EU-Western Balkans relations: Macroeconomic situation and EU financial support

Summary:

In 2003, at the Thessaloniki Summit, the European Council set out its determination to fully support the EU perspective of the Western Balkan countries. However, in the context of relatively limited progress in implementing reforms needed to align with the EU, none have joined since Croatia's accession in 2013, since when the region has been confronted by 'enlargement fatigue' and increasing Russian and Chinese interference. Responding to these challenges, European Commission President Ursula von der Leyen, who took office in November 2019, defined a new EU external policy strategy as a tool that 'stabilises its neighbourhood and accelerates enlargement'. Several political initiatives followed, to accelerate the Western Balkans' EU integration.

These have included the reformed enlargement policy, endorsed in February 2020, adopting the third Instrument for Pre-accession Assistance (IPA III) programme, for 2021-2027, with an allocation of over €14 billion, and the latest proposal of the Reform and Growth Facility (the Facility) (€6 billion) under the new Growth Plan for the Western Balkans. Together, IPA III funds and the Facility will constitute the main financing instruments for the region, helping to increase socio-economic convergence with the EU. President von der Leyen said that the Facility 'could double the economy of the Western Balkans in the next 10 years'. The Facility is a tangible result of the new 'gradual integration approach' endorsed by the European Council in June 2022. It aims to provide benefits of EU membership, even before accession to the EU, particularly through participation in the 'four freedoms' of goods, capital, services and people. The proposal for the Facility of 8 November 2023 links fulfilment of reform commitments with access to funding, incentivising reforms while allowing the Western Balkans to benefit from key areas of the single market. The Facility is set to complement the IPA III thematic allocation approach, by focusing on the specific determinants of social and economic growth. The European Parliament supports the enlargement policy as a strategic investment for peace and security. It has endorsed recent enlargement policy reforms, including a gradual approach. Parliament is scheduled to hold a debate and vote on the legislative resolution on the Facility for the Western Balkans during its second April 2024 plenary session.

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