The EU appreciates the decision of the Montenegrin authorities to join the EU sanctions against Russia and commends Montenegrin citizens and private companies for hosting and supporting around 7,000 Ukrainian refugees in the country
We are indeed living in challenging times. While the impact of the Covid-19 pandemic continues to linger, geopolitical tensions have intensified dramatically across the European continent over the last two months. Two years have already passed since the first wave of the pandemic hit the world economy, causing economic contraction across the EU and in the enlargement region. The disruptive impact of the Covid crisis started to subside in 2021 and economic activity rebounded in both the EU and the Western Balkans, with an optimistic outlook for 2022. However, since February 2022, the Russian war of aggression against Ukraine has deteriorated the economic outlook across the entire continent.
The economic fallout of the war against Ukraine will impact negatively on Western Balkan economies through various transmission channels, through inter alia higher energy and food prices and decelerating trade and investment. In the case of Montenegro, the ongoing crisis will also have a certain impact on the tourism sector, given that tourists from Russia and Ukraine account for 20% of total arrivals. While the Montenegrin administration needs to ensure a timely response to those downside risks, the implementation of structural reform should regain momentum with a view to fostering a sustainable recovery in the medium-term, in particular by fostering the digital and green transitions.
The EU’s economy must, and will, remain strong enough to be able to continue providing massive support to Ukraine, but also other countries in the enlargement process
The regulatory and institutional environment is a challenge that hampers private sector development and competition. Widespread informality undermines competition and hinders the efficient allocation of state and private resources, while reducing tax revenues and the funding of social security systems. The administration’s focus in the coming period should remain on business-centric reforms, in particular digitalisation, which – if successful – could well shrink the informality present in the economy. In order to address these structural challenges and implement the Economic and Investment Plan for the Western Balkans effectively, it would be crucial to exert further efforts aimed at tackling corruption, improving the rule of law, enhancing transparency and strengthening institutions and social dialogue.
The EU responded to Russia’s unprecedented military attack against Ukraine by adopting comprehensive packages of restrictive sanctions designed to cripple the Kremlin’s ability to finance the war, impose clear economic and political costs on Russia’s political elite responsible for the invasion, and diminish the country’s economic base. Through the latest package of sanctions, which envisages the phasing out of Russian supplies of oil to the EU, we are trying to maximise pressure on Russia while at the same time minimising collateral damage to us and our partners around the globe.
The EU’s economy must, and will, remain strong enough to be able to continue providing massive support to Ukraine, but also other countries in the enlargement process. It is also important to stand together during such challenging moments. The EU appreciates the decision of the Montenegrin authorities to join the EU sanctions against Russia and commends Montenegrin citizens and private companies for hosting and supporting around 7,000 Ukrainian refugees in the country. EU cooperation and solidarity has been essential in overcoming many previous crises and I’m sure it will be the same this time as well!