Day: April 1, 2025

The Growth Plan for the Western Balkans (WB) was adopted by the Commission on 8 November 2023. The Growth plan was formed with the idea of fostering an increase in socioeconomic convergence of WB states. The Plan is based on four pillars aimed at:

• Enhancing economic integration with the European Union’s single market
• Boosting economic integration within the WBs through the Common Regional Market
• Accelerating fundamental reforms
• Supporting convergence through increased financial assistance

The Facility has a total financial envelope of €6 billion for 2024-2027, consisting of €2 billion in grants and €4 billion in concessional loans, with payment conditioned on the WB partners implementing specific socio-economic and fundamental reforms. 

Each country is receiving a different amount of financial support, and for Bosnia and Herzegovina (BiH) this amount is 1,085 billion€. The Growth Plan for the WBs is an opportunity for BiH to receive funds after fulfilling concrete reforms that should create conditions for stronger economic growth, including more functional institutions, a stronger rule of law and a better business climate. In addition to investments and reforms, the Growth Plan opens opportunities for BiH to have greater access to the European single market, as well as to establish a common regional market in the WB.

Process of development and adoption of the Reform Agenda in the national context: Challenges on the way

To access the funds, BiH should create and submit to the European Commission a reform agenda. The key two steps are to agree on a list of indicative reforms and steps in the reform process and to prepare the narrative of the Reform Agenda. The working team was created in January 2024, composed of the Chairwoman of the Council of Ministers of BIH, Prime Ministers of both entities, State Ministers of Foreign Trade and Economic Relations, Communication and Transport, Finance and Treasury, the Ministry of Justice, as well as Entity Finance Ministers. The members of the working team are the prime ministers of all 10 cantons in the Federation of BiH, the mayor of Brčko District and the directors of the BiH Directorate for Economic Planning and the Directorate for European Integration.

Representatives of the parliaments in BiH didn’t actively participate in the process of creating the reform agenda. As stated in the previous paragraph, the members of the Working Team for the Reform Agenda were the presidents of the entity governments as well as the ministries of the entity governments. During the design process of the reform agenda, public consultations were not organised, moreover, the content of the reform agenda was never publicly presented. As in many cases so far, including this process, the design of creating a strategic document was presented to the public as an important step forward in the process of progress towards European integration, and it was represented in the media, but public opinion was unable to perceive the positive or negative aspects of the process itself or the content of the document.

After the formation of the Working Team, the process of creating a reform agenda began in accordance with the working version of the document, Reform Plan for BiH, which was previously sent to the European Commission, as a basis for creating an indicative list of projects and priorities. It is a document that contains four priorities, namely: Green and digital transition, Development of the private sector and business environment, Development and retention of human capital and Rule of law. But already at the very beginning, the Working Team faced problems. The second session of the Working Team for drafting the Reform Plan wasn’t held due to the lack of quorum, as representatives from Republika Srpska did not respond to the session.

Deputy Chairman of the Council of Ministers, Staša Košarac, and at the same time a member of the Working Team, requested the postponement of the session a day earlier. Zoran Zeljko, the Coordinator of the Working Team, Director of the Directorate for Economic Planning of BiH, pointed out that ”the deadlines stated on several occasions by the Delegation of the EU and the European Commission leave no room for delay, especially at this stage of the process, that the European Commission needs our position on indicative reforms so that we can continue the consultative process regarding reforms that are possibly unacceptable or unclear”.

The chairwoman of the Council of Ministers, Borjana Krišto, emphasised that BiH doesn’t have time to delay the process of bringing reforms and is necessary to continue the consultative process on reforms that are possibly unacceptable or unclear. As a country, without a statement on the reforms, we can’t even proceed with the preparation of the Reform plan for those that are indisputable, especially if we consider that the deadline for BiH’s response to the proposal for indicative reforms was January 22, 2024.

As a follow-up, the Working Team decided to make a list of reforms from the indicative list that all members of the Working Team in BiH have marked as acceptable, which will be forwarded to the European Commission with the request to continue with further activities for those reforms. The conclusion of the third session of the Working Team for drafting the reform plan is the decision to inform the European Commission about the reforms for which no agreement was reached, and in connection with this to urgently organize thematic meetings where the representatives of the institutions that didn’t give their agreement will receive additional clarifications from the representatives of the European Commission and pointed out their individual positions.

