How to reach six EU billions: Agenda until March, money for the summer

Montenegro needs to coordinate its reform plan with the EC by March of next year, so that it can withdraw the first tranche of funds in June or July at the latest

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Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate
Photo: Shutterstock
Photo: Shutterstock

Montenegro can submit a proposal for a reform agenda by March next year, which is one of the preconditions for receiving European money within the Growth Plan for the Western Balkans.

This is what the Ministry of European Affairs (MEP), headed by a minister, told "Vijesti" recently Maida Gorcevic (Europe Now Movement).

"From the very beginning, Montenegrin institutions have carefully followed the development of the Growth Plan for the Western Balkans and communication from the EU on this important issue," they said.

On November 8, the European Commission adopted the Growth Plan for the Western Balkans, with the aim of accelerating the enlargement process and the growth of the candidate countries' economies. For this purpose, a new reform and growth fund for the Western Balkans of six billion euros (two billion euros in grants and four billion euros in the form of soft loans) for the period 2024-2027 has been proposed.

Payments will be made only after the agreed reforms have been fulfilled, that is, the reforms will be tied to deadlines and their implementation will be a condition for receiving European money as support for the budget twice a year.

The EC's proposal on the creation of the fund should be adopted by the European Parliament and the European Council by next spring. This means that Montenegro should coordinate its reform plan with the EC by March, so that it can withdraw the first tranche of funds in June or July at the latest.

"Taking into account the good intersectoral cooperation, we believe that March 2024 is a realistic deadline by which Montenegro can submit a proposal for the Reform Agenda, bearing in mind that the reforms that will be the subject of this document are not new, but have certainly already been defined within the framework of the negotiation process ", they stated from the MEP.

A serious task before the new ministry: Maida Gorčević
A serious task before the new ministry: Maida Gorčevićphoto: BORIS PEJOVIC

They add that they will use the next period to prepare a high-quality response to the EC's requests, but it will also overlap with the preparation of the new Program of Economic Reforms 2024-2026, as well as the preparation of the Program for the Accession of Montenegro to the European Union 2024-2025.

"We are aware that there will be a significant level of coincidence of key reforms from these documents, and the framework for defining reform measures will also be recommendations from the recently published EC Report on Montenegro. This is a mitigating circumstance, with the intention that these key strategic documents with which we will define the key reforms will be complementary", said the MEP.

As they say, the Ministry also relies on good cooperation with colleagues from the EC in order to jointly prepare a document that will first of all be a good basis for planning and monitoring the implementation of reforms, and only then a mechanism for granting EU financial support.

Prime Minister Milojko Spajić recently said that Montenegro should receive 420 million euros from this Fund in four years.

"Vijesti" was told last week at the EU headquarters in Brussels that Montenegro no longer has an excuse for not implementing reforms.

"It would be a shame if he does not take advantage of the good mood for enlargement that currently exists in Brussels and among the member states. We need at least one success story," said one of the EU officials.

Illustrationphoto: Shutterstock

It is expected that by the end of the month, an EC delegation led by a high-ranking official will visit Podgorica, who will hold talks in that direction with those responsible for negotiation chapters 23 and 24, in which progress is crucial for continuing and speeding up negotiations on Montenegro's EU membership.

For each individual reform, for example for changing the law or its implementation, a certain amount of money will be provided, which the country will receive if it achieves them.

The money earmarked for a country whose agreed reforms are judged by the EC to be unsuccessful or not fulfilled within the agreed deadline, during the next payment will go to another country that has fulfilled its reforms, an EC official explained recently at a press briefing in Brussels.

"The money that is paid into the budget as a reward for successful reforms, the government can spend for the purposes it determines," he said.

The number of inhabitants and gross domestic product per capita will be the criteria for determining how much money a country will receive from this fund, it is foreseen in the proposal of the Regulation on the Fund for Growth and Reforms for the Western Balkans.

"For example, a larger and poorer country will receive more money than a smaller and richer one," said an EC official.

Serbia: Eight years of standing still on the way to the EU

Several important decisions related to the countries of the Western Balkans were announced by the European Union in the past seven days. From giving grants and loans to six countries of the Western Balkans in the total amount of six billion euros, to the fact that the payment of part of that money will be conditional on progress in negotiations and the normalization of relations between Belgrade and Pristina.

