Russia’s war in Ukraine has impacted Western Balkan states — Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia, collectively known as the Western Balkan 6 (WB6) — in numerous ways. While everyday citizens have grappled with economic challenges such as a war-related increase in energy prices, Russian geopolitical influence in the region remains a pressing challenge.

None of the WB6 openly contest the importance of EU integration, but Serbia, Montenegro, and the Republika Srpska entity in Bosnia and Herzegovina maintain strong ties with Russia and China, facilitating Moscow and Beijing’s regional influence. 

States in the region may vacillate with EU integration or pursue alternative models of regional collaboration for many reasons. One of the most significant is fatigue with the EU enlargement process, which at this stage has neither a clear vision nor an ending point. Although WB6 states consistently attempt to implement necessary reforms to draw nearer to the EU, the EU continues to move further away from them by delaying the process and introducing additional criteria and financial instruments without opening all accession chapters.

In light of these issues, the EU announced a new Growth Plan (GP) in November 2023. The GP is an enlargement instrument aiming to “accelerate much needed socio-economic convergence” between the WB6 and EU members by committing 6 billion euros in grants and loans. 

The GP is an important potential instrument for WB6 countries, as it promises significant financial support and employs a novel disbursement structure. This being said, it also carries challenges, mainly the lack of concrete links to the enlargement process. Unless these are seriously considered, the GP risks being non-functional. 

The Growth Plan’s four main pillars

The European Commission (EC) created the GP to “bring some of the benefits of membership to the region in advance of accession, boost economic growth and accelerate much needed socio-economic convergence.” For over two decades, EU enlargement has stalled. To move the process forward, efforts such as the Berlin Process have been launched outside the EU’s official enlargement policy, aiming to foster high-level cooperation between the WB6 and participating EU members and the U.K.. While the Berlin Process is an important initiative for the WB6, it has not yet yielded significant results in the enlargement process. Given this, the EU continues to develop various financial instruments aimed at facilitating WB6 states’ integration into the EU. 

The GP’s long-term goals are doubling the size of Western Balkan economies in the next decade, incentivizing WB states to accelerate implementation of EU acquis and advancing accession. The GP is built around four main pillars: bringing Western Balkan economies closer to the EU single market, deepening regional economic integration in the Western Balkans, accelerating fundamental reforms and increasing financial assistance to support reforms. 

The first two pillars are closely related to the Common Regional Market (CRM) initiative and are complementary: more regional economic integration means better prospects for joining the EU single market. The third pillar aims to hasten adoption of key reforms in the region. Lastly, the fourth pillar envisions establishing a Reform and Growth Facility to assist each WB state implement planned reforms.

How does the Growth Plan differ from previous mechanisms? 

The GP, while just another in the long line of mechanisms designed to facilitate enlargement, differs from existing EU financial instruments such as the Economic and Investment Plan (EIP), the Instrument for Pre-Accession Assistance (IPA), the Western Balkan Enterprise Development and Innovation Facility (WB EDIF) and the Regional Energy Efficiency Program (REEP). The GP is distinct in three key ways: it is oriented around each state’s implementation of predetermined reforms, it employs a different payment disbursement regime and it does not take an all-inclusive approach toward the region. 

Access to GP funds depends on implementation of reforms by individual states, unlike with other financial instruments such as the IPA, which disburse and allocate funds on the basis of thematic areas rather than allocating funds per state. The WB6 will develop individual Reform Agendas to be further assessed and adopted by the EC. Beyond the Reform Agendas, release of funds and payments is contingent on broad reforms linked to enlargement process fundamentals such as rule of law, democracy and human rights. 

The payments will occur biannually; the EC will suspend or reduce payment if requirements are not met. In such a case, the state will have one to two years to meet requirements; if not, funds will be divided among the other states in ensuing years.

The set conditions are critical, particularly for Kosovo and Serbia. Access to funds under the GP is conditioned on constructive engagement in normalizing relations between the two states. Kosovo and Serbia will be unable to access GP funding until they make progress on fulfilling their respective obligations under the Agreement on the Path to Normalizations and its Implementation Annex, all previous Dialogue Agreements, and engage in negotiations on the Comprehensive Agreement on Normalization of Relations. 

Individual pathways 

Under the GP, the EC is for the first time considering WB6 integration in the EU Single Market individually rather than collectively. While emphasizing that the WB6 must fulfill the work pledged under the CRM to approach integrating into the single market, the GP notes that no state could block access to the EU single market for the other five. 

This change opens up new avenues for the WB6. States committed to CRM implementation will be able to access available funding to prepare for the EU Single Market, allowing them to move closer to the EU without being slowed by the others. 

This feature holds particular significance for Kosovo and Serbia, who are embroiled in bilateral disputes that impact CRM Action Plan implementation and the Central European Free Trade Agreement (CEFTA)’s overall functionality. Kosovo and Serbia may struggle to keep pace with the rest of the WB6 if they do not make progress toward normalizing relations. The same is true for Bosnia and Herzegovina and its failure to meet CRM requirements, particularly mobility agreements allowing WB6 citizens to travel within the region using only ID cards.  

