SEVENTH EU-SOUTHEAST EUROPE SUMMIT



October 10th 2018


PRESS RELEASE
The Economist Events
Seventh EU-Southeast Europe Summit
A sustainable recovery for the Balkans?
Serbia in a leading role

October 4th-5th 2018
Metropol Palace, Belgrade


In the opening session, summit chairs, John Andrews and Maximilien Lambertson discussed the political and economic outlook for southeast Europe in light of several pivotal developments including discussions of a Kosovo-Serbia border adjustment, upcoming elections in Bosnia and Herzegovina and the inconclusive result in the referendum on FYR of Macedonia’s name agreement with Greece. On the economic side, Max Lambertson highlighted that the region as a whole has finally emerged from the protracted crisis period following the 2008 global financial crisis. While the period of 2008-15 saw countries in southeast Europe undergo painful macroeconomic and fiscal adjustments, with the export sector being the main driver of growth, the past three years have finally seen private consumption and investment contribute to growth. In the next five years The Economist Intelligence Unit forecasts real GDP growth in the Western Balkans to average around 3% annually, supported by wage and employment growth as well as by higher public and private investment. While this is a higher growth rate than the euro zone average, this still provides for a very slow pace of convergence.

Serbia’s foreign policy consists of two key pillars, EU integration and regional stability prime minister of Serbia Ana Brnabić said in her opening address. Serbia is focused on EU integration, not Euro-Atlantic integration as it is not seeking membership of NATO. That said, it does cooperate with NATO via the Partnership for Peace, the Serbian PM noted. Serbia wants to join the EU, Ms Brnabić said, firstly because EU is considered a peace project: aside from the conflict in the Balkans in the 1990s, the EU has achieved more than 7 decades of peace. Additionally, the EU’s shared values are the ones that Serbia espouses, and membership would improve Serbia’s access to EU funds and investments, which are particularly needed for infrastructure and environmental protection, according to the prime minister. Serbia supports the opening of accession negotiations for Albania and FYR of Macedonia. If they do not start negotiations, this will slow down the accession of Montenegro and Serbia, Ms Brnabić said. The prime minister is not worried about scepticism towards enlargement within the EU, as Serbia has plenty of homework to do in the meantime before accession time is near.

To the hypothetical question “what if the EU called off the enlargement process tomorrow?”, Ms Brnabić stressed that it would have no impact on the government's policies. Serbia would remain committed to the reform process, which needs to be followed anyway. Furthermore, if Serbia was offered to join the EU tomorrow, the prime minister would refuse, as Serbia is not ready, she stated. Serbia needs to make sure that it is competitive enough to handle EU membership. It would be a lose-lose for Serbia and the EU to have Serbia join without being fully ready. Prime minister Brnabić hopes that Serbia will join the EU by 2025, but if not, it will continue to aspire to membership in any case. The region needs to improve the flow of people and goods throughout it, while similarities in the region are stronger than differences, according to Ms Brnabić.

According to the Serbian prime minister, the country is committed to regional integration, particularly via the Berlin process, including: 1) The connectivity agenda, such as improving infrastructure links 2) Deepening the regional economic area and 3) Resolving political disputes in the region, including the Macedonia name dispute, the normalisation of Serbia-Kosovo relations and Serbia’s border disputes with Croatia and Bosnia. The Croatia-Slovenia border dispute has complicated the resolution of other border disputes in the region, which need to be resolved before EU accession. If other disputes go to international arbitration, the process could be extremely drawn out, the prime minister stated.

Opening a panel on EU enlargement and the western Balkans, the executive director of the Transatlantic Centre at the German Marshall Fund Ian Lesser, said that European integration is interconnected with regional stability. If enlargement is not possible, then at least convergence is needed. Mr Lesser said that EU foreign policy had long been enlargement, but that this is difficult in a period of public and elite disillusionment with enlargement. In addition, he noted that the geopolitical environment is not benign and that the status quo in the region is not acceptable. He said that while the US has long wanted and still wants Europe to take the lead in the Balkans, it cannot be complacent about stability in the region.

Lilyana Pavlova, minister for the 2018 Bulgarian Presidency of the Council of the EU, said that Bulgaria had wanted EU enlargement in the Western Balkans to be high on the agenda and is happy to see that the enlargement process has been reinvigorated. She said that the region needs to work on connectivity and economic development. Ms Pavlova added that the EU needs to unlock the potential of the region and that the best way of doing this is to support political dialogue.

