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Abstract
During the past five years, the economies of the West Balkans have been experiencing a period of sustained economic recovery with strong GDP growth, declining price inflation, increasing foreign direct investment (FDI), and the prospect of EU membership in the medium term. With Bulgaria and Romania having joined the European Union in January 2007, the terms of reference and institutional dynamics are changing for countries in the Western Balkans. Croatia is an accession country currently negotiating with Brussels the complex catalogue of membership requirements. The former Yugoslav Republic of Macedonia has been an EU candidate country since December 2005 and Montenegro completed a Stabilisation and Association Agreement (SAA) with the Commission in October 2007, while Serbia’s SAA was adopted in the summer of 2008 but is currently on hold. The economic progress achieved in the Western Balkans and the European perspectives raise the question over the region’s continued ability to take full advantage of this rather favourable mix of developments. This article explores the countries’ varying success in confronting political and economic challenges and seeking opportunities on their road to Europe.
Acknowledgements
This article highlights the personal views of the author, not necessarily those of the European Commission, nor of the European Agency for Reconstruction. The author would like to express his gratitude towards Kalliope Spanou, Michael Marrese, Max Watson, Brady Kiesling, Peter Sanfey, George Georgiadis, and Othon Anastasakis for their valuable insight during different stages of preparing this article. Discussions with David Bastian on the future of Kosovo proved crucial.
Notes
1. The constitutional name of the country is ‘Republic of Macedonia’. All EU institutions are required to reference ‘Republic of Macedonia’ under the name ‘former Yugoslav Republic of Macedonia’, in line with United Nations Security Council resolution 817/1993 and United Nations General Assembly resolution 225/1993. The designation ‘former Yugoslav Republic of Macedonia’ shall be used throughout this document.
2. The parliament’s police reform law fulfils the EU’s main condition for closer ties. Reforming the ethnically separate police forces has been a painstaking and time‐consuming affair. Since the end of the 1992–1995 war, Bosnia’s police have operated as two separate forces, one for each of the two autonomous regions, the Muslim–Croat federation and the Serb Republic.
3. ‘Meet the neighbours: A survey of the EU’s eastern borders’, Economist, 25 June 2005.
4. The Stability Pact was the first serious attempt by the international community to replace the previous, reactive crisis‐intervention policy in South Eastern Europe with a comprehensive, long‐term conflict prevention strategy. In June 1999, at the EU’s initiative, the Stability Pact for South Eastern Europe was adopted in Cologne. In the founding document, more than 40 partner countries and organizations undertook to strengthen the countries of South Eastern Europe ‘in their efforts to foster peace, democracy, respect for human rights and economic prosperity in order to achieve stability in the whole region’ (p. 2). Euro‐Atlantic integration was promised to all the countries in the region. At a summit meeting in Sarajevo on 30 July 1999, the Pact was reaffirmed. The idea for the Stability Pact arose in late 1998 and thus predates the Kosovo war. The Stability Pact is based on experiences and lessons from worldwide international crisis management. In 2008 the Stability Pact was renamed as the Regional Cooperation Council and relocated its headquarters to Sarajevo.
5. The countries are Albania, Bosnia–Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Montenegro, Serbia, Kosovo, and Turkey.
6. Despite its success, or in light of it,the Agency will be phased out by the end of December 2008. Following a decision of the Commission, the Agency’s Operational Centres in Pristina, Podgorica, Skopje, and Belgrade will be replaced by EU Delegations currently being set up. This phasing‐out process does not mean that the work of the Agency in the Western Balkans is completed; on the contrary, the decision indicates how the Commission and the beneficiary countries assess progress made on the ground in assistance delivery and subsequently proceed to implement institutional adjustments in the EU approximation process in the region.
7. The Stability Pact comprises four Working Tables, the second of which focuses on Economic Development and Cooperation. Table II includes the Trade Working Group that coordinated much of the initial negotiations on a single free trade agreement for South Eastern Europe.
8. Initially, Bulgaria and Romania were members of CEFTA 2006. But because of their EU accession in 2007, membership requirements obliged both countries to resign from the trade pact.
9. The Nabucco members are OMV from Austria, Botas from Turkey, Bulgargaz from Bulgaria, Transgaz from Romania, MOL from Hungary, and RWE from Germany. The consortium is open to further parties potentially joining, such as the French Gaz de France.
10. Gazprom has also signed an agreement in 2007 with OMV of Austria to take a 50% stake in its Baumgarten trading gas hub.
11. ‘Wie die Schweiz ungarische Häuser finanziert’, Neue Züricher Zeitung, 12 January 2008, p. 29.
12. Some observers in Belgrade have chillingly likened the loss of the province for Serbia to an ‘amputation without anaesthesia’ (‘Serbs struggle with a massive change’, International Herald Tribune, 25 February Citation2008).
13. In a significant and highly symbolic move, three of Serbia’s neighbours – Bulgaria, Croatia, and Hungary – jointly recognized Kosovo’s independence in March 2008. The three countries were the first of Serbia’s seven neighbouring countries to take this step. Two successor states of the former Yugoslav federation (Slovenia and Croatia) have now recognized Kosovo, while the former Yugoslav Republic of Macedonia is still withholding recognition. The fact that Slovakia has not recognized Kosovo to date (October 2008) is also a reflection of this country’s ongoing nationality disputes with neighbouring Hungary. All other so‐called Visegrád countries (Hungary, Poland and – after considerable hesitation – also the Czech Republic) have now formally recognized Kosovo’s independence. Despite the apparent EU split, the foreign ministers still agreed to deploy a 2000‐strong judicial and police mission (EULEX) to Kosovo. The EU mission and accompanying financial aid to Kosovo were endorsed by all 27 EU members.
14. NATO currently has 16,000 troops stationed in Kosovo. Its mandate is to ensure Kosovo’s security while seeking to avoid becoming a de facto police force for the territory.
15. To illustrate, the Kosovar government cannot appoint four key positions without the explicit consent of the EU Special Representative, Pieter Feith. These positions are: (i) Head of Customs Office, (ii) Tax Administration, (iii) Finance Administration, and (iv) Governor of the Central Bank.
16. The Irish commander of the international peacekeeping force in Kosovo, Brigadier General Gerry Hegarty, said in April 2008 that there is no end in sight to the need for Irish soldiers in the country. Irish soldiers would be needed in Kosovo for many years to come to ensure peace and stability. He also said that Kosovan economy would be on life‐support from Brussels for up to two generations (see The Irish Independent, 24 April Citation2008, where he declared that Irish soldiers would be ‘needed in Kosovo for many more years’).
17. President Filip Vujanovic (Democratic Party of Socialists) won a landslide re‐election in April 2008, cementing the country’s economic and political course since breaking away from Serbia two years ago. The presidential vote was the first since Montenegro gained independence after a May 2006 referendum.