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26 Dec 17

Balkans in 2017: Two Cheers for the Economy


Balkan economies made real progress in 2017 but media freedom ebbed in some countries, and the region remained hostage to East-West rivalry for influence.

Marcus Tanner BIRN London

As 2017 draws to a close, most inhabitants of the Balkans could afford to raise a glass to a year that brought the region saw some economic benefits and saw no major conflicts between any states in Europe’s still fractured and potentially neuralgic southeast corner.

Moreover, as Britain advanced its preparations to exit the EU, the first country to do so, interest grew into which of the five EU candidate countries – four in the Balkans – would be the first to take Britain’s vacant place.

Regional conflicts

The train painted in the colours of Serbian flag and words “Kosovo is Serbian”. Photo: Beta/Emil Vas.

The Kosovo-Serbia logjam continued without much sign of light at the end of the tunnel, but also without major alarms or repetitions of January’s ill-judged “nationalist train” affair, when Serbia upped tensions by attempting to send a train decorated with Serbian slogans into its former province.



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Kosovo and Montenegro failed to resolve their border issues, as the EU had demanded, after a new government was formed in Kosovo dominated by those elements that had rejected the previous government’s agreement to a border deal.

Further north, Slovenia and Croatia continued to argue over the waters of the Pirin Bay. Croatia ignored an international tribunal ruling in July, awarding most of the disputed water to Slovenia.

Political changes

PM Edi Rama while voting on June 25 in Tirana. Photo: LSA/Gent Shkullaku

Elections took place in a number of Balkan countries in 2017 but only a few resulted in substantive changes.


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By far the most important change of regime was in Macedonia, where the 11-year reign of the nationalist VMRO DPMNE party finally ended in May.

A new Social Democrat-led government under Zoran Zaev took office on a mission to re-establish the rule of law, calm tensions with the country’s large ethnic Albanian minority, reboot the stalled EU accession process and mend fences with neighbouring Greece and Bulgaria.

The change of government in Skopje was a setback for Russia, which had nothing to gain from the installation of a much more pro-Western administration than its predecessor. It also initially alarmed Serbia, which feared the new government might be more supportive of neighbouring Kosovo, whose independence Serbia rejects.

Elsewhere, regular street protests threatened, but did not topple the Social Democrat-led government in Romania, which protesters accused of seeking to subvert the fight against institutional corruption.

In Montenegro, the aftershocks of an alleged plot in 2016 to overthrow the pro-Western government continued to be felt as the trial of the alleged coup plotters opened.

Kosovo remained politically unstable despite the belated formation of a new government in September under former guerrilla leader Ramush Haradinaj. Composed of many diverse elements, it had only the narrowest of majorities in parliament, posing questions about its likely ability to deliver changes.

In Bosnia and Herzegovina, threats to the country’s territorial unity and integrity faded in 2017, as the combative Bosnian Serb leader, Milorad Dodik, was forced to back away from threats to call referendums in Bosnia’s Serb-led entity, Republika Srpska, on the powers of the country’s state judiciary and on the entity’s independence.

Economic trends

Photo: Franco Follini/Flikr

The year was a cause for modest cheer economically throughout the region, with growth rates exceeding European averages and poverty rates falling.

A World Bank report in mid-2017 predicted average end-year growth rates in the Western Balkans of 2.6 per cent, rising to 3.3 per cent in 2018 and 3.6 per cent in 2019, driven by rising consumption and investment, low inflation rates and the economic recovery in the EU. “Growth, jobs, and relatively low inflation helped to reduce poverty in the Western Balkans,” the bank said.


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While unemployment remained “staggeringly high”, it said regional employment levels had returned to pre-2008 levels.

In Montenegro, job creation of 3.5 per cent was driven by a strong tourism season and construction projects.

In Albania, the 3.4 per cent increase in employment was led by services and industry, as well as by self-employed entrepreneurs.

