Introduction

I am very pleased to have this opportunity to address the main players in the economic regeneration and development of Kosovo.  The existence of this economic policy roundtable is a very positive sign of Kosovo’s seriousness in tackling the policy challenges that impede its economic development.

From the Stability Pact’s perspective, the promotion of economic reconstruction, development and co-operation in South Eastern Europe, is a hugely important part of our overall objective of contributing to the stabilisation of the countries of the region and to their progressive integration into European and international structures.  Working Table II is dedicated to efforts in this field.

As I have stated on numerous occasions we cannot and should not pretend to be a fully comprehensive operation responding to all needs and interests that affect SEE.  Therefore, we seek to Identify regional initiatives that can make a substantial contribution to prosperity and integration and which, without our involvement would not have started or sustained themselves.

WTII – Economic Activities

Turning to the Pact’s activities that are specifically aimed at economic development, these can be grouped into two main areas – infrastructure and trade and investment.

TRANSPORT INFRASTRUCTURE

The reconstruction and modernisation of regional infrastructure remains a core and highly valued objective of the Stability Pact.  The importance of upgrading and improving the infrastructure and in particular the regional transport network of SEE as part of the overall effort to enhance economic stability and growth in the region cannot be underestimated.  The work in this area will ensure that SEE is fully assimilated into the Trans European Network thereby expediting closer integration with the EU and the wider Europe. 

The Infrastructure Steering Group (ISG) for SEE, which was created under the auspices of the Stability Pact, is chaired by is European Commission Official and consists of representatives from the EIB, the EBRD, the World Bank, the Council of Europe Development Bank as well as the SP office.  This is the only region in the world where the IFIs have a framework within which they can agree on priorities and co-ordinate financing, thereby reducing duplication and playing to comparative strengths.

The consistent message conveyed by the ISG and its members is that infrastructure projects will only be considered if deemed to contribute to the improvement of the REGIONAL transport network and is in line with the Trans European Network. 

So far Kosovo has benefited from a couple of the regional infrastructure projects under the ISG namely the roads rehabilitation project that has more or less been completed and the Blace Border Crossing which is also nearing completion.  At present, Kosovo must rely on grants to fund any infrastructure developments, as many of the IFIs cannot lend money without a "sovereign guarantee".  The SP has consistently lobbied for the IFIs to look at possible mechanisms to allow Kosovo to be included in lending programmes, while respecting their legal position.

I am very encouraged by the EU Council’s request to the European Investment Bank to explore options for concluding a framework agreement with UNMIK that would allow them to avail of EIB credits.  I understand that the EIB has submitted documents for UNMIK and the UN’s legal department to consider.  I would encourage you to respond to the EIB as soon as possible.

In addition, I am very pleased to note that UNMIK is firmly included in the deliberations on the future regional transport structures that are taking place within the ISG.  Your officials have participated in high-level meetings on the EC-funded regional infrastructure study – REBIS along with the IFIs and your neighbouring countries and I trust they will continue their active involvement.

Regional Energy Co-operation

This is a crucial area in terms of transition to a market economy, improved transparency and governance and European integration.  While the process is being led by the European Commission, the SP brings a defined value added through our insistence on using the process to achieve optimisation at the regional level, not only in the operation of existing facilities but more importantly, in planning for new interconnections and enhanced capacities.

The Memorandum of Understanding (MoU) on Electricity of 15 November 2002 (Athens), to which UNMIK is a signatory, commits the SEE countries to the creation of a regional electricity market and to its integration into the internal electricity market of the European Union.  This formalisation of a regional approach to the electricity industry in SEE will allow the IFIs, bilateral donors and the countries of the region to agree a framework for new investment in the electricity infrastructure – very important in the context of limited availability of finance.

I am pleased to hear that UNMIK has made progress in implementing elements of the MoU and welcome the establishment of the Regulatory Unit in particular. 

