Operationalising Fundamentals: Rule of Law Conditionality in the EU Growth Plan
The EU Growth Plan for the Western Balkans was introduced in 2023 as a complementary enlargement instrument designed to foster economic convergence and social development alongside the broader Europeanisation process. What distinguishes this instrument, however, is not merely its economic ambition but its method – modelled on the Recovery and Resilience Facility, the Growth Plan relies on a financial conditionality. By design, the instrument rearticulates accession conditionality within the enlargement framework by operationalising it through a dedicated financial mechanism. This raises the question of whether the Growth Plan marks a de facto shift in enlargement policy from predominantly normative commitments articulated as political principles, toward performance-based governance in the concrete realm of money, where compliance is assessed through measurable outputs and disbursement conditions. Therefore, the conditionality transforms from political rhetoric to operationalised incentives.
The Growth Plan is built upon the enlargement methodology which relies on the ‘fundamentals first’ approach, thus the performance-based funding is tied to specific rule of law benchmarks. This instrument highlights the conceptual link between economic integration and adherence to founding values in a way that access to the economic (and financial) benefits of integration is subject to political (and rule of law) conditionality in particular, while the rule of law reforms are also undermined by socio-economic determinacies,1 suggesting that fundamental reforms and socio-economic convergence are mutually reinforcing. More specifically, weak socio-economic conditions can reduce administrative capacity, deepen public dependence on politicised state structures, and make institutional reform more vulnerable to clientelistic capture, thus allowing the political elites to instrumentalise reform processes selectively, presenting formal compliance while preserving existing power relations. In this sense, the Growth Plan is not merely and only about growth, it is also about trust – trust in the legal and institutional framework of the candidate countries to manage EU funds. Hence, fundamentals are no longer treated as narrow objectives, but as preconditions for access to financial resources, market integration and gradual participation in the EU. At the same time, financial incentives and market access cannot substitute for structurally weak institutions.
This blog post examines how the EU Growth Plan reconfigures enlargement conditionality by embedding the ‘fundamentals first’ principle into a performance-based financial framework, and assesses the implications and contribution of this approach for the credibility and effectiveness of rule of law reforms in the Western Balkans.
Embedding the ‘fundamentals’ into a transactional framework
The Growth Plan is structured around accelerating fundamental reforms, including on the fundamentals cluster. For that purpose, each beneficiary (a country within the scope of the instrument) is required to prepare and implement a Reform Agenda, which is approved by the Commission following positive assessment by the Council. The Reform Agenda is organised around five policy areas, one of which is explicitly dedicated to ‘fundamentals’, thereby incorporating – albeit to a defined extent, rule of law-related commitments. Other policy areas include energy, green and digital transition, private sector development and business environment, and human capital (consisting of education and labour market policies).
The reform priorities are initially defined by the countries themselves, based on the findings of the enlargement monitoring mechanisms, accompanied by a logical framework of benchmarks. Hence, the instrument consolidates and extends the objectives established under the existing instruments, embedding them within a transactional logic whereby disbursement is directly tied to the fulfilment of reform benchmarks, meaning that reform progress is translated into material reward, while non-compliance carries financial losses. The facility has a total financial envelope of €6 billion for 2024-2027, consisting of €2 billion in grants and €4 billion in concessional loans.
The more active role for the Western Balkan countries departs to some extent from the top-down approach inherent for the accession process in which reform priorities and accession criteria are externally defined and compliance is rewarded accordingly.2 Another characteristic worth highlighting is the treatment of fundamental reforms in correlation with socio-economic policies aimed at bridging the convergence gap. In this way, the multidimensional nature of certain areas, such as the judiciary and the fight against corruption, comes to the fore, as they are positioned not merely as governance requirements but also as preconditions for economic integration. In that sense, the financial conditionality remains aligned with the values and priorities that the EU promotes in its enlargement policy towards the region.
Nevertheless, a key question is whether this financial arrangement provides sufficient credibility and incentive to push for reforms already long embedded in other enlargement instruments and frameworks, and whether it can effectively address the structural constraints that have traditionally limited their implementation. Before engaging in a more substantive analysis of the fundamental content within the Reform Agenda, the architecture of the instrument itself requires closer consideration.
On one hand, money does make a difference, as can be observed within the Union itself including through the introduction of Regulation 2020/2092.3 However, the amount of funds available under the Growth Plan is not comparable to the financial benefits associated with full accession. The instrument is time-limited and therefore operates primarily as a short-term catalyst rather than a structural solution which raises concerns about sustainability and strategic alignment.4
By creating a parallel financial framework that operates alongside, but separate from, the accession process, the Growth Plan may risk fragmentation rather than consolidation. This, in turn, invites reflection on the normative implications of incentivised compliance within the broader enlargement policy.
Beyond incentives: Assessing the reform logic
While the Growth Plan introduces an innovative financial framework, its transformative potential ultimately still depends on the depth and sustainability of the reforms it seeks to incentivise. Therefore, the next issue is not whether benchmarks can be defined or funds disbursed, but whether performance-based conditionality can generate genuine institutional transformation in areas that have continuously proven resistant to reform. In that sense, institutional transformation should be understood not merely as legislative adjustment, but as establishing a track record of sustainable and durable change in the behaviour and accountability of public institutions.
