MITTELEUROPEAN INSIGHTS: Brussels needs to jump-start the Western Balkan accession process

MITTELEUROPEAN INSIGHTS: Brussels needs to jump-start the Western Balkan accession process
Ukraine lags behind West Balkan average GDP per capita on a purchasing power basis.
By Gunter Deuber in Vienna, Fjorent Rrushi in Tirana, Ivona Zametica in Sarajevo July 13, 2022

The EU summit at the end of June, which included an EU-Western Balkans leaders' meeting, had a bitter aftertaste for the CEE region. By giving an official accession candidate status to Ukraine and Moldova, the EU has created an abstract enlargement perspective for those two countries. Such a move was possibly morally unavoidable. At the same time, the more concrete EU enlargement perspective for the Western Balkans continues to falter, as it has for years.

Compared to Ukraine and Moldova, Bosnia has not been granted official candidate status yet, with less than a handful of EU members supporting such a move now. Albania and Northern Macedonia are still not allowed to finally start EU entry negotiations because of internal EU blockades and leadership weaknesses inside the EU. The EU accession negotiations of Montenegro and Serbia have been stuck in no-man’s land for 10 years. In some cases, not only disappointment with EU enlargement, but alienation is also recognisable in the Western Balkans, given the EU’s complicated relationship with the region.

But right now, ironically, there is also hope. In light of the massive challenges with the new EU candidate Ukraine, some Western Balkan issues appear more manageable.

More strategically, with new EU enlargement candidates in the post-Soviet space, the EU's enlargement agenda will remain an essential and (geo-)strategic policy field for decades to come. Prior to this, enlargement agendas were not necessarily considered an important EU policy area.

Before the emergence of new EU candidates in the post-Soviet space, some hoped that the EU accession agenda after the potential entry of the Western Balkans might be put aside or even closed down. In such a beautiful fantasy world, one could have proclaimed the completion of European unification and "only" sought deeper co-operation (less than membership) with the remaining neighbouring and partner countries.

Possibly, the frozen EU accession process of Turkey (a candidate at least as challenging as Ukraine) could have come to an end in this way as well. Now a return to more serious EU-Turkey negotiations cannot be ruled out completely in the coming decade(s), given that EU expansion into the post-Soviet space will likely be a long-lasting process that will keep the EU enlargement agenda alive for a very long time.

Movement beneath the surface

Despite the fact that the June EU summit did not produce concrete results for the Western Balkans, there is optimism that underneath things are moving. We might see some concrete progress later in 2022. The Bulgarian parliament's vote on lifting the veto on North Macedonia under certain conditions goes in the right direction, although it remains unclear how palatable this will be to the fragile North Macedonian government.

The push from the French government a staunchly reluctant player in enlargement until recently to reach a compromise between Bulgaria and North Macedonia is very telling about the new geopolitical reality in Europe after Russia’s aggression against Ukraine. This is not to downplay that a lot of other EU member countries were also putting pressure on Bulgaria, among them Italy, Germany, Slovenia, Slovakia, Czechia, Hungary plus some Baltic countries.

Even for other countries in the region such as Bosnia and Herzegovina and Kosovo, the cup is not completely empty. The agreement brokered between the EU and all key Bosnian political parties in June seems to have laid the way for a positive outcome on the candidate status to be achieved by the end of 2022 if October elections will run smoothly and milestones are achieved (especially in the areas of rule of law and judiciary reforms outlined in the agreement).

It is indicative that in such challenging times, Republic of Srpska turned back from full confrontation with Western countries and signed an agreement with EU politicians, along with other political parties. Thus it seems that there is a swivel West rather than East even if a lot of (financial) sanction pressure from the USA and the UK was necessary. We see a fair chance that Bosnia will finally get candidate status in 2022, while Albania and North Macedonia might be finally successful in having their formal start of negotiations ticked off.

Kosovo, the youngest country in Europe, has shown a lively democratic environment, with competitive and fair elections, a rarity in this corner of Europe. Nevertheless, progress on the democratic front has not yet been rewarded by the EU. In our opinion, the EU wants to exert pressure on the Kosovo government to extract concessions in a final agreement with Serbia. That said, the EU could already offer Kosovo visa liberalisation as a gesture to bring the country closer, as it remains the only Western Balkan country that still has such restrictions.

The outlook of increasing competition among EU candidates and negotiating countries could also be interpreted in a positive way. It would be feasible to create a competitive "benchmarking" process. In this way, it might also be possible to initiate "accession rounds" again, although of course every accession decision is also a case-by-case decision. For example, it would be possible to achieve a faster round of enlargement in the 2020s with some selected more advanced Western Balkan countries, while countries that are still somewhat undecided in geopolitical terms (e.g. Serbia) might have to accept a later accession.

Turf wars

Potential enlargement of the EU into the post-Soviet space, i.e. to include Ukraine and Moldova as "former" Eastern Partnership (EaP) countries, has a substantive geopolitical dimension. The EU would expand far into areas that Moscow sees at its turf. In doing so, the EU would send an important signal from a long-term perspective to countries further in Russia's indirect and direct sphere of influence (Georgia, Armenia, perhaps also Belarus at some point?).

However, the EU is now entering into a geopolitical game with Russia and this must be taken into account. For example, the EU can hardly accept Ukraine or Moldova as EU members with significant long-term unresolved border issues. In this respect, the EU is dependent on Russia's "favour", or it indirectly forces Ukraine and Moldova to make unpalatable compromises.

