Growing Challenges and Ways Forward in Light of the War in Ukraine and Regional Tensions in the Western Balkans

Over the past three decades, the Western Balkans have faced significant economic underdevelopment and slow growth, which we attribute to three main factors. First, the stalled EU integration process, combined with a lack of credible accession prospects and insufficient financial support from the EU, has constrained the region’s growth potential. Second, unresolved regional disputes have impeded economic cooperation and integration, further retarding development. Third, the region’s inadequate economic model has led to low levels of investment, poor human capital development, and persistent issues of high poverty and inequality. The ongoing war in Ukraine has reinvigorated EU enlargement discussions; but it also presents fresh challenges. The Western Balkans risk being overshadowed by Ukraine’s accession process, which could potentially delay their own EU integration. Additionally, external influences—particularly from China and Russia—have grown in the wake of the EU’s limited engagement. This is complicating the region’s path towards EU membership. These challenges can be addressed through more substantial and expedited integration of the Western Balkans into EU structures, the resolution of deep-seated territorial disputes, and the adoption of a more interventionist and egalitarian economic model. Key policy options that could have the most significant impact include granting the Western Balkans full access to the EU budget, opening up access to the EU single market, and implementing enhanced industrial and innovation policies to stimulate domestic investment.