CONFERENCE CALL: Passion and pragmatism in the Western Balkans

CONFERENCE CALL: Passion and pragmatism in the Western Balkans
EBRD bankers with the six Western Balkans prime ministers at the EBRD Western Balkans Investment Summit in London on February 24.
By Clare Nuttall in London March 3, 2020

Western Balkan prime ministers discussed the need for infrastructure investment and the removal of barriers to regional trade at the European Bank for Reconstruction and Development’s (EBRD’s) Western Balkans Investment Summit in London on February 24.

This is the fourth time the prime ministers of all six countries — divided by war only a couple of decades ago — have met in this format for an amicable discussion of priorities and the path to EU accession since the first EBRD Western Balkans summit in 2014.

Commenting in his address to the summit on what has changed in the region over the last 20 years, EBRD president Sir Suma Chakrabarti said simply: “leadership”.

“It’s a leadership now of a different generation that emphasises unity of purpose rather than disunity, that actually looks for peace and economic development and really is enthusiastic about the wider world in a way that wasn’t the case a generation ago.” Chakrabarti also commented on the clarity in the region, both at project level and on the direction on Europe, and on the willingness to reform and make cross-border projects work well.

The EBRD has committed a total of €13bn to the region, with investment volumes stepped up in the last few years, putting its countries among the top recipients of investments from the bank in per capita terms.

EU integration the priority

With a decision by EU leaders on the opening of accession negations with Albania and North Macedonia imminent possibly as soon as this month, progress towards EU accession for the six countries was one key theme of the summit, which was also attended by Croatian Prime Minister Andrej Plenkovic, whose country currently holds the rotating EU Council presidency and is pushing for progress on enlargement.

The six Western Balkan prime ministers made it clear that one issue they are united upon is their desire to lead their countries closer to EU accession. In an interview with bne IntelliNews on the sidelines of the summit, North Macedonia’s interim Prime Minister Oliver Spasovski talked of the practical benefits in terms of increased FDI and access to EU funds and grants, but also of the intangible benefits — the “values and rights and all the aspects of European values”.

Starting accession negotiations, he said, would lead to discussions “that would ensure real reforms in our institutions in North Macedonia and that would be equally beneficial for our citizens and also for the region in general”.  

“There is no country [in the Western Balkans] that does not wish to be a member of the EU,” Montenegrin Prime Minister Dusko Markovic said during the opening panel. “We want, as the Western Balkans, to belong to a united Europe one day, and on that basis all our policies and priorities are structured.”

Kosovo’s new Prime Minister Albin Kurti, meanwhile, talked of the lessons the Western Balkans can learn from European history, namely that “cooperation, investment and reconciliation are crucial for our region”. “We believe that for long term peace and stability and security in our region we cannot find a better recipe than Europe did after WW2,” he said.

Roads to Europe

Aside from deepening their integration with the EU, there have been growing efforts on the part of the Western Balkans states to integrate within the region.

Prime Minister Ana Brnabic talked of the need for pragmatic steps, referring to cooperation agreements with “really tangible results for people” such as the regional roaming agreement that came into force last year.

“We need to be thinking in terms of what we can do to facilitate trade between us, [creating an] investment and business enabling environment. We need to be much more pragmatic about these things. People in the region expect that from us because they want to see a different future,” she said.

“We need to go back to thinking in terms of pragmatism, how to increase the quality of life for our people.” When it comes to development priorities, most Western Balkan leaders named road infrastructure. Putting this infrastructure in place is highly important for the region, not only for providing better, quicker transport links to EU markets but also for promoting intra-regional trade — although it is recognised that physical infrastructure is only part of the picture.

“We have to reconnect with each other at the level of infrastructure. We are all building roads towards Western Europe but we need also infrastructure between ourselves,’ said Bosnia & Herzegovina’s Prime Minister Zoran Tegeltija.

Work is on-going on several trans-regional road corridors including pan-European Corridor 10 that runs from Hungary to Bulgaria across the region, and Corridor 8 from the Albanian port of Durres across North Macedonia to Bulgaria. Other major road projects underway include the highway from the Serbian capital Belgrade to Bar in Montenegro and another highway from Belgrade to Sarajevo. According to Brnabic, work on the so-called highway of peace from Nis in Serbia to Pristina then on to Tirana and Durres could start by the end of the year. Another planned project is the Adriatic-Ionian highway of Blue Highway envisaged to stretch right down the western coast of the Balkan Peninsular.