Furthermore, Russia will actively eye any political and economic successes of the new EU candidate Ukraine. Any supposed failures or lack of progress in the EU agendas would certainly be actively addressed by the Russian side. In this respect, granting EU candidate status should by no means be understood "only" as a short-term fix and a political signal to provide Ukraine with a political tailwind and moral support.

In light of geopolitics, the EU candidate status is now a matter of promoting an EU-driven economic development and modernisation agenda for Ukraine (and Moldova), as the EU has done with the Economic and Investment Plan for the Western Balkans.

For the Western Balkans, the EU should mobilise up to €30bn in the coming seven years, adding at least 3% in additional GDP growth. Currently, 21 flagship investment projects worth a tad more than €3bn are already approved. From this perspective alone and in the light of their respective economic weights, for Ukraine at least €50bn in long-term EU investment funding (apart from an international reconstruction plan) would be a sensible minimum target.

Enlargement to include the Western Balkans and Ukraine should also be seen as partly connected in terms of time and content. On the one hand, the same transformation and reform efforts as in the Western Balkans must be demanded from the new accession candidates Ukraine and Moldova. In this respect, certain integration successes of the earlier and possibly more advanced EU candidates of the Western Balkans are also important for the new EU candidates in the post-Soviet space.

On the other hand, accession processes as slow as those in the Western Balkans must be avoided if possible. There is already great frustration there. Similar frustration or even partial alienation must be avoided in Ukraine (in the long term).

Moreover, it should be noted that Russia will actively exploit any weaknesses in the EU enlargement process (with regard to the Western Balkans and/or new candidates) in the future to show the "weakness" of the EU. Incidentally, the same can be expected if individual EU countries block the opening of official accession talks with Ukraine (or other candidates) at some point in the future. In this respect, the EU must also master sensible internal power politics (be it vis-à-vis Bulgaria and/or Hungary) and, as shown below, strengthen its own capacity to act.

Linkage to reform of the EU

EU enlargement to the Western Balkans is already seen as a substantial challenge at the EU level. This is especially true at the political level and in terms of voting procedures; it is less so in terms of population and economic power. In this respect, we believe it makes sense to actively link EU enlargement to the Western Balkans with the internal reform of the voting mechanisms. In this way, the EU would put itself under meaningful pressure and not just the enlargement candidates.

It would therefore be expedient to agree on both an EU reform and enlargement target date or time corridor (e.g. 2027-2030). We think that such a long-term goal fits well with the comprehensive mission- and vision-oriented EU policy orientation in other areas (such as green transformation).

In this respect, it is clear that only when the Western Balkans (or a part of the group) is integrated into the EU, and the EU manages to reform its internal co-ordination mechanisms and demonstrates more geopolitical problem-solving competence (plus corresponding pragmatism), can the EU really turn its attention to the accession candidate Ukraine or other potential accession candidates.

In this context, it should also be remembered that Russia has viewed EU accession as less of a threat, because the EU is not viewed as a "military organisation" (yet). However, this could change by the time of a possible accession window for Ukraine (and other candidates). It should not be forgotten that Russia has in the past actively countered concrete EU advances by some countries.

Sometimes EU accession has not been a winning strategy for policymakers in candidate/accession countries. It’s therefore of paramount importance to overhaul the EU funding for negotiating countries, i.e. to provide substantive EU funding and co-operation with EU institutions ahead of final EU membership. A current Austrian policy proposal, which has the backing of some other EU members, goes in this direction.

If negotiating EU candidate countries make progress by closing individual chapters, it is very important that they are somehow integrated into the EU financing programmes that are relevant to those chapters. This would have a tangible impact on the population of the Western Balkan countries as well as in the preparation of these countries to become full members. Participation in EU meetings with a special status without voting rights, involvement in the preparation of policies, could speed up the process of convergence and render these countries more ready when full membership comes.

Geopolitical challenge

Providing funding to Ukraine as a negotiating country might also be a feasible strategy. This would be a way for the EU to provide long-term and concrete support to Ukraine possibly even if the immediate and multilateral/international reconstruction plan/phase should eventually come to an end. Long-term economic development is key as Ukraine has so far shown one of the weakest catch-up performances of all potential EU candidates not even taking account of the current massive war damage.

Not only the potential EU enlargement into the post-Soviet space should be seen from a geostrategic perspective. In the Western Balkans, there is active competition with Russia, China and, to some extent, Turkey. Even though the geopolitical challenge or confrontation may be smaller in the Western Balkans, the EU could show geopolitical problem-solving competence here with relatively little effort and risk.

Geopolitics can be productively combined with economic self-interest. And here it is true that the Western Balkan countries are already much more closely linked to the EU economy than Ukraine. European foreign direct investment (FDI) in the Western Balkans (estimated at €40bn) is possibly higher than "true" EU FDI in Ukraine (correcting for offshoring). Western banking exposure to Ukraine just represents some 30% of Western Balkan exposure.

Not to forget that the Western Balkans can add to the much-needed energy security of the EU, be it via the TAP pipeline or increasingly established interconnectors in the region. On a positive note, the Western Balkans have also been invited to participate in the EU-Energy platform for the joint purchase of gas.  

Gunter Deuber is chief economist of Raiffeisen Bank in Vienna. This article was prepared with Fjorent Rrushi in Tirana and Ivona Zametica in Sarajevo.