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What’s another year? The European Union and the Western Balkans 2017

Johnny Logan from Ireland won the Eurovision Song Contest 1980 with the song “What`s another year?”. Also in April 1980, the European Community and Yugoslavia signed their first comprehensive Cooperation Agreement. The Commission news release noted that “the primary objective of the Agreement is to improve the balance in the EC-Yugoslav trade which produced an adverse balance to for the latter country of $3.5 billion in 1979.” 37 years on, many more agreements were signed with the Western Balkans, yet balanced economic relations remain illusory. From 2006 to 2016 the six Western Balkans countries have accumulated a trade de cit of 98 billion EUR with the EU. No wonder that economic development and integration have once again become the priority for EU-Western Balkans cooperation. In July 2017 the project of a regional economic area featured high on the Balkans summit agenda in Trieste, however it produced little more than encouraging gestures from the EU.

Are the Balkans back?

The Trieste summit was another annual meeting of a series, which started in the summer of 2014 in the wake of the war in Ukraine and shifting geopolitics. German Chancellor Angela Merkel wanted to reach “additional real progress” in reforming the Balkans on their way to EU membership. Results remain meager, but at least the EU’s attention for the region has grown. The deep structural difficulties have come into focus. Yet, the hopes that the EU will deliver the instruments and funding for speedy convergence and membership remain elusive. Shortcomings cannot be talked over, even if Brussels points to the opening of new negotiating chapters with Montenegro and Serbia and the e ectiveness of the new Commission “fundamentals first” approach on the rule of law and democracy. Hence, most people in the Balkans suspect that Brussels only shows an interest when local crises threaten the Union itself: such as migration corridor, source of organized crime, staging post for Islamist terrorism, or as a sideshow in the West’s conflict with Moscow.

Conflicts and tensions

The Berlin process intended to tackle some of the causes of blockage. The idea was to foster the resolution of outstanding bilateral and internal political issues in the Balkans. For a crisis-ridden EU it is paramount to avoid importing frictions, not least against the background of reemerging tensions within the EU. With consternation, many EU capitals therefore noted the agitation, which was prompted by the outcome of the international arbitration over on the sea border between Croatia and Slovenia, two “new” EU countries from the region. e list of unresolved issues in the Western Balkans is long and painful: Kosovo and Serbia are far from normalization and Bosnia and Herzegovina is blocked as politicians lack any common vision for the country deeply scarred by the war. The conflict in Bosnia and Herzegovina, since 1995 ossified into the Dayton Agreement, erodes society and economy year a er year. Albania, Macedonia and the EU-frontrunner Montenegro also remain riddled by destructive political antagonisms. Across the region societies have moved apart, not grown closer through the shared EU-perspective. Hence, the EU member states are pushing for more regional cooperation, trust-building and reconciliation. Germany and France supported, since 2014, the Regional Youth Cooperation Office (RYCO), which opened its secretariat in Tirana this spring. First youth encounters and school exchanges are expected this fall. is is good news but far from enough.

Integration without catching up                                                          

Progress takes place when people ́s lives become better thanks to EU integration. The most tangible result remains the EU visa liberalization of 2009, which has regrettfully not been extended to Kosovo yet. All countries, including Kosovo in 2016, have established individual bilateral contractual relations with the EU - the Stabilisation and Association Agreements (SAA). A key element that remains is trade. Autonomous trade measures were granted early on while the EU secured access for goods, capital and services. The SAAs are aimed at establishing a single market over a period of ten years. Hence, market integration has been advanced in a dynamic manner and also includes broader European arrangements, such as the Vienna-based Energy Community, the Common European Aviation Area and - recently signed in Trieste - the plan to develop a Transport Community between the EU and the region. As part of the pre-accession assistance, the region participates in Community action programmes such as Erasmus+, Horizon 2020, initiatives in the area of small and medium-sized business, environment and other sectors. Among the benefits of integration are increased mobility, communication and exchange. Another notable accomplishment is monetary stabilisation of this region, which for most of the 20th century was regularly ravaged by dramatic inflation. Curiously, the two countries which use the Euro as their currency are the frontrunners and last in the formal accession process: Montenegro and Kosovo. Bosnia and Herzegovina is using a Euro-based currency regime, while Albania, Macedonia and Serbia have tied their currencies to the Euro, trying to maintain a stable exchange rate. The region is also integrated into the European banking sector. These close economic ties developed in parallel to the financial crisis that hit the European Union almost ten years ago. In the Balkans the crisis migrated from the EU with a delay and only last year did the region start to grow again, yet at levels that will make it virtually impossible to catch up with the rest of the EU for a long time to come.                                                                   

