Thank you for giving me the opportunity to report on developments in the Stability Pact for the second time this year. I strongly value the involvement of the European Parliament in the Stability Pact and thus address you with pleasure. The involvement of the European Parliament and other Parliamentary Assemblies represents the parliamentary dimension of the Stability Pact. A dimension, which is highly necessary, considering the fundamental societal transformation process South Eastern Europe is going through.

South Eastern Europe has come a long way over the past few years, and I think the Stability Pact - and I mean everyone involved in this initiative - can take some credit for this development. But there are still numerous challenges ahead of us. The upcoming decision of the European Union to invite ten new members to join the Union will significantly change the political landscape of Europe. So will the decision on NATO enlargement, which has been taken in Prague last week. It is of the utmost importance to prepare ourselves for this new environment, which creates new challenges for the region, but also opens up new possibilities for the countries of South Eastern Europe. It will certainly bring increased stability to the region. But continued engagement of the European and Transatlantic institutions in South Eastern Europe has to be ensured to give these countries a perspective. New EU members such as Slovenia and Hungary will have the opportunity to play an important role in maintaining this focus on South Eastern Europe, supporting ongoing efforts of current member states.

I have participated in the latest conference organised by the Parliamentary Troika in Tirana in October. The three conferences of the Parliamentary Troika so far have been an important incentive for closer parliamentary co-operation within the region itself. As an initiative out of the region, I would also like to mention the meetings of Speakers of Parliament of the South East European Cooperation Process (SEECP) in this respect - a nucleus, which could develop into a Parliamentary network, maybe even a future Parliamentary Assembly of the region. Such an Assembly would increase regional ownership of the Stability Pact and should thus be supported in any way possible. A process in this direction should certainly remain closely interlinked with the Troika process in order to maximise synergies and sharing of experience. As a first step in this direction, I thus fully support your call for the establishment of Parliamentary Committees dealing specifically with the Stability Pact and European Integration and would ask you to enhance your efforts in this direction.

When addressing this forum in May, I had just taken up office and my presentation was very much a look ahead - giving an outline of proposed reforms and the goals that we had set ourselves for the year 2002. It thus comes naturally to start out with informing you on what has actually been achieved in this respect. And I do this with pleasure, because I think we have indeed reached our goals to a large extent.

• The network of bilateral free trade agreements between the countries of South Eastern Europe, which we are working to establish, will in effect create a free trade area of 55 million consumers and will make the region more globally competitive, encourage more foreign direct investment and create employment. With 12 out of 21 agreements signed and 9 under active negotiation much has been achieved in this area since the beginning of the year.
• In the field of infrastructure, 23 out of 46 infrastructure projects with a total volume of 3,46 billion Euro have commenced physically on the ground. The Infrastructure Steering Group is actively working to identify and overcome barriers to implementation. Furthermore, the South East European Electricity Forum has been launched in cooperation with the European Commission to improve the stability of electricity supply for the countries of the region, which is fundamental for economic development and political stability. A memorandum of understanding has been signed in this respect only a week ago in Athens. This is a real breakthrough and will form the basis for further work in this field.
• Regarding refugees, record numbers of refugees have returned in 2001 and 2002. The Stability Pact Refugee Return Initiative has successfully found sustainable solutions for over 125,000 persons this year. The initiative has basically worked itself out of a job and will be phased out in the course of 2003. Some of its activities regarding refugees will be mainstreamed into other Stability Pact initiatives. The OSCE is a full partner of, and major contributor to the Stability Pact's RRI Agenda for Regional Action and endorsed the guiding principles on return in Bosnia and Herzegovina, Croatia and Federal Republic of Yugoslavia.
• In an attempt to streamline ongoing initiatives to fight organised crime, the Secretariat of the Stability Pact Organised Crime Initiative will be established at the Regional Crime Fighting Centre in Bucharest. The Centre is a good example of regional ownership and has found strong support at the recent London Conference on Organised Crime in South Eastern Europe.
• A Small Arms and Light Weapons Clearinghouse for the region has been set up in Belgrade. The response in the region has been very supportive and the Clearinghouse has already developed substantive programmes.
• In close cooperation with High Representative Solana, who hosted the first informal round of regional principals in South Eastern Europe together with Commissioner Patten, I have launched a process of dialogue with UN Special Representative Steiner, High Representative Ashdown and EU Special Representative Le Roy on sub-regional issues. I am pleased about the willingness to strengthen our links with a view to promoting sub-regional cooperation in areas such as the fight against organised crime and trade issues. A next step will now require including the respective Governments.

We are looking forward to building on these successes in the next year. But the Stability Pact is an initiative that does not, and cannot know stasis. The situation in South Eastern Europe as well as in Europe overall is constantly changing, and the Stability Pact has to change with it. In the end, success for South Eastern Europe will be judged against three related but separate criteria:

• It's ability to work together effectively in the region to solve practical issues of common concern - considering the numerous fora, in which representatives of countries that fought each other only few years ago are now sitting together, much has been achieved already;
• The steady elaboration of the region's perspective towards the EU, resulting in a truly European Integration process - the Stabilisation and Association Process created by the EU is clearly the most important tool in this respect;
• And the region's capacity for undertaking and implementing international commitments made within a wide scope of international initiatives and organisations.

Its ability to support the region in these directions should also be the criteria by which success of the Stability Pact should be judged. But we need to keep in mind that the Stability Pact is not able, nor should it deal with every issue at hand. It needs to focus and come in with strength on those issues, where it can actually bring an added value.

In this light, we are currently working on establishing core objectives for the coming year and beyond, which will obviously show some continuity, but will have to adapt to the changing environment as well. We expect to deepen our work in local democracy and cross border cooperation, strengthen media standards, foster the building of the regional energy market, actively facilitate implementation of the free trade agreements, solidify an initiative to manage and stabilize population movements and develop an operational arrangement between the Bucharest Crime Centre and Europol.

Apart from this, the Stability Pact is currently - together with interested parties - exploring ways and possibilities on how to embark on an enhanced reconciliation initiative in South Eastern Europe. In order to add value and bring greater coherence to the wide variety of initiatives in the area of reconciliation, the planned initiative would focus both on the political as well as the project level - areas which could be envisaged are i.a. Education, Youth, Media, Local Democracy and Cross-border cooperation.

Let me add here that the Pact is a process, which I - as the Special Coordinator together with my team in the Secretariat - am promoting to the furthest extent possible. But the Pact is not just the Secretariat. It is as strong or weak as the commitment in political and human resources means that is brought forward by our participants and partners. In this respect, the efficiency and effectiveness of the Stability Pact operation continues to rely heavily on the leading role of the EU. The Pact is thus committed to coherence as well as mutual and complementary support to both the Stabilisation and Association Process (SAP) and the accession process for candidate countries, which also participate in the Stability Pact. I hope that the current discussions about the budget of the Stability Pact can be concluded satisfactorily soon in order to focus all our efforts again on helping the region move closer to Europe.

I would like to thank the European Parliament for its active support in our fascinating and challenging task and look forward to continuing our close cooperation in the future - for the better of the peoples in South Eastern Europe.