On the other hand, Tegeltija commented that railways had been “left at the margins” even though in Bosnia, for example, “all railways need upgrading”. The prime ministers of Kosovo and Montenegro also mentioned specific international rail projects that would benefit the region; from Prizren to Tetovo, and Podgorica to Sarajevo, respectively.

Expanding “mini-Schengen”

Aside from building the physical infrastructure, there have been efforts to remove barriers to trade and investment within the region, with the most significant recent step being the launch of the so-called “mini-Schengen” comprising Albania, North Macedonia and Serbia.

Edi Rama, the prime minister of Albania, talked of the need to act rather than waiting for the EU to “do things for us”.

“We have to change the paradigm for next generation, fight for foreign investment … we can’t wait to join the EU to get a bigger space of opportunities. If we are able to open our borders as soon as possible for people, goods and services … we can say here is a much bigger market than when every country is separated from each other.” The leaders of the three founding countries agreed on concrete steps to eliminate obstacles to the free movement of people, goods, services and capital in November, with the final aim of securing EU membership.

Among these are an agreement to allow free travel between the countries only using an ID card, and a common work permit that would allow people to work in all three countries. The free and fast movement of goods will be encouraged by the introduction of a 24-hour working time for all inspection services with a focus on phytosanitary and veterinary inspection.

Brnabic told the summit she hoped the rest of the region would join soon, as the initiative is “really something that can in the most tangible possible way contribute to us being presented as a united market and also offers a very different future to youth from the Balkans.” However, observers from outside the region have been more cautious on the creation of the “mini-Schengen”, not least because of the previous initiatives to achieve the same goals.

“I can only hope the Western Balkans will be increasingly viewed as single market, it is not yet. There was a regional initiative announced three years ago for the creation of a regional economic area, and countries in the region are also members of [the Central Europe Free Trade Agreement] CEFTA, but it is high time there was a reinvigorated effort,” said Zsuzsanna Hargitai the EBRD’s director for the Western Balkans, in an interview with bne IntelliNews ahead of the summit.

“Most importantly there simply needs to be an implementation of the free trade agreement and the understandings the six countries made under the regional economic area. Now is the time to have another look at it, because it’s now hurting the economies.”

Commenting specifically on the “mini-Schengen” regional economic area, Hargitai pointed to two main positives: the ownership of these countries, and that they are looking at very pragmatic steps to implement it.

“However, we are one of many who say they should make it inclusive,” she added. “In addition, while it is excellent they agreed to apply the highest standard among the three countries, for example on phytosanitary standards, are these the standards they already committed to under the regional economic area? Let’s have a higher aspiration and not undermine the commitments already undertaken.”  

Historic conflicts

Conflicts naturally remain in the region. Bosnia also remains a potential flashpoint in the Western Balkans, not least because of the secessionist ambitions of Milorad Dodik, the Serb member of Bosnia’s tripartite presidency. Dodik has recently resumed his calls for a referendum on a “RSexit” for Bosnia’s Serb entity, Republika Srpska. While the rhetoric is most likely related to the forthcoming local election this autumn, such calls inevitably also divert attention from the need for reforms and make regional cooperation more difficult.

In addition, efforts to normalise relations between Belgrade and Pristina all but broke down over the last year after Pristina imposed 100% tariffs on goods imports from Serbia and Bosnia in late 2018.

Brnabic commented at one point that we have “seen in past year increasing political challenges in the region unfortunately again”, with specific reference to the 100% tariffs. However, the days following the summit there was some progress on the issue, with Kurti announcing on February 27 that the country will partially and conditionally lift the tariffs starting from March 15.

And despite these persistent differences, Albania’s Rama — who rather stole the show during the opening panel — pointed instead to the achievements of the last few years.

“Until 2014 never ever had a meeting all together with the representatives of these countries to sit down without guns, without hatred, without blood and to talk about the future. It is amazing how we have moved forward,” he said.

“Of course we have disagreements and there are big problems to be solved, but we are working together to build together a future for our children that is totally different from the endless wars and conflicts that we inherited.”