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High level ho hum

The Atlantic Council today unveiled at a Western Balkans Partnership Summit its latest product. Some readers may remember that I panned a previous “Balkans Forward” report. This new one suffers none of the faults I cited then. It is a high-level step in a good direction: a statement signed by presidents and prime ministers in favor of economic integration among the Western Balkans 6 (or WB6: that’s North Macedonia, Albania, Montenegro, Bosnia and Herzegovina, Kosovo, and Serbia) and integration of that region with the European Union. Too bad–and symptomatic of underlying political problems–that they did not sign it, but instead put it out as “the chair’s” conclusions. Not clear to me who the chair was.

The dissolution of Yugoslavia in the 1990s produced five of the WB6, three of which had to fight for independence. It was only natural that newly independent states, and new states in a conflicted neighborhood, would put up border fences and controls where there had been none previously. Albania, an adversary of Socialist Yugoslavia and one of the most isolated countries in the world during the Cold War, already had tough border controls. The result was economic fragmentation in the former Yugoslav space and beyond that has persisted far beyond any serious security threats.

Jim O’Brien at the Partnership Summit cited a figure of 10% of WB6 GDP lost to long waiting times, documentation issues, infrastructure bottlenecks, and other barriers to integration. The Covid-19 pandemic makes these particularly unfortunate, he argued, as the WB6 have an opportunity to gain more investment as the EU seeks to shorten its supply lines and improve its economic resilience. The WB6, located between the main body of the EU and Greece, could benefit as a result.

Presidents and Prime Ministers of the WB6 have now committed to reduce delays at their borders, cut red tape that increases trade friction, and build much-needed infrastructure to improve connectivity. Favorable bilateral arrangements are supposed to be automatically available to all 6, a kind of “most-favored nation” provision. Donors–including the EU, the European Bank for Reconstruction and Development, and the US Development Finance Corporation–have committed to finance the effort. Money, as the EBRD representative at the meeting suggested, should be no object, not least because the EU has already committed 13.5 billion euros to the region to counter the Covid-19 impact. The President of Serbia and the Prime Minister of Albania propose monthly meetings at their level to monitor implementation. Progress will also be checked at the Berlin Process Summit planned for Sofia in the fall.

All of this is good, if rather mundane. As Albanian Prime Minister Rama put it, small steps can add up to big things. “Green lanes,” which by EU definition delay shipments less than 15 minutes at a border, are to be instituted among the WB6 and several of the leaders want them instituted between the WB6 and the EU. Infrastructure projects are to be made “shovel ready.” Operations of the Central European Free Trade Agreement, to which the WB6 are all parties, are to be improved and expanded to intellectual property and environment. Phytosanitary certificates are to be harmonized. Chambers of commerce are to be involved in monitoring implementation. The existing Regional Coordination Council will ride herd to keep things moving.

The barriers to achieving these and bigger steps toward integration are real. As Serbian President Vucic noted, it has taken 7 or 8 years to even get ready to begin work on the Nis/Pristina part of a highway that has been finished between Pristina and Durres (in Albania) for that entire time. He was not sanguine about removing existing barriers to trade between Kosovo and Serbia, which exist mainly on his own side of the border for political rather than economic reasons. Transportation agreements between Serbia and Kosovo supposedly negotiated by US envoy Grenell went unmentioned (or at least I didn’t hear them mentioned), I suppose because they are not implemented. I heard no commitment by Bosnia and Herzegovina Prime Minister Tegeltija to accepting Kosovo passports for visa-free travel.

The fact is that the barriers to economic integration are not all bureaucratic. Almost any trade issue can be seen through the lense of national sovereignty and political convenience. Domestic politicians will seek to gain advantage from battering the powers that be for perceived softness toward a disliked state or ethnicity. Serbia has lots of non-tariff barriers that block imports and travel from Kosovo. Bosnia does as well. For both, the reasons are political, not economic. Until the 2018 agreement (Prespa) between North Macedonia and Greece, the road to Thessaloniki was not freely available to North Macedonian trade and talks are still ongoing to remove barriers. Not to mention the EU’s refusal so far to implement the visa-free travel for Kosovo that Pristina earned by implementing more than 100 technical requirements. But the political stars have not yet aligned.

I might add: sometimes political stars don’t align because someone who benefits from trade barriers doesn’t want them to. The barriers among the WB6 present enormous opportunities for corruption: I doubt the smugglers have much trouble getting through, because they are ready and willing to pay. There might even be one or two leaders among the WB6 who benefit from the payoffs.

So yes, regional economic integration presents enormous opportunities. But it is yet to be shown that the WB6 are prepared to look past the political barriers and get the job done. That is why participation of the leaders is needed for ho-hum problems: only they can waive the political obstacles and go for the economic benefits. I won’t be surprised if they hesitate, so the EU and US will need to be ready to intervene with political muscle as well as hard cash from time to time. Let’s hope it works.