The transport sector is undergoing profound changes as it shifts towards more sustainable, climate-resilient and inclusive patterns. Modernising railways is a crucial part of these efforts, providing a cleaner, safer and greener alternative to roads. For both passengers and freight, rail offers the lowest marginal operating costs and greenhouse gas emissions per transport unit, making electrified railways one of the most sustainable modes of transport in existence.

The European Union is strategically expanding its high-speed rail network, and has achieved a 47% increase since 2013. Under its Sustainable and Smart Mobility Strategy, it has set ambitious goals to increase rail freight traffic by 50% by 2030 and double it by 2050, and to triple high-speed rail traffic by 2050 as well. These goals align with the Paris Agreement and Europe’s climate neutrality targets. 

The EIB’s commitment to the rail sector is clear. In 2024 alone, the EU bank invested €4.5bn globally, with the lion’s share going to upgrade existing infrastructure and bring new and innovative technologies to the European Union. Looking at the European high-speed rail network, the EIB has financed nearly every EU high-speed rail line built since the 1990s, with few exceptions, and been part of almost all public-private partnerships for rail infrastructure that have come to market in the European Union over the last 30 years. 

Maximising the impact of EU expertise and funding in the Western Balkans

Sharing the same continent and commitment to these targets, the Western Balkans play a significant role in this equation. Over 50% of railway tracks in the region are classified as poor, and only about one-third of the total network is electrified (compared to the EU average of 56%). The Core Rail Network spans some 3 000 km, with 2 882 km in operation and 65% electrified as of 2023. However, due to unreliability and inefficiency, rail’s modal share accounts for 19% of freight and just 7% of passenger transport, according to Transport Community data. Some estimates indicate that the investment gap exceeds €4bn.

These are some of the issues that were discussed at the recent event Bridging Europe: The North Macedonia – Sweden Railway Alliance, hosted by the Embassy of Sweden in Skopje. This event underscored the pivotal role of the European Union in developing a smart, safe and resilient railway network across the Western Balkans, aimed at stimulating economic growth and fostering regional cooperation. By leveraging existing EU funding opportunities, including those under the New Growth Plan, the region can maximise the impact of rail investments by aligning them with strategic mobility, digitalisation and climate goals.

Revamped railway tracks across the region

As the EU bank, the European Investment Bank’s development arm, EIB Global, supports transportation by taking a holistic approach that includes climate adaptation, environmental protection and safety improvements, and the promotion of social well-being. To date, the bank has unlocked nearly €2bn for the Western Balkan railway sector, aiming to improve infrastructure and advance digitalisation and automation.

Together with the European Commission, the bank has mobilised significant resources in EU grants and loans to initiate key rail projects, after decades of insufficient maintenance and funding. EIB Global is supporting the upgrade of several strategic rail sections in the region, including the routes from Vorë in central Albania to the Montenegrin border, and from Durres to Rrogozhinë; the Belgrade-Niš and Niš-Dimitovgrad sections in Serbia; the Bar-Vrbnica railway line in Montenegro; as well as Rail Route 10 in Kosovo.

In North Macedonia, a Team Europe financing package for the rail section from Kriva Palanka to the Bulgarian border was signed in 2023 with loans from the EIB and EBRD, and substantial EU grants totalling €210mn (though a €61mn EU grant has been cancelled following the project promoter’s decision to cancel the tender last autumn). This represents a tremendous Team Europe effort to realise the final phase of the eastern segment of Rail Corridor VIII, a crucial part of the core Trans-European Transport Network (TEN-T) and critical for regional and EU connectivity, as well as Nato commitments.

Financial and technical resources combined 

For these flagship railway projects, over €1bn has been provided in EU grants alone under the Western Balkans Investment Framework. Most projects financed also benefit from the EIB’s and the European Commission’s joint advisory programme, JASPERS, which helps with project implementation. This technical assistance ensures compliance with EU social, climate and environmental standards, as well as capacity-building in regional project management teams. JASPERS experts are involved in 21 rail assignments in the Western Balkan region, with an overall investment cost exceeding €5bn.

With the combination of EU financial and technical resources, the region is in a position to modernise its railway network and upgrade it to meet the latest safety, efficiency and environmental EU standards. Electrification and modernisation of major rail corridors will help reduce environmental pollution and improve safety. Trains require less energy to travel than other modes of motorised transport, and can carry the same amount of freight as around 50 trucks. Better infrastructure will boost the attractiveness of rail transport, feeding into a modal shift towards greener mobility.

Looking ahead, the region must continue to transform its rail sector to become more eco-friendly, accessible and digitalised. Alignment with EU standards is a crucial step on this path – including under the revised regulation for the TEN-T adopted in 2024, including the key section of the North Macedonian rail network in the Wester Balkans Eastern Mediterranean Corridor. Given the rising frequency of extreme weather events, climate-proofing new and existing infrastructure should also become an integral part of investment strategies. Further rail market integration, better interoperability and improved governance will boost market opening, enhancing efficiency and service quality. 

Together with all its partners, the EIB remains committed to fostering better connectivity within the region and beyond. In North Macedonia, the EIB and Team Europe stand ready to provide EU technical assistance and, importantly, blend EU grants and concessional loans to significantly improve the cost of projects for national budgets and taxpayers. The Team Europe offer stands.

Björn Gabriel is the EIB representative to North Macedonia.