The European Union’s stalled enlargement process is regaining momentum, but a new study by the Vienna Institute for International Economic Studies (wiiw) warns that candidate countries must accelerate deep economic and institutional reforms if they hope to meet ambitious timelines for EU accession.

The European Commission signalled in early November that accession negotiations with Montenegro, Albania, Moldova and Ukraine could wrap up within two years. However, wiiw, which carried out the study for the Commission, said progress would depend on narrowing critical gaps in competitiveness, labour markets and fiscal governance.

“For rapid EU enlargement to succeed, clear priorities for economic reform are needed to address the biggest problems facing the candidate countries,” the authors wrote, citing Ukraine, Serbia and Montenegro as case studies. The analysis benchmarks the three against Romania, Bulgaria and Croatia prior to their entry into the bloc and identifies required steps to meet the EU’s economic Copenhagen criteria.

“Against the backdrop of increasing geopolitical competition between the major powers, the EU would be well advised to stabilise its immediate neighbourhood in the east and southeast through a rapid round of enlargement,” said Michael Landesmann, an economist at wiiw and initiator and co-author of the study.

Institutional weaknesses

All three countries examined “still have significant economic and institutional shortcomings that stand in the way of EU accession,” the report found. These challenges were not insurmountable, it said, but progress would rely heavily on political will.

The report stresses that reforms related to the rule of law, media freedom and anti-corruption should be “irreversibly anchored” and subject to tougher scrutiny than in earlier rounds of enlargement. Without that, the authors warned, the EU risked “unpleasant surprises after accession”.

Ukraine, Serbia and Montenegro all face governance challenges, especially around judicial independence, public procurement and state capture risks. 

For Ukraine, the report argues that when martial law ends, “the restoration of a civilian public procurement system and irreversible reforms in the judiciary and in the fight against corruption” must be prioritised to prevent “any resurgence of the oligarchs and the hijacking of the state by special interests”. 

The continued issues with large-scale corruption have been highlighted by the National Anti-Corruption Bureau of Ukraine’s (NABU’s) revelation that more than $100mn was siphoned off in the Energoatom kickback scheme, orchestrated by Ukrainian President Volodymyr Zelenskiy’s former business partner and good friend, Timur Mindich. 

Weaknesses are also flagged in Serbia and Montenegro, where the report says media freedom, pluralism and accountability remain foundational conditions for accession.

Reconstruction against the clock

Ukraine’s war-damaged economy will require extensive support for rebuilding and restructuring national debt. Yet the report stresses that despite its challenges, Ukraine has moved forward.

“Despite its weak institutions and major shortcomings in terms of the rule of law and the fight against corruption, significant progress has been made,” said Richard Grieveson, deputy director of wiiw and co-author. “Ukraine’s EU accession should therefore be feasible.”

A major constraint is the country’s persistently low level of foreign direct investment. Ukraine is now competitive mainly in agriculture, raw materials, food, IT and defence-related industries, including drones, but its economic base remains narrow.

“In addition to the difficult security situation caused by the war, corruption and the lack of rule of law are important reasons for the low level of direct investment,” said Olga Pindyuk, a Ukraine expert at wiiw. “Solving these problems is also essential from an economic point of view.”

The report argues that Ukraine could follow the model used by Central and Eastern European member states in the 2000s by attracting Western industrial manufacturers, provided investment climate reforms accelerate.

Population decline is another structural risk. Since 2022, between 6.5mn and 7mn Ukrainians — many young and highly skilled — have left the country. “The Ukrainian government should work closely with EU countries to do everything possible to encourage as many people as possible to return and to offer them prospects,” Pindyuk said.

With a wartime deficit exceeding 20% of GDP and high public debt, the report concludes that international debt relief will be a “necessary condition” for Ukraine’s recovery.

Serbia’s political will in question

Serbia scores higher on macroeconomic stability than Ukraine; public debt and the deficit are under control, exports make up around 55% of GDP and growth has averaged between 3-4% in recent years. The biggest uncertainties are political and geopolitical, the report argues.

“China’s strong economic presence could prove to be a stumbling block for the country on its path to EU membership,” said Branimir Jovanović, the study’s Serbia expert. Beijing now accounts for roughly one-third of foreign direct investment, a share “equivalent to the combined total of all other EU countries”, the study notes.

But the central obstacle, the authors warn, is the attitude of Serbia’s leadership.

“The biggest problem for Serbia on its path to EU membership is undoubtedly the low motivation on the part of its authoritarian president, Aleksandar Vučić, to implement the reforms required for accession,” Jovanović said. Serbia has “slumped in all relevant World Bank rankings” assessing governance, corruption and the rule of law, the report notes.

Public frustration is growing. “As the ongoing protests by the population against corruption and nepotism in the country show, these abuses must be addressed,” he added.

Montenegro nears the finish line

Montenegro remains the frontrunner among the three. “Although it is the smallest of the accession candidate countries, Montenegro has come closest to joining the EU,” the report says. But it still faces entrenched governance weaknesses and a heavily tourism-dependent economy.

At 124% of GDP, public debt is the highest in the region and nearly triggered a crisis during the COVID-19 pandemic.

The government now aims to close all negotiation chapters by end-2026 and join the EU by 2028 — a target the report calls “ambitious, but politically significant”. 

For the aspiring members of the EU, the report’s authors conclude that accelerated enlargement is achievable but only if governments deliver substantive reforms — not symbolic gestures. “In principle, it should be possible to resolve these problems – provided the necessary political will exists,” the report states.