VYSOKÁ ŠKOLA EKONOMICKÁ V PRAZE
DIPLOMOVÁ PRÁCE
2008 Bc. Petra Holopírková
VYSOKÁ ŠKOLA EKONOMICKÁ V PRAZE Fakulta mezinárodních vztah ů
St ř edisko mezinárodních studií Jana Masaryka
Téma
Western Balkans and Austrian position on the EU integration of Western
Balkans
Vypracovala: Bc.Petra Holopírková
Vedoucí diplomové práce: Ing.Zbyn ě k Dubský
P r o h l á š e n í
Prohlašuji, že diplomovou práci na téma Western Balkans and Austrian position on the EU integration of Western Balkans jsem vypracovala samostatn ě . Použitou literaturu a podkladové materiály uvádím v p ř iloženém seznamu literatury a citacích.
V Praze dne: 19.4.2008 Podpis: Bc.Petra Holopírková
Acknowledgements
I would like to thank my tutors and helpful advisors professor Breuss from Economic University of Vienna, Department – Europainstitut and Ing. Dubsky, an Assistant Professor of University of Economics in Prague for their continuous and valuable support and for providing additional information on specific topics.
Also, the support given by Bundesministerium Österreich (Federal Government of Austria) is specially appreciated.
The last but not least, I am grateful to many other people and institutions for their support in research and discussions of the issues presented in the thesis among others Dr. Erhard Busek and Prof. Vladimir Gligorov, prominent Economist and a founder of the Democratic Party in Serbia in 1989; now Professor at the Vienna Institute for International Economic Studies, Dr Karl G. Doutlik, representative of the European Commission in Austria, Franz Wessig, Co-ordinator for EU- Enlargement, Foreign Economic Relations with East and Southeast Europe at BMWA Federal Ministry of Economics and Labour, Johannes Eigner Dr.iur., from Ministry for foreign Affairs from Department EU- Enlargement, Relations to the third countries. Albert Rohan, former UN general secretary, a former representative of Austrian government in Belgrade and Kosovo; now retired.
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Content
1 Introduction ...7
2 Western Balkans on their way to the European Union ...9
2.1 The Balkans ...9
2.2 The Stabilisation and Association Process ...10
2.3 The EU pre-accession assistance to Western Balkans...12
2.4 The EU Enlargement strategy...13
2.5 EU programme challenges...14
2.5.1 Enhancement of regional cooperation...14
2.5.2 Need for Visa-free regime towards the Western Balkan countries ...14
2.5.3 Research, education and culture...15
2.5.4 Civil society ...15
2.5.5 Cooperation and reforms in justice, freedom and security ...16
2.5.6 Trade integration – Central European Free Trade Agreement (CEFTA) ...16
2.5.7 Accession to the WTO ...16
2.5.8 EC, EIB, EBRD and the Council of Europe Development Bank ...16
2.5.9 Energy Community Treaty...17
2.5.10 The Commission and other donors ...17
2.6 The EU programme challenges: highlights and conclusion ...17
3 The EU commitment in individual Western Balkans candidate countries...19
3.1 Road map for accession of individual Western Balkan countries ...20
3.1.1 Croatia ...20
3.1.1.1 EU road map on Croatia integration...20
3.1.1.2 Croatia - economic progress ...20
3.1.1.3 Austrian road map on Croatia integration and Austria as strategic economic partner of the Western Balkans (mutual trade, FDI) ...21
3.1.2 FYROM – slow improvements ...22
3.1.3 Albania ...22
3.1.4 Montenegro ...23
3.1.5 Bosna i Hercegovina ...24
3.1.6 Serbia...24
3.1.7 Costs and Benefits of Kosovo´s Future Status ...24
3.1.8 Economic outlook ...26
3.1.9 Kosovo in the light of status developments ...27
3.1.9.1 Independent Kosovo ...28
4 2008, “a crucial year” ...31
5 Some critical perspectives on the Western Balkans integration to the EU by Western Balkan experts ...33
5.1 Europe’s troubled region ...33
5.2 Western Balkans on their way to the EU? ...40
5.3 Tough love ...41
6 NATO decisions on open-door policy...46
7 Austria and Balkans...47
7.1 The Western Balkans – Priority of Austrian Foreign Policy ...47
7.2 Austria as Regional investor ...53
7.3 Austrian paradox...54
7.3.1 Austrian public opinion on Western Balkans...55
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8 Austrian official opinions on Balkans and on future Enlargement of the EU with Balkans56
8.1 Vienna conference resolution ...56
8.2 Balkan EXPRESS – Symposium “Return to Europe- Talking Balkans” ...60
8.3 Interviews with Austrian leading politicians and an expertise of their views on the integration of Western Balkans into the EU...61
8.3.1 Interview with Albert Rohan...61
8.3.2 Gerald Knaus on Western Balkan integration...64
8.3.3 Interview with Dr. Busek ...65
9 Conclusions ...71
10 Resumè ...72
Bibliography ...73
Appendix ...76
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1 Introduction
This paper offers an academic analysis of the role and impact of the international community in the Western Balkans, primarily from an official EU and Austrian perspective.
As a scholarship appointee I opted for a three-month government grant in Vienna. This is a partnership programme of Czech Ministry of Education and Bundesministerium Österreichs (Federal Government of Austria). I have been in a constant touch with politicians of the Foreign Ministry of Austria, Austrian Chamber of Commerce, various economic institutions such as the Vienna Institute for International Economic Studies (WIIW), Austrian Institute of Economic Research (WIFO), Institute for the Danube Region and Central Europe (IDM), Austrian Institute for International Affairs (OIIP), Federal Ministry of Economic and Labour in Austria and European Commission based in Austria.
The topic was determined first by the fact I was based in Austria and involved in the talks and conferences on the very subject. Since official Austrian stance on the Western Balkans EU integration is rather unique within the EU countries given their positive experience either immediate or past, it was of high challenge to pursue this issue academically, backed by this Austrian experience. I benefited heavily from personal contacts and talks with some key persons involved in integration of Western Balkan countries into the structures of EU, Prof. Vladimir Gligorov, prominent Economist, Professor at the Vienna Institute for International Economic Studies, Dr Karl G. Doutlik, representative of the European Commission in Austria, Franz Wessig, Co-ordinator for EU-Enlargement, Foreign Economic Relations with East and Southest Europe at BMWA, Federal Ministry of Economics and Labour, Johannes Eigner Dr.iur., from Ministry for Foreign Affairs from Department EU- enlargement, Relations to the third countries. Albert Rohan.
