Brussels – The European Council’s approval to begin accession negotiations is not enough on its own. Bosnia and Herzegovina remains mired in institutional chaos, which now threatens – as has long been feared – the EU funds allocated under the new Growth Plan for the Western Balkans.
“Bosnia and Herzegovina has not submitted a final Reform Agenda to the European Commission yet. It is therefore highly likely that Bosnia and Herzegovina will not receive already after summer the first unconditional instalment of pre-financing worth 7%,” the EU delegation in Sarajevo stated in a post on X. “This is a missed opportunity for substantial early funding.”
This risk became apparent last autumn when the President of the European Commission Ursula von der Leyen made it clear during her annual visit to the Western Balkans that failure to implement key reforms would result in the redistribution of resources to countries capable of meeting those standards. With the Growth Plan swiftly approved by the EU co-legislators earlier this year, the European Commission confirmed two months ago that without meeting the necessary reforms, funds may be cut. “The first instalment of the Growth Plan can only be disbursed once the Reform Agenda has been submitted to and formally agreed upon by the European Commission and Bosnia and Herzegovina,” the EU delegation in Sarajevo reiterated on 25 July, urging for work to proceed “without further delay to avoid missing this opportunity entirely.”
Bosnia and Herzegovina’s share of funding from the Growth Plan is estimated at one billion euros. As of now, the country stands to miss out on the first pre-financing instalment of approximately 70 million euros.
The deadlock is the result of institutional chaos, particularly over the draft submitted by the Ad Hoc Working Group, despite the European Commission extending the deadline for reaching a last-minute agreement. Initially, Milorad Dodik, President of Republika Srpska, refused to accept two points (out of 112 on the agenda) regarding the appointment of judges to the Central Constitutional Court and the recognition of the Court’s decisions. Subsequently, representatives from four cantons of the Federation of Bosnia and Herzegovina (Central Bosnia, Tuzla, Zenica-Doboj, and Una-Sana) rejected the document, accusing it of prioritising the institutions of the two entities over state institutions and favouring projects in Republika Srpska and Bosnian-Croat majority cantons over those in Bosnian-majority ones.
“Despite all the efforts and support from the European institutions, not everyone has shown a minimum level of political responsibility to steer our activities toward a common European path,” said Borjana Krišto, Bosnia and Herzegovina’s Council of Ministers President, announcing the failure of negotiations on the Reform Agenda on 24 July. In addition to the EU delegation reiterating its readiness to continue supporting Bosnian authorities “if necessary,” the US Embassy in Sarajevo also issued a strong statement in defence of the Western Balkans Growth Plan, calling it “an unprecedented offer by the EU to the citizens of Bosnia and Herzegovina.”
What is the Western Balkans Growth Plan?
The Growth Plan for the Western Balkans was presented by President von der Leyen on November 8, 2023. “This is something exceptional. We know that prosperity comes with access to the Single Market, and we are already initiating this process. We are not waiting for the final decision on political accession,” the EU Commission President asserted, outlining the four pillars of the plan to “close the economic and social gap” between the EU and the Balkans, enabling “integration on the ground even before formal membership.”
The first pillar involves economic integration within the Single Market across seven key areas, aligned with EU rules and opening relevant sectors to neighbouring countries: free movement of goods, services, and workers; access to the Single Euro Payments Area (SEPA); facilitation of road transport; integration and decarbonisation of energy markets; the digital single market; and integration into industrial supply chains.
The second pillar focuses on internal economic integration through the Common Regional Market, based on EU rules and standards. Brussels estimates this could boost the economies of the six Western Balkans countries by up to 10 percent.
The third pillar addresses socio-economic and fundamental reforms to be implemented between 2024 and 2027, which will support both the EU accession process and foreign investment, while strengthening regional stability.
The fourth pillar involves EU financial assistance for reforms across all six partners, with the creation of a new €6 billion Reform and Growth Facility for 2024-2027. Disbursement is contingent on the implementation of reforms outlined in the respective agendas, similar to the Next Generation EU programme for the 27 member states. Following the EU’s interim review of the Multiannual Financial Framework 2021-2027, the green light was given for this instrument, consisting of €2 billion in grants (which will be incorporated into the EU budget with no changes to the Commission’s proposal) and €4 billion in soft loans. Allocations for each country will be based on GDP and population. Half of the Growth Plan’s support, which will be assessed twice yearly, is provided through the Western Balkans Investment Framework (WBIF), with the other half disbursed through loans directly to national budgets.
The Republika Srpska issue
Milorad Dodik has been one of the main obstacles to Bosnia and Herzegovina’s progress towards EU membership and access to the Growth Plan funds. Since October 2021, he has been championing a secessionist agenda, seeking to remove central state control in crucial areas such as the military, tax system, and judiciary, more than 20 years after the end of the country’s ethnic war. The European Parliament has called for economic sanctions in response to these moves.
Concerns intensified in late March 2023 when the Bosnian Serb government proposed a draft law establishing a registry of foreign-funded organisations and foundations. The so-called ‘foreign agents’ law mirrors one enacted in Moscow in December 2022 and was approved by the Banja Luka National Assembly in late September, drawing sharp criticism from Brussels. Simultaneously, amendments to the Criminal Code were proposed to reintroduce penalties for defamation, which came into effect on 18 August. These laws, which impose fines for defamation committed through the media, have raised serious concerns about freedom of speech in Republika Srpska.
The secessionist provocations were further compounded by Dodik’s ties with Russia following its invasion of Ukraine. On 20 September 2022, he visited Moscow for talks with President Putin, provoking Western partners by endorsing the illegal annexation of Russian-occupied regions in Ukraine. These provocations continued in January 2023, when Dodik awarded Putin the Order of Republika Srpska, the highest honour of the Serb-majority entity in Bosnia, during Republika Srpska’s National Day celebrations – a holiday deemed unconstitutional under Bosnian law. Dodik’s second trip to Moscow, on 23 May, led to concerns in Brussels about the EU’s failure to impose sanctions. Although EU sources revealed a framework of restrictive measures had been prepared for some time, Hungary, under Viktor Orbán, blocked their implementation, as foreign policy decisions require unanimity within the Council.
