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New report: EU must act to prevent needless environmental and social damage by Corridor Vc motorway in Bosnia and Herzegovina

Based on a recent site visit, the report examines two planned sections of the motorway – from Mostar South to the Kvanj Tunnel and from Konjic to Mostar, through the iconic Prenj mountain. Insisting on EU requirements on public consultation and environmental assessments is the only way to avoid increased public resistance and further delays, it finds.

In the Neretva valley south of Mostar, the project is in stalemate over disputes on routing and expropriation. The proposed route crosses agricultural land and villages with burgeoning small-scale tourism. Many people have already had to rebuild their lives from scratch due to war, yet are now threatened by expropriation, loss of income or ill health. Alternative routes are available, including one on the nearby Podveležje plateau, which was selected as the best one in 2011 but later abandoned for reasons that remain unclear. 

This January, the European Bank for Reconstruction and Development’s (EBRD) complaint mechanism published the results of an investigation (2), following a complaint by local people. It confirmed that the selection of the route south of Mostar had breached the EBRD’s environmental and social policy and that local people had not been consulted. As a result, it recommended re-examination of the route.

But the EBRD’s management is not willing to press for this re-examination, stating that project promoter JP Autoceste and the Federation of BiH authorities will not consider it. (3) Meanwhile, residents resisting expropriation are worried but determined, with several court cases ongoing.

The most difficult part of the motorway may be still to come – a 10-kilometre tunnel through the Prenj mountain, long planned to be a national park, but currently lacking legal protection. The report warns against repeating the same mistakes again, as the new routing was proposed in 2016 and adopted in 2017 without public consultations. 

People from the quiet village of Podgorani, nestled under Prenj, oppose the routing as it would run on viaducts behind their houses, causing noise and pollution. And at the other end of the Prenj tunnel, the motorway threatens the stunning Bijela valley, nominated for protection under the Bern Convention. (4) Local environmental groups such as Zeleni Neretva are also concerned that underground water flows in the area are not well enough understood to make informed decisions on the routing.

Fidanka Bacheva-McGrath, CEE Bankwatch Network – ‘People’s land is a source of security and stability. It can’t be ceded for an illegal and illegitimate motorway route, especially when reasonable alternatives exist. The European Commission and banks need to make it clear to the Federation authorities that the use of EU money depends on re-examining the route and meaningful public consultations. This could have been done by now if they had started when people first raised concerns.’

Pippa Gallop, CEE Bankwatch Network – ‘With more than EUR 3 billion in EU loans and grants for the Corridor Vc so far, it is imperative to ensure compliance with EU environmental, social and procurement standards. People’s livelihoods, BiH’s diverse and unspoilt rivers and mountains, and the EU’s credibility are at stake.’

Contacts

Pippa Gallop, CEE Bankwatch Network

pippa.gallop@bankwatch.org

+385 99 755 9787

Skype: pippa.gallop

 

Fidanka Bacheva-McGrath, CEE Bankwatch Network

fidankab@bankwatch.org 

+359 87 730 3097

Notes for editors

  1. The report, The Corridor Vc motorway in Bosnia and Herzegovina – A decisive test for EU standards, can be found here.

    The Corridor Vc is the EU’s 330-kilometre-long flagship road project in BiH. Around a third of the route has been built and several more sections are under construction (for more details, see here). It has been supported by more than EUR 3 billion in loans and grants from the EU, European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD), with more in the pipeline.

  2. Corridor Vc in FBH – Part 3 – EBRD Independent Project Accountability Mechanism Compliance Review Final Report, 11 January 2024.
  3. Corridor Vc in FBH – Part 3 – EBRD Management Response and Action Plan, 11 January 2024.
  4. Council of Europe Convention on the Conservation of European Wildlife and Natural Habitats.

NGOs request investigation into EBRD loan for North Macedonia mega gas pipeline

In a formal complaint to the Bank’s Independent Project Accountability Mechanism (IPAM), the groups assert that the project – due for approval by the Bank’s board of directors on 24 April – has breached national and EU law, and, as a result also contravenes the EBRD’s environmental and social policy.

