WESTERN BALKANS SUMMIT



PRESS RELEASE
October 8th,2019
The Economist Western Balkans Summit
“Reinforcing the momentum for European integration”
October 1st, 2019 - Skopje

More than 700 people attended
The Economist Western Balkans Summit in Skopje on October 1st, 2019 They heard from the Prime Minister of North Macedonia Zoran Zaev and his senior government ministers and from high-level speakers from the US, the EU, NATO, Greece and the Western Balkans about the challenges and opportunities confronting the country and the region.

 

The conference took place at a critical moment for The Republic of North Macedonia and for the whole region. Having postponed in June extending an invitation to North Macedonia and Albania to open accession negotiations, the EU will decide in two weeks whether to do so now. North Macedonia has kept its side of the bargain, finalising the Prespa agreement and signing a friendship treaty with Bulgaria, and now it’s up to the EU to fulfil its promises. Speaker after speaker said that the EU would lose all credibility in the region if it went back on its word.

 

Joan Hoey, Director for Europe at The Economist Intelligence Unit and the conference chair, pointed out that 16 years after the Thessaloniki declaration when the EU gave its unequivocal support to the European perspective of the Western Balkans, the region is growing impatient at being kept out without a credible membership perspective. Are we on the cusp of change or will the region remain in a limbo? 

 

Zoran Zaev, the prime minister of North Macedonia, emphasised that even a small country such as his could bring a message of hope and propel change in the region. He said that “we want to spread the good news that this region has changed” and that starting accession talks would have a positive impact on the whole region. The prime minister said that North Macedonia is not asking for accession, but only to start the process. Opening accession negotiations is only the start of a long process of becoming an EU member state. If the EU does not extend an invitation in October, it will be punishing a country that has met all the conditions that were set out by the EU.

The delay in inviting North Macedonia and Albania to start accession negotiations in June was explained as a matter of timing, coming so soon after the European parliament elections and before the formation of the new European Commission. Several speakers observed that real reason was resistance from some EU members such as France and the Netherlands. President Emmanuel Macron of France has been a vocal opponent of further enlargement on the grounds that the EU needs to get its own house in order before accepting any new members. The Netherlands shares with others strong concerns about rule of law issues in the region. Furthermore, enlargement fatigue in the EU has become more pronounced in recent years as populist parties have become more influential.

Alexis Tsipras, former Greek prime minister and leader of the main opposition Syriza, said that the Prespa agreement was made in the region and was not something imposed from outside, although the two countries had the support of their US and EU allies. It happened because of "our own willingness" to have an agreement, he said, adding that it symbolises the victory of diplomacy in a period when its value is questioned. The aspiration to unblock the EU and NATO accession process in the Balkans was a major incentive, he said, and now the EU must escape from its own introspection and send a positive message that it can be a force for stability in the Western Balkans by offering to open membership negotiations with North Macedonia and Albania.

Martin Schulz, former president of the European Parliament and former leader of the Social Democratic Party of Germany said that the EU needed to have "more courage, more ambition". In an impassioned speech, Mr Schulz declared: We need the enlargement, we need the stabilisation, we need the accession talks”. He said he hoped that the decision to begin accession talks would not be postponed again, "but in my experience nothing is predictable".

Guy Verhofstadt, member of the European Parliament, member of the Renew Europe Group and a former prime minister of Belgium, said that “for 20 years the EU didn’t understand the dispute”. A committed advocate of an ever closer union, Mr Verhofstadt argued that "If you want the completion of the internal market, the inclusion of Balkan countries is important, and it would be best to put all Balkan countries in the EU and around the same table." He blamed enlargement fatigue on mistakes made in the previous round of enlargement and on the failure simultaneously to undertake a deepening of the EU. That mistake should not be repeated with the next round of enlargement. Dimitrios Papadimoulis, vice-president of the European Parliament, concurred and said that political leadership, courage and commitment are necessary. In his opinion, an additional delay in opening accession negotiations would not only be unfair but also dangerous.

Bujar Osmani, deputy prime minister in charge of European affairs, observed that all Western Balkan countries have expressed a strong orientation to the EU and that North Macedonia had demonstrated by any merit-based analysis that it can deliver on EU reforms, make brave political compromises and show leadership in implementing European values. A huge amount is riding on the decisions made at the European summit in October: if the EU fails to acknowledge the efforts made by North Macedonia, it will damage its own credibility; undermine efforts to reach compromise agreements elsewhere such as in the Serbia- Kosovo dialogue; and weaken perhaps fatally the EU orientation of the region and the entire enlargement process.

Wess Mitchell, until early 2019 US assistant secretary of state for European and Eurasian affairs, gave a keynote address on the Western Balkans in an era of great power competition. He argued that the Prespa agreement shows that the momentum in the region is moving in favour of the West and against other non-Western actors such as Russia. He argued that Russia's main goal in the region is to destabilise, while China's modus vivendi in is to create dependencies in this region as elsewhere. The US goal, which is shared by the EU, is a Balkan peninsula populated by democratic states that respect the rule of law. It is not a foregone conclusion however that the Western vision will prevail. China and Russia are making inroads in the region because they are perceived to be better at keeping promises. If EU accession appears unattainable, he stressed, something else will fill this void.

In a session discussing security, Tacan Ildem, assistant secretary general for public diplomacy, NATO, said that North Macedonia has embarked upon an extraordinary journey towards European and Transatlantic integration. NATO is looking forward to welcoming North Macedonia as a member state, and he did not see any major impediment to the completion of this process. Nikola Dimitrov, minister of foreign affairs of North Macedonia said that the country would meet its 2% of GDP military spending target as a NATO member. Kate Marie Byrnes, US ambassador to North Macedonia, said that North Macedonia has set an example to others of how to resolve regional conflicts. The US government recognises the importance of regional stability in the Western Balkans and is pleased to see enhanced cooperation among the countries of the region. However, this is no time to be complacent, she warned, encouraging other governments in the region to follow the example of Greece and North Macedonia.