The second relevant impact on my work was given by the fact that my diploma thesis consultant and supervisor has been Professor Breuss from Economic University of Vienna, Department – Europainstitut and Ing. Dubsky, an Assistant Professor of University of Economics in Prague. These professors are main specialists concerning the EU questions at both universities. Ing.
Dubsky was advisor mainly on political point of view and advised mainly on political part of the thesis. Professor Breuss is an Economist and advised mainly economic part of the thesis.
Authentic interviews that were kindly given in person by these leading politicians to me are a fundamental and priceless part of the study.
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Reasons for processing this work in English are quite obvious. Most official materials are provided in English by both EU institutions and Austrian officials. Translating of all the materials would be so time consuming there would be only little time for processing them.
My professional interest was also aroused by discovering quite flagrant discrepancies of the views on the association of the Western Balkan countries, making differences among these countries and in the last the turmoil about the Kosovo independence, the EU recognition in respect.
The study doesn’t have a primarily an economic focus, it has an interdisciplinary character.
Most of the developments in the Western Balkans cannot be understood just by using an exclusively economic approach. Moreover, all policy analyses and recommendations have to take into account the non-economic preconditions, mainly (geo)political aspects, realities and consequences of economic decisions.
The countries being the scope of this work are namely: Albania, Croatia, Bosnia and Herzegovina (BiH), Former Yugoslav Republic of Macedonia (FYROM), Montenegro, Serbia and Kosovo. The accession EU criteria essential to fulfil are to be analysed here are as follows: political, economic and other. Whereas the category of ‘other’ is of a chief focus as this rather vague category seems to be most decisive. Some of the concerned countries are more favoured by the EU and Austria in particular; however, the EU officials are rather unspecific about giving any specific date for the countries accession unlike Austria’s official attitudes to Western Balkan countries which are very positive given their investment in this region. Austria is the leading proponent of all EU member countries Croatia to join the EU. The Western Balkans is the top priority of Austrian Foreign Policy, which makes Austria unique within the EU.
The study cannot ignore the latest development in Kosovo since the EU member countries’
recognitions as an autonomous state will decide whether and when Kosovo will become the EU member.
The study contains a relatively large number of tables and graphs. Most have been incorporated into the basic document, while others have been placed in the Appendix section (additional statistical tables and graphs).
Work on the present study started in late 2007 and early 2007. Before the first draft was concluded, several new developments in the Western Balkans needed to be taken into account, declaring independent Kosovo namely. Some, such as the ongoing negotiations with Croatia, negotiations on Stability and Association Agreements (SAA) with Western Balkan countries, can be expected soon, or very soon.
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2 Western Balkans on their way to the European Union
2.1 The Balkans
The countries at the Balkan Peninsula have been called by those outside this region as the Balkans. The Balkans are often associated with wars, fights and corruption. This part of Europe has traditionally been problematic and that might threaten the rest of Europe.
In the past eighteen years borders within this region have been renewed. The Socialist Federal Republic of Yugoslavia (SFRY) existed from the end of World War II. until 1992. It consisted of Bosnia and Herzegovina (BiH), Croatia, Republic of Macedonia, Montenegro, Serbia and Slovenia and the self declared, partially recognised Kosovo. In 1992, two remaining states, Serbia and Montenegro, formed the Federal Republic of Yugoslavia (FRY). FRY existed from 1992 to 2003. In 2006 Montenegro proclaimed independence. The other four countries BiH (1992), Croatia (1991), Republic of Macedonia (independent since 1991, The Former Yugoslav Republic of Macedonia FYROM since 1993), Slovenia (1991) proclaimed independence. These countries were gradually surrounded by countries joining the EU. Greece joined the EU in 1981, Slovenia in 2004, Romania and Bulgaria in 2007 and a very clear accession agenda for Croatia was defined. The Balkans was reduced into Western Balkans including Albania, Bosnia and Herzegovina (BiH), FYROM, Kosovo, Montenegro and Serbia. The “Western Balkans” is considered more as a label than a historically or geographically founded name.
Most countries are a mixture of different ethnic groups, cultures, languages and religions.
Despite these diversities, the Western Balkans countries are rather homogeneous according to these main characteristics.
All of them have a relatively small size: their population varies from about 3.1 to about 7.4 million inhabitants.1
With the exception of Albania, the countries of the Western Balkans were formerly republics of SFRY. The region is a mixture of weak states and international protectorates: BiH is under the Dayton Agreement2, the Kosovo is under the United Nation Security Council Resolution 12443 and
1 See Table 1 in Appendix
2 Dayton Agreement is the peace agreement signed in 1995,it was end of war in Bosnia.
3 After the war ended 1999, the UN Security Council passed Resolution 1244 that placed Kosovo under UN administration and authorized KFOR, a NATO-led peacekeeping force. Resolution 1244 also delivered that Kosovo will have autonomy within FRY (legal successor of FRY, Serbia).
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declared independence on February 17th 20084. The future of Serbia is influenced by its position vis- à-vis the International Tribunal of Hague for the former Yugoslavia5 and the Kosovo independence.
They are all post-communist countries in transition. GDP per capita in these territories is low;
unemployment is very high, foreign direct investment (FDI) is limited.6
An EU integration agenda has been already established in each country and all the Western Balkan countries share a perspective of eventual EU membership.7
2.2 The Stabilisation and Association Process
The Stabilisation and Association Process (SAP) offers an agenda for the countries to reform and to adopt European values and norms. The European perspective of the Western Balkan countries and the EU determination to support their efforts to move closer to the EU through a SAP were specifically underlined in the Copenhagen Council in December 2002.8
The EU commitment to Western Balkans integration was further confirmed by the
“Thessaloniki Agenda for the Western Balkans: Moving towards European Integration” in 2003.9 The accession process is determined by capacity of each country. This approach is a key element of EU strategy in the region.10 The countries of the Western Balkans have invested significant efforts in the SAP and they have been moving forward towards the EU at different speeds. Croatia completed all steps of SAP and is now finalizing the accession negotiations with the EU. The application of the FYROM for EU membership was accepted by the EU in 2005 and the negotiating framework was already defined in February 2008.11 Albania signed the Stabilization and Association Agreement (SAA) in 2006 and the SAA ratification is going to be completed by June 2008. The SAA between EU and BiH, Montenegro, and Serbia was not yet finalized and it is
4 www.kosovothanksyou.com, The Kosovar Assembly approved a declaration of independence on 17th February 2008.
