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CEE Watch: EU enlargement according to European Commission

This week the European Commission (EC) issued enlargement reports for several CEE countries. In particular, the EC recommended a start of EU accession negotiations for Ukraine as well as conditional one for Bosnia and Herzegovina. In this note, we provide a first summary of the reports and recommendations.

In the enlargement package approved this week, the European Commissions assessed the progress towards EU accession made by Ukraine, Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia, Turkey, the Republic of Moldova and Georgia. Below we present a summary of the reports for each country. The EC recommendations will be reviewed and still need to be approved for each country separately by European Council (planned for December).

Ukraine

EU provided positive signal on Ukraine’s accession, but the time span is uncertain. The decision of the EU to recommend its members to start accession negotiations with Ukraine is definitely viewed as positive news for the country. It fully fits current strategy of Ukraine on European integration (implemented in the Constitution) as well as correctly reflects the opinion polls of population, where 92% support the movement towards the EU. Moreover, this is a signal that Ukraine rather successfully implemented preliminary list of seven pre-conditions necessary to be moved to another stage. Nevertheless, we understand that this is just a recommendation, which still has to be approved by EU members (preliminary in December). This also means that every member state could potentially block this decision. But we do not expect this to happen if considering the joint view of EU institutions on the issue and the importance of this decision for supporting positive sentiment in Ukraine under extremely hard circumstances and risks tied to the war.

We do not believe accession negotiations would be easy and quick. Definitely, there might be additional requirements as to anti-corruption issues, transparency of policymaking and harmonization of Ukrainian legislation to European standards. We also should not forget about the additional requirements of some member states, which have their own view on the role of Ukraine in the Union. Hence, it may take additional time to address the issues either through legislative changes or through additional negotiations to soften some of them. Some political transformation after war ends and during elections can additionally delay the progress in EU accession negotiations. Definitely, more clarity will come soon, probably, during the approval of the decision by member states this December. Nevertheless, it is impossible to underestimate the positive signal sent by European Union to Ukraine during the war.

For further information also have a look at the EU report as well as at the fact sheet.

Serhii Kolodi

Albania

According to the European Commission, overall, Albania has achieved notable advancements in several domains, yet it continues to confront hurdles associated with political polarization, corruption, judicial efficiency, media independence, and environmental protection. To overcome these challenges, it is imperative to focus on bolstering institutions, upholding EU standards, and fostering inclusive growth and sustainable development.

Economic growth has been robust, and the country has made significant progress towards European integration. However, political polarization remains a pressing concern. The country’s political landscape is characterized by deep divisions, hindering effective governance and decision-making.

Corruption poses another significant challenge. Despite efforts to combat this issue, corruption continues to undermine public trust and hinder economic development. Strengthening anti-corruption measures, ensuring transparency, and promoting accountability are crucial steps towards eradicating corruption. The efficiency of the judicial system is vital for ensuring the rule of law and protecting citizens’ rights. Albania still faces obstacles in this regard, including a lack of independence and excessive delays in court proceedings.

While Albania has taken steps to promote media freedom, challenges persist, including political interference and limited diversity of media ownership. Environmental protection is an urgent global concern, and Albania is no exception. Despite efforts to address environmental challenges, such as air and water pollution, further action is needed. To overcome these challenges, Albania must focus on strengthening its institutions.

In conclusion, while Albania has made progress in various areas, challenges persist in terms of political polarization, corruption, judicial efficiency, media independence, and environmental protection. To address them, efforts should focus on strengthening institutions, adhering to EU standards, and promoting inclusive growth and sustainable development. By doing so, Albania can overcome these challenges and pave the way for a faster EU integration.

For further information also have a look at the EU report as well as at the fact sheet.

Fjorent Rrushi

Bosnia and Herzegovina

In the case of Bosnia and Herzegovina, the EU Commission said that it recommends opening the EU accession negotiations once the Commission assesses that Bosnia and Herzegovina has achieved the necessary degree of compliance with the membership criteria and in particular has met the key priorities. This means that Bosnia made some improvement on reforms, but it is not enough for negotiation status and EU side gives time for more reforms till March 2024.

