DUBRAVKA NEGRE, Head of EIB Regional Representation for the Western Balkans: Helping the Integration of the Region Into the EU

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EIB has a mandate to help improve social and economic development of the countries in this region but also help to support people’s needs when it comes to the provision of better health care, cleaner water, modern highways and better rail links

The EIB is the bank of the European Union, present in Balkan since 1977, and we have a political mandate to help the integration of the region into the European Union in line with the EU Strategy. EIB is contributing through concrete projects to improve the connectivity links between people and goods in the countries of the Western Balkans and facilitate their regional cooperation and economic development.

The EIB is in the heart of the European integration and social cohesion processes. Now when there are many deliberations about the future shape of the European Union, how do you see the legacy of the bank?

The EIB is the bank of the European Union. In the Western Balkans for example we are present since 1977, when we supported the construction of highways in Yugoslavia, the famous “Bratstvo i Jedinstvo” highway. We follow the EU policy and in the Western Balkans we have a political mandate to help the integration of the region into the European Union in line with the EU Strategy. EIB has a mandate to help improve social and economic development of the countries in this region but also help to support people’s needs when it comes to the provision of better health care, cleaner water, modern highways and better rail links. We are active in all these sectors across the countries. This is our legacy.

EIB has been active in the Western Balkans since 1977, and it witnessed its disintegration as well as its recovery. Your overall portfolio counts in billions and your recent investments are huge. Which one would you outline as the decisive for the further development of the region?

Regional cooperation is one of the fundamental values of the EU. The European Union of today has been created thanks to economic cooperation between the states in the aftermath of the Second World War. Western Balkans, due to their complex past, should strive to more regional cooperation, which will also facilitate their integration process with the EU. EIB is contributing through concrete projects to improve the connectivity links between people and goods in the countries of the Western Balkans and facilitate their regional cooperation and economic development. We can mention Corridor X project in Serbia and in FYR of Macedonia, Corridor Vc in Bosnia-Herzegovina or railway modernisation in Montenegro that will help improve rail links with Serbia, but also support to better and faster rail links between Serbia and Bulgaria, or supporting the construction of road connecting Kosovo* and Montenegro.

EIB President Werner Hoyer and Vice-President Dario Scannapieco delivered a strong message of integration of the WB in the European Union which resonates with the key messages delivered at the summit in Sofia. From the perspective of the EIB what can spur the convergence the most?

In our view, key to increasing competitiveness of economies in the region is support to innovation and research but also support to digitalisation. We are active in all these areas. Be it through support to develop modern infrastructure of scientific institutions such as Institute for Physics in Belgrade and science parks in Nis and Novi Sad, be it through the support to the development of the broadband in Albania. Supporting the development of education facilities is also very important, we are active in Serbia for example in expanding electro-technical faculty in Nis and faculty of organizational sciences in Belgrade, but we also plan to support education facilities in Montenegro. Through the activities of the European Investment Fund, which is part of EIB Group, we help the financing of innovative small and medium size enterprises through our cooperation with local commercial banks. Better living standards in each country is something we contribute to, so we invest in SMEs encouraging the sustainability of employment. As a proof of it, by investing in SMEs for a decade, the EIB Group has helped sustain over 440,000 jobs in the Western Balkans.

Which of your project do you perceive as the symbols of the true devotion of the WB leaders to work together?

The project we are currently considering for finance is Nis-Merdare highway, and more precisely the first phase of it – Nis-Plocnik. It is a project that will ultimately connect Nis and Tirana through Pristina. It is an important project under the connectivity agenda of the EU. It will help to connect the people living in Serbia with those living in Albania and Kosovo*, facilitating trade and economic exchange. It will also help the construction of Prokuplje bypass, but equally provide for better infrastructure in this part of Serbia contributing to the attractiveness of this region for private investors.

How much from the impetus of the Berlin Process in Vienna, to this day the region became rewired and willing to cooperate? How the events in Vienna and London, will further forge that alliance?

