Hahn: This window of opportunity should be used by Western Balkans

Johannes Hahn in Sarajevo; Photo: European Union

SARAJEVO – Speech by Johannes Hahn at the Western Balkans Six Leaders’ Summit.

Dear Prime Ministers and colleagues.

I would like to thank, Chairman Zvizdić, who agreed that Sarajevo would host today’s event. Thank you for that, Denis.

This first meeting of Prime Ministers in the region is exactly the symbol we need at this moment. It would be good to have summits after Trieste taking also place in the Western Balkans region

Originally for today, we had simply pIanned a meeting at Prime Minister’s level some time half-way between the Paris and Trieste summits to make sure the Berlin process agenda stays on track. To discuss connectivity and other cooperation. To discuss where we are with our respective commitments.

Our meeting today, however, now needs to deliver much more. We are meeting at a point when several of your countries are undergoing severe domestic political crises, sometimes heading towards serious ethnic tensions. At the same time, we are witnessing unprecedented levels of involvement from further east while it is not yet clear where US policy is heading for this region. So much for the rather bad news.

From Brussels by contrast, there is very good news: The EU as a whole fully understands the severity of the situation in the region, as well as its hard-headed self-interest to promote your countries’ European destiny. HRVP Federica Mogherini visited every single one of your countries last week to deliver just this message. Even more importantly, the European Council last week unequivocally confirmed your European futures.

Consider the timing: This statement at the highest level comes just before key elections in the Netherlands, in Germany, and in France amongst others. You know they are not making these commitments to win votes at home. Our prime ministers fully understand the strategic dimension. They knew who they could rely on during the tough times at the peak of the migrant crisis.

My main message to you today is: use this rare window of opportunity, as individual countries, but also as a region. I really cannot recall a time like now when Member States and others actively approached – even pushed – me to check what items could be quickly delivered to the Western Balkans to support the region. In short, I don’t think you can afford to squander this positive climate through domestic confrontations and blaming neighbours.

I like to sail. To me, our situation feels like the winds are picking up nicely, even the sun is coming out a little, and we are busy arguing over who should take the night watch. We need to get cracking, work together, and set all sails.

We now have one of those windows of opportunity where: either the region as a whole picks up momentum and we generate a genuinely positive narrative, or we end up in a really awkward spot – with a stream of bad news slamming the window firmly shut. This is playing with fire.

I appeal to your statesmanship to demonstrate your commitment to option number 1. This is self-interest: your citizens want your countries and this region to prosper, tensions don’t buy you anything.

So therefore, let’s get on with business. There is quite a lot of substantial work ahead in the next 2/3 months.

I wanted to use today’s occasion to talk about economic integration in the region. We have spent the past 3 years of the Berlin Process with a strong focus on connectivity, but now time is the time to expand an agenda that has focused on physical connectivity, whether of road, rail, power or gas, and look at the connectivity of economic markets.

Several of your Prime Ministers have called for ideas promoting Economic Integration to be included into the Berlin Process, including how to increase the level of trade within the region. I share those objectives, and I look forward to hearing from you about how you see this possibility.

With our Italian hosts, we want to propose this as an important deliverable at the Summit in Trieste. We are ambitious, and it will need your backing to break down barriers that have existed for far too long. Such barriers have no place in the heart of Europe in 2017.

I want to harness the potential of trade between your countries. Trade integration in the Western Balkans has developed positively since the countries in the region joined the Central European Free Trade Area some 10 years ago. CEFTA has been successful in developing a regional trade integration agenda that has led to a number of agreements.

However, the intra-regional trade flows did not grow enough during these years. Only around 20% of total CEFTA exports are achieved in the region, and 10% for imports. By comparison, exports from the Western Balkans to the EU almost doubled during the same period reaching 70% of total exports for the region. Imports increased by 40% reaching 60% of total imports for the region. Your exports account for a very low proportion of your GDP. While trade with the EU is quite strong, the Western Balkan economies remain poorly integrated into (rest of the) world trade. The post-1990s barriers in the Western Balkans have prevented trade to reach its full potential.

It is also about what you trade: your export patterns are still dominated by low-skill, low-tech and natural-resource-intensive products. Your exports are competing against each other in the lower end of the value chains, and trade integration between your economies remains low.

