Op-ed

A brighter future for South-east Europe: The Greek EU presidency is emphasising the Balkans and beyond – so should investors

Vima, 4 February 2003

By Jean Lemierre

A centrepiece of the new Greek presidency of the European Union will surely be the progress of central and eastern European countries as they move towards their accession to the EU in 2004. Only a decade ago, as central Europe stumbled from the rubble of the shattered Soviet system, who would have dared believe those countries could even aspire to EU membership? How times - and achievable ambitions - can change.

No country knows this better than Greece. Over the six months of EU presidency, Greece will draw on its own experience of 12 years in the EU to support central Europe's very immediate EU accession preparations. But the EU Greek presidency will also be looking to look toward a future when another group of countries will develop to European standards. With its own regional stability and economic linkages in mind, Greece wants to promote the transition of the Balkan states to market economies to the point they, too, may some day become EU members.

The Greek government is using its term as EU president to support stability, development and economic transition in south-eastern Europe. On his recent whistle-stop tour of the Balkans, Foreign Minister George Papandreou delivered the sober but encouraging message that economic and political reform, while difficult, are necessary and could eventually lead to EU membership. And Greek businesses are already eager to develop south-east Europe's potential, having invested around €3 billion in the region since the collapse of communism.

Like Greece, the European Bank for Reconstruction and Development is already busy in the Balkans. We have experience to contribute in bolstering south-east Europe, just as we have promoted transition from centrally-planned to market economies from central Europe to central Asia. For more than a decade this Bank has leveraged investment to promote reform and development right across the former Soviet region. Today, as the single largest investor in the ex-communist region, we work to match investors with business opportunities in these countries. And we share the project risk.

Part of the effort to foster investment involves encouraging governments of south-east Europe to restructure the political and legal sectors and public administration, to promote growth, stability, rule of law and sustainable development. In this we join with other institutions of the region working within the Stability Pact and with other international financial institutions such as the Black Sea Trade and Development Bank and the European Investment Bank. And we reinforce bilateral efforts such as the Greek initiatives.

Roughly 20 per cent of the EBRD's investment portfolio is in southeast Europe. The money we have invested has, in turn, leveraged around €10 billion from other investors, providing jobs, improved living standards and a better future.

The EBRD shares Greece's optimism about south-east Europe. Peace is breaking out in the Balkans, and there is a renewed momentum by investors, political institutions and local government to make the right things happen. Despite its painful recent past, prospects for south-east Europe are improving thanks to increasing political stability and better cooperation between neighbouring countries. Memories of the 1990s conflicts are beginning to recede. Tourists are returning, and business interests are starting to see the appeal of the region's large and growing market. Southeast Europe's economy outpaced central Europe's in 2002, achieving 3.6 per cent growth in gross domestic product, compared with 2.3 per cent in central Europe; this should increase to around 4.2 per cent in 2003.

Still, aspirations for south-east European countries to eventually join the EU will depend on strong will, much determination and their drive for establishing sound market economies. Challenges loom for the governments and people of the region. Economic growth must still accelerate. Cross-border dialogue must improve further. Regional trade must be a priority, both for development and regional stability, among the countries of the region.

Doing business in the Balkans still entails obstacles: the feeble rule of law, the red tape, the corruption and vested interests, the lack of infrastructure and finance.

But in considering the potential, one only has to look at the ever-building track record of the EBRD's Greek partners who have already invested in the region. Hellenic Petroleum, OTE, Alpha Bank, the National Bank of Greece, the Commercial Bank of Greece, EFG Eurobank, Delta Dairy, Titan Cement and Leventis are just some of the Greek companies doing business in the Balkans, opening up foreign investment in fields from telecoms, oil and gas, and equity funds, to food and packaging. It is that kind of progress that the Greek EU presidency will draw upon to promote ever more growth, prosperity across the southern belt of the growing entity of Europe.

Jean Lemierre is president of the European Bank for Reconstruction and Development