In following days, several countries (the United States, Turkey, Albania, Austria, Germany, Italy, France, the United Kingdom, Taiwan, Australia and others announced their recognition, despite protests by Serbia in the UN Security Council. The UN Security Council remains divided on the question. Of the five memembers with veto power, USA, UK and France recognized the declaration of independence and Russia and the People’s Republic of China consider it illegal. The EU has no official position towards Kosovo´s status. Of Kosovo’s immediate neighbor states, only Albania recognizes the declaration of interdependence. Slovenia, Bulgaria, Croatia recognized the declaration in March (Rumania, Hungary not yet)
5 The International Criminal Tribunal for the former Yugoslavia was established by the UN Security Council in May 1993 against the background of grave violations of international humanitarian law that had been committed on its territory since 1991.
6 See Table 1 in Appendix
7 The Balkan’s in Europe Future, page 23
8 The Stabilization and Association Process for South East Europe, page 44
9 Thessaloniki Declaration, page 5
10 The Road to Thessaloniki: Cohesion and the Western Balkans, page 13
11 http://www.eu2008/si/en/News_and_Documents/Speeches_Interviews/April/04095VEZhrFYRM.html
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expected that Kosovo will start the SAA negotiation too. FYROM has obtained candidate status and the 5 other countries continue to be potential candidates.
The progress made by each country has been evaluated in progress reports by the EC which identifies key priorities and the milestones. The last set of Progress Reports was adopted by the European Commission (EC) on 6 November 2007. The documents include summary of the progress made over the last twelve months by each candidate and potential candidates: Croatia, FYROM, Turkey, Albania, BiH, Montenegro, Serbia and Kosovo.12 EU evaluation of the Western Balkan countries’ progress is summarized in the Table 2.2.
In general, stabilization of this region has been maintained and transition process is completed in almost all countries. Democratically-elected governments are in place. Reforms are strengthening the rule of law and modernizing economic and social structures, improving governance and judicial system, and fighting corruption. More dialogue is needed in Serbia, Kosovo, BiH, and FYROM, in order to avoid the ethnic tension that slowed down reforms.13 All Western Balkan countries are further restructuring and opening up their economies. Western Balkan countries have reached relatively high growth rates and low and stable inflation. “Shy” fiscal and monetary policies were implemented in most countries of the region. These reforms fight organized crime and human beings traffics, money laundering and drugs’ production and make better business climate.
Regional and international cooperation has been improved. Free Trade Agreements were already finalized between all Western Balkan countries and the Central European Free Trade Agreement (CEFTA) was signed in 2006. CEFTA attracts FDI, foster intra-regional trade and integrate the region into the global trade. Albania joined WTO in 2000, FYROM in 2003.14 BiH, Montenegro, Serbia has observer government status from the WTO.15
Assuming that the Western Balkans will benefit from the progress towards EU membership as previous candidates from the Balkans, it is possible to imagine a scenario for their EU accession.
Bulgaria joined the EU in 2007, and is probably the best comparator regarding the SAP. Bulgaria signed its SAP in 1993. It achieved candidate status in 1997, opened negotiations in 2000.
Bulgaria’s integration process from SAP to the EU membership took in total fourteen years.
Assuming that Western Balkan countries would progress as quickly as Bulgaria, FYROM could probably join the EU in 2012, Albania in 2017 and Serbia in 2019.16 But we should also take into
12 http://ec.europa.eu/enlargement/key_documents/reports_nov_2007_en.htm
13 http://ec.europa.eu/enlargement/pdf/key_documents/2007/nov/strategy_paper_en.pdf
14 http://www.wto.org/english/thewto_en/whatis_e/tif_e/org6_e.html
15 Observers must start accession negotiations within five years of becoming observers
16 EU-Erweiterung ohne Ende oder andere Strategie? Page 18
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account that such bureaucratic scenario is not precise and that according to this scenario Croatia should join the EU already next year, which is not realistic according to the EC. This scenario is only one example of future perspective of these countries on their way to the EU.
2.3 The EU pre-accession assistance to Western Balkans
The EU financially supports the Balkan countries since 1991, through the PHARE Programme (1992-2000) and thereafter through the CARDS Programme (2001-2006). Bulgaria and Romania benefited from pre-accession assistance and cohesion funds in order to be prepared for accession and catch up with the members of the EU. The total EU financial support to Bulgaria and Romania was increased by more than four times during the period 2000-2006, support to Western Balkans was reduced during the same period by about 2 times.17
IPA stands for the Instrument for Pre-accession Assistance. It is the new financial instrument for all pre-accession activities funded by the EC, established in 2007. The multi-annual indicative financial framework (MIFF) for IPA is designed to provide information on the Commission’s intentions in terms of indicative financial allocations by IPA beneficiary. The MIFF acts as the link between the political framework within the enlargement package and the budgetary process.18
The total IPA support to Western Balkans during the period 2007-2009 as defined in the Multi-annual Indicative Planning Documents (MIPD) for countries of Western Balkan is about
€1.52 billion.19 If we compare it with IPA assistance during 2007 - 2009 for Turkey, which is €1,6 billion, so it shows that IPA support is higher for Turkey than to the group of countries in Western Balkan. On the other hand the highest IPA assistance in the Western Balkan region is for Serbia
€571 million is higher than IPA assistance in Croatia which is €435 million.20 The above data illustrate the difference in EU support between Western Balkan countries (potential candidate and candidate countries). The potential candidates in the Western Balkans countries will not have access to the full package of pre-accession assistance for at least another five years.
17 See Figure 1 in Appendix
18 http://ec.europa.eu/enlargement/key_documents/reports_nov_2007_en.htm
19 See Table 2 in Appendix
20http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/06/410&format=HTML&aged=0&language=EN&g uiLanguage=en
13 2.4 The EU Enlargement strategy
The EU has been enlarged several times and continues in the enlargement strategy. The last two rounds of enlargement were made in 2004 when ten new members including Slovenia joined EU, and 2007 when two Balkan countries, Bulgaria and Romania, completed the actual number of 27 member states. There is no further group enlargement planned.
The Western Balkans’ enlargement of EU shows both differences and similarities comparing with the previous round of enlargement in Balkans:
1. While the total population is comparable to Romania, the GDP of the Western Balkan countries represents about ½ only of the Romania’s GDP.21
2. The income gap between Western Balkan countries and EU 27 is much larger: average per capita income in the Western Balkan equals €2,683 (only 11% of the EU 27 average) and €23,537 in EU 27. This gap is larger for Kosovo (5.57%) and Albania (9.97%). Serbia, the richest country in this region accounts nearly half of the region’s GDP.
