Demonstrators hold a banner reading 'Kosovo' and wave flags during a protest against the accord on the normalisation of relations between Serbia and Kosovo in Belgrade. Photograph: Getty Images.
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The western Balkans are in danger of sliding backwards

The EU cannot afford a wait and see approach that creates the risk of economic divergence and renewed instability.

Fifteen years after the wars that devastated and divided the former Yugoslavia, the countries of the western Balkans are facing a different kind of challenge: the risk of permanent marginalisation as part of Europe’s “super-periphery”, a zone of stagnation beyond EU’s troubled southern rim. That has been one of the under-reported consequences of an economic crisis that has simultaneously derailed the region’s efforts to catch up with the rest of Europe while sapping the EU’s enthusiasm to admit new member states. It is the reason why all seven Prime Ministers from the region are gathering in London today for an economic development conference hosted by the European Bank for Reconstruction and Development.

A defining feature of transition economies is their ability to achieve growth rates that put them on a convergence path with the highest income countries. That is what the countries of Central and Eastern Europe managed to achieve in the years before and after EU accession. Judged by this measure the economic transition of the western Balkans has stalled with a double-dip recession, inadequate investment flows and unemployment running at around a quarter of the adult population. Growth is just beginning to return, but at levels that effectively amount to stagnation. Without a return to a higher growth path, the countries of the region will remain stuck at less than a third of the EU’s average wealth per capita.

It should be acknowledged that the nations of the western Balkans face significant economic difficulties that are not of their own making. Their relative distance from the EU’s largest and wealthiest markets and their proximity to Greece mean that they have felt the impact of Europe’s economic crisis more than most. But as a paper published by the London School of Economics last year found, there is a specific “western Balkans effect” that inhibits inward investment and retards economic development. This is the result of serious deficiencies in politics and governance that the leaders meeting in London need to address.

The first aim should be to reduce the political risk factors involved in doing business in the region. The Balkan wars are a fading memory, but there has been little in the way of real reconciliation. The different ethnic communities of Bosnia-Herzegovina continue to live separate lives. Serbia has normalised relations with Kosovo, but refuses to recognise it. Even Greece’s unresolved objection to the description of FYROM as Macedonia disfigures the politics of the region. As long these dividing lines and enmities remain frozen, investment will look like a risk.

One legacy of this political division has been to limit the scope of regional economic integration, raising costs and reducing opportunities for potential investors. Despite laudable initiatives like the Regional Co-operation Council and the Central European Free Trade Agreement, good intentions are not always matched by delivery and trade between countries in the region is far lower than it should be. Efforts to promote reconciliation and deeper economic linkages should go hand in hand, helping to convince investors that renewed conflict is unlikely.

The second issue that needs to be addressed is the absence of strong, market supporting institutions, like clean government and independent courts, needed to uphold the rule of law and protect property rights. Problems like corruption and the lack of judicial independence are responsible for a business climate that, according to international indices, falls far short of European standards. The political elites are viewed as predatory, using legal and administrative tools to intimidate businesses and secure financial and political favours.

Some efforts have been made to address these problems. But too often reform is superficial, introducing new laws and procedures without any change of underlying behaviour. For example, the European Parliament expressed concern about provisions in Serbia’s criminal code that give the authorities broad scope to criminalise commercial activities that are considered perfectly normal in any functioning market economy. Serbia revised its code and then reopened all of its existing cases under the new Article 234. An estimated 1,500 business people are currently under investigation (including Serbia’s second wealthiest entrepreneur, Miroslav Miskovic) often for doing little more than making a profit.

This creates real policy problems for the EU. Faced with its own internal pressures and economic difficulties, it needs to export the European model of governance, rather than import more problems from the western Balkans. Further enlargement will not therefore happen quickly or easily to a region with mass unemployment and limited economic prospects. But the EU cannot afford a wait and see approach that creates the risk of economic divergence and renewed instability across the western Balkans. It needs to redouble efforts to promote lasting change and real economic convergence

The traditional legalistic process in which the terms of accession are laid out and the member states are expected to demonstrate compliance on their own initiative won’t work any more. Getting countries of the region up to European standards will require a much more intensive form of supervision and a willingness by the EU to be firmer and more interventionist in dealing with the most serious deficiencies. But the political will to do that unless the region’s leaders first show that they mean business. That should be the message coming out of today’s meeting.