Boosting growth - rethinking EU enlargement                                                           

If the countries of the Western Balkans are to have any prospect of overcoming their current economic predicament, they will need to become more innovative and double their annual growth rates. A recent calculation by the World Bank indicates that the economies of the Western Balkans will need to grow at annual rates of at least 6 percent if they are to match the EU average by the end of the 2030s. After a decade that ended without net growth, the current figures scarcely exceed 3 percent - too low to catch up. Without closing the gap with the EU the region is already being exposed to the temptations of populism, nationalism and other anti-European currents. In this perspective, EU enlargement policy in the Western Balkans cannot be described as a success no matter how many chapters in the accession negotiations with Montenegro and Serbia have been opened or the SAA with Kosovo signed. The Western Balkans countries need a boost to start converging with the EU. The Berlin process was meant to enhance regional economic cooperation and lay the foundations for bolstering growth.

The ideas for a “Berlin plus” agenda, sketched out by the German Foreign Minister Sigmar Gabriel on 31 May 2017, points further into this direction. “Berlin plus” could make the programs and initiatives launched since 2014 more effective. But in order to succeed all EU cooperation and development tools will need to be better directed to the regional growth needs, including creating special funds for start-up business, vocational training, IT-infrastructure, environmental protection, research and development. The “Berlin plus” ideas will quickly be put to a test since they will be measured against the commitment of China`s “Belt and Road” initiative with some 10 billion Euro investments for 16 countries in Central, Eastern and Southern Europe.

EU-Western Balkans summit 2018                                                                                                        

In light of competition with other development projects and the elusive perspectives for convergence, a fundamental rethinking of enlargement policy is unavoidable. Rethinking will need to include all 27 EU members and six Western Balkans states. In March this year, the EU27 met in Rome to bolster its unity in light of “Brexit”. is was a missed opportunity to foster a broader sense of unity and urgency vis-à-vis the region. The coming year offers a unique chance to promote a joint reflection of societies, politics and business. Why should this not lead to a first full EU27-WB6 summit 15 years after Thessaloniki 2003? The Austrian EU-Presidency in 2018 is the ideal platform to connect these dots between EU enlargement and the Berlin process, signalling the creative re-launch of the European project in the Balkans.                                            

What ́s another year?                                                           

For once “a year” can make a difference. The next few months are pivotal. As a first, the European Commission will not present the annual “progress reports” on the Western Balkans countries` way into the EU. With the brexiting UK hosting the next summit in 2018, the Berlin process risks losing steam. The freed up energy can be used to focus minds on a truly generational challenge: how to create faster gradual and sectoral European integration and substantial social, economic and environmental convergence? How to reverse the trend of “stabilitocracy” and build democracy, the rule of law and open societies in the Western Balkans?                                                         

Hence, this year`s Bled Strategic Forum marks the changing of our approach towards south-eastern Europe. Next year, the EU is preparing for a new institutional cycle with a new EU budget, and soon after in spring 2019, with the elections to the European Parliament and a new Commission. The policies and objectives of the renewed EU27 are being defined now. One of the goals needs to be the integration of the Western Balkans countries during the next decade. For this to succeed more spaces for creative structural and active cohesion policies need to be opened. Success for its economic and social model in the Western Balkans would boost the EU’s credibility as an assertive strategic actor capable of creating a comparable standard of living across Europe securing peace and democracy in the long run. A task for now and not to be le for another year.  

The blog was first published by the Bled Strategic Times, the Official Gazette of the Bled Strategic Forum in September 2017 

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