Of course, there are also messages that the European Commission expects Serbia to comply with the Union's foreign and security policy, as well as to impose sanctions on Russia due to its aggression against Ukraine.

What is striking is that official Belgrade did not react to this kind of rhetoric, except for the general statement of the President of Serbia, Aleksandar Vučić, that Serbia's strategic goal is to enter the EU and preserve state and national interests.

And although the President of Serbia claims that there are good things in the European Commission's report on Serbia's progress towards the EU and that "progress" in reforms can be seen, experts on European integration state that Serbia has been falling behind in this regard in the last eight years. Since December 2021, Serbia has not opened any chapter in negotiations with the EU, and the annual shift towards the EU is 0,25 percent, with an average score of 3 for integration.

Nemanja Todorović Štiplija, executive director of the Center for Contemporary Policies, tells Danas that the Growth Plan stipulates that each country in the Western Balkans receives a certain amount of money every six months for the next four years.

- It is a new financial instrument that was created in imitation of the recovery plan of the Union after the pandemic. It will be more strongly conditioned by reforms in the most important areas than was the case with pre-accession assistance (IPA) instruments. The European Union has realized that the current approach is not producing any results and that something needs to be changed in the way of financial assistance to the candidate countries in the region, emphasizes Todorović Štiplija.

Nemanja Todorovic Štiplija
Nemanja Todorovic Štiplijaphoto: Screenshot/Youtube

He believes that this is the reason why new funds will require reforms on the ground.

- For several years now, there have been strong voices calling for the suspension of financial resources for Serbia due to the rule of law, but that never happened. Apart from reforms, Kosovo and Serbia will have to show steps forward in the process of normalizing relations. It is another attempt by the European Union to convince the two parties to implement the agreed obligations, says Todorović Štiplija.

According to him, based on the past experience of the dialogue process between Belgrade and Pristina, it is not certain how much this conditioning would force the two leaders to start implementing the obligations agreed in Brussels and Ohrid.

- We have already seen that blocking the withdrawal of funds for Kosovo did not lead to an improvement in the situation on the ground, concluded Todorović Štiplija.

In the EU's annual report, Serbia received bad grades in chapters 23 and 24 on the rule of law, but because it concludes trade agreements with China and other third countries that do not meet Brussels standards. On the other hand, the Prime Minister of Serbia in the technical mandate, Ana Brnabić, said that the European Commission "recognized Serbia's clear progress" on the European path.

Expert in European integration Milan Antonijevic states that it is good that, in the sea of ​​negative news that reaches us from the world, we should also turn to our closest environment, i.e. Europe and the European Union.

- The aid package for the countries of the Western Balkans, which was first announced during Ursula von der Leyen's visit to our region, and later presented and adopted in Brussels under the good name "growth plan" opens up new funds for our country, in addition to the already existing IPA pre-accession funds. Six billion euros, along with the opening of the European Union market, is more than good news for our country and is given with the intention of preparing our economy and country for full membership. This is the only way we can make up for the backlog, which is obvious in every area, from the green agenda, energy, to industry, e-mobility and more political topics, such as the rule of law and an independent judiciary, Antonijević points out.

Antonicevicphoto: BETAPHOTO

According to him, the priorities, i.e. The pillars of this plan that the European Union has stated, where the largest investments will be made, are also indicative and significant for every citizen of Serbia, from roads and railways, to the shortening of industrial supply chains, through the obligation to protect the environment and work processes in both industry and mining, especially of critical raw materials, from copper, lithium and borate.

- But it is better if I list all seven pillars, behind which there are many clear sub-goals and what each of us can feel. Free circulation of goods, Free circulation of services and workers; Access to the Single Euro Payments Area (SEPA); Facilitation of road traffic; Integration and decarbonization of energy markets; Single digital market; Integration into industrial supply chains. After the elections and all the passion that is already erupting in public debates, I expect that Serbia will immediately turn to the reforms and tasks facing us in the recently published report of the European Commission, but also to what is a prerequisite for "withdrawal", i.e. attracting these funds from the Development Plan to Serbia, Antonijević told Danas.

He adds that, in addition to the rule of law, this is a positive attitude towards the Brussels dialogue, the commitments undertaken, mediators in the dialogue and of course the full normalization of relations between Serbia and Kosovo, which we all expect, especially the Serbs in Kosovo, to whom this normalization would bring the long-awaited security, certainty , quality of life, but also parts of the "Growth Plan" that would be seen in the industry from whichever side of the administrative border they are.

