The European Bank for Reconstruction and Development, or EBRD, has a harsh warning for the Western Balkan countries who hope to be the next entrants into the European Union: unless they get serious about boosting productivity and implementing reforms, the six countries that make up the region could take up to 200 years to catch up to EU living standards.
That highly pessimistic outlook is just one of several recent blows to the Balkan integration strategy the European Commission put forward just a weeks ago. It comes after the IMF highlighted some of the severe infrastructural issues that still plague the region. Even though outside donor programmes have tried to narrow the gap in infrastructure between Western Europe and the Western Balkans, the quality of the region’s infrastructure remains far below EU levels.
That infrastructural gap, as the IMF points out, feeds into the wider income disparity between the Balkan countries and their European peers. Unsurprisingly, one of the European Commission’s principal initiatives in preparing the Balkans for accession is improving the countries’ infrastructure. EU funds to finance railways, bridges, waterways, and electricity transmission lines are supplemented by funding from other international institutions, including the EBRD.
These projects entail significant sums. The European Investment Bank alone has disbursed almost €4.7 billion in the region in the last five years. Of course, fixing Balkan infrastructure requires that money actually arriving at its expected destination. Thanks to the region’s rampant corruption, that is far from a given.
Examples of previous graft abound. One highway construction project in the Former Yugoslav Republic of Macedonia (FYROM) saw its costs intentionally inflated by €120 million by unscrupulous high-level politicians, who moreover favoured politically-connected subcontractors. Public tenders in the region are routinely awarded with no competition – or false competition, in which bidders agree amongst themselves who will win the public procurement.
The EU is hardly unaware of these issues, but it has long struggled with imposing reforms on its neighbours while not pushing them out of the European orbit. As the EBRD and IMF make clear, Brussels needs to do a better job of wielding both carrot and stick.
It’s imperative the EU figure this out quickly. The Commission’s recently released “credible” Western Balkan strategy is meant to overcome more than a decade of enlargement fatigue, ensure that the Balkans do not pivot towards Moscow, and jumpstart convergence with the EU-27. Even so, no less than Commissioner Johannes Hahn had to admit his suggestion that Serbia and Montenegro might be ready to join the EU by 2025 was ‘very ambitious‘.
Balkan leaders regularly remind their counterparts of the stakes involved in bringing their countries into the European fold. Last April, Albanian Prime Minister Edi Rama dramatically warned of the “nightmare” that Europe faced if the Balkans lost faith that they will eventually accede to the EU and instead drifted into the orbit of other outside powers.
At the same time, the EU learned from its experiences with Romania and Bulgaria that admitting countries before they had fully caught up economically and politically with the rest of the bloc risks serious consequences. That helps explain why the Commission’s strategy imposes strict requirements on the Balkans, although the tough line in Brussels has mostly made itself felt on political issues (such as Serbia’s refusal to recognize Kosovo’s independence).
That severity only goes so far. The Balkan nations already enjoy many of the benefits of EU membership—visa-free travel, membership in the European Common Aviation Area, and of course the massive inflows of funding meant to bring their countries up to speed. Unless the EU puts its foot down on financial mismanagement as well, funds earmarked for Balkan infrastructure risk ending up building bridges to nowhere and lining corrupt politicians’ pockets.
Those corruption risks are only increasing as potential candidate countries find themselves tempted by authoritarian leadership. Despite being singled out as one of the ‘frontrunners’ for EU accession, Montenegro is essentially a poster-child for the dangers of Balkan political cronyism. Polls suggest Milo Djukanovic, who has ruled Montenegro for most of the last quarter century, is likely to come out of “retirement” to run again in upcoming presidential elections.
In a region where corruption and cynical political gamesmanship are the norm, Djukanovic’s reputation is the stuff of legend. As the former Yugoslavia disintegrated, Djukanovic led Montenegrin troops in the shelling of Dubrovnik (he later apologised). As leader of an independent Montenegro, Djukanovic was indicted in Italy for renting out Montenegro’s ports to the mafia to smuggle illicit cigarettes.
Djukanovic claimed immunity as prime minister, only to be thrust back into legal difficulties after his sister was reportedly involved in a bribery scandal in relation to Hungary’s Magyar Telekom. For years, Djukanovic and his closest friends have been accused of using the country’s First Bank as their “personal ATM”. More than half of the Montenegrin population already believes that public procurement is intimately linked to political influence – what is the likelihood of responsible stewardship of EU funds if the man honoured as 2015’s Man of the Year in Organized Crime seizes control again?
In an interview, Djukanovic once shrewdly hinted at the international community’s willingness to forgive the Balkans’ shortcomings in exchange for them turning their back to Moscow. He warned against the peninsula’s perpetual instability and said that “when trouble starts in the Western Balkans, Europe needs to send money, lots of it”.
Instead of blindly heeding Djukanovic’s problematic advice, the European Union needs to treat the region’s gross financial irregularities and political failings as seriously as it does its border disputes. Otherwise, the Balkan nations could remain in their frustrating holding pattern for decades – if not necessarily centuries – to come.