16.02.2018

February 16, Skopje

SESSION 4: SOUTH EAST EUROPE: WHAT IS THE CURRENT PATH FOR INTEGRATION AND GROWTH?

Eleven years since Bulgaria’s own accession to the EU, it is already impossible to measure the all-encompassing benefits of the membership. It widens countries’ potential and expands horizons. The EU integration process has produced outstanding results in a number of countries and proved to be a model to encourage countries to reform themselves. As a Presidency we are committed to achieving substantial progress in the Balkan countries’ aspirations to join the EU.

A key priority of the Bulgarian Presidency will be the EU Enlargement Policy, which continues to be the most effective instrument for guaranteeing peace, stability and prosperity in the Balkans. The Bulgarian Presidency's ambition is to be a Balkan Presidency.

The European Union has a clear interest in stable, secure and prosperous Balkans, where its rules and values are respected. Delivering a tangible European perspective for the Western Balkans including a dialogue, based on fulfilment of the conditions and the principle of own merit, political will and decisive reforms by these countries, is key not only for the region, but for the European Union as a whole.

The successful integration of the region requires a rigorous accession framework, which supports the enlargement countries to meet the two economic criteria. This would help building a strong economic governance framework, which is necessary for the region to identify and overcome structural economic challenges, thus accelerating the pace of convergence. It also helps enlargement countries to better understand and meet the requirements of the Stability and Growth Pact and the Macroeconomic Imbalance Procedure, thus avoiding breaching the rules right after the accession to the EU. On the other hand, the active economic dialogue in the region and with the EU as a whole helps to build an in-depth knowledge and better common understanding of the countries’ specific strengths and weaknesses.

Speeding up economic growth and improving the standards of living have the potential to improve the political stability and to reduce ethnic tensions in the region. In addition, this could provide strong support to all economies, as well as reduce the incentives for migration to Western Europe.

A lot has been done in the recent years and the results are visible. However, we still need to face the challenges in creating a business environment conductive to growth, including improving the institutional set up and stabilising the governance arrangements. Removing high compliance cost to regulatory burdens, rationalizing regulations and strengthening implementation of legislation will positively affect private sector investments.

In order to enhance growth potential, we need to work together to reduce informal economy and fight tax evasion,  remove competitiveness obstacles and tackle high unemployment, in particular among the youth and long-term unemployed. Quality of education and training systems is also crucial as their relevance to the labour market would increase the supply of suitably skilled labour force to the economy.

Of course, I cannot omit prudent fiscal policy as a key factor for  the long-lasting macroeconomic sustainability and economic growth.

Another area of common concern should be the development of transport policy and energy strategy embedded in the regional agenda on connectivity.

The Bulgarian Presidency attaches great importance to deepening regional cooperation and developing good neighbourly relations. The topic of the connectivity of the Balkans is of particular importance - the so-called "Connectivity Agenda" (transport, communications, energy, education, digital) with the understanding that its aim is to improve specifically the links with the EU Single Market.

Trade relations between the EU and the Balkan countries have intensified significantly in the past decade. Exports to the EU have increased by more than 8% annually on average, while imports have grown by above 4%, reaching a turnover of about EUR 44 bn per year.

It is not only the intensity of the trade that matters, but also the possible diversification and specialization and the gains that come from further integration and participation through production and trade in EU value chains. As a result of expanding trade volumes and advancing fragmentation of production processes, regional interconnectedness and integration brings new opportunities for many economies. In particular, as Bulgaria’s experience has shown, enhanced participation in trade and stronger presence in European markets fosters more efficient resource allocation, offers opportunities to exploit economies of scale and helps technologically lagging economies gain knowledge of and access to leading technologies.

Bulgaria sends about 4% of its exports to the Western Balkans and provides above 2% of the imports from the six countries. The trade is rising in absolute and relative terms and it’s very important for Bulgaria, as a neighboring country, this tendency to continue. But we should note that despite the geographical proximity, bilateral trade shares are relatively low and as regards cross-border investments there is room for significant improvement. The pathway to prosperity for the Western Balkans hinges on further regional and international economic integration by connecting to global markets trough trade, transport and investments. Despite the challenges which the accession process posses, there is mounting evidence that enhanced openness and integration in economic unions has multiple desirable effects for both parties. Well-designed and formulated economic policy instruments embracing and fostering easier access to the common market and stronger participation in value chains will foster the economic development of the region and nearby countries.