- A hand has been extended from the European Union, let's accept it, concluded Antonijević.

BiH: Quality work leads to EU money

It's no secret that the European Union has been investing large amounts of money in Bosnia and Herzegovina for decades.

The EU Delegation in Bosnia and Herzegovina says that EU aid is aimed at supporting Bosnia and Herzegovina on its way to the EU.

- Since 2007, the Instrument for Pre-Accession Assistance (IPA) has been the EU's main financial instrument that provides support to BiH to carry out necessary reforms and meet EU standards, he explains. Ferdinand Koenig, spokesperson of the EU Delegation.

He points out that within the framework of IPA II (2014-2020), the EU allocated EUR 530 million in grants to BiH to help implement reforms.

- Funds from IPA II have not been fully used. The EU delegation in BiH develops IPA annual action plans in BiH. After the entry into force of the Financing Agreement for the IPA Annual Action Plan, there are 3 years to contract the project and additional time for implementation. The EU delegation is currently completing the tendering and contracting procedures for the funds allocated under IPA 2020. It is expected that these funds will be used in the coming period, Koenig emphasizes.

Under IPA III (2021-2027), there is no longer a country allocation. Funds are awarded annually based on the policy relevance and maturity of proposed projects by the beneficiary country.

- Projects require a high degree of preparation, sector strategies, clear implementation arrangements and other elements in order for the country to fully utilize the available funds. Assessments of projects and financing are also connected with reform processes, which requires a high degree of coordination of all actors and political commitment to reforms. Although there is no national allocation, the EU remains committed to the principle fair share in disbursement of IPA III funds, says Koenig.

He adds that for 2021 - 2023, IPA III funds for national programs amount to over 256 million euros for BiH. These funds also include 70 million euros for the Energy Support Package.

- BiH also benefits from funds allocated on a regional basis. As part of the Investment Framework for the Western Balkans, 2021 million euros in grants have been provided since 715, supporting projects such as highway sections and subsections of Corridor Vc, the rehabilitation and modernization of the Čapljina pumped hydroelectric plant, and the rehabilitation and modernization of the Sarajevo water supply system, explains our interlocutor and adds that BiH also benefits from EU assistance through the Multistate IPA Program.

The EC recently adopted a new Growth Plan for the Western Balkans. This new instrument would provide additional financial support of up to €6 billion for the period 2024-2027, which includes €2 billion in grants and €4 billion in concessional loans provided by the EU.

- As part of the Growth Plan, each partner from the Western Balkans will be invited to prepare a Reform Agenda based on existing recommendations, including the annual enlargement package and Economic Reform Programs of the countries, Koenig points out.

He adds that BiH also receives EU funds through EU programs such as Horizon 2020, Creative Europe, Erasmus+, Europe for Citizens.

- The EU offers numerous opportunities through many different projects and programs in various fields. It is up to the competent bodies of the country to ensure that the opportunities provided by the EU aid are used to the maximum, says our interlocutor.

And by 2030, it is expected that 152 km of highways will be built, 1 port of inland waterways and 40 km of waterways will be renovated, 182 MW of renewable energy capacity will be installed, and water and sanitation services will be improved for 770.000 people.

The Directorate for European Integration reiterates that there is no predetermined amount for IPA III per beneficiary country. A total budget of 14,2 billion euros is available.

- There are two basic criteria by which the EC is guided when approving project proposals, namely the criterion of relevance and the criterion of technical maturity. In addition to the criterion of technical maturity, the criterion of relevance is of particular importance for BiH, the Directorate points out.

They emphasize that IPA III covers all sectors.

- Through the state aid packages for 2021, 2022 and 2023, the EC has so far approved about 188 million euros in aid to Bosnia and Herzegovina, according to the Directorate.

They add that the institutions have also prepared projects for the State aid package for 2024, and the EC will decide how much funds will be approved for BiH.

- Part of the grant funds for projects from the Investment Framework for the Western Balkans (WBIF) is financed from the multi-state IPA III, and since the beginning of the year, BiH has been approved through this Instrument about 300 million euros in grant funds. A new public invitation is expected soon. So far, within this Investment Framework for the Western Balkans, a total of about one billion euros of grant funds has been allocated to BiH. The largest part of these funds has been approved since 2015, according to the Directorate.

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