Title

Foreign Meddling in the Western Balkans

Tuesday, January 30, 2018
10:00am
Russell Senate Office Building, Room 385
Washington, DC
United States
Guarding against Economic Vulnerabilities
Official Transcript: 
Unofficial Transcript: 
Moderator(s): 
Name: 
Robert Hand
Title Text: 
Senior Policy Advisor
Body: 
Commission on Security and Cooperation in Europe
Witnesses: 
Name: 
Ruslan Stefanov
Title: 
Director
Body: 
Bulgarian Center for Study of Democracy
Name: 
Milica Kovačević
Title: 
President
Body: 
Montenegrin Center for Democratic Transition
Name: 
Nemanja Todorović Štiplija
Title: 
Founder and Editor in Chief
Body: 
“European Western Balkans” media outlet
Name: 
Dimitar Bechev
Title: 
Research Fellow, Center for Slavic, Eurasian, and East European Studies
Body: 
University of North Carolina – Chapel Hill
Name: 
Andrew Wilson
Title: 
Managing Director
Body: 
Center for International Private Enterprise

Malign outside influence in the Western Balkans, in particular by Russia, is of increasing concern. The lack of a strong legal framework makes countries in the region especially vulnerable to foreign capital that can be used to sow instability, undermine integration, and delay democratic development.

In the past decade, Russia has exponentially increased its economic investment in Balkan countries.  Without adequate governance and transparency, so-called “corrosive capital” will wield its financial power to distort policy making, lessen the European focus of the countries concerned, and potentially cause instability in the region.

The Center for International Private Enterprise (CIPE) has worked with local private and civil society partners to analyze the economic governance gaps that allow “corrosive capital” to gain a foothold in Bosnia and Herzegovina, Macedonia, Montenegro, and Serbia.

According to panelists, Russia’s economic footprint is most obvious in key strategic sectors, including real estate, banking, energy, and mining.  Russian foreign direct investment stock is close to 30 percent of Montenegro’s GDP and it exerts both direct and indirect control of approximately 10 percent of the economy of Serbia. The dependency of Balkan countries on Russian imports and financial loans is also a prevalent form of indirect power.

As a result, when Montenegro joined NATO in 2017, the Russian Foreign Minister announced that Montenegro had sacrificed its economic relations with Russia. Russia further sanctioned Montenegro by discouraging travel to the country by Russian tourists, characterizing it as a dangerous place.  Although the anti-NATO campaign has not succeeded, it did indicate Russian intentions as well as local vulnerability to outside influence. 

The economic presence of outside actors other than Russia was also discussed.  In general, the panelists emphasized the need to diversify foreign direct investment and reduce reliance on capital from non-democratic countries. Transparency in foreign investment and a depoliticization of corporate governance is also necessary. A free, independent and diverse media also will help ensure greater accountability in both the political and economic sectors.

Helsinki Commission activity regarding the Western Balkans reflects ongoing concern for the countries of the region. With several Balkan states on the cusp of NATO and EU membership, it is particularly important for these countries to strive for greater democratic development and economic prosperity.

The United States has played a significant role in the region, providing political, economic and military support.  If not seen through to completion of NATO or EU membership as desired, these states face the continued risk of backsliding.

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