The EU's Growth Plan for the Western Balkans
A Step Forward or More 'Stabilitocracy'?
In November 2024, at a railway station in the northern Serbian city of Novi Sad, a 150+ foot concrete canopy collapsed, killing 16 people, including multiple children. In the aftermath, attention turned from mourning the loss of life to anger at the increasingly illiberal and authoritarian government of Serbian President Aleksandar Vučić. Protests broke out in earnest, leading to the resignation of multiple Serbian officials, including Prime Minister Miloš Vučević, and multiple headline-grabbing flashpoints, including a fistfight in the National Assembly between government representatives and their opposition counterparts. Vučić, in a rare concession, attempted to gain control of the situation by releasing protesters from custody and offering pardons for those that might be convicted of any crimes related to their participation in demonstrations, but this has not quelled dissent.
Eight months in, protesters have instead remained engaged and have called for snap elections and Vučić’s resignation from office. This has most recently culminated in street fights between anti-government demonstrators in Belgrade and police, with accusations of police brutality rampant. Though Vučić has seen off protests in the past and though he has previously benefited from a highly fractured opposition, this episode serves as the most sustained pressure Serbia’s president has yet faced.
The obstacle in the way for anti-Vučić activists? That bastion of democracy, human rights, and the rule of law: the European Union.
Just as the Serbian police purportedly bludgeoned pro-democracy demonstrators into submission, Europe celebrated the apparent progress states like Serbia have made in a very public reaffirmation of a plan to help maintain European influence in its outermost flank.
In its current form, it [the growth plan] raises serious doubts about the EU’s ability to drive lasting economic reform in the Western Balkans.
Indeed, in Skopje (the capital of North Macedonia), leaders from six Western Balkan states – Albania, Bosnia and Herzegovina (BiH), Kosovo, Montenegro, North Macedonia, and Serbia – recently met with the European Union’s Enlargement chief Marta Kos to celebrate and champion the EU’s Growth Plan for the Western Balkans. The plan, which could see each state earn gradual integration into the European Single Market while unlocking as much as 6 billion euros in funding for projects in clean energy, digital connectivity, transportation, and tourism, is seen as another carrot-and-stick style project to help instigate sorely needed reforms in each state.
For foreign investors, the disconnect between what’s discussed at conferences in Skopje and what’s unfolding on the ground in the region reveals real commercial and operational risks that cannot be overlooked.
Legal systems across much of the region remain opaque and subject to severe backlogs, with regulations often shifting according to informal political pressures.
Corruption often neutralizes the notion of competition, particularly in sectors like construction, energy, and public procurement.
Generally poor infrastructure (as evidenced by the tragedy in Novi Sad) and high levels of brain drain emigration continue to complicate development efforts.
Despite being promoted as a catalyst for investment and development, the Growth Plan is unlikely to address these unresolved obstacles. In its current form, it raises serious doubts about the EU’s ability to drive lasting economic reform in the Western Balkans.
For the EU, the Growth Plan presents an image of hope and economic opportunity. But for others, this plan raises more red flags than reassurance. The EU’s silence on democratic erosion, its ongoing tolerance of clientelist regimes, and its failure to resolve deep-rooted governance issues may be entrenching its seemingly never-ending love affair with “stabilitocracies.”
Background: What the Growth Plan Offers (and Omits)
The Growth Plan outlines four key pillars: further integration with the EU Single Market, regional cooperation via a Common Regional Market, public administration reform, and financial support for key projects in energy, digital, and infrastructure sectors. On paper, these are indeed sorely needed reforms and would be markers of progress.
Though the pillars of the plan offer a sound foundation – establishing a common regional market, for example, could boost local economies significantly – other elements are head scratching. For one, it’s light on specifics and on prescribing the methods in which Western Balkan companies or individual workers can navigate the labyrinth of EU bureaucratic policies to take advantage of opportunities within Europe. Indeed, one can conclude that in actual fact, until a lengthy process of harmonization with EU customs standards is carried out, nothing has really changed for the discerning Western Balkan firm seeking to make inroads in the European marketplace.
While adopting EU standards could conceivably help propel lagging Balkan bureaucracies forward and toward greater harmonization with its continental neighbors, Europe’s rigidity in approach does not extend to the reconciling of serious political and civic shortcomings in the region.
