movement of goods and services To begin with, the ruling in Lancry, which was the first case of the new approach to be discussed, showed that Art. 30 TFEU is applicable also to customs duties which were applied upon crossing a region of a MS, rather than merely to customs applied at the border of a MS. This is at odds with the earlier ruling in SIOT where the CJEU stated that Art. 30 is applicable to goods in transit from one MS to another, but made no mentioning of the fact that the provision can also be applicable to regional customs duties. The issue in Lancry is the fact that the wording of the treaty provision did not envisage the possibility that regional customs duties might be applied to goods, so the CJEU felt the urge to intervene and to find the duties incompatible with EU law

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in light of the aim of Art. 30 TFEU and of the formal completion of the internal market. Even assuming that this was justified in light of the fact that regional tariffs had, as far as foreign-sourced goods are concerned, the same effect as border ones, the Court went on even further. It effectively invalidated the regional tariff not only when applied to goods which were in transit from one MS to another, but also when applied to goods which were in a purely internal situation, such as the ones in the domestic proceedings giving rise to the case. It did so for purely pragmatic reasons, stating that it would be hardly possible to distinguish which goods are of domestic and which of foreign origin. This meant that the Court not only gave a ruling in a case where the facts were, admittedly, purely internal, but it also invalidated the domestic law provisions both when applied to goods of domestic and of foreign origin on a purely practical, but in no way legal basis. It seems that the Court has acted ultra vires taking on the role of a legislator and policy-maker, along with that of a judicial institution. This ruling proves the theory that the new approach of the CJEU lies in the act of invalidating domestic law, which has the potential to infringe EU law, even if it does not do so on the specific facts of the case. The regional tariffs in Lancry would most certainly have been applied to goods which are in a cross-border situation, and a potential ruling of the kind made would be adequate and legally sound only then. Consequently, the Pistre case was analyzed in relation to Article 34 TFEU. There, the Court explicitly said that even though all of the facts of the case are purely internal the provision can be applicable. This was in clear contrast to the Mathot case mentioned already, where the case was purely internal and was therefore deemed to fall outside the scope of EU law, the only difference being that the legislation in Pistre was technically applicable both to domestic and to foreign-sourced goods. Nevertheless, the Court in Pistre saw the potential that the domestic legislation will potentially discriminate against foreign goods and raw materials as they would, respectively, never be able to satisfy the conditions for receiving the label “mountainâ€? nor be used for the production of products of domestic origin satisfying those conditions. Although the ruling is once again rational and forward-looking, it is questionable whether the CJEU should have made such a pronouncement in a purely internal case, rather than wait for a case to arise where foreign-sourced goods would be at stake. Instead, the Court made a speculative ruling relating to hypothetical goods which were to be imported into France. Finally, the Jersey Potatoes case needs to be compared with the Delhaize Frères case. Both cases concerned Article 35 TFEU: in the former there was domestic legislation

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applicable to exports of potatoes within the UK, demanding that they satisfy a number of conditions, whereas in the latter there was a domestic law limiting the number of wines that were to be exported outside the region of production. In the Delhaize case the CJEU outlawed the legislation to the extent that it applied to wines which were to be exported to other MS, but did not include within its ruling those that were to be exported to other regions of the country. In the Jersey Potatoes case however the CJEU outlawed the domestic legislation even though it was applicable only to exports within that MS because of the possibility that the goods might be exported to other MS later on. The latter ruling seems to be warranted based on the fact that most of the potatoes exported were exported from Jersey to the UK, which meant that even those that were to be later on exported would have passed through that route, and, thus, would have been subject to the rules. However, the fact that the Court entered into such a pragmatic and highly speculative analysis in a case which was purely internal is worthy of criticism. Indeed, there was nothing preventing the export of potatoes from Jersey directly to other MS, rather than indirectly through the UK. This ruling reaffirms the fact that a potential exercise of cross-border movement of goods suffices to bring a case within the scope of EU law, even in a purely internal situation where the domestic legislation is applicable only to internal export. The same kind of approach was shown in the free movement of services case of Alpine Investment which must be compared with the Corsica Ferries case. Both cases were included within the scope of EU law, with the difference that the service recipients in the latter were clearly identified and they were indeed located in a MS different than the one where the service provider was based whereas in the former the service recipients were unidentified; their potential existence was however enough to trigger the application of EU law. It is true that the company in Alpine Investment was providing services outside the country where it was based, but such a situation was not at stake in the factual pattern. This once again proves that the CJEU accepts hypothetical links with EU law. As a conclusion, in the new approach of the CJEU the linking-factor test does not need to be satisfied on the facts of the case; it suffices if the domestic measure would potentially affect the cross-border movement of goods, which though not necessarily identified in the case, are identifiable with some degree of certainty. Although the new application of the linking-factor test has led to considerable benefits, such as the fact that now domestic measures which have a protectionist aim are caught by the EU law net, it does contradict in one way or another the old orthodox approach of the Court,