The deadline for submitting the list of reforms as part of the reform agenda was April 30, 2024. At that moment, BiH was the only one of the six countries of the WB that didn’t finalise the key prerequisite, which is submission to the list of reforms. At the very last moment, the last day before the deadline for submission to the list of reforms, the document was still not created in its entirety by the representatives of the authorities in BiH. Namely, on the last day of the deadline for submitting the list of reforms, there were no answers from the institutions of Republika Srpska. The responsible ministers from this entity didn’t declare themselves on this issue.

The working team still managed to complete the reform agenda and BiH submitted this document to the European Commission. The list of reforms approved by the Work Team was also fully harmonised with recommendations by the European Commission, meaning more than 97% reform activities agreed between representatives of the European Commission and BIH Directorate for European Integrations.

However, the document had numerous comments and corrections and was returned to B&H authorities by the European Commission for further coordination. At the end of July, the content of the document was updated again. Pressure from the public increased, demanding greater involvement in the creation of the document. However, now the cantonal ministers are involved in these negotiations, without whose consent the document will not go to Bussels, although this was not the case when the document was delivered on April 30.

A new document on the reform agenda was sent in September. The Chairperson of the Council of Ministers, Borjana Krišto, sent the draft of the Reform Agenda without the two incompatible measures. The document was sent without the consent of the lower levels of government, which showed that seeking the canton’s consent was an unnecessary move in the context of the Growth Plan. It is important to emphasise that in the process of creating the document, there were no public consultations where non-state actors would have had the opportunity to comment on the content. Moreover, the content of the document has never been disclosed in its entirety.

The document did not meet the criteria of the European Commission, ”Unfortunately, BiH hasn’t submitted a final reform agenda, and we continue to encourage the country to do so as soon as possible”, said Gert Jan Kopman, Director General of the Directorate for Enlargement in the European Commission, during his visit to BiH, in November 2024.

Contested or Blocking reforms: The Constitutional court and Council for state aid 

The process of developing the reform agenda in BiH is defined as an important step forward for BiH in the process of joining European integration, but with different visions when it comes to the aspirations of the representatives of the two entities in BiH. Namely, during the process of creating the reform agenda, the representatives of the RS didn’t deviate from the process of decentralisation, or did they want to establish a complete system that would bring the reform agenda to a functional level on the territory of the entire country. On the other hand, representatives of Federation of BiH see the reform agenda as a progressive means of action in terms of financial resources that would be provided by the fulfilment of all reforms from the Growth plan. The high level of decentralisation is a problem in the functioning of BiH. The fundamental problem of BiH is the constitutional order that is being abused by representatives of all the leading political parties. This level of decentralisation simply doesn’t enable functionality. Furthermore, all three levels of government in BiH must unanimously adopt the content of the reform agenda.

The prime ministers of four cantons in the Federation of BiH (Tuzla Canton, Zenica-Doboj Canton, Central-Bosnia Canton, Una-Sana Canton) sent their consent with certain conditions, which the Council of Ministers didn’t accept. As there was no consensus, the Reform Agenda wasn’t sent to Brussels.

This document, which received the support of all actors and levels of government except these four cantons, had 111 harmonised measures out of a total of 113 measures. This time, again, the measures that the authorities in the Republika Srpska consider controversial, which refer to the filling of the Constitutional Court of BiH and compliance with the decisions of this body, and the removal of the entity veto from the Council for State Aid, were left out of the document.

The leaders of the party of the Alliance of Independent Social Democrats, the leading party in the Republika Srpska, do not want to lose the right to vote by entity when it comes to the decisions of the Constitutional Court. They don’t want the decisions of the Constitutional Court to be implemented on the entire territory of BiH. Also, representatives of the leading parties from the Republika Srpska entity do not give up the possibility that the entity authorities can put veto on the decisions of the BiH State Aid Council.

The second attempt officially failed, BiH was left without the possibility to receive 70 million€, precisely, the pre-financing tranche of the Plan, and mutual accusations began among the politicians in BiH. The leaders of the SDA Party, from which the prime ministers of the cantons who didn’t agree to this document came, criticized leaders of Our Party, People and Justice and Social Democratic Party for “accepting a plan that is not complete”, while the answer from other side was that “the four prime ministers blocked the entire country.”