The pipeline, if built, would import an additional 1.5 billion cubic metres of gas into North Macedonia –  three times the country’s 2021 consumption – massively increasing its dependence on fossil fuel imports.

Yet its main environmental impact – greenhouse gas emissions from burning the gas it transports – was not assessed in the environmental impact assessment for the project.

And no mandatory public consultation period was held before the environmental assessment was approved by the North Macedonia authorities.

Despite this, a loan for the project has already been approved by the European Investment Bank, as well as a grant from the EU’s Western Balkans Investment Framework.

Ana Colovic Lesoska, Executive Director, Eko-svest: ‘Most people in North Macedonia have no idea about this project, as there has been no public debate. But instead of insisting on meaningful public consultation, the EBRD has turned a blind eye. A European bank must insist on EU standards – which are anyway mandatory for a candidate country like ours.’ 

Pippa Gallop, Southeast Europe Energy Policy Officer, CEE Bankwatch Network: ‘The EU and its banks must stop applying double standards: At home they understand the need to phase out gas, but they have no problem with helping the Western Balkans get addicted to this pricey imported fossil fuel – and pretending it has next to no emissions. The EU must stop acting as a broker for the gas industry and push for a rapid phase-out.’ 

 

Contacts:

Pippa Gallop

Southeast Europe Energy Policy Officer, CEE Bankwatch Network

pippa.gallop@bankwatch.org

+385 99 755 9787

Ana Colovic Lesoska,

Executive Director

Center for environmental research and information Eko-svest

ana@ekosvest.com.mk

+38972726104

Notes for editors:

EBRD project summary document: https://ebrd.com/work-with-us/projects/psd/51747.html

More information on the project is available here.

Mostar locals continue to resist Corridor Vc routing amid new tunnel loan talks

Although the expropriation process for the South Mostar – Tunnel Kvanj section of the highway is at an advanced stage, some households are not willing to sell their land and are defending their rights, including in court, objecting to the way the route selection and expropriation has been carried out.

More than 20 people in Malo Polje, who have properties in the immediate vicinity of the planned highway route, told Bankwatch that no one has contacted them about the project’s impacts on their houses and land. They are extremely worried about damage and property value plummeting when the valley turns into a massive construction site, especially since the local economy, including tourism and residential construction, has been flourishing in recent years. Under these circumstances, routing the motorway through the valley looks more indefensible than ever.

The complaint mechanism of the European Bank for Reconstruction and Development (EBRD) has concluded that the route selection process was not transparent and lacked public participation, and that new environmental and social assessments for the section are needed. The mechanism has recommended a reassessment of the route alternatives, however, the project promoter, JP Autoceste, has rejected such an option.

Meanwhile, the EBRD has signed a new EUR 220 million loan for the North Mostar – South Mostar section. The 15 kilometers road will include a two kilometers long tunnel and is expected to cost in total EUR 433 million.

The EBRD and the European Investment Bank are also considering loans for a 10-km long, EUR 600 million tunnel through the iconic Prenj mountain. Home to bears, wolves and other protected species, the area is planned to become a National Park, but has not yet been protected. The current routing was chosen without public consultations, turning the tranquil Podgorani and Bijela valley areas into a motorway corridor, and threatening a new public backlash.

Fidanka Bacheva-McGrath, Bankwatch, says: ‘Four billion Euro from the EU, international banks and BiH have been invested in the construction of the Corridor Vc so far. It is incomprehensible that a project that has received such significant international financial backing can continue without following international standards.’

Beyond profit: Launch of report on EU’s green finance challenges

The report, entitled ‘Beyond profit: How to reshape the European Green Deal for people’s well-being’, examines the EU’s key funding mechanisms such as the Recovery and Resilience Facility (RRF) and InvestEU. It reveals significant shortcomings in how the EU’s investment strategy is being implemented, particularly its tendency to prioritise technological innovation and competitiveness over the basic needs of people and environmental sustainability. Additionally, crucial long-term solutions have been overlooked, leading to deficiencies in the quality and timing of funding. 

