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Analyses

Mini-Schengen, Regional Economic Area and Common Regional Market: What is what?

BELGRADE – It has been a year since the main concerns in the Balkans regarding regional economic integration were – is mini-Schengen initiative just a substitute for the lack of commitment of the EU, is it a tool for creating a new Yugoslavia or is is just shifting the focus away from disappointment caused by the postponement of the opening of EU accession negotiations with Albania and North Macedonia. Some of the critics even went further to call this initiative “a cheap political trick that would only look good on paper.”

A year later, things became clearer and it could be said that nothing and everything has changed.

Why is “mini-Schengen” not fully endorsed by the WB6?

The idea of creating a “mini-Schengen” came in October 2019, as Prime Minister of Albania Edi Rama and Prime Minister of North Macedonia Zoran Zaev, together with President of Serbia Aleksandar Vučić met in Novi Sad and declared that this initiative is open to all of the countries of the region and that it will strive to achieve “four freedoms” in the Western Balkans.

To promote this idea as a truly regional one, Serbia insisted on attracting all of the WB six countries to join the initiative, even Kosovo, which it did not recognize. When asked about this, Vučić stated that recognition in this matter is irrelevant, as “it has nothing to do with the flow of goods, people, services and capital.”

On the other hand, Kosovo’s leaders were strongly opposing the idea, until the Washington agreement, which stated that “Belgrade and Pristina will join the ‘mini-Schengen’ zone, which Serbia, Albania and North Macedonia declared in October 2019, and will take full advantage of it.”

After praise coming from Albania, North Macedonia and Serbia, for the decision to join the initiative, up until this date, Kosovo did not attend any of the meetings, nor did it sign a recent memorandum on the fight against COVID-19.

As for Bosnia and Herzegovina and Montenegro, despite many invitations, they have decided to remain spectators.

“As an idea, ‘mini-Schengen’ unfortunately did not manage to reignite the spark for closer regional cooperation and integration in an area regulated by EU’s 4 freedoms,” explains Srđan Majstrović, Chairman of the Governing Board of the European Policy Centre – CEP and a member of the Balkans in Europe Policy Advisory Group (BiEPAG), for EWB.

He explains that even though it was perceived as a sound initiative, “mini-Schengen” failed to get on board all the countries from the region, thus failed to secure the respect of inclusiveness as one of the major principles of the regional cooperation in the process of region’s EU integration.

One of the crucial questions last year, when the countries announced the establishing of “mini-Schengen” initiative, was whether this idea will become just a substitute for the lack of commitment of the EU.

The initiative was then and to some, still, seen as one out of many that would ease a disappointment caused by the postponement of the opening of EU accession negotiations with Albania and North Macedonia. Therefore, the countries were reluctant to join, believing that this would slow down an already slow pace towards full EU integration.

Majstorović points out that the initiative failed to explain clearly that it never intended to be an alternative to EU accession of all WB6 countries.

Western Balkans countries' flags during Berlin process
Western Balkans countries’ flags during Berlin process

“Unfortunately, it was not well prepared since initiators simply failed to note that some of the countries might not be interested in establishing brand new regional initiative. Finally, it showed a realistic picture regarding the level of mistrust in the region and how difficult it is to establish a trustworthy atmosphere among the WB six, even in those situations which might contribute to faster EU accession of them all,” says Majstrović for EWB.

What are the achievements of the Initiative?

In November, Vučić and Rama signed an agreement that enabled the citizens of Serbia and Albania to enter the territory of the other with a valid biometric ID card. This interstate agreement between the two countries was perceived as a first concrete move in year-long cooperation.

During the same meeting, the leaders of Albania, North Macedonia and Serbia signed a memorandum on cooperation in the fight against the COVID-19 pandemic.

According to the memorandum, the three countries will now share information on the virus, and a negative PCR tests will not be required for travelling between the three countries. In addition to this, the memorandum stipulates that should citizens of one country become infected while visiting the other country, they will be able to receive free treatment.

Despite these tangible results, so far it seems that the initiative overpromised, and underdelivered, or it is perhaps yet to deliver?

Rama, Vučić and Zaev; Photo: Tanjug/Tanja Valić

Is “mini-Schengen” a necessity with the existence of the Regional Economic Area?