Earlier, the Minister of Foreign Trade and Economic Relations, Staša Košarac, announced via social networks fact that the European proposal is not aligned with the Dayton Agreement is controversial for the Republic of Srpska. “Certain issues, which are within the constitutional jurisdiction of the RS and the FBiH, cannot be transferred to a common level under the guise of ambition towards the EU, such as the law on gas at the BiH level or the abolition of entity voting, because these are things that the RS will never agree to”, said Košarac.

The Prime Ministers of four cantons who expressed disagreement in terms of the content of the reform agenda, point out that “the document is too important to be taken lightly.”, The process of harmonising the document was conducted in a non-transparent, biased and methodologically extremely questionable manner”. Furthermore, they emphasize that reform agenda represents “the covert erasure of the state institutions of Bosnia and Herzegovina under the guise of reforms’’ and special observation is related ‘’on deleted obligation to appoint constitutional judges and the obligation to apply the decisions of the Constitutional Court of BiH on the territory of the whole country.’’

The ruling party in the Republika Srpska, the Alliance of Independent Social Democrats, is characterised as the main culprit for the unsuccessful process of adopting the document due to the non-acceptance of two measures in the reform agenda. On the other hand, the prime ministers of the four cantons were marked as the brakemen of the process because they did not want an incomplete document to be sent to Brussels that would deny the stability and integrity of BiH.

Gert Jan Kop, the Director-General of the Neighbourhood and Enlargement Negotiations, visited BiH in the middle of November and organised a meeting with several decision makers who hold the key to the adoption of the Reform Agenda document. He set a new deadline of December 4 for the adoption of the Reform Agenda. Koopman repeated the position of the European Commission that any document without all 113 agreed-upon measures will not be accepted in Brussels.

Opinions related to the status and concept of the reform agenda after this visit and meetings with the members of the state coalition are still incomplete. Representatives of the leading political parties from the Republic of Srpska are still unyielding in their positions when it comes to harmonising the content of the reform agenda. They don’t want to accept any kind of imposition when it comes to the status of foreigners in the Constitutional Court. Radovan Višković, Prime Minister of the Republic of Srpska, emphasised point: ‘’the road map related to the resolution of the status of foreigners in the Constitutional Court of BiH is mentioned. We do not accept such wording. We want it to be written clearly and loudly that a new law on the Constitutional Court should be passed, in which the issue of foreigners sitting in the Constitutional Court of BiH will be resolved’’.

Conclusion 

The work of the working team in the process of adopting the reform agenda was painstaking and full of obstacles. Despite all efforts, key decision-makers failed to complete this process. Representatives of the authorities from Republika Srpska did not want to give up their position that the remaining two measures refer to the filling of the Constitutional Court of BiH and compliance with the decisions of this body, and the removal of the entity veto from the Council for State Aid, to be harmonized. On the other hand, the four cantonal prime ministers didn’t agree with the proposed content of the reform agenda, pointing out that in this way the integrity of BiH is denied.

The reform agenda was never completed, and the first tranche of 70 million€ was lost. Representatives of the authorities in BiH spent the entire year 2024 harmonising positions on the content of the reform agenda, and they failed in their attempts to do that. There is a new opportunity in March 2025, but judging by the previous scenarios, it will also be a futile attempt.

The Western Balkans are often seen as Europe’s periphery, but they are in fact embedded within the continent’s history and future ambitions. Despite close economic ties with the EU, these six countries—Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia—remain outside the Union, navigating a complex path toward accession.

In this episode of The Sound of Economics, Rebecca Christie is joined by Simonida Kacarska, Nina Vujanović and Anna Fiore to explore the economic realities, trade dynamics, and political hurdles facing the region. How integrated are these economies already? What barriers remain, and can the new EU growth plan bring about meaningful progress?

This podcast was produced with financial support from The Open Society Foundations Western Balkans.

At the end of March 2025, the EU started disbursing the pre-financing payments foreseen under the Growth Plan for the Western Balkans. North Macedonia and Albania are underway to receive the first payment, and Serbia is to follow suit. The disbursement happened almost two years after the European Commission President announced the plans for introducing such a new instrument in her GLOBSEC speech at the end of May 2023 and one year after the agreement for the Regulation on the Reform and Growth Facility for the Western Balkans (RGFWB) was adopted at the EU level.

