The Energy Community of South East Europe: Challenges of, and Obstacles to, Europeanisation

The Energy Community Treaty, signed in Athens in 2005, creates a legal framework for an integrated energy market between the European Union and nine South East European partners – Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Montenegro, the Former Yugoslav Republic of Macedonia, Romania, Serbia and the United Nations Mission on behalf of Kosovo. This paper examines the challenges posed by the application of the EU model of energy regulation and the acquis communautaire, and the ability of States to meet those challenges. Given the recent historical context of the 1990s Balkans conflict and subsequent reconstruction efforts, a number of external countries and bodies have intervened in the region with aid and technical assistance programmes. However, the incentive of eventual EU membership affords the EU in particular a certain bargaining power through pre-accession instruments, and the Energy Community framework allows it to act as gatekeeper. This regulatory alignment, encouraging co-operation on technical issues, is expected to create spill-over effects in other sectors of reform. The paper considers whether the EU energy model is appropriate in South East Europe at this stage. It suggests that regulatory reform alone may not be sufficient – the domestic institutional framework is a significant factor. Analysis using the World Bank's quality of governance indicators suggests that different groups of countries should approach reform differently according to institutional capacity, and a 'one size fits all' solution may not be appropriate. This may have implications for targeting technical assistance and capacity building measures.