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Annual review of TERRITORIAL GOVERNANCE IN THE WESTERN BALKANS

Original Annual review of TERRITORIAL GOVERNANCE IN THE WESTERN BALKANS / Cotella, G.. - In: ANNUAL REVIEW OF TERRITORIAL GOVERNANCE IN THE WESTERN BALKANS. - ISSN 2707-9384. - STAMPA. - 2/2020(2020), pp. 1- 174.

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08 October 2021 Annual review of TERRITORIAL GOVERNANCE IN THE WESTERN BALKANS JOURNAL OF THE WESTERN BALKANS NETWORK ON TERRITORIAL GOVERNANCE (TG-WeB) Governance in The e ects of COVID-19 on Tourism in the Age Western Balkans Governance and Development of Uncertainty Municipal Finances in Water and Energy Learning from the the Context of COVID-19 for Resilience CENTROPE Initiative

ISSUE 2 2020

Annual Review of TERRITORIAL GOVERNANCE IN THE WESTERN BALKANS JOURNAL OF THE WESTERN BALKAN NETWORK ON TERRITORIAL GOVERNANCE (TG-WeB) Annual Review of Territorial Governance in the Western Balkans Journal of Western Balkan Network on Territorial Governance (TG-WeB)

Issue 2 December 2020 Print ISSN 2617-7684 Online ISSN 2707-9384

Editor-in-Chief Dr. Rudina Toto

Editorial Manager Dr. Ledio Allkja

Editorial Board Prof. Dr. Besnik Aliaj Dr. Dritan Shutina Dr. Sotir Dhamo Dr. Peter Nientied Dr. Marjan Nikolov Prof. Dr. Sherif Lushaj Prof. Dr. Giancarlo Cotella Dr. Dragisa Mijacic

Language Editor Dr. Maren Larsen

Design Klesta Galanxhi Aida Ciro

Scope: Annual Review of Territorial Governance in the Western Balkans is a periodical publication with select policy briefs on matters related to territorial governance, sketching the present situation, the Europeanisation process, the policy and the research and development agenda for the near future. The publication targets policy-makers and policy-in uencing actors.

Copyright @2020 Co-PLAN, Institute for Habitat Development and POLIS Press. All rights reserved. No part of this publication may be reproduced, stored, transmitted or disseminated, in any form, or by any means, without prior written permission from the Publishers, to whom all requests to reproduce copyright material should be directed, in writing.

Publishers December 2020 Table of Contents

Editorial: Adaptive Territorial Governance in the Face of COVID-19 8 Giancarlo Cotella Policy Debate: Government and Governance on the Western Balkans 19 Andreas Faludi Tourism Development in the Western Balkans: Towards a Common Policy 24 Enrico Porfido Tourism in Transition, the Post COVID-19 Aftermath in the Western Balkans 46 Peter Nientied, Dritan Shutina Universities and Socio-cultural Institutions in Highly Uncertain Contexts: Challenges 61 and Opportunities during COVID-19 in three Western Balkan Countries Ledio Allkja, Esmerina Hidri Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër 73 Municipalities Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova Socio-economic E ects of COVID-19 in Bulgaria: A Spatial Analysis 96 Hristo Dokov, Kalina Milkova, Ivaylo Stamenkov Transboundary Water Management in the Western Balkans: Challenges of the Land-Water 118 Nexus in the Drin River Basin Francesca Vanelli, Besmira Dyca, Paul Rabé Economic Viability of Alternatives for Lignite-free Electricity Production in North 140 Macedonia: The Case of TTP Oslomej Vesna Garvanlieva Andonova, Marjan Nikolov CENTROPE Initiative – Lessons Learned and Inspirations for the Western Balkans 150 Maroš Finka, Milan Husár, Matej Jaššo Abbreviations 168 8 Annual Review of Territorial Governance in the Western Balkans, II, 2020, 08-18 https://doi.org/10.32034/CP-TGWBAR-I02-01

EDITORIAL

Adaptive Territorial Governance in the Face of COVID-19 Giancarlo Cotella

[email protected] Interuniversity Department of Regional and Urban Studies and Planning (DIST), Politecnico di Torino

Keywords: Territorial Governance, Resilience, Adaptive Governance, COVID-19, Western Balkan Region, Sustainable Development

Introduction

During the last few decades, extreme weather events and global and regional economic crises have been forcing us to rethink the way that governments approach territorial development. The inherent links between social, economic, and ecological systems are proving to be increasingly signi cant, and exist only in a complex whole characterised by multiple feedbacks (Berkes et al. 2002). In this light, managing the relationship between the social, economic, and ecological aspects of development is of paramount importance for those interested in establishing sustainable development trajectories in the long-run. This is particularly true since the COVID-19 pandemic has added further entropy to the picture of socio-ecological interactions. During the early stages of the pandemic, decision making, regulations, and communication had converged at the national level. However, throughout the course of the pandemic, there has been growing room for improvement in policy-making. As such, there is a need to rethink development objectives and their governance according to a new long-term perspective – one that takes better account of dierent issues and needs. Key concepts such as multi-level governance, place-based development, circular economy, and the localisation of the Sustainable Development Goals can all help Western Balkan countries to achieve a better quality of life while preserving productivity, social inclusion, and the environment (Cotella and Vitale Brovarone, 2020).

However, to develop territorial governance systems to support secure, long-term societal development is particularly challenging (Lambin, 2005), and requires the introduction of forms of territorial governance that explicitly take into account the possibility for immediate and long-term change (Dietz et al., 2003; Folke et al., 2005). ‘Adaptive’ governance models and mechanisms are those that are able to address uncertainty through continuous learning and feature the involvement of multiple actors and levels in decision and policy making processes. Continuous knowledge sharing and learning is indeed a critical component when facing complex dynamics and uncertainty. It can be stimulated by networks that enable interaction between individuals and institutions at multiple levels and use those interactions to draw upon various knowledge systems and develop better policies (Adger, 2001; Olsson et al., 2006). In this light, adaptive territorial governance models rely on polycentric institutional arrangements that operate at multiple scales (McGinnis, 1999), balancing between centralised Editorial: Adaptive Territorial Governance in the Face of COVID-19 9 and decentralised control (Imperial, 1999). At the same time, these models should be exible enough to re-organise and re-form through institutional arrangements that encourage reection and innovative responses (Brunner et al., 2005; Folke et al., 2005).

Since the rst appearance of the concept in the early 2000s, (Dietz et al., 2003), the boundaries of adaptive governance have evolved signi cantly, particularly in relation to the governance of territorial development. However, an explicit research agenda on the matter has yet to coalesce. A synthesis of the literature concerning adaptive governance may contribute to the quest for new models of territorial governance that address the dynamic, large-scale nature of the most pressing crises, such as the 2008 global nancial crisis that still projects its shadow over our economies and, more urgently, the uncertainty surrounding the COVID-19 pandemic and its aftermath. Serving as an introduction to the 2020 Annual Review of Territorial Governance in the Western Balkans, this editorial focuses on the concept of adaptive territorial governance in the face of COVID-19, with particular reference to the Western Balkan Region. After this brief introduction, the concept of adaptive governance is detailed in relation to its evolving boundaries. The challenges that may undermine the implementation of adaptive governance in practice are then reected upon before a number of tentative research avenues in relation to the Western Balkans are brought forward. Finally, the various contributions that compose this volume and the way that each contributes to the debate are introduced to the reader.

Adaptive Territorial Governance: Conceptual Boundaries

The concept of adaptive governance rst emerged in relation to the management of institutional interactions in complex systems (Dietz et al., 2003; Walker et al., 2004; Folke et al., 2005), particularly as a consequence of the multiple uncertainties associated with global environmental change. According to these pioneering contributions, top-down territorial governance systems are unable to match the relevant scale of socio-economic and ecological complexity, especially in the face of rapid change (Cumming et al., 2006). Similarly, hierarchical governance often fails to provide eective solutions for highly contextualized situations, falling short in coordinating governance across multiple jurisdictional boundaries (Lemos and Agrawal, 2006). In response, a growing number of bottom-up approaches have emerged through local social networks, often under the collaborative initiative of community leaders sensing the need for alternatives to top-down government and new approaches to decision making (Weber, 2003). However, these local governance initiatives often suer from coordination problems across complex geographies due to the lack of overarching arrangements able to approach ‘soft spaces’ with ‘fuzzy boundaries’ in a exible way (Haughton et al., 2009; Faludi, 2018). Additionally, they often defect in terms of legitimacy, accountability, and inclusiveness, ignoring the voices of those stakeholders who are marginalized by dominant power relations (Swyngedow, 2005).

Acknowledging these challenges, adaptive governance emerged as a possible solution to the quest for new approaches to territorial governance capable of tackling large-scale problems in a way that is exible and responsive enough to adjust to complex, unpredictable feedbacks between social, economic, and ecological components. The rst contribution introducing the concept dates back to 2003, when Dietz et al. articulated the need for a more ‘adaptive’ governance of socioeconomic and environmental systems. This called for continuous shifts in the scale and in the actor constellation to be involved in the governance process. The authors suggested that eective governance conditions would ideally manifest within systems in which (Dietz et al., p.1908): (i) resources and their use can be monitored, veri ed, and understood through a relatively low eort; (ii) dynamics of change are slow or moderate; (iii) networks of 10 Giancarlo Cotella

actors are dense and consolidated; (iv) outsiders can be excluded at a relatively low cost and (v) users are engaged in eective monitoring and enforcement. At the same time, however, they recognise that these conditions rarely exist in coordination with one another or at once, with most territorial governance scenarios having to deal with incomplete information and conicting and ever-evolving values and preferences (Ostrom, 2005). As a consequence, governance models should be exible enough to accommodate the feedbacks originating both in the territorial and actor spheres. This can be achieved through an iterative and inclusive dialogue between actors and within a complex, multi-layered system of institutions that facilitate experimentation, learning, and change.

Since this seminal contribution from Dietz et al., the literature on adaptive governance has begun to approach territorial systems in terms of ‘resilience’, i.e. their capacity to absorb natural and human impacts while still maintaining their structure and function (Holling, 2001; Folke, 2007). Resilience scholars call for adaptive governance models to deal with uncertainty in the face of unexpected disturbance or sudden change by either increasing the resilience of existing systems or facilitating their transformation (Walker et al., 2004; Folke et al., 2005). Using the terms ‘adaptability’ and ‘transformability’ to de ne properties of a territorial system and its associated governance institutions, Walker et al. (2004) situate adaptive governance in the context of scholarship on resilience, arguing that governing a territorial system from a resilience perspective shifts the role of governance institutions from limiting change to managing and shaping the ability of a system to cope with, adapt to, and allow for further change. Many of the early empirical and theoretical contributions to adaptive governance are framed in terms of adaptive co-management, often used synonymously (e.g. in Olsson et al., 2007; Huitema et al., 2009). According to Plummer et al. (2013), adaptive governance builds on foundational sources from the adaptive co-management literature and may be considered as the organizational context necessary to actively manage resilience in territorial systems (Folke et al., 2005).

Importantly, the rst comprehensive set of criteria necessary for a successful transition towards adaptive governance are detailed by Folke et al. (2005). In their work, they highlight that most criteria are a function of social capital and include knowledge generation and learning, organizational learning, collaboration, devolution of management rights or power sharing, participation, organizational exibility, trust, leadership, social memory, and the formation of actor groups or teams. At the same time, they also argue that adaptive territorial governance should be characterized by scaled approaches to resource management provided for and coordinated within an adaptive and collaborative learning environment fostered by adaptive governance. In order to create such an environment, adaptive governance requires functioning social networks that connect individuals and organizations across multiple levels and scales and that strengthen the capacity for taking advantage of windows of opportunity for transitions toward more exible and adaptive models and mechanisms.

While adaptive governance was developing within resilience scholarship, authors in other elds started to adopt the term to explain governance changes with relation to the emergence of community-based natural resource management. In the volume Adaptive Governance: Integrating Science, Policy, and Decision Making, Brunner et al. use the concept as a framework for adapting “policy decisions to real people […] on the ground” (Brunner et al., 2005, p.19). They suggest that adaptive governance cannot be reduced to a list of speci c prescriptions but is context-dependent, and thus should be analysed through an exploration of the ‘pattern of practices’ to be read in the particular contextual conditions within which they developed. Altogether, the cases collected in the book highlight the importance of local initiatives for resolving small-scale contestations over resource use, often involving livelihoods that are Editorial: Adaptive Territorial Governance in the Face of COVID-19 11

seemingly incompatible with larger-scale policy directions (Chan et al., 2014). Although adaptive governance initiatives seem to have the potential to infuse larger-scale policy- making with local knowledge and capacity, community-based initiatives often suer from a lack of governing authority, legitimacy, funding, and sustained leadership. Furthermore, they function at a scale that is smaller than most of the territorial systems they rely on, leaving them vulnerable to changes outside of their sphere of inuence (Brunner et al., 2005). Taking this into account, adaptive governance should bridge locally-oriented practices with wider- scale interests and initiatives to develop improved policy frameworks that guarantee their coordination and organisation.

Main Challenges to Adaptive Territorial Governance

Whereas adaptive governance models and mechanisms certainly present multiple advantages, empirical studies on the matter have shed light on the existence of a range of impediments to their introduction. Whereas decision and policy makers may be willing to embrace new governance mechanisms and practices, they are often constrained by traditional arrangements, limited institutional capacity, as well as concerns regarding the potential risks that come with the new con gurations (Berisha et al., 2020). Drawing on insights gained from a critical literature review on the matter, Rijke et al. (2012) argue that constraints to the uptake of adaptive governance relate, to a large extent, to the inability of practitioners and policy makers to cope with complexity and uncertainty, in particular:

(i) the ambiguous purposes and objectives of what should be achieved; (ii) the unclear contextual conditions in which governance takes place; and (iii) the uncertainty around the eectiveness of dierent governance strategies.

Building on the traditional literature depicting the shift from government to governance, they argue that the process that should lead to the identi cation of the purpose of governance is often not straightforward, due to the dierent priorities of the various stakeholders involved. Such diversity of values often leads to a ‘paralysis’ in which the actors involved in the process confront each other with dierent understandings of the problem and proposed paths of action. Furthermore, the ambiguity of the actual governance purpose may raise questions in relation to who is legitimated to take decisions, as well as to what dimensions and aspects of sustainability should be prioritised (Smith and Stirling, 2010). Hence, ambiguous governance purposes resulting from a dierential range of values creates a signi cant challenge for applying adaptive governance.

The unclear, ever-changing contextual conditions within which governance takes place also constitute a challenge for implementation. Territorial systems are complex systems that evolve through continuous interactions between territorial characteristics, the governance system, and civil society. Hence, changing conditions in the social and physical context of territorial systems inuence the eectiveness of governance to serve a speci c purpose. Adaptive governance, in particular, should rely on networks that connect actors (individuals, organisations, and institutions) at multiple organisational levels (Folke et al., 2005). Its eectiveness to solve complex problems depends on the combination of network structure and context (Turrini et al., 2010). As such, any framework conceptualisation merely identi es the elements and general relationships that need to be considered for institutional analysis, without providing policy makers with the speci c methods through which to develop eective governance strategies (Ostrom, 2011). 12 Giancarlo Cotella

Finally, as governance relies on networks that connect actors at multiple organisational levels, analysing relations between actors helps to understand how social structures may enhance or hinder eective governance. Although the eectiveness of networks to solve complex problems depends on a combination of network structure and context, decision and policy makers have a tendency to develop holistic, blueprint solutions that fail to take uncertainty and the complex dynamics of governance systems into account. Prediction and control approaches are derived from mechanistic thinking in which system behaviours and responses can be predicted; optimal control strategies can be designed within regulatory frameworks that are shaped by technical norms and legal prescriptions (Pahl-Wostl, 2007). However, policy makers and practitioners continue to struggle with setting learning goals and expectations, de ning adequate learning mechanisms, and identifying who should be involved in learning processes (Armitage et al., 2008). In turn, this hampers their ability to develop adaptive governance strategies that rely on continuous learning.

Adaptive Territorial Governance in the Western Balkans. Towards a Research Agenda

The above review has introduced a number of issues that are relevant for the territorial development and governance context at the core of this Annual Review. It is nonetheless worth reecting on a number of possible research paths in order to explore the potential for introducing and consolidating adaptive governance models and mechanisms within the institutional framework of the Western Balkan Region. Today, the Western Balkans are a heterogeneous macro-region, featuring numerous challenges to territorial development: institutional corruption, informal economic and land development, weak and often ineective participation in public processes, and a low awareness of environmental issues (TG-WeB, 2018). At the same time, all countries in the region are progressively integrating into the European Union (EU), a process that is introducing additional governance levels and the devolving central powers to subnational levels as well as to functional regions that transcend administrative boundaries. More adaptive governance approaches could help to deal with these challenging trends, fostering the mutual cooperation of dierent countries and supporting the creation of networks on common issues, problems, and actions, both in a top-down and bottom-up fashion. Networking and cooperation among actors from various Balkan countries is a very challenging task, as networks are expected to not only understand and ful l the requirements of a highly globalised territorial development, but also to intrinsically understand the endogenous needs of local societies. To this end, more adaptive governance models and mechanisms could constitute an added value.

The review presented here has suggested that adaptive territorial governance is essential for dealing with the complexity and uncertainty associated with rapid global changes. This will be of utmost importance in the aftermath of the COVID-19 pandemic. However, adaptive governance cannot be created by a unilateral action of government, as it is highly context- dependent, rather fuzzy, and often organised symbiotically with the territorial system within which it develops. As a consequence, a transition towards more adaptive governance cannot be imposed, but can be encouraged through interventions aimed at raising institutional and adaptive capacity. The latter may emerge when actors, networks, and organizations initiate a transformation in search of a new, more desirable state of environmental governance or when they reorganize in response to perturbations such as policy windows, funding opportunities, and/or particular shocks to the system.

Adaptive governance represents a link between the social, economic, and environmental dimensions of sustainable development and takes into account the dynamic evolution of Editorial: Adaptive Territorial Governance in the Face of COVID-19 13

these dimensions and the complex, mutual interrelations that links them and their inherent uncertainty. Born from the social will to manage territorial development reexively and holistically, adaptive governance cannot be realized without functioning social networks. Such networks create cross-level and cross-scale linkages that allow for broad participation and experimentation, harmonization at a system-wide scale, and the establishment of a culture of learning that increases knowledge generation and sharing across a multilevel governance structure. Adaptive governance theoretically culminates in coordination at a macro-regional scale – a scale at which the governance structure best ts the function of coordinating and harmonising territorial development patterns and trajectories. The Western Balkan Region constitutes an interesting test-bed due to the rather uid structure of governance and the institutions that characterise the various countries.

To this end, further research is required to explore a number of avenues and, in turn, provide meaningful and timely guidance to actors at the various levels in the process. Firstly, it would be relevant to explore the relationship between the conceptual boundaries between the principle of adaptive governance and those that fall under the heading of ‘good’ territorial governance (ESPON, 2014; Nadin et al., 2018). Whereas these areas of inquiry may be understood as separate (one focused on the governance of ecological systems and one focused on purely societal issues of legitimacy, equity, and justice) it may be worth combining them based on the assumption that the resilience and desirability of the social system is equally important to that of the ecological system. Another promising eld of inquiry concerns the necessary preparations to take advantage of windows of opportunity in order to increase the likelihood of successful transformations towards more adaptive models of governance. Since such windows will certainly open up within the framework of the EU integration process, actors should be ready to seize various opportunities and come forward with coordinated actions and arrangements that concern the whole region to acquire a critical mass in their interactions with the EU. Finally, the many barriers to implementing adaptive governance that still exist within the institutional and organization frameworks of the Western Balkan countries deserve further attention. Interventions to support the emergence of adaptive governance when a window of opportunity opens should be prioritised, together with speci c changes in the law that are necessary to open up policy space and allow further exibility.

Each of these research avenues calls for the development of an empirical record and an increased eort to explore case studies of both successful and unsuccessful transformations toward adaptive governance in the region. With particular reference to unsuccessful transitions, researchers should pay attention to the politics of adaptive governance to de ne the roles of power, equity, and justice in fostering or inhibiting transformations. To address these questions, the Western Balkan Network on Territorial Governance (http://tg-web.eu/) constitutes an important platform of interaction and knowledge transfer. Its activities form an ideal framework within which to open up a discussion about the results that the transition towards more adaptive governance models and mechanisms produces in practice. This volume and the contributions it includes are a direct product of these activities.

A Roadmap for the Reader

This issue of the Annual Review of Territorial Governance in the Western Balkans positions itself within the aforementioned debate on adaptive territorial governance with particular attention to the consequences of and the reaction to the COVID-19 pandemic, as well as to the medium and long-term policies that may be adopted to face its aftermath and future uncertainties. It assembles a number of contributions focusing on a rather heterogeneous set of issues, 14 Giancarlo Cotella

providing insights on the region and its governance from both a conceptual and a practical perspective. Together, the various articles seek to provide the reader with dierent entry points into the state of art of territorial governance in the Western Balkans, oering food for thoughts on how to make the latter more adaptive.

In the rst contribution, Andreas Faludi frames the issue of government and governance in the Western Balkan region in the light of the contents of his most recent editorial eort (Faludi, 2018). The author reects on the need for a common perspective on territorial governance in a context in which the powers and resources of governments still vary and are dependent on the acquiescence and active support of other actors. While reecting on the ongoing EU enlargement process, the contribution argues that this could occur though the formation of tailor-made communities following functional or cultural lines, resulting in multiple, overlapping spaces that deal with issues in areas t-for-purpose. However fuzzy, the resulting pattern could be characterised by the capacity to adapt to situations on the ground that are not easily managed within traditional administrative arrangements.

After this inspiring framework, the following two contributions focus on how the eld of tourism could constitute an interesting eld to study ‘softer’ territorial governance processes. Enrico Por do reects upon the need and potentials for a joint tourism development policy for the Western Balkan region through a comparison of the strategies undertaken. In his contribution, countries are grouped by policy characteristics and analysed in relation to the magnitude of investments as well as the policies’ evaluation and implementation. The study highlights a number of common elements across the various policies, resulting in a competition among countries for the same tourism market portion. The paper suggests that a common tourism policy could connect the eorts of the involved actors, enhancing the competitiveness of the region at a global scale.

Whereas the potentials for development linked to tourism are undoubtable, this sector has been severely challenged by the COVID-19 emergency. Peter Nientied and Dritan Shutina shed light on this matter in their contribution, making the case for a transition to a post-COVID-19 tourism model as opposed to a return to the status quo. The authors discuss the current uncertainties of the tourism economy in the region in light of a number of international policy frameworks such as Next-Generation Europe and the European Green Deal. Ultimately, the suggested transition should entail the development of a more adaptive and resilient tourism sector through policies and practices that picture the regions as an integrated destination.

The reaction to the COVID-19 pandemic is also the central focus of the contribution authored by Ledio Allkja and Esmerina Hidri, which reects upon the role, challenges, and opportunities for universities and socio-cultural institutions. The authors argue that the pandemic has hit socio-cultural services hard; they were quickly shut down and transferred to virtual platforms. Despite this generating factor, the ongoing transition oers interesting prospects for future policies in terms of increasing the resilience of services as well as institutionalizing new ways, norms, and practices of doing things.

The fth article included in this volume reects upon the impact of the pandemic on municipal nances. Here Merita Toska, Marjan Nikolov, and Vesna Garvanlieva Andonova analyse how the outbreak of COVID-19 positioned municipalities at the forefront of the emergency, challenging them with the increased need to protect their communities and ensure the continuity of their activities despite nancial constraints. Their work provides a picture of the impact of the pandemic on municipal nances, particularly in relation to the Albanian and North Editorial: Adaptive Territorial Governance in the Face of COVID-19 15

Macedonia governments’ interventions. Overall, the authors argue that in view of the expected lower revenues, and added pressures for expenditures and unbalanced cash-ows, it will be imperative for local authorities to regain nancial control in order to avoid liquidity shortages and equip themselves with adequate nances.

A further exploration of the socioeconomic impact of the pandemic is proposed by Hristo Dokov, Kalina Milkova, and Ivaylo Stamenkov, who present a spatial analysis in the Bulgarian context to provide a wide picture on the occurring changes. Through their analysis, the authors reect on the key factors that drive the processes and determine the intensity, scale, and persistence of the immediate multidimensional impacts of the outbreak and their territorial implications. Through a mix of quantitative and qualitative approaches, they show that the COVID-19 crisis has severely impacted the country, although dierentially across territories, generating signi cant entropy and uncertainty.

The governance of transboundary water basins lies at the focus of the contribution from Francesca Vanelli, Besmira Dyca, and Paul Rabé. The authors discuss how water basins experience signi cant pressure from urban growth, tourism, energy, and food demands, exacerbated by the pressing challenges of climate change. In light of these challenges, they explore the potentials for a transboundary water management policy with respect to the Drin River basin. In doing so, the contribution assesses water governance’s eectiveness and eciency, applying a land-water nexus framework to evaluate the extent to which relevant land-based activities are included and eectively monitored. Building on the analysis of various aspects (existing transboundary and national legal frameworks, institutional and nancial capacities for data collection, and the presence and enforcement of a land-water nexus vision) the authors point towards the need to understand policy gaps between riparian countries and the need to develop an integrated cross-sectoral framework for resource management as the basis for a better land-water nexus and more sustainable and resilient development.

The contribution from Vesna Garvanlieva Andonova and Marjan Nikolov also focuses on the management of resources, in particular the economic viability of alternatives for lignite-free electricity production in North Macedonia. The authors explain that the usage of coal to produce electricity has become less and less attractive as a consequence of the environmental protocols attached to the EU integration process. On this basis, they argue that this situation will have severe impacts on those regions that host thermal power-plant, that either directly or indirectly employ a high number of people, and that focus on coal to contribute to the regional economic value added.

Finally, in the nal contribution of the volume, Maroš Finka, Milan Husár, and Matej Jaššo present a number of inspirational lessons from the CENTROPE Initiative, which could stimulate the introduction of more adaptive governance models and mechanisms in the Western Balkan region. CENTROPE is presented as one of the of the most visible projects that characterised the integration of central and eastern European countries into the EU throughout the second half of the 1990s and the 2000s. CENTROPE sought to develop a governance framework for eective and ecient cooperation in a large transnational area. The contribution explains that, similar to the Western Balkans, the economic and social development of CENTROPE was and still remains uneven, as the initiative did not manage to promote polycentric governance arrangements that could have enabled the eective management of spatial activities in the region.

Through various angles, all the contributions included in this volume touch upon the challenges and pitfalls that characterise the present con guration of territorial governance in the Western 16 Giancarlo Cotella

Balkan region and how the region is coping with economic uncertainties and the COVID-19 pandemic. The authors propose a number of ways forward to inspire the introduction of more exible models and mechanisms that, in turn, could contribute to making the governance of the region more adaptive.

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Disclosure statement No potential con ict of interest was reported by the author. Annual Review of Territorial Governance in the Western Balkans, II, 2020, 19-23 19 https://doi.org/10.32034/CP-TGWBAR-I02-02

POLICY DEBATE

Government and Governance on the Western Balkans Andreas Faludi [email protected] Delft University of Technology

With no direct exposure to ‘The Western Balkans Network on Territorial Governance,’ I take it to be a joint eort concerning a loosely-de ned region for which there is no unitary government, nor will there be one. Hence, we are talking about ‘governance’ rather than ‘government’, the former referring to anything that goes beyond or comes in lieu of exercising formal competences, and/or spending the treasures of a government body. To invoke the concept of governance recognizes that the powers and/or resources of government are insucient, so much so that the latter becomes dependent on the acquiescence of and/or active support from other actors able to ll the gap. Where, as in the Western Balkans, there is not one, but rather a multitude of governmental bodies, collaborative governance is the only option.

But why bother with government and governance in the Western Balkans in the rst place? The answer is that the Western Balkans form a gaping hole in the body of the European Union (henceforth EU), which turns the region into an object of its concern and vice versa: the concerned countries see advantages in joining the EU. In other words, a process called enlargement (integrating the states concerned through their becoming members) is an issue both for the EU as well as for those would-be Western Balkans members. To complicate matters, each country in the Western Balkans has a dierent agenda and the prospects of each for a speedy resolution of the issues involved in starting, yet alone completing the process vary.

Once completed, the whole area would of course no longer be the gaping hole in the body of the EU which it is now. If such a thing existed, the Western Balkans could become the object of EU spatial planning. Such planning could play a role in sorting out the many issues involved in coordinating investments and harmonising regulations amongst new member states and between them and the existing members, issues of which, of course, there would be many. To be more precise, if such planning were amongst the so-called competences of the EU, the new member states concerned could participate in whatever went on under this label. In general, such a shared competence gives the European Commission the right of initiative, empowering it to put before the Council of Ministers proposals for relevant regulations and/ or directives. Subject to the approval of the Council, and also the European Parliament under co-decision making, member states would be required to tackle speci c issues as stipulated by those regulations and/or directives (which of course has happened in countless other areas). However, there is no such competence for spatial planning, so why give the matter attention?

There have been intensive, but inconclusive eorts in the past to investigate the matter, for instance during the preparation of the ‘European Spatial Development Perspective,’ also known as the ESDP (CEC 1999; see Faludi and Waterhout 2002). Prepared as an ‘intergovernmental’ 20 Andreas Faludi

document, but with support from the European Commission, the story of the ESDP shows that much can be done, even without a formal competence. This situation continues today with the ‘European Spatial Planning Observatory Network,’ commonly known as ESPON1, and with the successive versions of the ‘Territorial Agenda.’ These initiatives demonstrate two things. Firstly, even without a formal competence, forms of territorial governance exist. Secondly, sometimes non-members of the EU participate, including in cross-border and transnational cooperation. In Faludi (forthcoming) I revisit my work above and what I have done since concerning European territorial governance. Which has made me quite critical, not so much of the valiant eorts of planners of various denominations, but of European integration generally being framed by what I call ‘territorialism.’ Giving pride of place to state territories, it stands for member states, each defending its sovereignty and reluctant to cross borders in a literal as well as metaphorical sense to play a dominant role in the EU. Whoever has followed the spectacle of the European Council debating the Multi-Annual Financial Framework 2021-2027 and the Recovery Fund will understand what I mean: There, the same insistence on defending one’s own has dominated the proceedings.

These comments are very much written with my claims concerning ‘The Poverty of Territorialism’ (Faludi 2020[2018]) in mind. Below I return to discussing, albeit briey, the subtitle of that same book: `A Neo-Medieval View of Europe and European Planning.’ Since publishing that book, I have discovered even more sources on the territorial nation-state, a privileged building block of the EU though it is, being (in some respects) un t for dealing with present and future challenges. In my forthcoming chapter mentioned earlier, I show myself particularly impressed by David J. Elkins (1995) from Canada.

Elkins is important because of his reference to the French-Canadian province with separatist inclinations, Québec, as well as to the existence throughout Canada of ‘First Nations’ with constitutional rights but without a territorial base. He covers not only these speci cs of Canada but also oers interesting insights on more macro-trends, starting with the bold statement that I have chosen as the epitaph of my forthcoming paper. There he says: We have not yet witnessed “…the transition away from the assumptions that a nation-state must have territory and that the territory should be contiguous, continuous, and exclusive” (Elkins 1995, pp. 22-23). Not concerned speci cally with the EU, this author concludes from this that “…if the process of globalization were to encompass a world government and worldwide free trade, it would be a less radical change … than what I have suggested is under way – the demise of territory as the sole basis of political units and the consequent decline of all-purpose political units, especially nations” (Elkins 1995, p. 28).

The importance of this lies in what it implies for European integration, including enlargement encompassing the whole of the Western Balkans. For better or for worse, integrating states, each with their territories, in so doing creating a larger territorial entity and endowing that entity (in this case the EU) with at least some governmental functions, may be a vain eort to sustain territorialism. Elkins diagnoses that the “…demise of territory as the sole basis of political units…” will hit us in the face.

Indeed, in our very rst account of the making of the ESDP, we concluded that seeing European planning (and European matters generally) through the lens of the nation-state was unhelpful. Our still timid reaction then was to exult the role of networking and mutual learning through the formation of cross-national working groups and other ad-hoc arrangements working as a ‘learning machine’ (Faludi 2008). My idle hope was that learning might change attitudes towards integration: that the ‘Europeanisation’ of planning through learning would lead to a qualitative Policy Debate: Government and Governance on the Western Balkans 21

jump towards a European policy-making state – to borrow the term from Richardson (2012). The end-game, I thought (2014), might just might be the ‘EUropeanisation’ proper of planning. This was the last of my expressions of pious hope for some form of EU-level planning.

As already indicated, and as its sub-title speci es, what has dawned on me since is that even if its members were to allow the EU to work as intended – which they do not – the best we could hope for is an EU as the kind of territorial polity, which Elkins has allocated to the dustbin of history.

This was the message of ‘The Poverty of Territorialism,’ written before I had read Elkins. I could have arrived at similar conclusions from reading Keating (2012). His theme is regional autonomy, which he relates in novel ways to sovereignty, more speci cally to nationality claims made by regions (he lives and works in Scotland). Dividing territories into separate states is now widely discredited, he says. The reason is a radically dierent meaning attached to statehood. Like Elkins writing about ’non-territorial provinces’ as options for the French language community or ‘First Nations’ in Canada, Keating points to the possibility of non-territorial self-government. This is why he prefers talking about autonomy as his way of reframing issues in manners that could be of great relevance, and not only to the Western Balkans: “One is autonomous in relation to some other person or entity” (Keating 2012, p.17). But, Keating adds, autonomy becomes meaningful only when one has the power to do something.

In this respect, the Ottoman Empire giving autonomy to minorities, as the Austrian part of the Habsburg Empire did, may have done better than their ill-deserved reputations as the ‘prisons of nations’ would suggest. In particular, religious minorities were given the right to administer their own aairs. Since the Western Balkans partake in the heritage and traditions of both these empires, unearthing such historic memories is worth considering for their implications on present issues and their resolution.

Autonomy rather than sovereignty is even more relevant to consider since Keating also points to what I describe as the production of democratic legitimacy. Rather than strictly con ned to elections being held within and by territorial constituencies, the production of democratic legitimacy also needs to be adapted to the new, uid situation whereby spaces are only loosely bounded. The answer may not be government as it exists; Nor may it be new, more encompassing, but still bounded spaces, with their establishment absorbing signi cant vital, and sometimes lethal energy. The answer may be more networking.

This leads to territory, and with it to territorial autonomy, acquiring new meaning. Pursuing autonomy is not the same as creating spatial monopolies of authority, identity, or capacity. Rather, it requires more complex forms of authority by creating dierent bundles of competences for dierent territorial con gurations. Such con gurations can be unbundled and re-combined more easily than sovereign territories. Even recognising the symbolic importance of particular spaces does not necessitate their becoming subject to sovereign control. So remember, the nation-state provides only one answer to the conundrum of reconciling identities, institutions of government, and systems of representation.

These are vast issues involving the rethinking and possibly the reshaping of our ways of pondering and doing politics with outcomes that are uncertain, which poses a challenge not only for the current issue of enlargement, but for shaping the future of the EU and, in fact, for global governance. Unfortunately, (and here I return to the geopolitical situation in the Western Balkans), none of these considerations resonates well with the present situation. Currently, the only option seems to be the consolidation of the parts of the Western Balkans not yet members 22 Andreas Faludi

of the EU by state formation based on the model of the existing members as a condition of their accession. This only serves to sustain an EU as a union of member states, each retaining its hard-won sovereignty as much as possible.

The latest (though unlikely to be the last) sign of thinking about the EU in such terms is of course Brexit. From Scotland, Keating (quoted above) has dissected the very issue of sovereignty as applied in the referendum leading to Brexit. He suggests that the slogan ‘take back control’ to restore British sovereignty shifted the locus of sovereignty from the Parliament in Westminster to the British people. He also points out the eects this has had on other nations within the United Kingdom beyond the English; in particular the Scottish and the Northern Irish. He thus shows that the UK is an ad-hoc construct with “… no de ned constitutional status, no unitary demos, no xed telos and refusal to address the issue of sovereignty explicitly…” (Keating 2019, p.168). So too with the EU. Europe, he writes, “…provides a discursive space for ideas of shared and divided sovereignty, multiple demoi and constitutional pluralism…Europe is understood and framed by dierent actors in dierent ways, as a free trade area, an intergovernmental body, a federation in the making or a sui generis polity. It has economic, social, cultural and political dimensions, stressed at dierent times by dierent actors” (Ibid.) This description is a far cry from the bogey man of a would-be federal state with a government in Brussels.

Indeed, reading Keating I feel vindicated in giving my 2018 book as its subtitle: ‘A Neo-Medieval View of Europe and European Planning.’ It makes my work part of a literature oering what has proven to be unheeded advice about an alternative to ‘hard’ European integration. Keating and others give rise to my observation that the situation on the ground seems already somewhat like in the Middle Ages, with spheres of authority overlapping and featuring more governance than government.

Elkins raises yet another point to consider when talking about Canada’s ‘First Nations’ and French Canadians forming non-territorial provinces with devolved, non-territorial, sovereign rights. Such forms exist in Belgium featuring three l–anguage communities next to and overlapping with the three regions. If we include the federal level, this adds up to seven governments altogether, which would be alright were it not for Flanders vying for outright independence on the model of the nation state.

I only have imsy evidence as to what is happening on the ground in the Western Balkans, but I think such lines of enquiry are well-worth pursuing, particularly for ‘The Western Balkans Network on Territorial Governance.’ For instance, something like one third of the population of Montenegro thinks of themselves as Serbs,2 which could lend itself to thinking about autonomy in the sense of Keating discussed above: some form of non-territorial governance in matters of culture. By the same token, why not talk of cultural autonomy for Kosovar Serbs, including control of religious shrines, rather than raising the thorny issue of territorial sovereignty? And, while we’re at it, rather than dividing Bosnia and Herzegovina into quasi-independent ethnic states, why not allow each ethnic and/or religious group similar forms of autonomy? This could also be a way forward for Albanians in Serbia, Montenegro, North Macedonia, and Greece. There is a cultural issue also between Bulgaria and North Macedonia concerning their common history and whether (and to what extent) their respective languages are similar. Such issues could be addressed through a language union with no implication whatsoever for statehood. In this respect, take a page out of the Dutch Language Union governing matters relating to maintaining and promoting the Dutch language spoken in the Netherlands and Flanders. It leaves the independence of either territory for what it is. Policy Debate: Government and Governance on the Western Balkans 23

Certainly, if all this and more were done by shaping tailor-made communities on cultural and also functional lines, the result would be a confusing jumble of overlapping spaces. But, did I not say neo-medievalism was arguably the future? So why not start where nation states have not yet fully crystallised, in the Western Balkans? The very term ‘territorial governance’ points in the direction of issues being resolved in areas t-for-purpose. Which means that it also implies overlapping spaces. Surely the resulting pattern seems disorderly, but this is the cost of responding exibly to situations on the ground that do not lend themselves to easily being cast into a mould of neatly formed states with coherent territories and the homes of clearly identi able nations. The model never really tted the situation in Europe anyway, leading to much needless (and senseless!) conict, not only in the Western Balkans, but throughout the continent and beyond.

Notes and European Planning (Elgar Studies in Planning Theory, Policy and Practice), Edgar 1. ESPON stands currently for European Elgar Publishing, Cheltenham, UK and Territorial Observatory Network. Northampton, MA, USA.

2. According to the Census 2011 data in Faludi, A., forthcoming. European traditions Montenegro, as accessed in https:// and history: Revisiting the European Spatial eacea.ec.europa.eu/national-policies/ Development Perspective. In M. Neuman eurydice/content/population- and W. Zonneveld (Eds.) The Routledge demographic-situation-languages-and- Handbook of Regional Design. Routledge: religions-51_en, on 21 September 2020. New York. Faludi, A. and Waterhout, B., 2002. The Making of the European Spatial Development References Perspective: No Masterplan (RTPI Library Series), Routledge, London. Commission of the European Communities (CEC), 1999. European Spatial Development Keating, M., 2012. Rethinking autonomy Perspective: Towards Balanced and Sustainable in a divided society. In A.-G. Gagnon and Development of the Territory of the EU. M. Keating (Eds.) Rethinking Autonomy in Luxembourg: Oce for Ocial Publications a Divided Society: Imagining Alternative of the European Communities. Democracies in Complex Settings, Palgrave Macmillan, Houndsmill, Basingstoke, Hants, Elkins, D. J., 1995. Beyond Sovereignty: pp.13-32. Territory and Political Economy in the Twenty- First Century. Toronto, Bualo, London: Keating, M., 2019. Brexit and the nations. In University of Toronto Press. G. Kelly and N. Pearce (Eds.) Britain Beyond Brexit, The Political Science Quarterly, 40(52), Faludi, A., 2008. The learning machine: pp.167-176. European integration in the planning mirror, Environment and Planning A, 40(6) pp.1470- Richardson, J. (Ed.), 2012. Constructing a 1484. policy-making state? Policy dynamics in the EU, Oxford University Press, Oxford. Faludi, A., 2014. EUropeanisation or Europeanisation of spatial planning?. Planning Theory and Practice, 15(2), pp.155- 169.

Faludi, A., 2020 [2018]. The Poverty of Disclosure statement Territorialism: A Neo-medieval View of Europe No potential con ict of interest was reported by the author. 24 Annual Review of Territorial Governance in the Western Balkans, II, 2020, 24-45 https://doi.org/10.32034/CP-TGWBAR-I02-03

Tourism Development in the Western Balkans: Towards a Common Policy Enrico Porfidoa

Summary

Tourism is one of the fastest-growing sectors of the global economy. Most countries are relying on it for their economic growth, including Western Balkan countries, which are investing in tourism and considering it as key-sector for their development. In the last decade, several initiatives have been undertaken by national governments, such as reviews of tourism strategic plans, tourism communication campaigns, and the creation of national tourism brands.

This contribution aims to provide a complete framework of public tourism policies in the region through the comparison of the strategies undertaken by each country. Later, countries will be then grouped by policies’ characteristics and analysed according to additional indicators, such as amount of investments, policies’ evaluation and implementation, and tourism numbers trends.

Preliminary ndings indicate that Western Balkan countries are adopting similar tourism policies in terms of objectives, products, and investments. This fact may lead policymakers to consider the dierences and unique features of their respective territories and generate competition among neighbouring countries, which are consequently obliged to contend for the same tourism market. In such a context, the conclusions and recommendations of this work point to the possibility of a common tourism policy in order to join eorts and to jointly address the region’s competitiveness on a global scale.

Keywords: Balkans, Regional Policy, Tourism, Tourism Policies

Contact

a enrico.por[email protected] pais(vi)agem collective, Barcelona-Paris Sealine Research Center, Ferrara University, Italy Institute Habitat Tourism Territory, UPC Barcelona – UMA Malaga, Spain Tourism Development in the Western Balkans: Towards a Common Policy 25

Introduction: Tourism in the Western The Balkan peninsula contains countries Balkans that are at dierent stages of tourism development. “Indeed, besides the long- Over the past decades, tourism has established tourist destinations along the experienced continued growth and Croatian coast, also other, more remote deepening diversi cation to become one and rural areas are becoming hotspots for of the fastest growing economic sectors tourism” (Lehmann and Gronau, 2019, p. in the world (UNWTO, 2019). In the last 46). This dierence is mainly caused by their twenty years, it also grew rapidly in the diverse economic, political, and historical Balkan region, growing from less than 4 backgrounds. million foreigner visitors in 1999 to more than 27 in 2018 (see Table 2). Due to its There are several variables along which the position and complex history, the region Balkan peninsula countries can be grouped has been considered “between stagnation and analysed. Already from a geophysical and progress, between the past and the point of view, the region can be de ned future, between preserving the existing in three ways according to various natural state and a revolution for far too long” borders: the Sava-Danube line, the Trieste- (Dragicevic-Sesic and Dragojevic, 2004, p. Odessa line, and the Carpathian and Balkans 19). In particular, the climate of insecurity line (Hajdù, et al., 2007). caused by conicts (most recently resulting Figure 1. Balkan Peninsula: Geo-physical from the dissolution of Yugoslavia between Vision 1991 and 2001) delayed the mass tourism boom that other Mediterranean countries have enjoyed since the 1970s.

Due to the region being ‘undiscovered’ and ‘unknown,’ today the entire Balkan region is going through a golden age of tourism growth. The increasing importance of tourism in the economic structure of Balkan countries is undeniable (Cvetkoska and Barišić, 2017). Lonely Planet – the colossus of travel guides – awarded Albania the best destination of 2011. In 2016, the Bay of Kotor in Montenegro was ranked as a must- Sava-Danude Line Trieste-Odessa Line visit city, while Transylvania in Romania Carpathians and Balkans Line was ranked as the best region in the world Source: Author, based on Hajdù, et al. (2007). to travel to (Butler, 2015). The region of the Julian Alps in Slovenia recently entered From a political economy point of view, the its rankings, winning third place in the discussion is even more complex. There category, ‘Best Destination of 2018’ (Lonely are at least four dierent groups to which Planet, 2018). Western Balkan countries belong according to organizational reports and other Göler and Doka (2018) have divided the documents mentioned in this study. region into three main typologies of tourism development: (i) the ‘traditional For the purpose of this study and the Mediterranean holidays resorts’ of Greece mission of the journal, the analysis has been and Turkey; (ii) the ‘restructured post- narrowed to the so-called Western Balkans socialist model of tourism and leisure and Croatia since most of the documents activities’ in Bulgaria and Romania; and (iii) analysed consider it part of WB though the ‘well-functioning remainders of the it is already a member of the EU. Bulgaria, liberal model of a socialist market economy’ Greece, Romania, Slovenia, and Turkey are in Croatia and Montenegro. not part of the study1. 26 Enrico Porfido

Table 1. Tourism-Economies Groups according to the documents mentioned in this study

Organization Name Countries Albania, Andorra, Bosnia and Herzegovina, Croatia, United Nations World Cyprus, Greece, Israel, Italy, Tourism Organization Southern/Mediterranean Malta, Montenegro, North (UNWTO) Europe Macedonia, Portugal, San Marino, Serbia, Slovenia, Spain, Turkey Albania, Bosnia and Organization for Economic Herzegovina, Kosovo, Co-operation and South-East Europe Montenegro, North Development (OECD) Macedonia, Serbia Albania, Bosnia and 2 European Union (EU) Western Balkans (WB) Herzegovina, Croatia, Kosovo, Montenegro, North Macedonia, Serbia Austria, Belgium, Bulgaria, World Travel and Tourism European Union Croatia, Republic of Cyprus, Council (WTTC)3 (sub-region) Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden Albania, Armenia, Other Europe Azerbaijan, Belarus, (sub-region) Bosnia and Herzegovina, Georgia, Iceland, Moldova, Montenegro, North Macedonia, Norway, Russian Federation, Serbia, Switzerland, Turkey, Ukraine

Source: Author, based on EU (2008), (2018) OECD (2018), UNWTO (2019), and WTTC (2019).

Observing the tourism numbers of the EU in 2013, which opened its borders to Western Balkans countries – Albania, Bosnia Schengen countries (OECD, 2016), among and Herzegovina, Croatia, Montenegro, others. Kosovo, the Republic of North Macedonia, and Serbia – important gaps are already In order to compare the WB countries, the evident. Out of the seven Western Balkans table above includes a ‘Tourism Growth countries, Croatia stands out with 16.649 Index 2017/2027’ in the last row (Table 2). million tourists in 2018 (UNWTO, 2019), This index is calculated according to the data followed by Albania, Montenegro, Serbia, included by the World Travel and Tourism Bosnia and Herzegovina, the Republic of Council (WTTC) in its annual Country North Macedonia, and Kosovo, for which Reports. The average growth for this time updated data are not available. This is frame is 35%, with Croatia, Montenegro, predictable due to the long and historic and Serbia above the average, and Albania tourism tradition of Croatia (Beyer, et al., slightly under the average, followed by the 2013; Orsini and Ostojić, 2018; Lehmann Republic of North Macedonia and Bosnia and Gronau, 2019) and its admission to and Herzegovina. These tourism growth Tourism Development in the Western Balkans: Towards a Common Policy 27

Table 2. International Tourist Arrivals (in million per year)4

Year ALB BIH HRV KOS5 MKD MNE SRB 1990 0.03 N/A 7.049 N/A 0.562 N/A N/A 1999 0.039 0.089 3.443 N/A 0.181 N/A N/A 2010 2.191 0.365 9.111 0.0 34 0.262 1.088 0.683 2015 3.784 0.678 12.683 0.079 0.486 1.56 1.132 2017 4.261 0.733 14.353 0.086 0.529 1.879 1.272 2018 5.340 1.053 16.649 N/A 0.707 2.007 1.711 20276 6.25 1.018 26.033 N/A 0.754 2.978 2.095 Tourism Growth Index 31.84% 28% 44.87% N/A 29.84% 36.9% 39.28% 2017-20277

Source: Author, based on UNWTO (2000, 2016, 2017, 2019), WTTC (2017) and Kosovo Agency of Statistics (2020). rates con rm that the entire region has importance of the tourism sector is also become an important international tourism con rmed by its contribution to national destination over the last two decades. The GDPs (Table 3).

