Authors: Joseph Vann and Valbona Zeneli
The Biden administration has made clear to Europe that America is back. Nowhere is this clearer than in the Western Balkans. Biden’s recent executive order establishing the fight against corruption as a national security interest and the additional memorandum highlighting its willingness to take punitive measures against individuals in the Western Balkans send a shot across the bow of many of the region’s leaders. After too much inattention, we have seen the catastrophic results. From diplomatic backsliding, the destabilizing spoiler activities of Russian and China, and the propensity of government leaders to distract their populations from much needed reforms by purposefully setting off emotional tripwires by rehashing unsettled scores of the turbulent last three decades over the more immediate needs of the people. Yes, the Western Balkans are very much in play. Importantly, after more than a decade of being distracted by other geopolitical events, the European Union is equally back in the game.
Both Machiavelli and Winston Churchill have been credited with saying never let a good crisis go to waste. Leaders in the Western Balkans would be remise not to take note of this concept. The Western Balkans are in crisis and now is the time to benefit from the current alignment of EU and America interests. This opportunity cannot be squandered. We have seen how geopolitical events can change the focus of great powers with great speed and place issues of lessor powers further back in the queue of importance. Clear examples are the distractions of the 2008 financial crisis, the Arab Spring, the crisis in Libya, the annexation of Crimea, Ukraine, Brexit, a change of U.S. administration, and last but not least, the Covid pandemic. Simply put, Western Balkan leaders have a window of opportunity that best not be wasted.
Reports note that economic activity in the WB contracted more than 6 % in 2020 because of the Covid-19 pandemic, which exacerbated existing structural problems. The impact of the pandemic on the Western Balkan region is a classic case study of how fragile states bear the brunt of economic shockwaves and offers some lessons for governments on the importance of building economies with a greater degree of resilience to outside hardships. Currently, most of the region’s economies lack the economic diversity needed to weather economic storms. Many of the economies survived the pandemic but recoveries will not be felt uniformly across the strata of civil society. In all countries of the Western Balkans, the vulnerable groups will feel the economic downturn the most and the setbacks will take years from which to recover. As an example, to date, almost 150,000 jobs have been lost and around 300,000 people have been pushed into poverty.
The economies of the Western Balkans were not functioning well before the pandemic. At first blush, most countries have shown moderate growth trends in the past two decades but these are not normal balanced economies. Much of positive has been buoyed by a blend of remittances from its expatriate workers, citizens working within well-entrenched informal economies, and more recently, an additive dimension of a growing amount of money laundering that is propping up real estate prices and adding an artificial element to property prices.
While the vast proportions of the populations of the region wishfully remain focused on the prospects of joining the European Union, getting there has been complicated by the ineptitude of successive governments over the last two decades. Investments in structural reform have repeatedly been ignored across the region. The informal economy robs governments of much needed revenues and the remittances that fuel the region’s economies and provide a lifeline to families are a further contributor to the informal economy. These underlying issues are complicated by the high levels of corruption that adds yet another layer to the self-imposed challenges.
The Western Balkans has the potential for fast-growing economies, easily connected to the common EU market, but sustainable economic development can only be achieved if the focus is on strengthening institutions to create a friendly and fair business environment with a strong economic rule of law to attract serious foreign direct investment. The EU is both the biggest recipient and investor in the global economy. The Western Balkans have received only 0.6% of the EU investment in the global economy (USD 13 trillion stock of investment, making up 33% of the global outward FDI.) The region has a new window of opportunity because of the post Covid-19 European economy, where near shoring will play a new role.
These and other causative factors are well within the ability of elective leaders to address. Institutional reforms must be the focus of the day. Fixing these types of challenges is not rocket science. The critical enablers are very clear. Examples include promoting meaningful judicial reform and bringing the rule of law to the forefront of governance. Fighting corruption and promoting institutional reform is well within the power of the region’s leaders—if only they can manifest the courage to demonstrate political will. It is truly about leadership and political will and the courage to make hard choices that will ultimately benefit the country and its people. Equally important is the recognition that transatlantic community and its support is waiting to sign on to making the region a success. However, America and the EU cannot want success more that the region’s leaders.
The views presented are those of the authors and do not necessarily represent the views of the U.S. Department of Defense or its components.