Jadranka Joksimovic, the Serbian minister for European integration, prefers to use the term “southeast Europe” to “Western Balkans”. She said that Serbia needs credible enlargement policies for the EU and that while the EU says that it does not want to import problems, it generates plenty of its own. Ms Joksimovic pointed out that Serbia joined the EU accession process, and that it is a partner with the EU, who needs to recognize potential of brave and innovative southeast Europeans.

This is a critical juncture for the EU and the Balkans, the Greek shadow minister for foreign affairs George Koumoutsakos said. He said that the weakening of the European perspective has opened space for Europe’s competitors. The migration crisis put the Balkans back on the European agenda and this is a historic opportunity to firmly bind the Western Balkans to the EU. He said that solutions should be viable and he lauded Serbia for being a frontrunner in the enlargement process.

Enlargement is back in focus and the EU is not satisfied with a status quo scenario, according to Sem Fabrizi, ambassador and head of the EU delegation to Serbia. For the EU, enlargement is a geostrategic investment and the EU could open accession negotiations with two countries (Albania and FYR of Macedonia) next year. The EU will insist on respect for the rule of law in enlargement countries in a merit-based process that does not allow for shortcuts.

John Bruton, the former Irish prime minister, opened a panel titled Brexit: What next for Britain and Europe? John Bruton gave an overview of the UK-EU relationship. He said that EU-UK negotiations were complex given that 27 member states have to agree with the UK and that the EU has problems to deal with other than Brexit. He said that the UK government has rejected a relationship with the EU on the lines of Norway (single market) or Turkey (customs union). The Chequers formula means a single market for goods not for services or for people. It is unclear how the UK can agree a deal that excludes free movement of people that also does not upset the Belfast agreement by establishing a hard border between Ireland and Northern Ireland. John Bruton noted that the EU is a rules-based organisation and the precedent that the UK sets is critical.


Denis Keefe, the UK ambassador to Serbia, agreed that there remains a very big body of things to be decided between the UK and the EU. He sees three phases in the EU-UK relationship going forward: 1) the negotiations of a withdrawal agreement, 2) the adjustment to the reality of the UK outside the EU and 3) the final future UK-EU relationship. He pointed out that the UK will remain a member of many international organisations and that it is in the interest of the UK for the Balkans to join the EU.

The economic UK-EU context was outlined by the chairman of the executive board of Erste Bank Serbia Slavko Caric. He found that the UK depends more on the EU than vice versa and that the UK economy had been performing poorly since the Brexit vote, and suggested that the UK should stay in the EU.

Kyle Randolph Scott, the US ambassador to Serbia, highlighted the strong performance of the US economy and explained US trade policy. He argued that the US has long talked about tearing down trade barriers and protectionism. He said that in the early postwar years the US could afford to be magnanimous, and believed that other countries would eventually lower their barriers. Since that has failed to happen, the US president, Donald Trump, has pulled out of unfair trade deals and renegotiated others. Mr Trump is now getting results with revised trade deals with South Korea, Canada and Mexico. Ambassador Scott then cited average tariff figures to illustrate that US goods faced higher tariffs in the EU than vice versa, that the average Chinese tariff is twice what it is in US and that many more US products face tariffs in Serbia than Serbian products do in the US. He concluded that the US is just pressing world to play fair, and still firmly believes in free trade.

The first deputy prime minister and minister of foreign affairs of Serbia Ivica Dačić, gave a keynote address to open the event’s gala dinner. He highlighted that the EU, in its new 2025 enlargement strategy, had recognised Serbia as a frontrunner and acknowledged that Serbia had made progress in essential reforms. He pointed out that there remain many challenges to progress on enlargement including EU parliamentary elections and Brexit, but argued that this is not an excuse not to continue reforms. He then highlighted various recent initiatives to boost regional cooperation, including the establishment of the Regional Youth Cooperation Office in Tirana and the Chamber Investment Forum in Trieste. He said that the region can only solve its problems peacefully, and that he hopes that the 2025 accession date will be met.

In the October 5th opening session on energy opportunities in the Balkans, Paolo Scaroni, deputy chairman of Rothschild Group and former CEO of ENI, found that the Balkan economy was doing reasonably well, but that it had a lot more room to grow and that the region needs to regenerate its energy systems. He pointed out that electricity generation in the region comes mainly from coal, and to a lesser extent from hydropower. The reliance on coal hurts the air quality in the region and makes it difficult to reduce emissions. To improve its energy mix, he said that the region needed more power production from renewables and gas. Aleksandar Antic, the Serbian minister of mining and energy, noted that the region had long be left out of European energy policy and that the region has a huge gap with modern energy trends. He lauded Bulgaria’s initiative to hold advisory committees of regional energy ministers. He said that the last launch of a new energy production facility in Serbia was in 1991, but that Serbia was at last building new capacity, two-thirds of which are renewable, including wind energy. He also said that coal remains important for Serbia’s energy security and that Serbia would not be doing away with it anytime soon.

