Economic governance and better connectivity: opportunities for Western Balkans

Belgrade, (23 October) - Commissioner for Enlargement and European Neighbourhood Policy Štefan Füle together with Vice-President of the Commission Jyrki Katainen is attending the "Western Balkans Six" Ministerial Conference about new economic governence and better connectivity in the region.

The meeting in Belgrade is attended by the Foreign Ministers and Economy or Finance Ministers from Albania, Bosnia and Herzegovina, former Yugoslav republic of Macedonia, Kosovo, Montenegro and Serbia. The aim of the discussions is dicsuss measures to strengthen economies, boost competitivness, growth, investements and job creation in the countries of the Western Balkans in the framework of their EU accession process.

In his opening statement Commissioner Füle stressed the following:

‘Ministers, distinguished guests, ladies and gentlemen,
I would like to express my gratitude to the host for hosting us here in Belgrade in a way that allows us to focus on extremely important issues related to the enlargement process. I am happy that this time you have two of us, Vice-President of the European Commission Jyrki Katainen and me, to make the point that what we are discussing now is not part of an isolated enlargement agenda, but a reflection of the challenges and opportunities we see these days in the European Union.

Building on what Jyrki has already said short while ago, I would like to start by outlining how economic governance has become one of the key pillars of our enlargement policy.  

First, we have lived through a major economic global crisis. Over the mandate of this Commission, we have seen major changes in the European Union's economic governance. Since the aim of enlargement policy is to help you to prepare for the European Union membership, it is essential that we share with you the very important changes that are taking place at European Union level. The new process we are proposing – involving a credible reform programme and an enhanced surveillance with the European Union – is inspired by the European Semester process.

Second, as you know, the Commission does not yet consider that any Western Balkans country meets the economic accession criteria, in terms of functioning market economies or having the capacity to cope with competitive pressures and market forces within the Union.

Third, we want to enhance economic policy-making capabilities in the Western Balkans to boost competitiveness and growth and job creation.  Relevant and credible reform programmes will be needed to restructure your economies and to safeguard macro-financial stability.

Dear colleagues,

As outlined in the Enlargement Strategy Paper two weeks ago, we are inviting you to start the new process by preparing the National Economic Reform Programmes.

Jyrki already stated this: the first part of the programme is not new to most of you. It is an enhanced version of your already existing programmes – except in the case of Kosovo, who will participate in this process for the first time. And I am very happy that after we concluded and signed the Stabilisation and Association Agreement, here we have another platform to strengthen your position in the enlargement mainstream in the Western Balkans.

The really new element is in the second part of the programme, entitled "Sectoral structural reforms to promote competitiveness and growth". We invite you to present the ongoing and planned national policies and a limited number of flagship reform measures in key sectors that directly contribute to competitiveness and growth.

In our guidance, we define competitiveness in line with the second Copenhagen economic criterion. We therefore invite you to address the most relevant issues that are in line with national priorities and European Union recommendations in five key areas:
 
1.         physical capital – this may include measures supporting transport and energy networks, energy efficiency or green economy. This links to our afternoon session, where we will focus on improved connectivity within the region and with the European Union;
2.         human capital – this may include measures supporting education, vocational training, research and innovation;
3.         better industrial structures – this may include measures such as supporting dynamic SMEs, better access to finance and smart specialisation;
4.         good business environment – this may include micro-economic measures for more efficient functioning of companies in line with state aid rules and cutting the red tape in different sectors of economy;
5.         trade integration – this may include measures to support export promotion and to attract foreign direct investments;

Dear colleagues,

Allow me to make four remarks about why we have increased the focus on competitiveness as part of the new process.
First, the economic challenges in your countries are great. You need to prepare a more comprehensive and convincing domestic reform agenda that goes beyond fiscal consolidation. You need to be able to demonstrate that you are serious with your plans to improve the know-how to serve your economy and that you are capable of smart investment which enhances competitiveness and creates jobs.

One of the lessons of the recent crisis is that countries need to enhance their own competitiveness.

Second, a convincing national economic reform programme with an enhanced surveillance procedure with the European Union will send a strong signal to investors that a good business environment is a national priority. Investments will only happen if you are able to demonstrate solid policy plans and commit to concrete improvements in the investment climate.