And while 6 billion euros is not nothing, the funding for the plan pales in comparison to past Europe-led initiatives in the region. For example, the 2020 Economic and Investment Plan for the Western Balkans offered roughly 30 billion euros in grants and loans. Given that discrepancy, it remains to be seen how motivating the Growth Plan’s financial support will be for states like Serbia, which have been notably resistant to certain reforms. Consider the incentives from the last plan that were available to a state like Serbia in 2021, when the Greek Embassy in Belgrade summarized the reasons why many Greek firms were bypassing the state and the wider Western Balkans region:
“…the gap between the adopted legislation and its practical application; non-transparent public procurement processes for the selection of contractors; unfair competition and uneven treatment between national and foreign investors; very slow judicial processes; vaguely determined legal requirements for imports of commodities subject to different interpretations by the relevant custom officers; and inadequate protection of land use rights.”
These issues persisted despite more financial assistance having been available than what the Growth Plan offers.
Given past assessments like this, perhaps the most frustrating aspect of the plan lies in the imbalance between the concessions Europe demands from these states and the relevant issues it chooses to overlook. While adopting EU standards could conceivably help propel lagging Balkan bureaucracies forward and toward greater harmonization with its continental neighbors, Europe’s rigidity in approach does not extend to the reconciling of serious political and civic shortcomings in the region. There is no demand, for example, for Serbia and Kosovo to resolve one of Europe’s most contentious diplomatic disputes, despite notable incidents exacerbating tensions in recent years.
Additionally, despite the Growth Plan’s requirement that each state develop its Reform Agenda through a collaborative and transparent process, the end result clearly fell short. Despite this, Europe approved the Reform Agendas anyway. In short, the Growth Plan process, from an oversight perspective, has been handicapped from the outset and, as a result, the potential for meaningful reform is diminished.
Europe has thus ensured the continued relevance of the term, “stabilitocracy,” after having first been coined in 2012 and later popularized by academics Florian Bieber and Marko Kmezić. Bieber summarized the concept as being related to “governments that claim to secure stability, pretend to espouse EU integration and rely on informal, clientelist structures, control of the media, and the regular production of crises to undermine democracy and the rule of law.”
Vučić and the EU’s Crisis of Credibility
While some Western Balkan states, such as Montenegro, have finally moved past their longtime “stabilocrats,” Serbia under Vučić remains a potent, and perhaps the most glaring, example in the region. Despite the region also being home to the likes of Republika Srpska leader Milorad Dodik (a nationalist that often undermines Bosnia and Herzegovina’s weak government model), understanding Vučić’s rise to power is crucial for anyone seeking to grasp how Europe came to its current stance toward an evidently illiberal state.
Vučić, who began his career as an agitator in the highly politicized soccer grandstands of late-stage Yugoslavia, was a committed nationalist throughout the violent 1990s. A member of the ultra-nationalist Radical Party under the leadership of paramilitary leader and convicted war criminal Vojislav Šešelj, Vučić was Serbia’s Minister of Information (read: Propaganda Minister) in the late 1990s while Slobodan Milošević led the then Federal Republic of Yugoslavia. As Minister, Vučić banned foreign press and oversaw highly repressive clampdowns of the local media. The 1999 murder of journalist and Milošević critic Slavko Ćuruvija, for example, serves as an example of the dangerous terrain for Serb journalists while Vučić served as Information Minister. Though Vučić was not implicated in Ćuruvija’s murder, those convicted of the crime (again, intelligence officials) were acquitted by an appeals court in 2024, sending shockwaves through journalistic circles and press freedom watchdogs.
Following Milošević’s ouster from office and eventual arrest, Vučić remained close to the nationalist movement while Serbia, under the leadership of Vojislav Koštunica and Zoran Đinđić, attempted to reintegrate the nation into the wider international community after years of pariah status.
Adorned with all the trappings of a mainstream center-right European political party akin to Germany’s Christian Democratic Union or the UK’s Conservative Party, Vučić quickly became a favorite of Angela Merkel and was the subject of well-planted stories in mainstream outlets chronicling his evolution from hardened nationalist to pro-European pragmatist.
Infighting and the eventual assassination of Đinđić by members of the Serbian intelligence services revealed the deep rot permeating the state. Koštunica, after receiving initial support from the west, eventually became persona non grata following the U.S. government’s claims that he had called off police responding to the 2008 firebombing of the U.S. embassy in Belgrade (by protesters angry at the U.S.’s recognition of independent Kosovo). Others, like the Democratic Party’s Boris Tadić or even the Socialist Party’s Ivica Dačić (a close ally of Milošević once often referred to as “Little Slobo”), were feted by the West as potential partners. With organized crime and far-right violence (against the Serbian LGBTQI+ population, for example) still a feature of Serbian life, the West began looking for alternatives.
