THE PERIPHERY OF THE PERIPHERY: THE WESTERN BALKANS AND THE EURO CRISIS Dimitar Bechev POLICY BRIEF SUMMARY Despite the euro crisis, the European Union continues to expand into the Western Balkans: in July 2013, Croatia will become its 28th member. But beneath the surface, the EU’s relationship with the countries on its doorstep is changing as a result of the crisis and the way it is transforming the EU. Integration is a double-edged sword for the Western Balkans: in good times, the European core exported its prosperity towards its south-eastern periphery; but now, at a time of crisis, it is exporting instability. European policymakers and analysts still casually speak of the EU as the cure for Balkan pathologies – as if the crisis has never happened. But the truth is that a disintegrating EU could also be a curse for them. The EU is now faced with what Timothy Garton Ash calls a “damned if you do, damned if you don’t” situation: if the eurozone sorts out its problems, the price might well be introversion and no appetite for enlargement; if it doesn’t, the Balkans will be left out in the cold with little external support for their modernisation and democratic consolidation. 1 Either way, the crisis is relegating the region to the outermost circle in a multi-speed Europe – the periphery of the periphery. A Greek exit from the eurozone would send shockwaves through the Western Balkans, with whom it has developed extensive trade, investment and human links over the past two decades – exactly as Brussels hoped it would. SUMMARY The euro crisis has not killed enlargement but it is relegating the region to the outermost circle in a multi-speed Europe – the periphery of the periphery. With Balkan economies beset by low or negative growth rates and rising unemployment, it has exposed the limits of the EU’s growth model and undermined the narrative of convergence between the EU and the Western Balkans. Greece, once one of the region’s models, is now a warning about the perils of Europeanisation without deeper transformation. EU membership is still popular in the Western Balkans, but more often than not elites talk Europe’s talk but do not walk the walk. The euro crisis further reinforces the temptation that already existed in the EU to pursue a “wait- and-see” approach to the Western Balkans. But the apparent stability of the status quo could prove deceptive. While the violent conflicts of the 1990s are unlikely to re-emerge, stagnation within the region erodes the EU’s inluence and encourages competitors. To make enlargement work and reclaim its soft power, the EU must shift its focus from a narrative based on security to one based on the economy. The EU needs to deploy strategically its scarce resources, together with other international actors such as the IMF, to avert an economic meltdown and assist growth. 1 Remark made at the 10th anniversary conference of South East European Studies at Oxford (SEESOX), St Antony’s College, Oxford, 28 May 2012.