David Clark is the founder and editor of Shifting Grounds, and served as special adviser to Robin Cook at the Foreign Office from 1997 to 2001

David Clark was Robin Cook’s special adviser at the Foreign Office 1997-2001.

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Air pollution: 5 steps to vanquishing an invisible killer

A new report looks at the economics of air pollution. 

110, 150, 520... These chilling statistics are the number of deaths attributable to particulate air pollution for the cities of Southampton, Nottingham and Birmingham in 2010 respectively. Or how about 40,000 - that is the total number of UK deaths per year that are attributable the combined effects of particulate matter (PM2.5) and Nitrogen Oxides (NOx).

This situation sucks, to say the very least. But while there are no dramatic images to stir up action, these deaths are preventable and we know their cause. Road traffic is the worst culprit. Traffic is responsible for 80 per cent of NOx on high pollution roads, with diesel engines contributing the bulk of the problem.

Now a new report by ResPublica has compiled a list of ways that city councils around the UK can help. The report argues that: “The onus is on cities to create plans that can meet the health and economic challenge within a short time-frame, and identify what they need from national government to do so.”

This is a diplomatic way of saying that current government action on the subject does not go far enough – and that cities must help prod them into gear. That includes poking holes in the government’s proposed plans for new “Clean Air Zones”.

Here are just five of the ways the report suggests letting the light in and the pollution out:

1. Clean up the draft Clean Air Zones framework

Last October, the government set out its draft plans for new Clean Air Zones in the UK’s five most polluted cities, Birmingham, Derby, Leeds, Nottingham and Southampton (excluding London - where other plans are afoot). These zones will charge “polluting” vehicles to enter and can be implemented with varying levels of intensity, with three options that include cars and one that does not.

But the report argues that there is still too much potential for polluters to play dirty with the rules. Car-charging zones must be mandatory for all cities that breach the current EU standards, the report argues (not just the suggested five). Otherwise national operators who own fleets of vehicles could simply relocate outdated buses or taxis to places where they don’t have to pay.  

Different vehicles should fall under the same rules, the report added. Otherwise, taking your car rather than the bus could suddenly seem like the cost-saving option.

2. Vouchers to vouch-safe the project’s success

The government is exploring a scrappage scheme for diesel cars, to help get the worst and oldest polluting vehicles off the road. But as the report points out, blanket scrappage could simply put a whole load of new fossil-fuel cars on the road.

Instead, ResPublica suggests using the revenue from the Clean Air Zone charges, plus hiked vehicle registration fees, to create “Pollution Reduction Vouchers”.

Low-income households with older cars, that would be liable to charging, could then use the vouchers to help secure alternative transport, buy a new and compliant car, or retrofit their existing vehicle with new technology.

3. Extend Vehicle Excise Duty

Vehicle Excise Duty is currently only tiered by how much CO2 pollution a car creates for the first year. After that it becomes a flat rate for all cars under £40,000. The report suggests changing this so that the most polluting vehicles for CO2, NOx and PM2.5 continue to pay higher rates throughout their life span.

For ClientEarth CEO James Thornton, changes to vehicle excise duty are key to moving people onto cleaner modes of transport: “We need a network of clean air zones to keep the most polluting diesel vehicles from the most polluted parts of our towns and cities and incentives such as a targeted scrappage scheme and changes to vehicle excise duty to move people onto cleaner modes of transport.”

4. Repurposed car parks

You would think city bosses would want less cars in the centre of town. But while less cars is good news for oxygen-breathers, it is bad news for city budgets reliant on parking charges. But using car parks to tap into new revenue from property development and joint ventures could help cities reverse this thinking.

5. Prioritise public awareness

Charge zones can be understandably unpopular. In 2008, a referendum in Manchester defeated the idea of congestion charging. So a big effort is needed to raise public awareness of the health crisis our roads have caused. Metro mayors should outline pollution plans in their manifestos, the report suggests. And cities can take advantage of their existing assets. For example in London there are plans to use electronics in the Underground to update travellers on the air pollution levels.

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Change is already in the air. Southampton has used money from the Local Sustainable Travel Fund to run a successful messaging campaign. And in 2011 Nottingham City Council became the first city to implement a Workplace Parking levy – a scheme which has raised £35.3m to help extend its tram system, upgrade the station and purchase electric buses.

But many more “air necessities” are needed before we can forget about pollution’s worry and its strife.  

 

India Bourke is an environment writer and editorial assistant at the New Statesman.