A modern-day gold rush is on in the Western Balkans. But how these six countries — and key European and U.S. partners — handle the opportunities available will determine whether such investment will support desperately needed political and economic reforms or further reward and consolidate illiberal regimes. The latter outcome will prevail if three basic questions are not asked and satisfactorily answered: Do citizens have the right of informed consent for exploitation in their community? Is there a functioning legislative and oversight mechanism to ensure enforcement of European standards across the board? And where is the money going?

In the generation since the end of the Cold War and the opening of the Western Balkans to the democratic, free-market West, promises of economic opportunity and rejuvenation have ebbed and flowed. There were the initial inflows of foreign investment (including brands familiar to consumers like McDonald’s, Microsoft, and Benetton); partial and imperfect privatization of State/publicly owned enterprises (everything from industrial facilities to factories to hotels); and the acquisition and sale of real estate (seaside, urban, and mountain).

These economic processes are never smooth or easy anywhere — witness how the former East German areas continue to lag even today compared with the country’s western states, and that was a case in which the territory was integrated willingly by a democratic and accountable government. By contrast, the six Western Balkan countries (here defined as the territory of the former Yugoslavia plus Albania) have never enjoyed such a good-governance dividend. Their situation has been made all the more difficult by global economic dynamics such as de-industrialization and offshoring from the global west towards production in the east (especially China), the 2007-2008 financial crisis, and the impact of automation on jobs.

Taking the long view, it is difficult to find a greater current and potential future boom than that presented by the need for strategic or critical raw materials for new technology and the green energy transition. There is a global rush on to secure these materials, with countries and firms prospecting, digging up, shipping, and processing everything from lithium to magnesium to nickel and more. (Other ore that may not be strategic but is nice to have – like silver and gold – is also being sought and scooped up.) The rise of mobile information and communication technologies and the move towards greener tech is behind the hunger for energy and the batteries in which to store this energy; new outputs require new inputs. And the return of geopolitical competition is heightening interest in the United States and Europe in securing these supplies at home or close to home, or in “friendly” countries, to reduce reliance on and dominance by countries like China.

Location, Location, Location

The Western Balkans is a tiny space when compared with land masses like China, Brazil, or Russia. However, its proximity to the rest of Europe and the European Union, and the status of these countries (all except Kosovo) as candidates for future membership in the EU club make the region’s resources, however limited in size, highly desirable.

While no part of the region is immune from the ogling eyes of investors (perhaps with the exception of Serbia’s flat agricultural region of Vojvodina in the north), a visual scan shows that Bosnia and Herzegovina and Serbia could offer the most potential. An EU -funded Mineral Register already shows what’s on the menu; it is helpfully organized by base metals (aluminum, bauxite, copper, etc.), special and rare metals (e.g., lithium, cadmium), iron and fero-alloys, precious metals (gold, silver), energy commodities (uranium, coals, etc.), gemstones and construction/building materials, and so on.

Much of this is related to the EU’s “European Green Deal” and broader efforts to begin reducing fossil fuel consumption by identifying and developing alternative forms of energy and of energy storage and transmission. What better way to not only ensure the EU reaches its green-energy goals than by securing them and at the same time enhancing economic “connectivity” with the Western Balkan candidate States, for example, through the Green Agenda for the Western Balkans?

Mineral mining opportunities have been scouted for years in the Western Balkans, but the initiatives have generally drawn little public attention, either due to non-transparent government processes, weak local media and business reporting, investor discretion, or some combination of all three. It is not lost on observers that some permitting progress was made during the period of the COVID lockdowns, when by unfortunate timing or lucky coincidence public gatherings were either prohibited or severely curtailed. For example, a Bosnian-Australian businessman bought a small Bosnian company in 2012 that became Eastern Mining, which itself was later bought by U.K.-based Adriatic Metals in 2017. Finally, in 2020, Adriatic Metals received its largest concession to that date to explore and exploit land in and around Vareš, about 25 minutes from the capital Sarajevo, with resources including silver, zinc, lead, and barite. In 2021, a German firm MFE “Magnesium for Europe” was founded and began operating in Kupres, a Croat-majority town in Bosnia about two hours from Sarajevo and about 2.5 hours from the port of Ploče in Croatia, with a focus on hauling out magnesium.

