Brussels, Are You Financing the Problem You Say You Are Trying to Solve?

2h më parë

Serbia, European Funds and the Failure of Conditionality: When Billions for Reform Are Failing to Produce the Democratization Promised by the Enlargement Policy

By Isuf B. Bajrami

The European Union has invested money and political capital for years in the transformation of Serbia. The logic has been familiar: financing reforms, strengthening institutions, the rule of law, democratization and economic convergence would push the country towards European Union standards and, ultimately, towards membership. The Instrument for Pre-accession Assistance, IPA, was created precisely for this purpose: to finance and support reforms in countries that are in the accession process.[1]

Serbia has benefited from this policy on a scale that cannot be considered symbolic. According to the European Commission, IPA III financing decisions for the 2021–2024 period amount to approximately €875 million. IPARD III adds €288 million in European support for rural development. Meanwhile, under the Reform and Growth Facility, Serbia has an indicative allocation of €1.586 billion, linked to the implementation of the reform agenda.[2] These categories are not all the same and do not automatically represent disbursed funds; but together they demonstrate the scale of the financial relationship that the European Union has built with Belgrade.

The problem begins precisely here.

These are not merely funds for economic development. A significant part of them is directly linked to institutional reform, the rule of law, public administration, fundamental rights and alignment with European standards. In the IPA III package for 2021–2024 alone, the Commission identifies €30 million for strengthening the independence, efficiency and competence of the judiciary and €43.5 million for public administration and public financial management.[3] In other words, the objective has not simply been to make Serbia wealthier; it has been to make it more European in the way its state functions.

After years of funding, the political balance sheet can no longer be measured by the number of completed projects. It must be measured by the state of democracy and institutions.

And it is precisely here that the European Union's own reports provide a troubling picture.

The European Commission's 2025 Serbia Report continues to identify serious problems concerning the rule of law, fundamental rights and freedom of expression, while calling for the reversal of negative trends in these areas.[4] The European Parliament has been even more direct, pointing to the deterioration of the democratic climate, pressure on independent media, the opposition and civil society, and limited progress in several key areas of the European process.[5]

This constitutes a contradiction that Brussels cannot overcome merely by repeating that "reforms must continue."

If European funding is an instrument for the democratization of Serbia, then after so many years there must also be accountability for the results of that investment.

Responsibility for Serbia's political condition rests first and foremost with the Serbian authorities. But this does not exclude the responsibility of the European Union for the policy it pursues. The EU is Serbia's largest provider of financial assistance and its main economic partner.[6] This gives Brussels not only influence, but also an extraordinary instrument of conditionality.

The question is whether this instrument is being used with the strength that European policy itself requires.

The EU does not claim that funds are provided without conditions. On the contrary, the Reform and Growth Facility has been built precisely on conditionality. Funds are linked to the fulfilment of specified reforms and, for Serbia and Kosovo, to constructive engagement in the normalization of relations and implementation of the obligations arising from the dialogue.[7] The Commission has even published its assessment of the conditions that led to the first release of funds to Serbia in January 2026.[8]

But financial conditionality cannot be merely a procedure.

A condition that produces no real cost when violated gradually loses its political meaning.

Here lies one of the greatest weaknesses of Brussels' approach towards Belgrade. European reports identify the problems, European institutions demand reforms, the European Parliament adopts critical resolutions, yet the financial relationship with Serbia remains substantial and strategic.

This sends Belgrade a double message: European integration requires reforms, but failure to implement them does not appear to alter the financial relationship with the Union proportionately.

It is not difficult to understand which message is more powerful for a government calculating the political cost of its decisions.

The European Parliament has recognized this problem. In its report on Serbia, it calls on the European Union to reconsider the scale of financial assistance to Serbia if support for anti-democratic ideologies and non-alignment with EU restrictive measures and the Common Foreign and Security Policy continue.[9]

This position is politically significant because it acknowledges something that is often lost in the technical language of enlargement: European money and the political conduct of a candidate country cannot be treated as two separate worlds.

If political conduct is sufficiently problematic for the European Parliament to call for a review of financial assistance, then financial assistance must be genuinely sensitive to that conduct. Otherwise, the warning remains declarative.

Serbia presents a particularly difficult case also because of its relations with Russia. The Commission and the European Parliament have repeatedly documented that Serbia has not aligned itself with EU sanctions against Russia. At the same time, Belgrade continues to maintain close political and military relations with Moscow.[10]

This is not an ordinary disagreement between a candidate country and the European Union. Following Russia's invasion of Ukraine, policy towards Russia has become one of the central lines of European security. For a state aspiring to EU membership, refusing to align itself with one of the Union's most important common policies cannot be treated as a peripheral difference.

Yet Serbia continues to benefit from European financing and integration instruments.

Here another problem of conditionality emerges: the EU is asking Serbia to move closer to Europe while allowing Belgrade considerable political space not to align itself with Europe on a strategic issue.

