Stability Pact: WTII Environment Task Force Document

Business Advisory Council

Meeting No 3 on June 23, 2000 in Stuttgart: Summary Record

Introduction by the Co-chair Mr. Nussbaumer; Approval of the agenda; Approval of summary record Vienna meeting.

The agenda of the present meeting and the summary record of the previous meeting were approved. Co-chair Nussbaumer delivered introductory remarks on the agenda-items listed, indicating how the BAC's activities and involvement might contribute to furthering the economic development of South Eastern Europe

Changes in Membership and Co-chairmanship.

Mr. Nussbaumer informed the members about Mr. Monod’s decision to step down as BAC co-chair following his nomination as the advisor to the French President. Co-chair Nussbaumer introduced the newly appointed co-chair, Mr. Yves-Thibault de Silguy, former member of the European Commission responsible for Economic Affairs and currently Member of the Executive Board of Suez-Lyonnaise des Eaux. Furthermore, two new members of the BAC were introduced/announced: Mr. Velitchko Alexandrov from Bulgaria and Mr. Erich Becker from Austria, replacing Mr. Michael Groeller.

Material, Documents

Under this agenda-item Mr. Nussbaumer presented information material about the working structures and the membership of the BAC, which had been distributed previously with a folder to all members. Furthermore, a flyer and language on BAC priorities as well as slides, which will enable a uniform presentation of the BAC were presented. Mr. Nussbaumer encouraged the members to make use of this material. The data files of the slides are available as PowerPoint-files on request at the support office to Mr. Nussbaumer.

Communication among BAC members, external contacts

Co-chair Nussbaumer reported that effective e-mail communication has been established among the BAC members. Apart from the Stability Pact website ( www.stabilitypact.org) , other useful sites were given: www.seerecon.org (EC/WB office for SEE), www.eib.org (EIB), www.worldbank.org (WB), www.ebrd.com (EBRD). Information on tenders for QSP (Infrastructure) will be available on: www.seerecon.org (WB/EC, go to "Business and Investment Opportunities") or www.ted.eur-op.eu.int (for EIB projects) or www.ebrd.com (EBRD, go to "Procurement"). Mr. Nussbaumer reported about the great interest which has been shown from the side of various business associations towards the BAC. Specifically he mentioned letters which he received from the Business and Industry Advisory Committee (BIAC) to the OECD, from the US Council for International Businesses (USCIB) and from the Black Sea Economic Cooperation Business Council (BSEC EC).

Members’ statements to StP initiatives

BAC Members did not have any particular comments to make on the key papers (reports produced by World Bank, EIB, EBRD and the Investment Compact) prepared for the March Funding Conference on March 29-30, 2000 in Brussels.

Regional Funding Conference, March 29-30, 2000, Brussels

Regional Table Meeting, June 8, 2000, Thessaloniki

The Deputy Special Coordinator for Working Table II, Mr. Ed Kronenburg reported on the results of the Regional Funding Conference, where donors had pledged 2.4 billion Euro for Quick Start Projects. With regard to the 35 infrastructure projects (worth 1.1 billion Euro) the EC/World Bank Office for SEE, together with other lead agencies analyzed these pledges and highlighted those projects where additional funding was required. For the vast majority of projects, however, funding was already secured. Private Sector Development under Working Table II attracted total donor pledges of EUR 356 million. The participants in the Funding Conference were presented a list of ten priority Regional Private Sector Initiatives, which was prepared by the EBRD. Pledges of grant funding to these specific initiatives totaled EUR 82 million. In addition, IFI/multilateral commitments totaling EUR 253 million were made particularly in the area of lending to SMEs and trade facilitation programs.
Furthermore, Mr. Kronenburg gave a short summary about the Regional Table meeting, which took place on 8 June in Thessaloniki. The Regional Table endorsed the ‘Agenda for Stability’ which will be the basis for taking forward Stability Pact activities in the coming months. The document will assist in consolidating the Pact’s achievements and in rationalizing further work. As a general rule, emphasis will be put on taking forward the activities currently being pursued before establishing new initiatives. In addition thereto, the Regional Table approved a ‘Charter for Media Freedom’, in the spirit of which Stability Pact partners will co-operate to protect freedom of expression and encourage observation and implementation of the principles enshrined in it. The Regional Table reached consensus on full participation of Canada, Japan, Norway and Switzerland in the Stability Pact.