An exception to the rather quiet prospecting and extraction was the highly publicized street protests that forced the Serbian government to withdraw licenses in January 2022 for the company Rio Tinto to mine lithium not far from the border with Bosnia. But this project was not forgotten, and Serbian President Aleksandar Vučić this month signaled that his government would now greenlight it based on environmental assurances from the company and the EU. Serbian authorities have also issued licenses to look for gold, copper, and more in and around Rogozna, a mountainous area between Novi Pazar, the largest city in Serbia’s southwest Sandžak region, and Kosovo – including the Trepča mining district in north Kosovo. In addition to both areas being poor places with a history of sensitive minority/majority relations and underinvestment, north Kosovo in particular remains the focus of significant political contestation and instability.

Exposure Grows

More recently, independent probing by journalists and researchers is unearthing more such efforts and bringing such initiatives to public attention. The respected Center for Investigative Reporting in Bosnia (started in 2004 with funding from the U.S. Agency for International Development) published one of the earlier articles in July 2023 describing fiscal and environmental side effects of the Adriatic Metals project in Vareš, with their journalists on the receiving end of the apparent irritation of the firm (see at the 1-minute mark here). Other probing coverage has followed examining the Vareš project and issues in the small town of Lopare in Bosnia’s majority-Serb Republika Srpska, where lithium is being prospected, as well as by German, French (in German language), and Italian websites or media outlets. Most importantly for citizens of the region has been increasing reporting and discussion in regional media broadcasts.

These issues and the actors involved are also coming to light through the open promotion of mining in the region by the EU and its various private businesses and associations, as they seek to exploit opportunities in the Western Balkans. A recent online workshop organized by private and public entities of the EU and the region was promoted as a chance for “matchmaking” between companies eager to do business and the people and places in the region offering opportunities. The tone and content of the event was so “western” in its presentation it would have been easy to think that the opportunities being discussed were in countries like Germany or Switzerland, where the basic elements of democratic accountability are not questioned. Themes such as corruption, state capture, and kleptocracy were blissfully absent; one presentation included a PowerPoint slide describing the rule of law in a specific part of Bosnia as good, drawing derision from some local participants in the online chat and discussion.

The companies involved in such prospecting also are assiduously trying to polish their reputations with various audiences. Lycos Balkan metals has made donations to religious communities and sponsored scholarships in Bosnia. Adriatic Metals has sponsored diplomatic receptions such as the King’s Birthday Party at the British Ambassador’s residence and a joint annual Danish/Finnish/Norwegian/Swedish reception, both also in Bosnia. (The pros and cons of corporate sponsorship of such events should be another subject of consideration.)

While some observers would characterize all of this as good and responsible corporate social responsibility, others can’t help but see some amount of reputation-laundering and greenwashing. It is also reasonable to consider the value of these ad hoc and limited gifts when compared with the revenues structured into concessions and deals. As more information about all of these dynamics comes into the public square, a big question is what will — or what can — this greater awareness yield?

The Missing Piece

In a normally functioning and accountable system, such investment should serve as a massive opportunity for people and communities to benefit from their birthright while rebuilding areas shattered by the triple punch of post-war stagnation (the after-effects of the 1990s wars of the former Yugoslavia linger to this day), deindustrialization, and globalization. This should be an opportunity for local leaders to work together within and among countries to negotiate the best possible deals for their citizens and futures, rather than enabling a race to the bottom.  It should be an opportunity to not only decide what ores to dig up and export, but what processing could be done in country, as it is the processing phases that enable good, high-paying jobs, and the education, research, and cultural opportunities such a healthy ecosystem can provide.

But this aspirational lifecycle of opportunity is simply missing in much of the Western Balkans because of the governance, accountability, and transparency deficits that have been clear in the region for a generation. It’s a situation that suits local politicians who have little interest in changing the rules of the game because they have profited from it for so long.

Based on the fact pattern of the past three decades, it should not be surprising that the promise of profits is not prompting a move towards cleaner governance or political economies in the region. The political games are obvious, and the key leaders in the region know the rules. This is brilliantly and succinctly explained in the book “The Moneywasting Machine: Five Months Inside Serbia’s Ministry of Economy,” in which Serbian political economist, professor, and former politician Dušan Pavlović clearly explains how Vučić has perfected the extractive power of his party – and in turn the government and State–  through a political economy based on a combination of public sector patronage, dodgy foreign-investor transactions, and state-owned enterprise privatization deals that would never pass muster if more responsible accountants examined the books. (This book should be required reading for any international official working in the Western Balkans, as it essentially offers a decoder ring for the region as a whole.)

Turning a Blind Eye?