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prejudicing the principle of legal certainty. In addition, as can be seen in cases such as Jersey Potatoes, the CJEU seems to be crossing the line of what can really be considered a threat to EU law and is becoming rather intrusive in MS competences with its new approach. For this reason, the Court should have in mind the principle of remoteness in its jurisprudence, meaning that it should not include within its scope domestic measures whose effect upon free movement is too uncertain or indirect. Even more so, because this principle has already been laid down in case law on the fundamental freedoms. To add on, some commentators have proposed that the Court include a de minimis rule in its jurisprudence on fundamental freedoms, similarly to cases in the area of competition law. As a result, situations which have only a small and insignificant impact upon the aim of the freedom at stake would be considered to fall outside its scope. This would reduce the number of cases in which CJEU artificially extends its competence, and would perhaps address any concerns MS might have with the seemingly over-intrusive new approach.

Free movement of workers Having discussed the first group of cases where a new approach in applying the linking-factor test can be seen, it is time to address the second group: that relating to persons. The first case is Carpenter. Therein, Ms. Carpenter was afforded the right to reside in the UK, due to the fact that otherwise her husband would be deterred from exercising his freedom to provide services in another MS. What is problematic in this reasoning is that the third condition of the linking-factor test, namely, the existence of an impediment to the exercise of a cross-border movement for an economic purpose was not fulfilled. The Court considered that that impediment was the act of not affording Ms. Carpenter the right to reside, but there was no direct causal link between the two since nothing would really prevent Mr. Carpenter from continuing to pursue his cross-border activities, even if his wife had been deported. The argument that not granting the family reunification rights to Ms. Carpenter would be detrimental to the family life of the couple would be valid in light of an assessment made on the basis of Article 7 of the Charter of Fundamental Rights, but definitely not on the basis of freedom to provide services, which has as its main aim the establishment of an internal market, and not the pursuit of family life. Mr. Carpenter’s decision to provide services abroad had no connection whatsoever with the decision of the UK authorities to expel his wife. Moreover, while the Carpenter case had at least satisfied two of the three conditions for the linking-factor test, another example mentioned in the area of establishment 104 |

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however, the N case, had satisfied only the first one. Mr. N had exercised cross-border movement, but with the aim of residing abroad and not for an economic purpose. Hence, the chain of causation was already broken at the second limb. The Court however included the case within its scope although the matter was obviously one much more closely relating to the citizenship provision of Article 21 TFEU. This case can be contrasted with the founding Knoors judgment where the freedom of establishment was indeed applicable since there was a cross-border movement exercised for an economic purpose which was impeded. In N, on the other hand, the Dutch national was indeed residing in one MS while being established in another one, but the order of events seems to have been reversed as compared to the one that the CJEU was envisaging when it laid down the ruling. Ergo, although the endposition was effectively the same, the chronology of events and aim of cross-border movement certainly was not. Finally, the Ritter-Coulais case should also be analyzed more carefully. Similarly to the N case, therein the CJEU included the factual pattern so as to be covered by EU law merely because the applicants were EU nationals who were employed in a MS (Germany) different than the one where they were residing (France). The Court did so even though the couple had not exercised their freedom of movement for workers; they merely had exercised a cross-border movement with the aim of residing in another MS. Once again, it seemed that the case was ideal for an analysis under Article 21 TFEU since, obviously, the second condition of the linking-factor test was not satisfied. As a conclusion, it can be clearly seen that the Court of Justice has failed to properly apply the linking-factor test in its case law in the area of persons. This has led to positive developments such as the fact that each time a case involving persons is included in the scope of EU law one less case of reverse discrimination arises, and, in the cases relating to family reunification especially, a human rights perspective is also beneficially taken account of. However, from a purely legal point of view, the CJEU’s approach is very much distanced from what was stated in the founding cases on the subject matter, and, unlike the new approach with regards to goods and services, the link with EU law is not even potential or hypothetical; it just does not exist. Even more so, now the difference of treatment between persons falling within the scope of EU law and those falling outside is unjustified. As an alternative to the current methodology, the CJEU should instead rely, where applicable, more on the citizenship provisions (Article 18-25 TFEU), which although not leading to the same

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benefits as the fundamental economic freedoms do, are nevertheless the adequate legal basis. In addition, once a case is brought within the scope of EU law, a separate assessment under the Charter of Fundamental rights can be of use to deal with any domestic law injustices. Reverse discrimination, on the other hand, is something which the Court should not try to tackle indirectly by sacrificing legal certainty and consistency in its case law on fundamental freedoms. There is a much better way to do this, as will be seen in the context of the preliminary ruling procedure.

