Speech of Minister Ditmir Bushati

Western Balkans Conference – Berlin, “Economic governance: getting closer to the EU”
August 28, 2014

Ministers of Foreign Affairs’ segment

 

I would like to start by thanking Germany for taking the initiative to bring us together in Berlin and Frank-Walter for hosting this session. We surely hope that this will become a yearly joint exercise of the Western Balkans and the EU member states.

This conference is both a statement that the Western Balkans matter and a further incentive for the Western Balkans to become a true region in economic terms.

It might sound awkward, but we are far from being a true region, particularly in terms of infrastructure and energy interconnectivity. Indeed it is easier for our peoples to travel to EU member states than to a neighboring country.

There has been tremendous change in our region, and we have had some good news in the past years. But we have gathered here do to more than merely contemplate our fragile stability. Both peace and stability cannot be guaranteed in the long run without sustainable economic growth.

The risk we currently face as a region is that the economic gap widens between the Western Balkans aspirants countries and EU member states.

This is why it is important that the pre-accession process envisages projects with a regional economic impact that will help improve the lives of our citizens and connect physically the Balkans with the EU.

Furthermore, in the last few months the European geopolitical and security landscape has changed immensely:
•    In the Eastern neighborhood: the Ukrainian crisis has developed into a prolonged geo-economic confrontation;
•    In the Southern neighborhood and the Middle East: fundamentalism and terrorism destabilize the whole region.

It is against this backdrop, that we believe enlargement should also be seen in geopolitical terms, as the Western Balkans offer the prospect of enhanced cooperation and security amongst nations now at peace with each other.

Even if it is clear to us that enlargement is not calendar, but process and performance driven. The overall process needs to remain both credible and predictable.

I consider this conference as an instrument of credibility and predictability. It brings further purpose to our meetings, providing a clear opportunity for us to collectively define a vision of where we would like to see our region in the next 5 to 10 years. In particular in relation to our common strategic goal to become fully-fledged members of the EU.

In this collective vision, “Economic governance” should become our common denominator. By Economic governance I mean not only a set of economic policy reforms but also a new set of instruments for our region and a set of concrete projects of regional impact.

A first step in this direction was taken by the EU Commission which developed a platform of Enhanced cooperation within the Stabilisation and Association Process. A platform that brings incentives for us to focus on acquis-related areas such as rule of law, economic governance and connectivity.

Yet, the Western Balkans currently face a two-fold problem:

a)    On the one hand, because of internal dynamics in the EU member states, there seem to be difficulties facing the enlargement process, difficulties which we understand.

b)    On the other: our countries are deprived of long-term public and private financing sources. The region will not be able to kick start on its own a new period of modernization and growth, in particular one based on investment and exports.

Let me elaborate on this point a little bit:

In financial terms, measured by net inflows from EU funds: the difference between member states and candidate countries is by a factor of more than five.

Furthermore, IPA funds are mainly used to build institutions and prepare sectorial policies. Only limited IPA funds can be used to build necessary national and local infrastructure, or extend long-term resources to improve human capital and build innovative Small and Medium Enterprises.

Importantly, since the financial crisis, limited fiscal space has been largely utilized to stabilize the economy and little is left for launching new projects, in particular those of regional/EU importance.

Within this context, a slower integration process, on top of negative political effects, would have deep negative economic consequences.

This negative scenario would mean that the region would remain outside of major energy and transport routes and on a weak growth trajectory, offering very few business opportunities for EU key energy and infrastructure players. In a nutshell, the risk is that we could be seeing a period of economic stagnation and a fatal uncertainty about our region’s EU destination.

We want instead the remainder of the decade to be a period of catch up and dynamism. In a Working Paper, that we have circulated to the participants of the conference, we have outlined the need to facilitate and restructure the economic integration process of the region through the launch of several large scale initiatives of joint EU- Western Balkans interest.

The following regional projects are now being discussed by our colleagues:
•    Regional infrastructure projects such as the Blue Highway, and regional Railway networks,
•    Energy infrastructure and energy security: with key strategic projects such as TAP and IAP,
•    Support for SMEs, human capital financing and vocational training,
•    Regional tourism projects.

Through these regional projects, the geo-economic traction of the Balkan states should help revitalize the European idea.

We are fully prepared to take the necessary internal governance decisions to boost our courses towards the EU, especially in the areas of rule of law, economic governance and connectivity.

Short of rapid membership, it is important that the EU integration process keeps going on, giving tangible benefits to ordinary citizens, so as to continue being the strategic anchor for the region. We would expect all countries in the region to be well advanced in their negotiations to join the EU by the end of this decade.