Brussels – The new Growth Plan for the Western Balkans is taking shape, and with the European legislature nearing its end, the legislative process to implement the Instrument that will lead to the disbursement of 6 billion euros in support to the economies of Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro, and Serbia, is also heading towards its conclusion. The EU Parliament and Council today (April 4) reached a provisional agreement on the European Commission’s proposal for the Reform and Growth Facility for the Western Balkans, consisting of €2 billion in grants and €4 billion in loans.
“I welcome the fact that this parliamentary mandate has strengthened enlargement, putting it back on the agenda, and this agreement confirms that,” said Croatian co-rapporteur for the European Parliament Tonino Picula (S&D), emphatically noting that the negotiations led to the inclusion, among the key objectives for the provision of funding, also “full alignment with the EU’s Common Foreign and Security Policy, including restrictive measures,” a “clear” signal for countries like Serbia. Also confirming the scope of the understanding with the Belgian rotating presidency of the EU Council was his colleague -also Croatian- Karlo Ressler (EPP), who highlighted how this is “an additional important instrument that will bring these countries closer to the EU” just a step away from the “historic opening of accession talks with Bosnia and Herzegovina,” during the last European Council.
Considering the concerns highlighted by the ECA, the ‘fundamentals first’ approach has been included in the Growth Plan for the Western Balkans, i.e., linking the rule of law, anti-corruption, and fundamental rights with the other two crucial areas of the EU accession process: economic governance and the strengthening of democratic institutions and the reform of the public administration. In addition, parliamentary oversight has been strengthened with regular high-level dialogue with the European Commission monitoring the progress of the Facility. In terms of transparency, a dedicated web page will include up-to-date data on the final recipients of over 50 thousand euros of cumulative funding over four years. At this point, the Plenary of the European Parliament and the Council of the EU have to approve the provisional arrangement before it enters into force.
What is the Western Balkans Growth Plan
European Commission President Ursula von der Leyen widely anticipated the Growth Plan for the Western Balkans and illustrated it to stakeholders during her last fall tour of the region before the official presentation on November 8, 2023, along with the publication of the 2023 EU Enlargement Package. “It is something exceptional. We know that the miracle of prosperity comes with access to the Single Market, and we are already starting this process. We are not waiting for the final decision on political accession,” the number one EU executive had claimed, outlining the four pillars of a Plan that should”close the economic and social gap” between the EU and the Balkan region and allow “integration on the ground even before they formally enter as member countries.”
The first pillar is precisely economic integration in the Single Market in seven key areas, subject to alignment with EU rules and the opening of relevant sectors to neighboring countries: free movement of goods, free movement of services and workers, access to the Single Euro Payments Area (Sepa), facilitation of road transport, integration and de-carbonization of energy markets, single digital market, and integration in industrial supply chains. The second pillar is internal economic integration through the Common Regional Market (based on EU rules and standards): Brussels estimates that this alone could potentially add 10 percent to the economies of the Balkan Six. The third pillar concerns fundamental reforms, which in the Brussels Plan will support the Western Balkans’ path to EU membership and support for foreign investment and the strengthening of regional stability.
The fourth pillar of EU financial assistance for reforms regards investments for all six partners. Specifically, it is a new €6 billion Reform and Growth Facility for the Western Balkans for 2024-2027, the payments of which are linked to the implementation of agreed socio-economic reforms (just like Next Generation Eu for the 27 Member States). With the interim review of the 2021-2027 EU Multiannual Financial Framework, the green light was given to the facility consisting of 2 billion euros in grants (ending up in the EU budget without changes to the Commission’s proposal) and 4 billion in concessional loans, the implementation of which will first require each of the six countries to submit a reform agenda based on the recommendations of the Enlargement Package and Economic Reform Programs (ERPs).
Finally, it should be noted that for Serbia and Kosovo there is an additional clause: “They must engage constructively in the dialogue on normalization of relations,” President von der Leyen specified. In other words, without progress in the Pristina-Belgrade dialogue, funding under the Plan will remain stalled – or lost. The same is true for Bosnia and Herzegovina in the event of failure to implement key reforms: “Resources will be redistributed to other countries that are able to do so. This is a strong incentive to move forward in an active way,” the Commission’s head warned on her November 1 visit to Sarajevo.
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