Railway Reform in South East Europe and Turkey : On the Right Track?

Abstract

The railways of South East Europe and
 Turkey experienced significant declines in traffic volumes
 in 2009. This reflected the impact of the international
 financial crisis unleashed in the last quarter of 2008 and
 its contractionary impact on the economies of the region and
 elsewhere. Lower traffic volumes translated in most cases
 into a serious deterioration of the financial performance of
 the state-owned railways. This brought home the costs of
 failing to implement essential reforms to improve the
 operational and financial performance of the sector when the
 economy was strong. In Romania in 2010, large-scale layoffs
 were announced at short notice for the state rail companies.
 The situation is similar for the Bulgarian state rail
 incumbents; they face an acute liquidity crisis, and will
 require additional state aid merely to keep running. The
 lesson of these events is clear: it is unwise to delay
 implementing state railway sector reforms during good
 economic times, because the consequences can be too severe
 if a financial downturn occurs before those reforms have
 been taken and properly implemented. This report begins by
 assessing implementation of the European Union (EU) legal
 and institutional framework and the state of institutional
 reform in South East Europe and Turkey. It then turns to a
 comparative assessment of the operational and financial
 performance of the rail sector in each of the 10 countries
 over 2005-2009, comparing the report countries with the
 EU-27 benchmark and three EU countries, Germany, Poland, and
 Slovenia. The report then moves on to the issue of rail
 corridor performance, with a specific focus on improving the
 institutional and regulatory environment at border-crossing
 points, before offering some conclusions. The first annex
 focuses on the performance of the incumbent state-owned
 railways of South East Europe and Turkey in much greater detail.