Table 3. Tourism sector contribution to GDP by country in 20198

Country 2019 Contribution to GDP Growth 2018-2019 Albania 21.2% +8.5% Bosnia and Herzegovina 9.8% +6.9% Croatia 25% +4.1% Kosovo - - Montenegro 32.1% +6.1% North Macedonia 6.2% +3.8% Serbia 5.9% +5.0%

Source: Author, based on the WTTC Country Reports: ‘2020 Annual Research: Key Highlights’ [available at https://wttc.org/Research/Economic-Impact].

Tourism assumes an essential role in Yet, tourism’s strict interdependence with boosting socio-economic growth, especially other sectors such as the environment, in developing countries. This industry in education, health, and transport, makes it this region is a signi cant factor in the even more challenging to reach the goals democratization process, acting as a driver countries’ have for the sector. For example, for EU integration of the region (Priniotaki- the tourism sector strongly relies on local Ioannis and Kapsis-Stavros, 2008). Indeed, human capital, which means that tourism “given the proximity to major European and hospitality employees should be markets and the secular growth of tourism, correctly trained for speci c jobs (education it is plausible to assume that the tourism sector) and that mobility should be facilitated sector could be another key sector to drive both in terms of infrastructures and public the Western Balkans’ catching-up process” transport (transport sector). Tourism is (Benner, 2019, p. 1). Therefore, tourism indeed a largely service-based sector, policies and their implementation are which ranges from travel, accommodation, central for WB countries. 28 Enrico Porfido

transportation, activity planning, and food The comparative analysis, supported services, but also resource protection, with data and best practices, results conservation, and valorisation. into a concluding paragraph that opens doors for future research. An additional Tourism is inuenced by many other recommendation paragraph is included, variables, which go far beyond a single which focuses on the possibility of national strategy or policy. On the one hand, introducing a common policy for the WB natural disasters are unexpected triggers, region. such as the 2004 Indian Ocean tsunami which strongly impacted tourism in Thailand The methodology adopted in this study is (Birkland, et al., 2006) or the ongoing based on scienti c literature and a review of COVID-19 pandemic, which is aecting ocial documents (listed in Table 2). These tourism at a global scale (Gössling, et al., documents are compared along a number 2020). On the other hand, international and of criteria. national economic and political crises can also impact the tourism industry, such as Tourism Policies across the Western Bal- Thomas Cook Airlines’ bankruptcy in 2019. kans: A Road Trip The tourism sector is likely to have a considerable inuence in the policy arena Planning for tourism policy, or tourism and to liaise with other policy areas to make policy-making, is a lengthy process that necessary changes (Chaperon, 2017). This is is almost always led by the national why it is so important to develop resilient government and involves public sector tourism policies that can stand up to several agencies that play a tourism-related role emergencies and unexpected changes, and who act as advisors to the government building a tourism system with a long-term (Chaperon, 2017). vision and perspective. The tourism industry is integrated into Objectives and Methodology WB government structures, falling under the jurisdiction of dierent ministries This overall objective of this article is to (Metodijeski and Temelkov, 2014). Croatia is provide a broad framework for national the only country with a ministry dedicated tourism strategies and policies in the region explicitly to tourism, while the others and to open a debate about future scenarios. combine it with other sectors such as The analysis will focus on public tourism the environment, trade, economy, and policies, which are “a statement of intent” sustainable development. aiming to set out “desired future conditions and presenting the guiding principles for All countries have established national decision-making” (Chaperon, 2017, p. 427). tourism agencies or organizations (Tables 4 and 5) except Kosovo (Demokraci për In the rst section, a literature review of Zhvillim, 2017). It is worth noting that a WB’s national tourism strategies will create tourism agency is a “central administrative a table of the visions and priorities for each body with administrative responsibility for country, easing comparison among them. tourism at the highest level” (Jeries, 2001, p. 10). At the same time, an organization The central discussion focuses on three main or association is an “autonomous body aspects of tourism policies, presented as a of public, semi-public or private status, comparative analysis: (i) tourism policies’ established or recognized by the state as objectives and products promoted in each the body with competence at the national country; (ii) the amount of investments level for the promotion – and in some promoted by each government; and (iii) cases, marketing – of inbound international a contextualized reection about policies’ tourism” (Jeries, 2001, p. 10). Albania and evaluation and implementation, related North Macedonia have national agencies, to the analysis of tourism trends in each while other countries have established national strategy. Tourism Development in the Western Balkans: Towards a Common Policy 29

Table 4. Latest Tourism Policies and Promotion Campaigns by Country

Latest Tourism Strategies Country and Policies Latest Tourism Campaign Strategy for the Sustainable Development of Tourism 2019- Albania 2023 (Ministry of Tourism and Albania – Go your own way Environment, 2019) Strategy for the Development of Tourism in the Federation of Bosnia and Herzegovina Bosnia and Herzegovina for the period 2008 – 2018, Bosnia and Herzegovina – and Republika Srpska Tourism The heart-shaped land Development Strategy 2010-2020 (OECD, 2018) Tourism Development Strategy of the Republic of Croatia until 2020 Croatia (Government of the Republic of Croatia – Full of life Croatia, 2013) No national tourism strategy Be in Kosovo – the young Kosovo approved or drafted. Europeans (uno cial) Montenegro Tourism Development Strategy to Montenegro 2020 (Ministry of Tourism and Montenegro – Wild beauty Environment, 2008) National Strategy on Tourism Development 2016–2021 North Macedonia (Government of the Republic of Macedonia Timeless Macedonia, 2016) – only drafted. Tourism Development Strategy of the Republic of Serbia 2016-2025 Serbia (Government of the Republic of Serbia - The place to be Serbia, 2016)

Source: Author. organizations, associations, or boards. The Proda (2017) and Ciro (2019) have noted in case of Kosovo deserves special attention their contributions, there have been several because several tourism associations exist ocial tourism policies and strategies and operate in the territory but none of them promoted by the governments since the have been established by the government collapse of communism. (Ministry of Trade and Industry, 2014). In the following paragraphs, the tourism policies Almost all tourism strategies of the Albanian adopted and promoted by each country will government have been discontinued for be presented individually to be compared dierent reasons. This happened in 1993, and evaluated later. 2002, 2006, and 2007, while the 2014 strategy remained a draft. The “Strategy for Albania the Sustainable Development of Tourism 2019 – 2023 […] marks the rst approved In the last few years, Albania, which has a strategy in a series of attempts” (Ciro, 2019, long tradition of tourism though at a smaller p. 75). The term ‘sustainable development’ scale (Por do, 2019), has invested signi cant was included the title but was not resources in this sector and represents elaborated on in the body of the text. Other a “laboratory for tourism development” sectorial strategies have developed upon (Göler and Doka, 2018, p. 89). As Kapllani- the term however, such as the National 30 Enrico Porfido

Table 5. Government Bodies Responsible for Tourism Policy Development in Western Balkan Countries

The government body National Tourism Country responsible for tourism policy Organization or Agency / development Web page Ministry of Tourism and Environment (former Ministry National Tourism Agency - Albania of Tourism, Culture, Youth and Kombëtare e Turizmit / akt. Sports) gov.al and albania.al SFederation of BiH - Ministry Tourism Association of of Environment and Tourism / Bosnia and Herzegovina Bosnia and Herzegovina Republika Srpska – Ministry of - Udruženje za turizam / Trade and Tourism bhtourism.ba Croatian National Tourism Croatia Ministry of Tourism Board - Hrvatska turistička zajednica / croatia.hr Kosovo Tourism Association, Kosovo Alternative Tourism Ministry of Trade and Industry - Association Kosovo Department of Tourism Tourism, Association of the southern region, Association PRO IN / beinkosovo.com National Tourism Organization of Montenegro Montenegro Ministry of Sustainable - Nacionalna turistička Development and Tourism organizacija Crne Gore / montenegro.travel Agency for the Promotion and Support of Tourism in the Republic of North Ministry of Economy - Macedonia - Агенијата за North Macedonia Department of Tourism and промоција и поддршка на Hospitality туризмот во Република Северна Македонија / tourismmacedonia.gov.mk Ministry of Trade, Tourism and National Tourism Telecommunications Organization of Serbia - Serbia (former Ministry of Finance and Туристичка организација Economy, Department of Tourism) Србије / srbija.travel

Source: Metodijeski and Temelkov (2014, p. 235), adapted and updated by the author.

Strategy for Development and Integration p. 84). Therefore, the Strategy 2019-2023 2015-2020 which “set forth two strategic represents the rst real tourism policy objectives focusing on sustainable tourism oriented towards sustainability. It places development” (Ciro, 2019, p. 75). a fundamental importance on “orienting the development of one of the strategic With the exception of this last document, priority sectors crucial to the economic a small number of initiatives have been development of the country” (Ciro, 2019, p. undertaken to initiate a discussion on 77). sustainable tourism development in Albania. Nonetheless, “current conditions This policy document is articulated around for sustainable tourism in Albania are four strategic goals to achieve through ve rather unfavourable” (Nientied, et al., 2018, policies groups: (i) the promotion of public Tourism Development in the Western Balkans: Towards a Common Policy 31 and private investments; (ii) improvement of Bosnia and Herzegovina for the period of tourism services; (iii) consolidation 2008 – 2018,’ but it was never adopted. The and development of tourism products; Republika Srpska approved and adopted (iv) re-orientation of promotion towards the ‘Republika Srpska Tourism Development tourism potentials; and (v) supporting the Strategy 2010-2020’ (OECD, 2018). management of destinations (Ministry of Tourism and Environment, 2019, pp. 17- Unfortunately, it was not possible to 20). Each policy counts three sub-speci c directly access and consult the ocial goals, which describe in more detail draft document of the Federation of BiH’s the actions to undertake. Besides being strategy. Therefore, this study includes vaguely described, the policies span from only a review of the ‘Republika Srpska macro-themes such as basic infrastructure Tourism Development Strategy 2010-2020 implementation to concrete and speci c - Стратегија Развоја Туризма Републике ones, themes such as an evaluation model Српске за Период 2010–2020’ (University to classify accommodation and services. of Banja Luka, 2009).

What emerges from an assessment of these This strategy is organized in two parts: ve policies is that the Albanian governments the rst deals with general tourism is focusing on three main typologies of development factors, while the second tourism – marine, natural, and cultural – in focuses on the vision, strategic goals, and terms of services, products, and promotion policies adopted. “The purpose of the (e.g. creation of marine infrastructure to Republika Srpska tourism policies is to build generate future activities). It is also worth the competitiveness of its tourism clusters9” noting that attracting strategic, private (University of Banja Luka, 2009, p. 82). The investors and developing an educational policies embraced stress investments, program in tourism are considered two spatial and urban development, standard main priorities, while no attention is paid quality improvement (in terms of services, to domestic tourism, which “makes up an accommodation, and statistics system), important tourism contribution because of and the de nition of a branding/marketing its year-round seasonality and continuous strategy. Education also appears as a priority. demand” (Ciro, 2019, p. 85). Unlike other countries, the Republika Bosnia and Herzegovina Srpska government means to create regional touristic clusters and to promote In the last 20 years, the tourism industry place-based tourism initiatives instead of in Bosnia and Herzegovina (BiH) has been coordinating at a national level. In this regard, aected by exceptional circumstances such the document states that governments as war, aggression, refugees, and transition should support the building of clusters and (Özlen and Poturak, 2013). Despite this, the boost their competitiveness through various country is not new to international tourism, investments in infrastructure (University starting from the organization of mega- of Banja Luka, 2009). Many scholars agree events such as the Winter Olympic Games about the impacts on dierent aspects of of Sarajevo in 1984 and maintenance of tourism development caused by the lack the world-renowned pilgrimage site of of a coordinated national tourism policy Medjugorje (Osmankovic, 2017). (Radovic, et al., 2013; Berjan, et al., 2014) and urge the inclusion of long-term perspectives BiH is organized in two federal entities – in various strategies (Šarenac, et al., 2019). the Federation of BiH and the Republika Srpska, which have developed their own Croatia tourism strategies – and the Brčko District (a self-governing administrative unit). The According to the WTTC (2020), the Federation of BiH drafted the ‘Strategy for contribution of tourism and travel to the Development of Tourism in the Federation Croatian GDP amounts to about 25%, which 32 Enrico Porfido

is the highest rate among WB countries year long; education and skills in tourism; studied here. The importance given to and destination management, among the tourism sector by the government is others. evident, from the extremely organized governmental structure to the detailed Croatian tourism policies are, without a strategies and policies. doubt, the most thorough among the cases included in this review. Even though the The Croatian Ministry of Tourism has four document seems accurate, in the last couple directorates working on international of years some representatives of the private cooperation, competitiveness, tourist board tourism sector have blamed the ministry systems, and legal aairs. The Croatian for producing inecient tourism policies. National Tourism Board deals with all A shortage of skilled labour, inadequate tax promotional activities. Also, at the regional policy, and the necessity of legal changes level, most county administrative oces for work in the tourism sector are among have a department responsible for tourism the main issues (Kolar, 2019). Another hot (OECD, 2016). topic is the government's focus on the ‘sun and sea’ tourism model, which has led to The ‘Tourism Development Strategy of the high seasonality with a signi cant impact on Republic of Croatia until 2020’ reects this various infrastructures (Orsini and Ostojić, accuracy in its contents, setting clear and 2018). reachable goals, ecient strategies, action plans, and including economic analyses for This last point inevitably forces a reection long-term periods. Besides, this document on the importance of monitoring policy should “ensure Croatia's integration into a results to guarantee their eectiveness. consolidated tourism policy of the European Union” (The Government of the Republic of Kosovo Croatia, 2013, p. 3). Currently, “Kosovo does not have a “The main aim [of the strategy] is to increase comprehensive strategy on tourism, and the attractiveness and competitiveness the current law on tourism is not fully of tourism by 2020” (OECD, 2016, p. 326) implemented” (Demokraci për Zhvillim, through the ful lment of set priorities: 2017, p. 7). Therefore, it is not possible to improvement of accommodation quality, include it in this study. development of new attractions, food oer branding, creation of a modern visitors Despite this, it is worth mentioning that centre, and the establishment culturally- Kosovo's government is working on a themed routes. The ministry supports the Tourism Strategy as part of a broader development of tourism infrastructure with Private Sector Development Strategy. The thematic grants allocated to both public strategy will include a series of policies and private institutions. aimed at boosting the hospitality sector and improving the quality of accommodation. The strategy includes detailed descriptions Also, when dealing with promotion, Kosovo of the 26 tourism policy measures, already “engages in a range of promotional which measures progress towards the activities, including participation in following topics: diversi cation and quality international events and fairs” (OECD, 2018, improvement of the tourism oer including p. 614). new products such as nautical, health, cycling, adventure and sport, and cultural Montenegro and business tourism; promotion of ICT initiatives from Wi-Fi access in tourism Montenegro is going through the destinations to information accessibility negotiation process for EU membership. improvement; facing seasonality through Aligning their economies and policies to EU pilot projects aimed at attracting visitors all standards represents a signi cant challenge Tourism Development in the Western Balkans: Towards a Common Policy 33

(European Commission, 2018). In this of six touristic clusters, whose “scenic framework, tourism is a critical sector for and cultural traits dier from each other” achieving membership. (Ministry of Tourism and Environment, 2008, p. 66). These clusters are connected through The ‘Montenegro Tourism Development tourism corridors in order to create a unique Strategy to 2020’ (Ministry of Tourism and experience, ranging from the coastal areas Environment, 2008) is the latest strategy of to the hinterland. the national government related to tourism, which was preceded by a ‘Masterplan for North Macedonia Tourism in 2001’ and an action plan in 2008 (OECD, 2018). The latest strategy aims at The North Macedonian government positioning Montenegro as a “high-quality drafted the ‘National Strategy on Tourism destination and de nes goals such as Development 2016–2021’ in 2016 upgrading accommodation infrastructure, (Government of the Republic of Macedonia, raising service quality, diversifying the 2016), but it was never ocially adopted. oer […] and linking tourism with other Therefore, the “country has no valid long- industries” (Benner, 2019, p. 2). term strategy for tourism development” (UNECE, 2019, p. 21). The document is organized in three main sections: an analysis of the present situation, Previously the Former Yugoslav Republic the strategic orientation for Montenegrin of Macedonia implemented a tourism tourism development (including vision, strategy for the period 2009-2013, but there objectives, and policies), and the expected is no evidence of its evaluation, or whether outcomes. any relevant insights from that strategy informed the current one (OECD, 2018). The strategy counts ve objectives with The 2009-2013 strategy envisioned that 20 detailed policies to achieve them: (i) Macedonia would become a “famous travel ‘quality instead of quantity’ improvement and tourism destination in Europe based of touristic infrastructures; (ii) the creation on cultural and natural heritage” (Petrevska, of a unique, integral tourism destination; 2012, p. 118). (iii) diversi cation of the tourism oer to face seasonality; (iv) strengthening the Although it remains a draft, the latest institutional and legal framework; and (v) strategy (2016–2021) forecasts signi cant local communities’ involvement in tourism improvement, with a focus on urban, activities. cultural, and lake tourism (Petrevska and Among all detailed policies, two are worth Collins-Kreiner, 2019). It also envisages mentioning because of their novelty: investments in ‘special tourist development the establishment of a “clean image of zones’ (UNECE, 2019). The document Montenegro” (1.7); and all policies under the drafted by Kohl and Partner consulting fth objective of involving local communities company counts eight key objectives, (Ministry of Tourism and Environment, 2019, focused mainly on improving the awareness p. 43). The rst links the touristic image of the and attractiveness of Macedonia as an country to the critical waste management international tourism destination (Kohl and situation, aimed at its improvement through Partner, 2016). an awareness campaign and the creation In the meanwhile, the government of new infrastructures. The second aims to is nancing programs for tourism encourage entrepreneurship in domestic development managed by the Ministry of tourism, raising awareness about the Economy and the National Agency for the tourism sector’s importance for the country. Promotion and Support of Tourism (UNECE, As in the case of BiH and Albania, the national 2019). government sustains the establishment 34 Enrico Porfido

Serbia obstacles for economic development in the Western Balkans (Krešić, et al., 2017). The Republic of Serbia is also going through the negotiation process for EU membership. Finally, an action plan outlines priority Like Montenegro, tourism represents a measures aligned with the strategy’s priority sector for the national government objectives (OECD, 2018). The 21 measures within the integration process. Despite proposed are grouped into six typologies: (i) its importance, tourism growth was been the coordination of tourism activities among slightly under the regional average until actors; (ii) improvement of the statistical 2017 (Gajić and Vujko, 2017); new data oer monitoring system; (iii) improvement of more promising gures (see Table 2). tourism infrastructure; (iv) introduction of new ICT technology; (v) support activities Since the rst strategic document related to dedicated to local stakeholders for funding tourism – the ‘Tourism Strategy of 2006,’ the applications; and (vi) improvement of Serbian government has adopted a cross- destination management. As in Montenegro, sectorial approach, integrating tourism the local communities’ involvement is with other sectors such as the environment. relevant for the government, as it can Natural resources and protected areas are provide support for funding applications. considered fundamental for tourism as well as rural development. Indeed, the 2006 In the nal section, the strategy focuses tourism strategy addresses “social issues on the importance of indirect and in rural Serbia such as unemployment, direct measures for supporting tourism depopulation and the disempowerment of development. The indirect measures include women and the youth” (Orlović-Lovren, et lowering the VAT rate for tourism businesses al., 2013, p. 50). and promoting incentive programs for local agencies and tour operators, among others. This rst document set the basis for the Direct nancial instruments include grants, following strategy, ‘The Serbian Tourism loans, venture capital funds, and public- Strategy 2016-25,’ adopted in November private partnership projects applied directly 2016 (Government of the Republic of Serbia, or through nancial intermediaries. 2016). This strategy is an excellent example of collaborative preparation, with inputs Discussion: A Comparative Analysis of from tourism experts, relevant associations Tourism Policies and organizations, local authorities, individuals from academia, and business Based on the review of each country’s and NGO representatives (OECD, 2018). strategy, it is evident that WB national governments and policymakers have The strategic document 2016-2025 opens certainly recognized the importance of the with a thorough review of the current tourism sector. Five out of seven countries situation, including a comparison with have structured tourism strategies, some of tourism-competitive countries. It then which also include long-term perspectives de nes the vision and sets objectives and detailed policies. North Macedonia’s for 2025, which include the sustainable Ministry of Economy is currently “updating development of tourism, strengthening the draft for another round of consultations the sector’s competitiveness, increasing with other ministries” (UNECE, 2019, p. 22), the sector’s employment trends and GDP while Kosovo is working on the rst draft of contribution, and the improvement of a tourism strategy (OECD, 2018). Serbia’s overall image in the region, Europe, and globally (Government of the Republic In the following paragraphs, national of Serbia, 2016). It is worth mentioning policies are compared in order to have the use of the term of ‘grey economy’10 in a clearer picture of the region’s policies, the objectives (which the strategy aims to objectives, and products (4.1), investments reduce), as it is considered one of the main and funds (4.2), and evaluation and Tourism Development in the Western Balkans: Towards a Common Policy 35 implementation programmes, as well as described in each country’s tourism their impact (4.3). strategies. Investment attraction, promotion, quality standards improvement, Tourism Policies’ Objectives and Product and destination management represent the lowest common denominators of all Table 6 summarizes the tourism policy strategies. objectives and the tourism products

Table 6. Policies highlights and tourism products by country

Tourism Policies – Objectives’ Marine, natural, and cultural Country Highlights tourism. Investment promotion, tourism services improvement, consolidation and development National Tourism Agency - Albania of tourism products, promotion, Kombëtare e Turizmit / akt. and destination management gov.al and albania.al support. Investment attraction, spatial and urban development, standard Rural, mountain, transit, Bosnia and Herzegovina quality improvement, and religious, health, and urban branding/marketing strategy tourism. de nition. Diversi cation of tourism products, ICT initiatives Sun and sand, nautical, promotion, seasonality, health, cycling, adventure Croatia education and skills in tourism and sport, cultural and busi- improvement, and destination ness tourism. management. Kosovo - - Touristic infrastructure improvement, creation of a Nautical, mountain, golf, unique tourism destination, congress and other events, Montenegro diversi cation of tourism oers, wellness, camping, cultural, seasonality, institutional and legal natural parks and UNESCO framework strengthening, and sites, and agritourism. local community involvement. North Macedonia - -

Ministry of Trade, Tourism and Business events, mountain Telecommunications and lakes, urban, health, Serbia (former Ministry of Finance and nautical, touring, and rural Economy, Department of Tourism) and transit tourism.

Source: Author.

Croatian, Montenegrin, and Serbian improvement, weak legal and legislative strategies stand out for their completeness, frameworks, and non-existent monitoring which is also reected in the types activities, Croatia, Montenegro, and of objectives set. The introduction of Serbia introduced themes that represent innovative ICT initiatives, diversi cation challenges for the most developed tourism of tourism products, and the topic of destinations worldwide. seasonality represents an essential element for evaluation. While all countries are facing obstacles such as tourism infrastructure 36 Enrico Porfido

Figure 2. Countries grouped by Typologies of Tourism Policies

Investments promotion Basic services Destination management and attraction improvement improvement

Introduction of ICT Diversi cation of Facing seasonality innovative initiatives tourism product issues Source: Author, based on Table 6.

Tourism products, nature, and cultural impact on national economies in terms of heritage represent the leading resources for investments promoted and funds allocated, the Western Balkans. Albania and Croatia policy evaluation and implementation, and bet on a more general natural and cultural the possible impact on tourism numbers. tourism, while Montenegro has decided to target speci c groups by focussing The amount of funds allocated to tourism on nautical, golf, congress, and wellness investments in each country is a determining tourism. Bosnia and Herzegovina and factor in the future development of tourism Serbia invest more in rural, mountain, and industry. Albania has included a speci c lake tourism. Nevertheless, considering the “Tourism Development Program” in the common starting points in terms of natural National Strategy (Ministry of Tourism and cultural heritage, the risk of competing and Environment, 2019, p. 22), which around the same tourism products is high. directly allocates almost 1.5 billion EUR Coordination is needed to avoid this from of public funds over four years to tourism happening and to improve the states' development initiatives. Attracting private cooperation. investments is mentioned as Policy Goal 1 and Economic Output 3, for a total of around Investments and Funds 2.5 billion EUR. The average investment per year is circa 1 billion EUR. Besides the typology of tourism policies and products included in each strategy, it is Croatia’s tourism vision allocates 7 billion also important to reect on their concrete EUR in investments during the period 2013- Tourism Development in the Western Balkans: Towards a Common Policy 37

Figure 3. Countries grouped by Tourism Prodwucts

Sun, sand and sea Cultural and Rural, mountains and lake traditional model religious toursim toursim

Natural resources Adventure and sportive Business, congress Ecotourism Health tourism toursim

Source: Author.

2020, which means an average investment green eld investments to be started in 2008 of 1 billion per year (Government of the and nished in 2020 (12 years), for a total Republic of Croatia, 2013, p. 31). The sum of 10.5 billion EUR (Ministry of Tourism document has detailed the typologies of and Environment, 2008, p. 87). This means investments, but it does not explicitly refer to an average private investment of 0.9 billion/ the origin of the funds, or mention if they are year. to come from public or private sources. The national government has also developed a Serbia’s tourism strategy 2016-2025 allocates national catalogue of investment projects, a total of around 2 billion USD (in euros 1.85), which identi es and presents public 20% of which are invested by the public projects for which the Republic of Croatia sector. This amount has been estimated by seeks investors (e.g. construction of new the use of the Growth Model, which means hotels and resorts; investing in newly that the economic eects of tourism (or realized tourist attractions such as golf whatever other activity) are based on the clubs, conference centres, etc.; and investing country’s economic growth projections. in other tourist infrastructure). In the case of Serbia, the tourism numbers used as a reference are those published by In the case of Montenegro’s strategy, there the WTTC. The investment per year amounts is no direct reference to the total to 0.2 billion USD (for a ten-year strategy). investments planned, public nor private. However, Section 3.6 – “Expanding bedding Data for Bosnia and Herzegovina, Kosovo, capabilities” –includes a detailed table of and North Macedonia are not available. As 38 Enrico Porfido

shown in Figure 4, no great dierences exist The investments of Serbia, however, are among the other Western Balkan countries. considerably under average (estimated Although resource origins might be split around 0.2 billion USD/year). This last gure dierently between private and public seems contradictory to the number of funds, Albania, Croatia, and Montenegro policies promoted and the solid structure allocated an average of 1 billion EUR/ of the Serbian strategic plan itself and may year to their respective tourism industries. need to be updated in light of new numbers.

Figure 4. National Governments’ Investment Plans in the Tourism Sector, (in billions EUR)

Source: Author, based on Ministry of Tourism and Environment – Republic of Albania (2019), Government of the Republic of Croatia (2013), Ministry of Tourism and Environment – Republic of Montenegro (2008), and Government of the Republic of Serbia (2016). Evaluation, Implementation and Impact represent an important change of direction of Policies in the evaluation and implementation of tourism policies. Policy evaluation and implementation represents a sore point for all WB tourism The Albanian government set a range strategies. This reection already emerges of indicators for each speci c goal. from several evaluation reports and articles The “Performance Evaluation Matrix” (OECD, 2018; UNECE, 2019; Kolar, 2019; provides precise gures on a yearly base, Ciro, 2019), which stress the need for categorized as general economic outputs monitoring and implementation activities. and policies objectives (Ministry of Tourism If not adequality evaluated during and after and Environment, 2019, pp. 26-28). The their action periods, tourism policies and evaluation is entrusted to a focus group strategies are almost useless. on Tourism and Culture Development, led by the Deputy Minister and including BiH, Croatia, and Montenegro’s strategies the regions’ responsible prefectures and a end this year (2020) and none have been number of observer members belonging to implemented or evaluated to date. The local, national, and international authorities, Croatian strategy included a detailed universities, and civil society associations. Its calendar of implementation by year, but recent approval in 2019 makes it impossible no evaluation reports have been issued to to discuss its evaluation further, since no con rm its accomplishment. Montenegro evaluations have been done of previous only mentioned monitoring as a priority strategic documents. of the strategic objective concerning the creation of an appropriate institutional and Serbia represents ta best practice in legislative framework. the region in terms of evaluation and implementation. The strategy 2016- Albania and Serbia’s strategies, which end 2025 includes a section dedicated to the in 2023 and 2025 respectively, seem to evaluation and implementation of the Tourism Development in the Western Balkans: Towards a Common Policy 39 previous strategy (2006-2015), providing Tourism Organization of Serbia the task of a detailed description of the results implementing annual plans concerning accomplished, although they represent promotional activities. “only a part of the expected” ones (Government of the Republic of Croatia, Finally, measuring the impact of tourism 2013, p. 52). Among the ‘unaccomplished’ policies on tourist numbers is dicult, issues, the implementation of international especially since the time periods of each quality standards, the share of the grey country policy are out of sync. Table 5 economy, and monitoring of tourism represents an attempt to relate policy sector performance are mentioned. eectiveness through a comparison of According to the new strategy, the Tourism tourist numbers by year and forecasts Ministry is responsible for the evaluation included in the strategies, when mentioned. and implementation of tourism policies, The table includes only the countries whose while has assigned to the NTOS – National strategies provided speci c forecasts.

Table7. Comparison between Real Tourist Numbers and Forecasts (R= real arrivals number; F = forecasted arrivals)

Country 2018 R 2019 F 2019 R 2020 F

6,406,038 6,401,160 interna- Albania international tional arrivals arrivals 106 86 Croatia million overnight million overnight stays stays 3,689,983 3,689,000 Serbia international international arrivals arrivals

Source: Albania (Ministry of Tourism and Environment, 2019, p. 28; INSTAT Albania, 2020), Croatia (Government of the Republic of Croatia, 2013, p. 62; Ministry of Tourism Republic of Croatia, 2019), Serbia (Government of the Republic of Serbia, 2016, p. 49; Републички завод за статистику, 2020).

Albania accomplished its 2019 objectives, ‘Game of Thrones’ shooting that generated although it is risky to attribute this to the a strong and solid niche of tourism (Tkalec, promotion of its tourism policies since et al., 2017). In the case of Serbia, the 2020 they were approved in the same year. target of 3.69 million arrivals was reached in (The eectiveness of policies can only be 2019. evaluated after a certain amount of time has passed since their approval (Dutch If one judges a policy’s eectiveness based Ministry of Foreign Aairs, 2009)). Croatia on the accomplishment of targets set by has forecasted 86 million overnights stays a policy itself, it is possible to say Albania, for 2020, though it already exceeded one Croatia, and Serbia met their objectives hundred million stays in 2018. Indeed, this and that the policies promoted paid o. fact results from the great tourism promotion But this nal reection also emphasizes the campaign that the Croatian governments diculties in analysing the eectiveness started after the ocial entrance in the EU of tourism policies, especially in the short- area, the arrival of low cost airlines such as term. The tourism industry is aected by Ryanair, Vueling and EasyJet that connected many variables that go far beyond each the country to the main European capitals, country borders, such as global market and the indirect promotion related to events trends, international tourism companies’ such, for example, the famous TV series investment strategies, and unpredictable 40 Enrico Porfido

natural disasters or economic crisis (such as great attention paid to the valorisation of the ongoing COVID-19 pandemic). each country’s speci c resources, and the similar objectives stress the fact that the Conclusions: Prioritizing the Tourism starting points and opportunities are the Sector in WB countries: Challenges and same for all WB countries. Indeed, sharing Opportunities common objectives and being aware of their territorial speci city means that the sector In conclusion, it is clear that all WB countries can be more ecient, gaps at national level are prioritizing tourism in their political can be overcome, and countries can learn and economic agendas. The comparison from each other’s experiences. of the tourism policies promoted, the tourism products identi ed, the amount of Yet, the comparative analysis reveals that investments in the sector, and the policy the amount of tourism investment across results illustrates that the region is going WB countries is small, averaging 1 billion in the same direction, both in positive and EUR a year (in Albania, Croatia, Montenegro negative ways. and Serbia). Another weakness is the poor attention dedicated to tourism policies’ Indeed, what emerges from the discussion evaluation and implementation. In most section is that, although WB countries are cases, the evaluation is not even mentioned not synchronized in the tourism destination among the activities of the strategies (BiH, development phase, the objectives, North Macedonia) or it is cited but not challenges, and opportunities of the sector implemented (Croatia and Montenegro). are similar for each of them. In addition, the The great attention paid to this theme in strong and weak aspects of national tourism the most recent strategies incite hope, such policies are common to all WB countries. as the case of the Albanian and Serbian strategies, which include detailed policy When dealing with policy objectives, WB evaluation systems. countries can be grouped into two main categories: those creating basic services for These two last elements are de nitely tourism (Albania, BiH, North Macedonia, and the weakest of the entire comparative Serbia), and those addressing issues of more analysis and represent the most important advanced tourism destinations (Croatia and challenges to deal with moving forward. Montenegro). This dierence is not reected To prioritize tourism as an economic sector however in the typology of tourism and to develop a consistent and sustainable products promoted. Indeed, there is a rst model of development, all countries need obvious distinction between the countries make an eort to increase investments and facing the sea and promoting the sun, sea constantly monitor their eect. and sand model, and the ones inland that are focusing on mountain and adventure In addition, many fundamental aspects of tourism. But there are also other categories tourism go unaddressed in the strategies of tourism products that can impact these analysed. One is the huge importance given assets, such as business event tourism (a to international tourism to the detriment common target of Croatia, Montenegro, and of the domestic. Indeed, “the Balkan Serbia) and religious tourism (promoted countries exchange among themselves in the coastal countries). Finally, it is clear signi cant tourist ows which support the that the promotion of natural resources development of the tourism industries represents a priority for all WB countries. mainly in the neighbouring countries” (Vasileva and Preslavsky, 2017, p. 43), but The diversity of the tourism products domestic tourism is not treated in any promoted by each country and the similarities national strategy, with the exception of in their objectives represent the strongest Montenegro, which sets a speci c objective aspects of WB tourism policies. Indeed, the dedicated to its promotion. diversity of tourism products highlights the Tourism Development in the Western Balkans: Towards a Common Policy 41

The second aspect is a critical and more and politics (e.g. changes in political assets general reection. In the current historical among countries), among others. Indeed, period characterized by the COVID-19 none of the strategies included in this study pandemic, which has imposed strong refer to any of these topics. limitations on travelling, the global tourism industry has proven not to be ready to Therefore, each government should adopt face such challenges. Few countries were local and national tourism policies that prepared for such dramatic events, including can respond to local, regional, and global the WB. Indeed, none of the documents phenomena, including natural catastrophes. presented in this study consider the eects The adaptability and resilience of the of natural disasters or economic crises. In tourism sector can be achieved through addition, climate change, resilience, health strengthening local policies and institutions, issues, and political crises are completely and by building strategies and initiatives ignored. Vulnerability and uncertainty are that make use of place speci cities and common risk factor of tourism worldwide. diversity, while being complementary. This Considering them in national policies can be emphasises the idea of a regional policy, a good starting point to design and develop which does not override national eorts a more solid and sustainable tourism model. and initiatives, but enhances their impact and eciency. Recommendations: Towards a Common Consequently, a possible solution is the Tourism Policy for the Western Balkans in establishment of common tourism policies times of Global Crisis among neighbouring countries. “Common tourism strategies and actions could support The recent events related to the COVID-19 the momentum for regional cooperation pandemic show that the measures emerging from recent initiatives” (OECD, adopted until now by most countries 2018, p. 619). Several scholars and worldwide are not versatile nor exible. institutions have agreed that the creation The tourism industry is completely blocked of common regional initiatives is of crucial as a consequence of the global lockdown importance (Hammer and Siegrist, 2008; (Gössling, et al., 2020). This will have Denga, et al., 2019). enormous consequences on future tourism development, in both short and long term11. Following the ndings of this study, similarities among Western Balkan tourism Western Balkan countries, whose tourism policies are evident. The establishment almost fully relies on international uxes, of the macro-regional strategy EUSAIR have been strongly aected by such an – the ‘EU Strategy for the Adriatic and event. Six months after the beginning of the Ionian Region’ – and the Transnational worldwide lockdown12 and the slow lifting Cooperation Programme ‘Interreg ADRION of restrictions, many WB countries are still (Adriatic Ionian),’ which enhance and on the ‘black-list’ for tourism, in the sense promote sustainable tourism initiatives in of both entering and leaving. Croatia is the this speci c regional framework, represent only exception and opened its borders to all a rst step towards the development of tourists in the beginning of July. common goals. Indeed, the EUSAIR strategy included ‘Sustainable Tourism’ as its fourth This reection emphasizes the urgency pillar (and involve Albania and Croatia). of designing resilient tourism policies, which can deal with several unexpected To conclude, Metodijeski and Temelkov events related to many elds including: the (2014) make a step forward stating that the economy (e.g. crisis); the environment (e.g. “next step [for WB countries] should be a climate change and its eect on consolidated joint presence on the international tourism tourism destinations); health (e.g. the market as well as mutual promotion” above mentioned COVID-19 pandemic); (Metodijeski and Temelkov, 2014, p. 239). 42 Enrico Porfido

Considering the signi cant similarities in this study to calculate the Tourism among opportunities and challenges Growth Index from 2017 to 2027. for tourism sector development in each WB country, the creation of a commonly 7. The ‘Tourism Growth Index 2017/2027’ functional set of tourism policies and is calculated on the percentage ratio strategic alliances may represent an between the international arrivals opportunity for the entire region. Such registered in 2017 and the 2027 initiatives will not substitute local or forecasted by WTTC (2017), for each regional authorities, whose importance is country. evident, but rather integrate them within a multi-level governance structure. 8. Once again, for guaranteeing the same data collection and elaboration methodology, the data included in Notes this study refers to the WTTC Country Reports. Also, in this case, data should be 1. Throughout the text, the WB countries considered with caution. The Albanian are always mentioned in alphabetical case is illustrative. The national INSTAT order. oce registered a percentage tourism contribution to GDP of 2.5% in 2017 and 2. EU ocial documents have generally 2.8% in 2018, while the WTTC already adopted the term ‘Western Balkans’ estimated a contribution of 21.2% in for the countries that are currently not 2019. members but are either candidates or in negotiation process to join. This means 9. Translated by the author from Serbian: that Croatia was considered in this group “Политике у туризму Смисао until 2013, when it ocially became a туристичке политике Републике member. Српске своди се на изградњу конкурентности њених туристичких 3. Kosovo is not included in the WTTC кластера” (University of Banja Luka, reports, neither in the sub-region 2009, p. 82). ‘European Union’ nor the ‘Other Europe.’ 10. For ‘grey economy’, the author intends 4. Tourism data collection and elaboration that economy sector which escapes methodologies are dierent for each taxes payment – committing tax evasion WB country, especially concerning the and/or fraud - and which is dicultly de nition of international tourist and monitorable by local and national visitor. Therefore, all ocial data should governments. It is often referred as be considered with caution. informal sector, shadow economy, underground economy, among others. 5. Data concerning Kosovo are not available in the UNWTO because it is not 11. For more on COVID-19’s implications on part of the United Nations system. Data tourism in the Western Balkans see the used in this study belong to the Kosovo article of Nientied and Shutina in this Agency of Statistics [available at https:// issue. ask.rks-gov.net/en/kosovo-agency-of- statistics] and is only available from the 12. The 9th March 2020 is assumed as the independence declaration of 2008 until start of the lockdown, when the Italian 2017. Government announced the beginning of restrictions in its national territory, 6. Until 2017, the WTTC Country Reports which was followed by many other included the forecast of international governments in the following days. visitors for each country for up to ten years. Indeed, this data has been used Tourism Development in the Western Balkans: Towards a Common Policy 43

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Tourism in Transition, the Post COVID-19 Aftermath in the Western Balkans Peter Nientieda, Dritan Shutinab

Summary

The purpose of this article is to make a case for a transition in post-COVID-19 Western Balkan (WB) tourism away from ‘back to tourism business as it was’ recovery thinking. The COVID-19 crisis is unique; unlike other disasters it is global and not local or regional, and it is leading to a global economic recession and increased social inequalities. WB tourism is severely hit by the COVID-19 crisis and the pace of tourism recovery is a question mark. Current uncertainties for WB tourism are discussed, amongst others future tourism behaviour. In view of international developments like the EU economic recovery strategy based on the Green Deal, it is suggested that the present COVID-19 crisis must be used for a transition in tourism, if WB tourism wants to remain relevant for EU tourists in the future. A transition entails building up tourism resilience, which is an obvious reaction, developing policies and practices for sustainable tourism, and building up WB as an integrated destination.

Keywords: Tourism, Western Balkans, COVID-19, Uncertainty

Contact

a [email protected] (Corresponding author) Rotterdam and POLIS University, Tirana b [email protected] Co-PLAN, Institute for Habitat Development, Tirana Tourism in Transition, the Post COVID-19 Aftermath in the Western Balkans 47

Introduction Travel restrictions came into force in 2020. All kinds of social, cultural, and business The WTTC (2017) concluded that the events were cancelled, tourist attractions, global picture of Travel and Tourism’s hotels, and restaurants discontinued their growth forecast of 4% per year for each of services and even national borders in the next ten years (on average) masks the Europe were closed for ‘non-essential visits’ fact that the sector faces ever-increasing to neighbouring countries. Governments and unpredictable shocks, from terrorist in Europe enforced lockdown policies in attacks and political instability, to health various manners and heralded that people pandemics and natural disasters. Each year, ‘stay at home.’ An unprecedented tourism new challenges arise to test the resilience situation emerged: from a forecasted good of the sector at more local levels. Looking 2020 season, to an almost lost season back, this conclusion of WTTC was largely and rather bleak prospects for the years correct. One point however was wrong, thereafter (Gössling et al., 2020). namely the use of the phrase ‘at local levels.’ In their deliberations about critical issues This paper examines the question of post- for the future of travel and tourism, WTTC, COVID-19 tourism in the Western Balkan like the rest of the tourism sector and in (WB) region. Tourism is one of the sectors fact almost the whole world, could not severely hit by the pandemic (OECD, 2020) imagine a global health pandemic with far- in the WB. It is an important economic sector reaching consequences. COVID-19 has had in WB, as Table 1 shows. The gures of three and continues to have major impacts on all major neighbouring tourism destinations economic sectors, and perhaps most acutely are presented as well below. on tourism, hospitality, leisure, and the arts.

