Greece's Aid and Investment Boost Balkan Economy and Stability

By Mallias, Alexandros P. | European Affairs, Spring-Summer 2006 | Go to article overview

Greece's Aid and Investment Boost Balkan Economy and Stability


Mallias, Alexandros P., European Affairs


In the Balkans, two issues - security and economy - are key for the regions present and future. On security, the collapse of the bi-polar system fundamentally altered the overall security perception in Europe and in the Balkans. Now the challenges are mainly organized crime and illicit trafficking, as well as the gray economy. A combination of the gray economy and organized crime has proved to be a serious impediment to foreign direct-investment in the region.

Economically, the Balkan states are relatively small entities. The new states that emerged from the disintegration of Yugoslavia were not attractive to large-scale foreign investment. Now the perspective of the abolition of economic borders, in the context of potential membership in the European Union, has opened new opportunities for the Balkans: first, through the establishment of a free-trade zone and, second, through the phased inclusion of the countries of the region into the EU. An emerging marketplace of 50-million consumers has the potential to attract big cross-border investments, and I would advise our American partners to invest there.

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European integration and the prospect of EU membership constitute the strongest single soft-power mechanism for engaging reforms, consolidating democracy and making institutions more compatible with European standards. It also benefits the economy: market reforms are necessary, not just within individual countries but also for the region as a whole.

There is a fundamental change in the region since the 2002 EU summit meeting in Thessaloniki: Greece's presidency of the EU gave an unprecedented boost to the western Balkans' legitimate aspirations on the European stage. For the first time, the Balkans are at the forefront of European integration. This is a qualitative change from the lack of EU cohesion during the region's crises in 1990s. Right now, all Balkan states without exception are eligible for EU membership. This is an historic moment.

In Thessaloniki, all the leaders of EU member states, including the newcomers from the "big bang" enlargement together with their counterparts from Western Europe, sat at the same table. Kosovo was also present, represented by the United Nations Interim Administration in Kosovo (UNMIK). The UNMIK delegation included leaders of both the Kosovo Albanians and the Kosovo Serbs. So that constituted a positive message that the page is turning in this conflict and a painful chapter is closed.

Greece's overall strategy also includes Turkey. This is why Athens took the lead in helping to engage Ankara in important reforms via the EU integration process. It is up to Ankara to display the necessary political will. For Athens there is no ambiguity: full implementation of EU standards, commitments and criteria will lead to full EU membership for Turkey. There is no room for less-than-full performance either way. Greece's strategy is clear: we support Turkey's European aspirations and Turkey has to do more to back up its European bid. In the economic field, Greece has been investing and will continue to do so. Most recently, the National Bank of Greece acquired 46 percent of the shares in one of the largest Turkish banks, Finansbank.

Now we have a marketplace of 120 million people; Greece ranks among the top investors in the Balkan countries, where Greek investment amounts to roughly ten billion dollars and has generated 200,000 new jobs. The trade volume between Greece and its Balkan neighbors is about four billion dollars.

Improving the hard and soft infrastructures in the Balkans is a key for attracting fresh investment. Transportation and energy networks are an urgent priority. During the 1990s, choices about cross-border highways and railways were politicized. The regional energy treaty signed in Athens on October 25, 2005 (also known as the Energy Community Treaty or the Southeast European Energy Treaty) constitutes a strong incentive for investments in this sector in the Balkans - an energy marketplace that we estimate will attract over $20 billion in investment in the next five to ten years. …

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Greece's Aid and Investment Boost Balkan Economy and Stability
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