In a region that is for decades burdened by multifaceted conflicts, any form of regional cooperation is highly welcomed, especially since it is one of the requirements for EU membership.

However, some experts are not shying away from calling this initiative dispensable or unnecessary, or even a political stunt which is used to gain scores and to create an image of good neighbourly cooperation in front of the EU, rather than as an initiative that would contribute to a useful economic integration of the Western Balkans.

The reason for this lies in the Multi-Annual Action Plan on Regional Economic Area (MAP REA), established at the Trieste Summit in 2017, under the Berlin Process.

The goals of both, “mini-Schengen” and MAP REA are overlapping — namely, the freedom of movement of goods, services, people and capital, but the important difference is – REA actually gathers all of the WB six.

“The MAP REA, whose development was coordinated by the Regional Cooperation Council (RCC) upon request of the Western Balkans’ Leaders and supported by the European Commission (EC), aims to enable the unobstructed flow of goods, services, capital and highly skilled labour, making the region more attractive for investment and trade, and accelerating convergence with the EU, thus bringing prosperity to Western Balkans citizens,” it is stated.

Another crucial difference is that MAP REA provides much-needed structure. Many experts have warned that for the idea like “mini-Schengen” to become reality “it needs a strategy, an action plan, detailed objectives, measures, indicators, benchmarks, available financial resources and qualified staff”.

“We have all those in the CEFTA and the RCC. The Berlin Process since 2014 provides the political backing while the EU Commission offers the financial support,” said earlier this year for EWB Ardian Hackaj, Research Director at the Institute of Cooperation and Development Institute in Tirana.

Since 2017, this form of economic integration achieved notable results. One of the most tangible ones is the abolishment of roaming in the region.

“The most obvious benefit for the citizens of our region is the fact that we are now paying from 83% to 96% less roaming charges in entire Western Balkans. And as of July 2021, roaming costs will be zero,” stated Maja Handjiska Trendafilova, head of Programme Department and Pranvera Kastrati, Senior Expert on Economic and Digital Connectivity, of the RCC for EWB.

The RCC reminds that two significant memorandums of understanding between the WB6 – one in the area of interoperability and trust services in the Western Balkans, and the other on 5G roadmap for the digital transformation of the Western Balkans were signed, as well. All of that under the MAP REA legacy though the Annual Digital Summits.

“The WB Digital Summits offer the opportunity for businesses and people to showcase their best practices in the digital sphere as well as to exchange the know-how and acquire new networking opportunities,” states the RCC.

Evolution of the MAP REA into the Common Regional Market

Those and many more agreements were signed under the MAP REA. However, during three years, multiple shortcomings were noted.

The RCC acknowledges the challenges of various nature – coordinative nature, political spillover of unresolved issues, different development stages among the WB economies, not fully adequate financial and technical support instruments, high pressure on public administration to respond to very demanding agendas, and so forth.

“You will remember the imposition of 100% tariff in CEFTA context that lasted for more than a year. The overall situation was additionally worsened in 2020 with the pandemic lockdown. All these factors posed certain challenges and hampered the smooth implementation of REA in some of its areas,” explained Maja Handjiska Trendafilova and Pranvera Kastrati.

In addition to this, they note that the negotiations on mutual recognition of professional qualifications were discontinued “due to non-consensus among Western Balkan economies on the legal base of the agreement as well as some political sensitivities and complexities tabled during the negotiations.”

All of these setbacks led to the re-examination of the entire process, more specifically on how to improve it.

As a “catalyst for deeper regional economic integration and a stepping stone towards the EU Single Market,” the Common Regional Market (CRM) was created. It is said to be an evolution of MAP REA that will address its shortcomings.

The leaders of the WB6 endorsed the CRM 2021-2024 Action Plan at the Berlin Process Summit in November in Sofia, which is – just like the “mini-Schengen” and MAP REA, based on the EU four freedoms.

“The process will continue with the renewed momentum demonstrated in Sofia, and clear political commitment was expressed by WB Leaders with the endorsement of CRM. It will also provide a good basis for ‘phasing in’ EU policies in areas where sound progress is reached. Among the key areas in which CRM will build upon REA are to reduce roaming charges WB-EU, align with EU best practices in 5G, extend green lanes with EU, reduce the cost of bank transactions in WB and later prospectively join the Single European Payment Area and many other enlisted in the CRM itself,” states the RCC.