Growth rates in 2017 were strongest in Montenegro, Kosovo and Albania [all close to 4 per cent], were stable in Bosnia and were weakest in Serbia and Macedonia [around 2 per cent], where the country’s prolonged political crisis deterred investment.

Kosovo still had a mountain to climb, however; its unemployment rate remained around 30 per cent and around 50 per cent among under-24-year-olds, the worst by far in the region.

Less encouragingly, fiscal deficits in the region were expected to rise because growth-stimulating investment was not being accompanied by corresponding cuts in public spending, except in Serbia.

Turning to the future, the World Bank advised Macedonia to tight up its tax collection, Albania to diversify its economy, Serbia to complete its transition to a market economy by reforming or selling loss-making state enterprises, Kosovo to remove barriers to private enterprise and exporters and Bosnia to address its overlarge public age bill.

Foreign policy

Putin and Vucic lead the two countries' delegations. Photo: Kremlin.ru

Unlike Western and Central Europe, firmly anchored to the US and the EU, the Balkans remained a zone of competing influences in 2017, with Russia registering some gains – and losses – over the year.

In Bulgaria, the election of a pro-Russian president in November 2016 had brought Moscow comfort, although the President’s modest powers meant this gain was largely symbolic and, as an EU member of years’ standing, it was not likely to change the country’s basic orientation.


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In the far east of the Balkans, Russia looked to make further gains in Moldova, which remained torn between East and West, with a pro-EU government and a pro-Russian president. Russia pinned its hopes on the pro-Moscow Communists winning the 2018 legislative elections.

Serbia remained a fruitful field for Russian influence, still very much conflicted between its strategic goal of pursuing EU membership and its simultaneous desire to preserve close ties to the Kremlin, its mainly ally on the issue on Kosovo.

In Macedonia and Montenegro, on the other hand, Russia experienced real setbacks.

In Montenegro, the inability of pro-Russia opposition parties to dislodge the pro-Western government allowed the latter to continue pursuit of NATO accession. The country finally joined the Western military alliance to the Kremlin’s dismay in June.

In Macedonia, the formation of a pro-Western administration under the Social Democrats increased the likelihood that Macedonia would also follow suit, leaving only Kosovo, Serbia and Moldova outside NATO in the entire Balkan region.

Kosovo remained the biggest hostage in the region to these geostrategic East-West tugs of war. Russia’s loss of influence in Macedonia and Montenegro made Russia even more determined to preserve its alliance with Serbia, which in turn impacted on Kosovo’s ability to join even such minor international organisations as UNESCO.

Human rights

Photo: Pixabay

In Serbia, there were many complaints that the space for independent journalism and free criticism was narrowing, with non-government aligned outlets closing and pro-government social media trolls targeting probing investigators.

“Journalists in Serbia continue to operate in a hostile environment,” Human Rights Watch noted over Serbia late in 2016.


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“Pro-government media continued to smear independent journalists and human rights defenders, as well as the Ombudsperson’s Office,” Amnesty International agreed.

“I am concerned that reconciliation has stalled and is being superceded by mounting ethnic divisions and polarisation in the region. These relate in particular to denial of genocide, glorification of war criminals and attempts to rehabilitate persons involved in crimes committed during the 1990s,” Europe’s Human Rights Commissioner, Nils Muiznieks, noted after a tour of the Western Balkans in November 2017.

In Croatia, police were widely accused of illegal pushbacks of refugees to Serbia, which reportedly led to the death of a six-year-old Afghan girl hit by a passing train on the border in December.

In Romania, there were fears that the governing Social Democrats were bent on subverting the independence of the courts and stymying the fight against corruption through so-called reforms of justice that parliament adopted in December.

LGBT rights, or lack of them, remained an issue of concern in most countries of the region. However, in Kosovo, the first ever Pride parade was held in October – a landmark event in a socially conservative mainly Muslim society.

In Serbia, meanwhile, the nomination of an openly gay Prime Minister, Ana Brnabic, also signaled a softening of previously hostile attitudes to LGBT persons in the country.