Connectivity Agenda in the Western Balkans: a Snapshot
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The Connectivity Agenda in the Western Balkans: A snapshot Briefing Aprill 2020 CONTENTS: Executive Summary 1 1. Introduction 2 2. The Connectivity Agenda and its main financing instruments 2 2.1. Western Balkans Investment Framework (WBIF) 3 3. Connectivity and infrastructure in the Western Balkans 3 3.1. Albania 4 3.2. Bosnia and Herzegovina (BiH) 5 3.3. Kosovo 6 3.4. Montenegro 7 3.5. North Macedonia 8 3.6. Serbia 9 4. Conclusion 10 Notes 12 EXECUTIVE SUMMARY Regional cooperation is one of the key components of preparing the Western Balkans (WB) for the European Union (EU) enlargement process. The Berlin Process was launched in 2014 by the German Chancellor Angela Merkel to facilitate this coopera- tion, among others aiming to improve connectivity both within the WB countries and between the WB and the EU. The ultimate goal of which is to improve living standards and quality of life for the citizens. This mutual commitment by the WB countries and EU has been further strengthened through the EU Connectivity Agenda for the WB (launched in 2015), a combination of political commitment and monetary funds to strengthen the transport and energy sectors. Since the Berlin Process, several projects were undertaken or are currently underway. Until 2019, the Agenda supported 39 projects with an investment value of EUR 3.2 billion, grant value of EUR 880 million and EUR 97 million on technical assis- tance for project preparation. However, all WB countries lag behind in both sectors in comparison to EU members’ states. Key challenges identified include low operation and administrative capacity, limited progress and investment in renewable energy options, old infrastructure to demand for higher monitoring and cooperation. This Agenda offers many opportunities to improve not just the energy and transport sec- tors but also the wellbeing of WB citizens in the long term. It is therefore essential for the WB to make the most of the Connectivity Agenda and further intraregional coop- eration in reaching their goals. As the information provided in this briefing was limited by restricted access to data and literature resources, we do not exclude that further information on the topic might exist 1 1. INTRODUCTION Connectivity holds that both states and individuals can only reap the full benefits of globalization when the world is connected through permanent and highly advanced physical and digital linkages. The establishment of networks on the supranational, national and personal levels is therefore paramount to any region aiming to uphold stable economies amongst neighbouring countries and a high standard of living for all. Yet, the current state of infrastructure in the Western Balkan Six (WB6) countries is 50% below the EU aver- age.¹ Regional cooperation is imperative to palliate this deficit and prepare WB for the EU enlargement process. In 2014, the Berlin Process, a diplomatic and outcome-oriented initiative was launched to facilitate such cooperation. One of the main objectives of the process is to improve connectivity both within the WB and between the WB and the EU. At the WB Summit in Berlin (2014), first in the series of the Berlin Process, the WB countries pledged to make connectivity a priority. Pledges by WB countries have been reconfirmed in the subsequent annual summits held in Vienna (2015), Paris (2016), Trieste (2017), London (2018), and Poznań (2019). The Berlin Process and other EU-WB Summits, including Sofia (2018) and Zagreb (2020), reaffirmed the EU’s support for the WB countries, and the commitment by the latter to the European perspective for the region. This is a snapshot to the progress, including key challenges and opportunities to the WB6 to fulfil their pledges and achieve their goals in further advancing the connectivi- ty. It starts with a short introduction of the Connectivity Agenda, followed by a brief country-by-country overview, and conclusions. This briefing only scratches the surface of such a massive topic related to connectivity in WB which requires a comprehensive research and analysis to fully understand and appreciate the progress, challenges, impact and benefits to the societies in each WB country and region as whole. 2. THE CONNECTIVITY AGENDA AND ITS MAIN FINANCING INSTRUMENTS The Connectivity Agenda aims to strengthen regional cooperation and economic development in the WB. Launched by the EU in 2015, it combines the high-level politi- cal commitment of the parties involved with monetary funds to strengthen the trans- port and energy sectors. It sponsors projects (39 financed in 2019) on road, rail and waterways throughout the WB6. These projects, with an investment value of EUR 3.2 billion and a grant value of EUR 880 million, ² have a dual aim. First, they benefit citi- zens by cutting down travel times, increasing overall safety and reducing air pollution. Second, they contribute to the economy by increasing trade, creating new jobs and securing energy efficiency at competitive pricing.