Where B&H made advancement? Important steps and commitments were made towards the fulfillment of the 14 key priorities (despite negative legislative developments and media freedom seen on RS entity level). The formation of a State-level coalition government at record speed is an important proof of a new political dynamism and will. B&H completely fulfilled 2 of 14 priorities, while visible steps were made within other priorities with adoption of five laws from EU agenda: the Law on the Ombudsman, the Law on Access to Information, the Law on the High Judicial and Prosecutorial Council, the Law on Foreigners and before the Law on Public Procurements.

What is in front of B&H in context of necessary reforms? B&H needs to fulfill remaining 12 priorities or “necessary degree” of that which will be estimation of the EU Commission. The priorities that B&H has to complete refer to elections, functioning at all levels of the coordination mechanism on EU matters, improve the institutional framework, steps to reconciliation, functioning of the judiciary, prevention and fight against corruption and organized crime, border management, protection of the rights of all citizens, enabling environment for civil society, freedom of expression and of the media, protection and inclusion of vulnerable groups, and public administration reform. In general, a lot of work for a short time.

What can B&H get with reforms? Economic convergence is an essential element in getting the Western Balkan counties closer to the EU. It should enable partners to step up reforms and investments to significantly accelerate the speed of the enlargement process and the growth of their economies. To this effect, the EU Commission is proposing a new growth plan for the Western Balkan based on four pillars, aimed at enhancing economic integration with the EU single market, boosting economic integration within the Western Balkans, accelerating reforms and increasing financial assistance to support the reforms through a new instrument worth EUR 6 bn in non-repayable support (EUR 2 bn) and loan support (EUR 4 bn), with payment conditioned on the partners fulfilling defined reforms.

Having in mind local political weaknesses and vulnerability, global uncertainty marked with Russian aggression on Ukraine and war in the Middle East, we believe that political representatives in B&H, led by State Coalition, have awareness that country has the generational chance to get closer to EU and that they will fulfill necessary reforms till March 2024 so that the country is granted with Negotiator status. In the meantime, the EC recommendations need now to be approved by the European Council at the December meeting.

For further information also have a look at the EU report as well as at the fact sheet.

Mirza Zornic

Kosovo

According to the EC, the government in Kosovo continues to pursue its ambitious EU reform agenda. However, members of Srpska Lista boycotted the Assembly’s work, hindering progress. Despite these obstacles, Kosovo has achieved important legislative milestones, including electoral reform.

Kosovo remains engaged in the EU-facilitated Dialogue on normalizing relations with Serbia, but it must demonstrate greater commitment, invest more effort, and make compromises to advance the normalization process. Upholding Dialogue commitments and fully implementing past agreements are crucial for progress. Failure to make progress risks missing out on significant opportunities. The situation in the north of Kosovo has been marred by various crises, including a violent attack against the Kosovo Police, exacerbating tensions.

In response to the lack of deescalation, the EU has implemented temporary measures impacting financial support to Kosovo. While some steps have been taken in the right direction, more efforts are needed to deescalate tensions in the north of Kosovo and address the EU’s concerns.

The approval of new legislation on public officials and salaries, though fast-tracked, risks creating gaps in administrative capacities. The judicial system is still in its early stages of development, with limited progress observed. Strengthening tools safeguarding the integrity, accountability, independence, and efficiency of the justice system is crucial. Kosovo’s fight against corruption is also at an early stage, with limited progress observed. Implementation of anti-corruption legislation and proactive investigations need improvement. Kosovo’s fight against organized crime has seen limited progress in the investigation and prosecution of cases.

In terms of economic criteria, Kosovo has shown some progress but faces challenges such as a widespread informal economy, corruption, and weak rule of law. The economy demonstrated resilience during recent crises, but structural challenges hinder the private sector. Limited progress has been made in public procurement, financial control, and statistics.

Kosovo has made some progress in aligning with European standards, particularly in the internal market, but limited progress is observed in other areas such as competitiveness, digital transformation, and environmental issues. Kosovo’s administrative capacity and coordination across sectors need improvement for effective implementation of the EU acquis.

Overall, the progress of Kosovo towards EU will depend on the normalization of relations with Serbia. In our opinion, there can be no breakthrough until the early elections in Serbia are held on December 17.

After that there could be a window opportunity until European Elections in June, to reach a final agreement, paving the road for further progress with EU needed reforms (link to report and factsheet).

