By Marja Novak
BLED, Slovenia (Reuters) - Western Balkan states need to improve 'hard connectivity' such as transport links and strengthen their legal systems as they seek to attract more investment, the vice president of the European Bank for Reconstruction and Development said on Tuesday.
Pierre Heilbronn told Reuters the EBRD would keep investing about 1 billion euros ($1.19 billion) per year in the region that includes Serbia, Bosnia, Montenegro, Macedonia, Kosovo and Albania - all of which aspire to join the European Union.
He said countries have to focus on how to "remove obstacles between these markets, which otherwise are quite small for even domestic investors".
"Everything which is linked to hard connectivity ... everything which is linked to the rule of law is very important," Heilbronn said on the sidelines of a regional political and economic forum in Slovenia's Alpine resort of Bled.
With enlargement on hold, the EU is pushing the six Balkan nations to integrate their economies to foster development and stability, concerned over sometimes fraught relations in the region and the influence of an emboldened Russia.
But political bickering is hampering these efforts. At a recent meeting in Trieste, Italy, Bosnia failed to sign a deal on upgrading transport links because of objections from its autonomous Bosnian Serb region, while Kosovo objected to a proposed customs union.
Heilbronn said he expected Bosnia would eventually join the transport union because it would enable easier investment.
"There is a clear understanding (by local authorities) that this would be a positive way forward."
He said EBRD was focusing particularly on investments in renewable energy and energy efficiency which could produce large savings.
Heilbronn said the biggest risks in the region stemmed from political tensions between countries. But last week's meeting between Serbian President Aleksandar Vucic and Kosovo President Hashim Thaci "was a good first step" which was extremely welcome. Kosovo broke away from Serbia in 2008.
He said the EBRD was trying to promote the region and its potential by holding its 2019 annual meeting in the Bosnian capital Sarajevo.