Southeastern Europe as a strategic region for the European Union

Southeastern Europe occupies a pivotal position at the crossroads of Europe, Asia, and the Middle East, making it strategically significant for energy, trade, and infrastructure connectivity. Its geographic location has historically facilitated economic, cultural, and political interaction and continues to shape its role in regional and broader European geoeconomic and geopolitical dynamics. The region comprises Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Montenegro, North Macedonia, Romania, Serbia, Slovenia, and partially Greece (northern regions) and Turkey (European Thrace), with a combined population of approximately 50 million.¹

This paper draws on Albania, Croatia, and Serbia as case studies to illustrate the geoeconomic and geopolitical importance of Southeastern Europe for the European Union.

Topography

The physical topography of the region is extremely diverse. High mountains, extensive river courses, natural harbours and a dense network of roads and rail connections form corridors that effectively link Central Europe with the Aegean Sea, the Black Sea and the eastern Mediterranean. These natural conditions not only facilitate the transport of goods and people but also create optimal conditions for economically and technologically relevant projects, especially in the field of renewable energies. The region’s connectivity and natural corridors make it a focus for EU-supported infrastructure projects, including transport, cross-border energy networks, and regional cohesion initiatives. Additionally, there is an urgent need to modernize infrastructure across the region, including outdated electricity grids, roads and bridges, rail networks, water and sewage systems, and communication networks, many of which still date back to the socialist era, particularly to support renewable energy development.

Total potential for renewable energies in a European comparison

The region offers outstanding potential for the generation of sustainable energy. Intense solar radiation, constant wind currents in the Julian and Dinaric Alps, the Carpathians, and along the coasts—the mainland coastline of the Western Balkan states stretches for approximately 2,500 km, the Black Sea coasts of Romania and Bulgaria together cover approximately 600 km, and numerous rivers enable economically attractive photovoltaic, wind, and hydropower projects. Significant rivers include the Danube with 2,850 km, the Sava with 990 km and the Maritsa with 480 km.² Wind speeds of over 7 m/s are measured, particularly on the coasts, making offshore and coastal wind energy projects considerably more attractive.³

Compared to Western and Northern Europe, Southeastern Europe thus has above-average potential for sustainable energy production, promising long-term economic returns, yet the large-scale deployment of such energy has so far been constrained by structural, regulatory, financial, and political obstacles, including fragmented electricity markets, outdated grid infrastructure, inconsistent permitting processes, limited access to financing, and differing national support schemes across the region. This renewable energy potential aligns closely with EU strategic priorities, allowing for integration into the European electricity grid and access to funding under instruments such as the Green Deal, RRF, and CEF Energy.

Optimal conditions for photovoltaic projects in Southeastern Europe

One particularly noteworthy feature is the annual solar radiation: in terms of solar irradiance (a value used to measure the annual solar radiation on a horizontal surface in kWh/m²/year), it makes the Western Balkans and Southeastern Europe one of the most attractive regions in Europe for photovoltaic and solar technology projects.

With a regional average of around 1,410 kWh/m²/year, the region is significantly above Central Europe, which averages around 1,300 kWh/m²/year—an increase of around 110 kWh/m² or approximately 8.5%.

The advantage over Northern Europe is even more pronounced due to Northern Europe’s higher latitude, which results in lower solar exposure, where annual solar radiation averages only 960 kWh/m²/year. Southeastern Europe, therefore, offers almost 50% more solar energy potential than Northern Europe, making it particularly well-suited for photovoltaic projects.⁴

Agricultural potential and need for modernization

In addition to the energy infrastructure, the natural conditions also offer excellent opportunities for agriculture. The Pannonian Plain, one of Europe’s largest sedimentary basins with exceptionally fertile soils, stretches across large parts of Romania, Serbia, Croatia and Slovenia. It extends approximately 400 km from west to east and approximately 300 km from north to south.⁵ The rich soil of this plain, coupled with a predominantly continental climate and Mediterranean influences in the coastal regions, enables the cultivation of cereals, fruit, vegetables and oilseeds, as well as the development of viticulture projects. Together with the rich biodiversity, this opens up far-reaching opportunities for an export-oriented and sustainable agricultural economy. From an EU policy perspective, modernizing agriculture and water management in the region supports European food security, promotes sustainable practices, and complements CAP and other EU investment programs.

