Which compass direction for the Western Balkans?

Bulgarian Foreign Minister Nikolai Mladenov at the Sofia Forum for the Balkans

Amid the clamour and cacophony of the European economic crisis and the rapidly-whirling rumour mill about the future of the euro zone, it is hardly surprising that the EU integration of the Western Balkans is a talking point drowned out by the noise.

The Sofia Forum for the Balkans, organised by the Bulgarian Foreign Ministry and the Centre for Liberal Strategies, was meant to serve as something of a corrective to that.

The international event, held on June 8 and 9 in the Bulgarian capital, brought together a number of authoritative voices from EU member states, leaders from the countries of the region, academics, media and some representatives of Balkan countries’ younger generation in a bid to focus debate on the European integration prospects of the Western Balkans.

There was no shortage of stated support for such integration – allowing, of course, for the continuing reality that some countries in the region are very far from what in foreign policy speak is termed “good-neighbourly relations”.

Serbia and Kosovo, obviously, with Belgrade steadfast in its rejection of the 2008 declaration of independence in Pristina.

Athens and Skopje, of course, and as it happened, the conference coincided with the newest episode in the melodrama of bilateral relations between Skopje and Sofia. Statements attributed to Bulgarian Prime Minister Boiko Borissov about the Macedonia name dispute prompted hysteria in the media in the former Yugoslav republic.

In turn, a number of senior figures in Bulgarian politics issued reminders of their annoyance about an anti-Bulgarian film produced in Skopje and its portrayal of World War 2-era Bulgaria (Sofia, among other weightier matters, objects to the film’s depiction of the Bulgarian flag as having a swastika superimposed on it; in IMDB-speak, this is less a goof than possibly a deliberate error by the filmmakers).

On a weekend where news on the continent was dominated by the decision by euro zone ministers to lend 100 billion euro to shore up Spanish banks hard-hit by bad property loans, and where Greece’s financial woes tended to creep in to almost every panel discussion, no reminder was needed that the Western Balkans would probably need an edge-of-precipice crisis of their own to get back anywhere near the top of the EU agenda.

And for all the stated support of the principle that all the countries of the Western Balkans should accede to the EU, it was equally clear that these countries remain anything but skilled and eligible dance partners, callously ignored at the edge of the dancefloor by a bloc preoccupied by its wallet and inescapable worries about borrowing and lending.

No one need wait for the regular reports by the European Commission to understand that the Western Balkans countries have shortcomings, to varying degrees, in their sometimes deeply fractious foreign relations with their neighbours; in their own economic troubles; in domestic Euro-skepticism (which surveys show to be higher in countries closer to accession than those for which this is far-off) and, as well, in nationalistic tub-thumping. President Nikolic, we’re looking at you.

Perhaps worse, they’ve become a bit boring, and not just because of the tediously endless Macedonia name dispute or the intractable impasse between those 22 EU countries that recognise Kosovo and those five that do not.

Generally, for all the occasional drawn-out drama over the formation of a coalition, the countries of the Western Balkans are stable. Precisely this contributes to keeping them low down on the agenda.

And on top of this, apart from those politicians in various EU states whose opposition to further EU expansion is visceral, the current crisis is certain to make the accession process more arduous than first envisaged – a point made by more than one participant in the Sofia Forum.

There were other telling points made, positive, negative or simply relevant.

While old problems were harsh and difficult to solve, people from the Balkan countries knew each other well, but an entire generation has now grown that might know the EU and Western Europe better than their own neighbours, Sandra Breka of the Robert Bosch Foundation said.

“What we need to do is still open up the region and develop a voice for the region […] What we need is public attention, we need media coverage, we need the activity within the region to establish itself on that global platform and I think that this conference contributes to this in a great way and I hope that it will not be the last of its kind,” Breka said.

Swedish foreign minister Carl Bildt said that in the Balkans, the consequences of peace were beginning to show. Among what he described as anecdotal examples of this were the countries of South Eastern Europe voting for each other in the 2012 Eurovision song contest. “They ganged up against the rest in a way unthinkable before,” Bildt said.

He said that the economic and social problems and challenges facing Europe would continue for some time to come, affecting the EU enlargement process so that it would be different to the way it was envisaged at the outset.

Bulgarian Foreign Minister Nikolai Mladenov said that the idea of uniting the Balkans in the EU was one on which politicians needed persuading more than the people.

It did not matter whether people voted for each other in Eurovision, he said, but the fact was that people had gone much further than the politicians in the region and the politicians needed to catch up.

Leading political analyst and Centre for Liberal Strategies chairman Ivan Krastev told a panel discussion that the basic problem was that some countries in the Balkans were not in crisis, but suffered instead cases of bad equilibrium, a situation of slight dysfunctionality that could replicate itself.

He said that it was not that the EU was not interested in the Balkans, but that the Balkans were not part of the conversation about the EU.

The most recent crisis had shown that a country could be a failed state even within the EU, Krastev said, saying that the case of Greece had shown that being part of the EU did not mean having no further problems.

The vision from the 1990s, that the European community was the way forward towards a secure future, remains as true today as it was then, but it should not be taken for granted.

“The European agenda and the European concept, it is important that are a presence in our societies and our politics, because the European Union is a strong instrument for going forward with the democratic processes in our countries,” Macedonia’s deputy prime minister for European Affairs, Teuta Arifi, said.

Countries in the region still have unresolved issues among themselves pertaining to national identities and ethnicity; European integration would bring an element of common stability to the region. “The European Union is the best and easier answer [to solve these issues]. If you try to start to find an answer locally, it is too complicated and not every time will you find an answer,” Arifi said.