You can and should address this situation collectively: I want to use Trieste as a springboard to raise regional economic integration to a new level; this will include formulating clear policy objectives for the WB6 countries over the next few years.

For today’s meeting, we have circulated a few proposals worked out with the Regional Cooperation Council which should form the basis of a consolidated action plan on regional economic integration for adoption in Trieste. I wish to thank the colleagues in the RCC for their work.

We propose a Common Market for the Western Balkans. Our ambition is to remove barriers and create a single space for economic development. It will also make clear a longer-term aim of integrating the Western Balkans Common Market into the EU’s Internal Market.

Building a common market is exactly what happened inside the EU. And produced extremely positive economic developments. In a best case scenario, if we crudely extrapolate job creation from the EU’s Common Market, the region could be looking at up to 80,000 new jobs by 2025.

I want to insist that what I propose to you in this area is an essential part of your own EU integration objective. Trade integration is a step towards the EU, not an alternative to membership.

I propose that this plan has two elements: First, a component on trade, trade facilitation, and trade in Services which will also look at removing barriers to trade.

We need to go further than what CEFTA has already done: proposing new areas of work, but also better implementation of your existing obligations. Much of this will dovetail with the trade facilitation through our Connectivity Agenda (removing transport barriers).

Concretely I want to see swift implementation of the CEFTA agreement on trade facilitation, the completion of your negotiations on liberalising trade in services.

We will be proposing ways to remove barriers to trade in goods, but also services and capital. And we need to do more to facilitate movement of workers across the Western Balkans, for instance through mutual recognition of professional qualifications.

Second, a component on investment and business promotion. The aim here is to have a strong agenda that can develop an economic space that is attractive to (European) investors. You need to send the message that investing in any one of your countries is investing in a – common – market of some 20 million consumers.

Let me be clear: I am talking about real investment promotion. I am not talking about a cheap race to the bottom for corporate taxes. We need to stimulate the strengths of the region and local entrepreneurship. The highly developed skills levels of your people, their proximity, and their enthusiasm. Let us build on smart growth and on sustainable growth approaches as developed Europe-wide: smart specialisation, knowledge economy, green growth.

I am ready to examine how better to exploit the growth opportunities provided by the Stabilisation and Association Agreements. To drive this forward, we need to listen carefully to the business community and encourage them to work with each other.

At the Trieste summit we will announce a substantial increase in the budget of our Western Balkans Enterprise Development & Innovation Facility (EDIF), in order to help businesses, particularly small and medium-sized enterprises, to work together to develop the opportunities in the region.

I propose that the workplan for a Common Market for the Western Balkans has a strong digital element. This should cover both access to the digital economy (reduce roaming charges further, promoting broadband) but also the content (reducing barriers to online trade, questions of data protection). The key is to push existing – even traditional – industries & sectors into the digital age.

For this new Common Market to be both ambitious and realistic, I propose that the RCC be tasked with developing the comprehensive Action Plan to be presented in Trieste. And that they are also entrusted with driving it forward, once the agenda is adopted (with the help of other partners, such as CEFTA, the World Bank, Chambers of Commerce).

Finally, I would like to repeat that, for this to work we will need a very strong political commitment from you, as the Leaders of your respective countries. Like for the EU itself, this Common Market will only work of I can count on your ambitious engagement, removing barriers to trade at all levels between your countries.

Before handing over the floor to you, I would like to mention two other things. Firstly, tomorrow morning I will have the pleasure, alongside with authorities of Bosnia and Herzegovina and Croatia, to attend the launch of the Svilaj Bridge project. This is proof that our shared work on the connectivity agenda, is delivering results. I count on your drive to ensure that we can visit more such project launches this year.

This will show your citizens that your – admittedly often uncomfortable – work with the EU pays off very concretely. And it does so now, not just upon joining the EU.

The second is that we should dedicate some time during today’s meeting to discuss the Transport Community Treaty and its Secretariat. I propose that we take some time over lunch to outline conditions for discussing where that Secretariat is going to be.

I would like to close by congratulating all of you on the commitments you have been able to make in today’s declaration which Denis Zvizdic has circulated earlier. This is an important sign that not only your governments but also the region as a whole is ready to set sail!