In addition, the region’s vast grasslands, such as the Wallachian Plain in Romania (approx. 50,000 km²), the Thracian Plain in Bulgaria (approx. 11,000 km²) and the Kosovo Basin (approx. 1,500 km²), combined with direct access to the Adriatic, Mediterranean and Black Seas, offer ideal conditions for extensive livestock farming and fishing.⁶

These areas represent a clear competitive advantage for the sustainable use of agricultural resources and, at the same time, open up opportunities for the development of export-oriented, regionally integrated agricultural systems, which are of great strategic importance in view of the global need to secure food supplies.

Drinking water resources and quality: tomorrow’s strategic resource

Another strategic resource that will play a key role globally in the future due to climate change is the water reserves and drinking water quality of the countries of Southeastern Europe.

In a European comparison, Croatia (which recorded the highest renewable freshwater resources in Europe), Slovenia and Bosnia and Herzegovina are among the countries with the highest per capita freshwater resources, with values ranging from around 30,700 to 80,000 m³/year, while Serbia and Bulgaria are in the upper mid-range. Romania has significantly lower values of around 10,700 m³ per capita, which are only slightly above regional water stress thresholds.⁷

Montenegro tends to have high water resources, while limited data is available for Albania, North Macedonia and Kosovo, and availability is likely to be below the EU average.

In terms of drinking water quality, water-rich countries such as Croatia, Slovenia and Montenegro also perform best, with Serbia and Bulgaria achieving average levels, while Albania and North Macedonia rank significantly lower.

According to the Yale Environmental Performance Index (EPI, also known as the eBEE score), which assesses access to safe drinking water, the quality of water treatment and the safety of the distribution network, Montenegro ranks at the top of the region with 97.1, Croatia ranks in the good mid-range with 84.8, Serbia and Bulgaria are in the middle segment with around 82 and 79, respectively, and Albania and North Macedonia are at the lower end with 71 and 70, respectively.⁸ Ensuring reliable access to quality water aligns with the EU Water Framework Directive and presents opportunities for EU investment to support infrastructure upgrades and climate-adaptive water management.

Despite these top scores in a general comparison with the rest of Europe, it should be noted that most water supply systems in the region are in urgent need of modernization investment and, above all, irrigation systems in agriculture are completely underdeveloped.

Beyond infrastructure and compliance considerations, water security carries significant geopolitical implications for Southeastern Europe. Shared river basins and transboundary aquifers make water a potential source of tension between neighboring states if allocation or quality issues arise, while effective cooperative management can strengthen regional stability. Reliable water resources also serve as a critical benchmark for EU integration, as compliance with EU water standards reflects both governance capacity and alignment with European environmental policies. Moreover, in the context of climate change, securing sufficient, high-quality water supplies is essential for long-term resilience in agriculture, industry, and urban development, positioning the region to better absorb climate shocks and sustain economic growth.

Raw material deposits

The strategic importance of Southeastern Europe is further underlined by its rich raw material deposits. While efforts are being made around the world to secure strategic access to raw materials in order to supply high-tech and defense industries, the exploitation potential in Southeastern Europe remains far below its potential or, in some cases, has yet to be tapped. Lithium, copper, bauxite, nickel, chromite and rare earth elements (REE) are available in the region and play a central role in the energy transition, as well as in the further development and securing of supply chains for entire industries. Crude oil and natural gas are also available in substantial amounts and, due to the global energy crisis, could once again become the focus of attention with regard to exploitation, even though there have been serious concerns about environmental protection conditions in recent years. The exploitation of these strategic raw materials is crucial for the EU to strengthen supply chain resilience, secure critical inputs for high-tech industries, and reduce dependency on external sources.

The combination of favorable natural conditions, economically exploitable resources, and a geostrategic location creates an environment that offers both high economic returns and geopolitical relevance. Southeastern Europe and the Western Balkans thus present themselves as a key region for long-term investors whose focus is on sustainable energy, agricultural use and strategic raw material security.