Aleksandar Vučić is not an idiot. Eventually quoted as saying “only a donkey doesn’t change,” Vučić and his ally, Tomislav Nikolić, abandoned the Radical Party and formed the ostensibly pro-European Serbian Progressive Party. Adorned with all the trappings of a mainstream center-right European political party akin to Germany’s Christian Democratic Union or the UK’s Conservative Party, Vučić quickly became a favorite of Angela Merkel and was the subject of well-planted stories in mainstream outlets chronicling his evolution from hardened nationalist to pro-European pragmatist. Publicly, the Progressives did indeed espouse a pro-European slant. Though Serbia attained official EU candidate status in the final days of Boris Tadić’s presidency in 2012, its accession process has been negotiated entirely by Vučić and his team.
Europe’s bets seemed to be paying off. While Vučić could not go so far as to accept Kosovo’s independence – wide swaths of Serbian society still view Kosovo as a part of Serbia – he seemed to be willing to serve as an arbiter of regional stability during an otherwise turbulent time geopolitically. While the West was grappling with the fallout from the Syrian civil war and the subsequent migration crisis it provoked, the last thing Europe had the tolerance for in that moment was the notion that the dormant Balkans would become hot again. To play ball, Vučić even let Belgrade’s Pride Parade, for example, go off without much disruption. The trappings of a forward-thinking, pro-European state were indeed present.
The reality on the ground, though, was much different. Government corruption scandals were still a regular feature. Most prominently, ties between the Serbian government and organized crime groups, including the same sort of soccer hooligans Vučić once resembled, generated a significant number of headlines, particularly when many of those figures ended up dead. In a throwback, press freedom in Serbia has been severely curbed, with investigative outlets like KRIK frequently the target of government crackdowns. And protests, which have been a regular feature of Vučić’s tenure for years now, have been met with heavy-handed and even brutal repression. A memorable incident includes a private security firm assaulting journalists at Vučić’s 2017 presidential inauguration. The firm had ties to organized crime organizations, demonstrating a blasé approach for an administration that once sought to project a progressive image.
Now, with Vučić facing his strongest domestic headwinds to date, the crackdowns against demonstrators are as vicious as they have ever been. And so begs the question: why is Europe choosing now to do more business with him?
While some have wagered that this is Europe countering both Russian and Chinese encroachment, the fact is that Europe already accounts for 38% of all Serbian foreign direct investment while China, famously through its Belt and Road Initiative, accounts for just 9% (this number is closer to 0% in the other Western Balkan states). As it relates to Russia, a nation many Serbs feel a kinship toward, Vučić’s government has acted strategically in response to the invasion of Ukraine, often voting with the West on UN resolutions but also recently announcing that it would stop third-party arms sales to Ukraine. Vučić will undoubtedly continue to massage his relationship with Moscow because, well, why wouldn’t he? Especially since there haven’t been any repercussions from Europe.
Instead, Vučić has recently met with European leaders like Ursula von der Leyen and Kaja Kallas, and his government is once again being given carte blanche from Brussels even as the Serbian civic space shrinks and becomes ever more hostile to the anti-Vučić opposition.
The Rio Tinto Affair: A Brief Case Study
Perhaps no single project in recent years demonstrates Europe’s willingness to trade its values for greater economic and resource integration than the proposed Rio Tinto lithium/jadarite mine in Loznica, Western Serbia. Jadarite, a mineral comprised of lithium and boron, could help wean Europe off of Chinese lithium as it continues to transition to electric vehicles and other strategic priorities. Unfortunately for Europe, the mine is of concern to environmentalists, and the project has been the subject of protests for years. Sensitive to political pressures, Vučić, revoked Rio Tinto’s license to mine lithium just ahead of the 2022 elections.
Helpfully for proponents of the project, that ruling was deemed unconstitutional by a Serbian court and the project was back in the pipeline. Europe, in trying to appease environmentalists, called for an environmental review, and Vučić himself was quoted as saying the project would not progress if it meant that people’s lives or the environment were at stake.
Europe remained keen.
Europe wanted its mine and Serbia was happy to comply if it meant a continuation of the stabilitocracy doctrine. The mine will likely come online before the end of the decade.