In the panel on the financial and economic outlook for the Balkans, Sinisa Mali, the Serbian minister of finance, said that Serbia was one of the fastest growing economies in the region, with unemployment falling and new factories opening. He cited positive fiscal and investment figures and noted that the dinar and inflation were stable. He outlined government initiatives to lower the social contribution burden for employers, to sustainably increase pensions and salaries and plans to build transport infrastructure.

Pavle Petrovic, the president of the Serbian fiscal council, agreed that public finances were under control and that growth was strong this year, but said that growth needs to pick up further and that employers need tax relief. He urged for more investment in infrastructure and better environment protection (dump sites, non sanitary landfills, untreated waters). He argued that fiscal space not be used for wages and pensions.

An overview of the Serbian banking sector was given by Constantinos Kypreos, senior vice-president at Moody’s Investors Service in Cyprus. He showed that after excessive growth in loans until 2010, much in foreign currency to unhedged borrowers, Serbia has undergone extensive deleveraging. Non-performing loans (NPLs) have declined dramatically, partly thanks to the government’s NPL resolution policy and also because of banks’ own policies. Serbian banks’ reliance on foreign funding has fallen while liquidity buffers have risen. He thinks that banks are now in a position to increase lending, and the main two areas where changes are needed are the still high level of euroisation of the economy and the need to develop deeper local capital markets.

Peter Tabak, associate director for economics, policy and governance at the EBRD said that the region’s fiscal stance has improved, with Serbia undergoing a particularly large adjustment. He said that the challenge is now to establish fiscal sustainability and increase public investment. He said that countries in the region need to improve public procurement procedures, rule of law and judicial systems. He found that the pace of growth is insufficient for significant convergence to the EU average and that productivity needs to increase by improving governance, the business environment and the quality of public services. He said that labour shortages are also an issue in the region even though unemployment is still high.

Dominique Bolli, head of the government advisory practice at Henley & Partners, spoke about how residency by investment programmes can help the region reduce debt levels and attract more foreign direct investment (FDI), citing large sums Greece and Malta have attracted from Henley & Partners’ programmes.

In a panel entitled Looking through Alice’s Magic Mirror: What Lies in Store for Business?  - Attracting FDI: Why Serbia? Danela Arsovska, president of MCC, said that the three most important factors for investors are the rule of law, the fight against corruption and stable and predictable legislation. Gaetano Massara, president and CEO of Tungsram South Europe, noted that much of the region was at risk of falling into a middle income trap and suggested areas for improvement including increased use of public-private partnerships, reforms to state-owned enterprises, making tax systems more progressive, keeping incentives stable and exchange rates flexible. Bojan Markovic, deputy director for sector economics and policy at the EBRD, outlined the EBRD’s investments in Serbia, 40% of which are in infrastructure. He said that while firms have relied on debt in recent years given historically loose monetary policy, that in the coming years funding costs will go up as will demand for equity. He said that the improvements to corporate governance and labour skills will help to attract more investment. Erika Teoman-Brenner, head, Serbia, Macedonia & Montenegro at Advantage Austria, noted that the Austrian economy was driven by strong small and medium-sized enterprises and that the Serbian diaspora in Austria could use its experience to help SMEs in Serbia. Aleksandar Kemiveš, adviser to the president in charge of investments at the Chamber of Commerce and Industry of Serbia, outlined Serbia’s free trade agreements, cited the high quality of the Serbian labour force and noted that large foreign companies who have come to Serbia have not left.

In a panel about the innovative and digital era, creativity and innovation expert Kirk Vallis, highlighted how important creativity is to innovation and how many new technologies in history have disrupted and wiped out incumbents. He illustrated the exponential rate of change and challenged others to examine how they are disrupting themselves to innovate and be creative.

the digitization and digital transformation that the financial services sector is undergoing was explained by Jelena Galic, chief executive officer of AIK Banka. She explained how the financial sector can use technology to improve services and noted how changing mindsets was a big part of this.

Maja Andjelkovic, team leader for the Serbia Research innovation and Technology Transfer Project at the World Bank, said that innovation and entrepreneurship have potential to contribute to growth in Serbia, and there have been positive early results. However, she said that in comparison to the EU, and even to some regional peers, R&D financing is insufficient and inefficient, preventing many potential innovations from being transferred to the market, and that growth-stage innovative enterprises in a variety of sectors often face a lack of mentors and stage-appropriate financing.

