Serbia has a crucial role to play in the Western Balkans, both for ensuring stability and as a motor for the economic development and prosperity of the region. The biggest country in the region, Serbia, could make rapid progress towards EU membership. However process of European Integration of Serbia has been burdened with many political barriers which have made the overall process complex and prolonged. Stabilization and Association Process (SAP) of the Republic of Serbia began formally in 2001 establishing Joint Consultative Task Force as a mechanism for cooperation between Serbia and EU. The EU Feasibility Report of April 2005 confirmed that Serbia and Montenegro was ready to begin negotiations for a SAA (Stabilization and Association Agreement), with official SAA negotiations beginning in October 2005. Following the referendum on independence on May 23st, 2006, Montenegro declared its independence on 3 June 2006. Subsequently, Serbia has confirmed itself as the successor state of Serbia and Montenegro, in line with the Belgrade Agreement of 2002. As a successor state Serbia could has continued negotiations with EU however these were called off in response to Belgrade’s failure to locate the remaining International Criminal Tribunal for the former Yugoslavia (ICTY) indictees in May 2006.
During the suspension of the negotiations, the EU made efforts to ensure that the process of European integration in Serbia does not lose momentum. Therefore while the negotiations on SAA were called off the negotiations on visas were opened and after a year in September 2007 Serbia signed the agreements on visa facilitation and readmission between Serbia and the EU, which came into force on 1 January 2008. In February 2007, following parliamentary elections in Serbia, the EU agreed to restart negotiations once a new government was formed and in mid-2007 talks resumed. Negotiations were finalized in September 2007, with an SAA initialed in November 2007. Signature of it, however, remained conditioned on establishing full cooperation with the ICTY. The start of 2008 foresaw a period of political instability for Serbia, which continued to hinder process of European Integration of Serbia. Relations with the EU and USA have deteriorated at an all-time low level over their recognition of Kosovo’s unilateral declaration of independence. Prior to the unilateral declaration of independence of Kosovo relations between Serbia and the EU were progressing at a good pace though under pressure of joint issues of resolving Kosovo final status and cooperation with ICTY. However unilateral declaration of independence of Kosovo has created a strained situation in relations between Serbia and EU as well as perception among some Serbian politicians that the European perspective of Serbia conflicts with theirs national interest. Additionally, the governing coalition appeared to be weak and the government fell in March 2008, split over whether to pursue a nationalist or pro-European path. Nevertheless, push for further integration from both Brussels and Belgrade continued regardless of the seemingly difficult political environment which surrounded the issue of relations between Serbia and EU. Several EU states were favorable to signing a Stabilization and Association Agreement – in order to boost the country’s pro-European forces ahead of the parliamentary elections, which has been seen as crucial for the country’s future. As a result of these efforts on April 29th, 2008 EU signed a SAA with Serbia, which has been seen as a key step towards future full membership. However signing of the SAA deeply divided Serbia’s own political elite, considering it would mean abandoning Kosovo and recognizing its independence thus if nationalist forces won parliamentary elections European Integration of Serbia could come to a halt.
Nevertheless slow progress towards EU membership as well as inherent lack of political consensus over major priorities of the country accompanied with the frequent internal political instability created a climate of status quo in the European Integration process of Serbia. Additionally aforementioned factors caused the protracted transition of the Serbian economy which continuation depends upon the political success of the pro- European forces in the country. Furthermore the latest political developments created environment conducive to economic populism and significantly aggravated the economic situation in the country over the last period. What is more important if continues, uncertainty and country risk will lead to a further fall in foreign direct investment thus declining economic growth.
This paper gives an overview of overall political context of the European Integration process in Serbia and goes on to examine the key political barriers and challenges to further integration of Serbia into EU. Beside political context of the European integration of Serbia recent development in the Serbian economy as well as evaluation of the structural reforms has been analyzed extensively. The final section on prospects of future economic development encompasses possible scenarios depending on the political circumstances in Serbia.
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