The economic situation in the Western Balkans is disastrous. The Western Balkans conference at the end of August should promote investment, writes Dušan Relji?.
Dušan Relji? is Head of the Brussels Office of the German Institute for International and Security Affairs (SWP) and is doing research on the European Union. This op-ed was previously published on the SWP Website.
The assertion of Western Balkans governments that their countries have a perspective of joining the European Union – backed by the Brussels bureaucracy and politicians from EU member states – is sounding increasingly hollow. Similar threadbare assertions will likely be heard at the second Western Balkans conference on 27 August in Vienna. After three decades of war and strife, the accession perspective has become a political tranquilliser for this part of Southeastern Europe. But its credibility has largely evaporated, and the poorest of the poor have abandoned hopes of improvement and ever achieving a life with dignity. During the past year, tens of thousands of Roma and Albanians have left their homes to seek a future in Germany and elsewhere in Western Europe.
Economic Stagnation and Political Turmoil
The first Conference on the Western Balkans, instigated by the German government, was held one year ago in Berlin. Political and business leaders from the region, the European Union and the EU member states came together with the primary objective of fostering economic cooperation between the Western Balkan states and with the European Union. This mechanism, the initiators believed, would speed EU membership, stem uncontrolled emigration, and curtail interference by external powers such as Russia, the Islamist regimes or Turkey, which the West does not want. But the statistics tell a different story. Since the outbreak of the economic and financial crisis in the European Union seven years ago, economic growth in the Southeastern European accession candidates has come to a standstill or fallen, while political turmoil has worsened. The pronouncements of the 2014 Western Balkans conference have done little to change that.
Apparently migrants assess their socio-economic circumstances more realistically than the governments of the Western Balkans and many of their foreign advisers. In 2014, the GDP of the Western Balkan states (including Croatia) was still 10 percent below the level of 1989, when the break-up of Yugoslavia began. According to the Economist Intelligence Unit, per capita income is just 27 percent of the EU15 average, and about half of the level of the countries that joined the Union between 2004 and 2007. One quarter of the adult population and 50 percent of young people are unemployed, investment is sparse, demand for products and services from Germany and Italy – the two most important trading partners – is sluggish. State debt is spiralling along with migration, and extreme poverty is proliferating, especially in Kosovo.
Economic atrophy leads to emigration of better-educated young people, and the thinning of the social base for liberal and progressive political options. Populists of all colours – some of whom bear personal responsibility for nationalist incitement during the Wars of Yugoslav Secession of 1991–2001 – have long since regained the upper hand. Although they all pay lip service to future EU membership, the consequences of their policies are devastating. Worst of all, they are incapable of securing greater employment and a fairer distribution of income. While this is partly due to the repercussions of the economic crisis in the EU, the refusal of current leaders to share power makes matters worse. They shy from reforms that would relieve business and society of state paternalism and make leaders politically accountable. And thus the standard of living continues to fall, political institutions deteriorate, political power concentrates uncontrolled in the hands of individuals, ethnic chauvinism grows apace, and freedom of speech and the press suffer.
No Impact of Political Reforms without Economic Growth
Better governance and reforms of political and economic institutions – as demanded by EU leaders, usually with little reference to the economic weakness of the countries concerned – will not on their own alleviate the misery. How, for example, can the labour market be further liberalised in the face of such a low employment rate? Can the state become even “slimmer” without condemning further tens of thousands to unemployment? Without economic growth, political reforms will remain without impact. It is plain that the Western Balkan states are incapable of generating growth on their own. If they are indeed to join the EU in the medium term, employment-generating investment, initiated and backed by the EU and its member states, will be crucial. The candidate countries must also be granted greater access to the EU labour market, in order to tackle uncontrolled emigration. Further, the Western Balkan states should be included fully in as many EU policy areas as possible, such as energy, transport, environment, climate and agriculture. Otherwise ongoing economic and social backsliding will accelerate the already glaring erosion of democracy and collapse of stability in Southeastern Europe.