The departure from the traditionally top-down conditionality enhances domestic ownership and contextual adaptation, but it still does not eliminate the risk of using the EU agenda to reinforce hybrid regimes and political elites’ dominance.5 The challenge lies in ensuring that reform agendas reflect substantive domestic commitment rather than strategic alignment designed primarily to unlock funding. The requirement to include and consult civil society organisations in the preparation of the Reform Agenda represents a positive step in this regard, not only in terms of transparency but also in mobilising societal support around shared reform objectives. Nevertheless, its effectiveness will ultimately depend on the depth and sincerity of such engagement rather than its formal inclusion alone. Financial conditionality can shape elite behaviour precisely because it alters the cost-benefit structure of reform, yet where ruling elites benefit from institutional informality or politicised control, such incentives may (re)produce selective adaptation rather than genuine reform.
An analysis of the Reform Agendas reveals that the majority of rule of law measures – particularly those concerning the judiciary, remain largely focused on “legal engineering”, such as the adoption of new legislation or the strengthening of institutional capacities. This approach is evident, for instance, in the cases of North Macedonia and Albania, where reform commitments are primarily framed in terms of legislative amendments and institutional capacity-building efforts. A further paradox emerges when considering the length of time individual countries have spent in the accession process, as this shapes differing levels of alignment and progress. In Montenegro, the current frontrunner in the accession negotiations, the Reform Agenda adopts a broader approach, emphasising the full implementation of procedures for the appointment, performance evaluation and promotion of judges and public prosecutors through dedicated strategies and action plans, in line with the amended Law on the Judicial Council and Judges and the Law on the State Prosecution. At the same time, the European Commission has consistently assessed Montenegro’s judicial system as only moderately prepared.
The most illustrative case, however, is Serbia. Serbia’s Reform Agenda prescribes only two measures in the field of judiciary reform: increasing the number of elected judges and public prosecutors by 10 percent, and reducing the disposition time of first-instance cases before the Administrative Court by at least 55 percent. Both indicators are predominantly quantitative in nature. Notwithstanding these limited benchmarks, Serbia was approved funding in January 2026, even though the Commission’s assessment of the conditions for payment noted that political pressure on the judiciary and prosecution remained high and that a considerable number of judicial vacancies were yet to be filled. The assessment further highlighted the pending amendments to the Law on the Judicial Academy and stressed that the new legal framework would need to be implemented consistently and effectively in order to strengthen judicial independence. Shortly thereafter, however, Enlargement Commissioner Marta Kos indicated that the EU was reconsidering further funds for Serbia, citing concerns that recent justice-related legislation was “eroding trust” in the country’s commitment to the rule of law. Moreover, the EU signalled that it could withhold funds from a €1.6 billion allocation of loans and grants if these concerns were not adequately addressed. Therefore, financial conditionality can generate immediate leverage but the limits of incentivised compliance among structural governance deficits still persist
Conclusion
The EU Growth Plan operates within the enlargement framework, designed to strengthen the EU offer to the Western Balkans in a context of heightened geopolitical competition and to stimulate reforms, including those under the ‘fundamentals first’ approach. In this sense, it should be understood not as a substitute for accession, but as a catalyst for reform and a test of the EU’s credibility in enforcing conditionality through tangible incentives.
At the same time, the Growth Plan must remain coherent with, and subordinate to, the accession process, which continues to constitute the primary strategic objective of integration. Its time-limited nature and finite financial package mean that it cannot, by itself, resolve entrenched structural and systemic deficits, particularly in the field of the rule of law. Nonetheless, it represents a positive development in that it approaches fundamental reforms in a more multidimensional manner, linking governance and socio-economic convergence.
Ultimately, the Growth Plan serves as an experimental ground for financial conditionality within enlargement policy. If embedded consistently and applied credibly, it may strengthen the overall architecture of the accession process by reinforcing the link between access to funds and the membership perspective. The Growth Plan is less likely to matter as a stand-alone breakthrough, but in revealing how far financial leverage can go in advancing rule of law reform – understood not as a self-standing objective but as a precondition for economic advancement, just as socio-economic strengthening can in turn support more durable institutional change.
- Hogic, Nedim. “Pre-Enlargement Reform Failures in the Western Balkans: Social and Economic Preconditions of the Rule of Law.” Hague Journal on the Rule of Law, vol. 16, 2024, pp. 693–714. https://doi.org/10.1007/s40803-024-00235-2
- Schimmelfennig, Frank, and Ulrich Sedelmeier. “Governance by Conditionality: EU Rule Transfer to the Candidate Countries of Central and Eastern Europe.” Journal of European Public Policy, vol. 11, no. 4, 2004, pp. 661–679. https://doi.org/10.1080/1350176042000248089
- Ognjanoska, Leposava. “Can Money Buy Rule of Law? Overview of the Recent Instruments within the EU Conditionality Policy.” UNIO – EU Law Journal, vol. 10, no. 2, 2024, pp. 4–17. https://doi.org/10.21814/unio.10.2.6050
- Marović, Jovana, and Odeta Barbullushi. Enforcement, Incentives, and the Missing Link: How Accession Treaties Can Strengthen Europe. Policy Brief, BiEPAG, Feb. 2026.
- Richter, Solveig, and Natasha Wunsch. “Money, Power, Glory: The Linkages between EU Conditionality and State Capture in the Western Balkans.” Journal of European Public Policy, vol. 27, no. 1, 2020, pp. 41–62. https://doi.org/10.1080/13501763.2019.1578815