Based on the success to date of the electricity component, the preparation of a similar approach to the gas industry is underway.  As with electricity, the European Commission will lead this initiative, with the SP providing support to gain political consensus among the SEE countries and among bilateral donors as well as ensuring the involvement of the private sector.

Trade Liberalisation

As you may know, 21 Free Trade Agreements (FTAS) have been concluded under the auspices of the SP MoU on Trade amongst seven countries.  We are now focused on ensuring that these agreements are ratified and fully implemented as we consider moving to the establishment of a genuine Free Trade Area in SEE.  This will be a difficult and complex task requiring an intensive combination of political willingness, specialised expertise, international support and technical assistance.  We also want to ensure that Kosovo is integrated into this regional free trade initiative as fully as possible.

The Stability Pact’s Trade Working Group comprising senior trade officials from the SEE countries, international organisations (European Commission, World Bank, WTO) and third countries (France, Germany, Switzerland, UK, USA) is a unique forum.  It brings together a potent combination of regional and international resources, experience and expertise that has greatly facilitated trade liberalisation in the region.  UNMIK and PISG officials are now participating in the regular meetings of the Group and in a number of the training seminars and workshops that take place under the auspices of the Trade Working Group.

The Group’s Strategy and Action Plan for 2003 sets clear priorities in this task and highlights the range of trade-related support available from the European Commission and other bilateral donors.  The Group is also looking at strengthening regional trade-related institutional structures.

Investment Compact

This initiative is identifying and monitoring, through Country Economic Teams (CETs), a range of concrete commitments on policy reforms required to improve the local climate for business and investment.  The initiative is co-haired by the OECD and Austria, but SP involvement is vital to promote regional ownership of the reform process, encourage further integration into EU structures and increase the visibility of the IC in the region.

Through the Monitoring Instruments (MIs) component of the IC, SEE countries manage and chart ongoing progress in implementing policy reform to improve the investment climate.  They provide information on policy issues that impact on investment, the responsible agencies or ministries within SEE countries and proposed time deadlines set for actions to implement reform.  They are updated at regular intervals (every six months).  It was agreed earlier this year to try to integrate Kosovo into this process and I would urge you to take this opportunity.  The SEE countries have stated that the Monitoring Instruments facilitate the reform process, assist in creating awareness and inter-ministry discussion on policy issues and in highlighting progress. 

Business Advisory Council

Through its combination of senior executives from multinational and SEE companies, the Business Advisory Council can provide Governments with a dynamic forum from which they obtain the private sector's perspective on current and planned policies, particularly in areas such as trade liberalisation, SME development and improving the climate for foreign direct investment (FDI).  The BAC meets on a regular basis, usually in the region, and always takes the opportunity to have a roundtable with Government representatives on the business climate.  In addition, the business missions that are an integral part of any BAC meeting in the region provide excellent promotional opportunities for the region.

Another area that we are working on that should interest you is electronic South East Europe – eSEE.  The so –called eSEE Agenda, signed under the auspices of the SP in October 2002 is designed to assist the countries to introduce the appropriate policy framework to stimulate and develop the information society.  All actions are fully in line with the EU’s eEurope and eEurope+ processes.

Finally I must mention Social Cohesion  - The approach to economic reconstruction, development and co-operation of the SP would be fatally flawed if it did not involve a social dimension.  WT II’s Social Cohesion Initiative brings together decision makers and experts in SEE countries with experts from the international community to facilitate the development of the appropriate social policies for the region as it undergoes the transition process exacerbated by the recent conflicts in the region.  In 2003, the Social Cohesion initiative is looking at areas such as pension reform including cross border benefit collection, the development of housing policy for vulnerable groups and employment policy.

I hope this quick tour d’horizon has provided you with a snapshot of the SP’s main activities in the field of economic development.  I invite you to use the regional angle to exploit the potential of the Stability Pact.  European Integration has clearly shown that regional prosperity benefits all its sub-components.