The United States, the EU, the U.K. and others have long complained that countries unfettered by values such as good governance, anti-corruption, and transparency (e.g., China, the Gulf States, Russia, as explained in illuminating detail by Pavlović) are clamoring to work in such an environment. However, companies from the EU and its allies are also increasingly willing to do business in this same ecosystem, turning a blind eye to the lack of the rule of law, genuine citizen consultation, unbalanced revenue sharing, etc. – much as they did in Russia for decades, for that matter. Pavlović notes, for instance, that public subsidies that maintain power structures in Serbia often benefit European firms — for example from Germany, France, and Italy – meaning the Serbian people are subsidizing these Eu companies.)

The result is increasingly cynical societies in the Western Balkans who observe that the lofty language on rule of law and EU accession reforms stands in stark contrast with the reality practiced by those very authorities and their private investors. The small sums spent to support civil society-driven good governance projects are dwarfed by the hundreds of millions of euros in dealmaking going on at the same time. The mining boom will turbo-charge these counterproductive – and even destructive — dynamics in a region purportedly preparing for future EU membership.

This may be a matter of classic capitalist profit-making: What Swiss, German, British, or other western company would not want to make a favorable concession deal that would never be possible on their home turf? Who would not want to ship out ore from a region most associated only with war, to be later processed back at home by workers enjoying good-paying jobs?

But the more that such extraction occurs in a rules-free environment, the less likely it is that any vision of comprehensive continental European security, much less the democratic and prosperous future purportedly intended for these countries, will be realized.

The only way this potential will not be squandered will be to embed it within a vision of a political economy and a social contract that works for the citizens of the region. This cannot happen at the elite level, from the top-down. It can only have a chance of success if meaningful and intentional bottom-up engagement  is complemented  by top-down pressure, in a meaningful and intentional way – a dynamic the Democratization Policy Council, where I am a senior associate, has termed a “pressure sandwich.” My colleague Kurt Bassuener has articulated the three questions that should be asked and sufficiently answered, in points echoed by Lippman:

  1. Do the people in a given community have the opportunity for and right of informed consent on any project foreseen or underway, in terms of greenlighting or stopping a project and throughout the project lifecycle?
  2. Is there a clear legislative framework and accompanying implementation and enforcement regime to regulate such activities and ensure compliance, and is the framework at least as good as those common in the EU framework to which the country purportedly aspires, particularly on issues related to environmental oversight and public health?
  3. Where is the money going, how much is legally obliged to stay in the community/country and how is this money then being used?

A Potential Future of Dignity – for the Region and the EU

This should not be viewed as some pipe dream. Shifting this debate so that the opportunity and potential riches fall squarely on the people in the country where the resources are located would at long last offer a future and vision grounded in dignity rather than humanitarian handouts. The EU and its allies should commit to only supporting investment and resource exploitation that meets standards of participation, clarity, and equity. This should include a number of elements, throughout the Western Balkans:

  • Commitment to early and regular mandatory citizen deliberations on ongoing or potential mining and the benefits, risks and risk mitigation options available.
  • Support to mayors and municipalities so that they can effectively develop and influence local and higher-level policies and legislative frameworks (on the environment, royalties, etc.) that will ensure local communities are not left with the crumbs while billions are shipped out.
  • Commitment to support publicly available information on deals being made throughout the region, through a publicly accessible portal/database, so citizens get solid information before a project becomes a fait accompli.
  • Establishment of independent citizen-review boards to provide monitoring, oversight, and reporting on competent domestic institutions and the public finances related to this industry.
  • Application of European Green Deal opportunities and standards to the six Western Balkan countries immediately, with the understanding that these opportunities, properly implemented, could well hasten the reforms needed for accession.

Such commitment would finally be a real acknowledgement — not just workshop/conference/roundtable lip service — that power and agency has to start in and be held by the affected communities, and that EU membership is not just for the elites, but should be built on — and for — the people in these countries.

It is not too late for the EU, the United States, the U.K.,  Norway, Switzerland, and others pursuing these mining riches to get on the right side of history and the people. The European Green Deal is about power. Critical raw materials are about power. This is finally a time to enrich all the people of the Western Balkans and give them the power they have been denied for a generation – for the long-term good of a future European Union, whole, free, green and at peace.

IMAGE: Hundreds of environmental demonstrators block the main highway in Belgrade, and several cities in Serbia, to protest against a project by Anglo-Australian mining giant Rio Tinto, which wants to exploit lithium in this Balkan country, on November 27, 2021. (Photo by Andrej ISAKOVIC / AFP via Getty Images)