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Countries in the Western Balkans, Europe’s impoverished historic flashpoint, see prospects of joining the EU slip away

The European Union has spent years and billions of euros preparing Balkan countries to join the bloc, an effort the U.S. has supported in the hopes that it would spread stability in a region long racked by political volatility and sporadic violence.

But with EU leaders meeting counterparts from those aspirants Wednesday, the reality is that membership is slipping further into the future, not getting closer.

Biden administration officials and many in Europe worry that the stalling of the EU’s expansion into the Western Balkans opens the region to rivals and adversaries including Russia and China, all of which have historic or economic interests there.

Mr. Biden, in a call on Monday with European Commissioner President Ursula von der Leyen, “conveyed strong support for continuing the accession process with countries in this region,” a White House statement said.

Yet abstract threats from a region that was Europe’s last war zone aren’t swaying public opinion in big Western European countries, which have turned increasingly hostile to enlargement. Historic friction between EU members and some of the aspirants, combined with growing tensions in the region, have also drained political energy from enlargement, sparking growing local frustration.

“EU enlargement is effectively dead in the Western Balkans, or at least in suspended animation,” said Petrit Selimi, a former foreign minister of Kosovo. “Politicians in countries in Northern and Western Europe are currently paying lip-service to enlargement but not walking the walk.”

The EU’s cold shoulder is particularly harsh to North Atlantic Treaty Organization members Albania and North Macedonia, the start of whose membership talks have been repeatedly delayed despite Brussels saying they are technically ready.

The EU is engaged in enlargement talks with Serbia and Montenegro, but they are barely progressing. Promised talks with North Macedonia and Albania have been blocked, first by France and then by Bulgaria. Kosovo and Bosnia are nowhere near starting membership talks. EU accession negotiations with Turkey are shelved.

With near-term membership prospects fading, European officials are increasingly worried that Serbia is growing more authoritarian under President Aleksander Vucic. Violence has again flared between longstanding foes, Kosovo and Serbia, while China has used its Belt and Road initiative and the Covid-19 crisis to expand its influence.

After the EU added 10 countries in 2004, Romania and Bulgaria won membership in 2007 and Croatia, in 2013. The political consensus behind enlargement has ebbed since.

France has long argued that expanding the bloc renders decision-making impossible. Culture wars and political clashes between newer Eastern European members and traditional Western European ones have further dented support.

Britain’s exit raised the prospect of the club’s unraveling and removed one of the bloc’s strongest enlargement champions.

Vessela Tscherneva, deputy director of the European Council on Foreign Relations in Sofia, Bulgaria, said the EU is stuck between a group of Central and Eastern European countries genuinely pushing for enlargement and others who are deeply skeptical but don’t want to kill it off.

The process is stalled “because of this underlying doubt about whether European societies are able to absorb more members,” she said. Some West European politicians know enlargement is a losing issue in elections, she said.

European officials involved in negotiations acknowledge talks with Montenegro and Serbia are advancing very slowly. Brussels had hoped that one of the countries could join by 2025, a date that now looks implausible.

North Macedonia’s pro-EU government in 2018 pushed through a historic agreement with Greece to change its name—Athens had long objected to the name Macedonia because of its links with the Greek region.

Yet France wouldn’t allow the start of accession talks until the bloc’s process was recrafted. Then, Bulgaria’s government, facing political turbulence at home, blocked negotiations, citing disputes over Macedonia’s history, language and identity. Brussels officials hope Sofia will finally give a green light after November’s parliamentary and presidential elections.

European officials insist the bloc hasn’t accepted a new status quo where increased financial support, investment and emergency support—the bloc will have shipped close to six million vaccines to the region by year end—will replace the membership push. Yet when Slovenian officials tabled proposals that Wednesday’s summit statement set a 2030 target date for western Balkans countries to join, the move was immediately quashed, diplomats said.

Gerald Knaus, chairman of the European Stability Initiative, a regional think tank, said the enlargement process is no longer credible and has therefore lost its power to transform candidate countries. He said the EU should return to the 1990s model of offering membership of the bloc’s single market in exchange for realistic reforms as a staging post to full membership.

The accession process is “not working to achieve any of the objectives—including stabilization of the region,” Mr. Knaus said.

In one sign of that, last month saw some of the worst clashes in years between ethnic Serbians and Kosovars in northern Kosovo. The normalization of ties between Belgrade, which doesn’t recognize Kosovo’s 2008 independence, and Pristina is a precondition for both countries’ EU entry.

“This is our backyard,” Latvian Prime Minister Krišjānis Kariņš said on his arrival at Wednesday’s summit. “The western Balkans is a very clear case that either Europe extends the hand and pulls these countries toward us or someone else will extend a hand and pull these countries in a different direction.”

