Southeast European railways: A puzzle of national companies in need of a regional strategy

Posted: 4 June 2015 | | No comments yet

What options are there for the Southeastern Europe railway industry to up their game? Can concentrating on increasing infrastructure financing, adopting fairly-regulated competition and driving forward a clear transport policy help the situation? Libor Lochman, Executive Director at the Community of European Railway and Infrastructure Companies (CER) and Matteo Mussini, CER Head of Public Affairs and Operations, look at some suggestions.

southeast european railways

Around two decades after the collapse of the Soviet block and the breaking up of Yugoslavia, Southeast Europe is still looking for a consistent regional narrative, where the European Union could serve as a solid reference for the development of its national public institutions and a framework for sound economic growth.

Instead, Southeast Europe is today a territory where the European and the Russian spheres of influence still compete over the strategic friendship of this or that country, with possibly other interferences from the Far East. Greece has been in the middle of a social, institutional, political and economic crisis for at least five years now and an exit from the Euro area looms on the horizon, while the EU is more often perceived as a problem rather than as a solution. Romania and Bulgaria, both EU Member States since 2004, are still far from completing what the Union defines as the ‘Europeanisation process’ – revealing once more how the Union has been incapable of promoting the respect of its most celebrated Copenhagen criteria. The Western Balkans, with probably the only exceptions of Slovenia and Croatia, struggle with regional cooperation and are far from being able to exploit the opportunities offered by their geographic position and a fast growing Middle East.

All in all, most European policies have failed in this macro-region, and transport policy represents no exception. Most unfortunately, the railway system reflects with a great deal of exactitude the broader situation. Ultimately it has been a mix of national and European Union errors which brought the situation to its current point. And strangely enough overly hasty absorption of the EU acquis has often been as much to blame for the failings as too much resistance to it.

In some cases, errors were made due to overzealessnous on the part of national governments in following the European way.

Romania for example not only absorbed most of the EU rail acquis in record time but went much further. Beyond opening those portions of the market which were demanded by the various rail packages, Romania decided to pursue the highest ambition of the Union executive branch by separating the rail infrastructure manager in 1998 and introducing competition in 2001, without however being able to provide for adequate and reliable financing of the rail infrastructure. As a result, the already market-disoriented public rail company was split up into an under-financed infrastructure manager, and passenger and freight operators, which suffer today from all possible diseases: fierce competition from better-financed private competitors and more efficient road carriers, a quality of the services necessarily limited by the quality of the infrastructure on which those services are provided, a failing social dialogue which has been incapable so far to bring any positive results either to the companies or to their workforce.

Bulgaria closely followed the Romanian example, with the only difference being that the rail network has been so far slightly better financed.

And another example is of course Greece. Years before the economic crisis hit the Western economies and plunged Greece into its worse crisis for centuries, Greek railways were strong-armed into reforms that did everything but give Greek railways a chance to recover: it led the nearly 2.5% passenger modal share of 1995 to shrink to a little more than 1% in 2010, and caused the 1% freight modal share to rise from 1995 up to 2007 only to plummet again the following years.

In other cases, countries proved themselves to be particularly good at prioritising national issues.

The Western Balkans have in fact been ailing from the exact opposite disease to Romania: they only followed Brussels’ suggestions to think regionally to a limited extent, as they were too busy consolidating local institutions. As a result, regional cooperation has been suffering dramatically. Cross-border services in this region are today an option for old-school rail enthusiasts rather than for business and businessmen. Pan-European corridors are simply not delivering the kind of reliability and speed required to be competitive with the shippers that prefer to reach Rotterdam via boat from the Chinese Sea through the Suez Canal.

The situation today is tragic, although there is increasing lucidity as to the roots of the problems that affect the Southeast European region. The Western Balkans in particular seem recently more keen to work to be a real gate for the cargo coming from the East – but much still needs to be done.

A few suggestions for a brighter future:

Concentrate on infrastructure financing

The quality of the rail services can only be as good as the quality of the rail infrastructure. With no good rail infrastructure, there is no good rail service. Graph 3 shows the positive relation between rail infrastructure financing and rail freight modal share development in the EU between 2002 and 2012 – with Romania and Bulgaria in the bottom left corner of the graph.

There is no chance for rail if competition with road is not based on a fair regulatory environment

Fiscal and charging policies have to help rebalance intermodal competition, pushing towards modal shift and a logistics system where each transportation mode does what it does best.

Think regional

Infrastructure managers must think with a corridor-approach, coordinating infrastructure development and maintenance along a few key routes. Rail companies must cooperate with each other, and work in view of offering to clients the possibility to talk to single interlocutors (acting as one-stop-shops) in order to plan international routes. Furthermore, it must be pointed out that the blame for the current great lack of regional cooperation in Southeast Europe should not be put on transport ministries alone. Cross-border services can work only if all relevant ministries (of transport, of finances, of internal affairs) combine their efforts in streamlining all administrative procedures.

Have a clear transport policy and take great care in implementing the EU acquis intelligently

It is necessary for Southeast European countries to start by shaping their own transport policy first and defining what their regional rail system needs: once this is clear, they must then try to see how much these needs fit the EU acquis and find the best possible match.


Libor Lochman has been Executive Director of the Community of European Railway and Infrastructure Companies (CER) since 1 January 2012. Libor graduated at the Transport University in Zilina and has a doctorate in electronics from the West-Bohemian University Plzen. He has a strong background in Control-Command and signalling systems. Prior to his role as CER Deputy Executive Director and Lead of Technical Affairs (2007-2011), Libor acted as Director of the Railway Test Centre – a facility for testing European rolling stock, infrastructure and signalling components in Prague (2000-2005). Libor joined the Editorial Board of European Railway Review in January 2013.

Matteo Mussini joined the Community of European Railway and Infrastructure Companies (CER) in 2009 and is currently its Head of Public Affairs and Operations. He is an Italian public affairs professional with previous experience working in the European Parliament as a Political Advisor in the cabinet of an Italian MEP, and in Italian public administration as European Project Manager. Matteo studied philosophy, business and economics in Milan, and political science in London.