West Balkans in the Spotlight

By Janusz Bugajski
A landmark conference organized by the Center for Strategic and International Studies on Balkan economic development, regional cooperation, and international integration was held in Washington on 5-6 October. The event generated substantial interest among the policy and business communities.
The western part of the Balkan peninsula stands at an important crossroads between the past and the future. The one remaining status issue between Kosova and Serbia is rapidly approaching resolution by international actors. As a consequence, it is now clear that regional collaboration, business investment, economic progress, and eventual European Union assimilation are the most important challenges facing the entire region.
The Washington conference assembled several senior officials from the region, including Bosnia- Hercegovina’s Prime Minister, Kosova’s Deputy Prime Minister, Montenegro’s Economic Minister, Slovenia’s Economic Minister, and other officials from Greece and Serbia. U.S. and EU officials were also in attendance, including the Assistant Secretary for Europe in the U.S. Department of Treasury and the Western Balkans Director in the European Commission.
Even more significantly, the presence of representatives from U.S. business and major financial institutions, economic analysts, and NGO leaders also underscored that it was time to look ahead to promote self-sustaining regional development.
The CSIS conference focused on five sets of issues that are fundamental to the region’s progress: the political and legal framework, infrastructure development, trade barriers and opportunities, the business environment and investment promotion, and banking and financial sector reform
Several recommendations were generated by the conference in a number of key areas. Three will prove the most significant. First, a regional free trade agreement needs to be finalized by the end of the year through an enlargement and modernization of the CEFTA (Central European Free Trade Area). The highly successful Nordic Council can serve as a valuable model for the entire Balkan area.
The European Commission is pushing for a free trade agreement between all non-EU states in the Balkans to replace the multitude of confusing bilateral arrangements currently in place. The EC also seeks to increase assistance for small businesses and encourage other initiatives for the free movement of labor and capital.
Second, the regional energy market must be expanded with the involvement of multinational energy companies. The Balkans can benefit from regional linkages and from the transit of oil and gas from the Caspian basin to the EU. And the region will need to be fully integrated with the EU’s Internal Energy Market in all key sectors.
And third, all West Balkan countries need to create more favorable conditions for foreign direct investment. By working with neighbors, removing trade barriers and customs backlogs, and devising a regional investment framework, each country can become a hub for commerce and communications that can attract foreign business.
Many local leaders now understand that the western Balkans is a significant market of over 25 million people on the crossroads between Europe and Asia. Together with the East Balkans and Turkey the market exceeds 120 million. Needed however are the structural and legal conditions that would significantly stimulate the developmental process.
The EU approach is rational and should not be seen as a substitute for Union entry. An economic boost around the region will help the advocates of West Balkan incorporation in the Union and undercut those who claim that the EU’s absorption capacity has been exceeded. Pro-enlargers can argue that Balkan leaders are applying European standards in preparation for eventual EU integration.
The stage is now set for the next phase of Balkan development, where economic cooperation in areas such as trade, energy, communications, and infrastructure runs parallel with the process of “Europeanization.” In sum, the CSIS conference has highlighted the imperatives of economic cooperation and business investment and generated positive recommendations for both government and business. “Independence without economic borders” should become the regional slogan.