3. As shown in table 2.9, there are different GDP growth forecasts for 2008 made by different organizations like for example EBRD, the EU, OECD, UN in all transition countries. As seen from the table, GDP growth is the highest in countries of Commonwealth of Independent States (8,4%), than Central eastern Europe and the Baltic states accounts average GDP growth of 5,8% which is just about 0,2% higher than in South-eastern Europe (the highest in Albania and BiH accounts 6%
exceeds the GDP growth in Bulgaria – 5,7%, Croatia – 4,9% - quite low and Romania – 5,9%). It means that Western Balkan countries have a great GDP growth potential.22
4. What FDI net inflow concerns see Table 3.3 comparing FDI net inflow to 10 New EU Member States in Eastern Europe with FDI in Western Balkan states during period 1990 – 2007.
The highest FDI in 10 New member states in Eastern Europe were in 2007 in Poland (10 000 Mio USD), Bulgaria (5389 Mio USD) and Czech Republic (5200 Mio USD). FDI were a bit lower in Western Balkans. The highest FDI was monitored in Croatia (3844 Mio USD), Serbia (3000 Mio USD) and in BiH (1500 Mio USD), which is significantly lower than the 10 new EU member states.
According to Professor Breuss study “Erfahrungen mit der fünften EU-Erweiterung”23 the EU membership and perspective brought about great benefits for these SEE countries joining the EU in 2004 and attracted more FDI.24 He expects that the EU perspective of Western Balkans will benefit
21 See Table 1 in Appendix
22 See Table 10 in Appendix
23 WIFO- Monatsberichte 12/2007, page 14
24 See Table 12 in Appendix
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them in great increase in FDI as Bulgarian, Polish and Czech Republics’ experience. Figure 3 FDI net inflow shows different development in FDI in 10 new EU member states, Austria, Western Balkan and Turkey. Slow increase in FDI in Western Balkan countries which outruns even FDI in Austria in 2007. Turkey’s FDI is much higher than in Western Balkans since 2004. Confirming Professor Breuss study, FDI in 10 new EU member states rapidly increased in 2004 and were showing rising trend till 2006. Since 2006 until 2008 there is FDI slow down in these countries recorded.25
2.5 EU programme challenges
2.5.1 Enhancement of regional cooperation
Regional cooperation framework completed in February 2008. The Commission will provide support for this regional framework and invites the countries in the region, the member states and other donors to contribute. Furthermore, the Communication analyses the people-to-people contacts, familiarising people with the EU, in particular in the areas of visas and scholarships.
2.5.2 Need for Visa-free regime towards the Western Balkan countries
Visa-free travel to the EU is of considerable importance to the people of the Western Balkans.
Citizens of the Western Balkan countries, except Croatia, still need visas to enter the EU. Moving towards a visa-free regime is part of the preparations for EU membership, which includes eventually becoming part of the Schengen area. On the other hand, being a very sensitive area for all EU member states, the EU needs to keep its internal security and its migration interests.
EC has negotiated visa facilitation agreements with the Western Balkan countries, signed in 2007. They reduced fee for obtaining a visa (€35 instead of €60) and also set time-limits for issuing a visa, maximum ten days.26
In line with the Thessaloniki agenda27 the Commission has taken steps towards visa liberalisation. The Commission is now working on establishing road-maps for free-visa regime with these countries.
25 See Figure 3 in Appendix
26 http://europa.eu/rapid/pressReleasesAction.do?reference=IP/07/1350&format=HTML&aged=1&language=EN&guiL anguage=en
27 In Thessaloniki, the European Council of 19 and 20 June 2003 reiterated its determination to fully and effectively support the European perspective of the Western Balkan countries. It endorsed the Council’s Conclusions of 16 June 2003 on the Western Balkan countries including the annex „The Thessaloniki Agenda for the Western Balkans: moving
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The Commission started visa liberalisation dialogues with Serbia in January and with FYROM and Montenegro in February 2008.28 The dialogue with Albania has started in March. Bosnia and Herzegovina will follow.29 The Commission wants to finalise the roadmaps as soon as possible.
The speed of movement towards visa liberalisation will depend on each country’s progress in fulfilling the conditions. The Commission will provide financial and technical assistance to support implementation of the road-maps. The Commission and the Council will closely monitor progress in the relevant reforms.
2.5.3 Research, education and culture
The Western Balkan countries, supported by the Commission, are drawing up an integrated research policy, in line with the European Research Area. Activities of the Joint Research Centre have been opened to scientists from the Western Balkans.30
EC demands more scholarships for students from the Western Balkans. The Commission has been offering scholarships for students from the Western Balkans under Erasmus programme.
EC has implemented a regional programme to protect cultural heritage in SEE covering 177 buildings and sites.31
2.5.4 Civil society
Involving civil society in the process of political, social and economic reform in the Western Balkans strengthens democracy. Despite some positive steps, civil society organisations remain weak and need training from western European countries. The EU assistance for civil society development in the Western Balkans is given special attention under IPA. Assistance to civil society in the Western Balkans under EU programmes totalled € 27 million in the period 2005-2007.
In its strategy paper 2007, EC decided to establish a new facility to promote civil society development in this region within sectors of human rights, gender equality, social inclusion, health, environment, business advocacy and representation, media, culture and consumer policy.32
towards European integration”, which introduced the European Partnerships as a means to materialise the European perspective of the Western Balkan countries within the framework of the Stabilisation and Association Process.
28 http://www.delmkd.ec.europa.eu/en/bilateral-relations/visa%20facilitation.htm
29 http://europa.eu/rapid/pressReleasesAction.do?reference=IP/07/1350&format=HTML&aged=1&language=EN&guiL an guage=en
30 Erweiterungsstrategie und wichtigste Herausforderungen 2008, page 30
31 Western Balkans: Enhancing the European perspective. Communication from the Commission to the European Parliament and the Council, page 7
32 Commission Strategy Paper 2007, page 18
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2.5.5 Cooperation and reforms in justice, freedom and security
Cooperation in fighting organised crime and corruption, reforming the judiciary and police, are of particular importance for the Western Balkans and a main priority for their European agenda.33 The Western Balkans is a cruel field of Europol. Strategic agreements with Europol were signed in 2007 by Albania, BiH and FYROM; similar agreements are planned to be negotiated with Montenegro and Serbia. Advanced operational agreement is between Europol and Croatia. Croatia also signed a cooperation agreement with Eurojust in 2007.34
2.5.6 Trade integration – Central European Free Trade Agreement (CEFTA)
The enlarged CEFTA, signed in 2006, attracts FDI, foster intra-regional trade and integrates the region into the global trading area. EC provides technical and financial assistance to the parties.35 The Commission is exploring ways to ensure a more intensive diagonal cumulation between the Western Balkans, Turkey, EFTA and the EU.
