New Growth Plan and Reform for the Western Balkans : a step to take these countries out of the waiting room

This year we are celebrating the 20th anniversary of the historic ‘big bang’ EU enlargement when 10 Central and Eastern European countries became members of the EU.

On the contrary, there was no cause for celebration last year, when we reached another milestone – 20 years since the Thessaloniki Summit when the EU Heads of States and Governments gave their commitment to the EU integration of Western Balkan countries.

In a two-decade long enlargement process only one country has joined the EU (Croatia in 2013), and all the other countries are still in the waiting room, to which were added in 2022 Ukraine, Moldova and Georgia.

Despite much progress and engagement of the EU in the Western Balkans, the EU’s commitment to enlargement has in the last 20 years been inconsistent and the EU is sometimes not delivering on its promises. Some Member States are also hesitant to welcome new members. This has led to scepticism and doubts as, and as a consequence the EU is losing its transformative power in the region allowing third countries’ interests and influence to spread.

On the other hand, six Western Balkan countries (Serbia, North Macedonia, Albania, Bosnia and Herzegovina, Montenegro and Kosovo (this designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Brussels Declaration, 13 December 2023. )) have been slow in reforming and meeting the EU criteria for membership, sometimes even backsliding on democratic reforms, fundamental values and freedoms, and some are not even aligning with the EU CFSP which is seriously hindering their rapprochement with the EU.

What is especially worrying is that young people are disillusioned and leaving their countries, with serious consequences for future socio-economic development.

So, something needs to change: We need a new impetus, and to that end the initiatives for gradual integration of certain sectors into the EU single market is a very good instrument to support preparations for membership and already bring tangible benefits to candidates during the accession process (such as acceding to the SEPA, lowering transaction costs, lowering roaming costs, investment and connection of transport and energy infrastructure).

Socio-economic convergence is an essential prerequisite for enlargement countries to integrate with the EU.

The EU is the leading trade partner for all Western Balkan countries, with almost 70% of the region’s total trade. EU companies are by far the leading investors in the region, accounting for 55% of foreign direct investments in 2022. Exports to the Western Balkan countries have more than doubled in the last 10 years and imports have more than tripled in the same period. The Western Balkans is a market of 17 million consumers

But economic convergence of WB economies with the EU is weak and the gap is increasing. Average GDP per capita in purchasing power for the WB is between 27-50% of the EU average. This gap is and will remain a challenge unless gradually closed.

To achieve convergence and implement necessary reforms more resources and a different approach are needed. To that end the EC proposal from November 2023 for the New Growth Plan and Reform and Growth Facility for the Western Balkans is very welcome.

The Facility will cover the period from 2024 to 2027 and is expected to provide up to EUR2 billion in grants and EUR4 billion in loans to the EU’s Western Balkan partners. It will complement the existing Instrument for Pre-accession Assistance (IPA III), considerably increasing financial assistance to partners in the region. It will support also the EU’s Western Balkan partners in undertaking EU-related reforms and stimulate their economic convergence with the EU, based on ambitious reform agendas. The Facility will also promote partners’ alignment with EU values, laws, rules, standards, policies and practices with a view to future EU membership.

The New Growth Plan and Facility mean more money and incentives for WB countries, with strong conditionality and predictability between reforms and funding.

In our EESC opinion we stress that a gradual, predictable and merit-based approach to acquiring increasing benefits for candidates during the EU accession process, including integration into the EU single market, is the best way to proceed towards enlargement of the EU. We welcome the robust conditionality approach in the Reform and Growth

Facility, emphasising key reforms in democracy, rule of law and human rights, including minority rights.

In line with the EU partnership principle and the social and economic objectives of the plan, the EESC insists that social partners and civil society must be involved in developing, implementing, monitoring and evaluating the reform agendas in a timely and meaningful manner.

One of objectives of the New Growth Plan and Facility is to accelerate regional economic integration as a stepping stone for WB economies to better integrate into European value chains and improve their competitiveness and better integrate in the EU single market.

Increased intra-regional economic cooperation and trade based on EU standards will unleash the untapped economic potential of the region, increase competitiveness of companies by fostering cross-border production chains, leverage regional comparative advantages, create new jobs, be beneficial to consumers and attract investors to benefit from a bigger market.

A recent Eurochambres survey shows that 82% of companies in the WB support the Common Regional Market. However, conditions for increased regional cooperation need to be advantageous and business friendly, based on EU standards.

In order to facilitate intra-regional trade and help businesses and citizens deal with diverging legal practices and costly regulation, we recommend in our opinion to establish in each country a centralised online portal, along the lines of Digital Gateway in the EU.

Besides geostrategic importance, enlargement is also a business opportunity for European companies, and we need to see the benefits of this. Globalisation is dying, we need to think about Europe’s strategic autonomy, stay strong and resilient, and we need to consider the Western Balkans as an integral part of European solutions to global challenges.

 Dragica Martinović Džamonja,
  Co-rapporteur of the opinion REX/581 “New growth plan and Reform and Growth Facility for the Western Balkans”
  Member of the EESC Employers’ Group

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