Alexis Minte, loan officer, lending operations in the Western Balkans at the European Investment Bank, said that the Western Balkans are a key priority for EIB lending activity, including for digitalisation and innovation projects in Serbia. He said that effective digitalisation will require a committed digital policy, a modernised administration based on e-government, an education system integrating the digital world, and a vibrant start-up ecosystem where people are able to implement their ideas.

Michael Nelson, tech strategy at Cloudflare and former professor of internet studies at Georgetown University, said that communications and culture are the hard part of benefiting from new technology. He believes that the pace of innovation and disruption will increase dramatically in the coming decades and that countries like Serbia could benefit most from these changes. He said that governments can often slow things down owing to internal opposition to change and argued that they should be ready to “lose control” of technological changes.

Katarina Aleksic, adviser for digitalization in education to the Serbian minister of education, said that the digitalization of education is one of the main priorities of the ministry of education. They are doing this via human capacity development, the standardization and improvement of ICT infrastructure and by the creation of free eEducational services.

In a panel on strengthening ties between Cyprus and Serbia and the European Energy Roadmap to 2050, Marios Demetriades, former minister of transport, communication and works in Cyprus and managing partner at MD Mindset Consulting, highlighted the strong historical ties between Serbia and Cyprus and FDI flows from Cyprus to Serbia in trade, technology, real estate and construction. He said that Cyprus can act as a stepping stone for Serbian investments into the EU and noted the potential to increase cooperation in maritime activity, science, technology and education between Cyprus and Serbia.

Αmbassador of Serbia to Cyprus Marko Blagojevic noted the good relations between the two countries and strong historical ties. He thanked Cyprus for its support for Serbia’s EU accession and territorial integrity. He also pointed out how Cyprus and Serbia were both hit particularly hard by the global financial crisis but were both now seeing rapid economic growth. He expects several bilateral agreements to be signed at an Intergovernmental Conference between Cyprus and Serbia to be held in Cyprus by the end of 2018.

Founder and director-general of the National Energy Security Fund in Russia Konstantin Simonov highlighted the region’s lack of gas infrastructure and stressed the prominence of Gazprom as a large investor in Serbia. He also pointed to the increasing share of Russian gas on the European market and to the potential to increase gas flow to the Balkans from Russia via new projects and also from other sources possibly thanks to the new agreement on the delimitation of the Caspian Sea.

Cigdem Borke Tunali, associate professor in economics at Istanbul University, noted that southeast Europe has a low per capita primary energy supply but a high energy intensity. She said that cheap coal in the region is a barrier to decarbonisation and that the region is highly dependent on oil and gas imports. She finds that the Southern Gas Corridor project is a significant project for diversifying the region’s gas supply routes.

Conference websites:
www.hazliseconomist.com
www.serbia2018.economist.com

 
Gold sponsor:  Henley & Partners

Bronze sponsors:  AIK Banka, Erste Bank, Invest Cyprus
Communication sponsors:  Blic, Tanjug News Agency, SeeNews, To Vima, Ta Nea
Contributor:  Hanikian Law Firm
Logistics supplier:  DHL
IT Sponsor: Sieben-Pobuca
Supporting organisation:  Advantage Austria





October 5th 2018

                                                                                                                                                                                                           


PRESS RELEASE
The Economist Events
Seventh EU-Southeast Europe Summit
A sustainable recovery for the Balkans?
Serbia in a leading role

October 4th-5th 2018
Metropol Palace, Belgrade


Ana Brnabić, Prime minister of Serbia

Serbia’s foreign policy consists of two key pillars, EU integration and regional stability, according to Serbia’s prime minister
Ana Brnabić, who delivered a keynote speech within the context of The Economist’s Seventh EU-Southeast Europe Summit in Belgrade entitled “A sustainable recovery for the Balkans? – Serbia in a leading role”.

EU integration

Serbia is focused on EU integration, not EuroAtlantic integration as it is not seeking membership of NATO. That said, it does cooperate with NATO via the Partnership for Peace, the Serbian PM noted. Serbia wants to join the EU, Ms Brnabić said, firstly because EU is considered a peace project: aside from the conflict in the Balkans in the 1990s, the EU has achieved more than 7 decades of peace. Additionally, the EU’s shared values are the ones which Serbia espouses, and membership would improve Serbia’s access to EU funds and investments, which are particularly needed for infrastructure and environmental protection, according to the prime minister.

Serbia supports the opening of accession negotiations for Albania and FYR of Macedonia. If they do not start negotiations, this will slow down the accession of Montenegro and Serbia, Ms Brnabić said. The prime minister is not worried about scepticism toward the enlargement within the EU, as Serbia has plenty of homework to do in the meantime before accession time is near.