2.5.7 Accession to the WTO
Joining WTO fosters economic and trade reforms. Albania is already member of WTO since 2000, FYROM since 2003. BiH, Montenegro and Serbia have observer government status by WTO, which means that they start accession negotiations within five years of becoming observers.36 The Commission continues to provide technical assistance to BiH, Montenegro and Serbia for their accession negotiations with the WTO. EC assists the Western Balkan countries in process of joining WTO.
2.5.8 EC, EIB, EBRD and the Council of Europe Development Bank
In 2007, EC agreed with the EIB, the EBRD and the Council of Europe Development Bank to create an Infrastructure Projects Facility for the Western Balkans. The Facility is being launched with a budget of €16 million. It helps to prepare projects and finance them from grants and loans in the areas of transport, energy, the environment and social infrastructure. They also committed creating a Western Balkans Investment Framework by 2010.37
33 Europe´s Troubled Region, page 150
34 The Western Balkans on their Way to the EU? Page 60
35 www.cefta.org
36 www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm
37 A European Perspective for the Western Balkans
17 2.5.9 Energy Community Treaty
Reliable supply of energy and reliable transport network is important for sustainable growth in SEE. Energy Community Treaty is attracting investment in energy generation, transmission and networks. EC signed Transport Community Treaty with the Western Balkans. The purpose is to work towards an integrated market for road, rail, inland waterways and maritime transport in the Western Balkans region.38 The Commission will continue to provide financial and technical assistance for South East Europe Core Regional Transport Network.
The Agreement on the European Common Aviation Area (ECAA), signed in 2006. The aim is to integrate the Western Balkan countries into the EU’s internal aviation market.39
2.5.10 The Commission and other donors
EC is trying to involve the EIB, the EBRD, other international financial institutions and bilateral donors. EC is bringing together grants and loans for regional modernization in Western Balkan.
2.6 The EU programme challenges: highlights and conclusion
The EU programme challenges of the communication have after all rather promising and optimistic prospects. The future of the Western Balkans is the EU. The EU highlights the importance of peace, stability and security in this region and wants Western Balkan countries to come closer to the EU, fulfilling the necessary conditions. The Western Balkans have a great potential to obtain EU membership. 2008 will be a crucial year for the Western Balkans.
Great progress is going to be made by Croatia this year, which can be a decisive one for Croatia’s accession negotiations. Croatia needs to approach the issue of the Ecological and Fisheries Protection Zone. Albania’s further progress towards the EU depends on the implementation of the SAA, ensuring that future elections will meet international standards and on the strengthening the rule of law, especially the fight against corruption and organised crime.40 Montenegro’s further progress towards the EU depends on the fight against corruption, enhancing administrative capacity.
Exact implementation of SAA is crucial. BiH has to meet the outstanding conditions and then SAA
38 Beilage de Wiener Zeitung, Sonderheft IDM 3. 2007, page 13
39 Western Balkans depends on Transport Development, page 61
40 Communication from the Commission to the European Parliament and the Council, page 21
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can be signed.41 Serbia plays a key role in ensuring stability, good neighbourly relations in the Western Balkans. EC demands from Serbia to make sure about its participation to a future within the EU.
The EU has been engaged to support Kosovo’s political and economic development. Kosovo has an EU perspective, as the rest of the Western Balkans. EC promotes democratic reforms, good neighbourly relations and economic progress in Kosovo.42
Key reform priorities for the Western Balkans are judicial reforms, fight against corruption and organised crime, civil society development. Full cooperation with the International Criminal Tribunal for former Yugoslavia (ICTY) is still a condition on the way towards the EU.43
The Commission starts a dialogue with all Western Balkan countries in the region to establish road-maps for lifting the visa-free regime.
The Commission will further increase the number of scholarships granted to students from the Western Balkans to study in the EU.
Coordination with IFIs, in particular the EIB and the EBRD, and with bilateral donors is highlighted in order to get grants and loans for modernisation of this region. EC supports also the Regional Cooperation Council (RCC) and other cooperation frameworks, including CEFTA, the Energy Community Treaty and the Agreement on a European Common Aviation Area. Regional cooperation brings real benefits to the peoples of the Western Balkans and tries to bring them closer to the EU.
41 Commission progress report 2007 on BiH
42 Commission Progress Report 2007 on Kosovo, page 13
43 Reform priorities for the Western Balkans, page 26
3 The EU commitment in individual Western Balkans candidate countries
As mentioned before in March 2008 the EC published a Communication which covers key developments in the European agenda of the Western Balkans, with a focus on new initiatives.
This communication is called: “Western Balkans: Enhancing the European perspective and is designed for the European Parliament and the Council”.44 The Communication covers the past two years and concludes that the countries of the Western Balkans have moved closer to the EU.
Potential candidate countries are still confronting a number of challenges in 2008 which could influence their security, stability and well-being. The Communication focuses on the need to solve the status of Kosovo. It is important to maintain peace and stability in the region. This can be better achieved by further enhancing the EU perspective. It also requires the constructive engagement of political leaders throughout the region. Public opinion in the Western Balkans is largely favourable to EU integration. The most Pro-European are Albanians (72% are Pro- European), then, in order, Kosovo (71%), BiH (62%), Macedonia (56%), Montenegro (54%), and the less Pro-European are Serbians (49%).45
All governments have committed themselves to this objective and are implementing reforms. It is in the interest of the EU that the region goes ahead as rapidly as possible with political and economic reform. The EU is mobilising all available policy instruments to support the achievement of these goals. The EC is giving particular priority to the support of the rule of law strengthening, better governance, judicial and administrative reforms and the development of civil society. The EU will continue to make the prospect of membership visible and concrete for the citizens of the countries of the Western Balkans. To this end, the EU should be ready to accelerate pre-accession preparations with all countries of the region, provided that they meet the necessary conditions. The progress of each country towards the EU is performance-driven, depending on its individual merits and success in establishing a track record of achievements in addressing reform priorities. 2008 is the year when primary responsibility for promoting regional cooperation is taken up by partners in the Western Balkans, notably through the new Regional Cooperation Council. The Commission supports the efforts of the Western Balkan countries reforms and regional cooperation through its Instrument for Pre-accession Assistance. It has taken a new initiative in the area of donor coordination, involving the international financial institutions and bilateral donors. This is intended to leverage the maximum amount of support
44 Communication from the Commission to the European Parliament and the Council Western Balkans: Enhancing the European perspective, page 6
45 See Figure 2 in Appendix
possible for the region’s modernisation and development needs, bringing together grants and loans.
The present Communication follows up the Thessaloniki agenda and the Salzburg Declaration46, in line with the Commission’s November 200 enlargement strategy paper. It sets out new initiatives for promoting people-to people contacts, covering areas such as visa liberalisation and scholarships, for developing civil society and for enhancing the region’s economic development.