CEFTA and the Growth Plan 

One of the key agreements for GP implementation is CEFTA, an EU-funded agreement created to facilitate trade between states aspiring to EU membership. CEFTA seeks to harmonize participating states’ regulatory frameworks with EU and other international standards. The current members are all WB6 states and Moldova.

The GP emphasizes CEFTA’s facilitation of regional cooperation and CRM implementation as key indicators governing WB6 access to GP funds. This is particularly problematic given CEFTA’s current challenges, which stem from bilateral difficulties. 

In particular, the representation issue between Kosovo and Serbia impedes implementation of relevant agreements and protocols. CEFTA remains the only regional agreement under which Kosovo is represented by UNMIK. Any attempt to modify this is rejected by Serbia, resulting in CEFTA’s activity being blocked. Barring unforeseen developments, Kosovo, Serbia and Bosnia and Herzegovina are highly unlikely to meet CEFTA conditions. And because CEFTA is one of the GP’s coordinating bodies, it is likely that its weaknesses will be reflected in the GP. The EU and WB6 should find ways to address these weaknesses. To be credible, CEFTA must reflect the region’s geopolitical reality and fairly represent all parties. 

Challenges and next steps

The GP is likely to face several challenges. First and foremost, completion does not guarantee EU membership. This increases the chance that WB6 states will not take implementation seriously or question whether participation is necessary, considering GP conditions. If successful implementation of reforms planned under the GP would secure EU membership, it would increase the WB6 states’ willingness to fully implement it. Second, while the GP is becoming available, three WB states potentially not being able to access funds due to bilateral issues would render the instrument impotent. Third, the GP lacks a vision or directive for addressing regional bilateral issues.

Making resolution of bilateral disputes and complete implementation of CRM, among other things, conditions for accessing funds, raises significant questions about the GP’s future effectiveness. Furthermore, designating CEFTA as one of the primary coordinating bodies for regional cooperation under the GP may be counterproductive, given the challenges CEFTA faces.

Moving forward, the GP will be reviewed by the European Parliament and EC. Upon approval by these bodies, the onus will shift to the WB6, who will be required to individually submit Reform Agendas detailing reforms to be addressed from 2024 to 2027.

Given the WB6 states’ slow progress toward accession, creating an instrument entirely contingent on the level of reform implementation raises the possibility of GP funds being inaccessible. According to the EC’s 2023 reports on enlargement, Albania and Kosovo made incremental steps, while the other four WB states made no substantial progress in 33 chapters. The level of preparedness varies in each state, but overall, progress has been slow. 

These circumstances beg the question of whether the WB6 will ever be able to meet the conditions required for obtaining GP funds. The current pace of reform implementation is insufficient. With this in mind, the EU should consider helping the WB6 build capacity to complete reforms so that the EU’s enlargement efforts and WB states’ willingness to join the EU can meet halfway. Otherwise, if the GP begins implementation when the WB6 are still far from meeting conditions, the entire instrument becomes meaningless. 

Resolution of bilateral issues 

The EU tries to facilitate the process of solving bilateral issues among the WB6, but little progress has been made thus far, impeding numerous critical regional EU integration processes and initiatives. Given that efforts to resolve these issues have not produced many positive results, it is doubtful that WB states will solve them just to access funds. However, the incentive to do so in order to progress with the EU integration process may provide favorable results. 

Bilateral issues remain a delicate topic in the region and the EU must continue to help promote and achieve their resolution. While the incentive in the GP may lead to positive outcomes in this regard, it is critical that the EU does not leave this issue entirely in WB states’ hands, but rather continues to foster dialogue and discussions in many forums alongside GP implementation. 

This challenge is especially crucial for Kosovo, Serbia, and Bosnia and Herzegovina, states that face significant challenges with regional integration due to bilateral and internal issues. While the EU seeks to help solve these issues, these states should find ways to move forward and deepen regional cooperation while pursuing EU integration. 

No clear path to EU membership

The GP lacks clear steps toward ensuring EU membership for WB states, and does not specify which reforms will unlock which enlargement chapters. As has been the case with other instruments, the GP may hold the enlargement process hostage and could fuel frustration among WB states. 

More broadly, a lack of tangible prospects for EU membership fosters Euroscepticism, especially among younger generations, opening doors for Russian and Chinese influence in the region. As dissatisfaction with the EU grows, WB states, excluding Kosovo, increase cooperation with China and Russia in development projects, risking debt traps and broader regional impact. If reform implementation within the GP is not linked to unlocking enlargement chapters, WB states’ may not see the GP as beneficial.

The GP has potential. However, when the EU develops such instruments, it should devise mitigation strategies for issues that will arise during implementation. Assuming its funds can be accessed, the GP will strengthen the regional economy. However, the GP does not include a clear indicator of future EU membership. The WB states should lobby the EC to ensure that successful implementation of reforms is linked to unlocking enlargement chapters so that integration moves forward.

Feature Image: Atdhe Mulla/ K2.0.

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