What if the EU called off the enlargement process tomorrow?

To this hypothetical question, Ms Brnabić stressed that it would have no impact on the government policy. Serbia would remain committed to the reform process, which needs to be followed anyway.

Furthermore, if Serbia was offered to join the EU tomorrow, the prime minister would refuse, as Serbia is not ready, she stated. Serbia needs to make sure that it is competitive enough to handle EU membership. It would be a lose-lose for Serbia and the EU to have Serbia join without being fully ready.

Prime minister Brnabić hopes that Serbia will join the EU by 2025, but if not, it will continue to aspire to membership in any case.

The region needs to improve the flow of people and goods throughout it, while similarities in the region are stronger than differences, according to Ms Brnabić.

 

Regional stability

According to the Serbian prime minister, the country is committed to regional integration, particularly via the Berlin process, including:

1) The connectivity agenda, such as improving infrastructure links
2) Deepening the regional economic area
3) Resolving political disputes in the region, including the Macedonia name dispute, the normalisation of Serbia-Kosovo relations and Serbia’s border disputes with Croatia and Bosnia.

The Croatia-Slovenia border dispute has complicated the resolution of other border disputes in the region, which need to be resolved before EU accession. If other disputes go to international arbitration, the process could be extremely drawn out, the prime minister stated.

 

Conference website: www.serbia2018.economist.com


 
Gold sponsor:
 Henley & Partners
Bronze sponsors:  AIK Banka, Erste Bank, Invest Cyprus
Communication sponsors:  Blic, Tanjug News Agency, SeeNews, To Vima, Ta Nea
Contributor:  Hanikian Law Firm
Logistics supplier:  DHL
IT Sponsor: Sieben-Pobuca
Supporting organisation:  Advantage Austria







October 1st 2018


PRESS RELEASE
The Economist Events
Seventh EU-Southeast Europe Summit
A sustainable recovery for the Balkans?
Serbia in a leading role

October 4th-5th 2018
Metropol Palace, Belgrade

As southeast Europe is searching for ways to boost innovation and competitiveness and to raise the skills and education level, the Seventh EU-Southeast Europe Summit by The Economist Events entitled “A sustainable recovery for the Balkans? – Serbia in a leading role” sets questions and proposals regarding growth and investments within the context of the current challenges in the region.

EU-integration and regional stability, EU enlargement, Brexit, trade policy, fiscal policy and innovation but also the developments in Serbia’s political and economic environment are also some of the main topics that will be discussed in the forthcoming summit in Belrgrade on October 4th and 5th 2018 at the Metropol Palace.

Confirmed speakers include:
Ana Brnabić, Prime minister, Serbia
John Bruton, Former prime minister, Ireland
Aleksandar Antić, Minister of mining and energy, Serbia
Jadranka Joksimović, minister for European integration, Serbia
Siniša Mali, Minister of finance, Serbia
Lilyana Pavlova, Minister for the Bulgarian Presidency of the Council of the European Union 2018
Mladen Šarčević, Minister of education, science and technological development, Serbia
Denis Keefe, UK ambassador to Serbia
Kyle Randolph Scott, US ambassador to Serbia
Genoveva Ruiz Calavera, Director in charge of the Western Balkans, Directorate-General for European Neighbourhood Policy and Enlargement Negotiations, European Commission
Maja Andjelkovic, Team leader for Serbia Research Innovation and Technology Transfer Project, The World Bank
Slavko Caric, Chairman of the executive board, Erste Bank Serbia
Jelena Galić, Chief executive officer, AIK Banka
Ian Lesser, executive director, Transatlantic Centre, vice-president for foreign policy, The German Marshall Fund of the United States
Alexis Minte, Loan officer, lending operations in the Western Balkans, European Investment Bank
Peter Tabak, Associate director and lead regional economist for Croatia, Russia, Serbia and Slovenia, EPG department, EBRD
Konstantin Simonov, Founder and director general, National Energy Security Fund, Russia
Paolo Scaroni, Deputy chairman/ former CEO, Rothschild Group/ ENI
Kirk Vallis, Creativity & innovation expert

Conference website: www.serbia2018.economist.com


 


Gold sponsor:
 Henley & Partners
Bronze sponsors:  AIK Banka, Erste Bank, Invest Cyprus
Communication sponsors:  Blic, Tanjug News Agency, SeeNews, To Vima, Ta Nea
Contributor:  Hanikian Law Firm
Logistics supplier:  DHL
IT Sponsor: Sieben-Pobuca
Supporting organisation:  Advantage Austria





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