European Union Office in Kosovo 
European Union Special Representative in Kosovo

Speech by Commissioner Olivér Várhelyi at the Kosovo Assembly

08/10/2020 - 15:08
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Honourable Speaker, honourable Members,

It is an honour for me to address this distinguished Assembly today, on the occasion of my first visit to Kosovo as the European Commissioner for enlargement and neighbourhood.

In normal circumstances, I would have visited Kosovo well before, but the COVID-19 crisis has come in between. This pandemic is hitting us all, and I know that Kosovo has already paid a heavy price. I would like to assure you that the European Union will continue to do its utmost to support Kosovo in managing this health crisis and in mitigating its economic and social consequences. 

The European Union has already provided significant emergency medical assistance to Kosovo and I am glad to announce that the first payment of the EU’s €100 million macro-financial assistance to Kosovo was disbursed in the first days of October. 

This expression of support shows the priority we are giving to the Western Balkans. For the European Commission there is no doubt: the future of the whole region lies in the European Union and it is in our strategic interest to bring you closer to the EU. 

That’s why from day one, the Commission is working in support of the Western Balkans along three tracks: We reinforced and renewed the enlargement process through a revised methodology to make the policy more credible for our Member States and for the region. 

On this basis, the decision to open negotiations with Albania and North Macedonia was made possible. And we are strongly focused on speeding up the economic convergence of the region with the EU. 

Through these three objectives we don’t just support our partners individually, we work for the whole region, to the benefit of people and economies.

Now our focus is on supporting the longer-term socioeconomic recovery of the region and its economic convergence with the EU. There is an enormous gap in terms of economic development between your region and the EU. The faster we close that gap, the faster we start creating resilient, strong, and sustainable market economies, the faster you will be able to join.

This week the Commission has put on the table a large-scale Economic and Investment planfor the Western Balkans. The plan is designedspecifically to boost the long-term recoverythrough a substantial investment package.This in turn will lead to sustained economic growth, it will support the implementation of reforms required to move forward on the EU path, and bring the Western Balkans closer to the EU Single Market. 

With the Plan we aim to mobilise up to €9 billion of grant funding under the future Instrument of Pre-Accession Assistance to support the economic convergence of the region with the EU. The investment package is structuredaround 10 flagship initiatives in key areas of crucial importance: transport, energy, environment, digital, the private sector and youth. 

These priorities are common for the whole region. They were developed with the governments of the region and selected as the fastest, long-term and necessary to turn the Western Balkans into an attractive investment area.

In addition, the investment capacity of the region should be boosted by the mobilisation of a new Western Balkans Guarantee facility, with the ambition to potentially raise investments of up to €20 billion. In total, this means almost a third of the current GDP of the whole region which stands at around €100 billion. Investments leveraged by this support could potentially increase, by conservative calculations, a real growth of the GDP by 3.6% for the whole region.

The package will allow the region, over the next four years, to emerge stronger from the COVID-19 pandemic and lay the foundations for developing connected, competitive, knowledge-based, sustainable, innovation oriented and thriving economies in the Western Balkans, with increasingly dynamic private sectors. 

Kosovo is very much part of this plan and Kosovo people and businesses will directly benefit from it. In the area of transport, the Plan includes notably the Peace highway (linking up Pristina to Niš in Serbia), and the rehabilitation of Railway route 10 connecting Kosovo with North Macedonia and Serbia. 

In the area of energy, the Plan includes the North Macedonia - Kosovo Gas interconnector, which will contribute to Kosovo’s energy diversification and support its transition towards less polluting energy sources. Let me be clear! We urgently need to phase out coal in the region and switching to gas would have a potential of decreasing emissions as much as by 60% from current level. In Kosovo this might be even more. The region needs a diversity of supply, with gas having an important transition role, while pipelines in long term could be used for transporting hydrogen. 

Finally, in the crucial area of environment, the Plan focuses on the construction of wastewater treatment plants in Pristina and on the construction of the Ibër-Lepenc Hydro System Phase II. Those major investments will complement existing projects already supported as part of our assistance, such as the environmental upgrade of the Kosovo B power plant, to tackle air pollution. 

