What are the pros and cons of the Western Balkans regional economic zone?
The formation of the Western Balkans Regional Economic Zone would be a “Win-Win situation” – both regionally and when it comes to cooperation with the EU: the EU remains by far the biggest trading partner of the Western Balkans, both for imports (73.5%) and exports (80.6%). EU companies are also the biggest investors in the region, providing 73 per cent of foreign direct investment.
Regional integration strengthens competitiveness and cooperation within the Western Balkan countries – regional integration is a key factor in raising living standards in the Western Balkans. The creation of a Regional Economic Area (REA) brings more competition and allows economies of scale and productivity gains. A regional market would unshackle intraregional trade and make the Western Balkans a more attractive investment destination.
It could also contribute to harmonisation with EU law – market integration based on EU rules and standards will help create opportunities for developing new value chains and increasing the attractiveness of the region for foreign direct investments, including from the EU. EU-based investors are the main external drivers of growth and job creation in the region. The key to strengthening the resilience of the region is to ensure the full adherence of any foreign-funded economic activity to EU values, norms and standards, notably in key areas such as the rule of law, public procurement, the environment, energy, infrastructure and competition.
The stability of the Western Balkans can only be maintained in the long term under the umbrella of the EU: membership would mean that the borders between these states would be both solid and permeable. This would make nationalist unification projects unattractive.
Regional Integration Would Help Strengthen The Resilience Of The Western Balkans. It Should Also Ensure The Full Adherence To Eu Values, Norms And Standards Of Any Foreign–funded Economic Activity
Indeed, the EU’s enlargement policy must continue to export stability. The opening of EU membership negotiations with the Balkan states of North Macedonia and Albania would be an important signal for these countries.
However, there are certain obstacles that must first be removed. On bilateral trade and customs problems (e.g. Kosovo-Serbia) – the dismantling of non-tariff barriers: relations between Pristina and Belgrade worsened, most visibly with Kosovo’s decision to impose 100 per cent tariffs on imports from Serbia and Bosnia-Herzegovina.
The EU cannot and will not import bilateral disputes and the instability they can entail. Definitive and binding solutions that contribute to regional stability must be found and implemented before a country accedes. Good neighbourly relations and regional cooperations are essential elements of the Stabilisation and Association and enlargement processes. The historic agreement reached between North Macedonia and Greece resolving the 27-year-old name dispute sets an example of reconciliation for the region and beyond.
Rule of law needs to be improved, while jurisdiction and administrative capacity needs to be built up: the proper functioning of democratic institutions remains a key challenge in most countries. Credible progress in this area remains a significant challenge. These shortcomings often correlate with a lack of political will and institutional resistance.