Arifi’s point was reiterated by Ivan Vejvoda, vice-president of The German Marshall Fund of the US.

“Something that may be obvious but needs to be repeated is that the reason that we do have stability and we’re not in the headlines is because there is this promise of Europe, to put it very simply. This is where the soft power of Europe still works,” Vejvoda said.

The Balkans had been a playground for great powers for two centuries, but much of the damage of the 1990s was self-inflicted – had some politicians been in power at key moments, some if not all wars that accompanied the dissolution of Yugoslavia could have been avoided, he said.

“But the Balkans had this geographical luck to be on this continent called Europe where there is this ongoing project of peace after World War 2,” Vejvoda said.

This afforded governments in the region the opportunity to share the burden of reforms with EU authorities in Brussels. Furthermore, there was a “repository of resilience” still in existence on the Balkan peninsula, where people still remember the war of the 1990s, which make today’s problems pale in comparison.

Yet this resilience was fading away, giving governments in the region a closing window of a scant few years, during which Balkan politicians should seize the opportunity to push for reforms and offer their countries a clear-cut road map forward, Vejvoda said.

The sustainability of the Balkans region’s economic growth and the possible tweaks to the existing model are issues that repeatedly cropped up during the Sofia Forum for the Balkans.

The region’s dependence on Europe’s more developed economies is not a recent development; going back a century, historical economic data shows that only during times of prosperity in Western Europe did the Balkans effectively catch up in terms of per capita gross domestic product, Laza Kekić, regional director for Central and Eastern Europe at the Economist Intelligence Unit, said.

At the same time, when Western Europe was undergoing periods of economic adversity, the Balkan economies suffered harsher declines, with the result that the economic gap between the region and Western Europe has remained unchanged, or even worsened in some cases, by comparison to 1914.

The euro zone had a big impact on the small Balkan economies, often through multiple channels such as imports, remittances and foreign direct investment (FDI).

The countries most vulnerable to euro zone developments were in fact not the ones that traded the most with the euro zone, but those that depended the most on the bloc for remittances and FDI, namely Albania, Serbia and Croatia, Kekić said.

However, talk of fundamental alteration of the economic growth model was misleading.

“It creates the impression that there is some sort of great scope of choice for policy-makers to choose from. The truth be told, there isn’t very much,” Kekić said.

However, one area where policy-makers could influence proceedings was FDI – increasing financial inflows was depended on lowering political risk. “Policy-makers can do certain things to reduce political risk and also improve their investment climate in that respect. I’m almost inclined to invert the famous dictum from [former US president Bill] Clinton, in many ways ‘it’s politics, stupid’ in this region that is determining economic performance,” he said.

The story of the Balkans – that of perpetually converging but never actually catching up, following the lead of Western Europe in growth and decline, but in an exacerbated fashion – is not one exclusive to the region, economist Georgy Ganev, program director for economic research at the Centre for Liberal Strategies, said.

What was surprising in the current period of economic downturn was how resilient the region has been, holding up “reasonably well” so far, with the notable exception of Greece.

Ganev echoed Kekić’s point about changing the model growth: “It’s not like you have a ‘menu’ for growth and you pick the most delicious option for you.”

When economic growth returns to the region, different countries will embark each on their own path, but most of them will face much of the same challenges, such as the negative demographic dynamics that will require Balkan countries to address the issue in the foreseeable future.

The Balkans as a whole should strive to renounce their “laggard mentality” and quit expecting that they would be handed things; instead, the focus should be on what can the Balkans offer to the world, Tzvetan Lazhanski, a member of the advisory board at Bulgarian company Devin AD, said.

In this respect, the fact that the region’s countries have never had the time to develop entrenched capitalist business models could be an advantage – the Balkans could be a testing ground for new business models, offering plenty of opportunities because of the region’s relative underdevelopment, he said.

The current crisis in the region was not so much an economic one, as a crisis of values and priorities, Elvin Guri, chief executive of River Styx Capital, said.

“We built our growth, if it can be called a model, in the past 20 years on the basis of catching up, economic convergence without necessarily convergence of values. Essentially we wanted the EU money without their rules and that clearly has created an internal crisis, not just a fallout from the global economic crisis,” Guri said.

This discrepancy in values was one of several factors – along with political risk and small markets – were the key reasons why the Balkans attracted mainly “mediocre, opportunistic, small-time investors” skewing the growth towards a “short-term opportunistic model.”

The repositioning of Western European investors was an opportunity for local entrepreneurs to push forward with economic integration of the disparate countries of the Balkans. “Most of us that live here have no choice, we cannot just pack up and leave like the foreign investors are doing,” Guri said.

It would take building companies spanning the entire region to draw back strategic investors to the Balkans, an effort that would take economic, not political will. “Economic integration should bring about the integration of values, which would ultimately lead to political integration.”

Slovakia’s foreign minister Miroslav Lajčák acknowledged that the progress made by Western Balkan countries on their EU accession path did not yield “overall results adequate to the efforts invested”, but cautioned that membership in the bloc should not be taken for granted.

Although important for the Western Balkans, EU integration was not the top priority – that spot was reserved for issues like national identity and borders, he said, echoing Milica Delević’s earlier comments.

“EU membership is not a gift, it is not something that the European Union owes [the Western Balkans], it is something that you deserve through reform, because the EU enlargement, after all, should strengthen the European Union, not weaken it, and make it more, not less, efficient,” Lajčák said.

(Photo, of Bulgarian Foreign Minister Nikolai Mladenov addressing the June 8 opening, by Sofia Forum for the Balkans)

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