Table 1. Tourism gures (overnight stay)

% arrivals by No. inbound Ratio Inbound / Countries % GDP tourism land of total (million) population arrivals Albania 5.84 1.86 15.5 82 Bosnia and Herzegovina 1.14 0.10 2.4 64 Montenegro 2.08 3.33 22.2 n.a. North Macedonia 0.78 0.34 3.1 n.a. Serbia 1.71 0.24 3.8 n.a. Croatia 16.64 4.84 19.9 89 Greece 30.12 3.34* 9.9 29 Turkey 45.76 1.52 4.8 21

Note: UNWTO (2020a), checked with WTTC (2020). Due to various statistical issues, the numbers are merely indicative. Data on Kosovo are not available. * including domestic tourism

WB tourism has grown far above average drafted tourism strategies, have improved European levels during the last decade destination and product development (OECD, 2018). For Albania and Montenegro and have taken steps to attract more tourism is particularly important. Bosnia international visitors through branding and Herzegovina, North Macedonia, and and the liberalisation of visa arrangements. Serbia have developed tourism growth According to OECD (2018), challenges strategies. OECD (2018) assessed WB for the tourism sector include tourism tourism and observed that tourism has been governance, product development, tourism growing rapidly, that WB countries have education, the quality of accommodation, 48 Peter Nientied, Dritan Shutina

congress and spa facilities, the high experience should not be forgotten when seasonality, various ‘institutional constraints,’ the pandemic is more or less under control and good destination governance. OECD and that the tourism sector should use warns that the cost-based attractiveness the experience of the COVID-19 crisis for of the WB countries as destinations will preparing a more sustainable, alternative, be hard to sustain. Lehmann and Gronau tourism sector for several reasons. The rst (2019) examined why tourism in the WB has reason is to build up tourism resilience, grown rapidly, despite the imperfections which is obviously required. The second of its tourism products. Their conclusion is has to do with international policies; the that the tourism standards against which EU decided that the Green Deal will be the practices are measured are getting outdated instrument for economic recovery and the and that authenticity is apparently more WB is also part of this policy development important than formal quality standards. (as the recent EU-Western Balkans Zagreb For Albania, Göler (2018) mentions the Summit showed)1. Researchers have already country as new destination (‘Discover AL’) de ned sustainability issues as a threat to WB as a main opportunity for further growth tourism (Göler, 2018; Nientied and Shutina, and concludes that the ‘gold rush mentality’ 2018; Bučar, 2017, Alkier et al, 2015). Thirdly, hindering sustainability is a main threat. we must heed the saying: ‘never waste In other WB countries, a comparable ‘gold a good crisis’.2 “The COVID-19 pandemic rush’ mentality can be observed, with should lead to a critical reconsideration limited respect for their natural and social of the global volume growth model for environments. One of the results is that tourism, for interrelated reasons of risks UNESCO warned cities that they would be incurred in global travel as well as the sector’s put on the list of endangered sites (Balkan contribution to climate change” (Gössling et Insight, 2017; 2019). al., 2020, p.13). Indeed, the COVID-19 crisis compels us to rethink the future of tourism. The COVID-19 pandemic appeared in Europe In several European destinations rethinking in early 2020. The pandemic is a potential tourism futures has already started. For game changer in tourism and travel (cf. example, the city of Berlin uses the current Hall et al, 2020; Gössling et al., 2020). EU situation to redevelop the city centre governments, airlines, consultants, and towards a more walkable and bikeable area researchers all expect that the travel and (Corona bike lanes, as they are called in tourism sector is entering a new era – but Berlin) to reduce crowded public transport nobody knows exactly what kind of era and pollution in the city.3 After experiencing that will be. WB governments and tourism an empty city, cities like Barcelona, Prague, businesses may prefer to believe that and Amsterdam are currently discussing a tourism will go back to normal, as it was, ‘reset’ of their tourism.4 and it is understandable that they would be highly active in trying to recuperate tourism Before discussing resilience and a possible as soon as travel conditions allow. But transition of WB tourism, the speci c thinking that ‘things will be the same again’ character of the COVID-19 impact and the appears odd; COVID-19 led to a deep crisis current uncertain situation needs to be and leaves marks on all facets of the society depicted. and economy. The COVID-19 Situation The purpose of this contribution is to discuss the COVID-19 aftermath and to substantiate Unlike the 2003 SARS outbreak, the ebola our claim that a transition for Western crisis, various natural disasters (Filomena Balkan tourism post-COVID-19 is required, and De Coteau, 2020; Del Valle, 2020; WTTC, in contrast to ‘back to tourism business as it 2019; Hall et al., 2020; Gössling et al., 2020), was’ thinking. This article will briey discuss or the Arab Spring (Morakabati, 2019), the WB tourism situation and its current COVID-19 is a global manifestation, not a uncertainties. It is argued that the COVID-19 national or regional one. Even if they could Tourism in Transition, the Post COVID-19 Aftermath in the Western Balkans 49

freely travel, tourists cannot avoid aected struggling for survival. It is unavoidable regions and go elsewhere like before, since that many tourism entrepreneurs (big and the whole of Europe and the rest of the world small) lose their business income and many has been aected. Furthermore, travel has workers in the sector lose their jobs. Wren- become more dicult as 96% of all countries Lewis (2020, p.111), who has studied the have adopted travel bans (UNWTO, 2020b). economic impacts of pandemics, warns Because of this global reach, COVID-19 is that people (tourists) reduce their “social distinct from any other major occurrence for consumption in an eort not to get the the tourism sector. After the rst COVID-19 disease.” Social consumption means that wave, many countries eased their travel people spend money on doing things that restrictions, but already in early summer, bring people into contact with other people some restrictions were reintroduced, - things like going to the pub, to football limiting travel and making travel to holiday matches, or traveling. This implies that the destinations uncertain with regards to, for risk of getting COVID-19 is not a matter of example, an obligatory quarantine. Inbound one tourism season. As long as there is no tourism decreased quite dramatically in WB eective vaccine health risks will continue, countries during the spring and summer and people may choose to stay at home or of 2020. Tourism statistics indicate that the select a destination following health and decrease in the number of international safety protocols closer to home that they tourists during spring 2020 ranged from can reach by car. This pattern has been 80% to over 90%, and during the summer witnessed all over Europe. (July) - 40% to 60%. WB citizens also found it dicult to travel abroad because many The impact of COVID-19 on tourism goes EU countries imposed restrictive conditions beyond health risk considerations and a like obligatory quarantine on travellers from lost 2020 tourism season; the economic WB countries. recession will have an impact too. When incomes decrease, spending on holidays and COVID-19 is a health catastrophe in all its leisure will also decrease. All over Europe, human suering both inside and outside of the economic recession that commenced in hospitals and it has led to a global economic 2020 has lead to higher unemployment and crisis and social crisis with increasing income losses, which will in turn negatively inequalities. Countries with large tourism aect international tourism. The diculty is sectors in the WB are seriously aected, that tourism is among the rst sectors to be but countries with smaller tourism sectors hit by the COVID-19 pandemic and probably will also be aected by the economic the last that will fully recover because recession following the pandemic (OECD, travel and leisure will be overtaken by the 2020). The World Bank (2020) suggests population’s need for food, education, and that growth in the Western Balkans could security in a time of economic and social plummet by about 5.7 percent in 2020, crisis. causing a more severe recession than the global nancial crisis. It also suggests that The tourism year 2020 is generally consider- in 2021 the economy will bounce back and ed as a loss, although countries that had show a high rate of growth.5 A particularly modest COVID-19 cases tried hard to attract severe recession will aect Montenegro, tourists. Uncertainties for this and coming Albania, and Kosovo. However, World Bank’s years are high, depending on the duration estimates are based on UNWTO estimates of of the pandemic. Predictions on impacts 30% fewer international tourist arrivals, and of the health and economic crisis vary this is just a guesstimate. It appeared during and, as agencies like the European Central the summer that this gure was much Bank (ECB) stress, reliable forecasts cannot higher. Balkan Insight’s (2020) report on be given.6 The impact of COVID-19 and its tourism in Mostar and Medjugorje (Bosnia aftermath on WB tourism will depend on a and Herzegovina) shows empty hotels and series of factors, marked by uncertainties streets in the tourism centres, and companies that can be grouped into three categories: 50 Peter Nientied, Dritan Shutina

1) the duration of the crisis (pandemic This may be correct when looking at control, travel restrictions, reactivation of Asia, but a critical factor in the European transportation, the nature of the second situation is that restarting tourism depends COVID-19 wave, etc.); 2) which government on government permissions reducing support policies are implemented (in WB travel restrictions. Moreover, WB tourism and outside WB), who will be bene ciaries, has a strong focus on sun-sea-sand mass- how eective these policies will be, and; tourism, and a quick orientation towards 3) unknown tourist behaviour in the near nature tourism is not likely. International future, depending on considerations such travel has become more uncertain and more as: consumers losing or strengthening complicated. The experience of summer their appetite for travel, and the role trust 2020 has shown that a rapid tourism will play among aspiring tourists in nations recovery will be unlikely. The world looks or regions that are tourism destinations. towards a vaccine as a solution, and this These three categories of external factors remains an uncertainty. are complemented by situational factors of destinations, such as the dependency on Ad. 2) Government Interventions – ‘Stay Home’ tourism, adequate destination governance at various levels, and readiness to adapt Restarting tourism depends on govern- to emerging tourism behaviour. Some mental decisions in various countries. comments on the three categories follow. Reopening actions were and will be gradual (EC, 2020c) and permission to organize Ad. 1) Duration of the Crisis mass-events like festivals will take time. In EU countries, national governments In the WB, tourism providers and govern- discourage international travel (EC, 2020c) ments are urged, as soon as travel and prime ministers suggest that their conditions permit, to restart tourism as the citizens stay close to home. Already in losses for national economic development, early April 2020, the Spanish government employment and businesses are severe. reportedly prepared a plan for a ‘summer Whether and how fast inbound tourism without foreign tourism’ (ABC España, can be re-established, remains to be seen. 2020) and encouraged Spanish people to At a global level tourism has not been enjoy holidays in their own country. Austria, very vulnerable to shocks (Aramberri et Germany, and the Netherlands followed al., 2017; Brouder, 2020) and tourism has a similar approach. Croatia, Greece, and grown during the last decades, except for Turkey, among others, however, were keen the 2008/2009 period of the nancial crisis. to receive international tourists (Volkskrant, The COVID-19 pandemic is the rst global 2020, Guardian, 2020) but also felt forced to disaster tourism was heavily exposed to, pose new restrictions on inbound tourism and it is unknown how the tourism sector when COVID-19 numbers increased again will develop after the shock and during the during the summer. Government policies subsequent economic and social stress. to support tourism in the WB are modest, Hall et al. (2020) constructed an overview simply because countries lack the means to with scenarios of tourism recovery with give nancial assistance to the numerous numerous factors playing a role. Their small- and medium-sized tourism rms estimate (p.12) is that (OECD, 2020).

“There will be an uneven recovery as some Ad.3) The Uncertainty of Tourism Behaviour markets will be aligned with early phases of restarting tourism. An emphasis on saving After travel restrictions are removed and local restaurants, VFR tourism to reconnect airlines and tourism providers re-activate with loved ones, essential business travel, their services, the question of tourism and parks and nature tourism where physical behaviour comes into the light. It is tricky to distancing can be accomplished, will be the sensibly forecast what tourists will opt for. focus of initial tourism revival.” During the summer of 2020, the ‘staycation’ Tourism in Transition, the Post COVID-19 Aftermath in the Western Balkans 51

(holidays in one’s own city, country, or with high tourist densities, like in Kotor’s neighbouring country) was popular, but old centre in Montenegro (if cruise tourism tourist preferences for the coming years are starts up again (Cheer, 2020)) or around more dicult to predict. Tourism behaviour Mostar’s famous bridge in Bosnia and is still not well understood in the tourism Herzegovina (if packed Italian buses return) and academic sectors (Cohen et al., 2014). still attract many tourists? Or, will visitors “.. classic models of consumer behaviour search for places with more opportunities and traditional marketing frameworks tend for social distancing? UNESCO-heritage sites, to view consumers as rational decision museums, churches, castles etc. are spatially makers. Emergent thinking views the xed and easier to manage for tourism consumer as being more multifaceted – part providers than open access attractions rational, part emotional” (Ballentyne et al., like old city centres, monuments, beaches, 2018, p.85). Bigné and Decrop (2019, p.132) public squares, and so on. In conclusion, describe postmodern tourists thus: “far from given all the uncertainties, it is extremely taking ‘rational’ decisions and behaving dicult to make sensible predictions about predictably, these consumers stray further post COVID-19 tourist behaviour. and further from traditional models and segmentation frameworks. The past 20 Tourism Resilience and Current Risks in years have seen the arrival of a chameleon the WB tourist who is omnivorous and insatiable.” Tourism behaviour can be considered as a Pleas for enhancing tourism resilience should key uncertainty in the COVID-19 aftermath; be expected. Resilience is about dealing indeed it is a question of whether and what with change and, in the eld of tourism, kind of travel will be a priority after being is linked to ecosystems and sustainability. locked at home or pursuing a staycation, It often refers to how speci c models and whether travellers can aord holidays of social-ecological systems respond to (and if so, whether they will opt for staying disturbances (Lew, et al., 2017; Butler, 2018), in their own country or continent, or make or how tourism can adapt to social, political, longer trips). Tourists’ decision making is and economic change (Cheer and Lew, an outcome of many (uncertain) factors, 2018). The Rockefeller Foundation (2020) such as: feelings of psychological safety and de nes urban resilience as “The capacity security; the role of age and family situations of individuals, communities, institutions, in decision making; experiences with businesses and systems within a city to COVID-19 in both countries of origin and survive, adapt and thrive no matter what destination; and how social distancing as an kinds of chronic stresses or acute shocks element of ‘the new normal’ is experienced; they encounter.” This broad description can among other considerations. easily be adapted to tourism destinations. Resilience is important but needs a careful Spatially speaking, COVID-19 impacts on contextualization and issues like power tourism may range from changing travel relations among actors need to be taken patterns at both a global scale and through into account (Butler, 2018, Berbés-Blázquez micro scale practices. At the global scale is and Scott, 2018). Aramberri et al. (2017, the issue of intercontinental tourism, such p.147) discuss the research literature on as Asian visitors to the WB. Regionally what tourism vulnerability and conclude that is at stake is whether the WB will attract the ‘true’ vulnerability lies at the level of the European tourists who hesitate to go to destination, and that “a destination that is destinations in Spain and Italy. At smaller more vulnerable is, in fact, one that is less scales, the question arises about whether resilient to transformations/declines in its tourist behaviour can continue in the same tourism sector.” manner as before the crisis. Answers to some questions cannot be given as yet: will With regards to resilience, the WTTC tourists look for (crowded) beaches or prefer (2019) issued a white paper on crisis to go to quieter areas? Will popular cities readiness, responses to diseases, natural 52 Peter Nientied, Dritan Shutina

disasters, political turmoil, and terrorism term developments though impacts and security-related events. It discusses can be acute. Extreme weather preparedness to mitigate the impact of conditions can cause oods or forest crises, eective management to address res and aect tourism (Filimonau and the crisis, and responsiveness to ensure a De Coteau, 2020). For the Regional Co- speedy recovery. WTTC’s nal point is to operation Council (RCC), Vuković and ‘rebuild stronger and better’ as the crisis Vujadinović Mandić (2018) prepared may provide an opportunity to rebuild more a study with an important analysis robust, sustainable, and ecient (social of regional high-risk changes, where and physical) infrastructure, and enable a potential natural disasters constitute a destination to rethink its product oering major contributor. and its target audience. “In eect, disasters may disrupt previous political and nancial - Internal risks and regional issues in roadblocks, ultimately becoming a catalyst WB are often overlooked. “Political to change the tourism product, bene ting uncertainty, credit conditions, and both citizens as well as tourists. Ultimately, macroeconomic stability are other the goal for destinations should be to key domestic risk concerns, as well bounce ahead post-crisis by designing and as weather shocks, which aect both building a more resilient system” (pp.21-22). agriculture and energy production, both Whether destinations can develop adequate of which are vital to the economies of resilience and crisis readiness to withstand the region” writes the World Bank (2019, the shocks of an occurrence like COVID-19 is p.30) about the WB. The World Bank to be doubted, as it is a global phenomenon (ibid.) stressed (before COVID-19) that aecting all destinations. Yet, destinations slower global economic development with lower tourism dependency, well- in the Europe and Central Asia region functioning governance systems that can are risks for the WB economies. But handle bad times, and a tourism disaster economic realities have changed very management system that can anticipate rapidly. At the WB level, unresolved on expected shocks will recover and renew conicts might be exacerbated by the sooner. present crisis (looking for an ‘enemy’ outside to detract attention from The main risks for crises and severe stressors national problems is a worldwide can be summarized as follows (cf. WTTC, political practice) and may impact 2017; WTTC, 2019; Filimonau and De Coteau, the willingness of WB governments 2020) as they connect to WB tourism. to collaborate on tourism. Political uncertainties and leadership issues - Health and safety, like a protracted might trigger new regional tensions. COVID-19 period, or a new virus, or a During the last decade, politicians wave of immigrants from the Middle in the WB have shown that regional East attempting to travel to EU. collaboration at the level of the six WB countries7 is arduous, hampering the - International economy: tourism desti- positioning of the WB as an attractive nations that depend on tourism are tourist destination. obviously more vulnerable. Next to dependency, the seasonality of tourism WB Tourism Transformation and narrow focus in Albania and Montenegro on not less sustainable As discussed, the near future of tourism is sun-sea-sand tourism play a role. The uncertain. Tourism behaviour is certainly economic recession could become a inuenced by the risks mentioned above, stressor for WB tourism. but many more factors play a role in tourist decision making. During the summer of - Ecology: climate change and environ- 2020, Kosovo’s citizens continued going mental disasters are gradual, longer- to the Albanian coast and Serbian citizens Tourism in Transition, the Post COVID-19 Aftermath in the Western Balkans 53

to the Montenegrin coast – since they Green. Many international institutions opt could travel by car over a short distance. for sustainability, SDGs, greening the eco- In addition, we can expect the diaspora nomy, etc., as a strategy for economic to keep coming back to their homeland recovery; for ‘getting out of this COVID-19 for family visits and personal business. crisis better.’ Business leaders, the banking They may, however, come less frequently, sector (Hepburn et al., 2020; Allen et al., depending on the economic recession. 2020) and academia share this mindset. Tourism growth is unlikely for the coming The EU President has stressed the role of years as inbound tourism from the EU and, the European Green Deal in the economic to a lesser extent, from the Far East and the recovery8 and the EC (2020a) communication Middle East regions is a question mark. If the ‘Tourism and transport in 2020 and beyond’ WB region will ‘keep on doing what it did, it states that beyond the immediate steps to will get what it got,’ but will ‘get less of it’ for bring relief, the “shared ambition should be some time to come. to maintain Europe as the world's leading tourist destination in terms of value, quality, Tourism researchers Hall et al. (2020), sustainability and innovation,” and that “At Gössling et al. (2020, p.15), Jones and the core of this new ambition is sustain- Comfort (2020), Ioannides and Gyimóthy ability, contributing to both the European (2020) and Brouder (2020), among others, Green Deal and strong communities” highlight the transformative possibilities (p.14). The UNWTO (Pololikashvili, 2020, of the COVID-19 pandemic for tourism and p.17) mentioned as early as April 2020 that its sustainability, and stress that with the “Sustainability is at the heart of our plan magnitude of the COVID-19 pandemic, for tourism’s post-COVID-19 recovery” and there is an urgent need not to return to “Now is not the time for ‘business as usual’. business-as-usual when the crisis is over. Rather, this is tourism’s time to realize its COVID-19 can be seen as opportunity to potential as a major driver of fair, equal consider a transformation of the global and sustainable economic development, tourism system that is more aligned with and both businesses and governments – the SDGs (Sustainable Development Goals). as well as individual tourists – have a role Hall et al. (2020, p.8; see also Brouder, 2020) to play in delivering this, leaving no one also warn:“COVID-19 may provide an impetus behind.” In its subsequent report (UNWTO, for individuals to transform their travel 2020c), it advises reorienting the tourism behaviours, however the transformation of value chain towards sustainability. The EU the tourism system is extremely dicult.” uses COVID-19 to implement its agenda Politicians and businesses will insist that for a more ‘green/sustainable’ society, that the tourism sector should be opened up should be the ‘new normal’ in the EU. The as soon as possible to facilitate returning EU-WB summit’s Zagreb Declaration of May to ‘normal.’ Indeed, sustainable tourism has 6, 20209 includes the point, been advocated for in the past, but did not result in major changes globally speaking “In this endeavour, a prominent role should (McCool et al., 2015). WB tourism has grown be given to the association of the region to the despite the imperfections of its tourism EU’s climate-related ambitions, in line with the products (Lehmann and Gronau, 2019) and Paris Agreement, to promoting the Green the threats on sustainability (Göler; 2018; Agenda for the Western Balkans, as well Balkania / Balkan Forum, 2017; Ciro, 2019; as to furthering the digital economy and, Nientied et al., 2017; Nientied and Shutina, strengthening connectivity in all its dimensions: 2018). But 2020 witnessed a crisis that transport, energy, digital and people-to- changes mindsets. The WB should change people, including tourism and culture,” its tourism sector if tourism wants to grow after the recovery. A ‘back to business as it in line with the EC’s support to the Western was’ mentality will lead to a loss of tourism Balkans tackling of COVID-19 and the post- in the long run because it is not 1) green, 2) pandemic recovery communication earlier WB-wide, and 3) resilient. (EC, 2020b). 54 Peter Nientied, Dritan Shutina

If WB tourism wants to retain its EU- report with guidelines for ‘disaster readiness,’ inbound tourism and thinks that tourism with useful management information. growth should primarily come from EU Resilience is about systems that aim at less countries, following the EU’s green approach disaster management. The WTO’s (2020c) would be a wise strategy. The EU’s green approach is broader and refers to the approach will inuence tourism preferences SDGs, mentioning the goal of institutional and may well reduce demand for holidays strengthening and building resilience “To in destinations with old-fashioned ‘grey’ build capacities of decision makers, tourism tourism practices that are not safe and stakeholders and the local community with a do not respect the environment and view to adapting to the post COVID-19 reality community. The WB should also have much and to strengthen institutions and multi- more concern for climate change issues as stakeholder collaboration mechanisms they are increasingly becoming a stress in the sector for the purpose of mitigating factor for WB tourism and, as indicated, the impact of the crisis and accelerating entail serious risks that can occur any time. recovery” (p.20). The following resilience principles are based on the synthesis works WB-wide. A second pillar for a tourism tran- of Biggs et al. (2015) and are intended to sition can be that WB countries develop a oer guidance for building resilience in joint WB tourism approach that remains socio-ecological systems. Berbés-Blázquez diverse and complementary across and Scott (2018) have applied them to countries. WB tourism is fragmented; six general tourism context and below they are small countries are in competition rather re ned to the WB context. than in co-opetition. Collaboration between tourism sectors in the WB countries a) Diversity and redundancy. Diversity in is currently limited; ministers express types of attractions, dierent target constructive thoughts about tourism groups, etc. is thought to increase the collaboration, some tour operators organize resilience of a socio-economic system. bus package tours for tourists and agencies This also holds for WB tourism. For implement small externally funded projects. example, the small city of Mostar (Bosnia The Regional Cooperation Council (RCC) and Herzegovina) is very dependent on implements a €5 million, EU-funded project one single attraction, its famous bridge. It to support a tourism development and has become a mono-functional tourism promotion project that creates joint and situation, leading to high vulnerability, internationally competitive cultural and crowding, and a short tourism season. adventure tourism oers in the six Western Many bus tours (many from Italy) pay a Balkan countries. However, a number of hop-o hop-on visit to Mostar. Tourists very small grants over a three-year period is visit the bridge and the market with insucient. Projects like the successful trail cheap souvenirs, drink a coee or ‘Peaks of the Balkans’10 do not garner much refreshment and move on. Mostar also follow-up by other international projects if sees a lot of day-tourism from Sarajevo, no donor funding is available. A joint tourism that is used as a base camp by tourists. strategy and a joint WB tourism website will The level of organization of Mostar’s be required. Experience has shown that WB tourism providers is low. There is no easy leaders nd it dicult to collaborate. The way out of such monoculture. Economic present COVID-19 situation puts greater diversi cation (or a greater diversity pressure on WB countries, making it time to of tourist attractions), extending the explore the bene ts of better collaboration tourism season, and keeping tourists in the eld of tourism. for overnight stay looks like an obvious recipe to move forward. However, the city Resilient. The core issue in tourism resilience and country do not have the resources is building systems that can handle shocks and have sought to bene t from tourists and stressors and regain balance (Calgaro et without investing in the future of tourism. al., 2014). The WTTC (2019) has developed a One step in this direction is to search for Tourism in Transition, the Post COVID-19 Aftermath in the Western Balkans 55

more diversity in target groups, in the much more than plain marketing. There is organisation of events, etc. Redundancy hardly any tourism intelligence and there means that components in a system is an inadequate understanding of new have overlapping functions and that trends in tourism behaviour. Responses the system will continue to thrive even in the WB to trends like sustainable and if one part of it is negatively impacted experience tourism are limited. by a sudden change. This is easier in cities, where tourism is just one of many d) Experimentation and learning. In line with functions. In the coastal city of Durrës managing slow variables and feedbacks, (Albania), beach tourism is popular, but experimentation and learning are also tourists can also go to the city centre quite limited in WB tourism. Tourism and visit the boulevard and cultural providers, sometimes in collaboration attractions. with others, do engage in incremental innovation and experimentation. b) Connectivity refers to the links between However, at the level of tourism elements of a tourism system. “The very systems, these mechanisms are weak. nature of tourism means that it requires Tourism industry associations are networks at a variety of levels, from representing industry interests rather aviation that facilitates international than developing new forms of tourism tourism to local ground transport that and innovative oerings. Linkages allows economic bene ts of tourism between the tourist industry and higher spending to disburse throughout a education are also weak and tourism destination” (Berbés-Blázquez and Scott, destination management teams that 2018, p.17). Moreover, connectivity also could foster learning are absent or applies to IT, whether connections limited to marketing and information are smooth, safe, and stable. Road activities. Research on and learning from connectivity between the six WB EU tourism patterns is limited to the countries is slowed down by border copying of success formulas (especially customs, and discussions about easing when investments are small). travel across their territories have not yet led to many results. f) Participation and polycentric governance. In resilience thinking, the process of c) Managing slow variables and feedbacks. bringing together diverse stakeholders Slow variables give insight into the - including citizens and experts - leads dynamics of a system. A fast variable for to overall better decision making. tourism is the ongoing tourism numbers; Governance assumes that units act with for example, it is easy to monitor tourism a certain degree of independence from arrivals on a monthly or annual basis and one another while maintaining linkages make projections about future growth. both horizontally (e.g. between units Slow variables in a tourism system include working at the municipal level) and the diverse and evolving preferences of vertically (e.g. between units working at tourists, for instance. They are harder to municipal, regional, and national levels). gauge but ultimately shape the number Both participation and governance are of arrivals over time. Management of slow weakly developed in the WB in general, variables is near absent in WB tourism, as and in WB tourism in particular. Nientied the tourism approach has been based on and Shutina (2018) have discussed the tourism business development in known case of Albania, for instance. In Albania, segments (beach, cultural assets) and destination management organizations some tourism service development (such are not functioning well,11 resulting in as activities in mountain areas, guided serious challenges related to a total lack tours). The understanding of the many or poor cooperation between various niche markets is quite limited. Managing stakeholders. This impedes them from social media by tourism providers is not tackling important issues such as: 56 Peter Nientied, Dritan Shutina

seasonality and limited development development in a better direction compared of o-season tourism products; weak to the ‘gold rush’ tourism witnessed tourism infrastructure; inadequate during the last decade in the WB. Vargas- maintenance of facilities; missing Sánchez and Moutinho (2018) add to Del databases on local and regional tourism; Valle’s assessment by discussing strategic weak local and regional branding and developments in tourism. They conclude marketing; and environmental issues (p.332) that “... the market share approach is that are rarely considered in tourism dead, and it has been replaced by a dierent investment decisions (cf. Risi, 2017). one based on value share,” and (p.333) In other WB countries, the situation is “The key for marketeers in tourism rms is comparable. to stop talking about themselves and their products, and to start listening to what Improving tourism resilience along the people are talking about and are passionate lines of these system components is about, and sharing and facilitating those challenging. Political and power issues passions.” Many others advocate for changes play an important role. The WTTC (2019) in tourism systems and solutions have been stresses that destination governance built formulated (e.g. Woods, 2017), but such on trust-based coalitions is a requirement developments are slow and depend on for resilience. Such coalitions are needed tourist preferences (McCool et al., 2015). for crisis preparedness. In the WB however, Sigala (2020) has listed many paradoxes in citizens as stakeholders are left out of post COVID-19 tourism and made detailed decision making, with rare exceptions (Ciro suggestions for a new tourism research et al., 2019). agenda (cf. Zenker and Kock, 2020).

Final remarks Forward thinking in terms of a tourism transition is not likely to be a top priority for Del Valle (2020) anticipates that the most important stakeholders in WB tourism COVID-19 aftermath will enhance the when managing COVID-19’s immediate appearance of new tourism consumption impacts requires all their attention. habits. He stresses the issue of increased Thinking about lessons to be learned environmental and social awareness, where from the COVID-19 crisis and reecting on consumers’ concern for sustainability and and preparing for new shocks demands a social issues will continue, reinforcing the longer-term perspective and a helicopter importance of environmental and social view. Current attempts to revive tourism governance. Del Valle (ibid.) also states that require a shorter-term perspective and ethics will be as important as aesthetics action-orientation. In such situations, longer (beauty of destinations), as consumers will term plans do not align with this perceived give priority to destinations that respect urgency. Yet, few people believe that the the environment, low-pollution transport, matter is only recapturing the 2019 number etc. Del Valle’s is one of many informed of tourists, especially when the COVID-19 opinions and, like any prediction, it is pandemic continues to play an important dicult to assess whether he will be right. role and wleads us closer to a ‘new normal.’ Romagosa (2020, p.693) remarks “In brief, The issue is whether a destination takes all stakeholders, including us as researchers, into account the fact that tourism demands have a task of great responsibility: to help after a crisis may change along with what redirect tourism - from the point of view of a destination can and wants to oer. both supply and demand - towards a truly One task for academics and consultants sustainable and resilient pro le that is t is to discuss with governments and for a future that is constantly changing and stakeholders in the tourism sector to further full of new challenges.” Indeed, the point elaborate transition plans with scenario’s at stake is not being right as an observer incorporating sustainability, resilience, and or researcher, but also having the role of internationalisation. a practitioner, who pushes future tourism Tourism in Transition, the Post COVID-19 Aftermath in the Western Balkans 57

Notes 9. https://www.consilium.europa.eu/ en/press/press-releases/2020/05/06/ 1. https://www.consilium.europa.eu/ zagreb-declaration-6-may-2020/ en/press/press-releases/2020/05/06/ zagreb-declaration-6-may-2020/ 10. https://akzente.giz.de/de/artikel/neue- zeitrechnung 2. By Winston Churchill. Rahm Emanuel, senior advisor of former president 11. This is the subject of a Polis University Obama, shared “You never want a / Co-PLAN tourism study on tourism serious crisis to go to waste. And what destination governance (Nientied and I mean by that is an opportunity to do Ciro, 2019) things that you think you could not do before.” Emanuel is often quoted these days by various commentators who see Covid-19 as grounds for stressing that societies should change in a – what References is now believed to be – deglobalizing ABC España, 2020. El Gobierno Prepara el world. Escenario de un Verano sin Turismo Exterior por el Coronavirus. [Online] available at: 3. See https://www.theguardian.com/ (https://www.abc.es/espana/abci gobierno- environment/2020/may/07/world- prepara-escenario-verano-sin-turismo- cannot-return-to-business-as-usual- exterior-202004082310_noticia.html. after-covid-19-say-mayors for more [Accessed 11 April 2020]. examples and background. Alkier, R., Milojica, V. and Roblek, V., 2015. A 4. https://www.washingtonpost.com/ Holistic Framework for the Development of travel/2020/05/06/city-is-ours-again- a Sustainable Touristic Model. International how-pandemic-relieved-amsterdam- Journal of Markets and Business Systems, overtourism/ and https://www politica 1(4), pp. 366–387 .lavanguardia.com//20200511/48110235 6191/diputacion-y-ayuntamiento- Allan, J., Donovan, C., Ekins, P., Gambhir, impulsan-santa-susanna-como-destino- A., Hepburn, C., Robins, N., Reay, D., sostenible.html Shuckburgh E. and Zenghelis, D., 2020. A Net-zero Emissions Economic Recovery from 5. Such predictions are hard to make. C. COVID-19. University of Oxford, The Smith Lagarde mentioned during the ECB School of Enterprise and the Environment Governing Council press conference of (SSEE), Smith School Working Paper 20-01 April 30, 2020, that the economy of the EU zone would probably shrink by 5% Aramberri, J., Sharpley, R. and Jenkins, to 12%. Such a margin looks like a better C.L., 2017. Tourism’s Invulnerability: Lies, indication of the impact of the economic Damn Lies and Statistics. In V.S. Singh (Ed.) recession. Challenges in Tourism Research. Bristol, Channel View Publications, pp. 135-160. 6. See https://www.ecb.europa.eu/pub/ economic-bulletin/focus/2020/html/ Balkan Insight, 2020. Bosnia’s Tourist ecb.ebbox202003_01~767f86ae95. Hotspots Count Losses from Pandemic en.html ‘Catastrophe’. [Online] available at: https:// balkaninsight.com/2020/07/24/bosnias- 7. The non-member states: Albania, Bosnia tourist-hotspots-count-losses-from- and Herzegovina, Kosovo, Montenegro, pandemic-catastrophe. [Accessed 6 August North Macedonia, and Serbia. 2020].

8. See https://www.youtube.com/watch?v Balkan Insight, 2019. UNESCO Warning =lR7VJrFb754 for a discussion. Jolts North Macedonia Tourism Hotspot. 58 Peter Nientied, Dritan Shutina

[Online] available at: https://balkaninsight. Calgaro, E., Lloyd K. and Dominey-Howes, D., com/2019/05/24/unesco-warning-jolts- 2014. From Vulnerability to Transformation: north-macedonia-tourism-hotspot/. a Framework for Assessing the Vulnerability [Accessed 15 June 2019]. and Resilience of Tourism Destinations. Journal of Sustainable Tourism, 22(3), pp. Balkan Insight, 2017. Uncontrolled 341-360. Tourism Threatens Balkan UNESCO Sites. [Online] available at: https://balkaninsight. Ciro, A. 2019. Tourism Governance in Albania. com/2017/04/17/uncontrolled-tourism- An Assessment of the Policy Framework threatens-balkan-unesco-sites-04-13-2017/. for the Tourism Sector in Albania. Annual [Accessed 15 June 2019]. Review of Territorial Governance in the Western Balkans, I, pp. 69-85. Balkania / Balkan Forum, 2017. Research on Tourism in the Western Balkans. Skopje, Ciro, A., Toska, M. and Nientied, P., 2019. Balkan Forum. Social Innovation and Sustainable Economic Development: Participatory Tourism Ballentyne, R., Moutinho, L. and Rate, S., Destination Management. In M. Finka, M., 2018. Consumer Behaviour in Tourism. Jaššo, M. and M. Husár (Eds.) The Role of In L. Mountinho and A. Vargaz-Sánchez the Public Sector in Local Economic and (Eds.) Strategic Management in Tourism. Territorial Development – Innovation in Wallongford OX, CABI, pp. 73-86. Central, Eastern and South Eastern. Europe. Cham, Springer, pp. 173-192. Berbés-Blázquez, M. and Scott, D., 2017. The Development of Resilience Thinking. In Cohen, A.A., Prayag, G. and Moital, M. 2014. Butler (Ed.) pp. 9-22. Consumer Behaviour in Tourism: Concepts, Inuences and Opportunities. Current Issues Biggs, R., Schlüter, M. and Schoon, M.L. in Tourism, 17(10), pp. 872-909. (Eds.), 2015. Principles for Building Resilience: Sustaining Ecosystem Services in Social- Cheer, J.M. and Lew, A.A., (Eds.), 2018. Ecological Systems. Cambridge, Cambridge Tourism, Resilience and Sustainability, University Press. Adapting to Social, Political and Economic Change. Abingdon, Routledge. Bigné, E. and Decrop, A., 2019. Paradoxes of Postmodern Tourists and Innovation in Del Valle, A.S., 2020. The Tourism Industry Tourism Marketing. In E. Fayos-Solà and and the Impact of Covid-19, Scenarios C. Cooper (Eds.) The Future of Tourism, and Proposals. Madrid, Global Journey Innovation and Sustainability. Cham, Springer Consulting. [Online] available at: https:// Nature, pp. 131-154. worldshoppingtourism.com/en/the- tourism-industry-and-the-impact-of- Brouder, P., 2020. Reset Redux: Possible the-covid-19-scenarios-and-proposals/. Evolutionary Pathways Towards the [Accessed 19 April 2020]. Transformation of Tourism in a COVID-19 World. Tourism Geographies, EC (European Commission), 2020a. Tourism rst published 6 May 2020, DOI: and Transport in 2020 and Beyond, Brussels, 10.1080/14616688.2020.1760928 EC, COM(2020) 550 nal, 13.5.2020.

Bučar, K., 2017. Green Orientation in Tourism EC (European Commission), 2020b. of Western Balkan Countries, In S. Renko Support to the Western Balkans in tackling and A. Pestek (Eds.) Green Economy in COVID-19 and the post-pandemic recovery the Western Balkans. Bingley BD, Emerald Commission contribution ahead of the EU- Publishing, pp. 175-209. Western Balkans leaders meeting on 6 May 2020. Brussels, EC, COM(2020) 315 nal, Butler, R.W. (Ed.), 2018. Tourism and 29.4.2020. Resilience. Wallingford OX, CABI. Tourism in Transition, the Post COVID-19 Aftermath in the Western Balkans 59

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Universities and Socio-cultural Institutions in Highly Uncertain Contexts: Challenges and Opportunities during COVID-19 in three Western Balkan Countries Ledio Allkjaa, Esmerina Hidrib

Summary

The spread of the COVID-19 pandemic has posed serious challenges to the territorial governance of social services across the globe, as well as in the Western Balkans (WB). SARS-CoV-2, being a virus that primarily attacks the respiratory system and spreads through breathing or close contact has required governments to apply strong policies of physical distancing. Schools, libraries, museums, and other socio-cultural services closed and are now gradually re-opening. Because of the distancing policies, several initiatives were taken to quickly shift these services online. These initiatives, though temporary as a result of the crisis, may pose interesting prospects for future policies in terms of increasing the resilience of these services as well as institutionalizing new ways, norms, and practices of doing things.

This paper investigates the dierent policies and practices that were applied in WB countries in the university and cultural sector through a desk study. The cases presented are based on ocial documents, websites, and social media pro les of the representative institutions in Albania, Kosovo, and North Macedonia.

Keywords: COVID-19, Uncertainty, Universities, Cultural Sector, Western Balkans

Contact a [email protected] (Corresponding author) b [email protected]. Co-PLAN, Institute for Habitat Development, Tiranë, Albania 62 Ledio Allkja, Esmerina Hidri

Introduction the winter months looming closer the is still great uncertainty regarding the conduct of What started as a novel coronavirus (SARS- these sectors in the near future. CoV-2) outbreak in Wuhan, China has now developed into a global pandemic, The COVID-19 pandemic has increased dubbed COVID-19. The virus has spread to the importance of adaptive planning and 217 countries and territories worldwide, resilience in territorial governance discourse. infecting over 54,000,000 and has cost The unknowns and uncertainties associated the lives of more than 1,300,000 people with the evolution of the pandemic are (WHO, 2020)1. This is primarily a respiratory high and no clear answer can be given infection transferred via droplets and able regarding its duration, the time it will take to survive on multiple surfaces for several to develop a vaccine, and its success. This is days. testing governance capacities at all levels in attempts to adapt to the situation. On the The widespread eects of the pandemic one hand, debates regarding the health prompted many countries to develop new sector and the economic recovery after rules and restrictions to maintain social the pandemic are highly elaborated in distancing, such as pausing mass gathering the media. On the other hand, the socio- activities, as well as closing schools, cultural and education sectors often get museums, libraries, and several other less attention, even though these two (indoor) facilities. The COVID-19 outbreak sectors are related to development. The has also aected Western Balkan countries, OECD (2020) highlights the impacts that based on World Health Organization (WHO) the COVID-19 crisis poses on WB countries data. All countries have placed similar not only in terms of the economy, but restrictions on activities with the aim of throughout all sectors including education, increasing social distancing. This has also tourism, healthcare, digitalisation, and been conditioned by the challenges that employment. The pandemic is expected the low development of the health sector to pose serious challenges considering faces in the WB (Matković, 2017). Hence, the level of development and the adaptive tertiary education institutions, museums, capacity of these sectors in the WB region. and libraries all closed for at least two months beginning in March 2020. Most With the removal of restrictive measures in of these services had to adapt to the new WB countries, the number of people aected circumstances and transfer some of their by COVID-19 has drastically increased. activities online, while others tried to further Currently, there are general guidelines and support existing online services. Following protocols (MASR and ASCAP, 2020) for a two-month period, between March-May, the (partial) reopening of the education the activities started to slowly re-open in all sector in general and for universities countries of the Western Balkan. speci cally. With regards to universities, the ministry is providing recommendations to The pandemic’s situation remains uncertain continue with online teaching but allowing and so do the directives on education universities to issue their own guidelines. and cultural activities. The changes in Concerns remain high regarding health and the performance of the system (and the safety in the auditoriums and the quality backtracking) reect the immense pressure of service. The same concerns relate to from the continuously growing numbers the socio-cultural sectors. The spread of of COVID-19 cases. Both the university COVID-19 has placed several pressures on and cultural sectors in the three countries the above-mentioned sectors. At the same were shut down in the initial phase of the time, these pressures can be considered as pandemic and are now faced with the an opportunity to improve services. challenges of reopening their activities. While all three countries tried to loosen This paper analyses the responses to the measures during the summer months, with pandemic for the tertiary education sector Universities and Socio-cultural Institutions in Highly Uncertain Contexts: Challenges 63 and Opportunities during COVID-19 in three Western Balkan Countries and the socio-cultural sector through a captures a moment in time, i.e. the comparison of selected cases from Albania, timeframe between March and November Kosovo, and North Macedonia. For each 2020. Additionally, the considerations in this country, the analysis has focused on two paper are important in light of the prospect universities, the national museums, national of COVID-19 continuing into the autumn art galleries, and national libraries in order and winter of 2020-2021. for the comparison to be coherent. This is a rather limited sample aimed at developing COVID-19 Situation in the Western an understanding of trends and practices. Balkans Furthermore, online, semi-structured interviews ensured limited feedback, In Albania, North Macedonia, and therefore most of the analysis is based on a Kosovo, the trend of the virus’ spread review of activities published on the ocial has deteriorated between June and websites of the institutions and their main November 2020 compared to the period channels of communication in social media. between March and May 2020, mainly due This is a preliminary attempt to understand to reopening activities. These trends can some of the practices implemented during also be seen in the ratio of infected cases and soon after the pandemic’s restriction, against the numbers of tests conducted and the possibility for these activities to be where, in Kosovo, around 24,44% tests extended into the future. It is important to returned positive; in Albania, around highlight that the COVID-19 situation is still 17,88 %; and in North Macedonia, around evolving, with high levels of uncertainty 16,10%. regarding its spread. Hence, this paper

Figure 1. Trend of infections against number of tests in three countries

Source: Authors, based on WHO data.

In all three countries, the number of Figure 2 provides an overview of daily infections has doubled and the number of infections between March and November fatalities is also considerably higher when 2020 based on the data referred to WHO, comparing the February-to-May gures to followed by short country descriptions. the ones from June-to-November. 64 Ledio Allkja, Esmerina Hidri

Figure 2. COVID-19 daily cases in three countries

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Source: Authors, based on WHO 2020 data. 2

Albania cases, based on reports from the Ministry of Health and Social Protection. Between June The rst COVID-19 case in Albania was 12 and November 15, 2020, numbers have registered on March 9, 2020. Since then, almost tripled, with over 27,000 recorded the government of Albania has developed cases and over 600 casualties (World Health a series of legal acts3 by declaring the state Organization (WHO), 2020). Compared to of natural disaster for one month over the the initial stage, when the pandemic spread whole territory and then extending it for two mostly in high-density urban areas, there more months, which restricted all activities is now an evident increase in smaller cities until May 18, 2020. From March 9, 2020 and rural areas (Ministry of Health and until November 15, 2020, Albania recorded Social Protection of Albania, 2020b). 27,830 cases and 623 deaths (World Health Organization (WHO), 2020). Most cases have North Macedonia been registered in Tirana and the main cities such as Durrës, Fier, Shkodër, Lezhë, Korçë, North Macedonia con rmed its rst case and Vlorë, while in other parts of the country on February 26, 2020. 47,050 cases and there have been fewer cases (Ministry of 1305 deaths were recorded between March Health and Social Protection of Albania, 9, 2020 and November 15, 2020 in North 2020). The rst measures implemented Macedonia (World Health Organization immediately after the con rmation of the (WHO), 2020b). At the beginning of the rst cases included the suspension of travel outbreak, the government closed all to and from northern Italy. Then, with a schools, educational institutions, cultural special decree4, the government ordered premises, restaurants, and non-essential for the closure of all educational institutions stores. Only food stores, pharmacies, (public and private) for two weeks. All and stores allowing sucient physical sporting, cultural events, and other large distancing remained open. Starting on May public gatherings were cancelled for a 8, 2020, some shops were authorized to period of three weeks. As the number of open, provided they had the infrastructure con rmed cases increased, the government to maintain sucient physical distance decided to implement almost complete between customers. On May 13, 2020, the curfew hours for the entire country, giving government decided to allow shopping health authorities a chance to better malls to open under strict sanitary monitor the suspected cases. However, since conditions. By decision of the government, most of the restrictions have been lifted shops are mandated to maintain strict again, COVID-19 cases have quickly spiked sanitary rules, such as distancing, use of with a daily mean rate of 597 new recorded hydroalcoholic gel dispensers, and masks Universities and Socio-cultural Institutions in Highly Uncertain Contexts: Challenges 65 and Opportunities during COVID-19 in three Western Balkan Countries for employees for at least 200 days following COVID-19 and Universities7 the end of the state of emergency. The state of emergency was declared, on May 13, In all three countries, as soon as the rst 2020, with a government decree to impose ocial case of infection was declared, higher it. Similarly, to Albania after the re-opening education activities in auditoriums were of activities, North Macedonia has shown a suspended, as per government orders.3&6 The drastic increase in new recorded cases and quick and abrupt halt, combined with the casualties. From June to November 2020, uncertainty of the length of the lockdown the number of recorded cases has increased (Figure 3), posed a serious challenge to 47,050 with 1305 casualties (World to universities in terms of nishing the Health Organization (WHO), 2020b). This academic year and oering their services to abrupt increase in numbers has obliged the students. In Albania, compared to Kosovo government to go back to more restrictive and North Macedonia, the challenge was measures. even greater as the academic year had already been disrupted for a month in the Kosovo main universities, due to the November 26, 2019 earthquake hitting the Tirana-Durrës In Kosovo, the rst con rmed case of region. In addition to classrooms and other COVID-19 was registered on the March 13, facilities, student dormitories were not 2020. From March 13 to November 15, 2020 accessible across the three countries. Kosovo has recorded 29,805 cases and 883 deaths (World Health Organization (WHO), Nevertheless, and amid the uncertainties 2020c). On March 12, 2020, the government of the time, universities demonstrated created the Special Commission for the a quick response to the situation. In the Prevention of Infection from COVID-19 on six universities under study, all classroom behalf of the Government of the Republic activities were shifted online. None of these of Kosovo5. Initial measures included universities oered any online classes prior milder restrictions for public activities, to COVID-19, and hence the change was public gatherings, and businesses, though sudden and quickly became a new norm. refrained from shutting them down All universities, initially, used free platforms completely. The only suspended categories for their online classes such as Skype, ZOOM, were schools6 and public events (instructed Webex, Gotomeeting, and Google Classroom, to be held without public audiences). among others. These platforms also quickly Measures progressively became stricter evolved to improve their services and oer until the beginning of June. In the period more user-friendly interfaces and security between June 2020 and August 2020, with features suitable to online teaching. the reopening of activities and the border, Kosovo registered an increase in rates of Online lectures initially seemed like a infections and casualties. Especially in late temporary solution to the situation. July, the average number of new daily cases However, with the evolution of the pandemic recorded was 282, followed by an enormous and prolongation of quarantine, it became increase of infections on late October (418 clear that online teaching would last longer new daily cases) and November 15, 2020 than initially planned. Thus, universities also with 501 new daily cases (World Health had to adapt for the examination period Organization (WHO), 2020c). Casualties and oer other services online. In terms from COVID-19 have escalated as well, of exams, there was a general attempt to reaching 833. These increases are putting change curricula, where possible, in order signi cant pressure on the health sector to avoid in-person exams while ful ling while the government contemplates the module requirements through project- implementation of new restrictive measures. based course works and essays. Meanwhile, for modules that could not be assessed through coursework, exams were held. 66 Ledio Allkja, Esmerina Hidri

Figure 3. Reopening phases for Universities in Albania, Kosovo, and North Macedonia vis-à-vis number of daily infection.

