Econostrum | Economic News in the Mediterranean

Albania, Northern Macedonia and Serbia unite in "Open Balkans", antechamber to the Schengen Area

Written by Frédéric Dubessy on Thursday, September 2nd 2021 à 10:31 | Read 448 times

The Prime Ministers of North Macedonia and Albania and the Serbian President signed a free trade agreement (photo: Government of North Macedonia)
The Prime Ministers of North Macedonia and Albania and the Serbian President signed a free trade agreement (photo: Government of North Macedonia)
WESTERN BALKANS. Tired of stagnating in the queue to join the European Union, three Western Balkan countries decided to move forward together on their own. At the end of July 2021 in Skopje, at the Economic Forum on Regional Cooperation, Albania, Northern Macedonia and Serbia signed a free trade agreement called "Open Balkans".

The idea had been mooted in the early 1990s in this Mediterranean peninsula, before being shelved because of the Yugoslav war (1991-2001). It was revived in 2018 by Albania. Then, negotiations officially started from October 2019 in Novi Sad (Serbia) during a regional cooperation economic forum organised by the chambers of commerce and industry of the three countries and chaired by Edi Rama, Albanian Prime Minister, Zoran Zaev, his counterpart for Northern Macedonia, and Alexandar Vucic, Serbian President.

In moving from project to reality, the initiative has changed its initial name from "Mini-Schengen" to "Open Balkans", in order to better smooth out the reference to the Schengen Convention - the model, however - which governs the opening of borders between 26 European countries (22 EU countries + Norway, Liechtenstein, Switzerland and Iceland).

Free movement of goods and people

Having required eight intergovernmental summits before being formalised, this text will simplify the movement of goods and people. For example, fast-track priority border crossings will be reserved for the inhabitants of the signatories.

In addition to the fact that "Open Balkans" will promote trilateral trade, the labour market will also benefit from this rapprochement with the facilitation of the issuance of work permits to citizens of one country in the other two, as well as the mutual recognition of their diplomas and professional qualifications. It also includes an agreement on disaster prevention and coordination.
Covering an area of 131,935 km², the new "Open Balkans" free trade area has a population of 13.8 million and a combined Gross Domestic Product (GDP in current prices) of $80.39 billion by 2020.

The "Open Balkans" will be operational by 1 January 2023, with the effective opening of the borders. The initiative is intended as a first step, an antechamber, before its members join the European Union and will prepare them for integration. "We are starting today to do in the region what we will do tomorrow in the EU," commented Edi Rama, Albanian Prime Minister, at the signing of the agreement. However, all of them remain bitter about the EU's manifest lack of willingness to integrate them. Edi Rama even went so far as to compare cooperation with Brussels to Samuel Becket's play "Waiting for Godot".
Zoran Zaev complained about remaining on the EU's doorstep when his country, Northern Macedonia, like Albania, would have met all the entry criteria. Aleksandar Vucic spoke of "enlargement fatigue in the EU. We need to see what we can do for ourselves instead, what we can do for our citizens, how we can expand our markets."

Of the five current candidates for membership (Albania, Northern Macedonia, Montenegro, Serbia, Turkey), four are in the Western Balkans. But to date, Serbia remains the only one of them to have started, in 2014, the process of negotiations for its accession. Croatia was not only the last country in the region to be granted this status as of 1 July 2013, but also the last to become a Member State.

Kosovo highly critical of the initiative

Since the beginning of the discussions, this agreement has been intended to welcome other countries of the Western Balkans, and ideally all six of them. But, for the moment, Bosnia-Herzegovina and Montenegro are reserving their response, while Kosovo has clearly rejected any participation in this free trade area. Ready to join this initiative, Kosovo finally gave up on it in favour of a political changeover in the February 2021 legislative elections. When it came to power, the sovereignist left stopped the discussions. Since 2020, Albin Kurti, who has since become Prime Minister, has expressed his fears that Serbia will use the project to recreate "a fourth Yugoslavia".