The four exceptions to the purely internal situation rule in preliminary reference rulings Having closed the discussion on the scope of the economic fundamental freedoms, it is time to finally turn more in depth to the question of the CJEU’s jurisdiction in references for a preliminary ruling where the facts of the case are purely internal. As said already, the Ullens de Schooten case laid down for the first time a pronouncement on the situations in which the Court will depart from its traditional stance that interpretation of EU law is not given when the facts of the case giving rise to the question are purely internal. A more detailed analysis of each of the four exceptions is however required so as to better understand them. The first exception to the general rule was applied in Blanco Perez. The case concerned two Spanish nationals who wished to open a pharmacy in Spain, but could not do so due to the fact that they were not issued a license under the relevant scheme. They were thus claiming that the domestic decree providing for the scheme was in breach of the freedom of establishment. The defendants in the case, along with many MS governments disputed that the questions referred were hypothetical since obviously the case was purely internal – there was no cross-border movement of the claimants' business. The Court however ruled that it is in principle bound to give a ruling, that purely hypothetical questions indeed fall outside its scope, but that it is not obvious that the questions referred are such. To the contrary, a ruling is required if national law provides for the same rights to be granted to Spanish nationals as to nationals of other MS in the same situation. The legislation at issue in the case was indeed applicable both to Spanish and to foreign nationals, thus, entailing that it would fall within the scope of EU law had the case been brought by nationals of another MS who were exercising their freedom of establishment in Spain. Hence, what the CJEU effectively did in the case is that it once again acted in anticipation, by providing an interpretation of EU law to a hypothetical case and, hence,

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jeopardizing its rules on jurisdiction. The CJEU could have waited until an “adequate” cross-border case was referred, but it provided an interpretation also perhaps so as to prevent the emergence of reverse discrimination. The second exception can be found in the Libert case, where proceedings were brought by Belgian residents against the Flemmish Community due to its legislation which provided that property situated in the region can only be sold to persons who have established a sufficient connection with that region. The Court recognized that the case was purely internal, but once again brought up the argument that there exists the hypothetical possibility that nationals of a foreign MS could also be interested in acquiring property in the region. This was enough to justify an exception to the Court’s jurisdictional rules. Hence, once again the CJEU shows a tendency to provide interpretation of EU law on pure hypothesis of cross-border movement. Questions arise as to why the CJEU did not wait for a cross-border case to arise, where the legislation could be declared invalid to the extent that it applies to foreign MS nationals only. In relation to the third exception, this was formulated in the famous case of Guimont. The case concerned a French national who had sold cheese Emmenthal with a deceptive label, and who was claiming that the domestic regulations on this were in contravention of the free movement of goods. The Court invalidated the domestic legislation as it was applicable both to goods of domestic origin and to goods imported, and it thus hindered intra-Community trade. On the issue of the fact that the case was purely internal the CJEU said that it was the national court’s duty to determine whether it needs an interpretation, and that such interpretation will be denied only when it is quite obvious that it does not relate to the nature of the case or the subject-matter of the dispute. Then the CJEU most remarkably said that in this case it is not obvious that a reply is not needed because the domestic law might require that goods of domestic origin be treated in the same way as goods of foreign origin. The fact that the domestic court had not raised that argument or proved in any way that this might be the case was of no issue to the CJEU. Once again, the Court ruled up-front on an issue which would obviously arise sometime in the future, justifying this with the hypothetical need for a uniform regime to govern both crossborder and purely internal situations. Finally, the forth exception must also be discussed. It was established in the Dzodzi case. The case concerned a Togolese woman who was the widow of a Belgian national, and who was refused the right to reside in Belgium. Her Belgian husband had