Nemanja Stevanovic, state secretary, Ministry of Foreign Affairs of the Republic of Serbia, said that his country had three strategic foreign policy goals: EU membership, EU membership, EU membership. He reaffirmed that Serbia would not join any strategic military alliance but would remain neutral. He said that president Aleksandar Vucic is committed to the Serbia-Kosovo dialogue, which has been suspended because of the political situation in Kosovo and the 100% tariffs imposed by Kosovo on goods from Serbia, and to the goal of normalising relations between the two states.

Othon Anastasakis, director, south-east European studies at Oxford University and senior research fellow, St Antony’s College Oxford, highlighted a series of "bottom-up" security risks in the region, including Islamic fundamentalism, nationalist agendas and organised crime, saying they could exacerbate the problem of low levels of public trust in the system. He stressed the importance of strengthening institutions and the rule of law.

In response to Wess Mitchell's comments, Damir Marusic, non-resident senior fellow at the Atlantic Council in Washington, suggested that framing things as a competition between the West and Russia and China poses the risk of reactive thinking, and said that the solution in the region needs to be a European solution. The next step has to be getting Belgrade and Pristina back to the negotiating table and building on the momentum of the Prespa agreement.

In the afternoon, panel speakers in two sessions addressed questions related to economic growth, the business environment, foreign investment and intra-regional infrastructure and connectivity. It is ten years since the Western Balkans were hit with a lag by the fallout from the global economic and financial crisis, whose impact was felt from 2009 onwards. An economic recovery has been gathering pace in recent years and the region has undergone a significant economic adjustment. But is average annual real GDP growth of 3% or even 4% good enough when the region lags so far behind its peers in Eastern Europe such as the Czech Republic, Hungary, Poland and Slovakia, never mind the developed EU? What can be done to power faster growth and improve the prospects for foreign investment?

In his presentation Kocho Angjushev, deputy prime minister in charge of economic affairs of North Macedonia, said that economic development demanded two basic preconditions: political stability and rule of law. Progress made in both these areas has resulted in an uptick in foreign direct investment (FDI) inflows, to US$700m (5.6% of its GDP), in 2018, a post-independence record. Nina Angelovska, the minister of finance of North Macedonia, said that receiving a start date for accession talks would mean that the country's hard work had been recognised, but it would also mean that “we will have to work even harder on reforms”.

Matteo Rivellini, head of division at the European Investment Bank (EIB), said that the Western Balkans are a key priority for the bank’s lending activity. The EIB has financed projects totalling more than €8bn in the region since 2008. The bank's largest Economic Resilience Initiative project, a water treatment project for Skopje worth €10m, was approved on the day of the Economist summit. Bojan Markovic, deputy director for sector economics and policy at the European Bank for Reconstruction and Development (EBRD) said that faster catch-up growth is necessary for the region, but is constrained by the poor demographic profile and emigration as well as other structural deficiencies. Faster growth cannot be based on the easy productivity gains of the past which depended on low wages. The Western Balkans need a different kind of productivity growth, based on greater investment in innovation and research and development (R&D: the latter averages 0.4% of GDP per year in the region compared with 2% in the EU). Also better governance, at the macro level as well as the corporate level, would help in attracting investment, according to Colin Ellis, chief credit officer, EMEA, Moody’s Investors Service. Ellis stressed that it is really important for investors that governments do what they say they are going to do.

The conference’s final panel tackled the question of whether the western Balkans can evolve as a thriving business hub. It opened with Danela Arsovska, president of MCC who focused on corruption and rule of law problems as the main impediments to improving the business and operating environment. Athanasios Savvakis, president of the Federation of Industries of Greece (SBE), pointed out foreign trade still remains far below potential despite trade liberalisation after 2000 contributing to a large increase in volumes. Marco Mantovanelli, country manager for Kosovo and for North Macedonia at the World Bank, said that despite its internal problems the EU remains an anchor for reform in the region. He said all countries in the region needed to close the gap between statute law and actual practice in the economy, giving as an example the enforceability of contracts.

Stefan Peter, chairman of the management board of energy services company EVN stressed the importance of resources, not only natural resources but human resources, for economic development. Sotirios Theofanis, managing director of Thessaloniki Port Authority, highlighted the importance of the inter-connectivity of transport infrastructure as well as transport operations, citing as an example the need to change locomotives at the border. He proposed a network approach to transport instead. Eva Shukleva, general director of MEPSO, said her company’s development plan foresees investments of €150m over the next 10 years. Alp Er Tunga Ersoy, general manager of TAV airports, said that air traffic through Skopje airport has grown fourfold in a decade, from 600,000 passengers per year to 2.3m. He argued however that the sector needs more capital and better utilisation of innovation. Closing the session, Dimitra Kokkinou, CEO of Recycle Greece said that her company plans to invest in the recycling of hazardous waste in North Macedonia, an investment for which it has not only the vision, but also the budget.

www.hazliseconomist.com

Platinum sponsor:
Avicena Diagnostica
Premium gold sponsors: Granit, Beton
Gold sponsors:
Halkbank, TAV Airports
Silver sponsors:
EVN, Thessaloniki Port Authority
Bronze sponsors:
Gloa Design and Marketing Services, Recycle Greece Tserkezidis
IT sponsor:
Pobuca, Telecommunications provider: WIND
Airline carrier:
Aegean
Communication sponsors:
Nezavisen, Kapital, Online communication sponsor: SeeNews
Supporting organisations:
SBE (Federation of Industries of Greece), MCC



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