Frank Vanaerschot, Director of Counter Balance, says: ‘As it stands, the financing of the European Green Deal is built on shaky foundations. It pursues a short-term, market-based economic model that is incompatible with climate goals, economic growth and turning a profit. A stronger environmental agenda in Europe requires political will to build popular legitimacy through robust public investment in all Member States. Such investment must prioritise a just transformation by providing sufficient funding for critical climate actions and delivering green public services such as affordable housing, energy, transport and healthcare.’  

At present, InvestEU and the European Investment Bank (EIB) primarily target private investors, resulting in profitable companies receiving a significant portion of public funding. While the RRF represents progress in financing green initiatives with substantial resources allocated to Member States, its actual impact falls short, as only 18 per cent of milestones and targets have been achieved despite reaching its midpoint. Additionally, green policies face implementation challenges, particularly in central and eastern Europe. For example, in Latvia, no milestones and targets have been fulfilled relating to the green transition, and only 2 per cent in Bulgaria.   

Daniel Thomson, EU Policy Officer for Biodiversity at CEE Bankwatch Network, says: ‘The EU’s recovery fund was heralded as a key driver of Europe’s green transition when first announced. Yet halfway through implementation, we’re now seeing significant challenges emerging. In several countries, green measures have been delayed to such an extent that they risk not being implemented, and in some cases green projects have been removed entirely. The need to spend funds quickly should not compromise the enormous potential to deliver on the EU’s green objectives.’ 

The report advocates for a transformative public finance strategy that empowers citizens, civil society and local governments with access to information and resources for meaningful participation in shaping climate policy, recognising their central role in both legitimising and implementing climate action at the local level. 

For more information, please contact:

Notes to editors:

 

Environmental groups urge European Commission to speed up nature safeguards in the Western Balkans, Ukraine, Georgia and Moldova

The Energy Community countries are no strangers to conflicts between energy infrastructure and nature protection. Rampant hydropower construction in the last two decades has damaged rivers and streams in some of the most precious and pristine areas of the Western Balkans, Dniester River basin, and Georgia (2). 

But as the countries strive to overcome the recent energy crisis and meet their 2030 renewable energy targets (3), a significant ramp-up in energy infrastructure construction is starting, including both low-impact forms such as rooftop solar and highly damaging ones like hydropower and forest biomass. This is expected to intensify in the coming years.  

The Energy Community countries are global biodiversity hotspots, with well-preserved mountains, river and lake systems, that are home to numerous endangered and endemic species and important habitats. Many rivers are still in good or pristine condition, but are woefully under-protected. The EU accession process requires the countries to enact EU nature protection legislation, but in many cases there are no clear deadlines for this. 

The organisations are therefore asking the Commission to speed up the inclusion of the EU Habitats, Birds and Water Framework Directives in the Energy Community Treaty, in order to ensure a balance between nature protection and energy sector development.

In December 2023, the European Commission indicated that these Directives could be included in the Energy Community Treaty by the end of this year if work commenced ‘shortly’ (4). However, it is not clear whether any proposals have been prepared yet.

According to the organisations, ‘solar and wind development is finally ramping up, which is welcome and necessary’. But, they warn, ‘adequate environmental safeguards are a fundamental precondition for the success of such development and for the avoidance of a public backlash against renewables.’

Pippa Gallop, Southeast Europe Energy Policy Officer at CEE Bankwatch Network – ‘This region has already suffered from uncontrolled hydropower development and widespread public resistance. We can’t afford to repeat this with solar and wind.’ 

‘The Commission urgently needs to include EU biodiversity and water safeguards in the Energy Community Treaty, to reach a better balance between energy development and nature protection.’ 

The joint letter can be found here.

