CONTENT PREVIEW
Country Risk

EU-brokered agreement on common economic area in Western Balkans unlikely to significantly mitigate growing political instability

16 July 2017

Key Points

  • The six nations of the Western Balkans that are not members of the EU agreed to form a common economic area and co-operate more closely at an EU summit in Trieste, Italy.
  • Although the deal improves co-operation in certain sectors, notably transport, it does not address key internal and bilateral disputes in the region.
  • Political instability and corruption, which were not addressed at the summit, will remain key obstacles to foreign direct investment in the foreseeable future.

EVENT

The agreement on a common economic area agreement reached at the EU summit for the Western Balkans in Trieste is unlikely to resolve political disputes, which is necessary for the smooth implementation of the deal.

French president Emmanuel Macron, Italian prime minister Paolo Gentilone and German chancellor Angela Merkel at the summit in Trieste on 12 July 2017. (PA)French president Emmanuel Macron, Italian prime minister Paolo Gentilone and German chancellor Angela Merkel at the summit in Trieste on 12 July 2017. (PA)

The leaders of Albania, Bosnia and Herzegovina, Kosovo, the Former Yugoslav Republic (FYR) Macedonia, Montenegro and Serbia agreed to form a common regional economic area at a summit organised and hosted by the EU in Trieste, Italy. The agreement will effectively serve as an extension of the Central European Free Trade Agreement (CEFTA), which is already in place. The summit was attended by German chancellor Angela Markel, French president Emmanuel Macron, and Italian prime minister Paolo Gentiloni, signalling the importance that the EU has attached to the security environment in those countries. EU Enlargement Commissioner Johannes Hahn said that a common market has the potential to generate "more than 80,000 jobs" in the region in the next few years. However, lack of political will due to a series of bilateral and internal disputes will significantly challenge the implementation of the agreement and strongly mitigate its effects.

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