3.1 Road map for accession of individual Western Balkan countries 3.1.1 Croatia
3.1.1.1 EU road map on Croatia integration
Croatia is favoured to join the EU among the first of three candidate countries. EC president Jose Manuel Barroso signalled that Croatia should be able to conclude EU membership talks next year in a move seen as rewarding the country for its suspension of a protected ecological and fisheries zone.47 Croatia opened accession talks in 2005 and is most probably becoming full EU member by 2011. Croatia has so far opened 16 out of its 35-chapter EU negotiations package, while two have been provisionally closed. Provided that the negotiations are completed by 2009, Croatia might join the EU realistically by 2011.48 In January 2008 Austrian Socialist MEP Hannes Swoboda, who is in charge of the Croatian dossier in the European Parliament, had called on the country to speed up its reforms in order to complete negotiations by 2009 or face delay in EU membership.49
Croatia’s progress sends a signal to the other Western Balkan countries on their own membership prospects.50
3.1.1.2 Croatia - economic progress
In 2007 Croatia recorded the fastest GDP growth rate in the past ten years, up 6%. The economic expansion was driven by rising household consumption. Growth of private demand
46 Salzburg Declaration: March 2006, The conference reaffirmed the full support for the agenda set out at the Thessaloniki summit in 2003, as well as for the Stabilisation and Association Process which will remain the framework for the European course of the Western Balkan countries. In this respect, the EU confirms that the future of the Western Balkans lies in the European Union. The EU re called that a debate on the enlargement strategy is due in 2006 as set out by the Council conclusions of 12 December 2005. The EU also notes that its absorption capacity has to be taken into account. The participants agreed that each country's progress towards the EU continues to depend on individual merits in meeting the conditions and requirements set forth in the Copenhagen criteria and in the Stabilisation and Association Process, including full cooperation with the International Criminal Tribunal for the former Yugoslavia.
47 http://www.eubusiness.com/news-eu/1205402539.38/
48 Economic Prospects for Central, East and Southeast Europe, page 75
49 Swoboda: Kroatien auf gutem Weg in die EU, IDM Zeitschriften, page 9
50 IDM, Österreich – Kroatien, Freunde im vereinten Europa, page 18
nearly doubled compared to 2006 and was followed by increasing employment rate and rising wages. Inflation was accelerating in 2007 and reached its highest level since the year 2000. In 2007, employment growth benefited from the strong GDP expansion and rose by 3%.51 New jobs were created mainly in tourism and manufacturing.
Joining the EU and NATO membership are the two key priorities. EU negotiations progressed only slowly in 2007. In 2008 GDP growth has slowed down to below 5%. The GDP will continue to slow down in 2009, associated with declining investment and weakening of private consumption growth. Further privatization deals, involving shipyards in particular, are in the pipeline and should contribute to substantial FDI inflows.52
3.1.1.3 Austrian road map on Croatia integration and Austria as strategic economic partner of the Western Balkans (mutual trade, FDI)
Austria is a strategic economic (trade and investor) partner of all Western Balkan countries, especially of Croatia. Austrian Export to Croatia accounted 1.479.284 in 1.000 Euros in 2007, which accounts to the highest Austrian export into Western Balkans. The second highest Austrian export is to Serbia (535.817 in 1.000 Euros).53 Austria is intensively focusing on foreign direct investments (FDI) and on exports to these countries as no other EU- 15 member state does. Austria accounts nearly 20% of total FDI from EU – 15 member states. Austria is followed by Netherlands (12,3%) and by Germany (nearly 11%). This means that Austria has invested in this region double FDI in comparison to such big EU country Germany.54 Table 13 illustrates total FDI and Austrian FDI in each country of Western Balkan. 19% of total FDI in the region are Austrian. The highest Austrian FDI in Western Balkans is in BiH (30%of the total sum of FDI in this region in 2006), Rumania (24%), Croatia (20%), FYROM (13%) and Serbia (9,8%). The extreme left column of table 13 illustrates the ranging: Austria is the largest investor in BiH, Bulgaria, Croatia and Rumania and second largest investor in Montenegro and Serbia.55
As Croatia seems to be the most important Austrian partner of the region and also the fact that Austrian priority in EU-enlargement policy is nowadays the future EU membership of Croatia, this chapter is going to focus on Croatian economic relations to Austria.
Between 1993 and 2005, Austria accounted for 28,3 percent of total FDI flow in Croatia (around 3,2 billion euro), placing itself as the top investor in Croatia, leaving behind even
51 Weathering the Global Storm, yet Rising Costs and Labour Shortages, page 73
52 WIIW Database incorporating national statistics, page 74
53 See Table 6 in Appendix
54 See Table 11 in Appendix
55 See Table 13 in Appendix
countries like Germany and the United States.56 The most attractive field of Austrian investment is not only Croatia but also rest of the Balkans. These investments are mainly focused on the financial sector, but also in building industry and tourism.
The Austrian Banks have a leading position in the Western Balkan countries. For instance the market share of Austrians banks in these countries in 2007 was: UniCredit 13%, Erste Bank12%, RZB 10%.57 UniCredit has largely invested in Serbia, BiH, Montenegro, Croatia, Erste Bank in Croatia, Serbia, Montenegro and RZB in Albania, BiH, Kosovo, Serbia, Croatia and Montenegro.58 Austrian Banks still hold the majority of assets. Three major Austrian banking groups still control more than one third of the total SEE market segment 36%. However, in terms of asset growth their dominance seems to have slightly diminished.
3.1.2 FYROM – slow improvements
The reforms have slowed down during the past two years. GDP growth in 2007 has accelerated to around 5%.59 The inflation has risen in last year, but macroeconomic stability is not threatened as the fiscal deficit is small. The short-term prospects, are good and the medium- term prospects should improve. These developments are due to a large extent to the change in economic policy that has been implemented gradually in the last years. The government’s key target is to attract FDI. Government has been trying to improve the business climate and trying to offer advantages to investors.
The key to the removal of residual political risks is the speed-up of EU integration.
FYROM is a candidate country since 2005, but the EU has been reluctant to set a date for the commencement of negotiations due to slow institutional improvement in FYROM. According to Vladimir Gligorov, negotiations could finally start in the end of this year. He considers the labour market a serious problem; employment in FYROM remains low and unemployment is very high. The main risk according to the EC is that structural reforms will be delayed.
3.1.3 Albania
Albania has continued to make progress in reforms and approximation to EU standards. It is implementing well its Interim Agreement under the SAA and building up a track record.
