European Union leaders are scheduled in the coming weeks to once again discuss the progress of long-stalled requests from Balkan states to join the bloc. But recent studies exploring the scale of money laundering in the region are unlikely to appease France and the Netherlands, which, among other member states, want to delay EU enlargement, according to officials.
Albania, Serbia, North Macedonia and Montenegro are all EU candidates and have expressed frustration over their blocked applications. But opponents of EU enlargement are already grabbing a study suggesting the Western Balkans real estate market is being used to launder the proceeds of drug trafficking and migrant smuggling, causing prices to skyrocket. of real estate in the region.
The Global Initiative Against Transnational Organized Crime, an international non-governmental organization headquartered in Geneva, says illegal money is pouring into real estate markets and construction industries in the Western Balkans. “The dirty money produced and laundered in the region perpetuates an ecosystem of crime and corruption,” said Kristina Amerhauser, one of the authors of a report released by the NGO last month.
The authors say in their report, “Cash prices: analysis of the flows of people, drugs and money in the Western Balkans”, “it is not possible” to concretely quantify the amount of illicit money generated in the Western Balkans and abroad is effectively whitewashed. in the region ”, but they estimate the range to be between $ 2.2 billion and $ 5.6 billion.
While this may sound insignificant compared to some much richer regions, they note that “these numbers are remarkable, especially when put into perspective.” They add: “For example, in 2021, the budgets of the interior ministries of North Macedonia and Albania each amount to 168 million euros. [$200 million] ; the Kosovo police have only 87 million euros [$106 million] available to him. ”
Large amounts of criminal money are funneled into the region’s real estate markets, distorting them “because the prices are being artificially increased by criminals who want to launder their assets there”. While house prices fell across the region in 2020 due to the pandemic, many places have still registered significant gains since 2017. Albanian economy contracted last year. an average of 10.2%, but the real estate market continued to grow 5.5 percent.
And the pandemic and economic crisis had little impact on the residential real estate market in the Albanian capital of Tirana, which saw prices double from 2017 to 2020. The rise is “largely driven by crime cash. organized and corruption that has been invested in construction and corruption. immovable.”
The real estate sector in Serbia also experienced unusually high and inexplicable growth between 2018 and 2020, where the construction sector continued to expand despite last year’s pandemic and the contraction of the economy as a whole.
Several money laundering investigations involving real estate and large infrastructure projects have been launched in North Macedonia, including an investigation into Nikola Gruevski, the country’s former prime minister, and his business associates.
Large public infrastructure projects have also caught the attention of anti-corruption activists. “Meeting European standards has proven to be a particular challenge for the countries of the Western Balkans when it comes to large projects in areas such as infrastructure and energy in recent years,” according to Marko Pankovski of the Institute for Democracy “Societas Civilis”, a Macedonian Think Tank.
Writing in a commentary for the Western European Balkans, a news site, he added: “Despite all the efforts of civil society, the ruling parties appear adamant not to allow contracts relating to these projects to become fully transparent and subject to the control of independent institutions. . The main reason for non-compliance with standards is not hard to guess – ruling parties can cause money to end up in the pockets of their associates, which often leads to inflated prices. ”
France has been one of the main opponents of the accession of the Western Balkan states to the EU. French officials say the EU has suffered bad experiences with enlargement to central and eastern European countries as well as continued problems with corruption and the rule of law in countries like Romania and Bulgaria. They say this is the result of allowing what some officials describe as “unprepared” countries to join the EU and they fear the Western Balkan countries will turn into states captured by corrupt politicians, linked to the EU. organized crime.
Supporters of EU enlargement counter that being member states will help the Balkan countries in their anti-corruption efforts.
In 2019, after French President Emmanuel Macron had vetoed it, an exasperated Charles Michel, President of the European Council, tweeted: “I would like to send a message to our Macedonian and Albanian friends: don’t give up! You have done your part and we have not. But I have absolutely no doubt that you will become full members of the European Union. The President of the European Commission at the time, Jean-Claude Juncker, declared that the blocking of the accession negotiations was “a major historical error”.
Last week, Slovenian Prime Minister Janez Janša, whose country takes over the EU Council Presidency on July 1 for the next six months, said he would push for member states to agree to an aggressive enlargement of the EU. ‘European Union. He told a press conference that saying that the candidate Balkan countries would help resolve several issues plaguing the bloc, including with migration and with “malicious interference” from outside powers, which means Russia , Turkey and China.
But he said it would be difficult to achieve unanimity among EU heads of state and government. “Obviously we cannot do this overnight, we cannot do it without everyone’s consensus,” he said.
In March 2020, the EU gave the green light to Albania and North Macedonia to start the accession process, but in November Bulgaria blocked further formal steps due to bilateral disputes with Macedonia of the North on language and history. Serbia and Montenegro have already started accession talks, but they have also been slow.
North Macedonian Prime Minister Zoran Zaev has warned that the EU will lose ground to rival powers if the bloc fails to admit the countries of the Western Balkans soon.