Lots of Carrot, Plenty of Stick: The EU’s New Growth Plan for the Western Balkans


A new EU growth package for the Western Balkans links cash disbursements with social and economic reform. No reform, no money, say EU chiefs.

The European Commission last week adopted a new Growth Plan for the Western Balkans, with the aim of bringing some of the benefits of membership to the region in advance of accession, boost economic growth and accelerate much needed socio-economic convergence.

The Commission says that the objective should be to enable partners to step up reforms and investments to significantly accelerate the speed of the enlargement process and the growth of their economies.

For this, a new six billion euros Reform and Growth Facility for the Western Balkans has been proposed for the period 2024-27. Payments will happen only after the fulfilment of agreed reforms.

“With the adoption of the new Growth Plan for the Western Balkans, we are bringing the Western Balkans economies closer to the EU,” said European Commission President Ursula von der Leyen.

“The potential is extraordinary. This growth plan could double the economy of the Western Balkans in the next 10 years. With its combination of reforms and investments, it will allow the Western Balkan to benefit soon from key areas of our single market, including free movement of goods, services and workers, the single euro payments area, transport, energy and the digital single market.”

No reform, no money

The new growth plan is based on four pillars, aimed at enhancing economic integration with the European Union’s single market, subject to the Western Balkans aligning with single market rules and opening the relevant sectors and areas to all their neighbours at the same time, in line with the Common Regional Market.

It is also aimed at boosting economic integration within the Western Balkans through the Common Regional Market, based on EU rules and standards, which could potentially add 10 per cent to their economies, and accelerating fundamental reforms, supporting the Western Balkans’ path towards EU membership, improving sustainable economic growth including through attracting foreign investments and strengthening regional stability.

The fourth pillar foresees increasing financial assistance to support the reforms through the Reform and Growth Facility for the Western Balkans for the period 2024-27, with payment conditioned on the Western Balkans’ partners fulfilling specific socio-economic and fundamental reforms.

As part of the growth plan, all six Western Balkan countries will be invited to prepare a reform agenda based on existing recommendations including from the annual Enlargement Package and the countries’ Economic Reform Programmes (ERP). This reform agenda will be consulted with, then assessed and adopted by the Commission.

Speeding up convergence

Economic convergence is an essential element in getting the Western Balkan countries closer to the EU. Currently, the level of convergence between the Western Balkan partners and the EU is not progressing fast enough, with average GDP per capita in purchasing power for our Western Balkan partners standing at between 30 per cent and 50 per cent of the EU average.

Integration with the EU’s single market has been the main driver of economic growth for all countries that joined the EU. The positive impact on a country’s GDP and income levels that arise from the integration with the EU’s single market, has been clearly demonstrated in the past.

“The new Western Balkans Growth Plan and the new Reform and Growth Facility build on the 30 billion euros Economic and Investment Plan (EIP) launched successfully back in 2020,” says Olivér Várhelyi, Commissioner for Neighbourhood and Enlargement.

“Our new growth plan is a unique catalyst to accelerate the real socio-economic integration in the region. As we accelerate the implementation of fundamental reforms, we will open our single market to the Western Balkans. This will decrease the economic divide between the European Union and our partners, and prepare them for the competition on the EU Single Market so they can reap the benefits of their EU membership from the first moment.”

Josep Borrell, European Union High Representative for Foreign Affairs and Security Policy, meanwhile believes that the plan can help Serbia and Kosovo normalise relations, given incentive for achieving progress on relevant fundamental and socio-economic reforms.

“This offer can accelerate progress on the path to normalisation of relations between Kosovo and Serbia through the EU-facilitated dialogue,” he says. “Each and every one of our partners in the Western Balkans has an opportunity to boost economic growth and eventually gain access to the European Single Market even before enlargement.”

Source : Emerging europe