Increasing prices for natural resources have turned Albania into a potential exporter of oil, gas
56 Crotia and Austria should work together, page 15
57 http://portal.wko.at/wk/startseite_br.wk?BrID=18
58 See Banking Sector Report 2007 made by RZB
59 WIIW Database incorporating national statistics, wiiw forecast, page 76
and metals. Old mines are being revived and new ones investigated.60 Austrian Beach Petroleum announced to seek to drill for oil from off-shore reserves in the Adriatic Sea near the North- Albanian port of Durres. It is expected to yield reserves in excess of 100 million barrels of oil equipment.61 Albania’s hydro-power potential is also exploited. The Austrian utility company EVN won a tender to construct three hydro-electric power plants on the Devoll river in South Albania. Total output is expected to reach 400 MW.62 Total investment is expected to come close to EUR 1 billion. Project is part of a general plan to overcome Albania’s chronic power shortages.
3.1.4 Montenegro
Montenegro has made important steps forward since proclaiming independence in June 2006. Montenegro has worked actively to strengthen its institutional and legal capacities. The adoption of the constitution and the signing of the SAA in 2007 were major steps for Montenegro and its relations with the EU. Montenegro’s constitution is broadly in line with European standards.63
Growth has been high since the declaration of independence in 2006. It has been driven by consumption. Investments have also increased. FDI has been mainly flowing into real estate, especially on the coast, tourism and financial services. FDI has doubled within the past two years (in 2007 was around 40% of GDP). Montenegro uses the euro and has no recourse to monetary and exchange rate policies.
Although it started late, Montenegro was able to sign the SAA with the EU already in 2007. Further steps in the EU integration depend on the development of appropriate administrative capacity. While Montenegro is a small country, it has shortages of bureaucratic personnel. On the other hand it is politically stable.
Short term prospects are positive with GDP set to grow by 6% in 2008.64 In the medium run, there are risks to growth connected with the sustainability of FDI.
60 In early 2008 the Swiss-based Manas Petroleum Corporation announced that an independent evaluation has confirmed existence of giant oil and gas prospects on the company´s North-Albanian exploration blocks. Seismic analysis has revealed that the field might contain up to 3 billion barrels of oil as well as 3 trillion cubic feet of associated gas. If only a fraction of this can be delivered it would be a strong income boost to a small and porr country such as Albania.
61 Country report Albania, page 20
62 EVN.at
63 Western Balkans: Enhancing the European perspective, page 5
64 Montenegro: selected economic indicators, page 1
3.1.5 Bosna i Hercegovina
The political leaders committed in 2007 to advance the overall reform agenda in order to create the conditions for the signing of the SAA. Cooperation with ICTY has continued. These developments led to the initialling of the SAA in December 2007.
BiH politicians are criticized by the EC, that they are playing usual games. They agreed on policy reforms, but they tend to soften them in reality.
Much higher cooperation between politicians of different ethnies at all institutional levels is also needed.
3.1.6 Serbia
Serbia plays a key role in the region from an economic and political point of view. Serbia is also important for the stability of the region, The presidential elections held in February 2008 confirmed Serbia’s European aspirations. Though the resolution of the Kosovo issue has been in air since at least 2005, a decision has been postponed time and again. This influenced political stability in Serbia which negatively influenced macroeconomic stability. In mid-February, Kosovo declared independence. This led to strained relations between Serbia and the EU. SAA hasn’t been signed yet and the EU is waiting for the political decision in Serbia. That may be taken in anticipated parliamentary elections, held probably in the second half of 2008.
The key political instability is in the fact that the opposition to the EU integration, which includes some parties that are now in the government, commends the majority of the voters. The EU is afraid of the possibility that early parliamentary elections can lead to the anti-EU coalition taking over the government.
The major risk is that FDI will dry out and capital may even start to leave the country.
3.1.7 Costs and Benefits of Kosovo´s Future Status
Kosovo and Serbia are independent of each other. The political relations are typical unresolved post-conflict situations, the economic relations are distorted, and the legal system, politicised, and public finances are completely separated. Thus, benefits from normalization are significant while costs of political and social integration would be too high. Full-scale political integration would require the investment (political, financial and social) of EU, IFIs and the USA. Full-scale political, economic and social integration is not feasible for different reasons.
The potential gains of partnership between Kosovo and Serbia are significant for both parties, in economic and political terms. In this chapter there are alternative solutions analysed and discussed. The focus is on the fiscal sustainability of Kosovo, which depends on contribution
from outside sources, which are possible fiscal and other costs of Serbia. In order to analyse determination of the costs of Kosovo for Serbia at the moment and in the future, the current state of Kosovo´s economy needs to be assessed. The decline of foreign aid in the past few years had led to economic stagnation and economic decline.65 The 2007 EU Commission Report on Kosovo quotes GDP growth in Kosovo at 3,8%. After years of stagnation it seems to have moved to a path of growth in spite of the decline of foreign aid.66 The main drivers of growth are domestic consumption and increased exports. The private sector is expanding. Exports are also rising from very low level. The main economic problem is the extremely high rate of unemployment which is around 40%, as it is in most countries in this region, such as in Macedonia (36%), Serbia (20,9%), Montenegro (30%), and BiH (31% unemployment rate).67 Employment rate in Kosovo is very low especially among young and women.
Economic sustainability should be achievable fulfilling the following conditions. The first is the reliance on the private rather than to the public sector. Kosovo needs to become attractive to FDI. A recent example is Montenegro, which has attracted significant foreign investments after it became an independent country. The second is openness especially in terms of free trade agreements. From the point of view of economic theory this can be discussed but it is crucial in EU accession prospective. The third condition is the development of infrastructure, physical and institutional. A fourth condition, human capital development, is not less important than the previous ones. The population of Kosovo is young and unemployment is particularly high among the young and unskilled.
Kosovo was the recipient of significant budget and support until the late 1980s. This system was discontinued because of dissolution of Yugoslavia. After the suspension of Kosovo´s autonomy and the referendum for independence in the late 1980s, Kosovo was increasingly fiscally independent from Serbia. The Serbian government tolerated this independence as it minimized its financial obligations. Serbia together with Kosovo was under a rather severe system of international sanctions and was supporting war efforts. After 1999 the Serbian government lost all rights and obligations in Kosovo. After the settlement of foreign debts, Serbia took over Kosovo´s foreign debts. Serbia also finances the various needs of Kosovo´s Serbian population.68
It is important to notice that in economic terms Kosovo is very small compared to Serbia.
Serbian´s GDP is expected to reach EUR 30 billion in 2008 and Kosovo EUR 2.5 billion. Thus
65 GDP grew at 0,3% in 2005, by 3% in 2006
66 Commission Report on Kosovo 2007, page 17
67 See Table 1 in Appendix
68 The current Serbian budget provides for about EUR 50 million for Kosovo plus EUR 20 million for investments
Kosovo´s GDP is less than 10% of Serbian´s. Whatever costs and benefits are to be gained, those will be relatively small for Serbia and larger for Kosovo.
