Faced with the sovereign debt crisis and the potential collapse of the euro, the Eurozone may find a new source of growth in the addition of new...
Faced with the sovereign debt crisis and the potential collapse of the euro, the Eurozone may find a new source of growth in the addition of new countries such as Serbia. On February 24th Serbia edged closer to receiving European Union support for accession. It seems ironic that, given the current perception of the Eurozone as a failed project, there are eight countries applying for membership: four current candidates, Iceland, Macedonia, Montenegro, and Turkey; three potential candidates, Albania, Bosnia and Herzegovina, and Serbia; and one country awaiting approval, Croatia. Serbia’s desire to move to candidate status is driven by the economic benefits that still exist from joining the Eurozone. Increased trade and employment mobility could help boost Serbia’s employment and economic growth. Unemployment has risen to 23.7% from 13.6% four years ago. Serbia’s hope is that admission to the Eurozone will provide an even greater market for its textile exports, which began in 2005 with “the immediate opening of the EU market for textile and textile products originating from Serbia” (European Commission). But the prospect of joining the EU is not all balmy in Serbia. Approval ratings for the application fell by 2%, to a bare majority of 51%, in the most recent poll in December 2011. Additionally the number who would vote against joining the EU in a referendum rose to 28% from 24%. Most likely the lack of support for EU ascension derives from the current perception of the Eurozone and its stability. The Eurozone has focused heavily on bailouts and austerity measures in order to overcome the debt burdens of the periphery. But opposition also reflects the fear of an exploding trade deficit. Serbia has an “unsustainably high trade deficit which is swelling the country’s debt” according to Ivana Prica, an economist at Belgrade University. Greater access to the capital markets and trade markets of the EU could cause Serbia to fall into the same path as Greece. Still, Serbia’s government as well as a slim majority of its population believe that joining the EU will benefit their economy and political state. The challenges that face the Eurozone today are large and will require extensive attention and energy for the years to come. Will the EU be able to determine whether Serbia is a lurking drain on its safety or a potential source of trade and growth?
