Russia’s invasion of Ukraine has confirmed what many feared already: Russia is aggressively seeing to expand its presence in what it sees as its spheres of influence, and that includes the Western Balkans. Expanding the EU to this region, made vulnerable by its poverty relative to other parts of Europe and its long-standing unresolved conflicts, is a way of exporting stability and prosperity. Yet even before the war, political disputes had stymied the progress of the six Western Balkan countries. With no more clarity than before on how to resolve these, the question arises: can the region receive some of the benefits of EU membership while these political divisions are being resolved?
The idea of extending some sort of quasi-membership or some of the benefits of membership to those states that are waiting to accede has been around for a while. This is a politically sensitive topic, as there is resistance among the aspiring EU members as long as it’s seen as potentially an alternative to membership (rather than a step on the road towards full membership). But the concept was raised again after first Ukraine, then Georgia and Moldova filed membership applications, joining the queue along with the six Western Balkans countries that are at various stages of the process – and have been for many years.
A number of variations on this concept have been floated but what they have in common is that the candidates get to share in some of the benefits of EU membership such as access to EU markets and more development funds, while progress towards full accession (and continued access to these benefits) remains contingent on reforms.
As the June 23 EU Council meeting approaches, at which critical decisions will be made not just for candidate states Albania and North Macedonia, but also for the three Eastern Partnership states, French President Emmanuel Macron put forward the idea of a ‘political European community’. This would create a “new space of political co-operation, of security, of co-operation in terms of energy, of transport and to invest in infrastructure” for the Western Balkan and Eastern Partnership countries to be part of a ‘political Europe’ while waiting for accession.
The potential for extending economic benefits to the aspirant states and various forms of staged accession were discussed on a webinar organised by the Vienna Institute for International Economic Studies (wiiw) on June 8. A new study from wiiw and Bertelsmann Stiftung, “The long way round: Lessons from EU-CEE for improving integration and development in the Western Balkans”, looks at the lessons from the EU accession process of the Central and Southeast European EU member states for the Western Balkan economies. It finds that EU accession has improved regional economic integration in the CEE member states. Trade in goods and services rose by 50%, while intraregional FDI inflows grew too, but more modestly.
“The main channel through which EU accession has enhanced regional economic integration has been the income channel. Higher GDP per capita in the region has increased demand for and the supply of products from the region, which in turn has increased intraregional trade and investment, and EU transfers appear to be one of the main determinants of the increase in income. In fact, doubling the annual EU transfers that a country receives results in an overall increase in its GDP of 14%,” said the report.
“These findings imply that the best way to foster regional economic integration and development in the Western Balkans would be through policies aimed at raising incomes, and that one way in which this can be achieved is by increasing EU transfers.”
The report recommends “the greatest possible integration of the Western Balkans into the EU, including through full access to the EU budget with the necessary conditionality attached. Even if full accession is still some way off, increasing regional economic integration and development would make the Western Balkan countries better able to meet the EU’s entry criteria. Moreover, it could also contribute to mitigating the region’s territorial and constitutional disputes, which also represent some of the main barriers to EU accession.”
wiiw economist Branimir Jovanovic argued on the panel that the "current engagement strategy for the Western Balkans has not been very successful, to put it mildly”, pointing to how long countries form the region have been waiting to join. North Macedonia applied back in 2004, 18 years ago, and other candidates applied 12-13 years ago and have no immediate prospects of joining. By contrast, all the CEE countries that joined the EU took less than 12 years from start to finish, and just eight years for Czechia and Slovakia.
Similarly, the convergence of incomes in the Western Balkans to EU levels has been very slow, said Jovanovic. While some CEE already incomes are around 90% of the EU average, those in the Western Balkans are only at 30-40%.
On the political side, according to Jovanovic, while the accession process is conditional on the states sorting out bilateral disputes – most notably the normalisation of relations between Serbia and Kosovo – they are largely left to sort these out for themselves. This has not been very successful either with Serbia and Kosovo or with North Macedonia’s disputes with first Greece and later Bulgaria.
While there have been many initiatives aimed at speeding up enlargement to the Western Balkans, these have failed, argued Jovanovic, because they have “conditioned EU accession on improving regional co-operation … and assumed that regional co-operation improves with regional economic integration.” However, he added, “the prerequisites for this have never been present in the Western Balkans”, listing institutional factors such as the rule of law and controlling corruption, as well as structural, political and economic factors.