What Investors Should Be Aware Of
To summarize, Europe did not have the courage to offer a truly meaningful Growth Plan for the Western Balkans and quit stabilitocracy. If it had, it might have featured more straightforward pathways toward achieving greater alignment with EU policies on movement, yes. But it also might have signaled that the era of stabilitocracy, where the likes of Aleksandar Vučić have profited from European inertia and an unwillingness to risk any destabilization of the region, is over. Instead, even as Vučić flirts with Putin and crushes dissent at home, Europe has given the concept of stabilitocracy a new lease on life. Even as the Serbian opposition attempts to cobble together a patchwork of actors committed to challenging Vučić’s leadership, Europe is making that an ever more difficult proposition.
For foreign investors, the Western Balkans present opportunities, but those opportunities are undercut by the EU’s unwillingness to impose meaningful, enforceable democratic benchmarks.
Promoting a favorable business climate that provides a higher standard of living for young Serbs could stem the tide, but for now, the Serbian government seems content to oversee an easily manipulated local economy rather than introduce the reforms that would compel greater levels of investment.
Investors instead will contend with politicized legal systems where highly publicized proceedings can be and are interfered with and where the backlog of cases can ensure that decisions vital to business interests are stuck in queues that are sometimes years long. At particular risk are small-and-medium-sized enterprises that often do not have the resources to take on a judiciary mired in informalities and inefficiency. National regulations are often subject to unpredictable shifts or informal political interference. For firms considering long-term contracts, infrastructure investment, or public-private partnerships, these uncertainties present tangible commercial risk.
Corruption remains a constant, particularly in sectors like public procurement, which is often dominated by insiders. A European Commission report scanning public procurement awards in 2023 noted that the value of procurements given favorable treatment through exemptions to Serbian public procurement law nearly matched the value of contracts awarded through standard procedures, a damning statistic for the effectiveness of the regulation. The law on public procurement was adopted in 2020 and marked a sign of progress – however, it instead appears to represent yet another example of Serbia’s hollow democratization effort.
Labor dynamics and infrastructure also pose hurdles. Although youth literacy, English-language skills, and education levels are comparatively high, Serbia is beleaguered by astonishing levels of brain drain, with a majority of young people signaling their desire to emigrate. Promoting a favorable business climate that provides a higher standard of living for young Serbs could stem the tide, but for now, the Serbian government seems content to oversee an easily manipulated local economy rather than introduce the reforms that would compel greater levels of investment.
Logistics infrastructure remains underdeveloped despite funding promises. Sectors like energy, digital, and construction, targeted by Growth Plan funds, are especially vulnerable to patronage networks. According to the European Court of Auditors, weak anti-corruption mechanisms have already undermined prior EU investment programs in the region.
In short: programs similar to the Growth Plan have not sparked the sort of wholesale reforms the EU was aiming for; rather, states like Serbia have instead become a sort of money pit. While this can frustrate auditors and observers, an environment in which the rules can be massaged on request can sometimes play into Europe’s favor.
The Bottom Line
When asked why Europe continuously partnered with Vučić despite his unwillingness to oversee genuine reforms in line with the stated values of the EU, Enlargement Commissioner Marta Kos replied “if not him, then who do we talk to?” Investors and interested parties should probably read this as “he’s the best we can hope for, and we’d prefer to keep him around.”
In summation, the broader investment environment may offer growth potential, but it is not yet conducive to predictable or clean business. EU funding may help things churn, but without a meaningful push for democratic accountability and institutional reform, the long-term risk profile remains high, particularly for SMEs. Investors should consider their activities in Serbia with no illusions. The appearance of stability is built on a house of cards propped up by an uncreative Europe. For now, the Growth Plan may function more as political cover than as a reliable framework for durable, lasting reforms and development. Plan for stabilitocracy.
Dr. Keith Sonia graduated from UMass-Boston with a BA in Political Science, King's College London with an MA in International Relations, and holds a PhD in International Relations from Goldsmiths, University of London. Dr. Sonia has worked either in government or on campaigns on behalf of three Members of Congress, two Governors, and an array of state and local officials, including as a Foreign Affairs Fellow for a senior Member of the U.S. House Foreign Affairs Committee. Dr. Sonia has also worked on behalf of consulting firms based in London, U.K., Washington, D.C. and Tokyo, Japan, offering a diverse roster of private sector clients an overview of geopolitical trends.
The views and opinions expressed in this article are those of the author and do not reflect the official policy or position of any other organization or entity.
MonarchGSA is a strategic advisory firm built for startups, small and medium-sized enterprises (SMEs), and investors navigating global complexity. We combine elite expertise with practical insight to help you scale confidently and navigate volatile and high-risk environments.