However, these critical raw materials remain largely untapped due to a combination of regulatory and administrative hurdles, stringent environmental and social requirements, insufficient transport and processing infrastructure, high upfront investment costs, and, in some cases, political and geopolitical uncertainties that limit investor confidence and long-term planning. Addressing these challenges will be essential for Southeastern Europe to realize its full potential as a strategic supplier for high-tech, energy, and defense industries.

European Green Deal and European Union subsidies

Against this backdrop, the European Green Deal, as the EU’s core strategic program for achieving climate neutrality by 2050, opens up concrete opportunities for investors. The Green Deal’s guidelines and funding instruments not only define the regulatory framework but also enable the economic use of renewable energy, in particular through feed-in to the European electricity grid.⁹

Projects that feed electricity from photovoltaic, wind or hydroelectric power plants into the EU grid can be financially secured through funding mechanisms such as Contracts for Difference (CfD), grid fee exemptions, feed-in tariffs and targeted infrastructure investments. This ensures predictable revenues and minimizes investment risks.

For EU members Croatia, Slovenia, Bulgaria and Romania, the Recovery and Resilience Facility (RRF) and the Multiannual Financial Framework 2021-2027 form the financial backbone.

Since 2021, €650 billion has been made available here, of which around €184 billion is earmarked specifically for energy-related investments—for example, in renewable energies, grid expansion, energy storage, hydrogen technologies and the decarbonization of industrial processes.¹⁰

In addition, the Cohesion Fund enables investments in CO₂-reducing infrastructure and the integration of renewable energy sources, while the Connecting Europe Facility—Energy (CEF Energy) finances cross-border grid infrastructure, storage solutions and smart grids.¹¹

The LIFE program, the EU’s funding instrument for the environment and climate action, supports pilot projects and innovative technologies, and the REPowerEU plan will mobilize an additional €210 billion to accelerate the energy transition and reduce dependence on fossil fuel imports.¹²

Pre-accession instruments such as IPA III (2021-2027), with around €14.2 billion available for reforms, infrastructure measures and renewable energies, are available for investments in the Western Balkan countries, including Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia.¹³ The Western Balkans Investment Framework (WBIF) supports sustainable infrastructure projects and cross-border network connections (2020-2024: projects worth around €1.8 billion). The Economic and Investment Plan (EIP) supplements this with up to €9 billion in EU grants, which, together with national and private funds, will enable investments of up to €30 billion.¹⁴ In addition, the Reform and Growth Facility (2024-2027) provides a further €6 billion, while guarantees through EFSD+ and commitments from the European Investment Bank secure private capital flows.¹⁵

The combined funding architecture of the European Green Deal, the RRF, CEF Energy, REPowerEU and other instruments offers investors a clearly defined, risk-optimized platform for efficiently implementing renewable energy projects, reliably feeding electricity into the EU grid and thus achieving long-term returns. These EU funding instruments provide a predictable, risk-mitigated framework for private and public investors, reinforcing the region’s role in achieving EU climate neutrality and energy security targets.

From a Brussels institutional perspective, these mechanisms not only support the regional transition to renewable energy but also mitigate investment risks by ensuring compliance with EU regulations and funding standards.

Southeastern Europe thus combines strategic raw materials, natural resources, attractive landscapes and EU funding to create a highly interesting investment area for sustainable energy and infrastructure.

Strategic Country Case Studies: Albania, Croatia, and Serbia

Albania: Photovoltaic and wind energy potential

Albania has an exceptionally broad and strategically relevant portfolio of natural resources in Southeastern Europe, which is becoming increasingly important both in the context of European energy and raw material security and in terms of sustainable value chains. The country’s natural conditions are particularly favorable for the expansion of renewable energies.

Annual global solar radiation (global horizontal irradiation) ranges between 1,185 and 1,690 kWh per square meter, depending on the region, with around 2,100 to 2,500 hours of sunshine per year.¹⁶ This means that Albania significantly exceeds the average value for Central Europe, which is typically around 1,200 to 1,400 kWh per square meter, and is one of the most attractive locations for photovoltaic projects in South-Eastern Europe.

