With over 200 projects started, Stability Pact "Quick Start Package" is a motor of Southeastern Europe’s recovery

The vast majority of the 244 projects in the Stability Pact’s Quick Start Package have started. One year after the donor community secured their funding at the March 2000 Regional Funding Conference, 201 are underway. This makes the QSP probably one of the fastest multilateral assistance packages of the international community ever to be implemented. The Special Co-ordinator of the Stability Pact, Bodo Hombach, underlined that "… one would always wish things to go even faster, but this is a real success. The Quick Start Package has given a kick-start to progress in Southeastern Europe. In a joint effort together with our partners we have managed to establish an accelerated procedure for assisting the region". Hombach said that the region is still volatile and he warned against any diminishing efforts now: this would be the wrong signal. Two further conferences on assistance and reforms in Southeastern Europe are planned for later this year.

The QSP was presented by the Special Co-ordinator of the Stability Pact to the Regional Funding Conference held in Brussels on 29-30 March 2000. Donors pledged € 2.4 billion. One year later, the implementation of the Quick Start Package (QSP) is showing good results. According to a comprehensive report on the Quick Start Package, issued by the Stability Pact, out of 244 projects of all three Working Tables, 201 (82 %) are underway. This is significant because the timetable foreseen for the QSP was that projects should, where possible, start within one year. All of the 244 projects were conceived on the basis of proposals emanating from the governments of Southeastern Europe and were selected according to the strategic criteria of the Pact's three working tables.

The breakdown of the € 2.4 billion per working table was as follows: for Working Table I (Democracy and Human Rights) € 0,46 bio, for Working Table II (Economic Reconstruction) € 1,8 bio and for Working Table III (Security & Justice and Home Affairs) € 0,08 bio (an additional € 0,06 bio is not allocated to any specific Table).

Already about half the total aid committed for Working Table I (Democracy and Human Rights) has been expended, including refugee return programs with a disbursement rate of about 70%. At Working Table III (Security & Justice and Home Affairs), 55% of the money pledged has by now reached its recipients.

Infrastructure projects make up over half the financial commitments within the QSP (€ 1,3 bio). They are the most time consuming to implement. Nonetheless, in the infrastructure sector of Working Table II (Economic Reconstruction) 15 out of 25 projects are underway, representing 75% of the total financial commitments for this sector.

The overall disbursement rate for all Working Tables is satisfactory and against the background of the unevenly developed absorption capacity of the countries in the region is generally progressing better than could have been expected. However, there are some disbursement delays, for which both recipients and donors share responsibility. For instance, delays have been caused by lengthy and at times cumbersome procedures on the donors side, or the lack of legal conditions in the target countries, e.g., in the field of land expropriation.

All in all, the QSP has proved to be a very important instrument to generate momentum for the Stability Pact. The QSP was also instrumental as a catalyst in order to mobilise additional funds for the region, some of it bilateral and some with international organisations. The QSP added momentum for substantial internal reforms aimed at drawing the countries of the region closer to the EU. For instance, considerable progress has been achieved in the fight against corruption, which resulted in a detailed reform package for each of the countries concerned. Similarly, the Investment Compact spelled out reform requirements with a view to remove obstacles to private investment.

The importance of private investment for the region can not be overstated. The amount of 2.4 bio Euro, although considerable, is only a small fraction of what is needed to finance the huge requirements in terms of mental, political and economic reform measures or the much-needed improvements in infrastructure. Therefore, the Stability Pact’s QSP disbursement should be seen as a facilitator, as a catalytic element to mobilise domestic and foreign private investment. In this respect, the EBRD has clearly stated that the Stability Pact has had a positive effect on the region as a whole, although setbacks must be expected for some time to come. Therefore, the Special Co-ordinator wants to associate private business and foreign investors more closely to the Pact's projects, also in the framework of the next Regional Conference.

Regional co-operation has considerably improved since the Pact was launched. In many sectors, QSP projects have brought about the beginning of a genuine political regional dialogue. For instance, trade ministers of Albania, BiH, Bulgaria, Croatia, Romania, the FYR of Macedonia and the FRY have agreed in January 2001 in Geneva to prepare a Memorandum of Understanding to be signed by June 2001, which will initiate intra-regional trade liberalisation through a comprehensive network of free trade agreements. This will increase market size, stimulate growth, contribute to foreign investment and participate to EU rapprochement.

Through the QSP, the Stability Pact Partners enabled the principles of the Pact to take root. This has contributed to the reforms and democracy across the region as a whole, for instance in the following way:

• The QSP has helped to promote democratisation. The Szeged Process successfully worked on bringing about democratic change in Serbia. The main target groups were representatives of the then opposition-governed municipalities and the independent media. Partners supported practical assistance measures with roughly € 15 million Euro. Further, it has supported efforts to reintegrate refugees and displaced persons through the Refugee Return Initiative with its 18 projects that received € 303 million pledges.

• The Private Sector Development program has, in the economic field, achieved visible results. Pledges of € 356 million helped to promote cross Border Trade, Investment and SME support. Micro-enterprise Banks are now established in Bosnia Herzegovina, Kosovo, Albania and FRY, and are under preparation in FYR Macedonia and Romania.

• In the security sector, projects have helped inter alia in assisting the demobilisation and reintegration of combatants into civil life. Several projects, which received a combined total of € 32,6 million, provide training opportunities for several thousand former military personnel. The Regional Arms Control Verification and Implementation Assistance Center (RACVIAC) opened in Zagreb in October 2000, assists the countries of the region in the implementation of arms control agreements and confidence building measures.

The report is published at a time when the initiating phase of the Quick Start Package from March 2000 to March 2001 is formally over. However, the projects will, depending on their scope and nature, continue for months or years.

Last year has seen dramatic changes for the better in the region, namely the removal of President Milosevic in Yugoslavia. (Yugoslavia became a full member of the Pact on 26 October 2000). All countries of the region by now have democratically elected governments and war is no longer an option to pursue their aims by any government in the region. However, recent events in FYR Macedonia or Kosovo show, that the region is still volatile and that violence has not been totally eradicated. In Montenegro, the pending question on its status is adding to the uncertainty. To adjust the Stability Pact’s activities to this changing environment, the Special Co-ordinator, in close consultation with the EU and other partners, therefore suggests to streamline Stability Pact and to prioritise some sectors as part of a now needed mid- to long-term development effort for the region.

Priorities may vary by country. For the near future, they should, in most cases, include refugee issues and inter-ethnic relations, development of infrastructure, private investment and regional trade, fighting organised crime and corruption, disaster preparedness and prevention, reintegration of redundant military personnel, humanitarian de-mining as well as the further reduction of small arms and light weapons. The Working Tables will consider these suggestions at their upcoming meetings in May and June. At the next Regional Table to be held in Brussels on June 28, the Special Co-ordinator will then present this refocused catalogue of activities to the Pact’s participants. The Regional Table is the highest steering body of the Stability Pact.

As the conditions for a second Regional Conference set out by the High Level Steering Group for Donor Co-ordination in Southeastern Europe (led by World Bank and EU Commission) have been met, the Special Co-ordinator has recommended to hold this conference on 25-26 October 2001 in Bucharest. A Conference dedicated to funding the rebuilding efforts in FRY is planned earlier; no date has been set.

The full report can be found at: www.stabilitypact.org.