The Stability Pact is very pleased to support the European Commission and the countries of South Eastern Europe in this ambitious initiative.

I would like to congratulate all present for the considerable progress that has been made since our last gathering in Athens in 2003 including:

• Widening of the process to gas
• EU Council mandate to European Commission to negotiate an international treaty
• Start of treaty negotiations
• Physical reconnection of the electricity grid between the EU and SEE   (9 November) – electricity can now flow from Lisbon to Sofia , from Athens to Helsinki .

The Athens process is an initiative that makes sense not only in economic terms but also in political terms as it promotes a wider co-operation and interdependence in the region.  

It is also a unique political chance for the region to integrate into the EU single market in many cases before full accession

The process is a role model in terms of donor support and co-ordination and I think the rapid and substantial progress to date can be attributed in part to the strong cohesion among the international community on this issue.  Please keep it going !

As you know, the European Commission with the full support of the broader EU family leads the process.    I recently met with Commissioner Piebalgs in Brussels and I reiterated the Stability Pact’s complementary role:

• to facilitate political consensus;
• assist with donor co-ordination ;and
• stimulate interest among the private sector.

Over the past year, we have organised a variety of meetings for senior advisers to Prime Minister’s and for representatives of the private sector.    We will continue with these activities – particularly in promoting the process to the private sector whose involvement will be crucial for success. 

We have also, in co-operation with the EC, recently started a process to inform parliamentarians and social partners.

This is important!

The potential economic benefits of ECSEE for the countries of the region are great: 

·          increased reliability and security of supply, a level playing field with fair conditions for all market participants,

·          greater operational efficiency

·          more competitive prices for the end costumers;

·          vastly increased opportunities for intra- and inter-regional trade and a predictable regulatory environment   - this should attract private investment and financing;

·          enhanced transparency and a greater market discipline   - this should help in the fight against corruption;

·          a regional framework for determining critical investments   - this should lead to a substantial reduction in overall investment needs.

BUT

The ECSEE Process also entails many transition challenges for the countries of the region and progress will not be painless.  

Some of the issues to be addressed include

·          tariff rates and protection for vulnerable groups;

·          preparing and implementing suitable labour and retraining policies as part of the process of restructuring utilities and energy related companies

·          environmental protection

As you will realise from these examples, ECSEE will be a politically sensitive issue in South Eastern Europe for the foreseeable future and we must be prepared to deal with the consequences of this.

For one thing, we must ensure greater transparency of the process and early involvement of different stakeholders such as parliamentarians (who will after all have to ratify this treaty) and social partners.

I see the recent Bucharest conference on the ECSEE, co-organised in October 2004 by the Stability Pact, the Romanian Chairmanship-in-office of the SEECP and the European Commission, as a welcome first step in this process but more such activities are needed.

As you may have seen from their press release, last Friday’s meeting of the European Federation of Public Service Unions in Sarajevo heavily criticised what it perceives as a lack of transparency in the treaty negotiations process, it called for a stop to the privatisation process and raised issues regarding workers rights.

These are all important and sensitive issues that will attract considerable attention among the citizens of SEE and I would like to see increased emphasis on engagement with social partners under the ECSEE process in 2005.

In the meantime, I trust that the treaty negotiations will proceed well over the coming months and that the negotiators will find reasonable compromises to issues such as the timing of adoption of environmental directives etc.

As always you can rely on my full support and that of my office to facilitate this important process in any way possible.

Good luck!