The European Parliament has also called for transparency regarding the Russian-Serbian Humanitarian Centre in Niš and has called for an end to military cooperation with Russia.[11] There is no reason to label this structure a "Russian base" without such evidence. The existing documentation is sufficient for a more serious criticism: a structure created within the framework of Russian-Serbian cooperation continues to be a matter of concern for an EU institution, while transparency regarding its activities is publicly demanded.

This should be part of the conditionality policy, not merely part of the list of concerns contained in annual reports.

The Serbian arms industry makes the Belgrade–Brussels relationship even more complex. The European Parliament has taken into consideration the fact that Serbia has exported ammunition that has reached Ukraine through other countries, while at the same time Serbia has not aligned itself with EU sanctions against Russia.[12] This demonstrates that Serbia pursues a highly pragmatic policy, simultaneously maintaining channels with Moscow and economic and political relations with the West.

The problem for Brussels is that this Serbian pragmatic policy appears to have more flexibility than European policy towards Serbia.

In the relationship with Kosovo, the issue becomes even more sensitive.

The EU has invested enormous political capital in the Kosovo–Serbia dialogue. The dialogue agreements contain concrete obligations, and the new European financial mechanism itself links support to constructive engagement in normalization.[13] The European External Action Service has also confirmed that financial support from Serbia for Serbia-supported institutions in Kosovo has been addressed in the dialogue.[14]

This does not make every form of financial support from Serbia to Serbs in Kosovo illegal. The issue is different: what political and institutional status does the EU give this support, and how consistent is European conditionality when such support is connected to structures operating outside Kosovo's institutional framework?

This question becomes particularly important when the agreements of the dialogue itself provide for consequences for failure to implement obligations, including links to integration processes and financial assistance.[15]

If this principle is serious, it must be applied seriously.

If it is not applied equally and predictably, then the policy of conditionality loses part of its legitimacy.

This is also where the problem of perception in Kosovo lies: the European Union demands implementation of agreements, but the way it distributes political and financial costs and benefits between the parties is often perceived as asymmetric. A foreign policy that seeks to build trust in the region cannot ignore this perception.

The EU cannot demand the same standard from Kosovo and Serbia and then create the impression that the consequences for failing to respect that standard depend on the political weight of the party involved.

Equality of standards is part of the European standard itself.

The greatest problem with this policy is not the existence of funds. European funds for Serbia are necessary if the objective is its transformation. The problem is that financing has become far more visible than conditionality.

The EU has created sophisticated mechanisms for financing reforms, but the political impact of these mechanisms remains questionable if a government can continue to receive substantial benefits while European institutions themselves document recurring problems in democracy, media, the rule of law and foreign policy.

A completed project is not necessarily a successful reform. A funded institution is not necessarily an independent institution. A system equipped with new technology is not necessarily a more democratic system. And millions of euros contracted are not evidence that the political objective has been achieved.

This is what enlargement policy should have as its principal measure: the result, not merely the expenditure.

If, after years of European assistance, a country continues to have fundamental problems with democracy, the rule of law and media freedom, then it is insufficient to respond with another assistance programme and another list of recommendations.

The way financial power is used must change.

If judicial reform fails, funding for judicial reform must be linked to more measurable results. If the administration remains politicized, assistance to the administration cannot automatically be considered a success. If democratic standards deteriorate, financial policy must reflect that deterioration. If a candidate does not align itself with EU foreign policy on strategic issues, this must carry real weight in its relationship with the Union.

Otherwise, the EU risks creating a dangerous paradox: financing the institutional capacity of a state without having sufficient influence over how that state uses that capacity.

This is not only a matter concerning Serbia.

It is a matter concerning the credibility of the European enlargement policy itself.

Because if citizens of candidate countries are told that membership requires democracy, the rule of law, fundamental rights, alignment with foreign policy and respect for agreements, then these requirements must be more than chapters in annual reports. They must have measurable consequences for political and financial relations.

This is precisely where the EU must be harder on itself.

It is not enough for Brussels to identify the problem in its reports. It is not enough for the European Parliament to call for a review of assistance. It is not enough for the Commission to publish conditionality mechanisms.

Conditionality must work.

Otherwise, European funds lose part of their transformative power and become a financing policy that coexists with the failure of reforms.

This is why the issue cannot be reduced to the question of whether Serbia deserves EU money or not.

The issue is more direct: is the European Union using its financial power to produce the political change that it itself demands from Serbia?

If the answer is yes, the results should be visible in democracy, institutions, the rule of law, the media and foreign policy.

If the answer is no, then Brussels cannot continue to treat the problem solely as a failure of Belgrade.

Because Serbia is responsible for its own policy.

But the European Union is responsible for the policy it chooses towards Serbia.

And when a financial policy designed for democratization coexists for years with documented problems of democratization, responsibility does not end with the recipient of the funds.

It also reaches the financier.

Brussels cannot indefinitely demand the same result while using the same instrument and expecting that, one day, the result will be different.