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0 20-Jan-20 10-Mar-20 29-Apr-20 18-Jun-20 7-Aug-20 26-Sep-20 15-Nov-20 Albania Infection Cases Kosovo Infection cases North Macedonia Infection Cases

Source: Authors, based on WHO data

In Tirana, a mixed approach was applied the current situation. All of the universities and some universities postponed exams. have online systems where students can In September, a third semester was added view their timetable, grades, and conduct by some universities as an additional other administrative functions. However, opportunity for students to hold more this situation has created the pre-conditions consultations with their professors. for universities to quickly grow their online Meanwhile, exams were conducted in services. a hybrid fashion, combining in-person exams with online ones depending on class Universities in all three countries have size, facilities to conduct exams, and the extended their online presence and typology of the subject. For in-class exams, activities. There is a general tendency universities applied a partial re-opening for online webinars, talks, and digital under strict rules of distancing. In Pristina, conferences during this period. Additionally, exams were conducted in person. Students there are some eorts to establish online were required to wear facemasks and help-lines in order to support students with gloves throughout the entire exam period. queries. At the same time, however, these Additionally, students were checked at the eorts have yet to fully address issues such entrance for fever and asked whether they as inclusivity and equity due to the scarcity had any COVID-19 symptoms. Meanwhile, of resources, geographical location, limited in Northern Macedonia, although there was infrastructure, and inadequate availability a general attempt to open the sector and of online learning content. conduct in-person exams, the increase in the number of registered COVID-19 patients In Albania, the new academic year was in June obliged universities to rethink their expected to begin on November 2, 2020, position and shift all exams online. for public universities, while other private universities had begun the academic year It is important to highlight that prior earlier. The universities were expected to to the COVID-19 pandemic none of the start their academic year in hybrid mode. universities had established procedures for It was left to the discretion of academic online submissions or examination. This institutions to decide on the combination fact helps explain their quick response in of in-class and online activities. However, Universities and Socio-cultural Institutions in Highly Uncertain Contexts: Challenges 67 and Opportunities during COVID-19 in three Western Balkan Countries

Figure 4. University activities during COVID-19

Exams Country Online Online Online PhD with Strict Online Classes Exams Procedures Library Albania 3 3 3 3 2 Kosovo 3 3 3 3 2 North Macedonia 3 3 3 2 2

Source: Authors, based on data from university websites. on October 29, 2020, with the number COVID-19 and Socio-cultural Services of infections increasing, the Ministry of Health and Social Aairs announced that Along with universities, social and cultural universities would conduct all of their services such as museums, art galleries, activities online for a period of one month and libraries are among the most aected to evaluate the evolution of the situation. by this crisis. The sudden closure and lack of online access caused an absence of In Kosovo, the rectors of seven public services for citizens and a loss of revenues universities decided that the new academic for institutions. year 2020/2021 would begin in October. In Kosovo, universities are operating in a Libraries are an essential institution for hybrid mode. Classes have been moved students and the general public. In all three online, while laboratory-based activities are countries, all national libraries were closed being conducted in-person, with restricted and remain closed so for in-venue use numbers and in smaller groups. Meanwhile, due to the increased number of COVID-19 in North Macedonia, the new academic year cases. In Kosovo, the National Library 2020/2021 will start with online lessons and switched its services for the application no in-class activities. for ISSN/ISBN online8. These services were conducted through email communication. Switching to online education brought Meanwhile, the library oers a number of along some challenges, such as: quality online resources, primarily through links assurance of lecturing and exams; limited to other institutions such as the OECD number and access to free online libraries; library, IMF, Albano-logic Portal, as well as the absence of practical and lab work; the resources from Edward and Elgar Publishing impossibility to ful l tasks that require eld (National Kosovo Library, 2020). The Albano- work; proactive engagement of students logic Portal is oered in collaboration with in self-taught learning processes, which the Albanian National Library in Tirana. require strong free will and responsible Similarly to the Kosovo National Library, the behaviour; and eective online classroom Albanian National Library oers a limited management. These challenges could not number of services online, namely an be fully addressed in the short-term and online cataloguing service for nding books require innovative thinking towards new or other publications. Nevertheless, the ways and methods of teaching and learning. number of online, accessible publications However, innovation takes time and is very limited. Another service that has systemic challenges such as a procedural shifted online is the handling of requests for or methodological obstacles, infrastructural registering in the national library system.9 aspects, inclusive access, and sta capacity The St. Kliment Ohridski National and will continue to aect any long-term University Library in North Macedonia was strategy. also closed during the COVID-19 period. However, it is dicult to assess the operation 68 Ledio Allkja, Esmerina Hidri

of the library during the pandemic as there is Nevertheless, the closure of the museum, as no ocial (functional) website. Hence, in the well as the low number of foreign tourists in absence of a working website and content Albania, may pose a challenge in terms of on its social media page, it can be assumed the institution’s nances. that the services oered by the national library were limited. In all three countries, The National Museum of Kosovo was closed the COVID-19 pandemic found these key during the pandemic between March and national institutions unprepared and facing June 2020. The museum does not have an remarkable challenges to shift their services ocial (functional) webpage. This makes it online. After the isolation period, in all three dicult to assess the online services that countries, the national libraries reinitiated were oered to the general public. The only the lending of books without allowing the online channel of communication with the use of their facilities. public during the pandemic was the ocial social media page (National Museum of National museums and national art galleries Kosovo, 2020). Compared to the National also experience the COVID-19 crisis as Museum of Albania, the museum in Kosovo a risk to their sustainability. In Albania, did not oer any virtual, 3-D tour platforms. the National Historic Museum and the Nevertheless, the museum oered a series National Art Gallery were closed with the of videos regarding dierent exhibitions in outbreak of the pandemic in the country. the museum on its Facebook page during Both institutions are public and are usually the pandemic. A similar approach was funded from the government budget and also taken by the National Art Gallery in through entrance fees. The National Historic Kosovo. The Facebook page was its main Museum and the National Art Gallery had communication channel with the general an online 3-D tour service prior to the public during the COVID-19 lockdown pandemic, which was developed through (National Art Gallery of Kosova, 2020). A a European Project (Ministry of Culture series of virtual, 3-D tours were organized on of Albania, 2020a; 2020b). Hence, during speci c exhibitions such as “Onufri Remade” the pandemic, this service was promoted and “Home+” by Muslim Mulliqi. Both of further. Additionally, the National Historic these exhibitions were developed last year, Museum launched a series of online in 2019, and afterwards were published as campaigns between March and April 2020, 3-D tours during the pandemic lockdown. i.e. short informative tours of the museum Additionally, the National Art Gallery posted focused on dierent themes and children’s dierent paintings on its Facebook page activities such as “build your own mosaic,” to promote the work of dierent artists. as well as some online webinars (National Although the ocial website of the gallery Historic Museum of Albania, 2020). Similarly, was functional, no services were oered the National Art Gallery promoted the online through this medium. existing, online 3-D tour service10 through social media (mainly Facebook). However, The National Museum of North Macedonia unlike the National Historic Museum (which was also closed amid the pandemic. Looking attempted to develop some dedicated at the ocial website, no online services campaigns during COVID-19), the National were provided between March and May Art Gallery did not develop any. The gallery 2020 (National Museum of the Republic of did increase its presence on social media, North Macedonia, 2020; National Museum though most of the posts were YouTube of the Republic of North Macedonia, videos developed by other artists. Thus, it 2020b). Its ocial social media channels contributed to sharing certain debates or were not updated and were not utilized discussions in the art sector, not tailored from February onward. Like the National to the context. After the spring isolation Museum, the National Art Gallery did not period, the national Gallery reopened under oer any online services through its website strict rules and protocols and allowing or social media accounts (National Art only a limited number of visitors at a time. Gallery of the Republic of North Macedonia, Universities and Socio-cultural Institutions in Highly Uncertain Contexts: Challenges 69 and Opportunities during COVID-19 in three Western Balkan Countries

2020; National Art Gallery of the Republic of in some cases) of these services to online North Macedonia, 2020b). modes requires dierent alternatives to access art and culture. In all three countries, The above situation is characterised by the the reopening phase for the cultural sector challenges of weak or absent online systems, took place between May and June 2020 a lack of other alternatives to providing with restrictive measures to respect social services, and inadequate infrastructures distancing. This sector is facing a “new to do so. As art galleries and libraries are normal” without a proper plan if another usually enjoyed and used through physical lock-down occurs. presence, the transition (or the absence

Figure 5. Reopening phases in Albania, Kosovo, and North Macedonia vis-à-vis number of daily infections

Source: Authors, based on WHO data

Currently, all cultural activities are being several uncertainties regarding the future. reopened under strict rules. There are a Education and socio-cultural institutions are limited number of people who can take part also signi cantly impacted by the pandemic in these activities and a limited number of and will continue to be impacted depending visitors that can enter the institutions at on how the situation evolves. once. With the new academic year commencing in Discussion and Conclusions November 2020, the approaches across the three countries vary from hybrid learning This paper has oered a preliminary in Kosovo, to full online learning in North overview of the current situation in three Macedonia, and a mixture of hybrid and WB countries – Albania, Kosovo, and North fully online learning in Albania (depending Macedonia – in terms of the pandemic’s on the institution). So far, general rules eects on key socio-cultural and academic and protocols have been prepared by institutions. The investigation was based the respective ministries in each country. primarily on ocial documents, websites, Nevertheless, the code of conduct is at the and the social media pro les of the discretion of each university. Compared to respective institutions in each country. The socio-cultural sector activities, the academic current COVID-19 gures in Albania, Kosovo, sector was quick to shift its teaching and North Macedonia show upward trends, activities online. Although this is not the putting the health sector to test and raising best option for academic subjects that are 70 Ledio Allkja, Esmerina Hidri

lab-based, several subject areas have been Based on these preliminary ndings, a series transferred online. There are no current, of recommendations can be put forward: structured studies to assess the successes and acceptance of online teaching and - It is important to conduct a thorough learning from sta and students. Universities and complete analysis on the impact have adopted mixed approaches to conduct of the pandemic in the higher examinations. In some cases, there have education sector. Such an analysis been in-person exams while in others, could be survey-based and focus on exams have been conducted online. These the academic and research process, new exam procedures have aected end and on students and sta adaptation. of year exams for bachelor and master This is extremely important in order students, as well as PhD defences. One of to understand current dynamics as the main pitfalls of the university sector in well as oer adequate policy options all three countries, however, is the low level considering the uncertainties of the of electronic library resources oered. This is future a hindrance for research and compromises access to high quality, reliable, and - Universities need to work towards trustworthy resources for students. digitalizing their libraries and oering tailored access solutions to their This lack of electronic university resources is students. This is not a short-term exacerbated by the lack of services oered consideration but rather a detailed by the national libraries of each country. The program of digitalization and access to information on their respective websites online resources should be developed. was quite limited, while the number of The extent of digitalization and online electronic volumes available is very low. services should be carefully assessed As a result, students and citizens who wish regarding long-term implications, and to access books, archives, or other types should not be seen as a substitute for of publications cannot do so unless the the current, traditional, or conventional institutions housing them are open. practices but as complementary. Hence, the question in this case should The national galleries and museums not be how to switch to online services, have been slow to react to the COVID-19 but rather how online services can add pandemic. Only in the case of Albania, due value to existing practices. to a prior project, were virtual, 3-D tours oered for the national museum and the - Universities have a great opportunity national art gallery. Meanwhile in Kosovo, with the upcoming ERASMUS +, only two exhibitions from last year were Horizon Europe, and other funding oered through a virtual, 3-D tour service. In schemes to make great leaps forward North Macedonia, no services were oered with regard to technology and online online. resources. This poses a particularly great opportunity following the new This demonstrates that the sector was highly EU Green Deal, where economic unprepared to respond to a pandemic and recovery from COVID-19 is envisaged their services will continue to be under to be coupled with actions on climate pressure in case of a future lockdown. The change and the environment. current conditions are a challenge not only in terms of the services these type of - National Libraries, need to upgrade institution oer but also regarding their their services. This is evident in all income. National museums and art galleries three countries. They need to develop are dependent on entrance fees for part of a digitalization plan or programme. their income; hence we can expect their Libraries too can be an active part of budgets to be severely lower in the near EU funding schemes or other donor future. programs. Universities and Socio-cultural Institutions in Highly Uncertain Contexts: Challenges 71 and Opportunities during COVID-19 in three Western Balkan Countries

- National Museums, especially in North systems requires an integrated approach Macedonia and Kosovo, need to invest where social aspects, which also include more in terms of online, 3-D tours. Such education and cultural formation, constitute tours are a great service for reaching a factor of outmost importance. younger generations as well as promoting their respective countries Notes to foreigners. The digitalization agenda should also take in consideration 1. Figures are based on World Health services that can be oered through Organization data retrieved on payment. November 15, 2020.

- In the long-term, the education and 2. https://covid19.who.int/region/euro/ socio-cultural sectors should increase country/al; https://covid19.who.int/region/ their attention towards Disaster Risk euro/country/xk; https://covid19.who.int/ Reduction (DRR). These policies need region/euro/country/mk. to be mainstreamed in these sectors, especially when considering that the 3. Decree, No. 243, dated 24.3.2020. future challenges in terms of climate change will require further adaptation. 4. Decree, No. 91, dated 9.3.2020

These are only a few short-term 5. Decree no. 01/08, dated 12.3.2020. recommendations that come as a result of this preliminary study. From a research 6. Decree no. 01/07, dated 11.3.2020. perspective, it is important to assess the 7. Universities taken into consideration impact of the pandemic in both sectors were: Polis University and Polytechnic addressed in this paper. An important aspect University in Albania; the American for all institutions is the mainstreaming University of Kosovo and University of of DRR policies in their activities. These Prishtina in Kosovo; and “Mother Teresa” practices are limited in the WB context, as University and Ss. Cyril and Methodius most institutions only focus on a response University in North Macedonia. in the case of an emergency. Usually, these practices focus on evacuation protocols, but 8. https://www.biblioteka-ks.org/. are not expanded to contingency planning in cases of lockdowns. None of the institutions 9. https://www.bksh.al/. discussed here had a disaster risk reduction plan – only emergency plans related to 10. https://my.matterport.com/ show/?m= evacuations. Hence, disaster risk reduction QTqXxVmDWSR. plans need to be streamlined in all sectors, including education and the socio-cultural. References This pandemic oers an opportunity for WB countries to start acting with smart and MASR and ASCAP, 2020. Agjencia e Sigurimit resilient measures and enhance the above- të Cilësisë së Arsimit Parauniversitar. [Online] mentioned sectors from a technological available at: https://www.ascap.edu.al/ wp point of view. Lastly, it is important to shift -content/uploads/2020/08/Udhezuesi- the attention of political discourses towards per- llimin-e-vitit-shkollor-2020-2021.pdf. these sectors, especially at the national level. [Accessed 25 August 2020]. The current pandemic and health crises will soon be followed by economic and social Matković, G., 2017. The Welfare State in crises. The education and socio-cultural Western Balkan countries – challenges and sectors will need to rethink their roles and options, Belgrade: Center for Social Policy. approaches in overcoming these challenges in order to prepare future and resilient Ministry of Culture of Albania, 2020a; societies. To conclude, the sustainability of 2020b. National Art Gallery. [Online] available 72 Ledio Allkja, Esmerina Hidri

at:https://kultura.gov.al/3dsite/galeria- MuzeuHistorikKombetar/.[Accessed 6 kombetare-e-arteve/?lang=en. [Accessed 12 September 2020]. June 2020]. National Kosovo Library, 2020. Biblioteka Ministry of Culture of Albania, 2020b. Kombetare e Kosovës. (National Library of National Historic Museum Virtual Tour. Kosovo) [Online] available at: https://www. [Online] available at: https://kultura.gov. biblioteka-ks.org/. [Accessed 2 July 2020]. al/3dsite/gallery-item/muzeu-historik- kombetar/?lang=en. [Accessed 12 June National Museum of Kosova, 2020. National 2020]. Museum of Kosova o cial Facebook Page. [Online] available at: https://www.facebook. Ministry of Health and Social Protection of com/museumofkosovo/. [Accessed 9 June Albania, 2020b. Informacion i përditësuar 2020]. për koronavirusin COVID-19. (Updated Information for COVID-19) [Online] available National Museum of the Republic of North at:https://new.shendetesia.gov.al/9-korrik- Macedonia, 2020b. National Museum of 2020-informacion-i-perditesuar-per- the Republic of North Macedonia. [Online] koronavirusin-covid-19/. [Accessed 9 July available at: https://museum.org.mk/. 2020]. [Accessed 10 June 2020].

Ministry of Health and Social Protection National Museum of the Republic of North of Albania, 2020. Informacion i perditesuar Macedonia, 2020. National Museum of per COVID-19. (Updated Information for the Republic of North Macedonia o cial COVID-19) [Online] available at: https:// Facebook. [Online] available at: https://www. new.shendetesia.gov.al/9-qershor- facebook.com/Museum-of-the-Republic- 2020-informacion-i-perditesuar-per- of-North-Macedonia-169639123102635/. koronavirusin-covid-19/. [Accessed 9 June [Accessed 9 June 2020]. 2020]. OECD, 2020. The COVID-19 Crisis in the Western National Art Gallery of Kosova, 2020. National Balkans: Economic Impact, policy responses, Art Gallery of Kosova o cial Facebook. and short-term sustainabl esolutions. OECD. [Online] available at: https://www.facebook. com/Galeria.Kombetare.e.Kosoves/. WHO, 2020. Coronavirus disease (COVID-19) [Accessed 10 June 2020]. outbreak situation. [Online] available at: https://www.who.int/emergencies/ National Art Gallery of the Republic of North diseases/novel-coronavirus-2019. [Accessed Macedonia, 2020b. National Art Gallery of 9 June 2020]. the Republic of North Macedonia o cial World Health Organization (WHO), 2020b. Facebook. [Online] available at: https:// COVID-19 Dashboard North Macedonia. www.facebook.com/pages/category/ [Online] available at: https://covid19.who. Local-Business/National-Gallery-of- int/region/euro/country/mk. [Accessed 9 Macedonia-1422615451309319/. [Accessed June 2020]. 10 June 2020]. World Health Organization (WHO), 2020c. COVID-19 Dashboard Kosovo. [Online] National Art Gallery of the Republic of North available at: https://covid19.who.int/region/ Macedonia, 2020. National Art Gallery of emro/country/xk. [Accessed 9 June 2020]. the Republic of North Macedonia. [Online] available at: https://nationalgallery.mk/?lang World Health Organization (WHO), 2020. =en. [Accessed 9 June 2020]. COVID-19 Dashboard, Albania. [Online] available at: https://covid19.who.int/region/ euro/country/al. [Accessed 9 June 2020]. National Historic Museum of Albania, 2020. O cial Facebook Page. [Online] available at: https://www.facebook.com/ Disclosure statement No potential con ict of interest was reported by the authors. Annual Review of Territorial Governance in the Western Balkans, II, 2020, 73-95 73 https://doi.org/10.32034/CP-TGWBAR-I02-06

Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities Merita Toskaa, Marjan Nikolovb, Vesna Garvanlieva Andonovac, Sasho Trajkovd

Summary

The COVID-19 pandemic challenged governments of all levels, all around the world, requiring an immediate response. The Governments of Albania and North Macedonia, intervened with support packages aimed at mitigating the negative eects of the health emergency, which soon transformed into a socio-economic crisis. In both neighbouring countries, the outbreak of COVID-19 found municipalities on the front lines of response, protecting their communities and ensuring the continuity of their activities, while facing nancial constraints. Lockdown measures, freezing of economic activities, and eased local scal policies reduced the inow of municipal revenues, while municipalities faced a growing expenditure to alleviate the negative impact on the most vulnerable people, and to adapt to remote working while ensuring the provision of essential public services. Findings from Toto, et al. (2020) and Prorok et al. (2020) suggest that the inadequacy of nancial resources has been assessed as the main challenge that municipalities face amidst the COVID-19 crisis.

The purpose of this policy document is to better understand the potential impact of COVID-19 on municipal nances and present an overview of the Albanian and North Macedonia governments’ interventions in response to the crisis. Such an assessment builds on the Municipal Finances Self-Assessment (MFSA) methodology and speci cally the General Accounting Framework (GAF) as described in Farvacque-Vitkovic and Kopanyi (2019) and applied in Trajkov and Nikolov (2020)1 and Toska and Shutina (2020) 2.

Municipal nances in Albania and North Macedonia are expected to be adversely aected by the COVID-19 crisis in 2020 and in 2021, based on the scenario results presented in Trajkov and Nikolov (2020) and Toska and Shutina (2020). In light of the expected lower revenues (especially from own sources), added pressures for expenditures, and unbalanced cash-ows, it becomes imperative for municipalities to re-establish nancial control, avoid liquidity shortages, and be equipped with adequate nances. Keywords: Municipal Finances, Revenues, Expenditures, COVID-19, Albania, North Macedonia Contact a [email protected] (Corresponding author) Co-PLAN, Institute for Habitat Development, POLIS University, Tiranë, Albania b [email protected] Center for economic analyses-CEA, Regional studies association c [email protected] Center for economic analyses-CEA, Skopje, North Macedonia d [email protected] LED & ICD; Municipality of Gazi Baba, North Macedonia 74 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

Introduction In setting up these scenarios, assumptions on the eect of local factors (speci c to each The COVID-19 pandemic has brought municipality) and macro factors (economic about a new reality, and the functioning growth rate, business climate, expectations of local governments are no exception. on future health developments, consumer Being on the front line of COVID-19 crisis behaviour, etc.) are used. The summary response, municipalities witnessed nancial of the support measures undertaken by diculties (among others) while trying to the Government of Albania (GoA) and the respond to the immediate needs of citizens Government of North Macedonia (GoNM) and simultaneously ensuring the continuity will be presented to complete the picture, of their activities. As stated by the United paying particular attention to the state Nations (2020: p.24) the pandemic has budget revisions due to the COVID-19 “reminded policymakers that the local outbreak. However, these are only early government level is the closest to citizens assessments of the potential impact of and thus the best positioned to respond COVID-19 at a municipal level; the larger to their speci c challenges.” Other authors picture is frequently changing. also highlight the critical role of subnational governments in an immediate response to Public nances under COVID-19 the crisis as well as in the recovery phase (Allain-Dupre et al., 2020; UN, 2020; Toto et The COVID-19 pandemic poses al., 2020). unprecedented challenges and uncertainties at all levels of governments Municipal response, recovery, and resilience around the world (Prorok et al., 2020; require nancial resources, which are limited UN, 2020; EBRD, 2020; Damian and and expected to be adversely aected by Nikolov, 2020). The response to this health COVID-19 both in the short and midterm emergency has required governments (Allain-Dupre et al., 2020; Pozhidaev and at all levels to intervene by introducing Jackson, 2020). Quantifying the impact and sets of measures aimed at mitigating the understanding COVID-19 repercussions on negative impact of the COVID-19 crisis. This municipal budgets are preconditions for has included severe lockdown measures informed and eective decision making at to atten the infections curve and support the subnational level. packages, both for individuals and for the businesses, to at least partially absorb some The aim of this paper is to contribute to of the negative eects. The response to the assessment of the potential impact of the emergency through these measures COVID-19 on municipal nances and to and packages has required revisions in the summarize the measures undertaken in enacted state budgets with implications for the response phase to the crisis in Albania municipal budgets as well. and North Macedonia. The municipalities of Shkodër in Albania and Gazi Baba in North Macedonia are taken as case studies for this GoA and GoNM Response to the COVID-19 assessment. Impacts are explored though Crisis the Municipal Finances Self-Assessment (MFSA) tool and especially the General The two neighbouring countries, Albania Accounting Framework (GAF) as described and North Macedonia, were aected by in Farvacque-Vitkovic and Kopanyi (2019) the pandemic around the same time. and applied in Nikolov and Trajkov (2020) The rst positive case in the Republic of and Toska and Shutina (2020). North Macedonia (RNM) was registered on February 26, 2020 and in Albania a few days For both municipalities, a scenario-based later on March 9. Since then, the number of approached will be used, building on a set infected people has spiked with an upward of assumptions about revenue streams and trend registering a total of 13,9273 cases in expenditures for the years 2020 and 2021. the RNM and a total of 9,5134 in Albania as of Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 75

August 31, 2020. By March 18, the President businesses, decreased tourist numbers, of the RNM declared the rst round of a and disrupted value chains (being highly state of emergency caused by COVID-19, dependent on imports) are assessed as which was extended until June 22, 2020. factors contributing to the projected real At the beginning of the state of emergency GDP plunge in the RNM to -3.4% for 2020. a complete lockdown with curfew hours Alongside the real GDP contraction in both was imposed. Almost at the same time, by countries, other macroeconomic indicators March 23, the GoA declared a national state have been revised downwards (a summary of natural disaster due to COVID-19. A strict is provided in Annex 1 and Annex 2). lockdown was implemented including the cancellation of all cultural, sporting, and The mitigation of negative impacts of the other events; as well as the closure of bars, COVID-19 crisis in these economies has restaurants, tness centres, recreation areas, required interventions on behalf of the and land borders, among other sites. As a GoA and GoNM through speci c support result of the imposed measures, the socio- packages. The GoNM introduced three sets economic activity in both countries froze. A of economic measures. These three sets of large number of enterprises were forced to measures targeted primarily vulnerable close and those that continued to operate groups and a dierent array of businesses did so with reduced capacities. A gradual and citizens, with an estimated relative value easing of these measures was implemented of 5% of the GDP or 550 mil EUR (see Annex in Albania starting on April 27 and in the 3 for details). In Albania, scal and monetary RNM starting May 8, 2020.5 policies were used simultaneously in order to match the costs from the private sector to Alongside the immediate health crisis in the public sector. The Bank of Albania eased both countries, the socio-economic eects its monetary policy9 and set up a repo line of the COVID-19 pandemic are becoming to provide euro liquidity in the presence increasingly more tangible, forcing both of added market pressures due to the economies to slow down sharply (World COVID-19 shock (see Annex 4).10 The GoA Bank, 2020).6 Furthermore, the pandemic adopted two packages aimed at supporting of COVID-19 in Albania overlaps with a very businesses and individuals aected by the fragile economic situation following the pandemic at a total of about ALL 45 billion devastating earthquakes of September 21, (or about 2.8% of nominal GDP) as detailed 2019 and November 26, 2019 (of 5.8 and in Annex 4.11 6.4 magnitude, respectively). International and national institutions assessed that Budget Revisions and Implications for Albania’s and the RNM’s real GDP would Municipalities drop substantially during 2020 (as summarized in Annex 1 and Annex 2) and Amidst the COVID-19 pandemic and the that unemployment would rise over the stimulus packages introduced, the GoA same year (OECD, 2020; IMF, 2020; World and GoNM revised enacted budgets for Bank 2020). year 202012 with altered macroeconomic assumptions and projections on both In the case of Albania, the real GDP growth the revenues and expenditures sides. In rate is expected to drop to -4.3% from an Albania, the revised budget envisioned a initially projected level of 4.1%7,8 (Ministry contraction of revenues of about 3% and of Finances and Economy, 2020) due an increase in expenditures of about 17.8% to the stagnation of tourism and trade for 2020 as compared to realized values in activities and the spill over eects from 2019. In the presence of lower projected the EU economies with which Albania has revenues and higher expenditures, the close ties (and which have been severely budget de cit is expected to widen greatly aected by the pandemic, especially EU from the initially projected level of about countries like Italy). Similarly, a disruption 2.2% to about 8.4% of nominal GDP (see in the income levels of households and Annex 5).13 The same patterns appear in the 76 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

RNM’s scal indicators, where the revised 2019. This is based on projections for higher budget envisioned a decrease in expected revenues from: building tax (ALL 5.3 billion, revenues by about 11.5% compared to +2.8% compared to 2019); simpli ed small the originally enacted budget, an increase business pro t tax (+3.8% higher compared in projected expenditures by 1.4%, and a to 2019); and revenues from other local higher expected budget de cit of about sources (other taxes, asset management, 6.8% of GDP. local fees, etc.), which were projected to contribute about ALL 21.2 billion, 21% Regardless of the scal decentralization more than the level collected in 2019. In the models, changes in state budgets have revised budget, planned revenues from the implications for municipal budgets through local government were reduced by about two main channels: (i) intergovernmental 14.5% compared to the initial projections; transfers unconditional (general or speci c), the property tax revenue was projected to and (ii) shared taxes between the central be about 20.5% lower; other revenues from and local government. The third source of local government were revised by -13.2 %; revenues for municipalities is represented and no changes were applied for revenues by own source revenues or those generated from the simpli ed small business pro t tax. from local taxes, fees and charges, and Local government expenditures, initially asset management activities, among other planned at ALL 57.6 billion (2.4% higher sources, which feed into the consolidated than 2019), were reduced by about 7.1% as national budget. compared to the initially planned gure for 2020. In the case of Albania, budget revisions introduced by the GoA left the level of Data on scal indicators for the rst half unconditional (general and speci c) of 2020 are in line with the expectations transfers unchanged in 2020. The current of MoFE envisaged in the revised budget legislative framework in force provides for document for 2020. Total revenues from the stabilization of the size of unconditional local government in the rst six months of transfers: they should be at least 1% of 2020 marked a sharp decline of about 23.9%, nominal GDP and not lower than the level while tax revenues and property dropped of the same transfer for the previous year. by about 28%, and revenues from other Conditional intergovernmental transfers for local sources by about 23.7% compared delegated functions and investments also to the same period the previous year. On are not expected to change in 2020. Due the contrary, a positive development is to the sluggish economic developments registered in the tax on the pro t of small in internal and external markets, revenues businesses, where revenues marked an generated from shared taxes14 are expected increase of about 10% in annual terms (it to drop 10.4% lower than the initial had a marginal weight in total revenues of projections for year 2020. Such a drop is about 0.1% during 2019). not expected to severely aect municipal nances, since shared revenues account In the case of North Macedonia, budget for a marginal share in the total local revisions introduced by the GoNM will governments’ revenues. (In 2019, shared undoubtedly have an impact on transfers taxes represented about 2.1% of the total from the central to the local government. The revenues of municipalities).15 eects of the revenue collection declined compared to last year, which can be seen Revenues from municipal own sources are primarily through the revenue decrease expected to make a smaller contribution in tax collection in the rst four months to the consolidated national budget. In the of 2020. Instead of the initially planned initial budget for 2020, revenues from local increase of the annual budget revenues governments were projected at about ALL by 9%, the month-to-month (mtm) total 26.9 billion (about 1.5% of GDP) or about revenues during March and April dropped 16.6% higher than revenues collected during by 5% and 20% (respectively) and the total Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 77

tax revenue collection dropped by 11% and to the local government units (LGUs) will be 31% (respectively). Personal income tax reduced as well. collection in April compared to the same month last year dropped by 12% while VAT The 2020 enacted budget (prior to the tax revenues dropped by 17% in March and COVID-19 pandemic) envisaged a larger 43% in April compared to the same months relative increase in the planning of in 2019. transfers to LGUs compared to gures from the previous year. Transfers to local The PIT is a centrally administered tax that governments for 2020 were planned to be is shared with local governments in North about 12% higher compared to the previous Macedonia (3% of the centrally collected year, unlike the average annual increase of PIT taxes), acting as an important source 4% (ranging from between 2% to 8% over of revenue for local governments. April the last decade). Considering the almost 2020 employment forecasting projected full (99.6%) execution of current transfers that 28,000 employees would be sent into historically, it is likely that the execution technical unemployment and that their for 2020 will reect the same situation. contracts would end (around 7% of total However, it can be noticed that although contracts), which is expected to drastically overall tax revenue is expected to drop by impact the stream of total PIT revenues 16% with the supplementary 2020 budget, and, in turn, the portion that goes to local current transfer levels to the LGUs have governments in RNM. not been downsized. The supplementary 2020 budget provides for only a 0.2% The VAT ta is shared unconditionally reduction of the current transfers (from with local governments (4.5% of the VAT MKD 21,375 million to MKD 21,330 million, collected centrally, distributed by criteria16) almost exclusively within the block transfers and thus, it is another important source of account).19 However, given the percentage revenue for local governments. Yet, private change in the overall tax revenue collection, consumption is forecasted to shrink in 2020 transfers from shared taxes (including VAT by 4.3% and imports by 15.4%,17 thus also and PIT) can be expected to drop by around having an impact on the intergovernmental 16%. VAT transfers for local governments (see Annex 6). A 16% drop in the current transfers (unlike the revised 2020 budget projections) Considering the past data on the budget, compared to the originally planned budget revenue from tax collection is relatively will mean a decrease of about EUR 57 million 18 balanced. Variations can be observed (from MKD 21.38 billion to MKD 17.85 billion, with regards to the PIT in the months of a dierence of MKD 3.5 billion) for LGUs. If January and December, which is usually we consider only a drop in the VAT (note that around 6% and 13% of the annual tax the transfers should be 4.5% of the VAT and collected (respectively). The VAT collection 3% of the PIT collected) would result in an is more balanced throughout the year with overall reduction of funds for the transfers dierences of around +1pp to +2pp in the of about MKD 396 million or EUR 6.4 million. months after the ending of the quarters (4th, 7th, 10th and 12th month). In summary, economic growth rates in both countries have been revised downward, Assuming the projections of the revised with real GDP growth rates projected to 2020 budget, the expected PIT revenues will be negative. The containment measures be 8% lower than originally planned (down introduced by the GoA and GoNM in by EUR 26 million), and VAT will be 14% response to the health crisis has led to a lower (down by EUR 126 million). The overall deep socio-economic crisis. In order to budget revenue will drop by 11% (down by alleviate the negative impact of COVID-19 EUR 415 million). Thus, it is expected that crisis, both countries introduced speci c the transfers from the central government support packages which included measures 78 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

Table 1. Current Budget Transfers to LGUs (MKD million)

VAT Earmarked Block PIT revenues Budgeted Execution transfers transfers transfers for LGUs 2010 13,317 13,309 1,196 451 11,662 259 2011 14,414 14,074 1,164 397 12,513 216 2012 15,355 15,345 1,340 283 13,722 216 2013 15,646 15,631 1,540 279 13,812 228 2014 16,004 15,987 1,733 279 13,975 250 2015 16,343 16,322 1,733 288 14,301 279 2016 16,663 16,647 1,876 293 14,478 293 2017 17,049 17,014 2,067 289 14,658 314 2018 18,097 18,057 2,154 291 15,613 341 2019 19,124 n.a 2,216* 335* 16,573* n.a 2020 21,375** 21,330** 2,343 403 18,564 n.a

Note: *2019 Budget data, ** 2020 Budget and Revised (supplementary) Budget 2020

targeting both households and businesses municipalities, Trajkov and Nikolov (2020) and revised their enacted budgets for year and Toska and Shutina (2020) proposed 2020. A scissor eect is foreseen in the public three scenarios based on a set of nances of both countries at the national assumptions about revenue streams and and sub-national level, as well as a shortfall expenditures (which build on historical in revenues and higher expenditures. trends, average growth rates, updated information from the municipalities Municipal nances in Shkodër (Albania) involved, and expert judgments) for the and Gazi Baba (North Macedonia) years 2020 and 2021. These include a: - Baseline scenario which builds Subnational governments in Albania broadly on projections prior and North Macedonia are reporting a COVID-19; signi cant loss of revenues based on data from the rst half of 2020. The response to - Optimistic scenario, which assumes COVID-19 has required the use of nancial a moderate impact of COVID-19; resources to support communities, creating and a additional diculties for municipalities. Moving to the next phase of recovery, - Pessimistic scenario, which assumes municipalities need to quantify and assess a significant impact of COVID-19. what might be the impact of COVID-19 on their municipal nances, both on the Using alternative scenarios through a revenues and expenditures sides. The set of assumptions based on revenue potential impact of COVID-19 on municipal streams and expenditures enables a better nances will be explored using two case understanding of the impact of COVID-19 studies, namely the municipalities of on municipal nances, which constitutes Shkodër (Albania) and Gazi Baba (North a precondition to set up recovery plans Macedonia).20 Such an assessment builds over the short- to mid-term. For a better on the Municipal Finances Self-Assessment understanding of the impact of COVID-19 methodology and speci cally the General on municipal nances, it is important to Accounting Framework (GAF)21 as described understand the structure of municipal in Farvacque-Vitkovic and Kopanyi (2019) budgets, both in the Municipality of and applied in Trajkov and Nikolov (2020) Shkodër (MSH) and the Municipality of Gazi and Toska and Shutina (2020). For both Baba (MGB). Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 79

Structure of the Municipality of Shkodër’s Qark of Shkodër remain among the most Local Finances and Potential Impact of aected LGUs in terms of total infections 22 and infections per 100,000 inhabitants. COVID-19 As a result, nances are expected to be signi cantly aected in the short and The Municipality of Shkodër is the fourth midterm. largest municipality in Albania by population (according to Census 2011 data) and the Municipalities in Albania have three major 23 sixth largest by area under administration. sources of revenues: (i) own source revenues, About 4.5% of all active enterprises in including revenues from local taxes, fees and the country exercise their activity within charges, asset management, and others; the territory under MSH’s administration (ii) intergovernmental transfers, including 24 (2018 data). Business activity is mainly unconditional and conditional transfers, focused on the provision of services and shared taxes; and (iii) borrowing. Table (trade, accommodation, and food services, 6 summarizes information on the revenue among others); the agricultural sector; and structure in MSH. the manufacturing industry. Small and medium sized enterprises represent about a. Own source revenues accounted for about 73.5% of all businesses and are assessed 22.4% of MSH’s total nancial resources in to be the catalysts of local development, 2019, out of which 10.2% stemmed from both for growth and employment. Large local taxes (mainly revenues from property enterprises account for about 25.6% of total taxes and the infrastructure impact tax businesses (Municipality of Shkodër, 2020, of new constructions) and about 11.2% 25 p.8). While the data are very dynamic, the from fees and other own sources (mainly trends so far (based on ocial gures) show the waste management fee). MSH has that the Municipality of Shkodër and the full discretion over the allocation of these funds. At the same time, this category of

Table 2. MSH Revenues and Expenditure Structure (% vs. total)

2017 2018 2019 REVENUES A. Own source revenues 22.1% 24.8% 22.4% B. Intergovernmental transfers 77.9% 75.2% 77.6% Unconditional transfers 33.8% 35.8% 37.6% Conditional transfers 41.9% 36.3% 36.4% Shared taxes 2.2% 3.1% 3.6% Total nancial resources 100.00% 100% 100.00% EXPENDITURES A. Current exp. 87.1% 86.6% 78.2% Personnel 25.9% 23.4% 21.9% Operating 19.3% 29.0% 22.0% Subsidies 0.9% 0.0% 0.9% Transfers 41.0% 41.0% 33.4% B. Capital exp. . 12.9% 13.4% 21.8% Total expenditures 100.0% 100.0% 100.0%

Source: http://www.bashkiashkoder.gov.al/ and authors’ calculations. 80 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

revenues is highly sensitive to the general for delegated functions (social assistance economic situation in the municipality layouts and disability payments). Although through two conduits: no detailed information is provided on investments funded by the central - Deterioration of businesses’ nancial government, the intention to keep situation, which hinders their payment increasing general public investments is capacity. Measures undertaken due a positive sign for local governments. In to the COVID-19 crisis such as the contrast, in the revised budget, revenues lockdown, social distancing rules, from shared taxes are expected to be and working from home caused a lower compared to those planned in the signi cant contraction of activity, initial budget, aected by falling prices especially in sectors like trade, services in international markets and weakening (tourism), and transport, among export activity. Nonetheless, changes in others. Lower business activity means this item are not expected to aect MSH’s lower tax receipts (VAT, pro t tax, etc.) budget heavily, since the contribution of and lower paying capacity (local taxes, shared taxes to its total nancial resources fees, and charges). is low.

- Deterioration of households’ nancial c. Local borrowing (for investment and/or 26 situation (being laid o, unemployed, liquidity) is an instrument available for or earning lower salaries) weakens local governments27 and was accessed in their capacity to cope with local scal 2010 ( ve municipalities) and in 2014 (two burdens. municipalities) for investment purposes. To date, local borrowing has not been For both categories of taxpayers, a exercised by any of the 61 municipalities deterioration in their nancial situation is operating in Albania. During the expected, which in turn would negatively pandemic, the use of such an instrument aect their capacity to pay taxes resulting in is considered unfeasible, since Albania’s lower revenues and receipts at the local and public debt is revised at 85% of the GDP national level. and municipalities have a large stock of b. Inter-governmental transfers represented arrears (Co-PLAN, 2020). about 77.6% of MSH’s total nancial The largest share of available nancial resources at the end of 2019. resources, about 78.2% in 2019, is - Unconditional transfers (general and channelled in current expenditures speci c transfers for the nancing aimed at the coverage of personnel of new functions devolved in 2016) (21.9%), operating costs (22%), and accounted for about 37.6% of the other expenditure items (34.3%). Capital municipality’s total nancial resources expenditures in 2019 represented about in 2019; 21.8% of total expenditures. In light of less funding available, MSH is expected - Conditional or earmarked transfers for to introduce budget revisions including: delegated functions and investments containment of personnel expenditures in represented about 36.4% of total the range of -2% to - 3%; a possible increase nancial resources in 2019; and in operating expenditures from 1% to 4% due to an increased need for supplies and - Shared taxes accounted for about 3.6% disinfecting of public spaces; no substantial of total nancial resources in 2019. changes to the level of transfers (as de ned by the line ministry); a drop in investments With budget revisions applied, there are no between 20% and 25%, since MSH is mostly foreseeable changes in the unconditional nanced through own source revenues. transfers block though minor changes are foreseen for the earmarked transfers Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 81

MSH’s nancial management resulted in COVID-19 will adversely a ect MSH’s positive net operating margins over the nances in both the optimistic and 2017-2019 period, which accounted for pessimistic scenarios as compared to its 36.6% of current revenues in 2019. Capital performance in 2019 and to the baseline revenues have been volatile and show scenario. Under the set of assumptions decreases for the same period, from about used for constructing the scenarios, MSH’s ALL 129 million in 2017 to about ALL 62 current revenues are expected to contract million in 2019.28 Capital expenditures have during 2020 and 2021 by between 4% increased markedly during 2019 (+81.4% and8%; the net margin is expected to narrow compared to the previous year) and signi cantly ranging from an expected drop accounted for about 48% of the net margin of at least 30% to becoming negative in registered in the same year. 2020 and 2021; and capital expenditures are set to shrink by about 20%-25% compared to the baseline projections of the MSH.

Figure 1. COVID-19 Impact on MSH Finances

BaseBaselineline OpOptimisttimistic PesimistPesimistic ic Baseline Optimistic Pesimistic Current revenues (ALL bln) Net margin (ALL mln) 3.8 3.6 3.4 3.2 3.0 2.8 2.6 2.4 2.2 2018 2019 P2020P 2021

Baseline Optimistic Pesimistic Baseline Optimistic Pesimistic Capital expenditures (ALL mln) Borrowing need (ALL mln) 700 350

600 150 500 -50 400 -250 300 -450 200 -650 100

0 -850 2018 2019 P2020P 2021 2018 2019 P2020P 2021 Source: Authors’ calculations.

Structure of the Municipality of Gazi largest industrial area. Within the MGB Baba’s Local Finances and Potential are some of the largest companies in the country, although of the approximately Impact of COVID-19 3,000 legal business entities, 61.5% are Gazi Baba is the largest municipality by micro enterprises, 35% are small enterprises, population in the City of Skopje (according 2% are medium enterprises, and 1.5% to the 2002 census) and the second largest are large enterprises dominated by the by area. The municipality is the gateway to pharmaceutical industry, metal industry, 29 the City of Skopje and contains the city’s food industry, and trade and logistics. 82 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

In 2019 the transfers from central - Reduced block transfers of 2%-5%; government accounted for about 45% of the MGB’s total revenues, while own - Own source revenues 10%-20% (due to capital revenues accounted for about 30% one-time event of 2019 revenues from 30 and own current revenues for about 20%. EAST GATE project fees); Shared taxes from VAT represented 3% of - Fees for speci c services 10%-20% total revenues and PIT represented 2%. (revenues as part of City of Skopje, Own capital revenues are coming primarily dependent on accommodation and from land development fees (26% of the tourism dependent fees); total 2019 revenues). In the structure of own current revenues, property tax accounts for - Shared PIT and VAT (due to lower almost 10% and communal fees for urban consumption, lower employment) 10%- services for 10.2%. 20%.

Considering the structure of the Macedonian The expenditure of the MGB is also expected economy, the eects of COVID-19 are to change in 2020 (compared to 2019) in the primarily going to be seen though disrupted following budget lines: income for businesses and households. Certain business sectors will be aected - There are no changes in personnel more than others. expenditures;

The immediate impact of COVID-19 is on - Goods and services reduced by 5% income, reected through lower household (primarily due to the closure of the and business spending. The impact on the kindergartens and primary schools national RNM economy will be felt through reecting reduced maintenance and the limited ability for households to spend hygiene costs); (household expenditure accounts for more than 60% of GDP in RNM) due to COVID-19 - Subsidies increased by 5% as planned restrictions on mobility. The immediate (primarily for public utility companies’ result is that local businesses will receive services and subsides for micro and less income, in turn reducing labour hours small enterprises); and laying o workers where possible. Less - Internal transfers between entities in income is available to households, repeating the local public administration (due to the cycle. the likely decrease of cultural activities, The MGB’s local economic activities will be sports activities, and other planned aected by COVID-19 mainly in the sectors events); and of logistics, manufacturing, and wholesale - Capital expenditures decreased due to and retail trade (less so in tourism). Value overly optimistic planning. chains in MGB are highly dependent Under a zero, optimistic, and pessimistic on imports, particularly those from the scenario,31 the economy and thus the European Union (EU). Keeping in mind that nances of the MGB are inevitably going the RNM’s economy is connected to the EU to change due to the eects of COVID-19. economy, COVID-19 has lowered external Under certain assumptions for lower or demand from the EU and will negatively larger changes,32 the eects are expected to aect the RNM economy and the MGB local be decreases in current revenues by 15%- economy, especially through exports. 20% of the pre-Covid-19 plans, a reduced COVID-19 is expected, in relative terms, to net margin between 112%-118%, reduced have the largest impact on the following capital expenditures of 10%-15%, and a revenue budget lines of the MGB, compared likely need for borrowing that was not to 2019: planned for in the zero scenario. Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 83

Figure 2. Scenario Impact of Covid-19 on Certain Budget Lines of MGB

Baseline Optimistic Pesimistic Baseline Optimistic Pesimistic Total Current Revenues (mil. mkd) 950 100 900 80 850 60 40 800 20 750 0 700 -20 650 -40 600 A2018A 2019 P2020P 2021 -60 A2018A 2019 P2020P 2021

Baseline Optimistic Pesimistic Baseline Optimistic Pesimistic Borrowing needs (mil. mkd) 450 60

400 40

350 20 300 0 250 -20 200 -40 150 -60 100 A2018A 2019 P2020P 2021 A2018A 2019 P2020P 2021

Source: Authors’ calculations.

4. Conclusions and Recommendations and approval criteria. Furthermore, whether the principles of state aid control have been The COVID-19 pandemic has challenged enacted is yet to be evaluated, due to the governments at all levels around the world non-functional parliaments throughout and has required immediate responses, the crisis in both countries because of the which include countercyclical measures emergency measures. aimed at mitigating its adverse e ects. The success rate of these measures has yet COVID-19 is currently a ecting and will to be de ned (or researched further) in negatively a ect subnational nances countries like Albania and North Macedonia in both Albania and Macedonia. Data for in terms of timing adequacy, eectiveness, the rst half of 2020 show that a negative transparency, and proportionality. Support impact is materializing and that the nancial packages made available in both countries plans of municipalities in North Macedonia have yet to be evaluated on a performance and Albania are showing signs of nancial basis and it remains unclear whether distress. In light of expected lower revenues state aid has been ecient and eective (especially from own sources), added in mitigating the negative eects of the pressures for expenditures, and disbalanced COVID-19 crisis. This is especially relevant in cash-ows, it becomes imperative for the period to come, as it overlaps with the municipalities to re-establish nancial pre-election period and election processes. control and avoid liquidity shortages. In Perceptions in both countries are that the case of the MGB, COVID-19’s negative measures introduced were not adequately eects are likely to be dampened due to targeted, and that there has been of lack the already planned capital projects and the of transparency and clarity in the selection revenues expected to be generated from 84 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

them. For instance, the speci c investment would new nancial resources come from? project EAST GATE will likely absorb some The answer might be from internal sources of the negative impacts on revenues due through saving and improved collection to planned land development and other rates, and/or from external sources such as fees. In the case of the MSH, little space grants, donations, and borrowing (when for manoeuvre can be identi ed; revenues possible). As of the rst half of 2020, data from own sources are expected to drop and on executed budgets show that municipal expenditures can hardly be decreased in the nances will suer as a result of COVID-19. short run. Hence, in order to establish nancial control and stay on track for the rest of 2020 and for The e ects on municipal nances are 2021, the municipalities of Gazi Baba and going to be felt for a longer period of time Shkodër are recommended to: and are expected to be especially severe during 2021. The COVID-19 pandemic has - Review and dene what constitutes posed serious challenges for municipalities essential and non-essential services to in light of ampli ed needs for expenditures citizens.33 For both of these categories, and limited space to increase revenues. it would be useful to determine Municipalities in both countries are broadly reasonable levels of services to be dependent on intergovernmental transfers, delivered to citizens. This approach which can be interpreted in two ways. could allow municipalities to control First, such a dependency ensures for a for costs and ensure the continuation continued inow of nancial resources that, of local public services delivery in their if regulated in the legislative framework, will constituencies. In addition, workforce not change (ex. unconditional transfer size ‘savings’ can be deployed and assigned de nition in Albania has two speci cations: to other tasks (like in essential services), they should amount to 1% of nominal GDP to avoid contracting external parties and it cannot be lower than the previous for these services and having to lay-o year; in RNM block grants size is de ned). labourers. For the other items like conditional grants for delegated functions and investments, - Prepare and review an inventory of the central government decision-making about most essential public procurements transfer size can change at any time. It is and implement those procurement highly probable that shared taxes such as procedures. Limiting what is assessed the PIT and VAT will drop, especially during as non-essential procurements (at 2021. In the case of Albania, there is no least for one year) could create space clear indication about whether PIT will be for diverting resources towards what is distributed, despite being in force since considered essential. January 2018. Secondly, it is highly probable - Monitor liquidity needs and consider that economic activity during 2020 will end the possibility to defer or relax in negative, meaning that businesses and payment of certain taxes and local individuals’ nancial situations will worsen. fees, such as postponing payment for In this case, there will be less money in the categories particularly aected by the state budget for 2020 and 2021, which in crisis (ex. tourism and trade sectors, turn means that less money will be available households facing nancial distress) for municipalities in both countries. and oering the option to pay in instalments. Post-crisis recovery at a municipal level requires optimization in the use of - Revise and prioritize investment projects: resources (and if possible, mobilization keep pace with ongoing investments of new ones) to ensure the provision of that create jobs and contribute to essential services and, at the same time, economic recovery. stimulate the local economy and enhance resilience. Naturally, a question arises: where Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 85

- Mobilize nancial resources from external include measures and/or combinations sources: donor communities are active of measures like: (i) a commitment on in both countries and municipalities intergovernmental transfer levels as are encouraged to put more eort on planned in the MTPB programs for 2020- increasing their absorption capacities, 2022; (ii) a support grant to compensate especially for EU funds (improved municipalities for the net loss in revenues as planning and project preparation). In the a result of the COVID-19 pandemic; (iii) short case of the MGB, it should make full use term credit lines to cover liquidity needs of the World Bank MSIP 2 loans, grants, guaranteed by GoA; and (iv) a cost recovery and investment grants from GoNM that grant to compensate municipalities for extra support local capital investments. expenditures encountered and directly related to COVID-19. -- Better budget planning and close monitoring of risks from the COVID-19 Finally, for both countries, intergovern- crisis. In this context, it is important not mental communication, coordination, to shirk responsibility and postpone and willingness are key to recovery and payments to the next year, which could resilience. Governments at all levels should result in an increased stock of arrears. work in coordination to face the health crisis successfully and enable recovery. The As the government has provided support decentralization and local nance models packages for individuals and businesses in Albania and North Macedonia dier and in Albania, the same would be useful for thus the measures or policies recommended municipalities. A support package could should take into consideration the be designed for municipalities in order to speci cities of each country. Yet, undoubtedly, partially absorb encountered losses and intergovernmental communication and ensure the continuity of (essential) local coordination is necessary to soften the public services. Such a package could pandemic’s eects on local nances. 86 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

Annexes

Annex 1. Albania: Main Macroeconomic Indicators

2017 2018 2019 2020* 2021* 2022* 2023* Real GDP growth rate (in %) Initial projections 3.8 4.1 2.7 4.1 4.0 4.0 4.0 Revised projections 3.8 4.1 2.2 -4.3 5.9 3.8 3.9 Ination rate (in %) Initial projections 2.0 2.0 1.4 2.1 2.4 2.8 3.0 Revised projections 2.0 2.0 1.4 2.1 2.4 2.8 3.0 Budget revenues (% of GDP) Initial projections 27.7 27.6 27.4 28.7 27.7 27.6 27.6 Revised projections 27.8 27.5 27.4 28.2 29.3 29.1 29.0 Budget expenditures (% of GDP) Initial projections 29.7 29.2 29.3 30.9 29.6 29.3 29.0 Revised projections 29.8 29.1 29.3 36.7 33.5 30.8 30.3 Budget decit (% of GDP) Initial projections -2.0 -1.6 -1.9 -2.2 -2.0 -1.7 -1.3 Revised projections -2.0 -1.6 -1.9 -8.4 -4.2 -1.7 -1.3 Gross public debt (% of GDP) Initial projections 70.1 67.9 66.2 65.4 62.3 62.0 58.8 Revised projections 70.2 67.7 66.3 80.5 76.5 73.2 70.9 Current account balance (% of GDP) Initial projections -7.5 -6.8 -8.0 -7.2 -6.7 -6.3 -6.0 Revised projections -7.5 -6.8 -7.6 -8.9 -7.5 -7.5 -7.4

Source: Ministry of Finance and Economy, Albania

Annex 2. North Macedonia: Main Macroeconomic Indicators

Revised budget International National Bank of European 2020 Monetary Fund RNM Commission MoF, May 2020 April 2020 May 2020 May 2020 projections34 projections35 projections36 projections37 Real GDP growth (revised annual -3.4% -4% -3.5% -3.9% growth projections)

Ination rate (revised annual projections) -0.2% ~0% 0.1%

Budget revenues (change, original to -11.5% -14.7% -25% revised budget) Budget expenditures (change, original to +1.4% -2.3% revised budget)

Budget decit (revised budget) -6.8% -6.5% -6.8%

Source: Ministry of Finance, North Macedonia, National Bank of North Macedonia, European Commission, International Monetary Fund Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 87

Annex 3. RNM Government Response Measures to COVID-19

First Set Second Set (March 18, 2020) (March 31, 2020) Third Set (May 15, 2020) Goal: Liquidity protection, job retention, Goal: Restoring the domestic economy and support for vulnerable categories of through domestic demand and citizens. (Estimated value of €355 million consumption stimulus. (Liquidity of the out of which, for loans: 4.7 mil EUR Covid-1 private sector and job retention, support line; 8 mil EUR Covid-2 line) for citizens in order to stimulate domestic consumption, competitiveness of the agricultural sector and farmer (estimated value €355 million). - Tax breaks for pro t tax and personal - Payment voucher card for most vulnerable income tax; households for Macedonian products; - 50% subsidies for the social bene ts of - Payment cards with a value of 6,000 MKD employment contracts for ‘the most’ for citizens for domestic tourism services; aected sectors; - Support of youth and students for nancing - Direct support to the private sector for ICT skills development; employment contract salaries up to 14.500 MKD; - Financial reward for medical personnel; - Direct support for the most vulnerable; - Support for those that have lost employment; - Liquidity support through no-interest loans, low interest rate loans, postponing of - No-VAT weekend for certain sectors’ loans payments for citizens, and reprograming products; of loans for the business sector; - No interest loans with 30% grant - Reduced/halved penalty for late payments, component for micro and small enterprises; and late payment interest; - State guarantee scheme for commercial - Freeze on food prices. loans; - Platform for alternative sales; - Support for innovation and start up; - Matching funds for event organizing; - Credit lines for the agriculture and agribusiness MSM enterprise. - Payment cards for gas for mechanization.

