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Russia’s brutal invasion of Ukraine served as a wake-up call for the European Union (EU) and added urgency to the EU enlargement debate. The Russian war highlighted the need to accelerate the accession process of Ukraine and Moldova, and to revitalize it for the Western Balkan countries that are not yet part of the EU: Albania , Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. Earlier this month, EU foreign policy chief Josep Borrell even welcomed a deadline of 2030 for the next enlargement, hoping that this will mobilize energies both within the EU and in the candidate states. The question now is how to prepare candidate countries to join the bloc.
What would help the Western Balkans most is an EU-led economic growth plan. A small market of six countries with less than eighteen million consumers and a total gross domestic product (GDP) of $144 billionor less than 1 percent of EU GDP, the Western Balkans could easily be integrated into the EU single market. At the same time, the region continues to lag behind the rest of Europe, with an average per capita income of barely $7,650, just 14 percent of the EU average ($54,100), according to data from the International Monetary Fund. Convergence with the EU has been slow over the past twenty years.
Partly to narrow this gap, European Commission President Ursula Von der Leyen has proposed a four-pillar growth plan for the Western Balkans in May. The plan’s objectives include bringing the region closer to the EU single market, deepening regional economic integration, accelerating fundamental reforms and increasing pre-accession funds. With the Western Balkans representing the soft underbelly of Europe and talk of a return to EU expansion, the time has come to focus attention on advancing the goals of this plan and to accelerate the region’s accession to the EU.
Access to the EU single market
The EU is the main trading partner of the Western Balkans, representing more than two thirds of total trade in the region. All Western Balkan countries benefit from access to the internal market for goods via the Stabilization and Association Agreementsbut they are not deep enough, even compared to Deep and comprehensive free trade agreements the EU has it with Ukraine, Georgia and Moldova.
The EU should strive to deepen its integration with the region before full EU membership. To do this, it should gradually integrate these countries into all economic sectors by granting them full access to the single market and its four freedoms (goods, people, services and capital). This would promote convergence and strengthen institutional capacities, and give the EU greater leverage to ensure compliance with rule of law reforms. This would be similar to the EU’s economic relationship with Norway and Iceland, where the European Economic Area extends single market laws to both countries (with the exception of agriculture and fishing). While the deal with Norway and Iceland is meant to be an end in itself, for the Western Balkan countries it could instead be a gradual deepening towards full EU membership.
Since March 2022, Ukraine has enjoyed the four freedoms across the Directive on temporary protections, thus proving that this level of market access for third countries is achievable. The benefits of increased participation in the single market for the Western Balkan countries are clear. Croatia’s GDP, for example, has increased by 75 percent (from $59 billion to $79 billion) since joining the EU in 2013, resulting in higher incomes for its citizens, with an average increase in GDP per capita of 67 percent (from $13,900 in 2013). 2013 at $20,537).
Financial support is essential to reduce economic and infrastructural gaps between EU members and the Western Balkans. The EU is the largest provider of financial aid and development assistance in the Western Balkans, supporting reforms with financial and technical assistance through the Instrument for Pre-Accession Assistance (IPA), which has allocated 12.8 billion euros between 2014 and 2020. But the commitment for IPA under the current long-term EU budget is €14 billion, less than 1 percent of the total long-term budget and Next funds Generation EU for 2021-2027 (2.02 billion euros).
Given the importance of the Western Balkans, EU financial support to the region should be increased to accelerate the socio-economic convergence of its countries with the bloc and increase socialization with EU rules and culture organizational. This will help to facilitate the accession of these countries to the single market.
The “nearshore” of the Western Balkans
Being part of the EU single market is not just about trade: it is also about investment, economic modernization, democratic progress, the rule of law and better regional cooperation. In recent years, several initiatives have been adopted to promote regional economic integration, including the Action plan for the regional common market 2021-2024. These initiatives aim to build a common regional market based on EU rules and regulations and the four freedoms. They are intended to serve as a springboard for Western Balkan economies to better integrate into European value chains and improve their competitiveness. The initiatives focused on four major regional areas: trade, investment, digitalization, industry and innovation. The establishment of “greenways» – streamlining border crossings for goods vehicles – during the COVID-19 pandemic was a successful example of regional cooperation.
THE Berlin Process, a very important initiative which promoted faster economic integration with the EU, has also been revitalized and the next meeting will take place in Albania in October. The Open Balkans Initiative, another project that started as an economic cooperation agreement between Serbia, North Macedonia and Albania in 2021, also proposed practical steps for better economic cooperation In the region.
Regional economic integration is imperative for the Western Balkans to benefit from larger markets and greater competition by fostering cross-border production chains and leveraging regional comparative advantages. To attract the interest of serious foreign investors, it is necessary to cooperate in a “pooled» competition for foreign direct investment. This will help countries improve their competitiveness by encouraging technological and industrial clusters, as well as modernize their economies, facilitate innovation and improve skills and productivity.
As European companies seek to relocate their supply chains closer to home, investing in the Western Balkans for the production of essential goods would contribute to the EU’s strategic economic autonomy, in line with the objectives of “reduction risks” which occupy a key place in the new EU report European Economic Security Strategy.
The development of European industrial clusters in the Western Balkans would increase the EU’s competitiveness, particularly in key areas such as green and solar industries, biotechnology and electric vehicles. Adriatic Sea ports are important for the resilience of trade routes and also hold investment potential in the transportation of liquefied natural gas.
Low labor costs in the Western Balkans and strategic energy and transport connectivity make the region attractive, but more EU investment is needed to improve infrastructure networks. EU investments in strategic infrastructure projects in the Western Balkans to boost interconnectivity could also counter China’s growing economic and diplomatic tensions. footprint in the Western Balkans. This growing footprint challenges European commercial interests and fuels practices that prevent the EU from strengthening the promotion of Western norms and standards.
A two-way street for investment and reforms
To meet the enlargement timetable set for 2030, the EU should now redouble its efforts to help prepare the Western Balkan countries for accession. Increased European investment in the Western Balkans is needed to foster the creation of industrial hubs, while promoting better economic standards and accelerating important economic reforms.
But it must not be a one-way endeavor in which the EU intervenes without the deficiencies of the status quo in the region remaining unchallenged. Western Balkan governments should be ready to offer a serious platform for the relocation of European investments from China and other Asian countries to the region. A favorable business environment, based on European standards, the rule of law, transparency and regional integration, constitute the basic conditions for attracting serious investments.
The emphasis on the rule of law and its fundamental principles must also be at the heart of the EU enlargement process. Von der Leyen announced this month in his State of the European Union Address that the EU will present reports on the rule of law for the candidate countries. This is a welcome step. Without commitment and a high degree of accountability from the elected leaders of the Western Balkans, any investment of resources, time and attention by the EU will only lead to marginal results.
This is the ideal time to change the enlargement mindset, and it is in the EU’s interest to see the Western Balkans as an integral part of European solutions to global challenges.
Valbona Zeneli is a non-resident senior fellow at the Atlantic Council’s Europe Center and the Transatlantic Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security.
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Fri June 30, 2023
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Image: European Commission President Ursula von der Leyen speaks at a press conference after the Western Balkans summit. It was attended by the heads of state and government of the six Western Balkan countries which aspire to join the EU.
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