This potential is complemented by favorable wind conditions along the Adriatic coast and in the mountainous regions, where average wind speeds of 8 to 9 m/s enable the economic use of onshore wind power.¹⁷

By comparison, average wind speeds in Central Europe are typically between 4 and 6 m/s, making Albania particularly attractive for the development of wind energy projects. In addition, Albania’s distinctive river landscapes and alpine topography give it considerable hydropower potential, which already plays a central role in electricity generation and offers further potential for expansion.

In addition to renewable energies, Albania possesses significant mineral resources of strategic relevance to global industries. The Devolli nickel complex comprises proven ore reserves of around 35.6 million tonnes with an average nickel content of approximately 1.2 per cent, which corresponds to around 427,000 tonnes of nickel metal.¹⁸

Nickel is a key raw material for alloyed steels and modern battery technologies. In addition, there are chromite reserves of over 1.2 million tonnes, which are of central importance for stainless steel production and other metallurgical applications.

Albania’s role as one of Europe’s leading bauxite producers is also particularly noteworthy. In 2022, production amounted to around 1.38 million tonnes. Albania thus forms a potentially strategic basis for establishing and strengthening an independent European aluminum value chain.¹⁹ Albania also has oil and gas reserves, including the Patos-Marinza field, one of the largest onshore oil fields in Europe.

However, the use of these fossil resources is politically and environmentally sensitive and is caught between economic exploitation and long-term climate and environmental goals. The raw materials industry is supported by comparatively well-developed logistics connections: the ports of Durrës and Vlorë serve as central export hubs and facilitate access to regional and international markets.²⁰

Agricultural resources are also an important pillar of Albania’s natural capital base. The agricultural sector contributes around 17.9 percent to national value added. Extensive pastureland is conducive to cattle, sheep and goat farming, while climatic conditions and soil quality make fruit and vegetable production particularly suitable for sustainable agricultural models and export markets. In addition, the Adriatic coast offers economic potential in the fishing industry.

Another strategic advantage for Albania is its water availability, fed by numerous rivers and mountain springs. However, there are no standardized European per capita figures for renewable freshwater resources, making direct quantitative classification difficult.

In terms of quality, the country has an EPI score of 71.0 (the Environmental Performance Index assesses, among other things, secure access to drinking water and the quality of the distribution network; values of 90-100 are considered very good, with the European average at around 80), indicating structural deficits in supply, treatment and distribution networks and underlining the need for targeted investments in water management.

Overall, Albania is thus positioned as a country with a rare combination of renewable energy potential, critical mineral resources, water-rich ecosystems and an agricultural base. These resources not only open up national development options but are also of growing strategic relevance in an international context.

Albania’s strategic role in European energy, aluminum production, and maritime trade

Albania possesses significant potential in renewable energy and strategic mineral resources, which it can leverage to enhance its role in regional energy security and European supply chains. The government’s energy strategy is increasingly aligned with EU guidelines and creates investment incentives for photovoltaic and wind energy projects. Additionally, Albania’s strategically located Adriatic ports and proximity to EU markets offer valuable export opportunities for both energy and raw materials.

By positioning itself as a reliable supplier of nickel, chromite, and bauxite, Albania strengthens its negotiating position in regional infrastructure projects and within European industrial value chains. Alongside Greece, home to the Delphi-Distomon mine with an annual production of around 1.2 million tonnes, Albania ranks among Europe’s leading bauxite producers. These volumes form a key foundation for European aluminum production, supporting a more autonomous and resilient supply chain and reducing dependence on external sources.

Furthermore, Albania possesses the largest offshore oil field in Europe, the Patos-Marinza field. Through its participation in regional energy links such as the Trans Adriatic Pipeline and planned electricity grid connections, the country gains additional geopolitical weight, as it can help shape the energy flow in the Western Balkans. This position not only gives Albania influence in regional energy issues but also increases its leverage in an accelerated approach to the European Union.

Croatia: Coastal energy and water resource potential

Croatia exhibits a pronounced energy-geographical duality between coastal and inland regions. Solar irradiance reaches 1,500-1,700 kWh/m²/year on the Adriatic coast and 1,200-1,400 kWh/m² inland. Annual sunshine hours are 2,200-2,500 on the coast and 1,900-2,200 inland, reaching record levels for Europe. In addition, average wind speeds of 7-9 m/s on the coast, compared to 4-6 m/s inland, offer significant potential for resilient, diversified energy generation structures.²¹ The hydropower potential along the Sava, Drava and Kupa rivers is another stabilizing factor for the national base load.