Source: Government of North Macedonia 88 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

Annex 4. Measures of BoA and GoA in light of the COVID-19 Crisis

Bank of Albania Measures introduced: - Reduction of policy rate from 1% to 0.5% (Decision of Supervisory Council March 25th, 2020); - Decrease in the interest rate for the overnight lending facility from 1.9% to 0.9% (Decision of Supervisory Council March 25th, 2020); - Close monitoring of ER uctuations (Decision of Supervisory Council March 25th, 2020); - Regulatory changes (Decision of the Supervisory Council of the BoA, March 12, 2020);38 - Guidelines to banks for higher transparency, postponement of credit payments etc.;39 - Suspension of the allocation of pro t from banks up to the end of June 2020 (Decisions by the Supervisory Council, April 8th, 2020);40 - Eased treatment of banks’ exposure to Albanian government debt securities in foreign currency (for those to be issued during 2020); - Rescheduling of loan instalments (up to three months); - Temporary removal of commissions applied by banks on the non-paper-based credit transfers in ALL, starting from April 10, 2020; - Ensuring Euro liquidity by setting up a EUR 400 million repo line with ECB, in place until June 2021; - Cash supply and processing; - Intensive communication; Government of Albania Support Package 1 Measures introduced41 : Implementation of the measures (as of June 22nd Aimed at the alleviation - Additional nancing for 2020): of nancial losses of those health sector by about ALL aected by the COVID-19 2.5 billion; - Allocation of about ALL crisis and alleviating the 5.04 billion for the three position of vulnerable - Support for small months payments to categories. businesses forced to close bene ciaries (about 65,115 during the pandemic of persons). about ALL 6.5 billion (this measure included monthly - Subscribed by 12 banks; payment of ALL 26,000 for Total amount requested the months of April, May, about ALL 8.07 billion / 751 and June 2020); companies; - Reallocation of funds for - Total amount approved poverty alleviation for the about ALL 6.32 billion / 521 categories in need of about companies; ALL 2 billion (doubling of unemployment bene ts and social assistance layouts); - Sovereign guaranteed fund for companies accessing overdrafts in the banking systems for salary payments of about ALL 11 billion (0.6% of nominal GDP) (interest rates and cost fully covered by the government and no collateral requirements). Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 89

Support Package 1 Measures introduced42 : Implementation of the measures (as of June 22nd Extended the support to all - Single lump sum payment 2020): employees of the entities for employees in small directly aected from the businesses aected by the - Allocation of about ALL closure of businesses; crisis of about ALL 7 billion 373 million (about 9,333 those who lost their jobs, (0.4% of nominal GDP); bene ciaries) for those employees in tourism employed in businesses sectors, and all employees - Sovereign guaranteed with turnover higher than in businesses with an fund for all companies ALL 14 million and closed annual turnover of less accessing loans for due to GoA decision; than ALL 14 million who liquidity and capital faced limited economic expenditure nancing - Allocation of about ALL activity as a consequence of about ALL 15 billion 2.54 billion (about 63,405 of the COVID – 19 crises. (0.9% of nominal GDP). bene ciaries) for those The GoA guarantees 60% losing their jobs up to April of the principal and the 10, 2020; maximum loan amount per company cannot - Allocation of about ALL exceed ALL 300 million 2.66 billion (about 66,566 (grace period of six months bene ciaries) for those and ve years maturity). employees in businesses with a turnover up to ALL 14 million, who experienced a contraction of their economic activities;

- Allocation of about ALL 164 million (about 4,838 bene ciaries) for those employees in active accommodation structures since the beginning of the emergency;

- Allocation of about ALL 29 million (about 720 bene ciaries) for employees in the Ballsh Re nery.

- Subscribed by 9 banks;

- Total amount requested about ALL 4.04 billion / 89 companies;

- Total amount approved about ALL 0.84 billion / 40 companies; Simpli ed tax on the pro t of Exemption for those businesses with an annual turnover of ALL small businesses 0-14 million for FY2020; postponement for a) tourism, textile, and footwear until January 1, 2021; and b) all other sectors (excluding banks, pharmaceutical companies, retail of food supplies and telecommunication until October 1, 2020).

Source: Ministry of Finance and Economy, Albania 90 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

10.0% -28.0% -23.9% -23.4% -28.0% -23.7% -33.0% -11.6% 1.7% change -13.8% 2020H1 /2019H1 % annual

331 2,248 7,657 10,236 22,340 15,925 13,701 58,235 -38,487 2020H1 233,389 194,902

301 executed 3,123 13,458 10,034 29,158 22,129 20,444 65,913 -3,453 2019H1 229,569 226,116

4.0% 5.0% -0.2% -4.9% -1.2%

-18.3% -10.9% -16.9% -3.0% 17.8% budget 321.5% executed executed % change from 2019 from 0.1% 0.0% -7.1% -14.5% -13.2% -20.5% -13.5% -13.0% -13.8% -20.0% -10.4% 5.5% -12.4% 234.9% revision % revision nd change from change from initial budget 2 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -6.3% -5.9% -10.5% 1.6% -3.9% 73.1% revision % revision st change from change from 1 initial budget 369 4,254 rd 18,422 53,485 23,045 41,080 3 600 26,040 26,845 30,390 130,760 -132,965 579,535 446,570 2020 revision** 369 670

st 5,354 1 21,222 57,554 26,944 26,040 44,500 30,844 34,000 142,621 -68,699 558,374 489,675 revision*

3.8% 2.4% 2.8% 3.0% 3.9% 21.0% 16.6% 14.5% 11.7% 25.8% 10.7% budget % change to % change to executed 2019 executed 369 670 5,354 21,222 57,554 26,944 26,040 47,500 30,844 38,000 151,621 Initial budget -39,699 549,374 509,675

55.4% 96.9% 75.3% 90.0% 87.5% 101.7% 110.1% 109.2% 94.7% 95.9% 94.6% Planned Executed/ half of 2020 Performance in Selected Performance half of 2020 Items (in ALL million) st 355 5,208 17,539 56,227 23,102 46,124 36,575 132,412 -31,549 491,897 460,349 Year 2019 Year Executed 640 6,915 18,106 55,286 25,661 41,900 33,500 Plan 151,314 -32,900 519,577 486,677 Ministry of Finance and Economy, Albania and Authors calculations Albania and Authors and Economy, Ministry of Finance

revisions are related to changes introduced with Normative Act No. 28, dated 02/07/2020 ‘For some changes to Law No. 88/2019 ‘On year 2020 Budget’, amended’. amended’. 2020 Budget’, year 88/2019 ‘On No. Law some changes to 02/07/2020 ‘For 28, dated No. Act with Normative changes introduced to related are revisions rd revisions, are related to changes introduced with Normative Act No. 6, dated 21/03/2020 ‘For some changes and additions to Law No. 88/2019 ‘On year 2020 Budget’ year 88/2019 ‘On No. Law some changes and additions to 21/03/2020 ‘For 6, dated No. Act with Normative changes introduced to related are revisions, st Small business tax Total expenditures Other localtaxes government Local expenditures Unconditional transfers - govern Local ment revenues Property tax Own budget Personal income income Personal tax Shared taxes Shared Pro t tax Pro t VAT Total Total revenues Budget decit

*1 Annex 5. Budget Revision 1 and Annex Source: **3 Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 91

Annex 6. Monthly Comparison, Tax Revenue Execution, 2019-2020, RNM

Expected Revised annual downward Total change change Budget of NRM I II III IV I-IV change (Executed (Budget MtM change % Budget to Revised 2019/Budget budget 2020) 2020) ) Total revenues 5% 4% -5% -20% -5% 9% -11% Taxes and Contributions 11% 6% -4% -20% -3% 10% -13%

Taxes 7% 4% -11% -31% -9% 11% -16%

Personal Income Tax (PIT) 20% 9% -1% -12% 3% 8% -8% Value Added Tax (VAT ) 6% 2% -17% -43% -15% 7% -14%

Source: Monthly and Annual Budget Execution Reports, Ministry of Finance of NRM, last checked 28.05.2020

Annex 7. Tax Revenue Comparisons Month-to-Month, RNM Tax Revenue dip, Jan - April 2019/2020, mil MKD Tax Revenue dip, Jan - April 2019/2020, mil MKD 12,000 5,000

10,000 4,000

8,000 2,000

6,000 1,000 I II III IV V VI I II III IV V VI 2019 Taxes 2020 Taxes 2019 VAT (net) 2020 VAT (net)

Tax Revenue dip, Jan - April 2019/2020, mil MKD 2,000

1,500

1,000 I II III IV V VI 2019 Personal Income Tax 2020 Personal Income Tax Source: Monthly and annual budget execution reports, Ministry of Finance of NRM, last checked 28.05.2020.

Annex 8. PIT and VAT Tax Revenues, Annual Changes, RNM

PIT & VAT Revenues (mil MKD) growth rate YtY (%) 60,000 25.0 50,000 20.0 40,000 15.0 30,000 0.0 10.0 20,000 -5.0

10,000 -7.8 -10.0 0 -15.0

Total PIT (mil MKD) % change YtY PIT (rh) Total VAT (mil MKD) % change YtY VAT (rh) Source: Monthly and Annual Budget Execution Reports, Ministry of Finance of NRM, last checked May 28, 2020. 92 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

Notes to the counterbalancing eect of intensive growth imports, despite the 1. The working paper was prepared under continuation of positive growth rates the World Bank Urban Partnership of exporting activity (assuming no Program (UPP) in the Western Balkans external shocks in international primary in collaboration with the Municipality goods prices). As a result, the current of Gazi Baba, North Macedonia. Main account balance de cit was projected to ndings were presented and discussed narrow during 2020, registering a level in the Regional Workshop - Webinar of 7.2% of nominal GDP in 2020 and ‘COVID-19 Pandemic Risk and Potential shrinking further over the next three Impact on LSG Finances’ in October 29, years. The ination rate was projected 2020 (for more information see http:// to pick up gradually and, in 2023, to www.seecities.eu/seecities.eu/EVENTS/ hit the targeted level of 3% in light of Workshops). the accommodating monetary policy implemented by the Bank of Albania 2. The working paper was prepared under (BoA). Based on these projections, the World Bank Urban Partnership budget revenues were planned to Program (UPP) in the Western Balkans grow annually by 4.5% registering in collaboration with the Municipality about 28.7% of GDP in 2020 and to of Shkodër, Albania. Main ndings stabilize around 27.6% between 2021 were presented and discussed in the and 2023; expenditures were projected Regional Workshop - Webinar ‘COVID-19 to shrink somewhat and account for Pandemic Risk and Potential Impact about 30.9% in 2020 and about 29.3% on LSG Finances’ in October 29, 2020 of GDP (average) between 2021 and (for more information see http://www. 2023; and progressive narrowing of the seecities.eu/seecities.eu/EVENTS/ budget de cit and public debt were Workshops). projected over the considered period. However, the outbreak of COVID-19 3. Statics of coronavirus in North called for adjustments and revisions Macedonia, daily update, https:// of macroeconomic projections and koronavirus.gov.mk/stat underlying assumptions, as included in the Revised MFF 2021-2023. The real 4. Source of data: https://new.shendetesia. GDP growth rate is projected to plunge gov.al/covid-19-ministria-e- to -4.3%, widening the budget de cit shendetesise-75-te-sheruar-133-raste- to -8.4% in 2020 and narrowing it in dhe-4-humbje-jete-ne-24-oret-e-fundit/ the 2021-2023 period. Alongside the 5. At the beginning of June 2020, most MoFE’s revised projections, international economic activities returned to ‘normal’, organizations such as the International while public transportation and large Monetary Fund (IMF) have revised cultural and public events were still not nominal GDP growth rate projections allowed. downward for the period 2020 – 2023.

6. Global Outlook, World Bank, 2020 8. The Revised Fiscal Strategy (RFS) pre- COVID-19 anticipated a real GDP growth 7. Prior to the pandemic, in the MFF rate of 3.8% for 2020. Growth would be 2021 – 2023 the real GDP growth rate primarily driven by consumer spending was projected at 4.1% for 2020 and with an expected real growth of exports at 4% for the next three years, mainly by 9.8% and a current account balance based on the contribution of domestic of -1.2% of GDP. The ination rate was demand, private consumption, and projected to be stable at 1.7% and, investments (see Annex 1). External based on these assumptions, a budget demand was projected to contribute de cit of 2.3% of GDP was anticipated. marginally to overall growth due The budget projections were prepared Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 93

in accordance with expectations of Republic of Northern Macedonia for global economic growth of 3.4%, and EU 2020 during the state of emergency, GDP growth of 1.9% for the year 2020. Ocial Gazette of Republic of North Macedonia, 126/2020, as of 15/5/2020, 9. Decision of BoA Supervisory Council available athttps:// nance.gov.mk/mk/ of March 25th, 2020 available at: Budget_RSM_2020 https://www.bankofalbania.org/Press/ Supervisory_Council_decisions/SC_ 14. Fiscal indicators data for the rst half decisions_on_key_interest_rate/Monetary_ of 2020 show that revenues dropped Policy_Decisions_25_3_2020.html by about 13.8% compared to the same period the previous year. Among tax 10. https://www.ecb.europa.eu/ items, revenues from VAT narrowed press/pr/date/2020/html/ecb. by 11.6%, pro t tax revenues plunged pr200717_1~f143ca1c56.en.html by about 33%, and revenues from PIT dropped by about 28% in comparison to First package - Normative Act No. 6, 11. the rst half of 2019. dated 21/03/2020 ‘For some changes and additions to Law No. 88/2019 ‘On 15. Shared taxes between the two levels of year 2020 Budget’, adopted on March government are: (i) 97% of the property 19th included support measures for ownership transfer tax imposed on about ALL 23 billion (1.4 of nominal individuals, physical and juridical GDP), combining spending reallocations persons; (ii) 25% of the revenue from the and increased ones, and sovereign annual used vehicle circulation tax; (iii) guarantees to support businesses 5% of the revenue from mining royalties; aected by COVID-19 crisis. and (iv) 2% of personal income tax (PIT) Second package - Normative Act No. 15, revenue. Despite being in force since dated 15/04/2020 ‘For some changes to January 2018, PIT revenues have never Law No. 88/2019 ‘On year 2020 Budget’, been shared with local governments amended, was introduced on April 15th (municipalities). and included support measures for about ALL 22 billion (1.4% of nominal GDP) 16. The data and gures in this paragraph including direct transfers to employees and the following information on (of small businesses and those laid o Albania are sourced from the Local Public from large companies and the tourism Finances, Status Report 2019 of Co-PLAN, sector), as well as a sovereign guarantee Institute for Habitat Development, 2020. for all businesses in the private sector (which were tax compliant and solvent 17. The VAT is shared and distributed before the pandemic). based on a Decree for methodology for distribution of revenues from value 12. In Albania: 1st revision with Normative added tax per municipalities, by the Act No. 6, dated 21/03/2020 ‘For some GoNM. changes and additions to Law No. 88/2019 ‘On year 2020 Budget’; 2nd 18. National bank of Republic of North revision with Normative Act No. 15, Macedonia, https://bit.ly/2U2c0Ut. dated 15/04/2020 ‘For some changes to Law No. 88/2019 ‘On year 2020 19. Balanced: equal distribution per month Budget’, amended; and 3rd revision with of 8.3% throughout the twelve months Normative Act No. 28, dated 02/07/2020 of the year. ‘For some changes to Law No. 88/2019 20. Block transfers are conditional ‘On year 2020 Budget’, amended. transfers for education and preschool- 13. In RNM: Ministry of Finance of Republic kindergarten functions. of North Macedonia, Decree with legal 21. The Municipalities of Shkodër and Gazi force amending the Budget of the Baba both participated the World Bank 94 Merita Toska, Marjan Nikolov, Vesna Garvanlieva Andonova, Sasho Trajkov

– Austria Urban Partnership Program, 30. Municipality of Gazi Baba, Local Economy which envisaged the application of the https://bit.ly/3gIDHLL. Municipal Finances Self-Assessment (MFSA). 31. East Gate is a planned project for the urban center of the City of Skopje as the 22. GAF is part of the Municipal Finances biggest shopping and entertainment Self-Assessment, which municipalities center in the region and will include a can use to assess their nancial health, business center and residential area. identify gaps and design improvement action plans, assess their own 32. Scenarios are estimated by the World management of nances, and apply Bank and Gazi Baba team and use the shadow credit ratings, etc. World Bank Municipal Finance Self- Assessment tool. 23. Data on revenues and expenditures for the period 2016-2019 and planned 33. As presented in the Word Bank Working data for 2020-2022 are based on the Paper from May 2020: The potential documents of Medium-Term Budget impact of the COVID-19 pandemic on Program 2020-2022 and Budget Local Governments’ nancial health in Execution Report of the Year 2019, North Macedonia: Developing alternative Budget Execution Report of the Year nancial scenarios for the Municipality of 2018. Gazi Baba – Skopje. The paper is courtesy of the Mayor of Gazi Baba. 24. The Municipality of Shkodër is composed 11 administrative units namely: Shkodër, 34. An example of the classi cation Ana e Malit, Bërdicë, Dajç, Guri i Zi, of services into essential and non- Postribë, Pult, Rrethinat, Shalë, Shosh, essential can be found in: https://www. Velipojë, divided across one city and 93 publicsafety.gc.ca/cnt/ntnl-scrt/crtcl- villages. It has a population of about nfrstrctr/esf-sfe-en.aspx. 135,612 inhabitants based on Census 35. Ministry of Finance of Republic of North 2011 data, 55% of whom live in the city Macedonia, https:// nance.gov.mk/mk/ of Shkodër. The total municipal surface Budget_RSM_2020. is about 872.7 km2 with a population density of about 239.87 inhabitants per 36. IMF Country Report No. 20/113, Republic 2 km . of North Macedonia, https://bit.ly/ 2MkBdp9.

25. Source: https://drive.google.com/ le/d/ 37. National Bank of the Republic of North 1pY7px3pASHCiqYp0g_PWj0IVB6vfXOtY/ Macedonia, https://bit.ly/2U2c0Ut. view. 38. European Economic Forecast Spring 26. http://www.bashkiashkoder.gov.al/web/ 2020, https://bit.ly/2XPiI1q. veshtrim_i_pergjithshem_2871_3148. pdf. 39. https://www.bankofalbania.org/Press/ Supervisory_Council_decisions/Other_decisions/ 27. According to OECD (2020) about 50,000 Decisions_by_the_Supervisory_Council_of_the jobs have been lost due to the crisis. _Bank_of_Albania_on_12_March_2020.html. Source: https://www.oecd.org/south-east -europe/COVID-19-Crisis-in-Albania.pdf. 40. Source: https://www.bankofalbania.org/ Press/COVID-19/. 28. Law No. 9869/2008 ‘On local self- government borrowing.’ 41. https://www.bankofalbania.org/ Press/Supervisory_Council_decisions/ 29. Earmarked grants for investments, Other_decisions/Decisions_by_the_ revenues from the infrastructure impact Supervisory_Council_8_April_2020.html. tax, and sales of municipal assets are considered under capital revenues. Municipal Finances in the COVID-19 Context: The Case of Gazi Baba and Shkodër Municipalities 95

41. DCM No. 254, dated 27/03/2020 Nikolov, M. and Trajkov, S., 2020. The as amended ‘On the de nition of potential impact of the COVID-19 pandemic procedures, documentation and size of on Local Governments’ nancial health in the nancial bene ts for the employees North Macedonia: Developing alternative in businesses with an annual turnover up nancial scenarios for the Municipality to ALL 14 million, economic assistance, of Gazi Baba – Skopje.International Bank unemployment bene ts during the for Reconstruction and Development/the natural disaster situation caused by World Bank. COVID-19.’ OECD, 2020. The COVID-19 Crisis in Albania. 42. DCM No. 305, dated 16/04/2020 ‘On Retrieved from https://www.oecd.org/ the determination of procedures, south-east-europe/COVID-19-Crisis-in- documentation and size of the nancial Albania.pdf bene t for current employees and dismissed employees as a result of Pozhidaev, D. and Jackson, D., 2020. Covid-19 (amended by DCM no. 13, dated COVID-19 Emergency Response - Local 22/04/2020, and dated 28.04.2020). Government Finance, Guidance Note for Immdiate Action. Unlocking Public and References Private Finance for the Poor.

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Damian, A. and Nikolov, M., 2020. The Toska, M. and Shutina, D., 2020. How the potential impact of COVID-19 pandemic COVID-19 Pandemic Might Aect Municipal on Local Government’s nancial health Financial Health in Albania: Alternative in Romania. Developing alternative Scenarios for the Municipality of Shkodër. nancial scenarios for Sibiu Municipality. International Bank for Reconstruction and International Bank for Reconstruction and Development/the World Bank. Development/the World Bank. Toto, R., Toska , M., Shutina, D., Farrici , A. EBRD, 2020. Regional Economic Prospects in and Limaj, A., 2020. The response of local the EBRD Regions - Covid-19: From shock to governments during COVID-19 emergency recovery. EBRD. in Albania: Jannuary - April 2020. Tirana, Albania: Co-Plan, Institute for Habitat Farvacque-Vitkovic, C. and Kopanyi, M., Development. 2019. Municipal Finances: A Handbook for Local Governments. World Bank. [Online] United Nations Albania., 2020. UN Albania available at: https://www.academia.edu/35 COVID-19 Socio-Economic Recovery and 650946/Municipal_Finances_A_ Response Plan. UN, Albania. Handbook_for_Local_Governments_ Municipal_Finances_A_Handbook_ World Bank, 2020. The economic and social for_Local_Governments. [Accessed 18 impact of COVID-19: Western Balkans November 2020]. Outlook. World Bank Group.

Ministry of Finances and Economy (MoFE), 2020. Kuadri Makroekonomik dhe Fiskal i Rishikuar për Periudhën 2021-2023. Tirana: Disclosure statement Ministry of Finance and Economy (MoFE). No potential con ict of interest was reported by the authors. 96 Annual Review of Territorial Governance in the Western Balkans, II, 2020, 96-117 https://doi.org/10.32034/CP-TGWBAR-I02-07

Socio-economic E ects of COVID-19 in Bulgaria: A Spatial Analysis

Hristo Dokova, Kalina Milkovab, Ivaylo Stamenkovc

Summary

This paper studies the socio-economic eects of COVID-19 in Bulgaria to uncover their multidimensional forms and provide a broad picture and empirical evidence of the inicted changes. Based on available information and data as of the end of August 2020, the paper aims to uncover the key factors that drive the socio-economic processes and to determine the intensity, scale, and persistence of the immediate, multidimensional impacts of the outbreak and their territorial implications. The study is organized in three main parts. The rst provides a short overview of the most relevant processes at a European level. The second uncovers, visualizes, and explains certain relations between the time dynamics in the COVID-19 spread at a national level, the pandemic containment measures, and dierent socio-economic indicators and trends. The third scrutinizes the speci c processes at the regional and local levels, going deeper into the study of the dierent territorial factors, mechanisms, and scenarios. The mixture of quantitative and qualitative analyses in the study reveals that the COVID-19 crises severely devastated the Bulgarian economy in between March and May 2020, with some positive trends of recovery registered in June and July. The spatial discourse of the study detects diverse spatial impacts, with their size, strength, and expected duration varying according to speci c territorial characteristics. Yet, we also detect signi cant entropy in the system with subjective and random factors often being of real importance. Finally, permanent, in-depth studies of the ongoing COVID-related processes are crucially needed to be able to foresee some of the highest risks and to conceptualize adequate responses.

Keywords: COVID-19, Pandemic, Bulgaria, Impact Assessment, Spatial Analyses, Local and Regional Development, Territorial Governance

Contact a [email protected]a.bg (Corresponding author) Soa University 'St. Kliment Ohridski', Department of Regional and Political Geography, Soa, Bulgaria b [email protected]a.bg Soa University 'St. Kliment Ohridski', Department of Socio-economic Geography, Soa, Bulgaria c [email protected]a.bg Soa University 'St. Kliment Ohridski', Department of Regional and Political Geography, Soa, Bulgaria Socio-economic Effects of COVID-19 in Bulgaria: A spatial analysis 97

Introduction states and a number of non-member states, etc.). The abrupt outbreak of the COVID-19 pandemic gave birth to some unprecedented The pronounced spatial discourse in the phenomena in modern history. Due to the spread of the virus and in its related impacts crisis borne out of the pandemic, the current can be seen as a kind of rehabilitation of the socio-economic and political models spatial sciences (and especially geography) are faced with challenges and dilemmas in the 21st century. Spatial aspects of of eciency, and put under pressure to dierent phenomena are particularly visible transform and evolve. The unpreparedness in the context of growing hybridization, and inability of public authorities and an increasingly networked society, relevant structures to deal with the threat globalization, and the free movement raised many issues concerning global of people, goods, services, and capital. security and questioned the eciency of These features of the modern world have the existing world order itself. Furthermore, generally been treated as a strong privilege COVID-triggered processes added new and a common good by the social sciences variables and unknown quantities to ‘good and humanities. However, in light of the governance equations’ and thus have strong COVID-19 pandemic, it turns out that these implications on planning, territorial security, characteristics have much to do with the and local and regional development. major factors responsible for inducing vulnerability and insecurity in dierent Being a country where major trends in the economic and territorial systems. That spread of COVID-19 often diverged from is why the COVID-19 pandemic’s spatial those observed in Europe (and even in dimensions and components must not only neighbouring countries), Bulgaria presents be explored but also adequately managed an interesting case study to explicitly at dierent territorial levels (McCoy, 2020). illustrate some of the pandemic’s potential eects and to explain the determinants and If we consider outbreaks of infectious mechanisms that de ne the size, scale, and diseases as “socio‐spatial processes with strength of those impacts. At the beginning complex geographies” (Kuebart and Stabler, of the pandemic in Europe, while most of 2020, p. 482), the analysis of the territorial the European countries were registering diusion of these diseases in modern a rapidly growing number of COVID-19 societies requires a multidimensional cases, the situation in Bulgaria was very approach to space through the prism of much under control, with relatively low the TPSN (Territories, Places, Scales and number of infections. Then, in June and Networks) framework (Cummins et al., 2007; July, when newly registered COVID-19 Jessop et al., 2008). Networks are arguably cases decreased in most of the European the most important in conceptualizing countries, Bulgaria was severely struck and the geographies of disease outbreaks reached most of its record case numbers. because the networking of communicable The major question that arises is whether diseases necessarily occurs via ties of or not these peculiarities are related to the personal contacts or infection pathways restriction measures taken in the country. (Bian, 2004). Due to network patterns, From another point of view, Bulgaria is an infectious diseases hardly spread evenly interesting case because it is both an EU in space. Therefore, further analyses must member state (hence being integrated into focus on the behavioural patterns of the EU decision-making structures, being a humans and the way they interact with potential bene ciary of EU recovery funds, their built environment (Keeler and Emch, etc.), and a Balkan country (hence being 2018). The relationship between places part of a region that was ‘peripheral’ to the and people has been considered highly pandemic at the beginning, sharing lots relevant for the understanding of how of common social, economic, and political infectious diseases spread. Places and features with other eastern EU member networks are closely inter‐related in the 98 Hristo Dokov, Kalina Milkova, Ivaylo Stamenkov

process of transmittable disease outbreaks The rst part of the paper provides a (Wolf, 2016). Characteristics of places, short overview of the most important and such as size, shape, density, and available relevant processes for Bulgaria going at the infrastructure (among others) determine European level, with a special emphasis to a large extent not only the intensity and on programmes and measures addressed frequency of communications but also “the to nd eective solutions to deal with sociodemographic con guration of the the challenges of COVID-19. The second people most likely to be found at those part follows the temporal dynamics in places” (Kuebart and Stabler, 2020, p. 485). the spread of the virus, the pandemic containment measures taken at the national The aim of this paper is to provide a broad level, and the changes in some key socio- picture of COVID-19’s socio-economic economic indicators. Subsequently, the eects in Bulgaria by analysing some of paper presents empirical evidence of the the immediate, multidimensional impacts diverse impacts of the COVID-19 pandemic of the outbreak and their territorial in Bulgaria by uncovering, visualizing, implications. The research is based on analysing, and explaining dierent trends, available information and data as of the end relations, and models. Finally, the third of August, 2020 (i.e. almost six months after section scrutinizes the speci cities of the the rst active COVID-19 case was registered most relevant processes at the regional and in the country). While trying to reveal and local levels, going deeper into the study of explain the key factors and mechanisms that the dierent territorial factors, mechanisms drive the multidimensional transformations and scenarios able to explain these within the country in the last few months, processes and the situation in the country, the study concentrates on the most to foresee some of the greatest risks, and to relevant economic, social, and (to some conceptualize adequate responses. extent) political processes caused by the pandemic and measures taken to mitigate Europe and the Challenges caused by the its adverse eects. The analysis is based COVID-19 Pandemic on diverse data from: ocial institutional statistics and questionnaires; information After the rst recorded case in Europe on retrieved from the government’s and January 24, 2020 (in France), the virus began national crisis management sta’s regular to spread quickly throughout the continent, brie ngs; publications in national, regional, turning it into a major global disease and local press; institutional and municipal outbreak (especially at the end of February websites; TV interviews and media reports. and in March). As of August 31, 2020, more Further, own calculations are used to than 4.2 million people in Europe had uncover the most relevant socio-economic been infected, with almost 220,000 deaths changes, eects, and trends, with dierent registered (WHO, 2020)1. Europe, like many techniques applied to visualize those major other regions in the world, is experiencing research focuses. Finally, given the nature, a rapid economic slowdown as a result of scope, and ambition of the study, some the ght against the spread of COVID-19. research considerations and limitations According to Eurostat, the EU’s seasonally should be taken into account: the data is adjusted GDP for the second quarter of 2020 still insucient for making strong general is 11.7% less than in the rst quarter of 2020 conclusions, especially at lower territorial and 14.1% less than the second quarter of levels (regional and local), with its reliability 2019.2 Further, the latest forecasts of the sometimes questionable; many of the European Commission (2020b) suggest impacts would only be registered and felt that the EU economy will contract by 8.3% in a mid- and even long-term perspective; in 2020 and eventually begin to recover in the pandemic is not yet over so empirical 2021 (with an estimated growth of 5.8%). research must be seen as a snapshot of the The EU is facing diculties in nding the current situation. right balance between limiting the spread Socio-economic Effects of COVID-19 in Bulgaria: A spatial analysis 99

of the virus and supporting national health instruments and initiatives to control the systems on the one hand, and dealing crisis, began already in January. Dealing with the severe negative impacts inicted with the COVID-19 pandemic was also on the economy (Figure 1), mitigating the critical to decisions on the future EU budget diverse consequences, and recovering – after ve days of intense negotiations, the from the socio-economic crisis as quickly Special European Council (July 17-21, 2020) and painlessly as possible on the other. It nally agreed on a comprehensive package has reached a point where politicians have of over 1.8 trillion euros, which includes had to make the dicult decisions about the Multiannual Financial Framework whether to prioritize “saving the people (2021-2027) and the EU Recovery Fund. before saving the economy” or “saving the The debates on the latter, perceived as economy before saving the people” (Ozili the COVID-19 funding deal, were very and Arun, 2020, p. 20). controversial with claims made by those states most impacted by the virus (such as The adoption of emergency measures Italy and Spain) being highly contested by related to the repatriation of EU citizens, the ‘frugal four’ (Austria, Denmark, Sweden, funding of relevant scienti c research, and the Netherlands) and, to some degree, and bringing in new (or transforming old) Finland before the nal deal was struck.

Figure 1. COVID-19 Impact Index by Industry

Source: Dunlap et al. (2020)3

An in-depth analysis of trends in the spread “highly asymmetric” impact of the various of COVID-19 in Europe (based on World challenges posed by the crisis (OECD, 2020, Health Organization statistics) uncovers pp. 3-4). In order to make full use of the most signi cant dierences in con rmed cases universal measure to combat coronaviruses, and deaths both between regions and social distancing, dierent countries (e.g. between countries within a single region. Italy, Bulgaria, Spain, France, and Austria, One of the main reasons for this variability among others) have undertaken partial or is the dierent national approaches, complete national lockdowns, combined measures, and solutions to control the virus. in some cases with the imposition of a 24- Governments are working under conditions hour or a partial curfew – unprecedented of “radical uncertainty” to deal with the (in terms of scope) measures aecting 100 Hristo Dokov, Kalina Milkova, Ivaylo Stamenkov

more than half of the global population. The outbreak of COVID-19 and the closure There is already empirical evidence that of a large number of companies also the number of registered weekly cases revealed the EU economy’s dependence is lower in countries with a complete on China, including in vital areas such lockdown, as well as in those with an early as the production of pharmaceuticals, lockdown decision (Al Humaid et al., 2020). protective masks, respirators, disinfectants, Moreover, early lockdown approaches not and other medical equipment. Supply only separated the inuenza from COVID in chain disruptions, the closure of borders, the winter months, but also postponed the and complications with the transport peak of the infection and gave countries/ sector proved the instability, uncertainty, regions the opportunity to better prepare and unsustainability of the modern global their health systems for the threat. However, production system (Rustici, 2020). From this given that all countries saw tremendous point of view, the concept of nearshoring increases in COVID-related gures after the is gaining increasing popularity at the EU lockdown and that the economic eects level. Decision makers are reassessing the were devastating, it is still unclear whether potential bene ts of stimulating production or not lockdowns were the best approach. spatially closer to the European consumers, Yet, the removal of temporary restrictions is instead of production being primarily seen as particularly important for restoring concentrated in distant countries with the EU’s economy and fundamental values cheap labour markets. This can reduce related to the freedom of movement and logistics costs, delivery times, and most further integration, including in countries importantly provide greater exibility and with which the Union has special relations adaptability in similar, unforeseen situations (the United Kingdom, Switzerland, with distorted supply chains. COVID-19 Liechtenstein, Norway, and Iceland) and coincides with debates and preparations potential members from the Western for a new programming period and the Balkans and Eastern Europe. Thus, in June new EU industrial strategy in ways that can and July, a gradual opening of borders act as a kind of political impetus not only and removal of some restrictions followed, for the modernization and digitalization with each country maintaining the right to of European industrial policy, but also for impose quarantine or declare speci c rules its Europeanisation (Schmitz, 2020). Thus, for entry. by building and applying progressive strategies for attracting investments, the More and more policy measures to control Balkan countries stand a very good chance the pandemic and deal with the growing of turning into a desirable, nearshoring global recession were adopted by dierent destination. At the same time, in terms of countries with the ongoing spread of protectionism, the European Commission the virus and multiplication of related attaches special attention to balancing and problems. They can be conditionally divided controlling the EU’s openness to FDI through into four groups: monetary measures the screening mechanism (EC, 2020a). It is (granting regulatory forbearance or interest designed as an instrument for preventing moratorium, provision of liquidity, purchase inow of capitals unfavourable for the EU of bonds and securities, lowered interest and for safeguarding any potential capture rates, and sustained ow of credits); scal and control of key sectors by third countries. measures (government stimulus packages, provision of income support, and social No matter how adequate, reasonable, and welfare payments); public health measures timely the above-mentioned EU strategies (public and border quarantine, stay-at-home and measures to address the COVID-19 policies, and social distancing) and human pandemic seem to be, applying a one- control measures (border closures, shutdown size- ts-all approach is unlikely to succeed. of schools, military enforcement of stay-at- Therefore, an emphasis on the diverse local home orders, travel bans, and visa denial contexts is needed by utilizing place-based and suspension) (Ozili and Arun, 2020). approaches taking into account the speci c Socio-economic Effects of COVID-19 in Bulgaria: A spatial analysis 101

combination of territorial capabilities, system of the country. However, just a few potentials, and resources, as well as the weeks later, public debates were already particular economic, social, and political more focused on how to mitigate the adverse conjunctures. eects of the measures themselves and nd the right balance between restrictions and Impacts of the COVID-19 Pandemic in restoration of the economy and social life. Bulgaria Before uncovering and analysing the The rst COVID-19 case in Bulgaria was multidimensional social, economic, and registered on March 8, 2020, i.e. relatively political eects of the COVID-19 pandemic late (even for the Balkan region). This in Bulgaria, it is important to rstly trace a could be considered as crucial in terms of possible connection between the stringency enhancing the general preparedness to of the restrictions and cases/deaths related counteract the forthcoming threat. At that to the outbreak. An in-depth retrospective time, the country already had a functioning analysis suggests that six separate time national crisis management oce, whose periods (Figure 2) can be conditionally immediate recommendations made the distinguished. The dierentiation of these Bulgarian Parliament declare a state of periods makes it easier to characterize the emergency (starting from March 13) and ongoing trends and shed some light on the impose strict measures to contain the spread relationship between the spread of the virus of the virus. The fairly quick reaction was and the political measures aimed to counter widely considered as a necessity given the that process: weak and potentially vulnerable healthcare

Figure 2. Comparing COVID-19 Cases and Deaths with the Stringency of Applied Measures (March – August 2020)

Source: Authors’ elaboration based on Hale et al. (2020) and OurWorldInData (2020) data. 102 Hristo Dokov, Kalina Milkova, Ivaylo Stamenkov

- March (Week 1) – March (Week 3): real nature of the problem, which is The rst period denotes the quick better expressed by the exponentially introduction of diverse initiatives to growing number of COVID-19 patients prevent the spread of the virus, which who needed to be hospitalized5 (from is clearly attested by the Stringency 158 to 463 within these four weeks). Index (SI)4, measuring containment and closure, as well as economic and health - July (Week 1) – August (Week 1): During system policies related to COVID-19 this period, the new cases registered per (Hale et al., 2020). These measures week doubled and stabilized at a very were in line with the growing number high level for the country, setting some of newly registered cases, although new records. Around 5% of all tests in comparison to the other European were positive. The constant increase countries the overall number remained of hospitalized people (reaching over low (23 total cases per million as of 850 in the rst week of August) was March 22 compared to an average of 30 especially concerning for the stability of for the Balkan countries and 225 for the the healthcare system. EU countries). - August (Week 2) – August (Week 4): - March (Week 4) – May (Week 1): This The last period is characterized by a period is characterized by the application signi cant drop in newly registered of the most rigorous measures (the cases. The number of hospitalized weekly average SI reached its peak people also gradually decreased to level of 73.2), including school closures, around 710-720. These positive trends restrictions on gatherings and internal made some health experts predict that movements, and various international the pandemic was fading away, but travel controls, among others. The there are already some signs that those number of new cases per week was numbers don’t necessarily reect the growing slightly, as were deaths (on reality. On the one hand, these gures average 12.4 per week). However we seem inconsistent with the limited can conclude that the situation was, to restriction measures (and lack of control a large extent, under control. for their real implementation). On the other, health authorities themselves - May (Week 2) – June (Week 1): The admit that, due to some organizational decreasing number of new cases (only problems, they can’t register the 189 new cases per week on average), majority of active COVID-19 cases in the combined with growing social pressure, country.6 This latter fact might explain economic concerns, and the general why Bulgaria is among the EU countries feeling that the worst period was over, with the highest COVID-19 death ratio. resulted in a very brief removal of some major restrictions in an attempt to The analysis suggests a high probability return to normal life. The SI dropped to of signi cant linkages between imposed 44.4 in the last week of this period. restrictions and COVID-19 spread in Bulgaria. By calculating Pearson correlation - June (Week 2) – June (Week 5): The coecients to estimate in what time frame average number of new cases per the pandemic containment measures are week increased almost fourfold (in expected to provide best results, we can comparison to the previous period) to conclude that the time delay in the case of 742. The assumption is that the growing Bulgaria is generally around three weeks number of new cases is simply related to with a strong negative correlation of -0.57 the higher number of tests conducted, (i.e. the lower the SI is in week ‘x’, the more as there is a certain correlation between likely to have a higher number of new cases both variables (on average, 4.5% of in week ‘x+3’). Yet, the studied period is the tests in this period were positive). relatively short for drawing generalizable However, this logic might conceal the conclusions, and the SI itself doesn’t indicate Socio-economic Effects of COVID-19 in Bulgaria: A spatial analysis 103

the extent to which the dierent measures the quick introduction of serious restrictions were applied, followed, and abided by in (aecting some businesses) made its value practice. collapse to -17.7 in April, thus reaching its lowest level ever since February 1997. Yet, in Apart from the purely medical aspects, the the following months (until August 2020) a pandemic and the related restrictions posed positive trend was observed with a recovery a very serious challenge to the Bulgarian of more than half of the losses reported in economy. The size of this challenge could be April. The biggest impact and the lowest convincingly illustrated by the changes in speed of recovery are both reported in the the Total Business Climate Indicator7 for the business climate of the service sector, with country (Table 1). While remaining stable at problems related to tourism, transportation, the very beginning of the pandemic (i.e. in and education playing a key role. March), the declared state of emergency and

Table 1. Dynamics of the Business Climate (in %) in Bulgaria (January – August 2020)

January February March April May June July August

Total Business Climate Indicator 28.5 27.7 24.0 -17.7 -5.9 5.5 8.0 8.5

Business Climate in industry 26.8 26.8 21.6 -10.2 1.2 10.9 11.0 11.2

Business Climate in construction 30.3 30.8 32.2 -13.4 3.9 18.3 16.5 16.7

Business Climate in trade 41.6 41.0 34.4 -17.6 -1.4 14.4 20.8 17.9

Business Climate in service sector 17.0 12.4 10.3 -36.8 -34.3 -27.3 -19.1 -14.5

Source: Authors’ calculations based on National Statistical Institute of Bulgaria (2020b).

The worsening business climate to any positive mid- and long-term eects, (accompanied by the forced closure of as the current decrease in unemployment some businesses such as retail shops and might be explained by seasonal factors. A restaurants) and the inability of others to survey among non- nancial enterprises act at full capacity resulted in signi cant conducted by the National Statistical changes in the labour market marked by a Institute of Bulgaria (2020a) shows that from sharp increase in the unemployment rate in March to July, on average, 30% of enterprises April (Figure 3). Then, less than 13,000 people declared to make use of paid leaves in a were hired while over 87,000 (2.1% of the single month during this period and 21%, working age population) were registered unpaid leaves. Almost 14% were forced to lay as newly unemployed. The unemployment o personnel, while less than 8% bene ted rate reached 9% in May and decreased from the tailored government subsidies (a slightly to 8.3% in June (when, for the very national programme aimed at nancing rst time since the beginning of 2020, the 60% of the wage costs of enterprises number of new hires exceeded that of the that, due to the coronavirus outbreak, newly unemployed), and further to 7.9% in would otherwise lay o personnel). Only July (in July 2019, it was only 5.3%). Yet, this 5.7% of enterprises reduced wages and mild sign of mitigation may not be related salaries (Figure 4). These numbers suggest 104 Hristo Dokov, Kalina Milkova, Ivaylo Stamenkov

that many enterprises were forced to go be avoided, there should have been more through broad transformations and that, if eective political measures. The changes in the rise in the unemployment rate was to the Bulgarian economy and the asymmetric

Figure 3. Unemployment in Bulgaria (January – July 2020)

Source: Authors’ elaboration based on the Ministry of Labour and Social Policy of Bulgaria (2020).

