Regional integration could help EU accession, report says

11/06/2008

For the Western Balkan countries, deeper regional integration is a stepping stone to the eventual goal of EU membership, the World Bank said in a report Tuesday.

(MIA - 11/06/08; World Bank - 10/06/08)

"The strong economic justification for deeper integration within the Western Balkans provided by the report will hopefully help motivate improved regional stability," said Sanjay Kathuria, World Bank lead economist and lead author of the report. [World Bank]

Western Balkan countries can make quicker progress towards EU accession by deepening intra-regional integration, the World Bank suggested in a report released on Tuesday (June 10th).

Given their geographic and cultural proximity and other specific features, the Western Balkan countries are particularly well suited for regional integration, the Bank said.

Albania, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Montenegro and Serbia are at different stages in the EU accession process. Croatia began its membership negotiations with the Union in 2005 and could become the bloc's 28th full-fledged member in 2010. Macedonia, which is also an official EU candidate country, hopes to get a starting date for its accession talks by the end of this year.

Albania, Montenegro and Serbia have signed Stabilisation and Association Agreements (SAA) with the Union, thus making a major first step towards eventual membership. Bosnia and Herzegovina's (BiH) SAA awaits signature on June 16th, while Kosovo is expected to embark on the process pending resolution of its status issues.

According to the World Bank, Western Balkan countries should pursue intra-regional integration because for most of them, accession is still some time away.

"In the interim, regional integration can help to secure foreign direct investment (FDI) and exports, and hence improve sustained growth prospects," the report said. "Also, since much of the process of regional integration is best addressed by advancing the adoption of the relevant EU acquis, it can in fact help to reduce the time lag for accession."

All Western Balkan countries are signatories of the 2006 CEFTA agreement, which liberalises intraregional trade. But their trade relations with the EU are governed by the SAAs, for those that have signed such an accord.

For the countries that have not completed that step yet, the EU has granted far-reaching trade concessions through what are termed "autonomous trade measures until 2010".

Deeper integration within CEFTA countries, including the establishment of a single management of border crossing points, will contribute to the development of a larger market and improved quality of services and will thus help attract much needed FDI to the region, the Bank said.

All Western Balkan countries, except for Macedonia, have witnessed annual growth rates over the last decade in excess of 5%, the Bank noted, adding that even Macedonia's growth rates have accelerated since 2003.

But the region now faces the challenges of a changing international and domestic environment, with fewer trade preferences and increasing export competition.

"In order to reduce still-high poverty rates and work towards EU accession, Western Balkan countries need to improve -- and then sustain -- their economic growth performance," according to the report.

Among other steps, it calls on policymakers to focus on developing human capital and to take action to avoid energy shortages. It also urges a reduction in telecommunications costs.