³ It also requires that connectivity reform measures are incorporated in each country’s regulatory and legislative frame- works. As further elaborated below, the Agenda’s main financial backer is the Western Bal- kans Investment Framework (WBIF). Investment in transport, energy and digital tech- nology, aims to contribute to political stability, economic prosperity and social develop- ment. 2 2.1. WESTERN BALKANS INVESTMENT FRAMEWORK (WBIF) WBIF, as the leading funding instrument toward the Connectivity Agenda, has been launched in 2009 by the European Commission (EC), together with the Council of Europe Development Bank (CEB), the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB). The framework has two main objectives. The first is the distribution of grants, loans, and expertise to ensure adequate financing to priority investment projects. The second is to strengthen coherence and synergies among donors so as to increase the positive impact and visibility of investments in WB.⁴ WBIF sup- ports private sector development as well as infrastructure development within the environ- ment, energy, transport, and social sectors. Despite challenges, the WBIF is increasingly leveraging loans and grants, and giving priority to projects with regional impact. By doing so it furthers regional and national strategies, allowing for accelerated preparation and exe- cution of priority investments. 3. CONNECTIVITY AND INFRASTRUCTURE IN THE WESTERN BALKANS The following provides a brief country-by-country overview of the progress in advancing the Connectivity Agenda, along with the key challenges and opportunities for the WB coun- tries. Transport in Albania consists of transport by land (rail, roads), water and air. Albania has sev- eral seaports with Durrës, Vlorë, Sarandë, and Shëngjin being the most important ones. The country’s sole commercial airport is Tirana International Airport. Currently its only direct connection to other WB countries is the flight between Tirana and Belgrade (Serbia). It has no railway links with Greece, Kosovo and North Macedonia, and freight service only with Montenegro. By land Albania borders Greece, Kosovo, Montenegro and North Macedonia. Transport in BiH includes transport by land (rail, roads) and air. BiH has small access to the Adriatic Sea with 20 km of coastline in the town of Neum. The country’s largest airport is Sarajevo International Airport. Its only direct connection to other WB countries is through flights between Sarajevo and Banja Luka (BiH), and Belgrade (Serbia). It has railway links with Croatia and Serbia but not with Montenegro. BiH is bordered by Croatia, Montenegro and Serbia. Similarly, in Kosovo there is road, rail and air transport. Currently, only the railway with North Macedonia is functional. The country’s only commercial airport is Prishtina International Airport which has no direct flights to other WB countries. Kosovo is landlocked and bor- dered by Albania, Montenegro, North Macedonia and Serbia. Transport in Montenegro consists of road, rail, water and air. The main seaport is Port of Bar. Montenegro’s direct connection to other WB countries is through its two commercial airports in Podgorica and Tivat which offer direct flights to Belgrade and Niš (Serbia) only. Its railway is linked with Serbia only whereas with Albania freight service is used. Montenegro borders Albania, BiH, Croatia, Kosovo and Serbia. North Macedonia’s transport system includes road, rail and air transport. North Macedonia has no sea access but there are recreational marinas on Ohrid Lake and other lakes. Its direct connection to other WB countries is through its two commercial airports in Skopje and Ohrid which offer direct flights to Belgrade (Serbia) only. Its railway is linked with Greece, Kosovo and Serbia, and but not Albania and Bulgaria. It is bordered by Albania, Bul- garia, Greece, Kosovo and Serbia. 3 Serbia is landlocked, bordering BiH, Bulgaria, Croatia, Hungary, Kosovo, Montenegro, North Macedonia and Romania. Transport includes rail, road, water and air. The most important inland waterway is the Danube. Of the six WB countries, Serbia has the most developed direct connection to other WB countries through its two commercial airports in Belgrade and Niš which offer direct flights to Tirana (Albania), Banja Luka and Sarajevo (BiH), Podgorica and Tivat (Montenegro), and Skopje (North Macedonia). Serbia has no direct flights to Kosovo. Serbia has rail links with all neighbouring coun- tries, except Albania. 3.1. ALBANIA When it comes to transport policy