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Balkan countries strive towards common market, but finance integration far off

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Balkan countries strive towards common market, but finance integration far off

Six Balkan countries are working to create a common market for goods and services, according to statements by their prime ministers in a London press conference Feb. 26, but integration of the finance sectors remains distant.

Serbia, Montenegro, Kosovo, Macedonia, Bosnia and Herzegovina and Albania are already trading with each other on a tariff-free basis, but diverging regulations and cumbersome border checks make commercial flows difficult, the politicians acknowledged, promising to continue negotiations to reduce customs bureaucracy, including in the financial sector.

Macedonia’s Prime Minister, Zoran Zaev, said the Balkans were entering a "honeymoon period" of growth and stability. "We have big trust in each other and in having a common future."

"We will start this spring to have one-stop shops at borders at the initiative of all the prime ministers in the region to make it easier to do transportation," Zaev said.

The single Balkanic market is the priority of all six governments, with the aim of reaching "full integration" in all areas of the economy, added Bosnian Prime Minister Denis Zvizdic.

All of the countries except for Albania were formed following the bloody breakup of communist Yugoslavia in 1992, and they remain among the poorest in Europe. Croatia, a western Balkan state which did not participate in the Feb. 26 summit, joined the EU in 2013.

A common market would make the region more attractive for investment by big companies, Edi Rama, Albania’s Prime Minister, said.

Meanwhile, discussions over the harmonization of bank regulation, investment norms and accounting standards remain vague.

"Financial markets integration is the single biggest challenge to the common market in our region," Marko Cadež, president of the Serbian Chamber of Commerce, told S&P Global Market Intelligence on the margins of the conference. "The governments are all working on it with input from the private sector banks but there will probably not be any decision soon."

"The talks are still at an early stage – our data shows that in accounting alone the rules are very different."

Regulation harmonization in the Western Balkans should also seek convergence with EU law, prime minister Duško Markovic of Montenegro, told the audience. His country is already in negotiations to join the bloc, and all the others have said they would apply to join the EU in the future.

The six countries, together with Croatia and Bulgaria, created a joint equity trading platform in 2016 known as SEE Link.