Equity issue will help pay off more than €4bn in state-backed loans taken during worst of pandemic

Tui, the world’s largest package holiday operator, plans to raise €1.1bn by selling new shares after demand shot up during the summer.

The Anglo-German group said on Wednesday that it would sell more than 523m new shares at a price of €2.15 each, a 35 per cent discount to its stock price.

The equity issue will increase its cash and available facilities to €4.5bn, and help it pay off the more than €4bn in state-backed loans it took from the German government as the Covid-19 crisis devastated the travel industry.

“We want to, we can and we will find our way back to economic strength. We are working on this relentlessly,” chief executive Friedrich Joussen said.

Tui said that its largest shareholder Unifirm, which is controlled by the family of billionaire Russian steel magnate Alexei Mordashov, had chosen to exercise all of its subscription rights. Unifirm owns a roughly 32 per cent stake in the company.

“The offering will enable us to take a significant step forward, increasing our ability to take advantage of the business opportunities resulting from the easing of Covid-19 restrictions,” Joussen added. “It will provide us with a capital structure more appropriate for more normal operating conditions.”

Travel in Europe and the US opened up slowly over the summer as vaccination rates increased, allowing hard-hit travel companies to capitalise on some of the latent demand for international holidays.

Tui said that it had taken 5.2m holiday bookings this summer, about 1.1m more than it had when it gave its third-quarter update two months ago. More than 2.6m people travelled with the group in July and August, double the number of customers in the same two months last year, it added.

The company added that winter bookings in the UK, where testing and quarantine restrictions had been more stringent than the rest of Europe, had been “trending strongly” since the government loosened travel rules on September 17.

Tui said that it expected summer 2022 to “likely recover close to normalised levels of summer 2019”, but James Ainley, an analyst at Citi, warned that so far the group had booked less than 20 per cent of its expected capacity for next year’s high season.

Ainley said that Tui would need to see “further improvements in trading” or raise more capital to reach its leverage target of three times earnings before interest, tax, depreciation and amortisation.

They have partnered with the Responsible Jewelry Council to set out environmental targets for the Watch and Jewelry Initiative 2030.

PARIS – Kering is hoping to do for sustainability efforts in the watch and jewelry sector what it has for the fashion industry.

The French luxury group has joined forces with Cartier, owned by rival conglomerate Compagnie Financière Richemont, to launch the Watch and Jewelry Initiative 2030 in partnership with the Responsible Jewelry Council, marking its latest cross-sector alliance to implement industry-wide goals to protect the environment.

Unlike the Fashion Pact, launched in 2019 with 32 signatories, the Watch and Jewelry Initiative is starting small: in addition to Cartier, Kering’s watch and jewelry brands are joining. The division is comprised of jewelry brands Boucheron, Pomellato, DoDo and Qeelin, and watch brands Ulysse Nardin and Girard-Perregaux.

“The initiative is open to all watch and jewelry players with a national or international footprint that commit to dedicating their resources and energy to continuous improvement on sustainable business topics, and to developing a vision of excellence for the industry, no matter their starting point, market segment or position in the value chain,” Cartier and Kering said in a joint statement on Wednesday.

That means that like the Fashion Pact, the initiative will span high and low players, including brands, distributors and suppliers. Members must commit to progress in three areas – building climate resilience, preserving resources and fostering inclusiveness – and are required to report on progress on a regular basis.

Cartier and Kering built on an existing relationship: they’ve been partners in eyewear since 2017, in a deal that involved Richemont buying a 30 percent stake in Kering Eyewear. Kering and Richemont are also among the companies who joined an initiative this year to improve the traceability of colored gemstones.

The Watch and Jewelry Initiative 2030 aims to support the United Nations’ 17 Sustainable Development Goals, designed to achieve measurable progress by the end of the decade in areas from poverty and gender to climate change, inequality and closing the finance gap.

Cyrille Vigneron, president and chief executive officer of Cartier, said it had become clear that collective action was needed.

“More than ever, we remain committed to share our common vision of a future where all maisons, their suppliers and business partners are empowered to collaborate on projects that deliver positive impact on the planet and its people,” he said in the statement.

Jean-François Palus, group managing director of Kering, said it dovetails with the group’s existing commitments. Since 2011, Kering has been quantifying nature into monetary values across its entire supply chain, using its Environmental Profit and Loss tool.

“At Kering, we believe that luxury is inseparable from the highest environmental and social standards, and that it is our responsibility, as leading luxury players, to initiate the changes that are needed to protect our planet,” Palus said.

“For watch and jewelry just like for fashion, we believe that committing collectively to a common core of quantified environmental objectives focusing on a few themes is the best way to really have an impact,” he added.