Third, our new approach puts a specific emphasis on wider stakeholder involvement. The national economic reforms need to be coordinated. They need to be agreed across a wide range of ministries, not just the Ministries of Finance and Economy. They have to be supported with adequate budget funds. Wider consultation – involving national parliaments, regional and local authorities, social partners and civil society – will ensure ownership and facilitate implementation of reform measures.

Fourth, a credible and relevant economic reform programme will provide a solid basis for economic dialogue with the European Union. It will also help to frame future internal debates on priorities and it will support exchanges of best practices with other countries facing similar challenges. Simply put, these new programmes will add value to your own national policies.

The regional dimension is also relevant in this process. As many of the Western Balkan countries face similar challenges, some economic dialogue should take place in the regional fora. I believe that there is a positive dynamic now in motion after the successful Berlin Summit in August.

I would like to highlight the role of the Regional Cooperation Council as a key partner. In the new programmes you can, and in fact you should, draw on the targets you have introduced in the SEE2020 process.
 
Dear colleagues,

We have an ambitious timetable ahead of us. We look forward to receiving the first National Economic Reform Programme by the 31 January 2015. The first part is already familiar to you. Concerning the second part, we would encourage you to focus in this first pilot year on a few ongoing or planned flagship sectoral measures. They should already have a broad national consensus and be clearly budgeted with a time-bound implementation schedule.

After submission of the programmes, we plan to have the Commission's assessment missions in February/March.
For us, it is important that we work together in partnership with you on these important programmes. We plan to hold meetings with each of your countries in April next year to discuss our proposed country-specific guidance. After that we will also consult with the European Union Member States to ensure they also have ownership of the key recommendations.

We have also made a commitment in our IPA multi-country and country strategies that credible and relevant national economic reform programmes will be supported by targeted IPA assistance. This means there are more resources and better targeted to deal with that issue.

We see the International Financial Institutions as a key partner in this process. We have already had discussions with the IMF, the World Bank, the EBRD and the EIB on how to involve them and how they could support you in this process. I am glad their representatives were able to join us today.

Dear colleagues,

This work on the economy will be a key pillar in the enlargement process going forward.  Let me thank you for allowing us to come but based on the work you have already done in this region – despite all the obstacles and challenges – you have actually pushed us to come up with programmes on how to ensure that the benefits of the enlargement process are felt by the citizens already before you are able to join the EU. And that is the biggest added value of what we are trying to do with you.’

In the context of the "Western Balkans Six" Ministerial Conference, Commissioner Štefan Füle also addressed the media saying:

Dobar dan, good afternoon. At this important regional meeting  the ministers adopted very concrete and forward looking joint statement. Let me now highlight three points:

1) Our new approach to economic governance involves credible reform programmes and enhanced monitoring by the EU. This should help your transformation to functioning market economies, able to cope with competitive pressures and market forces within the Union, including boosting competitiveness, growth and jobs. What does it mean? It means to bring Serbia and other countries of the region the benefits of the enlargement even before joining the EU. It means building economic bridges and starting now to close the gap between the GDP in this region and in the EU.

 2) The Western Balkans countries have committed to prepare and submit National Economic Reform Programmes to the European Commission each year starting in January 2015. This should send a strong signal to investors that a good business environment is a national priority. Again - what does it mean? It means more investment and more prosperity for this country and other countries in the region. 

 3) We also discussed transport and energy connectivity among the Western Balkan countries, and between them and the EU. EU will help policy-wise and financially. Here, the EU is ready to support better connectivity with up to 1bn EUR in grants from IPA funds, and 10bn EUR in soft loans from international financial institutions until 2020. This means that we are finally moving from words to deeds. It means that time has come to offer the people in the Western Balkans modern infrastructure and transportation opportunities within the region and with the EU.

And since this is my last official engagement in the region in my current capacity, allow me to thank my partners in Serbia and elsewhere in the region for the work we did jointly over the last years. With Jyrki Katainen here, and Commissioner Johannes Hahn, you will be in good and responsible hands. 

And the presence of Jyrki here is a clear proof that what we talk about here is wider than an isolated enlargement policy. It is a clear sign that we want the Western Balkan countries to address the same challenges in the same way we are addressing them in the EU.

And Minister, Ivica - you should be proud of what you have prepared today and how you steered today's meeting. This event - although focused on the region was not just a regional event, it was a European event because of the work you have done over the last years.

Read the Joint Statement of the Western "Western Balkans Six" Ministerial Conference here [11 KB] .