ECONOMY

West Balkans’ huge needs in upgrading basic infrastructure

With Europe’s construction industry showing signs of recession (turnover declined 0.2 percent in 2002), southeastern Europe is emerging as the new El Dorado for the sector. The tremendous requirements for upgrading basic infrastructure, particularly in the domains of transport and energy, in Central and Eastern Europe, with the support of the European Union and other international organizations, are shaping a new frontier for the big construction groups. The opportunities do not leave Greek firms indifferent. Although their interest in recent years has been focused on projects subsidized by the EU and others related to the 2004 Olympics, a number of Greek construction firms are trying to expand in neighboring countries, with preference for Bulgaria and Romania. According to recent data, the construction markets of Central and Eastern Europe will grow at rates of 9 and 13 percent for 2004 and 2005 respectively, as several countries in the area are joining the EU and will be the recipients of aid. According to a study prepared on behalf of the European Commission, which is to be presented in London next week, the upgrading of transport networks alone in Croatia, Bosnia-Herzegovina, Serbia-Montenegro, Albania and the Former Yugoslav Republic of Macedonia in the next 10 years will require 16 billion euros. The «Regional Balkans Infrastructure Study» presents 132 priority projects with budgets totaling 3.7 billion euros, which must be implemented by 2009 in order to improve basic road and rail arteries, ports and airports. They include road and rail projects linking the capitals of the five countries and Montenegro’s Podgorica and Kosovo’s Pristina; road and rail links with neighboring countries; projects on the Danube River, the Adriatic ports of Durres and Bar and the airports of the five capitals. The so-called Core Network covers 6,000 km (3,726 miles) of roads and 4,300 km (2,670 miles) of rail, of which only 10 percent is considered in good condition. According to the Core Network plan, the estimated 3.7-billion-euro total represents between 0.5 and 1.4 percent of GDP of the five countries for the period up to 2009. Of the sum, 60 percent concerns the road network and half of the three arteries, X, which traverses Serbia, and Vb and Vc, which are part of inter-European networks. However, the Commission’s funding calculations raise a number of questions: The plan, for instance, requires the investment of about 3 percent of the GDP of Serbia and Montenegro, which is considered extremely difficult. Their present public spending can only cover 10 percent of the required transport projects. At the same time, the poor economic situation of these countries does not make them particularly attractive to firms that undertake projects on a concession basis. Funding the rail networks appears even more difficult, as the required sums are estimated at 12 billion euros and the railway companies barely have funds for maintenance.