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however never exercised his right to free movement so the case was purely internal, and the CJEU recognized it as such. However, the Court analyzed the purpose of Article 256 TFEU, and found no reason to exclude from its scope cases where the domestic law refers to an EU law provision so as to govern a purely internal situation. Instead, such an interpretation is warranted in light of potential misinterpretations of EU law that might arise. The CJEU does not even in principle have the obligation to look at the facts of the case to give a preliminary ruling. Ergo, the domestic court could more or less freely choose whether it needs an interpretation of EU law, a good justification for this being that the national law makes a reference to EU law which makes the latter applicable. Finally, the CJEU pointed out that its scope of interpretation covers only EU law, so although national law refers to the latter, an assessment of the overall domestic framework cannot be made. As a conclusion, the CJEU established in Dzodzi that it will give an interpretation of EU law when the domestic regime provides for the same treatment to be accorded to foreign nationals as to nationals of MS i.e. it provides for the same rules to be applied to a cross-border and to a purely internal situation. This goes well in line with the Guimont case with the difference that in Dzodzi the domestic court had at least established that Belgian law indeed refers to EU law whereas in Guimont this was a pure speculation of the CJEU. Having said that, the ruling in Dzodzi seems to be more legally - justified. As a conclusion, thus, the CJEU established that four different exceptions exist, but in reality they all relate to the situation where indistinctly applicable domestic legislation is challenged in a case which is purely internal. The Court nevertheless provides an interpretation of EU law in anticipation of a cross-border situation to which the domestic legislation would also be applicable. Behind this, perhaps lies the will of the CJEU to eliminate reverse discrimination by providing the interpretation of EU law in an obviously purely internal case and hoping that the domestic court will invalidate the incompatible national law as a whole. This can be mostly seen in Dzodzi where the CJEU did not need to rely on hypothetical scenarios or speculate about the need to have a uniform interpretation; the legal basis was already in the domestic law. Nevertheless, whether issuing rulings even in such cases is justified can be subject to criticism as the number of cases where the CJEU might then be called on to rule in purely internal cases might be insurmountable, not to mention the discrepancy with the previous jurisprudence. On the positive side, the liberal tendency spotted in all four cases does lead to a uniform interpretation and application of EU law, potentially both to persons in a cross-border and a purely internal situation. What the CJEU should do is now that it has demonstrated its

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willingness to assist domestic courts in this regard, it needs to be stricter in requiring proof that indeed the domestic law provides for the same solution to be adopted as in EU law, or that it prohibits reverse discrimination. Otherwise, the Court is losing its legitimacy and authority, transforming from a judicial institution into a consultative body. The ruling in Ullens de Schooten seems to point in the right direction however.

CONCLUSION To conclude, the “new” and “old” case law of the Court of Justice relating to purely internal situations in free movement law has been contrasted and compared. First section of the article presented the traditional approach of the Court towards finding a link with EU law whereby the three conditions of the linking factor test were strictly applied and needed to be satisfied on the facts of the case. This made the approach of the CJEU very simple and predictable, but still merited criticism on the fact that very often cases which obviously should have been covered by EU law were not due to a very theoretical reading of the law. Consequently, next sections of the article assessed how the Court responded to that criticism, namely, by adopting a much more flexible approach whereby it accepted the hypothetical fulfillment of the linkingfactor test as sufficient for bringing a case within the confines of EU law. It sometimes, in its cases on workers, even neglected that the second or third condition of the test might not be fulfilled. Next we also put forward another argument in relation to purely internal situations, namely, that the CJEU has started issuing preliminary reference rulings in cases whose facts are purely internal. Although this is an issue of jurisdiction and not of substance, and does not concern the scope of EU free movement law, it does demonstrate the Court’s increasing willingness to provide interpretation of EU law, where it previously did not, even where the questions referred to it might in reality be factually hypothetical. In the following discussions we argue that the reasons for the change of approach of the CJEU might be its willingness to deal with the initial criticism that it is being very formalistic and unreflective of the real nature of domestic measures which are at stake, and an attempt to deal with the issue of reverse discrimination. However, as further claimed, a better solution to these issues would be for the Court to put limits on its overly flexible approach through a de minimis rule or a principle of remoteness, and to make more and better use of the provisions regarding EU citizenship and the fundamental rights protection offered by the Charter. Finally, we also argue in relation to the expansion of jurisdiction in preliminary reference rulings that the CJEU should 109 |

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continue with this approach, under the condition that more proof of the need to provide EU law interpretation is given by the domestic courts referring questions. Only if the Court fulfills the aforesaid suggestions will the MS feel that their competences in purely internal situations are not being unlawfully infringed.

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Journal of Innovations and Sustainability (2018) Vol. 4, No 3 Terziev, V., Petkov, M., Krastev, D. (2018e). Operative mode for police cooperation between the member states of the European Union. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp.473-476. Terziev, V., Petkov, M., Krastev, D. (2018f). Organization on the European Union in the sphere of penal preparation. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 482-486. Terziev, V., Petkov, M., Krastev, D. (2018g). Pumps for the action on the European Union in the scope of the European agenda on security. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 497- 500. Terziev, V., Petkov, M., Krastev, D. (2018h). Sources of European Union law. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 511-516. Terziev, V., Petkov, M., Krastev, D. (2018i). The “Source of law� category. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 517-521. Terziev, V., Petkov, M., Krastev, D. (2018j). The process of forming a criminal policy of the European Union. Proceedings of SOCIOINT 2018 - 5th International Conference on Education, Social Sciences and Humanities, 2-4 July 2018 - Dubai, U.A.E, International Organization Center of Academic Research, pp. 505-510. Ullens de Schooten case. https://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=CELEX%3A62015CJ0268/.

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