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European Commissioner for Enlargement and European Neighbourhood Policy
Investments in Western Balkans – a new approach
European Bank for Reconstruction and Development
London, UK, 24 February 2014
Prime Ministers, distinguished guests, ladies and gentlemen,
I am very pleased to be here with you at the EBRD today and I congratulate the EBRD on taking this initiative to bring us all together to focus on investment opportunities in the Western Balkans region.
As Europe shows the first signs of emerging from the crisis, this is a key moment for the Western Balkans to seek to attract more investment. The fact that there is such a distinguished group of people gathered here today, bringing together the leaders of the region, current and potential private and public investors and representatives of the international community and the international financial institutions, shows how important increased investment is for the region.
And as I have this opportunity to address today so many people key to the economic future of this region, I am pleased to mark this occasion by presenting to you officially for the first time the European Commission's new approach to economic governance, competitiveness & growth for the Western Balkans region.
In last October's Enlargement Strategy Paper, we announced our intention to develop a new approach to the economies of the enlargement region. Today, I officially launch this new approach, which is about building a common understanding between leaders of these countries and potential investors on the priorities for economic reform.
What is the aim of this new approach? We want to continue to support you in meeting the challenges of creating jobs, enhancing competitiveness and boosting growth. Over the past five years, we have faced the same challenges in the European Union. Our efforts to tackle the crisis are bringing results. We have the experience – we want you to benefit from it already.
None of the Western Balkans is a functioning market economy. Unemployment across the region is high. The young are particularly affected. Public deficit and debt levels have been increasing. The external situation is vulnerable in many countries of the region.
Competitiveness is often hindered through politicisation of decisions that should be market-driven.
These problems should be addressed through a credible reform agenda coupled with ample funds from the private and public sector.
Reforms of public finances and of labour market institutions and reduction of administrative burdens for businesses should be priorities. Investments in education, skills and research also need to be high on the agenda.
The rule of law is particularly relevant in terms of legal certainty and investor confidence and hence, key for economic reform.
Investments will only happen if the countries improve the investment climate and create:
I encourage all you investors here today to take this opportunity to set out the areas on which you would want governments to focus to make the investment climate in the Western Balkans region more attractive.
I also want to emphasise the importance of economic governance in maintaining support for enlargement within the European Union. It's part of the response to the important debate about the need for different kinds of transitional controls. By driving economic convergence between aspiring and current member states, migratory pressures should reduce – thus helping new Member States to keep their brightest and best, while reassuring wider publics that enlargement can proceed without creating substantial migration.
Let me outline how we will work with you to achieve these goals.
First, we need macroeconomic, fiscal and financial stability. We already have a dialogue on annual macro-economic and fiscal programmes with all countries except Kosovo. We want to beef up this process and focus it on key structural reforms.
We will base our dialogue on your National Economic Reform Programmes. The result should be to jointly agree on a set of Country Specific Recommendations to guide reforms. We will, together with the IMF, give technical assistance to support the implementation of these recommendations.
Countries will also be asked draw up action plans on public financial management. Progress here will open up the possibility of sector budget support under the Instrument for Pre-Accession Assistance (IPA) - IPA II.
Second, we need sectoral reforms and investment in targeted sectors, leading to increased exports and more jobs. The Commission will invite countries to give overviews (every second year, starting from 2015) of their structural reform plans across sectors of most concern for improved competiveness and growth, such as transport, energy and education. By setting out clearly the priority reforms for the short- and medium-term in one document, this will be a roadmap for all you investors to identify where best to place your funds to get the best returns.
Third, significant funding through IPA II will support this process and the ensuing reforms with a focus in particular on sector support. And we will work with all of you and with the International Financial Institutions to deliver and finance these reforms.
Your countries, dear Prime Ministers, will depend on your leadership to ensure coordination across your government departments to make sure that you are delivering on the agreed reforms.
In Sarajevo last week, I explained how through this enhanced dialogue around reform, competitiveness and growth and a joint working group to accelerate implementation of European Union funded projects, we will address current social and economic concerns in Bosnia, in the immediate and longer term.
The investment needs in the region are substantial. I was therefore delighted with last November's agreement between European and International Financial Institutions to intensify their cooperation on key infrastructure investments including priority transport and energy projects. This will be done through the Western Balkans Investment Framework to make sure that resources flow through a single pipeline.
Let me also mention regional cooperation. I am very pleased that Goran (Svilanovic) is able to join us today. I believe the Regional Cooperation Council has an important role to play in preparing reforms.
The countries of the Western Balkans are highly economically integrated through the Central European Free Trade Agreement (CEFTA). It therefore makes sense to jointly prepare some reforms and evaluate their implementation. The South East Europe 2020 Strategy for Jobs and Prosperity in a European Perspective could be a key reference point for the Commission and the International Financial Institutions.
To conclude, I would like to thank Sir Suma and the EBRD for hosting us here today and giving us the opportunity to share our views on how best to promote investment in the Western Balkans region.
I urge you to embrace and sustain the new approach to economic governance that I have outlined. It will boost the investment climate and promote job creation, growth and competitiveness in your region.
I am sure that many of you private and public investors gathered here today will monitor closely the economic developments in the region and seek new opportunities to invest as the climate becomes steadily more attractive.