Strategic raw materials and energy security: Bauxite deposits in the Adriatic-Dinaric carbonate platform contain rare earth elements (REE), which are of central importance to the high-tech, energy and defense industries. The measured median values of approximately 250-570 milligrams per kilogram of rock and the increased proportion of heavy rare earths give these deposits strategic relevance in the context of European supply chain and resilience debates. In addition, Croatia has proven oil and natural gas reserves.²²

Croatia produces oil and natural gas mainly on the mainland and partly in the Adriatic Sea, covering around 20% of its oil and around 30% of its natural gas needs from its own production. Studies conducted in the Croatian part of the Adriatic Sea in 2013 indicated the presence of large deposits, primarily natural gas, which have the potential to position Croatia as a new European energy producer.²³

However, the suspension of further studies following massive protests by environmental organizations highlights the domestic political sensitivity of offshore production. Against the backdrop of the European energy supply crisis, the question arises as to whether Croatia can afford to leave these resources untapped in the long term.

Italy already extracts around 4 billion cubic meters of natural gas (approximately 5% of its own requirements) and smaller quantities of oil in the Adriatic Sea.²⁴ Environmental concerns are addressed there by regulatory minimum distances (approximately 6 km from islands and 10 km from coastlines). Against this backdrop, the energy and security policy logic behind Croatia’s resistance to its own offshore production appears limited, as ecological risks would have a cross-border impact, while Croatia is simultaneously foregoing the use of its own resources.

With the LNG terminal on the island of Krk, which has been in operation since 2021, Croatia has significantly strengthened its role as a regional energy hub and made a measurable contribution to reducing Europe’s dependence on Russian energy supplies. In addition, the JANAF pipeline (established in 1974, annual capacity around 34 million tonnes) serves as a key strategic infrastructure.²⁵ The Omišalj terminal supplies Croatia, Slovenia, Hungary, Bosnia and Herzegovina, and Serbia with oil over a total length of 759 km. The intermediate storage facilities in Sisak, Virje, and Slavonski Brod underscore Croatia’s importance as a logistical hub for energy supply and regional stability.

Between 1.5 and 1.7 million hectares are available for agriculture. The north-east of the country, in particular, is characterized by the Pannonian Plain, which offers extremely fertile soil for growing cereals, sunflowers, rapeseed, sweetcorn, wine and fruit.

There is an enormous need for irrigation and modernization in Croatian agriculture, as the outdated technology in the agricultural sector is far from capable of promoting the country’s potential. A highly developed livestock industry (cattle, sheep, pigs and poultry) complements the national security of supply. Fishing and aquaculture in the Adriatic Sea contribute to both food security and the export economy. The ports of Rijeka (the largest cargo port in the Adriatic), Zadar, Split and Ploče are strategically important export and supply corridors.

In addition to energy and raw material issues, Croatia has an exceptionally strong structural advantage in the field of water resources. Eurostat data show significant differences within the EU; depending on the country, the average values range from around 4,500 to 9,000 m³ per capita per year. With around 30,700 m³ of fresh water per capita, Croatia is the most water-rich country in the European Union. This exceptionally high per capita availability gives the country not only ecological but also long-term strategic importance in the context of climate change, agriculture, industrial settlement and security of supply.²⁶

Qualitative indicators also confirm this position: Croatia scores 84.8 in the Environmental Performance Index, placing it in the good international range.

Securing maritime supply chains, energy, and freshwater reserves for the EU

Croatia has a dual energy infrastructure between its coast and inland regions, as well as control over LNG and pipeline infrastructure, making it a key regional energy hub.²⁷ The government is leveraging these assets to strengthen the diversification of the EU’s energy supply, reduce its dependence on Russian gas, and promote EU-compliant renewable energy projects along the Adriatic coast.