Figure 4. Measures taken by Enterprises in Relation to their Personnel (March – July 2020)

Source: Authors’ elaboration based on National Statistical Institute of Bulgaria (2020a). Socio-economic Effects of COVID-19 in Bulgaria: A spatial analysis 105

eects caused by the COVID-19 outbreak of motor vehicles (mainly production of can also be perceived in an analysis of automotive parts and components) has been transforming industries in the country. A a success story for the country in the last few month by month comparison between the years. However, it suered severely during Total Industrial Turnover Indices for 2019 and the pandemic due to its globalized nature 2020 (Figure 5) reveals the deterioration of and strong connectivity with companies that all industry in the rst three months of the were forced to shut down. Another example pandemic, with the growth rate of the general of an activity negatively inuenced by both index falling from 5.6% in January to -25.6% disrupted supply chains and a general in May. In June and July, a signi cant recovery decrease in demand is the manufacturing is observed with gures almost reaching of machinery and equipment. On the other their 2019 levels. While the major sub-sectors hand, turnover in food production remained (mining and quarrying, manufacturing, and relatively stable, while the manufacturing electricity) follow more or less the general of pharmaceutical products even registered trend, it’s more interesting to capture the better results in comparison to 2019, with dynamic processes related to some speci c positive growth rates for each month in the manufacturing activities. The manufacturing period from March to June.

Figure 5. Monthly Comparison between the Total Industrial Turnover Indices for 2019 and 2020 (January – July 2020)

Source: Authors’ calculations based on National Statistical Institute of Bulgaria (2020b).

The pandemic also severely aected retail signi cantly in the following months. With trade, which registered an 18-20% decrease regard to non-food products, the sale of in turnover for April, May, June, and July the automotive fuel shrank (unsurprisingly, compared to the amounts generated due to travel restrictions and decreased for the corresponding months in 2019 industrial production). The most dispensable (Figure 6). At the start of the outbreak the consumer goods seemed to be textiles, retail sale of food, beverages, and tobacco clothing, and footwear. This can be partially remained stable, but decreasing incomes explained by the closure of some specialised and consumption made its turnover drop stores and the parallel growth of retail via 106 Hristo Dokov, Kalina Milkova, Ivaylo Stamenkov

mail-order houses or online shopping, with signi cant uctuations earlier, the growth the latter compensating (to some extent) of all analysed variables converged (except the reduced sales of textiles, clothing, and for online sales) ranging from -12% to -23%. footwear in stores. Curiously, in July, despite

Figure 6. Monthly Comparison between Turnover Indices in Retail Trade (except motor vehicles and motorcycles) for 2019 and 2020 (January – July 2020)

Source: Authors’ calculations based on National Statistical Institute of Bulgaria (2020b) data

The above-mentioned trends in industry and heterogeneous, with territorial speci cities trade are indicative of the entire Bulgarian bringing signi cant dierences in terms economy. They explain, to a large extent, of crisis management and the need for why forecasts remain rather pessimistic, policy responses. From this point of view, with some international organizations spatial discourses and implications play a forecasting a contraction of the Bulgarian key role in the following analyses related economy by between 5% and 7% in 2020, to: the existing outbreak patterns in the e.g. the European Commission (-7.1%)8, the country; the dierent levels of risk assigned World Bank (-6.2%)9, the European Bank for to territorial units; the diverse scenarios Reconstruction and Development (-5%).10 at regional and local levels based on the nature of the political initiatives taking Spatial Discourses and Scenarios related place, the attitudes of local communities to the COVID-19 Crisis in Bulgaria towards measures, and the COVID-driven behavioural models of dierent industries Already in the rst few months of COVID-19’s and companies, for instance. spread across Europe, dierent studies and In Bulgaria, the rst COVID-19 outbreaks observations revealed that impacts can vary were associated with: widely in scope, not only between countries but also within countries (Fernandes, 2020; - ski resorts (e.g. Bansko, responsible Böhme and Besana, 2020; Buheji et al., for some of the rst cases in Lovech, 2020; etc.). The regional and local eects of Plovdiv, Burgas, etc.); the COVID-19 outbreak seem to be highly Socio-economic Effects of COVID-19 in Bulgaria: A spatial analysis 107

- migrant workers returning from Italy, of students’ farewell balls (Veliko Tarnovo, Germany, the United Kingdom, etc., Plovdiv, etc.), and the reopening of discos, some of whom took part in family clubs, etc., played a major role in the gatherings and celebrations upon spread of COVID-19. Outbreaks in closed return (Lom, Kaolinovo, etc.); environments, such as those in care facilities for elderly people, generally have a more - participation in religious events limited impact on the spatial distribution, (Samokov, Perushtitsa); but are nevertheless an important feature of the COVID-19 geography. In contrast, - local outbreaks in closed environments Roma neighbourhoods aected by the (retirement and nursing homes in Vidin, virus have a much stronger spatial impact Ruse, Dobrich, etc.); on the diusion of the virus beyond the original outbreak. The main reasons are - employees in manufacturing working related to the socio-cultural speci cities in high-density environments (Dospat, of this ethnic group such as: large families Sarnitsa, Pleven, Pazardzhik, Septemvri, generally living in small, unhygienic homes; etc.); and many nomadic communities characterized - Roma neighbourhoods characterized by greater mobility, seasonal employment, by above-average household sizes, high and continuous dislocations; weak health building densities and poor hygiene culture and low percentage of people (Yambol, Peshtera, Sliven, Kyustendil, with health insurances; free spiritedness etc.).11 and habitual negligence of social rules and norms; and cultural traditions related At a later stage, attendance of sporting to organizing crowded family gatherings events (So a, Plovdiv, etc.), the organization and celebrations. It is noteworthy that in

Figure 7. Map of Bulgaria showing NUTS3 regions’ Centres, as well as all Cities/Villages mentioned in the paper

Source: Authors’ elaboration. 108 Hristo Dokov, Kalina Milkova, Ivaylo Stamenkov

the Roma neighbourhoods where the total population); and services of medical mediators were used, the negative consequences of the virus are - Healthcare issues – measured by: smaller (So a, Plovdiv, etc., in contrast to 1) Number of hospital beds per capita; Yambol).12 Thus, with some conditions, we 2) Number of physicians per capita may also consider the existence of an ethno- - COVID-19 spread – measured by: cultural model for the spread of COVID-19 in 1) The total number of registered cases the country. per capita; and In many cases, large cities with their open 2) Growth of registered cases in the last economies, business travels, and active three weeks. communications served as entry points The overall risk (Figure 8) is aggregated for the virus, though some rural areas on the basis of these three sub-risks. It is were also aected. This fact illustrates noteworthy that given the dynamism of one of the diculties in making territorial indicators related to the spread of the virus classi cations or conceptualizing well- and their relative unpredictability, the nal grounded spatial models of COVID-19’s results should be treated as a snapshot of spread. Further, there is no strict correlation the current situation and used only for short- between population density and the spread, term forecasts. They can nonetheless signal scale, and intensity of the disease around the growing risks for territorial security and country. This nding is also backed by Basset disclose some important aspects relevant (2020), who proves that density itself cannot to: adjusting and re ning certain strategies, completely explain the processes of spread measures, and responses; applying and considers issues related to poverty, poor dierentiated approaches and tailor-made housing conditions, and limited access to local policies; as well as conceptualizing healthcare as more important factors. Cities, the need to reform certain regional and large and dense by de nition, inevitably local healthcare systems. The analysis of the support explosive viral transmissions, but results reveals that: household congestion and poverty have even stronger impacts (Bell et al., 2009; De - Three NUTS3 regions (Vidin, Dobrich La Barra, 2000). The various socio-cultural, and Kyustendil) are considered at very demographic, economic, and geographical high risk and ve (Pernik, Blagoevgrad, features of dierent localities inuence Smolyan, Yambol and Gabrovo) at high the patterns of disease transmission and risk. The rest of the NUTS3 regions are explain why there are numerous outbreaks grouped within medium and low risks; and mini-epidemics across the country that none can be categorized as very low are dicult to classify. Yet, their studies help risk. draw some conclusions about the spatiality of the COVID-19 pandemic in Bulgaria. - Most of the regions characterized by unfavourable demographic and The high probability of a rather asymmetrical healthcare conditions are generally spread and impact of COVID-19 makes spared at this stage by the pandemic. it even more important to pay special There, the processes are to be followed attention to the healthcare systems at strictly as the eventual spread of certain territorial levels and assess their COVID-19 could easily cause havoc and crucial dierences in terms of vulnerability. a collapse of the system. To estimate the general COVID-related risk ahead of the healthcare systems in the - Given the relatively well-structured NUTS3 regions of Bulgaria (or the so-called spatial model, with many regions ‘oblasts’), separate risks in three dierent bordering ones with similar problems, it categories are assessed: may be relevant for regional authorities to design common strategies to address - Demographic issues measured by: COVID-19 challenges. 1) Population aged 65 and above (% of Socio-economic Effects of COVID-19 in Bulgaria: A spatial analysis 109

Figure 8. Risk Estimation for Healthcare Systems at NUTS3 Regional Level (as of July 31, 2020)

Source: Authors’ elaboration based on National Statistical Institute of Bulgaria (2020b).

The COVID-19 pandemic makes the crisis/conict management to control the identi cation, assessment, management, risk of escalation. On the other hand, in and control of risk a key issue. Local municipalities with greater trust in local authorities have an important role to play authorities initially (e.g. Burgas),14 people in translating, adjusting, and applying were generally more tolerant to measures national measures, as well as utilizing their enforced by the governance structures. In own instruments and means to guide the those areas, no cases of civil disobedience or processes into the right direction. In some protests against the pandemic containment municipalities there was strong resistance measures were registered. Instead, there by local citizens to restriction measures was a certain balance between health and (Kaolinovo, Venets, Bukovlak, Yambol, etc.),13 economic risks, as well as a better utilization with certain ethno-cultural behavioural of local resources and coordination with models often being an important health institutions. Further, in some places, determinant. Forms of civil disobedience there were joint actions of empathy, related primary to blocking local and inter- solidarity, and coordination taken by the settlement infrastructures were observed, local authorities of neighbouring municipal accompanied by the boycotting of certain administrations (Burgas Province), while in rules and accessibility bans issued by local other places, there was a lack of empathy, authorities. Such territorial tensions have mistrust, and mutual accusations of being negative impacts on local social systems, unable to control the outbreaks (Sarnitsa the supply chains, and certain space-related and Dospat). The practice shows that behavioural stereotypes of citizens (e.g. clustering of municipal administrations in routes used when moving to workplaces). Bulgaria generates positive eects not only Those tensions may lead to uncontrollable in terms of limiting the COVID-19 spread, but chain reactions in the mid- and long-term, also in softening its adverse socio-economic and suggest the need for adequate territorial eects.15 110 Hristo Dokov, Kalina Milkova, Ivaylo Stamenkov

Municipalities show varying degrees mentioned examples COVID-19’s impacts of vulnerability to the COVID-19 crisis are moderate, a group of municipalities depending on their economic pro le (with with a pronounced tourism-related identity levels of diversi cation and self-reliance (Bansko, Hissarya, Velingrad, Sandanski, etc.) playing a key role) and the resilience of stands out with increased unemployment, local economies (especially their ability due to the particularly strong blow inicted to respond to short-term shocks). One of by the pandemic on the tourism industry. the indicators that provides the best clues Those tourism and service-oriented about overall trends and changes is the towns do not have a diversi ed economy, unemployment rate. At the end of May, the which is why it will be dicult for them to lowest unemployment rate was registered emerge from the looming socio-economic in the capital – 4.4%. Thanks to the large crisis. Paradoxically, before the COVID-19 share of services, especially in the high-tech crisis, they were among the privileged sector and trade, So a’s economy is more Bulgarian territories characterized by good exible and less aected by the restrictive and stable socio-economic indicators. measures brought about by the pandemic Tourism is indicated as a priority sector (So a Investment Agency, 2020). Slightly and a factor for alternative employment in increasing unemployment in the capital is almost all municipal planning documents. related primarily to those working in tourism, In this context, it is necessary to rethink culture, sports, and public transport, among the planning process taking into account other sectors. Unemployment rates are also possible socio-economic scenarios and relatively low in smaller municipalities with deviated directions of development that sustainable industrial pro les (for example might be caused by similar crisis situations. Bozhurishte, Kostinbrod, and Sopot) and with well-developed mining sectors While generally considered as one of the supplying the non-ferrous metallurgy (for greatest achievements for the country’s example Chelopech, Chavdar, Laki, and economy over the past 15 years, the Mirkovo) (Institute for Market Economics, integration of the Bulgarian industry into 2020). The unemployment rate for May was global supply chains was tested with the below 10% in the municipalities with large spread of the COVID-19 pandemic and the cities as centres – 5.9% in Plovdiv, 5.8% in stringent measures introduced by many Varna, and 6.7% in Burgas. Given the nature governments. The pandemic and the of the measures to contain COVID-19, one responses of governments to it caused some of the most important factors for mitigating serious interruptions in supply chains and economic impacts and reducing costs is had a negative impact on production. Most the relative share of professions that can large manufacturing companies rely on be practiced remotely. The population in imported resources from countries aected large urban municipalities has signi cantly by the disease. Restrictive measures related greater potential for teleworking, with to the COVID-19 crisis not only disrupted better telecommunications and information the integrity of production systems, but technologies at hand. This capacity can also destroyed the network and cluster be de ned as a territorial resource for organization of many territorial economic sustainability in times of crisis, assuming systems. In the case of Bulgaria, all of these that certain, related external threats can circumstances can be directly related to also be recognized before-hand. the collapse of the automotive industry, which had shown a strong upward trend in Municipalities with traditionally high levels the country before the crisis struck. Many of unemployment before the pandemic automobile companies are operating in maintained their positions due to the low emergency mode with reduced production, economic activity of their population, the but some of them are using their capacity inertial socio-economic development over to produce other types of products and a long time period, and the limited human components: safety equipment; helmets; and resource potentials. While in the above- goggles; air puri ers; and sensors for Socio-economic Effects of COVID-19 in Bulgaria: A spatial analysis 111

temperature, heart rate, and blood oxygen regard are settlements populated primarily level (for instance, companies in Smolyan, by elderly people living alone (municipalities Plovdiv). Some of the sewing and textile from Northwestern and Northern Central companies (e.g. Tvarditsa, Gabrovo, Bulgaria). Under the new conditions of the and So a) are also rapidly reorienting pandemic, the virtues of a developed social themselves towards production needs economy and volunteering services gained under the new epidemic conditions (e.g. new importance. In some municipalities, reusable protective clothing) and changing regional and local donation funds were set their specialization.16 Such exibility might up to support the ght against COVID-19 not only help an enterprise to survive, but (raising funds for consumables and also foster its development. materials, medical equipment, protective clothing, recruiting volunteers, etc.). An analysis of the ongoing processes Volunteer centres were also created to suggests that manufacturing companies activate social actions, which are considered with insucient liquidity are particularly to be of paramount importance during a vulnerable. The ability to easily reorient crisis. In accordance with the national crisis towards new suppliers could be vital, with management oce, joint activities with SMEs experiencing signi cantly greater local stakeholders were sought to provide diculties in this regard. A key factor information, coordinated actions, and a that potentially increases the risk for the platform for recruiting volunteers as an Bulgarian economy is the large number essential element of local support (such as of SMEs – over 98% of all companies in in Topolovgrad, Yambol, and Gurkovo). the country.17 They are expected to be most aected by the crisis. Many small There are also dierences in terms of the companies have gone bankrupt and do measures applied to reduce the negative not have sucient funds to restore their eects of the pandemic. Some local activity or production capacity. In a spatial governments, for example, waived the and territorial context, small settlements collection of certain taxes and rents from where SMEs provide the majority of the jobs sites located on municipal land, extended will be particularly vulnerable and exposed the deadline for payment of local taxes to strong adverse eects. In contradiction (e.g. Dimitrovgrad, Varna, and Sliven), and to general trend in SMEs, many large allowed citizens to use short-term paid companies managed to preserve their parking zones free of charge during the state business activities and human capital during of emergency (So a). Local authorities also the rst months of the COVID-19 crisis. Such implemented various measures to support is the case with the copper mining company SMEs as well as disadvantaged groups. At ‘Aurubis Bulgaria’ (situated near Pirdop and the same time, in the rst half of 2020 there Zlatitsa, So a Province) and ‘Devnya Cement’ were 91 increases in local taxes and fees (Varna Province).18 These companies are and only 27 cases of reductions (Institute reporting a decline in demand, logistics for Market Economy, 2020). Those increases operations, communications, and the use were often ungrounded and untimely. A of large common oce spaces but continue positive trend is that some local authorities to be among the biggest donors in their are increasingly mobilizing digital tools to respective municipalities, and participate monitor and stop the spread of COVID-19 actively in local community initiatives to as well as to expand the range of electronic ght the coronavirus. and remote services oered (So a, Varna, and Pavlikeni). The COVID-19 crisis put local governments to a great test considering the serious The pandemic has empirically revealed two nancial problems of many Bulgarian aspects: local governments were faced with municipalities. Many of them had to uneven socio-economic challenges within organize urgent activities that were not their territories (the spatial discourse); and planned in the budget. Typical cases in this local governments have a crucial role to 112 Hristo Dokov, Kalina Milkova, Ivaylo Stamenkov

play in managing pandemics and other Conclusions emergency/disaster events (the governance discourse). Both of these aspects suggest for This paper studies the socio-economic the continuous need of local governments eects of COVID-19 in Bulgaria to uncover to improve their disaster risk reduction their multidimensional forms and the strategies and management actions. Some key factors that drive relevant processes, critical aspects that need to be considered change the status-quo, and determine the include: the behaviour of key economic intensity, scale, and persistence of observed entities; uctuations in businesses impacts. By linking processes at dierent producing basic goods and necessities; territorial levels (supranational, national, possible changes in the economic identity regional, and local) and scrutinizing diverse of the region; and social structures, socio-economic and political indicators attitudes, and responses of citizens. The and issues, the mixture of quantitative and governance discourse of the COVID-19 crisis qualitative analyses applied in this study encompasses not only timely and ecient reveals the main changes, consequences, coordination between national and local and spatial implications caused by the authorities, but also constructive dialogue COVID-19 pandemic in Bulgaria. between regional/local governance, citizens, and diverse stakeholders. By sharing The pandemic’s impactful and information on COVID-19's dierentiated multidimensional eects in Europe impacts on the local economy, budgets, and made nding the right balance between living conditions, local authorities might containing the spread of the virus and foster better understanding and agreement avoiding an economic crisis a top priority. on crucial issues, including the distribution The dierent monetary, scal, health, and of public investments aimed to support con nement measures tested some of the the post-crisis recovery in line with certain fundamental visions and values adopted strategic regional/local priorities. by the EU. The COVID-19 pandemic also reinforced and added to the political agenda There is a need to strengthen local some concepts that were (to a large extent) systems and stabilize the capacity of local formerly neglected, such as: nearshoring, authorities to manage healthcare, the Europeanisation of the economy, and FDI economy, and social protection (OECD, screening mechanisms. The pandemic and 2020). The alternative development of local the related need for initiating recovery funds and regional economies must mobilize the impeded the negotiation process for the capacity for greater autonomy by rethinking new EU budget (for the next programming the local model and strengthening sectors period, i.e. 2021-2027) provoking lengthy such as culture, education, health, and debates and controversies between some the social economy. It is no coincidence member states. As a country integrated that concepts related to empowering into the EU structures and global economic communities, developing community networks, Bulgaria is largely in line with the economies, and strengthening territorial major European trends in terms of COVID-19 identities are increasingly being added to impacts and the types of measures taken to the political agenda. The pandemic and stop the spread of the disease and mitigate its impacts suggest that this might be the its adverse eects. Bulgaria participated right moment for municipalities to take actively in the EU decision-making process over the situation for their communities by and negotiated an increase of dedicated employing a proactive approach, showing EU funds for the new programming period. high levels of accountability towards their The country also participates in the joint citizens, and no longer merely positioning European tender for the COVID-19 vaccine. themselves as implementers of instructions from the national government (Toto et al., The high degree of openness of the Bulgarian 2020). economy creates conditions for the strong and persistent inuence of exogenous Socio-economic Effects of COVID-19 in Bulgaria: A spatial analysis 113

factors and rapid transfer of external crises. capital, accelerate the development of social This makes the Bulgarian economy very services, and foster more active and goal- dependent on global processes and trends, oriented local communities. Strengthening with limited options of nding its own local governance in Bulgaria might be one of solutions and ways out of the crisis. The the most important elements for successful empirical analysis proves that the Bulgarian recovery and long-term sustainability. economy was severely devastated in the rst These processes should be supported by few months of the pandemic in the country the introduction of strong vertical and (March – May), while some positive trends horizontal coordination mechanisms of recovery have already been registered between the various government structures. in June and July. The spatial discourse of Stimulating cooperation between the study uncovers the diverse territorial municipalities and regions might avoid the impacts of the crisis, with their size, strength, loss of precious resources during a crisis and and expected duration varying according to further strengthen regional and local socio- social and demographic structures, political economic systems. responses, the sectoral specialization of local economies, and the degree of their The COVID-19 crisis underlines the integration into the global supply chains. importance of eective local governance, Yet, we detect signi cant entropy in the coordination of management decisions system as subjective and random factors at dierent spatial levels, active citizen often seem to be an important part of participation in local territorial decision- explaining the essence of the processes making, and the reassessment of national, related to both COVID-19 spread and regional, and local priorities. In this discourse, its inuences on local economies. While the activation and utilization of territorial detailed local knowledge and insight is capitals, as well as the implementation crucial to uncover unknown factors that of new approaches, strategies, and could shed light on these processes, it mechanisms for overcoming the crisis, is often seems insucient to support more of crucial importance. From this point of generalized logics on the territoriality of the view, possible integration and governance phenomena (e.g. why COVID-19 spreads in clusterization among the Balkan countries certain areas and spares others with similar aimed to secure the implementation of characteristics). This makes it dicult to common measures to ght the pandemic distinguish clear territorial patterns. The and its devastating impacts could turn into analyses demonstrate that the dierent a key instrument for the stability of the territorial units and economic entities region. Common activities in the spheres in Bulgaria are characterized by diverse of information exchange, prevention, and behavioural models and reactions to the application of restriction measures, tailored challenges set by the COVID-19 pandemic. to the cultural diversity of the Balkans and The uneven spread of the virus and the available resources in the separate countries, diverse spatial scenarios raise inherent could help ensure regional security and geographical questions about the political, recovery from the current health and socio- economic, nancial, socio-cultural, and economic crisis. In times of pandemic, demographic dimensions of the pandemic solidarity and shared responsibility among and its eects. The asymmetric impact the Balkan states might strengthen regional of COVID-19 on communities suggests cooperation, provide impetus for further the need to nd eective mechanisms joint political activities, and transform the to increase the resilience of territories process of regionalization and its socio- to health, economic, or social shocks. economic dimensions. This requires a more decentralized and regionalized approach. The latter might The ability to nd adequate solutions to the also help mitigate the social and economic complex challenges posed by the COVID-19 eects of COVID-19, build local social pandemic, conceptualize smart place- 114 Hristo Dokov, Kalina Milkova, Ivaylo Stamenkov

based strategies, adopt ecient recovery their business. The results are in the form mechanisms, and build resilient economies of balances which are the dierence will be key to fostering the sustainable between the positive and negative development of countries and regions. All answers. these issues are even more important in light of the current situation in Bulgaria, 8. https://ec.europa.eu/info/business- characterized by the persistent spread economy-euro/economic-performance of COVID-19 and accompanied by nearly -and-forecasts/economic-performance- two months of massive anti-government country/bulgaria/economic-forecast- protests. The potential coupling of medical, bulgaria_en political, and economic crises could turn into a real disaster for the country and 9. https://www.worldbank.org/en/ cause signi cant long-term damages to its publication/global-economic-prospects economy and society. 10. https://www.ebrd.com/news/2020/ ebrd-economies-seen-contracting- by-35-per-cent-in-2020-48-per-cent- Notes rebound-in-2021.html

1. As per the regionalization used by the 11. Information retrieved from the WHO, the European region also includes Government’s and National Crisis- Russia and the Central Asian Republics. management Sta’s regular brie ngs, online media publications, TV (national 2. https://ec.europa.eu/eurostat/news/ and regional) reports, and interviews news-releases (Eurostat News release with local governors. Euro indicators). 12. Information retrieved from media 3. https://www.computereconomics. publications, TV interviews with experts com/images/default/articles/2788/ (including representatives of Ethnic Figure1new.png. Minorities Health Problems Foundation), etc. 4. The Stringency Index is based on the Oxford COVID-19 Government Response 13. Information retrieved from TV interviews Tracker, which systematically collects and reports (national and local media). information on several common policy responses that governments have 14. This example is based both on the taken to respond to the pandemic. It is electoral behaviour of local citizens in calculated on a scale from 0 to 100. the last two mayor ballots (when the candidate received strong support of 5. This is the overall number of COVID-19 85% in 2015 and 65.8% in 2019) and on patients in a hospital on a single day. recent Internet questionnaire conducted by So a University students (subject 6. https://www.capital.bg/politika_i_ ‘Socio-economic geography of Bulgaria’) ikonomika/bulgaria/2020/08/25/4106 revealing that the mayor, during his two 189_zashto_jertvite_na_covid-19_v_ mandates (2015-ongoing), is trusted by bulgariia_dnes_sa/. 63.8% of the respondents. 7. The Total Business Climate Indicator is 15. Information retrieved from the national a weighted average of business climate crisis management sta’s regular indicators in four branches: industry, brie ngs, National Association of the construction, retail trade, and the service Municipalities in Republic of Bulgaria, sector. It is based on business surveys and TV interviews and reports (national that gather entrepreneurs' opinions and local media). about the situation and development of Socio-economic Effects of COVID-19 in Bulgaria: A spatial analysis 115

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Disclosure statement No potential con ict of interest was reported by the authors. 118 Annual Review of Territorial Governance in the Western Balkans, II, 2020, 118-139 https://doi.org/110.32034/CP-TGWBAR-I02-08

Transboundary Water Management In The Western Balkans: Challenges Of The Land-Water Nexus In The Drin River Basin Francesca Vanellia, Besmira Dycab, Paul Rabéc

Summary

Water basins experience huge pressure from urban growth, tourism, energy, and food demands, exacerbated by the pressing challenges of climate change. The competition for limited resources calls for eorts from riparian countries to de ne criteria for transboundary water management (TWM) to contribute to resilient environments. This paper explores the ecacy of TWM policies with respect to the Drin River basin in the Western Balkans, focusing on the Albanian territorial coverage of this basin area. To assess water governance eectiveness and eciency, the paper uses the OECD’s water governance indicator framework (2018). More broadly, it applies a ‘land-water nexus’ frame to assess the extent to which relevant land- based activities are included and eectively monitored in the Drin River TWM. A healthy and resilient river basin environment depends not only on good water governance but also on appropriate land uses and land development policies in the basin. Data was collected through desk research, supported by interviews with key stakeholders. The paper explores the Drin River TWM agreements based on: i) existing transboundary and national legal frameworks; ii) institutional and nancial capacities for data collection and enforcement; and iii) the presence of a land-water nexus vision to support TWM. Research ndings point towards the need to understand policy gaps between riparian countries and to develop an integrated cross-sectoral framework for resource management, such as a River Basin Management Plan, as the basis for a better land-water nexus and more sustainable and resilient development. Lastly, the authors present policy-oriented conclusions and recommendations at the transboundary, national, and local levels, focused on institutional, nancial, and informational gaps.

Keywords: Western Balkans, Transboundary Water Management, Land-Water Nexus, Drin River Basin

Contact

a [email protected] (Corresponding author) Institute for Housing and Urban Development Studies, Rotterdam, the Netherlands b [email protected] Northumbria University, Newcastle Upon Tyne, United Kingdom

c [email protected] Institute for Housing and Urban Development Studies, Rotterdam, the Netherlands

Transboundary Water Management In The Western Balkans: 119 Challenges Of The Land-Water Nexus In The Drin River Basin

Introduction highest stakes in water conditions, especially regarding ood control and accessibility. Transboundary Water Management As water availability and aordability depend on a “mismatch between physical Water resources experience drastic changes water availability and societal water due to various anthropogenic activities, use” (Cabello, 2013, p. 14), social and leading to environmentally insensible ethnographic awareness and engagement practices. Population growth and the are fundamental to enhance community consequent sprawl of new developments resilience and to endorse institutional and informal settlements alter land uses instruments for water governance (Cairns et and consumption patterns. These factors, al., 2017). especially in developing countries, have strained water accessibility and availability. In the European Union (EU), the Water At the same time, industrial production, Framework Directive (WFD) was adopted mining, and intensive agriculture, as in December 2000, to institutionalise a well as other water-wasteful activities, common vision for water management, have aected water quantity and quality moving from pollution prevention to the through groundwater pollution and de nition of a ‘good’ ecological water status. site contamination (Karar, 2017). These This condition is measured by biological, activities produce externalities inuencing hydro-morphological, and physic-chemical land and natural resources management. parameters. The WFD is structured around This paper aims to explore how land and the river basin scale – a natural geographical water governance are harmonised in a and hydrological unit – rather than being transboundary water management context bound to administrative or political to achieve a sustainable land-water nexus, boundaries (European Commission, 2019), focusing rstly on the extended Drin contributing to a territorial approach for the River basin and secondly on the Albanian solution of water issues. Good water quality territorial coverage area of the Drin basin. is achieved through mandatory measures, including legislation, pollution control Competition and conicts around limited measures, and a River Basin Management resources arise in particular due to poor Plan (RBMP), alongside supplementary governance, rather than to resource measures designed according to each scarcity or engineering impediments, country’s institutional and environmental calling for new management approaches landscape. The WFD has also helped to to be explored (Tropp et al., 2017). This promote community participation in water becomes especially relevant in the case governance with dierent results across the of shared water resources, de ned as EU, conditional on levels of democratisation “catchments or watersheds, including in various countries. (Ruiz-Villaverde and lakes and shallow groundwater, shared by García-Rubio, 2017). more than one country“ (UNDP, 2006, p. 206), which account for 60% of global river Water Governance in the Western ows. The complexity of transboundary water management (TWM) involves a Balkans multilevel approach, where the decision- The inclusion of the WFD in national making and enforcement responsibilities legal frameworks is legally binding for are shared among dierent governance EU countries but non-binding for non-EU levels. These levels and processes can countries. The presence of EU member include international actors, national and states, EU candidate countries, and non-EU subnational bodies, harmonisation with countries in the Western Balkans has led to local policies, as well as acceptance and a diverse legal environment around water legitimisation by civic society and citizens and fragmented the transposition of the (Earle and Neal, 2017). The latter group WFD into national legislation. Nevertheless, has the biggest potential impact and the the inclusion of the EU acquis in the national 120 Francesca Vanelli, Besmira Dyca, Paul Rabé

framework of candidate countries is part of national river basins, the country has two the EU enlargement strategy (Hearns, 2019). transboundary rivers: the Vjose Aoos River, Therefore, many Balkan, EU-candidate shared with Greece; and the Drin basin, countries have included the EU water norms shared with North Macedonia, Greece, in their framework through laws and bylaws, Kosovo,2 and Montenegro. Drin riparian while making agreements with other EU countries present a diverse legislative countries. The existing legal misalignment framework on water management. While between Balkans countries, together with North Macedonia has transposed most diering socio-economic and institutional of the WFD, Kosovo has reached a partial composition and development goals, are transposition (NIRAS, 2019), mostly due to among the main factors impeding the the post-war institutional and operational implementation of those agreements (Drin capacity challenges, damaged national water Corda, 2020; Kolokytha and Skoulikaris, infrastructure, and aected international 2019). However, the WFD remains the main cooperation (Krampe, 2017). Similarly to guideline for national and international Albania, Montenegro has made progress water resources in the Western Balkans. on the alignment with the WFD (as part of eorts towards EU admission), regardless Albania is the country with the largest of the lack of coordination between water- territorial coverage of the Drin basin. The related institutions (GWP-Med et al., 2015). country has experienced rapid growth since Finally, in Greece, TWM appears to occupy the dissolution of the communist regime in a low priority in the Greek development the 1990s. Considerable and ongoing rural- agenda, with few joint agreements and a to-urban migration, accompanied with lack of regular cooperation, despite the rapid urbanization on the one hand, and complete transposition of the WFD and an unprepared and weak public institutions amount of shared water resources equal to on the other, has resulted in vast land and 25% (Kolokytha and Skoulikaris, 2019). water quality degradation, exploitation of riverbeds, erosion, and problems related to The Drin Basin and Riparian Countries oods and droughts. At the national level, institutional eorts have addressed the The extended Drin River basin3 covers need to manage the country’s vast water 19,582 km2, the majority of which is located resources. The process of incorporating the on Albanian territory (Figure 1), and is WFD into national legislation began with the inhabited by roughly 1.6 million people approval of Law 111/20121 and its bylaws. (PointPro Consulting, 2017). Nevertheless, the challenges are numerous, and include the national water-services As part of the WFD, a multi-stakeholder coverage and quality. For instance,as process was initiated to foster TWM demonstrated in the National Strategy of and strengthen national institutional Water Supply and Sewage (NSWSS) 2020 - frameworks. Consultations in 2006 2030, the water supply coverage was 78.3% and 20084 started the Drin Dialogue, a and sewage network coverage was 50.2% in consultative platform that took place in 2017. Only 10.45% of the urban population 2010-2011 supported by international was connected to a wastewater treatment organisations. A Memorandum of plant (Ministry of Energy and Infrastructure, Understanding (MoU) signed by the ve 2019). This data helps to grasp the scale of riparian countries in 2011 was a milestone water-related issues, such as water pollution for transboundary cooperation and political due to untreated wastewater discharges, commitment. The process has resulted in problematic water supply services, an the Drin Coordinated Action5 (Drin Corda), inecient billing system, and substandard a joint body for the implementation of water quality. the MoU, facilitated by the Drin Action Plan. The Drin Corda institutional structure Albania has considerable surface and consists of: ministerial meetings; the Drin groundwater resources. In addition to four Core group, acting as a steering committee Transboundary Water Management In The Western Balkans: 121 Challenges Of The Land-Water Nexus In The Drin River Basin

Figure 1. Drin River Basin Boundaries investments that can address the priority issues highlighted in the TDA, including the de nition of an RBMP.

Several environmental challenges are present in the Drin basin regarding water quality, the environment, and the loss of biodiversity. The TDA has mapped the root causes of transboundary issues, including a lack political will, low nancial resources for environmental protection, and climate variability, leading to ve major environmental issues: deterioration of water quality, variability of hydrological regime, biodiversity degradation, sediment transport, and increase of water-related extreme phenomena (oods and droughts). In the Albanian territory, covering the downstream of the Drin River, pollution is mainly caused by solid waste and untreated wastewater discharge in urban areas (Alla, 2019; Mema and Ulqini, 2017), followed by industrial pollution and run-o of fertilizers Source: Drin Corda, 2020 and pesticides from agriculture (Alla, 2019). Moreover, the risk and occurrence composed of representatives from the of oods have increased on the Albanian ve riparian countries’ ministries (Table 1); side of Shkodër Lake. The intensity and the technical secretariat; and lastly, four frequency of oods have been exacerbated Expert Working Groups (EWGs). The EWGs by extreme weather phenomena, poor are focused on i) alignment with the WFD; riverbed maintenance, the mismanagement ii) monitoring and information exchange; of outow from arti cial lakes and dams, iii) biodiversity and ecosystems; and iv) the blockage of natural secondary drainage oods. The Drin Situation Analysis (2011) channels, and sediment transportation due attempted to identify transboundary issues to erosion and material extraction activities and degradation root causes; under the up- and downstream (Drin Corda, 2014). GEF Drin Project,6 this document is being Additionally, unsustainable tourism and (in) updated in the Transboundary Diagnostic formal urbanisation, combined with poor Analysis (TDA) resulting in six thematic sanitation infrastructures, cause runo in reports7 (Drin Corda, 2017). In April 2020, lakes and modify natural habitats. Lastly, the Strategic Action Programme (SAP), a water resources are frequently used as negotiated policy document, was signed energy sources, causing environmental and endorsed to map needed reforms and drawbacks on water ow and quality.

Table1. Representative Institutions forming part of the Drin Corda

Riparian Countries Representative Institutions involved in the Drin Corda North Macedonia Ministry of Environment and Physical Planning Greece Ministry of Environment and Energy Kosovo Ministry of Infrastructure and Environment Albania Water Resources Management Agency Montenegro Ministry of Agriculture and Rural Development Source: Authors, 2020. 122 Francesca Vanelli, Besmira Dyca, Paul Rabé

Relevance of the Land-Water Nexus weakly addresses morphological pressures, resulting in weakness in ecological status The idea of the ‘land-water nexus’ is assessment and monitoring. By contrast, advanced by the authors based on the Sustainable Development Goals (SDGs) experiences in the Netherlands and Flanders constitute a resourceful policy driver (Belgium) during the past decade with the advocating for cross-sectoral TWM, in concept of multi-layer (water) safety in particular SDG 6.5.8 response to ooding. This concept was partly based on the EU Flood Directive of 2007, Objectives and Methodology and recognises the importance of three- tiers of ood prevention measures for water In light of the existing challenges and safety, consisting of (‘hard’) infrastructure, frameworks, and given the relevance of land- (‘soft’) adaptive spatial planning, and water nexus thinking for TWM, this research emergency measures (see, among others, aims rst of all to explore the eectiveness9 Leskens et al. 2013; Kaufmann et al. 2016). and eciency10 of existing TWM policies The signi cance of this approach is that it with respect to the Drin River basin and recognises that water safety depends, to in the Albanian territorial coverage of the a large extent, on what happens on land, Drin basin. The authors use the OECD Water and vice versa. Therefore, water safety is the Governance framework for this purpose. responsibility not only of water managers Indicators from the OECD are collected at but also of planners and other government both the basin and country level, where departments and private actors, such as available. developers (Kaufmann et al., 2016). According to the OECD Water Governance In this article, the authors apply the Programme, water governance is “the set concept of multiple layers more broadly, of rules, practices, and processes through and adapt it beyond the con nes of which decisions for the management of water safety to include other domains water resources and services are taken and where the proper management of water implemented, and decision-makers are held requires close integration with land-based accountable” (OECD website, 2020). Through activities, including land use planning for a multi-disciplinary process, the OECD economic activities, agriculture, and water has developed twelve principles for Water management more broadly. This idea of Governance (Figure 2), clustered around a ‘nexus’ between water and land echoes three dimensions: eectiveness, eciency, other nexuses, such as the ecosystem-water- and trust and engagement (Figure 2). Due food-land-energy (EWFLE) nexus concept to the diculties in collecting primary data (Karabulut et al., 2018) and the land-water- from a broad range of stakeholders as a result energy nexus (see among others, OECD of the Covid-19 pandemic, the principle 2017). All of these recognise the importance of trust and engagement is excluded from of the interplay of dierent domains to the scope of this paper. Nevertheless, it is the long-term health of ecosystems—as integrated as a crosscutting theme in the opposed to pursuing a narrow, sectoral eciency and eectiveness dimensions, approach. According to Carvalho et al. based on the desk research ndings and (2019), the EU has had ambitions for cross- interviews. sectoral policy integration since the 1970s, providing member states with a huge The OECD provides a broad set of indicators number of directives inuencing pressures for all principles (OECD, 2018b), allowing on the environment and drivers of change, for the tailoring of the assessment on a focusing strongly on agriculture, and contextual basis, instead of proposing a rigid promoting the development of management framework as a one-size- ts-all approach. plans to control anthropogenic factors The OECD framework is not only tailored to (European Commission, 2017). However, as the national scale, but can also be applied to stated by Carvalho et al. (2019), the WFD only regional and transboundary scales of water Transboundary Water Management In The Western Balkans: 123 Challenges Of The Land-Water Nexus In The Drin River Basin management by providing a framework E ectiveness and Eciency of TWM in for evaluation and recommendations the Drin Basin (Ménard et al. 2018). Moreover, following the evaluative research on the performance E ectiveness of TWM of dierent policy frameworks against the OECD principles at European level by Neto Clear Roles and Responsibilities et al. (2018) (and endorsed by the OECD (2018)), the WFD is quite well aligned with At the basin level, the Drin Corda represents the OECD principles. This supports the use a good case for cooperation in the Western of this framework (in an adapted version) in Balkans, in accordance with the UNECE the transboundary context of both EU and Water Convention and the WFD, the latter non-EU countries. being the main subject of one of the EWGs. Despite the dierent levels of transpositions Figure 2. Principles of Water Governance of the WFD in national legislation, Drin Corda has provided support for WFD integration in the basin. Strong cooperation is exempli ed in the MoU, which is the result of a “sophisticated, step-by-step multi- stakeholders dialogue” (UNECE and INBO, 2015, p. 31), though it is a legally non-binding document. Noteworthy is the fact that the cooperation initiated by the Drin Corda relies on the formal contributions of only one ministry/agency per country, leaving cross-sectoral alignment and enforcement in the hands of national representatives (Libert, 2015). The Drin Corda has become a reference point for donors and it is currently seeking funding to implement the Strategic Action Programme (SAP) (Interview 4). Some legally binding bilateral agreements Source: OECD, 2015. for the management of international lakes exist, though they do not correspond to Second, the paper assesses to what degree transboundary coordinated action (UNECE a land-water nexus vision has been taken and INBO, 2015). into account in the TWM plans to enhance sustainable development in the Drin basin, Albania, in line with its EU integration and in Albania speci cally. The land-water aspirations as well as its high dependency nexus is analysed with regards to the vision on water resources, started the WFD of the land component in water sectors (and transposition by approving Law 111/201211 vice-versa), the transboundary and national and then approving supporting by- sectoral priorities, and the characterisation laws. This legal framework covers of land instruments. regulations regarding the protection of water environments from pollution and Data collection for both components was overexploitation, sustainable distribution, based on desk research, supported by four water use, and ood risk management, while online semi-structured interviews with establishing institutional arrangements Albanian and international consultants and and responsibilities. The governmental experts on the water framework and water restructuring after each general election, management in Albania. together with the approval of further laws, have contributed to institutional instability at a central level. Initially, the main central authority in charge of integrated water 124 Francesca Vanelli, Besmira Dyca, Paul Rabé

management shifted from the Ministry of Figure 3 is a summary of the institutional Environment to the Ministry of Agriculture arrangement regarding water management after the 2013 elections, then to the Ministry in Albania, presented in the National of Tourism and Environment after the Strategy of Integrated Management of 2017 elections. Currently, the authority Water Resources (NSIMWR) 2018-2027 resides within the newly established Water (Council of Ministers, Albania, 2018a). While Resource Management Agency (Law most of these institutions are already in 6/2018; Alla, 2019). Additionally, a variety place, some new institutions introduced by of institutions still cover dierent aspects the water legislation are still in their early of water management, such as irrigation, stages of consolidation or are still missing water supply and wastewater management, (Interview 3). and ood risk management, among others.

Figure 3. Institutional Arrangement of Water Management in Albania

Source: NSIMWR 2018-2027, translated by authors, 2020.

