Regional Connectivity Agenda: state of play and way forward Nicholas Cendrowicz Deputy Head of Unit, D5, Western Balkans Regional Co-operation & Programmes (DG NEAR) Third Meeting on Donor Coordination in the Western Balkans (March 16th 2017) 1

1. What is Connectivity? Key idea: Connectivity is not necessarily about building new infrastructure (roads, railways, power and gas transmission lines) It's about getting the best use of infrastructure Improving the framework in which transport and energy services operate Sometimes that involves working on the legal and regulatory framework Upgrading existing infrastructure or improving maintenance In certain key parts of the network, new infrastructure will be necessary

Connectivity Agenda Key elements High-level political driver Regional work to define common priorities National work to put investments in a sound economic context The link between infrastructure investments and legal and regulatory reforms EU assistance

A high-level political driver 1. Connectivity Agenda A high-level political driver The Berlin Process and the Western Balkans 6 A framework initiated by the countries themselves, with the support of key EU Member States Last year's summit in Paris, This year’s will take place in Trieste Need for push at the highest level (i.e. Prime Ministers)

2. Connectivity Agenda Regional work to define common priorities Transport: Defining a ’core transport network'– in road, railways and inland waterways, according to EU methodology Defining 3 'transport corridors' in the region Energy: Defining energy priorities in the region: using the 'Projects of Energy Community Interest' (latest list adopted in October 2016) Linked to creation of a regional electricity market Networks approved by all countries This allows all parties to focus attention on a limited number of projects Content of presentation

3. Connectivity Agenda National work to put investments in a sound economic context Investments in energy and transport should be part of national energy and transport strategies Countries should define a 'single project pipeline': a multi- annual programme of important investments to prioritise large energy and transport projects alongside other investments (schools, hospitals, water treatment plants, flood defences…) This SPP should be endorsed by a National Investment Committee Investment projects need to take account of work on countries' limited fiscal space Content of presentation

Connectivity Reform Measures monitoring 4. Connectivity Agenda The link between infrastructure investments and legal and regulatory reforms EU investments should take place in an optimal policy framework (for construction and operation) Reforms will add value to investments and will also help attract further investments The reforms are in line with countries' EU obligations Funding decisions linked to progress on these reforms In energy the countries have adopted a Roadmap for a regional electricity market, based on EU rules. In Paris, confirmation of the Vienna transport reform measures (linked to rail market opening, road safety, maintenance plans, border crossings). Content of presentation Connectivity Reform Measures monitoring Progress Report   December 2016

5. Connectivity Agenda Funding Connectivity exercise: €1 billion in multi-country funding over 6 years Projects to be funded through the Western Balkans Investment Framework: blending financing with the IFIs EU funding rate: not limited to 20% Projects selected on the basis of their maturity and regional benefits Key criteria for selection: progress on legal and regulatory reforms In Paris: 3 railway projects were selected, no energy infrastructure projects Instead invested in energy efficiency Increased focus on project preparation through various instruments to ensure that we have a steady pipeline of projects Content of presentation