European Western Balkans

[EWB Interview] Nègre: The region should focus on economic cooperation rather than competition

Dubravka Nègre; Photo: EIB

Interview with Dubravka Nègre, Head of Regional Representation for the Western Balkans in the European Investment Bank, taken during this year’s Macedonia2025 Summit in Skopje, where Nègre was one of the speakers.

European Western Balkans: Can you tell us more about the role of European Investment Bank in the Berlin process?

Dubravka Nègre: Since the Berlin process was launched, the EIB has played an important role in it, as the EU bank, complementing EU grants with our loans. The aim is provide effective support to the development of transport and energy networks throughout the region in order to help and increase the connectivity in the Western Balkans. To that end, we have been working intensively also this year to secure new financing agreements, for example, for the continuation of the construction of road Corridor 5C in Bosnia and Herzegovina as well as the rehabilitation of national roads in Montenegro to better connect it with the neighboring countries, but also to work on other new investment opportunities for the next year, recognized as priorities by the governments of the region.

EWB: What are, for instance, the main current projects dedicated to boosting connectivity?

DN: If we talk about Serbia, beside road corridors, there is also Corridor 10 rail which financing was signed this year. On top of some 70 million EUR grant, provided by the EU under the connectivity agenda, we have complemented it with 134 million EUR loan to support the electrification and modernization of that rail segment, which will connect Serbia and Bulgaria.

We have also been working actively in other countries of the region. Let me also mention Montenegro and rail connectivity between Serbia and Montenegro – the modernization of the rail network between Bar up to the border with Serbia, which is also funded with 20 million EUR EU grant, complemented by EIB loan of 20 million EUR.

This shows that under the Berlin process the availability of the EU grant funds for major infrastructure development, particularly in the field of connectivity, has increased since 2014 and we are there to provide competitive, long-term, favorable funding to complement those grants because public grant funds are limited. EIB’s goal is not only to complement those sources but also to team up with other partners in the region, be it multilateral financial  institutions, government authorities or private sector to reach the goal of better-connected Western Balkans, which would later stimulate exchange of goods and people. Connecting people will also help the reconciliation in this region, which is also very important.

EWB: As we saw from the EIB Reports, infrastructure gets the most funding, more than all the other projects in the Western Balkans combined, but connectivity is not just the infrastructure – for instance, it is also tied to digital economy. What is EIB doing to help other parts of connectivity agenda?

DN: If I may add, it is true that a large part of EIB’s support goes towards infrastructure, but equally large portion goes to the support of small-and-medium sized enterprises (SME), which are very important for job creation and for paving the way for sustainable economic growth. EIB Group is investing in local economy and local entrepreneurs.

Going back to digital economy, in the EU Enlargement Strategy from February, digitalization has been recognized as one of the priorities for the region, and there are many policy efforts conducted in all the countries in the region to, for instance, streamline their roaming tariffs in cooperation with the European Commission. On the other side, EIB is there to provide and support concrete investments, which would pave the way to improve digital connectivity in the countries of the Western Balkans. We are currently working on a few investment opportunities, notably in Albania and Serbia to help the countries’ roll-out broadband and to improve connectivity of certain public institutions, such as schools, and expand Internet to the larger parts of the population.

This sector is changing rapidly and has been under-invested, the needs for investments are important and we are ready to consider complementing EU grant resources with EIB’s funds. The important for this sector is also private financing, and for it to come, the regulatory environment should improve. Different efforts from different parts of the economy are needed.

EWB: Could you expand a bit on the regulatory aspect in the region, in broad strokes?

DN: The EU strategy defines that the need of the region is more efficient rule of law, as well as governance, but what is needed in the economy is to continue the restructuring of large public enterprises, improve corporate governance and their efficiency from  management and financial point of view. The next step would also be the finalization of bankruptcy procedures, which would create space for a more active private sector in some spheres of the economy.

EWB: What is the perspective of the Western Balkans economic area?

DN: The need for the Western Balkans economic area has been recognized at the political level. What is important now is to implement that idea – which is easier said than done. The countries need to cooperate on the implementation of that vision. The countries have large volumes of trade with the EU, but not enough between themselves, and this could be improved going forward.

EWB: We have heard during the Macedonia2025 Summit’s panel on Western Balkans economic prospects that the economies in the region are not cooperating, but competing, and that they are subsidizing the production of same products, therefore lowering the price, trying to outcompete each other. Do you see the space for the creation of regional economic cooperation, which wouldn’t lean on tariff or non-tariff barriers?

DN: The EU is the main trading partner of all the countries in the region, and from that perspective, the question could be asked what countries can do in synergy rather than in competition. At the level of chambers of commerce, there is a good understanding on where the gaps are and what needs to be tackled. A better transport and energy interconnection between countries would improve this situation, better and faster border crossings are important as well, which was the case for the EU as it developed and grew into a single market. I think that committing to this effort now would also help the integration process with the EU because the ultimate goal of this region is integration into a common European market. The goal of the Western Balkans should be to attract more foreign direct investments, because they bring value, knowledge, skills, and procedures and are important for the value chain. This is beneficial for the smaller companies, which are then suppliers to the larger ones. How the countries attract them is up to their policy and decision, but certainly I think that the presence and increase of those investments in the region is important, because they bring corporate governance, corporate and social responsibility, all the topics which are important for the development of the society.

We’ve seen that FDI levels are increasing in some countries and we hope for that trend to continue and EIB can support FDIs as we have done in the past – the largest one being FIAT’s expansion of the car factory in Kragujevac, which then had an impact on the whole value chain of the smaller suppliers in the area where the factory is located.

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