This complex stakeholder arrangement calls decisions regarding the establishment of for well-established practices of horizontal Drin-Buna WBC yet, creating an institutional and vertical coordination mechanisms. void that is being spontaneously lled Albanian water legislation has conceived of by ad-hoc agreements between dierent the Water Basin Councils (WBCs) as a melting- stakeholders for small scale and sectoral pot for all relevant stakeholders at a basin interventions. Each council relies on a scale (DCM 342/2016, Council of Ministers, technical body, the River Basin Agency Albania, 2016). The Drin-Buna WBC, part (RBA), whose role is often undermined by of the Drin basin, is to be composed of 21 a lack of resources and capacities (Rama, members with representatives from the 12 2018), thereby giving it only a marginal role local governments that share parts of the in practice. basin. However, there have not been any Transboundary Water Management In The Western Balkans: 125 Challenges Of The Land-Water Nexus In The Drin River Basin

Appropriate Scale within the Basin locations, and human activity sectors System causing environmental degradation, hence addressing the trade-os and spill- Following the WFD, the Drin basin scale and overs of water-related sectors. Afterwards, boundaries are clearly de ned as one single member countries are responsible for watershed, including surface, groundwaters, designing policies accordingly based on wetlands, and aquatic ecosystems. To the interventions negotiated in the SAP achieve a harmonised response, the GEF Drin (Interview 4). The achievement of this project plans to strengthen the institutional indicator is therefore highly dependent transboundary cooperation by setting up a upon national eorts towards sectoral High Level Joint Commission (built upon the balance. Core Group and the EWGs focused on RBMP de nition) and secondly, national Inter- As anticipated, the Albanian Government Ministerial Committees (IMCs) addressing has approved the NSIMWR 2018-2027 water, environment, energy, agriculture, (Council of Ministers, Albania, 2018a). This planning, treasury for the basin, and joint is the main policy document on water sub-basin management (Drin Corda, 2013). governance in the country, seeking to Additionally, the draft of a transboundary integrate four water-related strategic RBMP is planned and conditional to funding; pillars (energy, environment, food, and the TDA constitutes a term of reference for people) suitable to measure policy the RBMP report (Interview 4). Nevertheless, coherence in Albania. While the rst several multilateral agreements have been principle of the NSIMWR links water and 13 taken forward, supported by international land management, the fourth highlights water agencies, and are building upon the importance of the economic value of existing bilateral agreements. In fact, Albania water as a factor for informed decision- signed TWM agreements with neighbouring making. Nevertheless, the methodology countries at dierent stages: with Greece in used to translate the objectives set forward 2001, with the Republic of North Macedonia by this strategy into an actionable workplan in 2004, and with Montenegro and Kosovo with the relevant nancial instruments in 2010. These agreements constitute a basis is lacking. This strategy does not present for further development and for sub-basin any analyses of the monetary value and management, leading to the draft of donor- opportunity costs of the included water- based RBMPs for most of the Albanian basins related policies, nor does it succeed in (Rama, 2018). As reported by Rama (2018), presenting the budget required to ful l the Mati River RBMP has been approved, as the objectives it sets forth. Surprisingly, the has the Drini-Buna RBMP.12 However, in the section on nancial resources presents the latter case, there is no permanent body that 2018-2020 sectoral Midterm Budget Plans covers transboundary functions between (MBPs) for a variety of institutions relevant 14 Albania and Montenegro (GWP-Med et al., to water governance. In doing so, NSIMWR 2015); instead, the existing cooperation fails to provide policy coherence in dierent network works intermittently on a ways. First, by elaborating an integrated project basis. Overall, the lack of a supra- water management budget as a puzzle national RBMP entails that management composed of pieces of sectoral MBPs, it fails interventions are limited to the fragmented to guarantee that there will be coherence actions of each country or according to between these sectoral investments or the joint agreement, depending on local to ensure that these investments will capacities and development goals. contribute to the objectives set forward by the NSIMWR itself. Second, using the 2018- Policy Coherence 2020 MBPs as basis to estimate the nancial needs of 2021-2027 solidi es the status quo The TDA, through a consultative and of sectoral policies related to water, rather scienti c process, assesses speci c sources, than pushing forward the ful lment of the 126 Francesca Vanelli, Besmira Dyca, Paul Rabé

objectives of the NSIMWR. Additionally, been divided between building several some of the sectoral strategies cover only small-scale plants – ensuring a quick pro t the period up to 2020, hence it is hard to in concessions to foreigners – and the more make budgetary projections for 2021-2027. recent approach of building fewer large- Consequently, the NSIMWR does not present scale plants to be maintained as a national a budget linked to the objectives elaborated asset. The logic behind the latter approach in this document, but rather submits to a is that a combination of convenient location path-dependent sectoral approach to water and size and a reduced number of plants management. As stated in the document, would support energy-water integration the budget of NSIMWR is not an earmarked with neighbouring countries and increase budget that will address the identi ed safety and ood control, thereby having needs in water governance. Rather, it gives a less impact on river ows (Selenica, 2020). referencential picture of the nancial needs Regardless of their numerous environmental without making it binding, posing further externalities, the trend of constructing small challenges to the longevity and consistency hydropower plants has been increasing as of these strategic investments. an attractive investment opportunity for the private sector, though their overall energy Industry, agriculture, and fresh water production is negligible (Gallop, 2017). supply make up the main sources of Although classi ed as small hydropower water consumption in Albania (NSIMWR, plants due to their production capacity, their 2018). Data on the current and 2027 environmental impact can be substantial projections of water needs for each sector and their cumulative environmental impact are speci ed in NSIMWR at a national scale, has not been assessed (Gallop, 2017). while water needs for agriculture and Moreover, water use for power production water consumption are also speci ed on a can cause draught and limited access to basin level. The National Energy Strategy fresh water for local residents and rural (approved in 2018), on the other hand, does economies (Gjoka, 2018). The construction not report data related to current and future of Skavica hydropower plant is an example water consumption needs. Surprisingly, this of a key energy infrastructure project whose strategy does not include Law no.111/2012 socio-ecological impact is unclear.15 As the in the referenced legal framework. The project has been entirely managed by the level of coordination between these two central government, the lack of transparency strategies is unclear. The National Strategy and cooperation with local authorities and for Irrigation and Drainage 2019-2030 citizens has amounted to public resistance refers to Law no.111/2012; this document from local residents aected by the project: presents the current and projected surface 10,000 residents are expected to be displaced area of agriculture land for irrigation, as and 40,000 residents are expected to lose well as the range of water consumption per their agriculture lands to expropriation (ABC hectare without giving an absolute, overall news, 2020; Rrugaearberit, 2020; Shqiptarja. gure. Calculations based on the data com, 2020; Top-Channel.tv, 2020; Vision Plus presented here show gures similar to the TV, 2020). data presented in the NSIMWR. The Albanian central government is In terms of energy production, Albania attempting to create cross-institutional has been relying almost entirely on hydro working groups to support the integration energy production, although studies have of sectoral policies related to water. In 2015, shown high solar and eolithic energy the National Water Council (NWC) created production potential (Gjoka, 2018). There four thematic working groups composed of is a total of over 496 hydropower plants in dierent ministries that have water-related 16 Albania that are either operational, under interest and shared responsibilities. construction, or planned, 105 of which are However, these working groups are located in environmentally protected areas horizontal coordinating bodies on a central (Gjoka, 2018). National policymakers have level, having no established partnerships with regional and local stakeholders. Transboundary Water Management In The Western Balkans: 127 Challenges Of The Land-Water Nexus In The Drin River Basin

Capacity horizontal networking of stakeholders on speci c water-related sectors. Nevertheless, At the basin level, the overall institutional vertical and, most importantly perhaps, capacity is low. Drin Corda capacity building basin level stakeholder networking is activities target water institutions and lacking. Another challenge in terms of water authorities in the basin acting within the management capacities in the public sector institutional sphere (Drin Core Group, is the lack of permanent sta in managerial 2012a). The EWGs have provided several positions (Ministry of Energy and tailor-made trainings and workshops to Infrastructure, 2019) due to the continuous build capacity within the basin regarding restructuring of institutions and political topics such as pollution control, TWM, and and nepotistic practices of employment in gender mainstreaming, among others public institutions (Interview 1, 2 and 3). (Hearns, 2019). However, operational This is one of the main issues that needs capacity regarding data collection and use, to be addressed in terms of capacities in as well as the ability to set up an up-to- the water sector, especially since the cost date, automated information management of labour is one of the main costs of many system (IMS) is low across riparian countries public institutions (NSWSS, 2020-2030). (Hearns, 2019). Formalised peer-to-peer platforms are also lacking. Lastly, the Eciency of TWM lack of grant writing and management skills diminishes the possibilities for local Data and Information authorities to access funding without the support of foreign experts. Moreover, Drin As stated by Skarbøvik et al., (2014), reliable Corda’s contribution to the TDA and to and updated data on water resources is a several bilateral management pilot-plans key step to TWM. The Drin TDA collected takes the form of monitoring programs and the available data to generate the rst assessments, which will begin serving as a georeferenced database monitoring basis for a joint masterplan.17 report (the IMS) as part of the vision of the MoU.18 Besides collecting data from In Albania, the WFD’s transposition has national databases, the TDA was based been accompanied by an on-going reform on the previous analysis, eld activities to that expands the public sector institutions verify ecological parameters, and on the associated with water management in the construction of future climate scenario country. While these institutional changes taking into account climate variability (Drin could incentivise water careers in the public Corda, n.d.), resulting in a GIS database. sector, this is expected to happen over a This IMS is operating, although not as longer period of time. Regional and local an automated system and not one that water decision-making is quite limited, is open to the public; only institutional reducing local bodies (i.e. WBC and RBA) representatives and scienti c bodies of the to a passive role compared to the active member countries will be able to populate role of central water-related ministries and the database with the data available agencies (Rama, 2018). Currently, the supply (Interview 4, Drin Core Group, 2012a). of water-related study programs in the public Moreover, as con rmed in an interview, universities in Albania is limited to technical ocial data exchange platforms do not degrees (mostly related to environmental/ exist and monitoring circles are not in hydrological engineering) that do not tackle place (Interview 4). While data on physical water management (UNITIR, 2020; UPT, measurements are usually correct, data on 2020). Additionally, there are no guidelines chemicals are incomplete or irregular, and or standards for capacity building across the data on ood risks are often collected on authorities at all levels (Interview 1 and 2). a project basis. Similarly, donors usually play The associations of some institutions at a role in setting up the project for monitoring the local level, such as municipalities and and data collection at the national level, water supply associations, contribute to the linking data to speci c projects, timelines, and actors. 128 Francesca Vanelli, Besmira Dyca, Paul Rabé

In Albania, interviewees claimed that one licences for water related activities, areas of the main water challenges is the lack inclined to eutrophication, safeguard zones, of available, updated data and integrated health hazardous areas, and drinking water databases on which stakeholders can bodies.20 As suggested by Rama (2018), the discuss and negotiate. The Water Resource general lack of data, with the exception Management Agency is the institution of the Drin-Buna river, hampers the full in charge of creating, managing, and implementation of the RBMP, due to the updating integrated information systems impossibility of assessing water quality and on the water sector, namely the National ecological statuses in a timely manner. Cadastre of Water Resources (Law 6/2018, Art. 55; DCM.221/201819). So far, the agency Currently, data is collected through a network (supported by international donors) has of institutions across levels to ensure data launched the domain of the cadastre and collection at an appropriate scale (see the is working on a regulatory framework to table for details).21Horizontal data collection align population data and environmental is based on priority sectors and vertical data (AMBU, 2020). Environmental data will data collection (when the relevant data are include surface water classi ed according to collected on a local level and aggregated by its chemical and ecological status, protected the National Environmental Agency (NEA)) areas, modi ed water bodies, environmental (AKM, 2019).

Table 2. Water-related Data Collection in Albania

Institution Responsible for Data Collection Frequency of Data Collection Freshwater resources (surface and groundwater), such as the biological and NEA (AKM) Yearly report ecological conditions of freshwater Morphological conditions of freshwater resources NEA (AKM) Yearly report

Agriculture and urban discharges/polluters on NEA (AKM) Yearly report freshwater bodies

Coastal morphology NEA (AKM) Yearly report

Upon request and fee Natural hazards IGEUM (IGJEUM) payment

Protected areas NAPA (AKZM) Unclear

Source: Authors, 2020.

NEA reports are published and are accessible that informs the water basin management to the general public online but the plans and decision-making related to the disaggregated database is not. Interviewees economic exploitation of water resources raised concerns regarding the insucient (IGJEUM, 2019). Unfortunately, this data number of monitoring stations along water is not accessible to the public and is only basins for accurate data collection. Data from made available upon request and for a fee. the Institute of Geoscience, Energy, Water Regarding protected areas, it is not clear and Environment (IGEUM) (especially its what type of data the National Agency of cartographic data) is one of the main sources Protected Areas (NAPA-AKZM) monitors Transboundary Water Management In The Western Balkans: 129 Challenges Of The Land-Water Nexus In The Drin River Basin and evaluates and with what frequency. construction, waste management, and Nevertheless, the agency has published a water treatment facilities have often been variety of publications through dierent funded through external nancing (World donor funded projects.22 Bank, 2019). At the sub-basin level, water supply and sewage taris are the main Financing Tools source of nancial revenues for water organisations. This high dependency on Financing instruments for TWM are mainly foreign bodies impedes continuous project dependent on international donors and development and longer-term budgeting. come only partially from national funds. The Drin process was funded through the In Albania, the main water-related revenues limited resources of national governments are generated by the activities listed in Table (Germany and Sweden) and international 3 and are usually not earmarked, except organisations (GWP-Med and UNECE) those revenues generated by the Water (Châtel et al., 2014). Similarly, infrastructure Supply and Sewage Companie.

Table 3. Revenue Generating Activities

Activity Budgeting of the Revenues Collected

Industrial Polluted Water (Art. 30) Central Government Budget

Curative, Thermo-mineral and Geothermal Water Usage (Art. 48) Central Government Budget

Water usage/exploitation authorisations, licence and concession contract fee Central Government Budget (including administration fees) (Art. 50, 53)

Water supply and sewage (Art. 92) Water Supply and Sewage Company Budget

Source: Law 111/2012, updated.

The NSWSS 2020-2030 highlights the heavy reliance on foreign investment (up to challenges involved with water supply and 72% of planned investments). Again, a heavy sewage tari collection, as reported by reliance on foreign capital for investments local water supply and sewage companies. in the water sector is evident in the NSIMWR The latest data, from 2017, indicates that and in the central government’s 2020 revenues are collected on only 35% of water budget. The table below shows the ratio consumed, as a result of a lack of metering between domestic and foreign nancing in wells, pumping stations, reservoirs, and of capital investments in four main water- in some cases, households. Metered water related budgeting programs.23 supply coverage in 2017 was 68.3%, of which 86% of measured taris were collected. This is why revenues from taris make up, Regulatory Frameworks on average, only 50% of both water supply Regulatory measures underpin several and sewage companies' budgets, even if aspects of water governance, from use to during the last decade the water supply and accessibility and conict resolution. The case sewage taris have increased by 143% and of the Lake Shkodër’s future development, 218% respectively. In addition, the NSWSS shared between Albania and Montenegro, indicates serious nancial gaps between shows issues of water management the cost of the 2020-2022 strategy and the under weak transboundary regulatory nancing capabilities available, as well as a 130 Francesca Vanelli, Besmira Dyca, Paul Rabé

Figure 4. Domestic and Foreign Financing for Water Budget Programs

Source: Authors, based on the central government’s 2020 budget.

frameworks (Skarbøvik et al. 2014). Firstly, de ne drinking water bodies as protected unsustainable agricultural practices, where areas, though it does de ne safeguard zones intense production is combined with high around them as protected areas. Alla argues use of fertilisers, especially by under-trained that while safeguard zones are important, farmers, and over-pumping of water for their designation as protected areas is irrigation, result in increasing pollution in not meant to replace the designation of the Lake. Secondly, an increase in tourism, the whole water body as a protected area. if not paired with commensurate road and Moreover, the Albanian government has sewage infrastructure development, could yet to legally address key areas related aect the ecological status of the lake. to the establishment of environmental Thirdly, water availability on the Albanian objectives for: surface water; groundwater side depends on the Montenegrin use of and water in protected areas; requirements the lake as a drinking source. Fourthly, on how to conduct an analysis of river basin the development of hydropower plants characteristics; monitoring criteria; and and dredging activities would change the content of the RBMP.24 Such technical the hydrology of the lake. From the data criteria are important in guiding the available, it seems that these aspects are elaboration of management plans as well as undermanaged and lack platforms for their implementation and monitoring (Alla, conict resolution and monitoring at the 2019). basin level as a whole. Additionally, law enforcement, especially in protected areas, Innovative Governance constitutes a challenge due to the lack of coordination between national and regional The case of the Drin TWM has thus far been inspectorates, which generates a mismatch an innovative process in the Western Balkans, between recording illegal activities and both in terms of coordination eorts and in collecting nes. To tackle this speci c issue, terms of the broad range of stakeholders multi-inspectorates task forces are being involved. The MoU represents an innovative implemented in the Drin-Buna basin (GWP- tool for cooperation at the national and Med et al., 2015). transboundary level, involving ministries, national authorities, water users, NGOs, Alla (2019) recognises some important academics, the private sector, international aspects of WFD that have not been institutions, and donors (UNECE and adequately transposed into Albanian INBO, 2015). However, innovative tools legislation and raises concerns about their and information and communication practical implications on the regulatory technologies seem to be lacking in the framework. Law 111/2012 fails to explicitly region. Moreover, while the establishment Transboundary Water Management In The Western Balkans: 131 Challenges Of The Land-Water Nexus In The Drin River Basin of EWGs supports coordination among all the directives in the water sector) in riparian countries and the establishment an integrated manner. Simultaneously, of a shared baseline in the long-term, TWM this document assesses the cumulative suers from low societal awareness of water impact of the strategic objectives de ned governance’s relevance and poor juridical in the NTP on the environment. Doing so, prosecution at the local level (Drin Corda, the NTP de nes the strategic objective 2014). These issues can aect the scaling- of transiting from an energy importing down process from the transboundary to country to an energy exporting one as the sub-basin level. We can conclude, in incompatible with the water objectives the absence of a database agreed upon by as set out in the EIA. Nevertheless, the EIA dierent institutions and considering the comments on measures to minimise the issues on sectoral management highlighted environmental impact of such interventions in previous sections, that further innovation and does not challenge the validity of the in institutional coordination and in data proposed strategic objectives and projects collection and sharing is still needed. altogether. In this respect, the prevalence of the energy sector could undermine the Towards a Land-Water Nexus Vision establishment of a land-water approach. However, the nexus could also bene t the The RBMP, as envisioned by the WFD (Moss, national energy strategy by addressing 2004), is the main instrument anticipated the fragmentation of river systems and to help achieve integrated water unstable precipitations that aect the management. Achieving this objective continuity of energy production and force means aligning water governance with the country to import energy (IABR et al., land governance in an eort to control and 2016). Improvements to the infrastructure reduce pollution sources, such as urban network together with trading agreements run-o, urban wastewater pollution, and with neighbouring countries, land planning, intensive agriculture near water bodies. solutions for climate adaptation, and On a transboundary level, the land-water riverbeds preservation could mitigate nexus is embedded in the Water-Food- ecosystem fragmentation and degradation. Energy-Ecosystem Nexus report of the TDA, supported by UNECE and still unpublished While the expectation of some water (Lucia de Strasser, 2018). The rst phase experts is that the RBMP should be consisted of a qualitative assessment of informed on land management issues three priority issues, linking i) hydropower, by national spatial planning instruments ow regulation, and ood protection; ii) in place and then trickle down to local ecosystem services, biomass production, instruments (Interview 4), such an approach and forest management; and iii) agricultural overlooks the considerable impact that local activities and water demand. A second authorities’ decision-making has on water phase will provide a quantitative assessment quality and quantity. Shkodër Lake provides of these issues based on dierent climate some examples of these issues and impacts scenarios. The role of land in urban (Municipality of Shkoder et al., 2016). Firstly, development and urban land markets, untreated urban wastewater is one of the which have a direct impact on water quality main pollutants of the lake, which must and quantity, has been overlooked by this be addressed by local actors. Secondly, document. the Shkodër bypass, which connects two national motorways bypassing the inner Looking to linkages with territorial city of Shkodër, has almost been completed planning on a national level in Albania, despite the negative environmental impacts the Environmental Impact Assessment highlighted in public hearings. Speci cally, (EIA) of the National Territorial Plan the bypass creates a barrier between the (NTP) (AKTP, 2020a) sets environmental city and the lake, fragmenting the lake's objectives based on relevant, rati ed habitat and threatening urban expansion conventions and EU directives (including in its vicinity. Most importantly, while the 132 Francesca Vanelli, Besmira Dyca, Paul Rabé

bypass supposedly mitigates the ooding in the region: the riparian countries share risk by creating a water barrier, it increases a vision that takes advantage of political the risk of pluvial ooding in Shkodër as the will and momentum to collaborate. A key ow of rainwater towards the lake is now contribution of the Drin Corda is to increase disrupted. capacity and provide standards to follow at the same pace for its members. In this On a basin scale, there is a lack of sense, the recently-signed Strategic Action cooperation between the national and local Programme formalises the commitment governments in the absence of a second- of the riparian countries in addressing tier government such as a decentralized the transboundary issues framed in the regional authority, which poses several Transboundary Diagnostic Analysis. management challenges. Currently, the Although Drin Corda partners are involved main urban planning instruments employed in dierent pilot projects, these are in Albania are comprehensive territorial aected by institutional dissimilarities and plans, also referred to as general local a lack of reliable water data. Improving territorial plans in local legal terminology, the eectiveness of water governance in elaborated at the municipality scale. The de ning clear water policy goals and targets Albanian Drin sub-basin overlaps with will depend on institutional stability in the the administrative boundaries of thirteen riparian countries and on the elaboration of municipalities. Three of these municipalities a transboundary River Basin Management do not have approved General Territorial Plan. The eciency of water governance Plans in place (AKTP, 2020b), whereas the in maximising the societal bene ts at existing local territorial plans of the other least costs will be linked to much-needed 10 municipalities only cover the portion of balance and coordination among sectoral the river basin within each municipalities' national strategies and the involvement of territorial jurisdiction. Depending on local local actors. expertise and data availability, they vary in quality, accuracy, and approach to land In Albania, the policy and regulatory and water management. Therefore, they do landscape for water governance is not provide a clear picture of an integrated characterised by institutional instability land-water management plan for the entire and inadequate enforcement. Moreover, Drin basin in the Albanian territory. This funding sources for national and could be overcome by a regional plan. transboundary projects are mainly tied However, eorts to undertake regional to external donors, which compromises development reform in Albania have failed funding coherence. Data collection and to produce concrete sustainable outcomes accessibility are: dependent on speci c, (Imami et al., 2018) in terms of decentralised ongoing projects; based on agreements institutions that could undertake the task of between international and national elaborating and implementing a regional parties; and are not collected or shared in plan, while having the authority to raise a systematised manner. Integrated policy revenues independently. approaches and documents are lacking: policymaking and regulation occurs in a Conclusions and Recommendations piecemeal fashion rather than contributing to established strategic objectives at the The complex water system and socio- basin or sub-basin level. In addition, the political framework of the Western Balkans local capacity for fundraising and managing requires an integrated approach to grants autonomously is also limited. A lack transboundary water management across of horizontal and vertical coordination countries and sectors, especially since between public authorities is another environmental pressures are expected to challenge confronting the integrated water increase as a result of rapid political and management objectives. For instance, the economic change (Skarbøvik et al., 2014). overriding importance of the energy sector The Drin Corda constitutes a good practice recognised by the Albanian government Transboundary Water Management In The Western Balkans: 133 Challenges Of The Land-Water Nexus In The Drin River Basin conicts with other sectoral objectives and working groups, including private sector complicates the quest to address water representatives from farmer and shing governance as an integrated, overarching communities and businesses, energy trading way that involves various sectors. companies, water supply companies, and other private stakeholders. Moreover, it is A Land-Water Nexus Vision for Enhanced important to improve the transparency and Resilience: Institutional, Funding, and coordination of data and capacity sharing Data Gaps among donors, international agencies, and local entities for the sustainability of water- A land-water nexus vision is part of the Drin related projects. Corda approach, as well as part of Albanian In Albania, the implementation of basin and strategic plans. At the moment however, it sub-basin plans should rstly be combined is implemented nationally through zoning with an institutional decentralisation regulations for protected areas and general process to strengthen the role of local local territorial plans focused on local land institutions and increase their capacity and use. The fragmented nature of these latter power. Second, eorts should be taken to plans represents one of the main challenges ll institutional gaps at the regional level. to nexus implementation. This challenge This can be tackled by pushing forward the is compounded by the disproportionate process of establishing new institutions role played by central institutions in stipulated by Law 111/2012 (especially the resource management (compared to the Water Basin Councils) and decentralized weak position of local institutions) and the regional authorities. Thirdly, at the central lack of a regional, in-between body that level, national and regional strategies could address land-water nexus priorities should be guided by cost bene t analyses at a sub-basin level. Moreover, the lack of of water usage in all water-dependent a transboundary RBMP represents a gap sectors. These should also include bene ts between the institutional cooperation of that are hard to monetize, such as health, Drin Corda and the sub-basin level at which environment, and urban quality bene ts for RBMPs are being drafted. The elaboration water-related projects to better understand of a RBMP would also put the SAP in the the trade-os of each decision. In this longer timeframe of 30 years. Additionally, sense, environmental impact assessments it is possible to assume that due to the should be strictly applied to protected challenges highlighted in nancing tools, areas and used to inform national strategies data, and policy coherence, the nexus in the water-sector. In terms of energy, concept in Albanian policy-making will a diversi cation of the sector towards remain largely on paper until budgets and alternative energy sources could diminish implementation plans can be aligned in an dependency on over-exploited water integrated fashion. resources. Small hydropower plants should At the transboundary level, the need for be cautiously evaluated, since evidence drafting and implementing an RBMP is shows that they present numerous imperative. This should be informed by environmental externalities while their engagement processes with local actors and contribution to overall energy production is nal users, thereby improving negotiation very modest. abilities and providing cross-sectoral policy Local bodies should be capacitated to integration by prioritising the creation of increase their regulatory frameworks national Inter-Ministerial Committees. The and address uncontrolled local practices. RBMP should become a hybrid instrument, Moreover, a process of capacity building in able to inform national and local authorities. acquisition, spending, enforcement, and the It should also be able to gather and assess support of local informal networks would the needs and objectives of water-related empower local bodies to play a more active sectors through dierent consultative role in resource management. Similarly, 134 Francesca Vanelli, Besmira Dyca, Paul Rabé

greater awareness of water issues should be integrated water resources management promoted among all users and civil society, in the extended Drin River basin’ (PIMS especially in terms of risks and consumption. 4482/ GEF ID 4483); and, II) a medium-sized ‘add-on’ project ‘Enabling transboundary Notes cooperation and integrated water resources management in the White Drin and the 1. ‘On the integrated water resources extended Drin basin’ (PIMS 5510 / GEF management’ (Ministry of Environment, ID 9121)(Hearns, 2019, p. 2).The GEF Drin 2012) Project was endorsed in 2011 and began in 2015. The project supports the Drin Corda 2. All references to Kosovo are made in the activities and implementation of the MoU. context of UN Security Council Resolution 1244 (1999). 7. These thematic reports address: Biodiversity, Pollution, Hydrology, 3. The Drin River is composed of two main Institutional and Legal Setting, Socio- branches: the Black Drin and the White Drin. economics, and the Water-Food-Energy- The Black Drin ows from Ohrid Lake in Ecosystems Nexus. North Macedonia and joins the White Drin, which ows from Kosovo, in Fierza Lake in 8. SDG 6.5 calls for the following: “By 2030, Albania. Hence, the downstream of the Drin implement integrated water resources River ows in Albanian territory, where the management at all levels, including through Drin joins the River Buna before it meets the transboundary cooperation as appropriate” Adriatic Sea. (United Nations, 2020).

4. These consultations were carried out under 9. “Eectiveness relates to the contribution the Petersberg Phase II/Athens declaration of governance to de ne clear sustainable process and the Global Environment water policy goals and targets at all levels Facility (GEF) IW:LEARN Programme, of government, to implement those policy supported by the World Bank, UNECE, goals, and to meet expectation targets” and GWP-Med, with the nancial support (OECD, 2018a). of the Swedish Environmental Protection Agency and the German Federal Ministry 10. “Eciency relates to the contribution of for the Environment, Nature Conservation governance to maximise the bene ts and Nuclear Safety. of sustainable water management and welfare at the least cost to society” (OECD, 5. The Coordinated Action for the 2018a). implementation of the Memorandum of Understanding for the management of the 11. Amended with Law 6/2018 (Ministry of Drin basin (Drin CORDA) is supported by the Environment, Tirana, Albania); drafted by the GEF Drin Project. The latter is implemented Ministry of Environment with the assistance by the United Nations Development of two EU-funded projects: Implementation Programme (UNDP) and executed by the of National Plan for Approximation of Global Water Partnership (GWP) through Environmental Legislation (INPAEL 2009- GWP-Mediterranean (GWP-Med), in 2011) and Strengthening Environmental cooperation with the United Nations Law Enforcement in Albania (SELEA 2012- Economic Commission for Europe (UNECE). 2014). GWP-Med serves as the Secretariat of the Drin Core Group, the multilateral body 12. DCM 1/2020 (Council of Ministers, Albania, responsible for the implementation of the 2020). The DCM does not include the nal Memorandum of Understanding. plan of the river basin.

6. Composed of: I) a full-sized project entitled, 13. "Ecient (water) management links land ‘Enabling transboundary cooperation and management to water management Transboundary Water Management In The Western Balkans: 135 Challenges Of The Land-Water Nexus In The Drin River Basin

along the whole catchment area and sewage, etc) (National Environmental underground aquifers" (NSIMWR 2018- Agency, 2019). 2027, p.3032). 22. The most recent project is ‘Monitoring 14. These institutions include the Water Manual for Lake-bound Species and Resource Management Agency, Ministry Habitats of Lakes Prespa, Ohrid and of Environment, Ministries responsible for Shkodra/Skadar,’ which is an output of a water supply and sewage, civil emergency, transboundary project between Albania, energy, and the Albanian Development Montenegro, and North Macedonia (NAPA, Fund (NSIMWR, p.3072). 2019) on conservation and sustainable use of biodiversity at Lakes Prespa, Ohrid, and 15. Two options have been laid out for Skavica Shkodra/Skadar. hydropower plant, one with an estimated power of 120MW and yearly production 23. These four programs are the main water- capacity of 479 GWh that would cost related budgeting programs however they 308 million € and a second one, with do not cover the entire budget directed to an estimated power of 210 MW, yearly water-related issues, since other budgeting production capacity of 915 GWh, and programs might also have water -elated cost of 510 million € (Gordani, 2020), to be activity projects. Also, the 'Civil Emergency' nanced by the Government of Albania program refers to all civil emergencies, not after years of failed attempts to nance it only water-related ones. through a concession scheme. 24. Decision no.1 of the National Water 16. These groups were created by Decision Council ‘On the content, elaboration and NWC 4/2015. implementation of the National Water Strategies, Water Basin Management Plans 17. Pilot projects include the development of and Plans of Flood Risk Management’, the Lake Ohrid Watershed Management approved on 17/02/2015, should address Plan, a sewage treatment plan for Skadar/ this issue. However this decision has not Shkoder, and a joint monitoring network been published by the Ocial Publishing in the Skadar/Shkodër and Buna/Bojana Centre and cannot be accessed online. sub-basins in Albania and Montenegro. Moreover, a pilot project on ood adaptation is under consideration (Hearns, 2019). References 18. The MoU Action Plan includes “Action 3. ABC news, 2020. Hidrocentrali i Skavicës, Improvement of information exchange Beqaj: Duhet 1 komunikim i hapur e through the establishment of a system for transparent me banorët e Dibrës. ABCnews. regular exchange of relevant information [Online] available at: https://abcnews.al/ among the competent authorities of each hidrocentrali-i-skavices-beqaj-duhet-1- Party” (Drin Core Group, 2012b, p. 18). komunikim-i-hapur-e-transparent-me- 19. DCM 221/ 2018, Section III-2/ç (Council of banoret-e-dibres/. [Accessed 9 January Ministers, Albania, 2018b). 2020).

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Disclosure statement No potential con ict of interest was reported by the authors. 140 Annual Review of Territorial Governance in the Western Balkans, II, 2020, 140-149 https://doi.org/ 10.32034/CP-TGWBAR-I02-09

Economic Viability of Alternatives for Lignite-free Electricity Production in North Macedonia: The Case of TTP Oslomej Vesna Garvanlieva Andonovaa, Marjan Nikolovb

Summary

The Republic of North Macedonia (RNM) is undergoing a complex process of integration into the European Union (EU) including the alignment of environmental protection policies, which is one of the most challenging and cumbersome sectors. After signing the relevant international agreements and increasing awareness about the damage that fuel (lignite, coal) causes to the environment and human life, this energy source’s popularity began to decline signi cantly. Coal usage as an electricity input in North Macedonia is less and less attractive, particularly given the low quality and limited coal reserves, coupled with changes in the strengthened European environmental legislation and increasing competition from renewable energy sources (RES). The impact of these trends will be most acutely felt in the Southwest planning region of North Macedonia, where the Oslomej thermal power plant (TPP) (one of two in the country) is located. Although the plant’s lifespan is almost over, it has a signi cant eect on the local economy, both directly and indirectly. The sector (mining and electricity production) employs a noteworthy number of people and contributes to the regional economic value added. The lack of a clear approach to manage the anticipated post-lignite eects of Oslomej’s possible decommissioning in a timely and integrated manner is evident, as institutionally-coordinated initiatives to prepare for the transition are lacking (at least as far as the public is aware). This article intends to illustrate the economically viable alternatives to be considered for reducing or mitigating the negative economic eects of the post-lignite era within the framework of an adequate and timely approach to the transition.

Keywords: Decommissioning Coal Electricity Production, Economic Viability, Alternatives, Republic of North Macedonia

Contact

a [email protected] (Corresponding author) b [email protected]

Center for Economic Analyses (CEA), Skopje, North Macedonia, www.cea.org.mk Economic Viability of Alternatives for Lignite-free Electricity Production in North Macedonia: 141 The Case of TTP Oslomej

Introduction The decarbonization of power production is crucial to reducing greenhouse gas The decommissioning of fossil fuel power emissions and tackling climate change. production plants between now and Decommissioning coal power plants is 2030 is essential for Europe’s planned low in line with these environmental goals. carbon future. In this in-between period, This process is expected to have a notable signi cant changes are needed within the impact on the economy and the society as member countries’ energy sectors if the a whole, requiring a vital transformation European Union (EU) is to meet its goals for of the energy system. The transformation the Green Deal and to be climate-neutral towards renewable and low-carbon energy by 2050 (European Commission, 2019). This requires signi cant investments followed entails reducing greenhouse gas (GHG) by clear national strategies and action emissions to at least 40% below the 1990s plans. While it may be a signi cant potential level by 2030 (as per the Paris Agreement of source of economic activity and new jobs, 2015). While the EU has made considerable economic losses are also expected, caused progress in improving energy eciency by the closure of the traditional energy and using renewable energy sources (RES), plants and energy-dependent sectors. a well-planned transition out of carbon- The RNM’s compliance with the European intensive power generation is needed to environmental goals for decarbonization meet the long-term aim of creating a low- and the abandonment of coal-fueled carbon society not only in EU, but in the energy production will undoubtedly Republic of North Macedonia (RNM) as well. aect the socio-economic development of the Southwest planning region in North Through the 2030 Climate and Energy Macedonia, where the Oslomej thermal Framework (European Council, 2014) and power plant (TTP) is located. subsequently through the Green Deal, the EU set their renewable energy target to at least The goal of this article is to demonstrate 27% of total energy. The share of renewables the possibility for economically viable and in gross nal energy consumption at an EU pro table alternatives that can be both level was 18.9% in 2018, compared with 9.6 positive for the environment and for the local % in 2004 (Eurostat, 2020). The transition economy by modelling several scenarios. of the Macedonian energy sector from It provides an overview of the challenges environmentally polluting non-renewable of the energy sector in the context of the sources to RES is rather slow however, and environmental future of the RNM on the lignite production is still prevalent. Lignite path to full EU membership. Furthermore, as a source for energy production still the case of the Oslomej TTP models the accounts for over 70% of the country’s total possible regional, economic eects though energy mix (State Statistical Oce, 2020). several scenarios. The Republic of North Macedonia is an EU Energy-generating Mix in North candidate country. As of March 2020, the EU’s General Aairs Council decided to Macedonia open accession negotiations. While aspiring Energy resources in the Republic of to adhere to the European goals, the RNM North Macedonia indicate a modest has to deal with the challenge of being one energy potential, directly aecting the of the countries with the highest level of opportunities to meet the country’s own air pollution.1 Its urban areas regularly rank energy source needs. The exploited energy among the top air-polluted locations within sources in the RNM are predominantly Europe. While the EU is moving quickly coal and hydro-energy. The country relies away towards its ambitious environmental heavily on fossil fuels that are powered by plans, the RNM is struggling to keep up a low-quality lignite and oil for electricity as the environmental gap between North generation. In the last fteen years there Macedonia and the EU widens. has been a sluggish transition from coal- 142 Vesna Garvanlieva Andonova, Marjan Nikolov

based electricity generation towards clean Despite investments in the system’s RES such as solar and wind. In 2018, lignite modernization, domestic energy production accounted for 71% of the total energy has decreased by about 30% in the last ten balance while collectively, solar, wind, thermal, years (Figure 1), while imports have risen to and biogas accounted for less than 2% of 64% of total energy consumption (Figure 2) the total annual electricity generation. Hydro (State Statistical Oce of RNM, 2020). energy generation accounted with less than 14% (State Statistical Oce of RNM, 2020).

Figure 1. Energy Mix in North Macedonia, 2005-2018

Energy balance, in 000 toe

2000 84% 90% 79% 78% 81% 81% 80% 80% 1800 74% 74% 74% 73% 80% 71% 69% 67% 1600 70% 1400 60% 1200 50% 1000 40% 800 30% 600 400 20% 200 10% 0 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Lignite Thermal heat Fuelwood Wood of fruit trees and oth. plant residues Wood wastes, wood briquettes and pellets Hydro energy Solar electricity Wind electricity Biogas Biodiesel lignite/total (%) (r.h.)

Source: State Statistical O ce of RNM (2020)

Figure 2. Energy Balance North Macedonia, 2008-2018

Energy balance 2008-2018 ('000 toe) 4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

-500 Total primary production Recovered products Imports Stock change Exports

Source: State Statistical O ce of RNM (2020) Economic Viability of Alternatives for Lignite-free Electricity Production in North Macedonia: 143 The Case of TTP Oslomej

The International Monetary Fund has the Energy Community stated that, “the suggested that prices paid by consumers in adoption of the Energy Law in May 2018 North Macedonia for fossil fuels are broadly marks a turning point in the transposition in line with low domestic supply costs, but of the Third Energy Package” (Energy that low-priced supply does not reect Community Secretariat, 2018, p.102). “The the costs of environmental damage. This is legally binding renewable energy target was mainly due to the adverse impacts on health revised to 23% by the Ministerial Council in from “local air pollution and contributions 2018. In 2017, the country achieved a 19.7% to global warming, which are tantamount to share of energy from renewable sources, sizeable fossil fuel subsidies” (UNECE, 2019, lower than the 21% trajectory for the pg. 67). years 2017 and 2018.” (Energy Community Secretariat, 2019, p.138). Further, “Almost Challenges exist in meeting the country’s 80% of the total GHG emissions are CO2 legally binding renewable energy target, emissions originating from the energy, due to its reliance on fossil fuels and buildings and transport sectors. Due to the hydropower. The RNM’s target for RES in extensive use of fossil fuels and particularly 2020 was reduced from 28% to 23% (Energy the dominant share of lignite for electricity Community, 2018) while at the same time production, there is signi cant potential its solar and other RES energy potential is in the country for policies and measures considered to remain untapped (IRENA, leading to GHG emissions reduction” (ibid., 2019). p.144). The EC report also notes: “The amended national renewable energy action Strategic Direction in the Energy Sector plan is now in line with the binding target and European Policies of 23% of energy coming from renewable energy sources by 2020. The new Energy Law In 2010, North Macedonia adopted three is fully aligned with the Renewables Energy key documents for the energy sector Directive. The implementing legislation is valid for the next decade(s), the 2010 in the process of being adopted.” The new Energy Development Strategy, the 2010 strategy was adopted at the very end of Strategy for the Improvement of Energy 2019 to be implemented until 2040, with Eciency, and the 2010 Strategy for the three ambitious scenarios. The new energy Use of Renewable Energy Sources. The 2010 strategy clearly pinpoints the fact that TPPs Energy Development Strategy (valid until fuelled by coal, such as Oslomej and Bitola, 2030) faced major backlash due to a nuclear are both faced with a lack of coal sources. power plant scenario as one of the options. While Oslomej is using the nal coal reserves, Furthermore, the Strategy was criticized Bitola will be faced with this challenge in the for its excessive focus on hydropower and coming decade. insucient attention to other RES. A decade later, nalized at the very end of 2019, a new The Economic E ect of Thermal Plant national Energy Development Strategy was Decommissioning: The Case of Oslomej enacted by the Government of Republic of North Macedonia (GoNM) valid until 2040. The Oslomej TTP is in the Southwest Under the Energy Community commitments planning region of the country. The energy to increase the share of RES, the country sector of the region, primarily comprised had a target of 28% of the gross nal energy of the Oslomej mine and thermal plant, consumption in 2020, while at the end of contribute around 16% of the gross value 2018, the Energy Community’s Ministerial added (GVA) of the region (Center for Council adopted a decision lowering the Economic Analyses, 2017).2 The case of country’s 2020 target for the share of RES Oslomej TTP is of relevance, as the Oslomej in gross nal energy consumption to 23%. mine produces less than 2% of the total Regarding North Macedonia’s energy coal produced for energy transformation sector in 2018-2019, the Annual Report of when active. Oslomej TPP is the second 144 Vesna Garvanlieva Andonova, Marjan Nikolov

thermal power plant according to installed 2) Decommissioning – closing the plant capacity in North Macedonia. At one time, according to standards and appropriate it contributed approximately 10% of the technical activities, dismantling facilities, total domestic electricity production. and bringing the site to the state for Nowadays, when it is active, it contributes brown eld investment without soil up to 2% of electricity produced. Faced with decontamination; and the depletion of nearby coal reserves. the thermal plant’s future is not only bleak, it is 3) Alternative economic activities in the non-existent. Despite this, the ESM -‘Power primary, secondary, and tertiary sectors of Plants of North Macedonia, Five-Year agriculture, processing industry and tourism Investment Plan 2018-2022,’ commissioned services (potential areas determined in new coal reserves in the vicinity of Oslomej consultation with the community) as value- TPP, however did not occur due to the socio- added substitutes for the lost employment environmental reasons and public pressure in the electricity supply sector through (Ministry of Economy of RNM, 2019). a phasing out and gradual reintegration approach.3 At the same time, stakeholders are not aligned in the RNM about the direction to Input-Output Method (IOM) be taken. This is evidenced though the lack of an integrated and coordinated approach By using the IOM model of multipliers, the to energy development with long-term, three scenarios refer to the creation of new state spatial planning; environmental jobs and local value added that contributes protection planning; health protection to the economy of the region directly, and measures for the population; economic then takes into account the multiplier eects development; and sustainable growth. through the interaction with dierent Considering the lack of coordination, a civil sectors in the regional economy. society initiative evaluated the regional economic implications if and when the The comparison of the scenarios indicates Oslomej thermal plant is closed. In this that the decommissioning of Oslomej eort, and given several scenarios, the (either before or after the depletion of the results serve to illustrate the existence of lignite reserves) will lead to the loss of two possible alternatives that may mitigate the thousand jobs. Approximately half of these economic eects of closure. The scenarios jobs are direct losses with the other half demonstrate that, if adequately planned are job losses in interacting sectors in the 4 and implemented, it is economically viable local economy. The greatest impact, as a and preferable to decommission the coal result of the multiplier eects, is expected plant. in related economic activities such as: mining, processing, and electricity supply, In the Center for Economic Analyses and while positive outcomes are expected in Ekosvest’s (2019) economic analysis, agriculture as well as administrative and two approaches were used in designing other service activities. In terms of gross the scenarios: the Input-Output Model value added (GVA), the decommissioning approach (IOM) for the Southwest region of of Oslomej will generate a loss of over one the RNM, and a Cost-Bene t Analysis (CBA). billion denars,5 half of which will result as a The scenarios considered to estimate the direct loss from Oslomej's contribution to possible impact were: the sector. The remaining losses result from the indirect multiplier eects on related 1) Zero scenario/No change – where no economic activities. preparatory or other activities are taken after the full exploitation of the coal The scenario with the gradual substitution reserves in the Oslomej mine and there is of labour in alternative economic activities no compensation for jobs lost, nor for the illustrated though three given sectors6 value added to be lost once the lignite units could directly replace 194 direct jobs and are shut; another 994 indirect jobs in other sectors. Economic Viability of Alternatives for Lignite-free Electricity Production in North Macedonia: 145 The Case of TTP Oslomej

Without gradual substitution, the closure of The results of the scenarios modelled with the Oslomej upon depletion of lignite reserves input-output approach are summarized in the would immediately result in 991 direct following gure (see Figure 3). These results job losses and an additional 989 in other show that only in terms of employment, the related sectors. With the decommissioning sectors in the given alternatives cannot fully process, 912 direct jobs would be lost and absorb the labour substitution from Oslomej. an additional 999 in other, related sectors. However, the regional loss of value added to At the same time, following an approach the economy can be signi cantly compensated of substitutions with alternative economic though the generated value added from activities, the regional value-added loss other activities that will not only substitute but would be substituted and surpassed from contribute beyond Oslomej’s value added. the other sectors, mitigating the negative eects.

Figure 3. Comparison of Scenario Eects on Jobs and Value Added Reduction/Creation of jobs

S3: Alternative activities in three sectorsin the economy

2: Closing and decommissioning

S1: No change/ no action

-3,000 -2,500 -2,000 -1,500 -1,000 -500 05 00 1,00

Direct e ect Indire

Reduction/Creation of regional value added

Source: CEA, Ekosvest (2019) 146 Vesna Garvanlieva Andonova, Marjan Nikolov

What is crucial is timely, systematic, and with the bene ts and costs, which are much organized action, in accordance with good wider than only the nancial pro tability, practices and principles that are responsive then the state of play is signi cantly dierent to the needs of the citizens aected and and the economic bene ts exceed the costs environmental protection. many times over.

Cost-Bene t Method The most favourable scenario, measured by the CBA through economic net The results of the scenarios from the present value (ENPV), is the closure and second approach, with the nancial analysis decommissioning of Oslomej accompanied indicators, show that decommissioning with a plan for gradual labour substitution Oslomej is a nancially unpro table option. and reintegration in other, non-polluting However, the economic analysis shows sectors. In the scenario, a combination an economically feasible and pro table of primary agricultural production, food decommissioning scenario. Furthermore, processing, and the development of services we modelled the process of closing Oslomej in the eld of tourism are used. This is with a gradual substitution of labour and expected to generate bene ts of 2.15 billion reorientation towards economic activities denars7 in a period of twenty- ve years, with in other sectors, which is expected to have an internal rate of return of 24%. The most a signi cant, long-term, positive economic economically unfavourable scenario, on the eect. In particular, eects would be felt other hand, is not taking any action due on the quality of life of the people, the to the negative implications and costs for protection of the environment, and the society as a whole. protection of health and human life. The given scenarios assess the nancial and Concluding Remarks: There are economic pro tability in the continuance Alternatives of activity at Oslomej until the full depletion of lignite reserves without any planned This paper’s goal has been to illustrate the activities for the labour force or other economic viability and positive outcomes economic activity; in a decommissioning of alternative scenarios that are bene cial process without substitution; and two for the economy, community wellbeing, alternative scenarios of possible labour and the environment, through the case of substitutions within economic activities the Oslomej TPP. The essential prerequisites not related to coal production or other for win-win scenarios are political will, clear polluting, economic activities. goals, good planning, and an integrated approach, followed by determined and The results of the modelled scenarios ecient policy implementation involving indicate that, from a solely nancial the local community. Pursuing such perspective, the ‘no action scenario’ as well a scenario is important as the RNM’s as a scenario of ‘no action followed by labor transformation to a post-lignite era is substitution’ after the depletion of lignite lagging behind the European goals. reserves, has a positive nancial eect. These outcomes are expected since there are no The movement of the RNM towards the nancial capital investments in the period increased capacities and usage of RES vs. considered, merely revenue generation non-renewables is lethargic, especially (i.e. generating positive annual cash ows). for decommissioning coal usage. The two Gradual labour substitution in the three thermal plants (one of which is Oslomej), sectors (agriculture, food processing and though minimally signi cant energy tourism) would generate positive ows after producers nowadays, require a well-planned the closing of the TTP. system of decommissioning coupled with plans for the reintegration of the labour However, if we consider the economic force and mitigation of local economic feasibility and pro tability of the scenarios eects. While decarbonization and energy Economic Viability of Alternatives for Lignite-free Electricity Production in North Macedonia: 147 The Case of TTP Oslomej

Figure 4. Comparison of Financial and Economic Viability of Scenarios

S3.2 Decommissioning with labor substitution in 2,155.39 three sectors 270.15

S3.1. No change/ no action with labor substitution in 1,850.31 three sectors 659.27

3.84 S2: Closing and decommissioning -590.85

S1: No change/ no action 159.25 27.46

-1,000.00-500.00 0.00 500.00 1,000.001,500.002,000.002,500.00

Economic assessment (ENVP) Financial assessment (NPV) Source: CEA, Ekosvest (2019) system restructuring is a complex, lengthy, Notes and expensive process, immediate actions are needed. 1. Approximately 1,600 people die prematurely every year as a result Policymakers should balance the of exposure to AAP (PM2.5) in North environmental necessity for accelerated coal Macedonia (World Bank, 2019); 3900 plant decommissioning with a thoughtful, premature deaths in the Western managed allocation of the capital losses, Balkans due to coal plants (Puljic, V. M., while constructing a just system for the et al., 2019) transition of the labour force and local economic development. Environmental 2. The balanced regional development fairness programs should be enforced indices for RNM shows a huge gap to ensure that the local communities between the Skopje statistical planning participate fully and bene t from the region and the seven other statistical transition process towards clean, renewable planning regions. energy. 3. Please note that during the design of the Adopting and practicing no-coal and scenarios, we did not take into account clean energy should be put into practice speci c development parameters for more vigorously and dynamically, as each sector, such as the evolution of there are alternatives that are socially and market value, existing and future market, economically more viable than inaction. return on investment, engagement With adequate planning and support, these of institutions, providing a favorable alternatives can turn into eective policies environment for substitution, etc. that will not only mitigate or reduce the potential negative economic eects, but 4. For details of the methodology and the make them even more economically sound assumptions, please consult the full in the long run. study: Center for Economic Analyses, (2019) Economic Analysis: Towards a Lignite-free Development, Case Oslomej. 148 Vesna Garvanlieva Andonova, Marjan Nikolov

5. 1 EUR= 61.65 MKD, 1 bill. MKD =16.2 mill European Council, 2014. Decision, 2030 EUR Climate and energy framework, Brussels. [Online] available at: https://ec.europa.eu/ 6. The selection of the sectors to substitute clima/policies/strategies/2030_en, and the job losses are based on the responses https://data.consilium.europa.eu/doc/doc- of the local community. ument/ST-169-2014-INIT/en/pdf. [Accessed 23 September 2020]. 7. 1 EUR= 61.65 MKD, 2.15 bill. Mkd =32.4 mill EUR Eurostat, 2020. Renewable energy statis- tics. [Online] available at: https://appsso. References eurostat.ec.europa.eu/nui/show.do?data- set=nrg_ind_ren&lang=en. [Accessed 23 Center for Economic Analyses (CEA), 2019. September 2020] Economic analysis: towards a lignite free development, case Oslomej, Eko-Svest, in Ministry of Economy of Republic of North Macedonian language. [Online] available Macedonia, 2019. The Strategy for Energy at: https://ekosvest.com.mk/dokumenti/ development of the Republic of North publikacii/%d0%95konomska%20analiza. Macedonia until 2040. [Online] avail- pdf. [Accessed 23 September 2020]. able at: http://economy.gov.mk/Upload/ Documents/Energy%20Devwzelop- Energy Community Secretariat, 2018. An- ment%20Strategy_FINAL%20DRAFT%20 nual Implementation Report 2017/2018, Vi- -%20For%20public%20consultations_ enna. [Online] available at: https://www. ENG_29.10.2019(3).pdf. [Accessed 23 Sep- energy-community.org/dam/jcr:05c644e0- tember 2020]. 3909-4c26-84f5-e1cdb63e1af4/ECS_ IR2018.pdf. [Accessed 23 September 2020]. Puljic, V. M., Jones, D., Moore, C., Myllyvirta, L., Gierens, R., Kalaba, I., Ciuta, I., Gallop, P. Energy Community Secretariat, 2019. Annu- and Risteska, S., 2019. Chronic coal pollution, al Implementation Report 2018/2019, EU action on the Western Balkans will improve Vienna. [Online] available at: https://www. health and economies across Europe, HEAL, energy-community.org/implementation/ CAN Europe, Sandbag, CEE Bankwatch IR2019.html. [Accessed 23 September 2020]. Network and Europe Beyond Coal. [Online] European Commission, 2019. Commission available at: http://www.caneurope.org/ Sta Working Document North Macedonia publications/reports-and-briefings/1732- 2019 Report. [Online] available at: https:// report-eu-action-on-western-balkans- ec.europa.eu/neighbourhood-enlargement chronic-coal-pollution-is-a-unique-oppor- /sites/near/files/20190529-north-macedo- tunity-to-improve-health-and-productivity. nia-report.pdf. [Accessed 23 September [Accessed 23 September 2020]. 2020]. State Statistical Oce of Republic of North European Commission, 2019. Communication Macedonia, 2020. Energy statistics, www. from the commission to the European par- stat.gov.mk. liament, the European council, The council, The International Renewable Energy Agen- The European economic and social committee cy, IRENA, 2019. Renewable Energy Mar- and the committee of the regions, The Eu- ket Analysis: Southeast Europe. IRENA, Abu ropean Green Deal, EC, (COM(2019) 640 - Dhabi. [Online] available at: https://www. nal), Brussels. [Online] available at: https:// irena.org/-/media/Files/IRENA/Agency/Pub- eur-lex.europa.eu/legal-content/EN/ lication/2019/Dec/IRENA_Market_Analy- TXT/?qid=1596443911913&uri=CELEX- sis_SEE_2019.pdf. [Accessed 23 September :52019DC0640#document2. [Accessed 23 2020]. September 2020]. Economic Viability of Alternatives for Lignite-free Electricity Production in North Macedonia: 149 The Case of TTP Oslomej

United Nations, UNECE, 2019. Third Environ- Центар за економски анализи – ЦЕА, mental Performance Review (EPR) of North 2017. Детерминанти на влијание на Macedonia, UNECE, Geneva. [Online] avail- граѓанските организации во креирање able at: http://www.unece.org/ leadmin/ на политики за рамномерен регионален DAM/env/epr/epr_studies/ECE.CEP.186. развој. [Online] available at: https://cea.org. Eng.pdf. [Accessed 23 September 2020]. mk/wp-content/uploads/2017/09/CEA-De- terminanti.pdf. [Accessed 23 September World Bank, 2019. Air pollution management 2020]. in North Macedonia, World Bank, Wash- ington. [Online] available at: http:// Центар за економски анализи – ЦЕА, 2017. documents1.worldbank.org/curated/ Фискална Децентрализација за подобар en/116521576516981237/pdf/Air-Quality- регионален развој на граѓанското Management-in-North-Macedonia.pdf. [Ac- општество. [Online] available at: https:// cessed 23 September 2020]. cea.org.mk/wp-content/uploads/2017/02/ Fiskalna-Decentralizacija_WEB.pdf. [Aces - Eкосвест, 2014. Колку чини животот? sed 23 September 2020]. Eкономска проценка на ефектите по човековото здравје и живот од македонските термоелектрани, Ekosvest. [Online] available at: https://bankwatch. org/wp-content/uploads/2018/11/kolku_ cini_zivotot.pdf. [Accessed 23 September 2020].