Those joining the initiative must pledge to reduce carbon emissions with the aim of limiting global warming to 1.5 degrees Celsius, and achieving net zero greenhouse gas emissions by 2030. As a minimum commitment, they should engage in signing and submitting the Science Based Targets Initiative by 2022, the companies said.

Among the aims is to help vulnerable populations in the watch and jewelry industry value chain and contribute to low-carbon solutions for these communities.

New members should also pledge to measure and prioritize their impact on biodiversity and water across their sourcing of key raw materials. Going forward, they must ensure that supply chains are free of products sourced from ancient and endangered forests, and commit to restore habitats where mining and other extraction activities have occurred.

Brands are required to join the Responsible Jewelry Council and become certified in its code of practices – an international standard on responsible business practices for diamonds, colored gemstones, silver, gold and platinum group metals – in the following two years.

That includes supporting the certification of suppliers; eliminating the exposure of employees and nature to chemical risks; taking action in favor of diversity, equity and inclusion; and preserving craftsmanship.

Iris Van der Veken, executive director of the Responsible Jewelry Council, said she hoped all industry actors would get involved. “Business as usual is no longer an option,” she said.

The Fashion Pact launched by Kering two years ago now has 70 signatories, including high-street retailers H&M and Zara-owner Inditex; sportswear labels Adidas and Nike; American-based companies Capri Holdings Ltd., Gap Inc., PVH Corp., Ralph Lauren Corp. and Tapestry Inc.; European luxury groups Chanel, Hermès, Prada, Ferragamo, Giorgio Armani and Burberry, and Asia-based Fung Group.

One notable holdout is LVMH Moët Hennessy Louis Vuitton, which believes it does not make sense to be lumped together with fast-fashion and sportswear brands, especially because its activities extend to areas as diverse as winemaking and hospitality. However, LVMH is a signatory of the colored gemstones initiative, known as the Gemstones and Jewelry Community Platform.

The digital tokens should be viewed as financial market infrastructure, report proposes

International regulators are taking their first steps towards supervising stablecoins as the digital assets exert a growing influence on the financial system.

Authorities said in a report on Wednesday that operators of stablecoins, which act as a bridge between national currencies and the cryptocurrency market, should be regulated as financial market infrastructure alongside payment systems and clearing houses. The rules would apply to stablecoins that regulators have decided are systemically-important and had the potential to disrupt payments.

The International Organization of Securities Commissions — an umbrella group for financial regulators, and the Committee on Payments and Market Infrastructures, which is part of the Bank for International Settlements, laid out their global effort to establish oversight of the fast-growing $130bn stablecoin market.

“The payments landscape has undergone rapid transformation in recent years and continues to evolve at pace,” said Sir Jon Cunliffe, chair of the CPMI. “This is happening at the same time as financial innovation offers the prospect of new payment services and greater competition in payments but also potential risks to the financial system,” he added.

Stablecoins are cryptocurrency tokens running on blockchain technology. Operators say they are pegged one-to-one with underlying assets such as dollars, making it an relatively easy and fast way for traders to move in and out of speculative currencies such as bitcoin. But their rapid growth and limited transparency has drawn intensifying scrutiny.

The report said regulators did not intend to create additional standards for stablecoins. Instead, they planned to build on principles created in 2012 for critical financial market infrastructure.

The report’s authors recommended principles that could be applied to digital assets deemed to be systemically important. Those principles included governance, with a call for clear disclosures of the management structure of stablecoins, and any arrangements with affiliated companies.

Stablecoins should have “little or no credit or liquidity risk”, with the report warning that customers would be exposed if stablecoins broke their peg. It also advised that any regulatory framework for stablecoins should consider whether holders had legal claims on the issuer or underlying assets.

Different operators of stablecoins have different baskets of assets underpinning their coins. Tether says it holds more than $30bn in commercial paper, a type of short-term debt, making it the seventh biggest holder of paper in the world. But it has not revealed the names or location of the companies whose debt it holds.

Rating agency Fitch warned in July that the large amount of commercial paper held by stablecoin operators could trigger contagion in credit markets if it unravelled for any reason.

Others have felt the regulatory pressure. Facebook’s stablecoin Diem, formerly known as Libra, has struggled to get off the ground but said in August it was ready to launch its digital currency wallet Novi.

Stablecoins’ role has drawn more urgent global regulatory attention this year. The Basel Committee on Banking Supervision, the world’s most powerful banking standards-setter, said it is consulting with banks on capital requirements. The Biden administration is reportedly considering bank-like regulation for operators.

A separate report from the BIS last week suggested that private digital assets could coexist with potential central bank digital currencies but significant stablecoin adoption could lead to fragmentation and “excessive market power”.

The consultation on Wednesday’s proposed framework will last eight weeks. The CPMI and Iosco may work with other standard-setting bodies to cover any gaps in the regulation.