How Bosnia got an EU membership boost with a little help from its friends

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Good morning. News to start: The European Commission has acknowledged “serious concerns” about an amnesty for Catalan separatists being negotiated to enable Spain’s acting prime minister Pedro Sánchez to stay in power, in a letter sent to Madrid and seen by the Financial Times.

Today, our Brussels correspondent explains how the old Austro-Hungarian bloc helped advance Bosnia’s EU membership bid, while I have some more grim analysis of the EU’s economic competitiveness — this time in capital markets.

Plus: Join me today at 10.55am as I discuss EU enlargement with the commission’s Gert Jan Koopman, and France and Sweden’s Europe ministers Laurence Boone and Jessika Roswall, at the FT’s award-winning Global Boardroom digital conference.

The empire strikes back

Who says the Austro-Hungarian empire is over?

Bosnia and Herzegovina, the divided republic wracked by a brutal civil war in the 1990s, was pushed up the path to EU membership yesterday with the support of fellow former members of the Habsburg family firm: Austria, Croatia and Slovenia, writes Andy Bounds.

Context: Yesterday’s enlargement package had few surprises — the European Commission recommended that member states open talks with Ukraine and Moldova as soon as they fulfilled specified conditions. But Bosnia was another unexpected winner. “The door is open wide” commission president Ursula von der Leyen said.

Slovenia’s foreign minister Tanja Fajon told the FT that the commission had “acknowledged the geostrategic necessity of enlargement” after “vocal” lobbying by Ljubljana. While Bosnia “must also finish its homework”, she said, “Europe will be even more stable, safe and prosperous once EU enlargement is completed.”

But not all 27 members are convinced. One diplomat said of von der Leyen’s remark: “It’s a very small door and there’s a very big dog in front of it.”

“Ukraine and Moldova have been doing the work. Bosnia has done nothing. But their case is being pushed by three member states,” the diplomat said. They noted that while the former may soon start accession talks with few outstanding conditions, Bosnia can only do so “once the necessary degree of compliance with the membership criteria is achieved”.

Bosnia’s main problem is that while the federation is trying to hit the EU’s targets, its Serbian entity, Republika Srpska, is flirting with Russia and threatening to secede.

Olivér Várhelyi, the Hungarian commissioner overseeing the process, told the parliament’s foreign affairs committee that Serbia’s president Milorad Dodik was holding back Bosnia with “secessionist rhetoric” but had been constructive by joining a national government.

Thomas Waitz, of the Greens, warned Dodik: “You cannot sit on two chairs at the same time. You cannot voice your will to join the EU while visiting the foreign minister of Russia, Mr Lavrov.”

Those member states who worried that Brussels’ desire to lure countries away from Moscow would lead it to lower its accession standards were reassured, however.

“After the invasion of Ukraine, enlargement became a geopolitical instrument. This was an encouraging rebalancing,” the diplomat said.

Chart du jour: Hot mess

Our planet will very likely experience its hottest year, after record temperatures last month. The latest UN report showed that governments planned to produce more than double the amount of fossil fuels in 2030 than would be consistent with limiting warming to 1.5C.

Losing ground

The international competitiveness of the EU’s capital markets is falling, leading banks have warned, as the bloc continues to trail the US and UK as a financial hub.

Context: The EU in 2015 set out to create a single market for capital, aiming to deepen the bloc’s financing capacities and diversify funding routes for investors and businesses. Despite regular attempts to strengthen the capital markets union, it remains far below its intended scale.

The hurdles in unifying capital markets are part of the EU’s wider difficulty in maintaining its economic competitiveness and challenging powers such as the US and China. Access to capital is often cited by businesses complaining about barriers to growth in the EU.

This year has seen “a decline in the international competitiveness” of the EU’s capital market, according to an annual report released today by the Association for Financial Markets in Europe (AFME). “When considering medium-term trends, it is clear that the EU has not made significant progress in developing its capital markets.”

The assessment comes as EU finance ministers meet in Brussels today, where the state of the capital markets union will be discussed.

“Certain goals, such as rebalancing the EU’s funding sources towards more market-based financing, channelling individual savings into productive investments, and integrating national capital markets to create a unified EU market have not yet materialised to any meaningful degree,” said Adam Farkas, chief executive of AFME, which represents more than 150 banks and financial institutions. 

“The growth of an integrated capital market for Europe must continue to be a key priority if the European Union is to achieve its dual goals of sustainable and digital economic transformation,” Farkas added.

What to watch today

1. EU finance ministers meet in Brussels.

2. France hosts a humanitarian aid conference for Gaza.

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