Acknowledgements This policy paper is based on the economic analysis conducted by the Center for Economic Analyses for Eko- Svest in 2019 with approval. The authors and CEA are responsible for the content. It does not re ect the views of other entities.

Disclosure statement No potential con ict of interest was reported by the authors. 150 Annual Review of Territorial Governance in the Western Balkans, II, 2020, 150-167 https://doi.org/ 10.32034/CP-TGWBAR-I02-10

CENTROPE Initiative – Lessons Learned and Inspirations for the Western Balkans Maroš Finkaa , Milan Husárb, and Matej Jaššoc

Summary

European integration is a long-lasting and multi-layered process with dierent dynamics in particular parts of Europe. Important parts of these processes are cross-national, territorial cooperation initiatives at the meso-regional level, where several lessons for integration can be found and used for inspiration and transfer of experience. The last decade of the twentieth century was a period of optimism and positivity in Central Europe, fostering convergence and cooperation among cities and regions. One of the most visible projects of this era was the CENTROPE (Central European Region) initiative. The objective of CENTROPE, among others, was to create a governance framework for eective and ecient cooperation in an area of more than six million citizens and thousands of high-skilled laborers with the potential to be competitive in the European economy. However, the initiative did not deliver the expected results and, for the past several years, it appears to be inactive.

On the basis of an extensive literature review, 12 semi-structured interviews with key stakeholders from the area of public policy and academia, and experience from more than 20 years of working in the eld of cross-border cooperation, this paper discusses lessons from CENTROPE that can serve as an inspiration for territorial governance, regional identity management, place branding, and image building in the Western Balkan region. Like the Western Balkans, the economic and social development of CENTROPE was and still remains uneven; there are dierent administrative systems, complicated histories among the countries, and resulting societal atmospheres that do not favour close cooperation. As our research concludes, CENTROPE did not manage to fully overcome these problems because of failing to establish polycentric governance arrangements, which would have enabled an eective management of spatial activities in the region. This paper examines this development and concludes with recommendations that can feed into debates on territorial governance and regional identity management in the Western Balkans.

Keywords: CENTROPE, Western Balkans, Territorial Cooperation, Macro-regions, Regional Identity

Contact

a maros.[email protected] (Corresponding author) b [email protected] c [email protected]

Spectra Centre of Excellence of the EU, Slovak University of Technology in Bratislava, Vazovova 5, 812 43 Bratislava, Slovakia CENTROPE Initiative – Lessons Learned and Inspirations for the Western Balkans 151

Introduction many territorial processes – e.g. fostering and improving territorial governance Central European space, with its territorial processes, management of regional identity, and societal fragmentation and increasing and promoting social and regional cohesion. spatial inequalities and polarization, has The second part of the paper is dedicated to been a great challenge for spatial planning the case study of the CENTROPE region. The since the 1990s. It was during this period that third part discusses the CENTROPE initiative the region began to harmonize after nearly and its impact on the territory, and the nal half a decade of dierent social, cultural, and part discusses lessons and inspirations from political developments and look for ways to CENTROPE, which can serve to instigate foster cooperation (Schulz, 2019; Iammarino governance arrangements and regional et al, 2017). These inequalities are increasing identity building in the Western Balkans. at all geographic and administrative levels (Böhme and Martin, 2019). CENTROPE, as a Competition and cooperation in cities space between Austria, Slovakia, the Czech and regions Republic, and Hungary, is an example of how politicians have attempted to deal with Transformation and the re-structuring of these issues, seeking a more harmonious cities and regions have been key topics in and sustainable development of the spatial planning, economics, as well as urban entire region. Although the geography sociology discourse for more than 20 years and political situation is dierent than (see Finka and Petríková 2000; Kováč and the Western Balkans region, the issues Komrska 2000; Jaššo 2015; and Jaššo, Hajduk such as the history, mental imagery, lack 2019). Processes of European integration of common vision, and dierent political have delivered a plethora of concepts and and administrative systems are similar. We paradigms aimed at steering the optimal present how these complex issues were spatial development of the old continent tackled in the case of CENTROPE, although (e.g. Blue Banana Europe (Brunet, 1989) with limited success, and how this can be or the ‘European Grape’ (Kunzmann and stimulating for similar discussions in the Wegener, 1991)). Accelerated globalisation Western Balkans. (and particularly its negative impacts) have also generated processes of regionalisation The paper discusses the development and emphasized mutual interconnection. of the CENTROPE region 17 years since Some approaches consider both as part its establishment with the signing of the of a single process and introduce the term Kittsee Declaration, where 16 actors agreed ‘glocalization’ (see e.g. Messely et al., 2010; to work jointly towards the creation of the Jaššo, Hajduk 2019). Competition between Central European Region. This development cities, regions, and other territorial constructs can serve as an example for cross-border has been discussed in rather intensive and cooperation and provide insights and multidimensional way. Several types and examples for inspiring the development sizes of territorial subjects (cities, FUAs, of cooperation and attendant governance macroregions) generate their own speci c models for the Western Balkans. The and peculiar aspects of competitiveness, research is based on a set of 12 interviews de ned by Mayerhofer (2005) as the ability performed in 2018 and 2019 with key to generate while being and remaining stakeholders from the CENTROPE region, exposed to international competition and some of which are quoted in the text. In possessing relatively high level of income the rst part, we review the literature of and high employment levels. The various competition and cooperation between typologies of territorial constructs include cities and regions as a theoretical base for several fundamental characteristic and the paper. These types of competition and traits. In 2003, the OECD introduced the cooperation processes have been running following key factors (see Tosics, 2005): across Europe for the last two decades and have provided the underlying context for 152 Maroš Finka , Milan Husár, Matej Jaššo

- specialisation and sectoral structure - Traditional, rather linear spatial (clustering and advantageous location development is being replaced by factors); processes of polarization, fragmentation, and sometimes segregation (e.g. - innovation and knowledge (education gentri cation); and spread of know-how); and - Spatial development of urban - accessibility and connectivity (physical settlements with high density in central infrastructure and communication links). spatial structures is being replaced by networking spatial structures. Rapid technological changes, geopolitical New developmental poles beyond shifts, demographic changes, as well traditional hierarchic structures are as newly established innovations in rising. The space of ows is replaced production, distribution, and consumption by the space of networks (see Taylor, patterns have signi cant eects on the 2001); new role and positioning of European regions within these processes of mutual - Competition of municipalities, cities competition (more e.g. Ginger, 2005; and regions is increasing on an Jaššo, Hajduk 2019). Regions have taken on international level, while the traditional new roles as interregional and highly volatile hierarchic ties within national contexts competition exposed long-neglected are fading away. Moreover, this weaknesses and enabled territories to competition is not a linear one – the utilise their strengths and hidden potentials. number of competitors, their strengths, Each region is increasingly challenged to relevance, positioning, and assets are leverage its advantages and assets to try continuously changing. The city or and nd mechanisms to compensate for its region is not competing in only one weaker points (see Jaššo and Hajduk, 2019). competition but enters into dierent Currently, some of the most discussed policy competitive races and builds various topics are ideas such as smart cities and strategic and tactical alliances and smart regions, which emphasize the ability cooperation patterns; and of territorial subjects to learn (e.g. Husar et al, 2017). - Cooperation and competition are be- coming complementary mechanisms. Understanding regions as single and The same cities or regions might be autonomous places within or across national partners as well as competitors in states has begun an intense discourse on various elds. Highly pro led identity, regionalization (see e.g. Jaššo, 2009a). The authentic values, as well the legibility term “region” has become one of the most of the partner are key in the long term signi cant metaphors of current cultural, (more see Jaššo, 2015). political, economic changes and practices (Tangkjaer and Linde-Laursen, 2004, p.11). It goes without saying that a unique, The most signi cant factors of success in authentic, original, and attractive regional regional competition are considered to be pro le is the result of continuous, long, economic diversity, human capital, social and often arduous process based on the cohesion, institutional network, physical interaction of many stakeholders. Obtaining environment, communication networks, competitive advantages in a particular and institutional capacity (Parkinson, 1997, region is not possible without a legible, in Fertner 2006, p.13). Ginger (2005) stable, and clearly pro led vision and points out the following observations regional identity. This has been intensely regarding the highly dynamic and volatile reected in the development strategies, environment in which regional competition planning, as well as the regional policies on unfolds (further elaborated in Jaššo 2015 or various levels. The unique pro le of each Jaššo and Hajduk 2019): region, its positioning in the European and CENTROPE Initiative – Lessons Learned and Inspirations for the Western Balkans 153

global market, values, and distinctive traits of a region, city, or any other territorial are some of its most precious assets, since subject carries an emotional added value, these issues cannot be emulated, bought, or promotes identi cation with place, secures stolen (see Jaššo 2009a; 2015). orientations, and evokes feeling of empathy (Tangkjaer and Linde-Laursen 2004). Competitiveness has become one of the The general idea of the majority of place major leading forces of regionalization, branding concepts is to create a pro le of being the leitmotif of its legitimization. the region (or any other territorial subject) If a given territorial subject neglects the as an attractive, unique, and competitive process of competition (or cooperation, brand. The speci c situation of territorial which is considered as one of the most subjects allows them to clearly emphasize eective tools of interregional competition some of their core features (e.g. uniqueness, (see Ginger 2005)) it can lead to the openness, friendliness, hospitality) related marginalization and decline of the whole to a certain place or area. The authenticity region (“others will outmanoeuvre us” – of the message is a necessary precondition Tangkjaer and Linde-Laursen, 2004, p.11). in order to raise the emotional value of the One of the fundamental preconditions of brand and thus to develop brand loyalty. success is the authenticity of the message. This means not only nding the unique CENTROPE Region Case Study selling proposition (USP) of the region but, more than ever before, developing and Background Information on Developing managing regional identity in concordance the CENTROPE Initiative with past developments, value priorities, and the expectations of inhabitants (more CENTROPE is an acronym for the Central see Jaššo 2009b; 2015; Jaššo and Hajduk European Region consisting of territories 2019). within the quadrangle formed by the Czech Republic, Slovakia, Hungary, and Austria. The The regional identity and USP of any CENTROPE name and brand was a result of a territorial subject can be instrumentalised competition among schoolchildren back in by several marketing and external 2002, organised within the project CERNET, communication tools, e.g. through place a cross-border, educational cooperation branding or creation of a corporate project. More than 100 schools took a part in identity for the region or city. The term the competition with the winning proposal place branding refers to the cluster of coming from the students of the KMS Josef activities aimed at highlighting the Enslein-Platz secondary school in Vienna. essential characteristics and mental traits of The name CENTROPE combines both of the given region or city. Brand is a unique the basic, semantic characteristics of the mental concept of thoughts, emotions, region – central and Europe –together. The and characteristics delivered to selected rst cross-border, Interreg III A project was target groups. This term has been widely launched under this name in 2003. used since 2000, though the region or city as a subject of marketing campaigns The idea of creating CENTROPE materialized was already being researched in the early in 2003 in Kittsee. However, the history of 1990s. After shy and methodologically cooperation in this space is much older. In insucient initial attempts, it has been the 1990s, after the fall of the Iron Curtain, clearly shown that any territorial subject can several small activities aimed at re-initiating be a speci c category of product, requiring communication and cooperation between speci c and precise methods of brand the CENTROPE countries were starting to management (Kavaratzis and Ashworth, occur. It was the EU integration, however, 2005, p. 506). Nowadays, place branding is that gave the greatest impetus for continuing one of the most dynamically developing cooperation eorts (Austria became an EU phenomena of regional marketing (more member in 1995, while Slovakia, the Czech see Jaššo 2009a; Jaššo 2015). The brand Republic, and Hungary entered together 154 Maroš Finka , Milan Husár, Matej Jaššo

in 2004). Additionally, it provided a sort of of the newly established region. Several guarantee of staying in one large European sectoral development perspectives have space and being able to access funding been de ned, including communication for their cooperation activities. Joining and public relations, labour market and the EU and the ‘EU narrative’ fostered new quali cation, tourism, science, research members to overcome the complexity of and innovation, culture and society, as well relations in the region, including issues such as multilateral co-operation management as troublesome historic relations, as well as (more in e.g. Jaššo 2009b; Krajatis et al, 2003; political and administrative dierences. Lettner 2007). The Kittsee declaration (2003) stressed the following statements: The participating territorial subjects – namely the counties of Vienna, Lower - establish CENTROPE as a common Austria, Burgenland, Southern Moravia, region of growth and prosperity and Southern Bohemia, Bratislava, Trnava, Györ- support all measures towards the Moson-Sopron, Vas and the cities of Brno, attainment of this goal; České Budějovice, Bratislava, Trnava, Györ, - create an attractive, internationally- Eisenstadt, Sopron, Szombathely and St. respected, quality location covering Pölten – decided to prolong and advance all areas of life and improve the their bilateral, cross-border cooperation framework conditions for cross-border activities by forming the newly established cooperation; and Central European Region (CENTROPE) (Figure 1). The Southern Bohemia region - intensify cooperation by networking and city of České Budějovice later withdrew existing initiatives, communicate from the initiative. the future potential of the region to the public at large, and strengthen Figure 2. The CENTROPE Region the social and entrepreneurial commitment to the Central European Region.

After the initial the Kittsee declaration in 2003 (‘Building a European Region’), a series of political memoranda followed (see Jaššo, 2009b or CENTROPE, 2006). These memoranda and common meetings of stakeholders predestined future vectors of CENTROPE’s development and were clearly dominated by the optimistic, future-oriented, and progressive attitudes of the main actors. A series of political memoranda signi cantly contributed to building capacity, outlining structures, and de ning the context of the CENTROPE region’s activities. The St. Pőlten 2005 Political memorandum ‘We grow together, together we grow’ constituted the rst joint statement of the CENTROPE partners regarding sector-driven thematic areas Source: TourCentrope, 2020. and challenges in the common region. Dominant voices underlined a common The political declaration adopted in future and the need for a common unique September 2003 stressed common selling proposition in international markets. goals for raising the prosperity and The conference ‘We Shape the Future – fostering the sustainable development CENTROPE 2006 plus,’ held in March 2006 CENTROPE Initiative – Lessons Learned and Inspirations for the Western Balkans 155

at the Vienna City Hall, marked the end of made in terms of revitalizing brown eld the rst phase of the CENTROPE project and areas in the region, especially in urban the kick-o of a new stage of cooperation areas (e.g. gasometers in Vienna or the in the region. On the occasion of this event, Eurovea area on the Danube embarkment governors, region and county presidents, in Bratislava). Having entered into the and mayors presented the ‘Vision CENTROPE accelerating competition of European 2015’ for the rst time to a general audience. regions, CENTROPE has to clarify and live As an outcome of cooperation ventures its vision in order to mobilize and utilise all implemented during the preceding two- its extraordinary resources and potentials and-a-half years, the ‘Vision’ comprised the (see Krajatis et. al., 2003). However, many totality of shared ideas for development questions are still unanswered and many and togetherness in the quadrangle. The issues remain to be solved. political conference Bratislava 2007 – ‘Ready for Take-o’ was held in November 2007, CENTROPE Vision 2015 and its roughly eighteen months after the adoption Revaluation in 2020 of ‘Vision CENTROPE 2015.’ A timetable for concrete cooperation activities, supported The strategic vision of any territorial subject by partners on an equal footing, occupied might be one of the most powerful driving the forefront of political interest during the forces regarding its future development. conference. If the vision resists being a set of phrases and clichés, but presents a vibrant array of The period between 2003 to 2006 was imageries, it can be a very profound and predominantly dedicated to building powerful tool of regional development. The sectoral networks and political structures vision must encapsulate all underlying ideas, (e.g. Fertner, 2006, p. 76-77). May 1, 2004 – the aims, values, and basic assumptions, and day of accession of Slovakia, Czech Republic must reect the authentic and trustworthy and Hungary to the European Union – identity of the region. Finding a common provided an additional boost and new vision for regions and territories that have dynamics to these eorts. This act removed been repeatedly contested during previous almost all restrictions and increased the historical eras (valid both for Central Europe degree of economic convergence. and Western Balkan) or that are located on historical tectonic rifts is especially dicult The backbone of this region is represented and important. The vision is also a central by the metropolitan region of Vienna- control mechanism when the current status Bratislava, with its long common history, quo of the region is assessed, revaluated, or mutual functional ties, and high dynamics comes into the spotlight during disputes. of growth. The vision should be a living organism, being able to absorb new impulses, correct One of the most signi cant competitive obvious drawbacks and errors, and be advantages of the CENTROPE region is its mobilised in times of decreased overall scienti c pro le. More than 25 universities societal stamina and mental energy. and academic bodies are based in the region and their cooperation with business With this in mind, the CENTROPE Vision institutions is promoted intensely. 2015 has been adopted within the Vienna CENTROPE is striving to maintain its identity 2006 Memorandum (CENTROPE, 2006) as as a sustainable region by stressing its a result of more than two years of work by natural landscape potential. The Danube more than 200 experts from the elds of River and the green belt between Vienna politics, public administration, economy, and Bratislava are irreplaceable landmarks research, culture, tourism, labour, and the of the region. The outstanding quality of media in all four participating countries. life in the region derives from the proximity Vision 2015 was prepared as an interim open of urban centres and attractive natural document with the main goal of setting landscapes. Signi cant eorts have been up the vectors of future development, 156 Maroš Finka , Milan Husár, Matej Jaššo

de ning relevant tasks and ambitions, and a framework for the creative and productive reviving its image beyond purely political evolution of CENTROPE, in keeping with declarations. In this way, CENTROPE tried to the motto “We grow together - together we move closer to inhabitants, regional actors, grow” (CENTROPE, 2015, p.15).If we outline and local stakeholders. The document is the results of Vision 2015 now, in 2020, we directed more towards its main actors and can observe the following conclusions: players, however, and does not highlight dimensions of EU integration as robustly - All requirements for the free movement as it has in previous political declarations. of citizens have been ful lled. The Processes of collaboration should overcome economic growth of the CENTROPE is national dierences, distinctions, and on-going (Figure 2), though the region barriers. Though there have never been also faces the challenges of the current open animosities amongst the stakeholders pandemic. from dierent national parts of CENTROPE, the vision tries to encapsulate and reect - An intensi cation of cooperation all national perspectives and points of between ‘old’ and ‘new’ EU member view. CENTROPE Vision 2015 should countries continues. After severe generate further suggestions, alternatives, measures related to the COVID-19 impulses, and reections on the historical crisis, the borders among participating and contemporary development of the countries were opened as soon as region (Jaššo 2009b). In 2015, the horizon possible. (The borders in most EU of the vision was set up broadly enough to countries, including CENTROPE overcome current and temporary setbacks, members, were closed in the middle of unsolved matters, and everyday obstacles. March 2020 and were opened starting At the same time, the 2015 time-horizon on May 21, 2020). was set up to be not that far in the future, making the eort more tangible and - Research and development networking motivating. As such, ‘Vision CENTROPE 2015’ is operational and searching for new functions as a snapshot to inform ndings challenges. The cooperative business and possible perspectives proposed thus clusters (e.g. automotive cluster, far. It seeks to provide suggestions, trigger services Austria-Slovakia) seem to be reections, generate new impulses, and oer running smoothly.

Figure 2. GDP at Market Prices in CENTROPE countries, in EUR (2010-2019)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Austria 295,896 310,12 318,653 323,910 333,146 344,269 357,299 370,295 385,711 398,682 Czech 157,920 165,202 162,587 159,461 157,821 169,558 177,438 194,132 210,892 223,945 Republic Hungary 98,98 101,552 99,733 102,032 105,905 112,210 115,259 125,600 133,780 143,826

Slovakia 68,093 71,214 73,483 74,354 76,255 79,758 81,038 84,521 89,605 94,171

Source: EUROSTAT, 2020.

Yet, on the other hand: main CENTROPE events since 2000, the public has remained rather detached - The feeling of a common regional and feedback has been scarce.1 identity, social cohesion within the region, and feelings of togetherness - Decision-making processes are still are still rather weak and vague. Despite not fully or formally harmonised (e.g the intensive media coverage of all Clark, 2007, p. 17).2 Furthermore, CENTROPE Initiative – Lessons Learned and Inspirations for the Western Balkans 157

dierences in terms of governance CENTROPE Identity and Branding structures (especially between Austria and Slovakia) were heavily exposed Over the past 17 years, the CENTROPE brand and cooperation went on based personality has proven to be well-mannered more on personal contacts than on and friendly, manifold and versatile, smooth governance and decision- academic and sophisticated, but also diuse making mechanisms (Telle, 2017). and vague, arti cial, and sometimes too However, this can be overcome. As one ambitious. As stated by one interviewee: interviewee commented: “There are “…the biggest success was to create this some challenges, but if you really want image at all, which is still very much alive” to cooperate, you can do it. You can jump (Academic, Austria, 2018). Marketing over it. Also, in Austria inside there are communication was aimed almost these things, but if there is willingness, exclusively towards the external environment you can do it” (Public Ocer 2, Austria, (investors, foreign journalists, and banks) 2018). and completely neglected the domestic public and partners. Neither inhabitants - Business forces prefer to be related nor domestic small and medium enterprises to the TWIN-City Brand rather than to (SMEs) have been the target group of the CENTROPE. CENTROPE is still perceived numerous communication initiatives in as more scienti c or as a political recent years. The only entrepreneurial concept and necessary business- subject to mention CENTROPE as the market driven attention is lacking. Initial they were operating in was the Austrian development dynamics in some areas bank Raieisen. has decreased and new impulses are still lacking (Jaššo, 2009b). From this evaluation of the overall regional marketing strategy, we can conclude In 2012, as a result of project Centrope that CENTROPE’s brand personality or Capacity, the document ‘Centrope Strategy USP is well-de ned and communicated 2013+’ was released nine years after the though the brand is still rather ‘young and kick-o in Kittsee (Centrope Agency, 2012). inexperienced.’ CENTROPE is not perceived This document reects the more recent as a relevant brand to all segments of developments in society, strongly impacted society and, even after 17 years, is rather by the global economic crisis of 2008/2009, unpro led, lacking spontaneity, and and provides a more realistic view on the lacklustre. Evaluating its brand knowledge region as well as arguably more realistic (the degree of awareness and knowledge objectives. It seems as if the rst decade, made by personal experience or the degree characterised by optimism and enthusiasm of intimacy of the brand), it is evident that for the beginning of a new millennium, CENTROPE is not lived and transmitted by was an introduction to cooperation with personal experience (see Jaššo, 2009b). the objective of illustrating to partners what could be done together. Suddenly, it An important (but often underestimated) was time for more pragmatic approaches part of any regional identity is its inner focused on implementing concrete dimension – its identi cation with the lived initiatives and reecting on existing space and its spatial/social structures and challenges, including potential brain-drain patterns; its ‘Wir-Gefühl.’ Space is not a mere or excessive dependence on the automotive background for our social identity creation industry, among other issues. Four focus process, but is one of its dominant categories, areas had been determined (knowledge heavily inuencing all the other dimensions region, human capital, spatial integration, of identi cation processes. Space cannot be and culture and tourism), yet governance ‘value-neutral;’ it is always a projection of or other forms of cooperation remain some vision, ideology, and values (Low and absent and the initiative remains somewhat Walter, 1982). Local inhabitants are always voluntary. in delicate and rather awkward positions 158 Maroš Finka , Milan Husár, Matej Jaššo

regarding the fostering of regional identity the second half of 20th century all previous as they are both co-creators of this identity, communication channels and contacts as well as the key recipients concerning between Austria and the eastern bloc its acceptance and evaluation. A key countries had been suspended. Although element in this eld is the authenticity and there were some smaller initiatives before trustworthiness of the message – a regional 2003, their reach was limited. It was the identity and all its facets must be based upon Kittsee declaration (a success in its own right) the inner potential and natural substance of that launched continuous communication the region. It is especially important when on a formal (political conferences) and a new identity, branding, or vision is being informal (workshops and non-ocial built or re-born. meetings) level, the fruits of which can still be seen today. Highlights of CENTROPE “…We created the standards of CENTROPE is perceived rather critically communication and negotiation, we got today as the expectations anchored in its to know the people, which de nitely led to strategic documents of endless prosperity better understanding in this region. In the were, in hindsight, not realistic. Still, it is past there was no real cooperation…” (Public important to review the highlights and Ocer 1, Slovakia, 2018). successes achieved in the region. The biggest successes are the qualitative “…A lot of cooperation projects in the eld attributes of improved cooperation by of school cooperation were started then, I getting to know counterparts across the think that at least the programming of the border and introducing the idea that people Interreg period 2007 until 2014 was very much are not living in separate countries but in‚uenced by the ideas of CENTROPE” (Private belong to one common space. Planning Consultant, Austria, 2018).

“This initiative should lead to integration Another success, as perceived by CENTROPE within this space, to strengthening its stakeholders, was the creation the competitiveness, closer cooperation between CENTROPE brand. Although CENTROPE centres of the triangle Vienna, Bratislava, as a brand is viewed rather critically today Brno and their regional surroundings…” (low diusion towards the citizens, not (Academic, Slovakia, 2018). recognized by businesses, etc.), it was the rst time that this territory was portrayed as “The expectations were pretty high. Due to the a single unit under a common brand, which abolishing of physical barriers, it was supposed was accepted by partners from all countries. that national borders would diminish their The main idea was not to produce a slogan role and the ties between the regional centres for marketing stickers but rather to reveal would be intensive. But I don’t think that these a common identity. That identity was no expectations were ful lled’ (Public Ocer 2, longer perceived based on nation states Slovakia, 2018). within clearly demarked national borders, but as a modern European region sharing a Although it may sound like a minor success common heritage, territory, and culture. today, the greatest success of the CENTROPE initiative was launching a process of Lastly, it was the rst time that cooperation familiarisation and cooperation via activities began to be considered across the communication and mutual understanding. whole region. The cooperation projects of the This was linked to weak institutions in 1990s were exclusively focused on smaller parts the former socialist countries, which of the border and, as a rule, only between two came to interact with a more advanced countries. CENTROPE covers the territory of and established administrative system in four countries and focuses on the perception Austria. Increased communication was of this space as one uni ed territory in order to particularly crucial considering that during approach the development of this region CENTROPE Initiative – Lessons Learned and Inspirations for the Western Balkans 159

as a whole. This enables stakeholders to audience in regional and local politics. overcome historical tensions at the borders and provides a vision for developing the “One of the biggest limitations was the fact wider territory as one space with the that you would need a lot of political power potential to be competitive on a European and courage to get forward … there was and global level. not this strong force behind the project … somehow the partner [on the other side of the “…One of the biggest successes was starting border] was lost somewhere on the way […]. to deal with this whole territory. From the This was the biggest limitation: that on the historical point of view this was not so easy, political level, it was not really important in you know Benes decrees, Hungary-Austria the agenda” (Public Ocer 3, Austria, 2018). border history is not that easy…” (Public Ocer 3, Austria, 2018). “lack of ‘personal continuity’ – new mayors, politicians” (Politician 1, Austria, 2018). “In regions like ours, where you have so many borders on such a limited space, you need to Thirdly, while the role of the borders had cooperate not only with one neighbouring been changing and their importance had country, but with this whole bunch of diminished in terms of the barrier eect, neighbouring countries, and it would be really the dierences among the CENTROPE essential to take this transnational point of countries remained. This was evident in view” (Private Planning Consultant, Austria, terms of cultural and historical dierences, 2018). as well as dierences in the political and administrative systems (so-called multilevel Failures and Setbacks of CENTROPE mismatch). This was clear not only between the old and new EU member countries While speaking of the successes of (Austria versus the rest), but also between CENTROPE, it is also important to underline Slovakia, Hungary, and the Czech Republic. its setbacks and main limitations. Firstly, Closely linked to this issue were feelings there had been several rather formal issues of inferiority by representatives of Slovak connected to the daily operation of the regions when negotiating with their initiative, including language dierences Austrian counterparts. (four languages from three diverse language “Paradoxically, it is the borders of the nation groups). Similarly, bureaucratic procedures states as well as distribution of competences. dier according to national legal systems, In Slovakia we have a local, regional, and leading to lack of understanding of the national level and it works similarly in processes and a loss of cooperative dynamics. neighbouring countries, and there are too Secondly, political will and cooperation is many actors with dierent competences” weak in the political agenda of local and (Public Ocer 2, Slovakia, 2018). regional politicians. The 2003 declaration in Kittsee is regarded as a great success due to “I think there is still this cultural dierence, the fact that all the members were able to cultural-historical, some kind of, I don’t want nd consensus and sign the memorandum to say superiority or even snobbery...it took us of cooperation, but ever since then, political more time and energy to convince partners priorities have been changing. One of the about our truth [arguments], about our view. key drivers of this change was the economic Sometimes we even had to bring it to the crisis of 2008/2009 and later, the changing boil to push our ideas...” (Public Ocer 1, political climate in the EU linked to the Slovakia, 2018). migration crisis of 2015. These shifts in the thinking of national and regional politicians were clearly identi able within CENTROPE. Lastly, the PR activities and branding did not Another issue linked to politics was the fact turn out to be powerful enough to overcome that the CENTROPE representatives failed and sustain the rather narrow perception of to make the initiative attractive to a wider sovereignty and nationalism (vs. a common 160 Maroš Finka , Milan Husár, Matej Jaššo

European or CENTROPE identity). In the introducing themselves to one another. beginning, the branding was regarded as Their relationships were less balanced one of the key priorities and focal points. given the formal and real superiority of the Yet, despite the investments in branding, old EU countries (Austria) economically, it did not succeed in creating a common politically, and socially. CENTROPE, as an brand of CENTROPE that could be taken up EU-funded project, sought to overcome by actors from the public and private realm, these imbalances and provided some nor did it create a sort of common identity political and economic stability. One high- among citizens. level politician from Austria was very sure about CENTROPE’s successes in that it “Maybe it is a lack of PR to its local citizens” prepared countries for EU entry and created (Public Ocer 1, Austria, 2018) the basis for a transnational region with vivid cooperation and exchange of people, “We did not manage to successfully “sell” the goods, and ideas. From this point of view, it outputs and bene ts, like the bridge between was de nitely a success as the CENTROPE Schlosshof and Devinska Nova ves – this is space 20 years ago was critically dierent the CENTROPE in everyday life” (Politician 1, than it is today. However, the circumstances Austria, 2018. changed drastically. Several crises arrived (particularly the nancial crisis in 2009 and Discussion migration crisis in 2015) and not only did CENTROPE changed, but the overall mood The CENTROPE idea was a unique initiative in the EU and worldwide changed with reecting the overall social and economic states ‘closing themselves o’ (i.e. physical context in Central Europe at the beginning borders and the rise of nationalism). As of the 2000s, fed by optimism based on public ocers in Austria stated: geopolitical changes and shifts and fostered by the opening of borders in the 1990s. “For 50 years on, there was a strong wish of Regions placed directly on the interface working together without borders[...] there between the former East and West should was not a problem of immigration and other have provided for a masterful initiative of problems that arose, there were open borders, European political and territorial integration transferring over the borders, working and act as a role model for other cases together. This was more-or-less ne, but now born under similar circumstances. With you have a more national or regional view of the advantage of historic hindsight, it is this.” (Public Ocer 2, Austria, 2018). possible to be critical about its successes and setbacks. For an objective evaluation, “In many of the political parties they do not several target groups and levels are ght against this [rising nationalism in CEE], discussed. The following are those that we rather they use this atmosphere for their politics consider to be most essential, covering and it could have been even an advantage both the institutional level (political level, this kind of anti-European atmosphere for the administrative level, and common projects) CENTROPE initiative, because one aim was as well as ‘soft’ informal issues (public that the regional politicians write together perception): resolutions with the EU for the common goals but has also happened not so strong. (Public a. Political level Ocer 1, Austria, 2018).

On the political level, CENTROPE served Especially after the migration crisis in as an umbrella initiative as well as an ice- 2015, the national borders began to play breaker for initiating cooperation among a signi cant role in some politicians’ and old and new EU member countries. Before citizens’ mental landscapes again, though CENTROPE, the citizens as well as the bilateral relations among the participating political representations of the participating countries remain essentially cordial and countries were slowly and cautiously friendly. CENTROPE Initiative – Lessons Learned and Inspirations for the Western Balkans 161

Broadly speaking, many of the political themselves again and work on building trust. goals of CENTROPE were ful lled, such This was especially true for Slovak and Czech as the diminishing the role of national partners and Austrian partners expressed borders, integration of policies, increased frustration with the matter. (The Austrian mobility, etc. We can ask if these changes system is more independent and the would have taken place if CENTROPE did terms of public ocials are longer). Part of not exist, and our answer is perhaps yes, CENTROPE’s aims was also the convergence but at a slower pace and with less obvious of dierent systems and raising awareness acceptance among citizens. From a narrower of integration issues. This was done through perspective, some of the initial objectives exchanges of public ocers and numerous were not met, including a common labour seminars and common meetings fostering market; one single, uni ed, universally the need to work together and build trust. accepted vision for the whole CENTROPE Cooperation and trust are the basis of many space; and one common regional plan or cross-border initiatives, as partners need functionally integrated space. A feeling to be exible and driven to achieve the of a common regional/territorial identity common objectives. also remains rather vague. We need to add that as of today, none of these changes Another issue which came out of the eld seem to be taking place in the near future research was the professionalization of considering the atmosphere worldwide, communication and creation of standards current status of CENTROPE, and the for cooperation. Austrian partners in political situation on the national and particular were leading by example as regional levels in CENTROPE countries. But other partners were slowly acquiring these perhaps the current situation provides a skills and standards, something that could great opportunity to leverage CENTROPE help them in other projects. As time went, and resume cooperation again with a fresh these meetings and seminars became less perspective and a more realistic approach. frequent. Currently the project partners are Cooperation has evaporated over the years. meeting only annually in a formal manner. At the beginning, cooperation provided the Austrian partners were often perceived as idea of a fresh start, integration, and the re- the (sometimes dominant) “pace-maker” and invention of a region as a vision of the bright main decision maker, which was sometimes future of a uni ed Europe. Arguably, the met with criticism by other partners. This most dicult part of re-starting CENTROPE dominance has somehow slowly faded with will be just this – formulating the common both positives and negatives outcomes. ground for a new vision. c. Citizens’ perception b. Administrative level In everyday life, the perception of CENTROPE One of the most visible challenges in as a pro led brand is extremely rare. The cross-border cooperation is the so-called only private enterprise that referred to multilevel mismatch (Telle, 2017), wherein CENTROPE was the Raieisen Bank while administrative systems in the cooperating other businesses did not mention the area as states are not matched and responsibilities a brand at all. If you asked about CENTROPE are not mirrored. In the case of CENTROPE, on a street in Vienna or Bratislava, very few centralized and decentralized systems met, people would know about it; outside of causing misunderstandings and time delays these cities nearly no one would have heard when trying to work together (Figure 3). A of it. In the past, the business landscape in similar issue was raised in the relationship the region seemed to be more attached to between the political and administrative the Twin Cities Vienna-Bratislava concept, level: when the political representation which proved to be more business driven, changed after the election, the public exible, and politically independent. ocials changed as well, and partners on Compared to the Twin City initiative, the the other side of the border had to introduce CENTROPE idea seems to be a more political 162 Maroš Finka , Milan Husár, Matej Jaššo

Figure 3. Dierent Administrative levels compared between Austria, Slovakia, the Czech Republic and Germany

Source: Spacek and Husar, 2018.

and scienti c project with little relevance for d. Common projects citizens and businesses (especially SMEs). In fact, CENTROPE was more successful in Before 2003, there had been several smaller its branding outside of its territory. More projects nanced by the EU (Interreg, Phare politicians and academics in Europe and programs) or national governments dealing around the world know about the project with particular issues in the cross-border than CENTROPE’s citizens themselves. spaces. CENTROPE as a project idea was much larger and delivered a break-through The major success of territorial integration in its scale, complexity, and number of in the CENTROPE region is related to the actors and stakeholders. For many years it accession of the Czech Republic, Slovakia, served as an umbrella initiative supporting and Hungary into the Schengen area. In new project ideas. For funding agencies, it the border areas, the mobility of people for was an advantage to be under this larger work/shopping/leisure is high (Verwiebe initiative. However, when the funding for et al, 2017). Families spanning across two large projects on a CENTROPE level ran out, or more countries are not rare and they no these projects did not manage to create longer perceive borders as a problem. On a sustainable framework or structures to the other hand, CENTROPE, which arguably continue. In interviews, partners complained catalysed this convergence processes, did about each other, about providing funding, not succeed in creating a highly-pro led, and about what this cooperation should common territorial identity. In the past ve look like in the future. The result is that years, national identity has become stronger CENTROPE is not operating anymore. at the expense of a CENTROPE or European identity as a result of larger megatrends in Similar to the times before CENTROPE, Europe. At its height however, CENTROPE there has been a plethora of cross-border probably had the capacity and power to projects in the CENTROPE area, but covering articulate this identity more distinctively but much smaller territories and dealing with failed to do so.

1. CENTROPE Initiative – Lessons Learned and Inspirations for the Western Balkans 163

sectoral issues (transportation and mobility, However, turmoil in the last decade of the urban development and planning, and 20th century sowed some toxic notions in the environmental issues). Though these are public perception of their identity, common somewhat built on the debris of CENTROPE, future, or collaborative patterns. Yet, in the continuity of communication that recent years, there are still some examples of CENTROPE oered is missing. It seems that good cross-border cooperation taking into perhaps the moment is not right for an consideration a common regional identity initiative of the size and scope of CENTROPE. (the Istra peninsula, Croatian-Montenegrin The way forward is rather viewed in relation cooperation on maritime and ecological to smaller and less ambitious projects, but issues, and the via Dinarica, among others). with honest and realistic expectations and a common vision in some areas. Moreover, the Western Balkans is not one homogenous macro-region but rather a very A list of past and current projects in the manifold and unique metatext of dierent CENTROPE region includes: Project Jordes+ identities, narratives, and communities. (2000-2006, 311,807.48 EUR); project The process of maintaining, developing, EdTWIN (2008-2011, 2,200,000 EUR), and enriching the regional identity of INTERREG IIIA project Building a European every Western Balkan region or city is not a Region, project CENTROPE Map (geoportal nished task but a continuous process. Every operating since 2007), CENTROPE TT (2009- case is dierent but the study of successful 2012, 1,747,003 EUR), CENTROPE Capacity and unsuccessful processes of building (2009-2012, 4,515,462 EUR), Bratislava a cross-border identity, place branding, Umland Management BAUM 2020 project regional image, and mutually compatible (2017-2020, 674,227 EUR), project KOBRA governance models always delivers very (2006-2007, 69,000 EUR). useful examples and case studies that might serve as an inspiration or warning for every Conclusions and Key Lessons reiterated European region. for the Western Balkans We conclude the paper with eight key Central Europe and the Western Balkan lessons learned from 17 years of CENTROPE’s have been in close contact for centuries. operation, which can serve as inspiration Some regions might even be labelled as for regional identity management and overlapping both macroregional entities. territorial governance in the Western Both territories have overcome major Balkans’ cross-border regions: changes during the 1990s and 2000s. These changes were not only a consequence of 1. Active communication towards geopolitical shifts in Europe, but they re- the domestic audience (inhabitants, drew the mental maps of the inhabitants domestic SMEs) in terms of image and (in some cases) heavily challenged their building and maintaining is essential. social identities. Regional identity, a sense CENTROPE did not manage to orient its of belonging toward certain territorial units, communication activities towards local and socio-cultural milieus were modi ed, actors, who are the carriers of the tacit changed, and in some cases even contested. knowledge needed for brand and vision Although the new identities of many promotion. The active involvement of (now) cross-border regions and territories these actors is one of the preconditions integrated common heritage from the of success. Authentic, spontaneous, and past, they were also confronted with deep identi cation with the regional contradictions, resentments, and tensions. pro le and positioning is necessary Several Western Balkan regions were in order to be successful, especially in inuenced by partly contradictory issues: long-term. One of the key lessons for most of the countries have a centuries-old regions in the territory of the Western common regional history and/or identity Balkans is that the underestimation of characterised by a cultural melting pot. the domestic audience in branding and

164 Maroš Finka , Milan Husár, Matej Jaššo

marketing activities can back re, the nations. This common denominator leading to a complete failure of and grand narrative for cooperation is the marketing strategy. pro le and currently missing and is arguably one positioning is necessary in order to be of the reasons for the lack of activity in successful, especially in long-term. One recent years. of the key lessons for regions in the territory of the Western Balkans is that 5. Partners should mutually coordinate the underestimation of the domestic their activities and involve informal audience in branding and marketing structures and channels. This is related activities can back re, leading to a to the coordination of activities in complete failure of the marketing the framework of a good governance strategy. system, which accounts for both vertical and horizontal coordination of activities 2. Continuous and transparent re- in the territory across borders. This evaluation of the vision is an essential system needs to be eective from the corrective mechanism. A common international level all the way down and widely accepted vision is a living to the local/domestic level where the thing that needs to be re-evaluated implementation of activities and projects and adjusted according to changing takes place (the principle of subsidiarity). conditions (megatrends). Visions should Governance systems need to integrate be continuously enriched in terms of sectoral orientations together with a their emotional potential and ability holistic vision. to mobilize people. A regional vision is neither a prognosis nor audit, but should 6. Parallel communication and cooperation be a common denominator for all actors. structures can strengthen and complement ocial decision-making 3. Concentration on common interest and bodies. This way, the overall system is common goals encourages dedication more robust and resilient to various to the process of harmonising political types of vulnerabilities. Good peer- priorities. Building on points and to-peer relations, common ties, and themes of common interest is a way to relationships beyond ocial channels foster mutual trust and sustainability might not only speed up the collaborative of the cooperation. Competitive and process, but can be an invaluable asset cooperative elements must be in a in times of crisis, misunderstanding, or balance, not fatally disturbing each external pressure. Language as the most other. Regions must be open to starting important communication tool plays an new partnerships, learning from best important role. One of the advantages of practices in various elds of action, and many Western Balkan regions is the lack constantly upgrading their innovation of language barriers. potential. 7. Initiatives should adopt a suitable 4. Flexibility is crucial in the reecting cooperation dimension and scale. on the overall socio-political climate CENTROPE was a vast initiative (four (zeitgeist). Each historical or political countries, 16 cities and regions, 6 million period carries certain trends that are people), which did not manage to reected in the public spirit and have accentuate a common vision and nd the potential to impassion people. In the common denominators upon which their case of CENTROPE in 1990s, the region cooperation could have been built. One was focused on foreign investment, of the main diculties was the size and research, and technology. In the heterogeneity of actors. Therefore, it is 2000s, it was EU integration that was important to nd and build on common raising spirits in all four countries and interests through a bottom-up approach overshadowing the dierences among (as opposed to EUSDR, for example). The CENTROPE Initiative – Lessons Learned and Inspirations for the Western Balkans 165

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Disclosure statement No potential con ict of interest was reported by the authors. 168

Abbreviations

ALL Albanian Lek GVA Gross Value Added BiH Bosnia and Herzegovina GWP Global Water Partnership BoA Bank of Albania IGEUM Institute of Geoscience, CBA Cost Bene t Analysis Energy, Water and CEA Center for Economic Environment Analyses IMC Inter-Ministerial CENTROPE Central European Region Committee COVID-19 Coronavirus Disease 2019 IMS Information Management System Drin Corda Drin Coordination Action IOM Input-Output Model EC European Commission IT Information Technology ECB European Central Bank LGU Local Government Unit EIA Environmental Impact Assessment MBP Midterm Budget Plans ELV Emission Limit Value MFF Macroeconomic and Fiscal Framework ENPV Economic Net Present Value MFSA Municipal Finance Self- Assessment EU European Union MGB Municipality of Gazi Baba EUR Euro (€), ocial currency of 19 member states of MIE Monitoring and the European Union Information Exchange EUSDR The European Union MKD Macedonian Denars Strategy for the Danube MoU Memorandum of Region Understanding EWG Experts Working Group MSH Municipality of Shkodër FDI Foreign direct investments NAPA National Agency of FUA Functional Urban Area Protected Areas GAF General Accounting NEA National Environmental Framework Agency GDP Gross Domestic Product NSIMWR National Strategy of Integrated Management GEF Global Environmental of Water Resources Facility NSWSS National Strategy of Water GHG Greenhouse Gasses Supply and Sewage 2020- GIS Geographic Information 2030 System NTP National Territorial Plan GNSP General National Spatial NUTS Nomenclature of territorial Plan units for statistics GoA Government of Albania NWC National Water Council GoNM Government of North NYT New York Times Macedonia 169

OECD Organisation for Economic WHO World Health Organization Co-operation and WTTC World Travel and Tourism Development Council PIT Personal Income Tax RBA River Basin Agency RBMP River Basin Management Plan RCC Regional Co-operation Council (Western Balkans) RES Renewable Energy Sources RNM Republic of North Macedonia SAP Strategic Action Programme SARS-CoV-2 Severe Acute Respiratory Syndrome Coronavirus 2 of the genus Betacoronavirus SDG Sustainable Development Goals SI Stringency Index SME Small and Medium Sized Enterprises TDA Transboundary Diagnostic Analysis TPP Thermal Power Plant TWM Transboundary Water Management UN United Nations UNDP United Nations Development Programme UNECE United Nations Economic Commission for Europe UNWTO United Nations World Tourism Organization USP Unique Selling Proposition VAT Value Added Tax VFR Visiting Friends and Relatives WB Western Balkans WBC Water Basin Council WFD Water Framework

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