There are four alternative scenarios for the future Kosovo status. 1. Full sovereignty of Serbia over Kosovo 2. Substantial autonomy for Kosovo, i.e. symbolic sovereignty of Serbia over Kosovo. (Serbian proposal), 3. Supervised independency with or without a cooperation agreement (Kosovo proposal), 4. Partnership. The fist two proposals are not acceptable to Kosovo. The third one is not acceptable to Serbia, the fourth one is not acceptable to both sides, but looks the most as a compromise that could be forged and could lead to either acceptance by both sides. 69
3.1.8 Economic outlook
For most of the EU candidate countries and potential candidate countries in SEE domestic demand remains the core growth driver. In last years, GDP growth has stood at around 5% in the candidate countries and at about 6% in the potential candidate countries. In potential candidate countries such as Albania, BiH, remittances from family members working abroad and credit boom are fuelling both consumption and imports. It’s not the case of Turkey or Croatia, where the investment component in growth plays a greater role.
Generally speaking, the GDP growth forecast for the candidate countries for the period 2008 – 2010 is fairly optimistic. Experts expect growth rates to rise from above 4% to around 5% and up to 6% by the end of the three-year forecast horizon. Only Serbia with its unbalanced growth patch is likely to stagnate at 5%.
What employment rate concerns, except for Montenegro and Serbia, all countries in the region will experience employment growth.Employment rates have increased especially in construction and trade sector.
Although FDI inflows have increased in recent years, forecast for 2008 indicate stagnation and in some cases, even a slight decrease. Overall FDI stock per capita is rather low compared to the new member states (NMS). Only Croatia and Montenegro surpass level of FDI per capita in NMS. The other countries could not even reach half of it.
Concerning nationalist risks, Kosovo´s declaration of independence will impact mainly on Kosovo itself. Self- determination and the end of political uncertainty will stimulate investment according to Mario Holzner, Balkan specialist from WIIW. As mentioned above, the EU together with the WB is preparing to hold a donors conference, which will take place in June 2008. Economic sanctions that Serbia is imposing will for the most damage Kosovo’s economy
69 Costs and Benefits of Kosovo´s Future Status, page 11
and Serbia itself. There is a risk that the Kosovo independency declaration will be considered as a precedent from different ethnics in BiH. If national risks prevail and the Serbian economy drops to sudden stop, it could have a significant impact on the neighbouring countries. FYROM and BiH, would be directly impacted. Serbia is for these countries important trading partner.
With the change of government in France, the prospects of candidate countries joining the EU has improved. This is not true when we talk about Turkey, which still lacks the support of the majority of EU MS (especially negative are Austria, France, Germany). Another prospective is also considered for Croatia which could become EU member in 2011. Concerning the potential candidates there are many scenarios, which are also part of the thesis.
3.1.9 Kosovo in the light of status developments
On 17 February the Kosovo Assembly adopted a resolution which declared Kosovo independent. The Council noted that Member States will decide on their relations with Kosovo, in accordance with national practice and international law. The Council reiterated the EU’s readiness to play a leading role in strengthening stability in the region. The Commission welcomes the Council commitment to fully and effectively support the European perspective for the Western Balkans and its call on the Commission to use community instruments to promote economic and political development and to propose to the region concrete measures in order to advance in that direction.
The EU will support Kosovo’s future development through an international civil mission, headed by an EU Special Representative, an ESDP rule of law mission and substantial support to economic and political development.
On 4 February, the EU adopted a joint action, the ESDP mission (EULEX Kosovo) and appointed an EU Special Representative. The mission will include police officers, judges, prosecutors and customs officers to assist Kosovo’s authorities in maintaining the rule of law.
Major challenges for Kosovo include the strengthening of the rule of law, in particular the judicial, fighting organised crime and corruption, supporting economic development and the creation of jobs, improving conditions for the return of refugees and for minority communities, and enhancing dialogue and reconciliation between communities. Overall EU assistance to Kosovo is estimated at over €1 billion for the period 2007-2010 covering support to Kosovo’s political and economic development and financing the EU contribution to the international presence in Kosovo.
Kosovo has made further progress towards a democratic and multiethnic society. The November 2007 general elections were free and fair and largely in line with international standards. The new coalition government includes ministers from the Serb and Turkish
communities and has made commitments concerning the well-being of minorities, in particular Kosovo Serbs. The government has also underlined the importance of reforms in line with the European agenda. Kosovo has, as the rest of the Western Balkans, a clear and tangible EU perspective. Kosovo is engaged in a regular dialogue with the Commission on reforms and progress is regularly monitored. The Commission will intensify its support for institution- building and development and will organise a donors’ conference.70
Attitude of Council of the EU, Brussels, 18 February 2008 represented by Javier Solana, EU High Representative for the Common Foreign and Security Policy (CFSP): “We are going to discuss now at the level of ministers. The only thing I have to say is what I said last night: we expect everybody to act responsibly. We in the European Union have already decided to send a mission of stability and of law to Kosovo - a mission that should contribute to the stability of the Balkans. But let’s wait until we have finished the meeting of today. In the meantime, I would like to make an appeal to everybody to act responsibly.“71
3.1.9.1 Independent Kosovo EU on Kosovo
Foreign ministers from the EU 27 have failed to agree on a common position over Kosovo’s recent declaration of independence,72 with Spain the most vocal in denouncing it fears that this could set a dangerous precedent for separatist regions within its own boundaries.
After years of failed discussions within the UN over the future status of the majority ethnic Albanian territory of Kosovo, the breakaway province announced its independence from Serbia on 17 February.
As widely expected, the EU’s four biggest countries - Germany, France, the UK and Italy - announced on 18 February 2008 their intention to recognise the ethnic Albanian state, the sixth born out of the disintegration of Yugoslavia. Recognition of Kosovo was granted by Washington.
Spain was the country holding the toughest line against common EU recognition of Kosovo as Madrid as they fear other minorities separatist intentions, including its own Basque and Catalan regions.
A mild diplomatic wording was hence chosen for the conclusions of the Foreign Affairs Council which states that “member states will decide, in accordance with national practice and international law, on their relations with Kosovo“.
70 Western Balkans: Enhancing the European perspective, page 6
71 http://www.ukom.gov.si/eng/slovenia/publications/slovenia-news/6075/
72 http://www.euractiv.com/en/enlargement/eu-nations-remain-divided-kosovo/article-170383