The Growth Plan is an additional tool aimed at bringing the Western Balkan partners closer to the EU by offering some of the benefits of EU membership to the region in advance of accession, boosting economic growth, and accelerating socio-economic convergence. Modeling the EU’s approach of performance-based funding the RGFWB intended to bring the modalities of management of funds closer to the instruments used in the case of the member states in line with recommendations from experts and civil society.

Since the adoption of the regulation, most of the exchange between the European Commission and the governments in the Western Balkans has been focused on the structuring and adoption of the national Reform Agendas which outline the reforms that these countries are to implement in order to access segments of the funding. One year later, with the exception of Bosnia-Herzegovina, all of the countries in the region have managed to adopt and start implementing their Reform Agendas covering a variety of areas ranging from education to judicial reform. The experience of adopting the regulation on the Facility as well as the drafting of the Reform Agendas over the last two years sheds light on lessons learnt and delineates what can be expected during its implementation.

On the EU’s side, the launching of the Facility and the adoption of the Regulation were a race against time with the 2024 European Parliament elections. The Regulation on the Reform and Growth Facility was adopted shortly before the end of the parliamentary term of the previous EP composition. The sheer speed of adoption of the facility showed the capacity of the EU to act swiftly, against the expectations of many. It also showed the speed with which decisions on a policy change can be implemented if there is political will for it, which many have argued has been missing in the case of the Western Balkans. The time pressure also existed in terms of the adoption of the Reform Agendas in the region. With the exception of Bosnia and Herzegovina, all of the countries and governments delivered on the obligations in a relatively short time, demonstrating positive competition within the region, which is usually missing.

The swift adoption of the facility and the reform agendas also created significant challenges both in the EU and subsequently in the candidate countries. These short deadlines led to increasing political pressure for a quick adoption of the Facility itself, raising questions in the European Court of Auditors and a belated and ongoing process of impact assessment. Concerns were also expressed in the opinions of the European Economic and Social Committee, highlighting that the proposal for the RGFWB regulation lacked public consultation and an impact assessment. Similar concerns were raised in the Western Balkans, highlighting that the Reform Agendas were adopted with little information shared or consultations conducted.

The reactions from civil society as well as stakeholders outside of the government have varied, but an overall sense of insufficient process transparency persists. The result has been that the agendas, while meeting the minimum consultation requirements in the countries, have not been properly communicated to the public or broader societies. While time pressure is often understandable, it can have unintended consequences in the region’s already weak policymaking systems, which suffer from underdeveloped consultation and participation mechanisms.

This risk will also continue due to the specific time-bound performance indicators in the Reform Agendas. In a nutshell, in order to unlock a payment from the Commission, the countries need to report on their performance on the agendas as planned every six months with an additional period of 90 days for the Commission to assess the results. During this assessment, it is likely that not much information will be shared with external stakeholders, creating a potentially significant gap.

On the other hand, the fulfillment of many of the indicators and targets of the Reform Agendas will be impossible to reach without employing a whole-of-society approach, underlining the need for inclusion and partnership to achieve success. As is common with other policy documents, the consultation mechanisms include scoreboards, stakeholder inputs, and civil society engagement structures, and the devil is often in the details.

Looking at the experience of other EU processes, such as the Recovery and Resilience Facility may help, but at the end of the day, all of the countries will need to establish a certain system for consultation, information and, ultimately for societal pressure for reluctant actors to deliver on the reforms. This issue becomes even more pertinent in view of the evident democratic backsliding in the region and the shrinking civic space in Europe as well.

Overall, inclusiveness in monitoring the implementation of the reform agendas should not be seen only as a means to achieve the short- and medium-term goals of the facility. Even though the European Commission, in its documents on several occasions, notes that the Reform and Growth Facility is not meant to cover all of the needs in view of the accession process, it has the potential to help rebuild trust in the EU accession process as a whole. Moreover, due to various reasons, for some countries in the region, the Reform Agendas are likely in the near future to be the key document defining the obligations towards the EU accession process.  Тhe Facility and the Reform Agendas, therefore, could help spur reforms beyond their specific areas, contributing to broader systemic efforts directed towards EU membership if implemented in line with the principles of partnership.

Note: This op-ed builds upon the work of the Think for Europe Network as part of the project “Pathways to EU Integration: Advancing the dialogue on the Growth Plan for the WB”  and #IGNITA initiative financed by the Open Society Foundation.