Home Business “Frozen conflicts must be resolved” in the Balkans – DW – 07/12/2017

“Frozen conflicts must be resolved” in the Balkans – DW – 07/12/2017

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Deutsche Welle: The Western Balkans Summit in Trieste (July 12) aims to promote cooperation between Balkan governments and businesses. How do you assess the current situation?

Vladimir Gligorov: The EU strategy is: economic cooperation contributes to the process of political normalization. But it takes a long time. In practice, none of the frozen conflicts in the region have been definitively resolved. This limits regional cooperation – political and economic. And then there is the problem of closed markets. The Balkan states account for a relatively small share of exports in the production process.

The situation has changed in recent years and interest in increased cooperation with the EU as well as regional trade and investment is increasing. But because the markets are so small, there are no large companies in the area. This is why there are no major partnerships that can demonstrate a strong presence in third-party markets. This would require foreign multinationals that are not active in the region.

Germany supports The plans of the European Commissioner for Enlargement, Johannes Hahn create a regional economic space. But not all Balkan countries are so enthusiastic about the idea.

The Central European Free Trade Agreement (CEFTA) was concluded decades ago to achieve this goal. The implementation of the Stabilization and Association Agreement between the countries and the EU should lead to legislative harmonization with the EU. This is also the case for CEFTA. I am not sure that everyone really understands that a common market in the Balkans is only possible in conjunction with the harmonization of markets and laws with the EU.

Serbian President Aleksandar Vucic is a strong advocate of a customs union in the Western Balkans. He believes that stronger economic integration will be a major step towards the EU. Do you agree?

It should be understood that if they become members of the EU, all these countries will have to adopt the common EU customs strategy. There are therefore two possibilities: countries could adopt EU customs duties, i.e. join the European Union Customs Union (EUCU), which is already an objective of membership to the EU. The second option would be for all countries concerned to harmonize their agreements with third countries with existing EU agreements.

The main issue in this process is the free trade agreement between Serbia and Russia, that is, the Eurasian Economic Union (EAWU). Either Serbia renounces this agreement, or all other members of a Balkan customs union reach an agreement with Russia and the EAWU. But that’s not realistic. Serbia is expected to abandon the free trade agreement with Russia, but this will happen anyway as part of the EU accession negotiations.

Powder magazine in the Balkans

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To make progress on these issues, political stability is necessary. Are the Western Balkans ready to take this courageous step forward?

Frozen conflicts and other disputes must be resolved. This particularly applies to Kosovo and Republika Srpska, the Serbian part of Bosnia and Herzegovina. Everything depends on Serbia’s desire to normalize its relations. Perhaps a multilateral solution would be realistic in order to reach a regional agreement on the inviolability of borders. The EU could play a major role, especially if the integration process were to be accelerated. Investments in the region are also important.

Gligorov believes a Balkan common market is only possible with EU cooperation and harmonizationImage: wiiw/J. Australia

Will integration be easier if the Western Balkans moves closer to the EU as a region, or will each country have to defend itself?

The basic idea is that regional cooperation is of greater economic and political interest to the EU than a fragmented Balkan region. This should boost regional cooperation during the integration process. This would thus arouse the interest of European companies in the region and also strengthen the political stability of Europe.

This does not mean that countries like Montenegro or Macedonia should wait for other countries in the event of resuming negotiations with the EU. I think this would accelerate political normalization in the Balkans, particularly in Serbia.

Vladimir Gligorov is a senior economist at the Vienna Institute for International Economic Studies and a lecturer at the University of Vienna. He is also an expert on the politics and economics of the Balkan countries, including Serbia, Montenegro and Macedonia.

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