The strategic cargo ports of Rijeka²⁸ and Ploče²⁹ ensure the logistics of energy, agriculture, and industrial goods. The expansion of the Rijeka Gateway Container Terminal (first phase: 650,000 TEU, with future capacity exceeding 1 million TEU) and the modernization of the rail link to Zagreb and onward to Hungary strengthen connections to the European rail network, increasing the throughput capacity for freight traffic in Central Europe. In parallel, the Croatian port of Ploče functions as an important secondary seaport with universal cargo handling capabilities and a container capacity of approximately 60,000 TEU per year, as well as high bulk cargo volumes. This complements the logistics function of the Adriatic region and is of strategic importance, particularly along the pan-European transport corridor Vc, for the transit of goods to Bosnia, Croatia, and onward to Central and Eastern Europe.

Through the combination of modernized ports and efficient rail connections, Croatia is positioning itself as one of Europe’s most important infrastructure hubs.

At the same time, the integration of hydropower, offshore potential, and solar and wind projects makes Croatia a regional stabilizing force and a key player in European energy and industrial security. Its own oil and gas reserves in the Adriatic Sea, as well as traces of rare earth elements, underscore the strategic raw material potential that remains largely untapped in global competition. Furthermore, Croatia possesses the largest renewable freshwater resources in Europe, solidifying its key role in providing drinking water, ensuring sustainable agriculture, and fostering ecological stability within the EU.

Serbia: Lithium and agricultural resources

Serbia offers favorable conditions for renewable energies. Solar irradiance is 1,200-1,500 kWh/m²/year with around 2,000 hours of sunshine, while wind speeds on the plains reach 5-7+ m/s. The potential for hydropower is high, especially on the Sava, Drina and Ibar rivers.

In terms of raw materials, Serbia has one of the largest lithium deposits in Europe: Rio Tinto’s Jadar project comprises 136 million tonnes of ore with 1.8% lithium oxide, enabling an annual production of around 58,000 tonnes of lithium, sufficient to produce batteries for around 1.1 million electric cars. Copper production stands at 43,000 tonnes per year. In addition, rare earths have been identified in secondary deposits that could be relevant for technology and defense. Oil and gas reserves are also present.³⁰

Agriculture covers more than 3.25 million hectares of cultivated land; the regions of Vojvodina, Banat and Bačka are part of the Pannonian Plain and are ideal for arable farming. Serbia is one of the world’s largest corn exporters. Other agricultural products include oilseeds, fruit, vegetables, wine, milk and meat.

The agricultural sector exports grain, maize, fruit and wine worth over €5 billion annually, making it of great economic importance both regionally and internationally.³¹ Serbia is far from reaching its agricultural capacity and, in addition to efficient irrigation systems, needs capital investment in technology and the modernization of agricultural machinery.

In terms of drinking water, Serbia has high per capita freshwater resources, estimated at 64,000 m³/year, making it one of the more water-rich countries in Europe. Drinking water quality is good, achieving an EPI index score of 82.0, which indicates a medium to high level. This stands for a reliable supply and adequate treatment. In a regional comparison, Serbia is in the upper-to-middle segment, comparable to Bulgaria and Bosnia and Herzegovina, and significantly above countries such as Albania and North Macedonia.

Lithium and agricultural raw materials as bargains in EU accession negotiations

Serbia’s lithium reserves and extensive agricultural capacity give the country strategic advantages in the European energy transition and food security. The country has pursued a neutral foreign policy to date, is neither an EU nor a NATO member, and consciously seeks to maintain this neutrality, partly due to historically and economically close ties with Russia.

At the same time, Serbia is strategically focusing on its lithium deposits, particularly the Jadar lithium project, and is using these urgently needed raw materials as geopolitical and geoeconomic bargaining chips with the EU, recognizing the importance of these resources for the European high-tech and defense industries.³² Securing these resources for the EU would be an important step toward becoming less dependent on external sources and securing its supply chains. However, in its role as an EU accession candidate, Serbia is skillfully manipulating its lithium reserves to downplay Brussels’ demands for democratic reforms and compliance with other rule-of-law accession criteria, while simultaneously strengthening its strategic position in the regional raw materials sector.

A potential geopolitical tension arises from the rare earth minerals in Republika Srpska, the Serbian part of Bosnia and Herzegovina. Serbia has signalled its openness to close cooperation or de facto unification with Republika Srpska, particularly regarding the joint mining of these rare earths.³³ This strategic situation offers Serbia additional leverage in the regional raw materials market but also carries the risk of geopolitical tensions.

