Road and rail at centre of EU investment plan for Western Balkans

Shargan retro railway, Mokra Gora, Western Serbia. [Veronika Kovalenko/Shutterstock]

Alongside the annual country-specific enlargement reports on all EU hopefuls, the European Commission presented on Tuesday (6 October) an investment plan for the Western Balkans, which it hopes will bring investment to the region, spur greening and enhance regional cooperation.

Assuming pre-accession assistance budgets stay at the €12.6 billion figure agreed by European leaders this summer, the Commission plans to invest almost 70% of the available enlargement financing, or €9 billion, for the six countries planning to join the club through the investment strategy.

On top of that, the Commission also foresees establishing a guarantee facility to encourage up to €20 billion euros of additional public and private investments.

Altogether, injections could represent almost a third of the total GDP of the region, currently at about €100 billion, and lead to a growth of 3.6%, the Commission hopes. The region includes Albania, Bosnia-Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia.

The EU has already earmarked €3.3 billion to help the stressed economies of the region and immediate COVID needs, with the new investment plan focusing instead on longer time horizons.

Improving transport infrastructure will be a major focus of the seven-year plan, with three out of 10 flagship projects focusing on links in all directions.

“We need to link the region with Europe, much better, but also we need to link the region within. So we decided to provide plans to link up all the capitals with road and rail,” the Commission’s enlargement and neighbourhood chief Olivér Várhelyi said.

“Highways and railways highway connections are incomplete and themselves prevent new trade flows within and with the region,” Várhelyi told MEPs.

Plans include wrapping up the Kosovo portion of the “Peace Highway” connecting former arch-foes Pristina and Belgrade, from there enhancing the connection to Podgorica and Sarajevo.

Even though the European executive said it wants to invest in “sustainable transport,” about a half of the suggested transport projects focus on highways, with the Commission planning to finance about a fourth their costs.

“For each road infrastructure project, the Commission will promote developing green multimodal transport solutions,” the investment plan reads.

Proposed investments in renewable energy only focus on hydropower in the region, with the exception of solar and wind projects in North Macedonia.

Activists win battle, not war, against hydropower in the Western Balkans

Green lawmakers have hailed the cancellation of a hydropower plant in Albania but now fear that a forthcoming EU investment package for the wider region will promote small hydropower, which activists blame for destroying ecosystems.

The Commission is also betting on gas to help the transition away from coal in the region, where carbon burning is still the main source of power, accounting for 70% of electricity production.

The transition role of gas is of utmost importance,” said Várhelyi, adding that switching to gas could reduce carbon emissions by 60%, while the new pipelines built under the plan could later be used for hydrogen. 

In the area of environment, the Commission is planning to invest into wastewater management, cleaning rivers and bottlenecks.

“But the single biggest lowest hanging fruit, when it comes greening, is of course energy efficiency,” the enlargement chief said.

According to EU calculations up to 40% of all emissions in the region can be tied to buildings, and so investment will heavily focus on retrofitting buildings to diminish their carbon footprint.

Moreover, digital infrastructure will also be a focus of EU financing the Commission, with a special focus on national broadband development, “something completely missing in the region.”

“Brain drain is a serious problem of the Western Balkans,” Várhelyi said.

“When the region becomes more attractive for investors, the economic environment will become more attractive for the elite and highly skilled and educated people will return to the region.”

One of the Commission proposals to tackle the issue will be to extend the European Youth Guarantee to Western Balkans, created in 2013 in the aftermath of the financial crisis to tackle dramatic youth unemployment numbers in the EU.

A number of parliamentarians asked the Commissioner how he will ensure that the bloc successfully links monetary support to rule of law concerns pervasive in many countries in the region.

“This is a message I will be echoing in the region, that if we see any backsliding, or non-continuation of reforms, it is going to be very difficult for us to continue the funding,” Várhelyi said.

[Edited by Zoran Radosavljevic]

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