One of EIB’s priorities is to support to connectivity agenda. We are actively working on this since 2014 in line with the agenda under the Berlin process. In the last 4 years, close to EUR 600m have been signed by the EIB in support of those projects across the region. We are also channelling a great amount of EU grants in that regard as well. The latest examples being EUR 73m grant for the electrification and modernisation of a railways line connecting Nis and Dimitrovrad, or EUR 20m for the rehabilitation of a railway line in Montenegro from Bar to Vrbnica, on the border with Serbia. Regional cooperation is critical for further integration process with the EU, and connectivity among the countries in the region will facilitate those processes.

Your study “Smart Cities, Smart Investment in Central, Eastern and South-Eastern Europe” tells a lot about areas in which Wbs are particularly weak. What should be the priorities for Serbia to tackle its meagre BDP growth?

Our study demonstrates that there are infrastructure, productivity and innovation gaps and obstacles as well as demographic challenges faced by the cities in South-East Europe. The smart city approach uses digitalisation, clean energy and innovative transport technologies to address the challenges that cities face, to allow inhabitants to make more environmentally friendly choices and to boost sustainable economic growth and innovation, while enabling cities to improve their service delivery. For example in Serbia, we are looking into possibilities of financing environmentally friendly public transport in Belgrade but also to help enable digitalisation in schools across the cities in Serbia. This shows that the central and local governments in Serbia have recognized some of those priorities and we are working closely with our partners in order to address them.

How much is Serbia ready to switch from attracting SDI in industries with low labour costs and low to medium economic value added?

Structural reforms are critical for this to happen. They will enable more competition and attractiveness of the country for the private sector investment and development. The Government must look at ways to introduce measures to promote growth, in particular paying attention to further improving the business environment. Progressing the chapter 25 in the EU negotiation process on the rule of law will certainly raise confidence amongst investors. Efforts to reduce NPLs are giving good results, while reforms of state-owned enterprises and financial institutions are very important. All these reforms should help to improve Serbia’s external credit rating, which will on the other hand help attracting more private capital necessary to further support country’s development and competitiveness, paving the way for the increase of salaries. Investing and supporting innovation and high growth companies will further help these processes. The continuation in building up Serbia’s infrastructure, such as transport, energy and municipal infrastructure, as well as support to financing of SMEs are equally important, and all these sectors are supported by EIB Group investments.

Some of your most remarkable investments in Serbia are focused on education, science and innovation which are they key for development. How much Serbia use the opportunity to rely on its smart resources?

Serbia has recognized the importance of investing in these sectors. We have been supporting public sector research and development since 2010. The EIB financed alongside other partners and the Serbian Government completion of Zvezdara Science Park which today hosts some 50 companies and hundreds of engineers. We are helping to complete the construction of a similar technology park in Novi Sad as well as the one in Nis. This will enable these university towns to help promote research and provide better infrastructure for the young scientists. More links between science and economy are needed and an excellent example of this is the Biosense Institute in Novi Sad, supported also by the Horizon 2020, EU Reasearch and Innovation programme aimed at supporting innovation, alongside EIB financing of the infrastructure.

SUPPORT TO SMALL AND MEDIUM SIZE COMPANIES

According to some prominent Serbian think tanks behind the robust industrialisation and export numbers are not just foreign companies but a brand new domestic economy. How much is this part of the economy in your focus?

Very much so. Support to small and medium size companies is in the core of EIB priorities. Since 2009, the EIB has provided over EUR 2,5bn of financing towards SMEs in the region. In Serbia only, the EIB has help financed projects of SMEs with over EUR 1,5bn sustaining some 270,000 jobs. Furthermore, the EIF has committed some EUR 300m in dozens of transactions in Serbia since 2008, sustaining more than 5,300 SMEs in the country. This is the prove that we are supporting local entrepreneurs in making their products more competitive in order to gain advantages not only on local and regional markets, but to help them be competitive in the markets of the EU and beyond.

* This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo declaration of independence

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