In the time when the pandemic reached its full swing in the region, direct benefits, among others, stemming from regional CRM initiatives involve reducing border waiting time by 30% and furthering Green Lanes within WB6.

Western Balkans; Photo: Pixabay

The Green Lanes initiative is a concrete example of how good coordination between different border administrations of the Western Balkan countries had a very positive impact on the flow of goods during the first months of the pandemic of COVID–19.

“The region delivered concrete results through joining forces and making the challenge less painful for WB citizens and businesses. It enabled the unobstructed flow of essential goods and medicines throughout the WB during the crisis. When it was needed the most, the region stepped in and delivered,” points out the RCC.

As some of the goals that CRM has are joint border crossing points and expedited implementation of trade facilitation programmes, the establishment of a regional e-commerce market, development of the regional automotive and agri-food industry is also planned under CRM, together with the promotion of Western Balkans as a regional tourism destination, that suffered the hardest blow in COVID-19 pandemic.

“Last but not least, free movement of people with ID cards is another important precondition for a functional Common Regional Market. The region is in the process of starting negotiations on a regional Agreement on the Freedom of Movement and Stay, along with the Agreement on Recognition of Professional Qualifications, and the Agreement on Recognition of Academic Qualifications for which the preparatory work has already been launched as part of REA. We want to see more opportunities in the region for our people, and we see the commitment of WB6 governments to do so,” states the RCC.

How does CRM stand in relation to “mini-Schengen“?

The RCC explains that all regionally owned initiatives aimed at advancing regional cooperation and improving socio-economic development in the region are worth paying attention to and seeking synergies.

“’Mini-Schengen’ brought about political dynamics, focused mainly on the key objectives of REA and proposed few practical interventions in some of the WB economies that are now fully integrated into the CRM,” explains the RCC.

“The CRM streamlines and integrates all agendas which were part of “mini-Schengen” initiative. Naturally, the CRM is much broader and encompassing initiative, elaborating on many other areas such as digital transformation, industry and innovation, private sector-led measures with a sectoral approach in regional value chains, etc,” they point out.

Since it is an all-encompassing initiative, the experts are suggesting that the WB6 should direct its energy to what is agreed at Sofia.

“It is a commitment that all WB6 Governments have taken, and which will serve as a benchmark for measuring their honest dedication to the regional cooperation and their credibility. It is also a chance for the region to prove its capacity to deliver some positive news,” emphasises Srđan Majstorović, adding that proving sceptics wrong would be the best way to show the maturity of the region and to present it as a constructive part of the future EU.

What is the final score for “mini-Schengen”?

Taking all said into consideration – the lack participation of all the countries of the region, its achievements and necessity, as well as clear goals and structure, it could be perceived that “mini-Schengen” was used only as a political stunt.

We can speculate whether that was a convenient ‘political stunt’ or not. But in reality, unfortunately, the whole idea has not gained much traction on the ground. It was obvious that those who initiate it failed to communicate its ideas and intentions clearly,” says Majstorović.

Srđan Majstorović; Media Centre Belgrade

He explains that the initiative was faced with the lack of understanding of the region, as well as the lack of understanding of the EU and its Member States.

“One of the major lessons that we could draw out of this is that WB6 should stop mimicking the EU. Rather, it is a high time to try to be original and while respecting the EU’s rules and standards create new Balkans image or new Balkan stories,” Majstorović notes.

He believes that the implementation of the plans for the establishment of CRM is a chance to prove regions credibility and demand more credibility from the EU in return, but warns that the establishing CRM will not be an easy task.

“The RCC’s coordination and support from civil society will not suffice if Governments do not take responsibility and show political will to implement the necessary changes,” he says.

Finally, Majstorović explains that this requires resolution of bilateral issues to remove any obstacles for citizens to move and work freely on an equal basis in any of the WB6 countries.

“Civil society in the region can help in achieving this goal. But Governments are bearing ultimate responsibility, and they must choose whether they will remain stuck looking into the review mirror of history or to focus on the road ahead,” Majstorović concludes.

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