BAC Priorities

Mr. Nussbaumer presented a draft paper on BAC priorities. In the ensuing discussion BAC members emphasized, while recognizing the importance of infrastructure, the need to create jobs on a longer term. Several BAC members felt that the main task of the BAC was to give advise to the StP as well as to Governments in the region on disincentives to investment. Furthermore, a number of BAC members stressed that more emphasis be put on education, especially on vocational education. Several members suggested that every project should have a training component. It was agreed that Ms. Purg will elaborate a proposal on training for Government representatives.
Several members mentioned the need to encourage initiatives in the field of good governance. It was noted that the OECD is currently issuing a new version of its Guidelines on Good Governance. One BAC member pointed to the need to further develop the E-business in the region. The BAC members treated possible involvement in the QSP. Discussed activities ranged from regular monitoring of selected individual projects to a general monitoring of project reporting, in particular with regard to progress achievements. But it was felt that the organization, responsible for the implementation of the projects and the StP’s secretariat as supervising unit have all the means for monitoring and will inform the BAC on the progress of the implementation of the QSP. Generally it was felt that BAC members should get more information on the achievements of the Stability Pact so far and, more specifically, about the implementation of the QSP. The Office of the Stability Pact Coordinator will forward a summary of StP activities to date to BAC members.

Investment Guide for SEE

Co-chair Nussbaumer briefed the group on this initiative which was taken by the Bulgarian Foreign Investment Agency and which is part of the Flagship Initiatives under the Investment Compact. The SEE Investment Guide aims at strengthening links between FDI and the indigenous private sector and promoting the region as favorable investment zone. Co-Chairman Nussbaumer encouraged the BAC members once more to actively support this initiative and made reference to the relevant correspondence already exchanged of which copies were attached in the “meeting folder”.

Investment Disincentives

Co-chair Mr. Nussbaumer pointed to the efforts already undertaken in this field by the World Bank /IFC through FIAS, the EBRD, the OECD and others. Most of the existing initiatives, however, treated the improvement of the investment climate on a rather general basis. BAC members were, therefore, asked to present concrete and specific investment blocking issues in the countries of SEE. Several BAC members responded by giving concrete examples of investment barriers. Members were asked to put forward further examples, which would serve as important input for the envisaged visits by BAC delegations to the region. If need be, such information could be presented in a neutral way. It was agreed that the co-chairs would collect this information and, depending on the urgency of the issues, forward it to the Special Coordinator. Co-chair Mr. De Silguy elaborated on the absolute need for private investment and on the main investment disincentives: corruption, the lack of rule of law, the lack of significant local partners, the slowness in taking political decisions. The suggestion to propose that each country of the region voluntarily adheres to the recent OECD Convention combating Bribery and Corruption was unanimously accepted; in case of misuse of funds, the IFIs should consider suspension of payments. He also stressed that a core of rules for international bids should be put in place and that the BAC should make proposals to that effect.
Other members stressed that the main disincentive for investment in SEE was the political and economic instability.

Visits to SEE Countries

Under this agenda item members were asked to give their opinion on the idea of visiting the countries of SEE. It was agreed that the first such visit should be combined with the forthcoming mission of Special Coordinator Bodo Hombach to Bulgaria, planned for 19-21 July. Several members expressed their interest in joining Mr. Hombach on this visit. It was noted that, apart from meetings with Government representatives, it will be important to meet with representatives of the business community (both foreign and domestic) and with members of the Country Economic Teams, which were set up to implement the Investment Compact. The local member of the BAC should be involved in the preparation and organization of such visits.

Investment Compact

Two leading OECD representatives for the Investment Compact (Mr. Alter and Mr. Murphy) and the Country Economic Team (CET) Leaders from Romania (Ms. Zaharia), Bulgaria (Mr. Tabakov) and Croatia (Mr. Kardun) briefed the group on the state of play with regard to the implementation of the Investment Compact. It was explained that the ‘Country Economic Fact Sheets’ for all the countries in the region had been updated mid June. The Country Fact Sheets reflect the current state of the investment and business environment in the respective countries and give an outline of key policy reform priorities for the next one and a half years. The support office of Co-chair M. Nussbaumer sent the word data file of the Country Economic Fact Sheets to all BAC members on June 21, 2000. Mr. Alter repeated his invitation to BAC members to participate in OECD-meetings in individual countries to provide a private sector perspective to investment discussions. He also invited BAC members to the forthcoming meeting of the Investment Compact Project Team, which will meet on 6 July in London.
BAC members agreed to work closely together with the Investment Compact Team, since it is very much in the interest of the BAC to see a successful implementation of the Compact.

Calendar 2000

It was agreed that the next regular BAC meeting would take place on 17 October in the afternoon. It will be held back to back to the next meeting of Working Table II, planned for 16/17 October in Istanbul.

Any Other Business

- none -


Attachments:

1. BAC - Meeting No. 3, Final Agenda

2. BAC - Meeting No. 3, List of Participants

3. List of the documents provided at the beginning of the meeting (“meeting folder”)