Fjorent Rrushi

Serbia

In August 2022, Serbia formed a Parliament that included opposition parties boycotting the 2020 elections, indicating a broader political representation. However, political polarization deepened after mass shootings in May, leading to citizens' protests against violence, supported by various opposition parties. Parliamentary debates were marked by tensions between the ruling coalition and the opposition and early elections were called for December 17.

Concerns persisted regarding cooperation between the government and civil society, as an enabling environment for civil society organizations remained inadequate, with verbal attacks and smear campaigns by high-level officials. Public administration reform progress was moderate, with advancements in e-services, e-government policy, and civil servant training.

In the judicial system, Serbia made progress with constitutional amendments, establishing the High Judicial Council and High Prosecutorial Council. In the fight against corruption, limited progress was noted, and Serbia needs to adopt a national anti-corruption strategy. The fight against organized crime showed improvement in some areas but highlighted the need for enhanced resources and strategic shifts in approach.

Fundamental rights in Serbia faced challenges. Freedom of expression witnessed limited progress, with concerns about threats, intimidation, and strategic lawsuits against journalists. The media strategy action plan saw delays, but amendments were made to strengthen the independence of the regulatory body.

Economically, Serbia maintained a good level of preparation but faced challenges from Russia's war against Ukraine, impacting inflation and economic growth. Progress was made in fiscal rules, banking stability, and public investment, but challenges in public administration and state-owned enterprises persisted. In coping with competitive pressure, Serbia made moderate progress in economic integration, but challenges for small and medium-sized enterprises remained.

Active participation in the EU-facilitated Dialogue with Kosovo continued, but more commitment and compromises are needed for progress. Crises in the relationship with Kosovo, including a violent attack in September 2023, required serious attention, and adherence to past agreements is crucial.

Regarding EU membership obligations, Serbia made limited progress in internal market alignment, significant progress in competitiveness and inclusive growth, and some progress in the green agenda and sustainable connectivity. Limited progress was observed in resources, agriculture, and cohesion, and Serbia is yet to finalize its accession to the World Trade Organization.

In conclusion, Serbia has made strides in various areas, but challenges persist, particularly in electoral, parliamentary, and judicial reforms, as well as the fight against corruption and organized crime. Strengthening democratic institutions, fostering cooperation with civil society, addressing economic issues and a final agreement with Kosovo are essential for Serbia's continued progress toward EU membership (Link to report and factsheet).

Fjorent Rrushi

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Fjorent RRUSHI

location iconAlbania   

Fjorent is the head of ALM & Research for Raiffeisen Bank Albania. After a MSc in International Business from the University of Trieste and an MBA from MIB School of Management in Italy he started as an Investor Relations financial analyst at the aerospace & defense company Leonardo in Rome. After that he moved to the Italian Stock Exchange in Milan promoting blue chip companies through roadshows with institutional investors and after the merger with London Stock Exchange was in charge of primary markets of potential to be listed companies in Eastern Europe. In 2011 moved back to his native country to join Raiffeisen Bank in ALM & Research team in charge of fund transfer pricing, liquidity management and IRRBB. After a period at Intesa Sanpaolo Bank Albania as Head of pricing starting from 2021 he is heading the ALM & Research of Raiffeisen Bank Albania. Apart from macroeconomic analysis of particular interest for him is the disruptive technological transformation impacting the banking system. Fjorent’s hobby is football and he enjoys theatre and has been an amateur player as a teenager.

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Mirza ZORNIC

location iconBosnia Herzegovina   

Mirza is macroeconomic analyst in Raiffeisen Bank BH dd Sarajevo. He has joined to the Research Team in spring 2022 after 16 years work activities as a Credit analyst in Raiffeisen Risk Department where he was in charge for Corporate, FI and LRG clients. With desire to make step forward and improve his analytical skills in macroeconomics, he decided to join the Raiffeisen Research Team. Mirza holds master’s degree of Economic Sciences at Sarajevo University and he has experience in management of public institutions/companies as a member of the Supervisory Board / Assembly / Audit Committee in public institutions/companies. In private, most of time he spends with his family but he is trying to find some moments for tennis, football and running as a passionate sport fan.