Recently describing "Open Balkans" as an initiative "without vision" for the region, he also denounced an attempt, thanks to this agreement, by Serbian President Aleksandar Vucic to open up the Balkans to China, to the detriment of the EU. It is true that Belgrade is simultaneously working on its EU application, a free trade agreement with the Eurasian Economic Union (EAEU) and developing close relations with China.

"This suggests that there is an alternative to the region's common path to the EU. It is as dangerous to send this message as the delays in European integration," says Donika Gërvalla, Kosovo's foreign minister. Albin Kurti instead calls on the region to conclude a trade agreement with the European Union.

The fact remains that Belgrade's non-recognition of Kosovo - which unilaterally proclaimed its independence from Serbia in February 2008 - would not fail to cause problems in this new grouping.

The EU prefers a process involving all countries in the region

The European Union remains rather silent on this event. European Commission spokeswoman Ana Pisonero regretted that not all six countries in the region were involved. "We welcome the commitments made by the leaders to regional cooperation, which is an essential element of the European perspective of the Western Balkans and an integral part of the Stabilisation and Association Process. We understand the desire to move forward. At the same time, a process involving the whole Western Balkans region is essential. In this context, it is important that the region moves forward with the establishment of a regional common market, a political commitment made by the six leaders of the region at the Sofia summit last autumn," she says in an interview with the Kosovar newspaper Gazeta Express.

The EU prefers to be part of the Berlin Process initiated in 2014 in the German capital to strengthen regional cooperation. It is based on economic support, adopted in October 2020, which could mobilise up to €9bn of European grants for the Western Balkans. As well as a new guarantee mechanism to generate investments of up to €20 billion. A month later, in Sofia at the seventh summit devoted to relations between the EU and the Western Balkans, Emmanuel Macron insisted: "It is essential that we maintain and strengthen this very important dialogue with the Western Balkans: they belong to Europe, geographically, historically and culturally. And let me reaffirm very clearly that France supports the European perspective of the Western Balkans. The French head of state followed in the footsteps of Ursula von der Leyen who sees this region as "an absolute priority (...) The future of the region is in the European Union.

At the eighth summit in July 2021, the President of the European Commission said the same thing: "Our first priority is to accelerate the enlargement agenda in the region and to support our Western Balkan partners in their work to implement the reforms necessary to advance on their European path. But our engagement with the Western Balkans goes beyond that, and the Berlin Process has served as an incubator for many initiatives that have become an integral part of the EU's policy towards the region. Together, we have laid the foundations for a more sustainable, digital and resilient Europe.

Electricity interconnection between Albania and Northern Macedonia
As the first preliminary act of the Open Balkans agreement, an electricity interconnection between Albania and Northern Macedonia will be established. The start of construction of a new electricity substation in Ohrid (North Macedonia) on 31 August 2021 symbolises the rapprochement between the two countries.

The new network will extend from the Albanian border to Bitola in North Macedonia and will complement the existing 400 kV electricity ring between Albania, North Macedonia and Greece. A new 400 kV line between Albania and Montenegro and a submarine cable between Italy and Montenegro are also completed and operational.

The Albania-Northern Macedonia project is financed by the European Bank for Reconstruction and Development (EBRD), €37m (loan to MEPSO, the transmission system operator in Northern Macedonia), and the European Union (€12m grant) under the EU initiative. It aims to establish an east-west electricity transmission corridor between Bulgaria, North Macedonia, Albania, Montenegro and Italy.

This interconnection will improve energy supply and make it more affordable, both for individuals and businesses in North Macedonia. It will also normalise voltage levels by stabilising load flow and frequency fluctuations and reducing technical losses throughout the transmission system.

"Support to crucial regional cross-border infrastructure is essential to create larger integrated energy markets and increase energy security in the region," said Andi Aranitasi, EBRD Head of Northern Macedonia. "The construction of this new line will help increase renewable energy capacity in North Macedonia, allowing the country to decarbonise its power sector more quickly and improve the balance of power systems by linking the thermal-dominated North Macedonian power market with the predominantly hydro-powered Albanian power market."

Construction of a new electricity substation begins in Ohrid, Albania (Photo: Berd)
Construction of a new electricity substation begins in Ohrid, Albania (Photo: Berd)

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