By integrating the expansion of renewable energies and the modernization of irrigation into its national policy, Serbia is strengthening its role in regional energy cooperation, the diversification of supply chains in line with EU standards, and cross-border agricultural trade. Furthermore, its geographical location in the Pannonian Plain and its access to regional transport corridors increase Serbia’s influence in the energy and industrial networks of the Balkans.

Governance, Regulatory, and Political Constraints

Despite significant potential in the areas of renewable energies, raw materials and agriculture, the region continues to face structural and political challenges that can hamper investment and prolong project timelines. EU engagement, including pre-accession instruments and technical assistance, can help mitigate governance and regulatory risks, supporting the rule of law, transparent project implementation, and alignment with European standards. Deficits in the rule of law, governance and administrative capacity remain pronounced in several countries. Political influence on the judiciary and administration, incomplete enforcement of existing laws and informal decision-making mechanisms lead to limited predictability and increase regulatory uncertainty. International comparative indices such as the Corruption Perceptions Index indicate ongoing governance risks in parts of the region.³⁴

A key structural problem is the limited efficiency of public administrations. Approval and authorization procedures are often complex, lack transparency and are difficult to predict in terms of time.³⁵

Delays in environmental assessments, concessions, grid connections or sectoral licenses are not uncommon and have a negative impact on investment costs and financing conditions.

Overlapping responsibilities between different levels of government and inconsistent interpretation of regulatory requirements exacerbate this problem.

In some cases, informal networks and non-institutionalized power structures further influence decision-making processes.

Property and usage rights remain particularly sensitive, especially in agriculture and the raw materials sector. Unclear land titles, historical ownership claims and incomplete cadastral data delay project development and make it difficult to access long-term financing.³⁶

In the raw materials sector, political influence, social conflicts and licensing risks are additional factors, particularly in the case of strategically important materials such as lithium, copper and rare earths.³⁷

In the renewable energy sector, too, state dominance, inconsistently implemented regulatory requirements and unpredictable subsidy mechanisms make market access difficult for private investors.

Across all sectors, political tensions within individual countries and unresolved conflicts in the regional environment, such as between Serbia and Kosovo, are increasing the volatility of the investment climate. A pronounced shadow economy, limited enforcement of regulatory standards and restricted access to long-term financing are exacerbating operational risk.³⁸ EU engagement, including technical assistance and pre-accession instruments, can help mitigate these governance and administrative risks, providing investors with greater predictability and alignment with Brussels standards.

Overall, any engagement with the region requires a careful analysis of political and regulatory conditions, realistic assumptions about administrative processes and implementation periods, and consideration of resilient local structures to appropriately classify the potential presented as long-term strategic opportunities.

Conclusion: Strategic Implications for the European Union

From a European Union standpoint, Southeastern Europe represents a strategically vital region for achieving multiple policy objectives, including energy security, climate neutrality, economic resilience, and technological independence. The combination of abundant renewable energy potential, critical raw materials, water-rich ecosystems, fertile agricultural land, and favorable topography positions the region as a key partner in the EU’s transition toward sustainable infrastructure and value chains.

Integration of the region into the EU electricity grid through investments in solar, wind, hydro, and storage technologies contributes directly to the Union’s Green Deal and REPowerEU goals, while EU funding mechanisms such as the Recovery and Resilience Facility, CEF Energy, LIFE, IPA III, WBIF, and the Economic and Investment Plan offer predictable, risk-mitigated frameworks for both public and private investors.³⁹

These mechanisms ensure long-term economic viability and reinforce the EU’s strategic autonomy in energy and industrial supply chains.

The exploitation of critical raw materials (lithium, copper, bauxite, nickel, chromite, and rare earth elements) further enhances European resilience by securing high-tech and defense supply chains. Modernization of agricultural systems, water management, and infrastructure supports food security, sustainable practices, and climate adaptation across the EU.⁴⁰

Targeted EU engagement—including technical assistance, pre-accession instruments, and governance support—can mitigate political and structural risks, ensuring transparent project implementation and alignment with European standards. Overall, the region presents long-term strategic opportunities for the EU, offering both economic benefits and the reinforcement of European strategic autonomy, climate goals, and regional stability.

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