Jovanovic argues in favour of increasing EU budget transfers to the region, which will have the effect of boosting regional trade and co-operation. The report indicates that doubling annual transfers from 1% to 2% of GDP leads to an overall increase in GDP of 14%. However, Jovanovic added, “Greater transfers should be accompanied by strict conditions for institutional reforms”, and he also stressed that the proposal is not a substitute for EU accession.
Accession isn’t working
Dusan Reljić, head of the Brussels office at the German Institute for International and Security Affairs (SWP), went further in his criticism of western policy towards the aspiring EU members.
“The policy of the EU and US is evidently not functioning. My firm belief is that the structure of the political and economic relationship between the EU and the region is producing divergence, not convergence,” said Reljić.
“My impression is that in socio economic terms, we are witnessing the creation of a new Berlin Wall around the non-EU states in Southeast Europe.”
Reljić argued that taking together structural, cohesion and post-COVID recovery funds, the EU member states in the region are set to receive 11 times more grant and loan funding than the Western Balkans counties. “We see the revolution in EU fiscal policy in response to the pandemic as a huge missed opportunity for the Western Balkans,” he said.
Moreover, the lack of economic convergence – on top of the waning hopes for a future within the EU – is contributing to the massive emigration from the Western Balkans.
“In the last quarter century about one quarter of the population migrated to the EU,” said Reljić. “When the population in the region are thinking of the future, and coming to the conclusion there is no promise that the future will be better than the past, they are doing the only obvious thing: migrating outward … the chief problem of the region is the loss of human capital.”
New approaches needed
Hannes Swoboda, president of wiiw and the International Institute for Peace and a former MEP, argued that more money has to be spent on the region, saying the neglect of the aspiring EU members is “not justified”.
“If we don’t come to a new concept of engagement and see visible, clear steps forward, I see more chaos, more disappointment, more turning away of citizens from the EU,” he said. “The EU must give the region a framework where they can slowly integrate into the EU. Otherwise more money may be spent, but will not have the effect we want, integration of the region into the EU.”
Ranka Miljenović, executive director of the European Policy Center (CEP) in Belgrade, took a slightly more optimistic tone, saying she sees some form of staged accession as a way to unblock the enlargement process. She discussed the option of a four-stage accession process, an idea outlined by CEP in collaboration with the Center for European Policy Studies (CEPS).
An essential part of this would be that “access to the EU budget should be conditioned with the reforms – intuitional reforms and in the rule of law area”.
Changed geopolitical context
The war in Ukraine has deepened concerns about potential destabilisation in the Western Balkans, while it has led Ukraine, Georgia and Moldova to formally apply for EU accession. There have long been warnings that if the EU fails in the Western Balkans, it will create room for rival powers – such as Russia – in the region.
“If the EU does not show stronger support for the Western Balkans, that opens space that could be taken by other countries,” said Jovanovic. “The war in Ukraine is reinforcing our arguments: if you want to prevent Russia from interfering, the EU must show stronger support.”
The discussion took place just days after Russian Foreign Minister Sergei Lavrov was supposed to visit Belgrade – a visit that had to be cancelled after Serbia’s neighbours closed their airspace.
Meanwhile, as disillusionment grows in the Western Balkans about the prospects for EU accession, three states – Albania, North Macedonia and Serbia – took matters into their own hands with the launch of the Open Balkan initiative. Open Balkan had its latest summit in Ohrid on June 7 and 8. The initiative – so far joined by only three of the six countries – is intended to facilitate free movement of goods and labour within the region with the aim of stimulating the regional economy.
The third significant development of the week was German Chancellor Olaf Scholz’ tour of the region, as the June 23 EU Council meeting approaches. Scholz sought to encourage Bulgaria to lift its veto on North Macedonia’s EU accession talks, while also stressing the importance of normalising relations between Serbia and Kosovo. However, so far the indications are not promising that there will be any kind of breakthrough this month.
The EU Council members are also due to decide on whether to give candidate status to Ukraine, Georgia and Moldova – and further down the line, there will be different political problems to be resolved with the three Eastern Partnership states as parts of all their territories are occupied by Russia or Russia-backed separatists.
That being the case, under current procedures it’s hard to see what the EU can offer either to the Western Balkan states that have been long in the waiting room or to the new applicants that will have an immediate and concrete positive impact. Accordingly, alternatives that will still bring the non-members from Southeast Europe, Eastern Europe and the Caucasus closer to the EU fold are now being considered.