Contacts:

Pippa Gallop,
Southeast Europe Energy Policy Officer
CEE Bankwatch Network
pippa.gallop@bankwatch.org
+385 99 755 9787
Skype: pippa.gallop

Andrey Ralev,
Biodiversity Campaigner
CEE Bankwatch Network
andrey.ralev@bankwatch.org

Notes for editors:

  1. The Energy Community Treaty is an international organisation which brings together the European Union and its neighbours to create a pan-European energy market. It was founded by the Treaty establishing the Energy Community signed in October 2005 in Athens, Greece, in force since July 2006. Its key objective is to extend the EU internal energy market rules and principles to countries in Southeast Europe, the Black Sea region and beyond on the basis of a legally binding framework. The current Contracting Parties are Albania, Bosnia and Herzegovina, Georgia, Kosovo, Moldova, Montenegro, North Macedonia, Serbia and Ukraine.
  2. For more on this topic, see for example https://bankwatch.org/project/rivers, https://www.balkanrivers.net/en. 
  3. More information on the targets can be found here.
  4. See the conclusions of the Energy Community’s 26th Environmental Task Force meeting from December 2023. 

Halfway there but facing a mid-life crisis: why the EU’s recovery fund is failing to deliver

The evaluation [1] presents too rosy a picture of how public money has been spent on investments and reforms. But it fails to detail the challenges underlying the implementation of the programme, casting doubt on the potential of this massive fund to reach its objectives. This is particularly true for green measures, since fossil fuel investments are still allowed, money for nature and the ambition of ‘green measures’ is severely lacking, and the majority of funds continue to be channelled into big companies instead of benefitting community-led initiatives.  

Progress remains uneven across the EU, with some countries, particularly in central and eastern Europe, struggling to roll out key measures for the energy transition. Some of these are aimed at modernising electricity grids, deploying renewables and renovating buildings. In Bulgaria, for example, just 2 per cent of green measures have been implemented, while in Latvia, only 2.3 per cent of funds have reached their intended beneficiaries. With the recovery fund due to end in 2026, the pressure to spend quickly and compromise on climate ambition is now a major challenge for governments and the European Commission, with potentially negative impacts on the implementation of the 2030 climate goals.  

The use of the fund to tackle the biodiversity crisis has also been poor: less than 1 per cent of spending has been earmarked for nature restoration and conservation measures. Meanwhile, several Member States have watered down their environmental assessments under the guise of ‘emergency’ procedures, jeopardising the goals of the EU 2030 Biodiversity Strategy and European Green Deal.  

Unlike other EU-funded instruments, the recovery fund almost exclusively relies on milestones and targets to assess implementation progress. But due to the structure, it is incredibly difficult to assess the level of implementation, the contribution to green objectives, and the impacts of projects on the ground. Compounding matters, the imposition of tight deadlines has limited opportunities for meaningful public consultations, particularly with civil society and local authorities, leaving the needs of citizens unmet [2].  

The EU and its Member States must start discussing what comes next, as meeting the EU’s self-stated objectives will require further funding beyond 2026. Any future fund must learn from the experience of the Recovery and Resilience Facility for the benefit of both citizens and the environment.  

Christophe Jost, Senior EU Policy Officer at CEE Bankwatch Network, said: ‘The Recovery and Resilience Facility was initially a breath of fresh air, allowing Member States to invest in the energy transformation. But implementation has proved complex. Now there’s a real risk that not all of its objectives will be achieved. We need to see more detailed and transparent monitoring of the measures and debate the future of EU funding after 2026.’ 

Daniel Thomson, EU Policy Officer for Biodiversity at CEE Bankwatch Network, said: ‘The Recovery and Resilience Facility was clearly aimed at speedy disbursement. But we need to honestly assess what impact it has had on the quality of the measures and whether environmental safeguards have been properly applied. Time is of the essence when it comes to spending, but it shouldn’t come at the cost of achieving the EU’s green objectives.’ 

For more information, please contact: 

Daniel Thomson
EU Policy Officer for Biodiversity
CEE Bankwatch Network
daniel.thomson@bankwatch.org, +32 (0)2 893 08 61 

Christophe Jost
Senior EU Policy Officer
christophe.jost@bankwatch.org
+32 (0)489 69 03 56   

Notes for editors

[1] European Commission, Mid-term evaluation of the Recovery and Resilience Facility (RRF),  21 February 2024. 

[2] Citizen’s Observatory for Green Deal Financing, No recovery without citizens: why public involvement is key to Europe’s green transformation, June 2023.