Beyond that, the plan will provide strong support for the SMEs and focus on youth in particular. Through the education system we need to make sure that their skills match the needs of the labour market. We also need to turn brain drain into brain circulation so that young people can be one of the driving forces of prosperity and stability in Kosovo of the future.

With the Economic and Investment Plan we aim to bring the region closer to the EU and to foster regional cooperation. During the outbreak of the pandemic the region showed it can work together. With the successful establishment of “green lanes” within the region, we saw inclusive regional cooperation at its best. This success should inspire the future of regional economic integration. Regional participation, regional impact, regional planning.

For the past six months, Western Balkans governments have been engaged in developing a new vision for the regional economic area. I look forward to the Leaders of the Western Balkans agreeing an ambitious action plan to develop a common regional market at the Sofia summit on 10 November. This is critical to increase the attractiveness and competitiveness of the region and turn it into attractive investment hub, interesting also for global investors that are looking to reduce the distance to EU markets.

Regional economic integration is not a detour on the European path but a tool to enhance growth, to overcome the COVID-related economic crisis, to modernise the economies in line with the EU priorities and bring them closer to the EU internal market. It is an integral part of the region's EU accession process.

However, boosting investment and economic growth in the Western Balkans will only be possible if governments firmly commit to and implement fundamental reforms based on European values. Whether structural economic reforms, strengthening the rule of law, or improving public administration, these reforms are essential for an environment favourable to entrepreneurship, job creation and sustainable investment.

In this regard, the 2020 Enlargement package, which we adopted on 6 October together with the Economic and Investment Plan, provides a detailed overview of the state of play of fundamental reforms and guidance on these reform priorities. These remain at the heart of the EU accession process. These fundamentals remain the essential conditions that need to be met, not only to make a success of the Plan, but also to move forward on the EU path. 

This year’s Kosovo report reflected the fact the political context over the last year has been quite volatile, with early elections, two changes of government, and on top the COVID-19 pandemic. Overall, this context has, unfortunately, not been favourable to making bold progress on EU-related reforms in Kosovo. 

In order to put back focus on reforms, we have been able to agree with Prime Minister Hoti a second phase of Kosovo’s European Reform Agenda, which we just announced publicly.

This agenda will provide direction for Kosovo as it seeks to further reinforce the rule of law, increase its competitiveness, and ensure a successful economic recovery post COVID-19. I count on this Assembly to maintain the necessary cross-party consensus on EU-related reforms, which are in Kosovo’s strategic interests. This house has a key role to play and a key responsibility to bear.

The lifting of the 100% tariff on goods from Serbia and Bosnia and Herzegovina earlier this year was a crucial decision, which the EU has welcomed. It has allowed for a restoration in trade with Serbia and Bosnia and Herzegovina and for the resumption of the EU-facilitated Belgrade-Pristina dialogue. 

The Commission will continue to support this process. I hope that both sides can make decisive progress in the months to come. A comprehensive, legally binding agreement is crucial for Serbia and Kosovo to advance on their respective European paths.

The Commission remains committed to achieving visa liberalisation for Kosovo citizens. We know how important this issue is for people in Kosovo. As you know, the Commission’s assessment is that Kosovo still fulfils all criteria. The Commission is ready to provide all information requested by EU Member States once the issue is back on the EU Council’s agenda. Meanwhile, it is of course essential for Kosovo institutions to make sure that all benchmarks continue to be met. We are working hand in hand to convince the Member States that Kosovo deserves the visa liberalisation. We are not there yet and need support of this house to get there. 

To wrap up, the past year has overall been a very dynamic and challenging one. For me, the COVID-19 pandemic confirmed very clearly the need for the European Union and the Western Balkans to work together. I am pleased that with the Economic and Investment Plan we now have a blueprint to follow. 

I count on Kosovo authorities to work with us so that the Plan delivers swiftly. I believe it can and I am convinced that with a determined approach and commitment to the reforms and the implementation of the Plan we can create a new landscape for Kosovo and the region already in the next 4 to 5 years. Let us do this together!

Thank you very much.

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