The European Union

10. ENLARGEMENT SUSPENDED

There is a high risk that the EU will not enlarge further, with negative implications for economic reform and the security of investments in the Balkans and former Soviet Union.

Recent Developments

• Bosnian Serbs have postponed plans for a series of referenda that threatened to loosen their relationship with the rest of Bosnia, but the risk of secession remains high in the longer term.

• Kosovo’s Constitutional Court has upheld plans to devolve greater power to the Serb enclaves, a move which will effectively partition Kosovo along ethnic lines.

• In Montenegro, the unhappy ethnic Serb minority has demonstrated against state corruption in and plans by the government to accept an invitation for the country to join NATO.

• In Macedonia, the leading Albanian party, the Democratic Union for Integration briefly left the government in March, threatening an end to ethnic power sharing in the country.

• A popular movement is growing in Moldova for the disintegration of the country along ethnic lines and the unification of its Romanian part with Romania proper.

Background

Several countries in the Western Balkans are at long-term risk of disintegration. The root cause of this is the mismatch of ethnic and political boundaries in the region, combined with the absence of a strong tradition of human rights and a poisonous legacy of inter-ethnic conflict. Most countries have minorities but none are content with being second-class citizens in another group’s country. Almost all have made a violent bid for separation in the recent past.

For the last two decades, Bosnia and Herzegovina, Macedonia, Kosovo and Serbia have held together largely due to diplomatic pressure from the West; its refusal to countenance any changes to international borders; and the potential reward of EU membership in return for accepting the current political boundaries. In the case of Bosnia, the integrity of the state has required a permanent international supervisor with powers of veto over domestic policy. However, none of these states has consolidated and recent developments mean that the countries of the region are at increasing risk of disintegrating. The West’s ability to impose its will on the region is waning due to the internal crisis in the EU; Russia is shoring up its traditional Orthodox alliances in the region; and Muslim radicals inspired by the success of Islamic State are launching small-scale attacks.

The state at greatest risk of disintegration is Bosnia, where the Serb and Croat minorities have never accepted their place in a unified Bosnian state. The most serious challenge is coming from the Bosnian Serb leadership which is pushing for a new settlement with the centre. In recent months, it has made a number of threats to hold referenda, on the authority of the Court of Bosnia and Herzegovina, on the structure of the Constitutional Court and on independence for Republika Srpksa (RS, the country’s Serbian entity), if substantial powers are not transferred from the centre. In doing so, the Bosnian Serbs are supported by Russia which has declared that international actors should withdraw from Bosnia and allow local politicians to run their own affairs. In the meantime, as far it can, the leadership is using Serb representatives in central government to paralyse the decision-making process and, by default, to enhance RS’ autonomy. Meanwhile, Bosnian Croats are pressing for the creation of their own ethnic entity, comparable to RS, in a further challenge to the integrity of the Bosnian state, prompting tentative agreement by the Bosnian Muslim president to merge two ‘Croat’ cantons in a single, more powerful entity.

Macedonia is also under increasing stress as the largest ethnic Albanian party demands the reconstitution of the country along Swiss-style confederal lines - a demand which has been endorsed by politicians in Albania. This follows vocal discontent among ordinary Albanians about the conditions of life fifteen years after the signing of a peace agreement which was supposed to give Albanians full cultural and political rights, and a proportional share of the resources of the state. These demands could be buttressed by an effective boycott of central government following elections in June if the various Albanian parties refuse to work with the probable victor of those elections, the ethnic Macedonian VMRO-DPMNE party, which is discredited by evidence of corruption and criminality. This sets the stage for a potential break down in the power-sharing agreement between Macedonians and Albanians which has held the country together since 2001.

Kosovo is at increasing risk of fragmentation. The EU has negotiated a deal in which the Serbian enclaves in Kosovo will gain far-reaching autonomy over their own affairs, as well as the institutions and symbols of statehood, such as a president, parliament and flag. This formalises a de facto separation which has existed since Kosovo’s rupture from Serbia in 1999 and, in the long term, simplifies any future attempt by Kosovo Serbs to reunite their territory with Serbia. In the short term, a violent backlash by ethnic Albanian nationalists in Kosovo risks deepening the current divide with Kosovo Serbs.

Meanwhile, in Serbia, violent groups within the ethnic Albanian enclave of Presevo Valley in Serbia have demanded the same degree of autonomy as their Serb counterparts in Kosovo, risking a fracturing of the state. Serbia’s Muslim population has also reiterated its demands for separation.

While these problems formally exist in separate theatres, developments in one state are inextricably linked to those in all others. A bid for separation by Bosnian Serbs would reopen the question of Serbia’s borders, encourage Kosovo Serbs to break with Kosovo and fuel the creation of a unified Albanian state that included western Macedonia. Equally, a bid for separation by Macedonian Albanians would start a chain reaction in the opposite direction. Nor can developments in the Western Balkans be isolated from potential fracturing in the ethnically-divided former Soviet states of Moldova and Ukraine, especially if Russia uses its political power to allow one theatre of conflict to form a precedent for the other.

Forecast

In the long-term, the fragile states of the Western Balkans are probably heading for disintegration along ethnic lines, driven by the desire of minority groups for the dignity and security that comes with independence or unification with a mother state. This process is likely to result in the eventual creation of larger Serbian, Albanian and Croatian states at the expense of Bosnia and Macedonia, which will lose territory and population.

The timeframe for such an outcome is largely dependent on the constellation of international forces and, in particular, the extent to which the Western powers can resist a development which is likely to lead to instability. In this respect, the evidence is mixed. The EU and US’ ability to sanction local actors directly has diminished significantly since last decade but it retains extensive diplomatic strength, as evident in its management of the current political crisis in Macedonia and the hesitation of the Bosnian Serb leadership to call a referendum. This power could be enhanced following the inauguration of a new US president with a greater willingness to invest in Eastern Europe. An outcome implies stasis, defined by unresolved local frustrations that perpetuate low-level interethnic violence and economic stagnation, but not a full-blown conflict.

However, the evidence of the last year, especially in Bosnia and Macedonia where local nationalists have escalated their demands, is that the status quo may not be sustainable any longer, especially given the crisis in the EU and the end to any real hope that the Western Balkans will ever join the union. In this respect, the two deciding moments will be the elections in Macedonia in June, after which Albanian parties may abandon the central government; and the determination of the Bosnian Serbs to hold a referendum which loosens RS’s relations with the rest of Bosnia.

Immediate Impacts

• The persistently febrile political atmosphere across the region raises the risk of demonstrations, terrorist attacks and low-level outbreaks of violence.

• Ethnically divided governments in Bosnia, Macedonia and Kosovo will struggle to implement reforms and or leverage international finance.

• Private enterprises will exercise caution in making spending and investment decisions, slowing economic growth.

Potential Impacts

• A bid for independence by Republika Srpska would create intense legal and political uncertainty for investors and other businesses in the country.

• Political turbulence could generate spillover effects into the rest of Europe, including capital flight, outward migration and contraband.

• Outside powers could be drawn into a renewed crisis in the Balkans, raising the potential costs of renewed conflict.

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