Newsletter 12/2011 - From Brussels angle
INTERVIEW with Michael Leigh, Director General for Enlargement, European Commission
Western Balkans sends positive signals in attempt to live up to Europe 2020 ambition
How do you see the role of Western Balkan enlargement countries in the implementation of the Europe 2020 strategy?
Europe 2020 is the European Union’s (EU) growth strategy for the coming decade. In a changing world, we want the EU to become a smart, green and inclusive economy. Last year, the Member States chose these three mutually-reinforcing priorities to lead them to high levels of employment, productivity and cohesion. There is no doubt that the Western Balkans face similar challenges. It this situation and in view of our common future in the European Union, working on Europe 2020 should be part of the reform process in the Western Balkans. The Commission will assist countries in this ambitious agenda by engaging in enhanced economic policy dialogue and by providing financial assistance for Europe 2020-inspired reforms and investments.
How important are research and development for achieving market competitiveness and sustainable growth of an economy?
All Western Balkan economies had negative trade balances in years leading to the crisis. This situation exposed them to macroeconomic risks which were never fully addressed. The crisis has decreased domestic demand and imports, but the export capacities have not increased. If countries are to return to the previous growth rates, they will need to export. The preconditions are in place. The EU has opened its markets and the Central European Free Trade Agreements
(CEFTA) liberalised trade in the region. However, preferential access and labour costs that are still low are not enough. Competitiveness today is defined by innovation and high value added products. Only better products and services can guarantee sustainable growth of the region. Initial investment in research capacities and human capital will attract further investment and create more and better jobs. Research does not need to be high-tech. Accepting high quality standards and better responding to the needs of foreign investors could significantly improve the current situation. Creating cross-border centres of excellence and industrial clusters is an opportunity and a "must" in a region which has so much in common but continues to be fragmented.
What are the strongest potentials of the Western Balkans when it comes to Europe 2020?
Commitment to economic reforms is strong in the region. There are some good practices which provide us with optimism that the region can live up to its Europe 2020 ambition. The Energy Community has established itself as a single energy market, a platform for legislative approximation and an investors’ forum. The countries are very active in policies to support small and medium enterprises (SMEs). In so doing, they follow a set of EU recommendations compiled in the Small Business Act. All have specialised national programmes and work closely with banks providing favourable loans, particularly microloans. Trade flows within CEFTA are growing faster than trade with the EU. Investors increasingly perceive the region as a single market where the underlying rules are the same as the rules in the EU single market.
What are the weaknesses of the Western Balkan region and, in your opinion, how could they be overcome?
The region is well-equipped with strategies. Many were produced with EU assistance and serve the accession process. However, many of these strategies are not fully implemented and are not always rooted in domestic economic needs and capabilities. Moreover, public funds do not always follow these strategies. This situation, coupled with the weak rule of law and high levels of corruption, sends bad signals to potential investors. To re-assure investors, the region needs to improve predictability of its policies and show stronger commitment to crucial reforms. Another weak spot are persistently high unemployment rates. The region needs to improve the use of its human capital.
Where would you place the Regional Cooperation Council in the process of implementation of Europe 2020 in the Western Balkans?
The economic and sovereign debt crises have shown how interdependent European economies are, as well as the need for coordinated approaches in almost every policy area. Governance of the Europe 2020 strategy was therefore discussed at length and significant new commitments have been made. The countries have agreed to jointly examine their reforms in an annual “European economic semester” which will provide concrete policy guidelines for the national fiscal cycle. The Western Balkan countries coordinate well their policies with the EU, but there is added value in working closer with regional peers. There are region-specific challenges and some Europe 2020 policy objectives need adaptation to local realities. The RCC is well-positioned to bring together regional policymakers and the regional economic initiatives and steer their policy objectives and cooperation methods towards Europe 2020. High quality economic dialogue at the regional level can have an impact on national processes and contribute to bringing the region faster to the EU.
In addition to the 2020 agenda, what other priorities do you see for the region and the RCC in the short term?
An important priority for the RCC is the implementation of the Strategy and Work Programme for 2011-2013. We can be encouraged by the first few months of its implementation. On a general note, regional cooperation has made good progress in the past few years. However, there are instances where inclusiveness of all parties is not secured. Flexible and pragmatic solutions should be found that will allow for the participation of all regional partners in regional activities.
Michael Leigh is the Director-General for Enlargement in the European Commission. In his previous position as Deputy Director-General in the Directorate-General for External relations, he was responsible for European Neighbourhood Policy, relations with Eastern Europe, Southern Caucasus and Central Asia, Middle East and South Mediterranean. He has held a number of other positions in the Commission and the General Secretariat of the Council for over 30 years. M. Leigh holds a BA from Oxford University, a PhD from M.I.T., and has published and lectured on European integration, foreign policy and international relations at the University of Sussex, Wellesley College, and Johns Hopkins School of Advanced International Studies in Bologna.