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EU-Western Balkans: Time is of the essence

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Earlier this month the European Commission adopted its annual enlargement package, which includes a communication on EU enlargement policy assessing the current state of the Western Balkans integration within the EU and outlining priorities for future action. There are many reasons why both parties have an interest in advancing such a relationship, writes Vladimir Krulj, Fellow at the UK-based Institute of Economic Affairs.

First, the process of European integration is a source of political stability. This is especially important in a region where the memory of the tragic civil war is still very vivid in the minds of its people. Indeed, despite meaningful progress in many fields, the Western Balkans remain in a delicate and uncertain political situation. Populism is on the rise, corruption is rife, nationalism has revived and countries are suffering from democratic deficits.

In this situation, an ambitious EU integration agenda provides opportunity for the improvement of the judicial system, an advancement of the rule of law, the democratization of the political system and more credible and transparent government institutions that can benefit both sides. In particular, priority is to be given to effectively taking all concrete measures to tackle the endemic presence of corruption at all levels of governance. Governance should be guided by the core principal of common interest for each citizen and no more by the specific interests of certain groups. The time has come for action to fight against corruption and organised crime. No more promises! Results are expected by civil society.

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Second, deeper ties have an economic rationale, as evidence shows that both parties can gain in terms of increased trade. However, Balkan economies are fragile, and the pandemic is further exacerbating the situation. In response to this, the Commission has come up with an unparalleled Economic and Investment Plan for the Balkans – a  €9 billion package that will finance sustainable connectivity, the development of human capital, competitiveness, inclusive growth and accelerate the green and digital transition.

In exchange, Balkan countries are expected to “step up their convergent efforts” through the implementation of jointly agreed reforms to maximize the potential impact of said investment package. Harmonization of customs and tax regulations, freedom of movement between countries and efficient border management are all essential elements for a competitive regional market and emergence or consolidation of solid regional economic players.

Third, there are historical reasons and a sense of responsibility at play. The region of the Western Balkans suffered one the most tragic atrocities at the end of the twentieth century. The EU being a project of peace and prosperity, it cannot exist as a whole and as a free continent without sharing a common future with the Western Balkans. Nationalism and communautarism are never far away in the region where critical situations can escalate rapidly.

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Finally, there are geopolitical considerations. Geopolitics abhors a vacuum. If the EU will not provide an ambitious agenda for the Balkans, then other great powers – such as China, Russia, or Turkey could step in and extend their dominance directly at the EU’s door. Realistically, they already are and the EU isn’t proactively addressing the growing – sometimes aggressive – influence of its challengers.

Overall, the process of the integration of Western Balkans has achieved great results. However, the Commission laments inadequate progress in the rule of law area, a scant commitment to the independence of the judiciary and persistent and unacceptable levels of corruption. As for freedom of expression and media pluralism, progress has been made but less than in other years.

Clearly, Western Balkan countries must continue the political, judicial, and economic reforms, while the EU must think strategically and show a strong political will to support this region on the difficult path to reform.

European Commission

NextGenerationEU: European Commission disburses €231 million in pre-financing to Slovenia

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The European Commission has disbursed €231 million to Slovenia in pre-financing, equivalent to 13% of the country's grant allocation under the Recovery and Resilience Facility (RRF). The pre-financing payment will help to kick-start the implementation of the crucial investment and reform measures outlined in Slovenia's recovery and resilience plan. The Commission will authorise further disbursements based on the implementation of the investments and reforms outlined in Slovenia's recovery and resilience plan.

The country is set to receive €2.5 billion in total, consisting of €1.8bn in grants and €705m in loans, over the lifetime of its plan. Today's disbursement follows the recent successful implementation of the first borrowing operations under NextGenerationEU. By the end of the year, the Commission intends to raise up to a total of €80 billion in long-term funding, to be complemented by short-term EU-Bills, to fund the first planned disbursements to member states under NextGenerationEU.

The RRF is at the heart of NextGenerationEU which will provide €800bn (in current prices) to support investments and reforms across member states. The Slovenian plan is part of the unprecedented EU response to emerge stronger from the COVID-19 crisis, fostering the green and digital transitions and strengthening resilience and cohesion in our societies. A press release is available online.

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Cyprus

NextGenerationEU: European Commission disburses €157 million in pre-financing to Cyprus

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The European Commission has disbursed €157 million to Cyprus in pre-financing, equivalent to 13% of the country's financial allocation under the Recovery and Resilience Facility (RRF). The pre-financing payment will help to kick-start the implementation of the crucial investment and reform measures outlined in Cyprus' recovery and resilience plan. The Commission will authorise further disbursements based on the implementation of the investments and reforms outlined in Cyprus' recovery and resilience plan.

The country is set to receive €1.2 billion in total over the lifetime of its plan, with €1 billion provided in grants and €200m in loans. Today's disbursement follows the recent successful implementation of the first borrowing operations under NextGenerationEU. By the end of the year, the Commission intends to raise up to a total of €80bn in long-term funding, to be complemented by short-term EU-Bills, to fund the first planned disbursements to member states under NextGenerationEU. Part of NextGenerationEU, the RRF will provide €723.8bn (in current prices) to support investments and reforms across member states.

The Cypriot plan is part of the unprecedented EU response to emerge stronger from the COVID-19 crisis, fostering the green and digital transitions and strengthening resilience and cohesion in our societies. A press release is available online.

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Belgium

EU Cohesion policy: Belgium, Germany, Spain and Italy receive €373 million to support health and social services, SMEs and social inclusion

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The Commission has granted €373 million to five European Social Fund (ESF) and European Regional Development Fund (ERDF) operational programmes (OPs) in Belgium, Germany, Spain and Italy to help the countries with coronavirus emergency response and repair in the framework of REACT-EU. In Belgium, the modification of the Wallonia OP will make available an additional €64.8m for the acquisition of medical equipment for health services and innovation.

The funds will support small and medium-sized businesses (SMEs) in developing e-commerce, cybersecurity, websites and online stores, as well as the regional green economy through energy efficiency, protection of the environment, development of smart cities and low-carbon public infrastructures. In Germany, in the Federal State of Hessen, €55.4m will support health-related research infrastructure, diagnostic capacity and innovation in universities and other research institutions as well as research, development and innovation investments in the fields of climate and sustainable development. This amendment will also provide support to SMEs and funds for start-ups through an investment fund.

In Sachsen-Anhalt, €75.7m will facilitate cooperation of SMEs and institutions in research, development and innovation, and provide investments and working capital for micro-enterprises affected by the coronavirus crisis. Moreover, the funds will allow investments in the energy efficiency of enterprises, support digital innovation in SMEs and acquiring digital equipment for schools and cultural institutions. In Italy, the national OP ‘Social Inclusion' will receive €90m to promote the social integration of people experiencing severe material deprivation, homelessness or extreme marginalisation, through ‘Housing First' services that combine the provision of immediate housing with enabling social and employment services.

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In Spain, €87m will be added to the ESF OP for Castilla y León to support the self-employed and workers who had their contracts suspended or reduced due to the crisis. The money will also help hard-hit companies avoid layoffs, especially in the tourism sector. Finally, the funds are needed to allow essential social services to continue in a safe way and to ensure educational continuity throughout the pandemic by hiring additional staff.

REACT-EU is part of NextGenerationEU and provides €50.6bn additional funding (in current prices) to Cohesion policy programmes over the course of 2021 and 2022. Measures focus on supporting labour market resilience, jobs, SMEs and low-income families, as well as setting future-proof foundations for the green and digital transitions and a sustainable socio-economic recovery.

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