One year ago we came together in Sofia for a very useful discussion about regional ownership. This has been followed by a year of intense debate, most importantly of course at the Regional Table in Prague in November 2005, on how to move from the rather donor-driven concept that the Stability Pact was based on to a more regionally owned co-operation framework in South Eastern Europe. I am very happy about this process, because it demonstrated the value and importance of the Stability Pact and its work in the past seven years as well as its ability to adapt to constantly changing situations. Obviously it has also highlighted the need to further develop the Stability Pact, to allow it to evolve into the regional co-operation framework required for South Eastern Europe in the years to come.

Facilitating regional co-operation and supporting the countries of South Eastern Europe on their path towards European and Euro-Atlantic integration – the two main tasks of the Stability Pact – remain as relevant as ever. And while everyone agrees that much support is still required to successfully achieve these tasks, everyone also agrees that the process should be driven increasingly by the region itself.

Today we have a region which is well on track to Euro-Atlantic integration. While recurrent news about the co-operation, or lack thereof, with the Hague Tribunal sometimes seem to be pulling us back into the past, the region is starting to leave the bloody conflicts of the 90ies behind and is focused on a common European future. The peaceful separation of Serbia and Montenegro can be seen as a clear indicator of progress in the region and the role of the EU integration perspective in ensuring this peaceful settlement should not be underestimated.

On the side of the European Union we have a continuation of the debate of the 90ies between the supporters of widening the Union and those that call for a deepening of the Union. Everyone in South Eastern Europe needs to acknowledge this and the difficulty it poses for the EU in its external relations. Complaining about additional entry criteria or ‘goalposts being moved’ will not help – full engagement in the reform process and implementation fulfilling the EU criteria is the only answer. At the same time, the perspective of EU membership for the countries of the region clearly has to be upheld and the EU has just done that in Salzburg in March 2006.

In practical terms we are moving ahead significantly. The Energy treaty which will come into force shortly is essentially a sectoral expansion of the EU before actual enlargement. While implementation of the treaty will be quite a challenge, this is a significant success story for South Eastern Europe. Progress in the gas sector as well as the important issue of energy efficiency are next on the agenda.

Similarly, the decision to move from the network of free trade agreements to a multilateral agreement based on the simultaneous enlargement and amendment of CEFTA. This will improve regional trade and boost the attractiveness of the region for foreign direct investment. Our common aim should be to conclude the negotiations on this ambitious and modern agreement as soon as possible.

All of these very positive developments underline the progress made in South Eastern Europe. The situation we see in front of us today is drastically different from 1999 and this requires a different approach to regional co-operation as well.

I would like to thank Alpo Rusi, Goran Svilanovic, Vladimir Drobnjak and Franz Lothar Altmann for their work as part of the Senior Review Group and the clear recommendations contained in the Final Report of the Group. They were an important contribution to this discussion. I would also like to thank the European Commission for the intensive and close co-operation in past months in preparing our joint proposal for implementation outlined in the non-paper as well as in the proposed conclusions of our meeting here today.

The first and foremost aim of the proposal before you is to enhance regional ownership. At the same time, it remains important to show that the two processes – regional co-operation and European integration – are intrinsically linked. Successful and practical regional co-operation is a prerequisite for – and not a replacement of - the EU integration perspective, which is clearly defined in the Thessaloniki Agenda and which was re-affirmed at the Salzburg meeting under the Austrian EU Presidency.

Similarly, keeping the donor community involved remains a priority for all of us. While the region is indeed now at a stage where it can take on more ownership, support – politically and financially – by the European Commission, EU member states, important partners such as the United States, Switzerland, Norway or Japan as well as the International Financial Institutions – is still critical for years to come.

Finally, this proposal aims at preserving the quality of regional co-operation processes undertaken in recent years. The proposal foresees a phased evolution of the current Stability Pact into a more streamlined and effective regional co-operation framework, in which the SEECP, if successfully strengthened, could play a central role.

I think we all agree that there are a number of priority areas where regional co-operation will remain crucial in the years to come:

• Economic and Social Development, in particular the proposed single free trade agreement and a regional investment framework; this work should also be supported by the private sector, building upon existing arrangements.
• Infrastructure, in particular transport infrastructure focused on the main Corridors in the region, the energy sector including gas, airspace, electronic SEE; the full involvement of the international financial institutions in these processes remains critical.
• Justice and Home Affairs notably the fight against Organised Crime and Corruption, including support for enhanced regional law enforcement cooperation through the SECI Regional Centre for Combating Trans-border Crime and for enhanced co-operation between the SECI Centre and Europol;
• Security co-operation in particular security sector reform, including defence conversion and combating the spread of illicit small arms and light weapons.
• Building Human Capital in fields such as education, technical and vocational training, research and science in general as well as capacity building in public administration in particular. Education is of fundamental importance to the transition process in South Eastern Europe. Reforms in the field of Education and Research have a key role both in improving the quality of citizens’ participation in the democratic process as well as in promoting the creation of employment opportunities. Therefore we have proposed to make “Fostering and Building Human Capital” a core objective in Working Table I and I take this opportunity to thank all SEE governments for their involvement and support in the launching of this new initiative.
• Parliamentary Co-operation should be viewed as an overarching theme to support activities in the above areas.

An umbrella structure, the Regional Co-operation Council, or RCC, open to all partners active in South Eastern Europe, would co-ordinate regional co-operation processes in these areas and thereby take over the role of the Regional Table and Working Tables, provide guidance to the Secretariat and the Secretary General and support and prepare – as appropriate – SEECP Ministerial meetings and Summits. 

The Secretary General of the RCC should be a strong political figure from the region whose task would also be to ensure the co-operation processes are going in the right direction and support the rotating SEECP Chairmanship.

Let me add that a presence of the region in Brussels – building upon the assets created by the current secretariat of the Pact - will in my view be crucial for sustaining a close link between regional co-operation and your EU and NATO integration perspectives. Which form such a presence would take, is however entirely up to you to decide. But what I would like to stress is that the increasing number of staff from the region in the Stability Pact Secretariat in Brussels is an excellent starting point for enhancing regional ownership.

The SEECP should play an important role in this process. I was impressed with the substantial debate at the SEECP Summit earlier this month on the issue of regional ownership and creating the operational basis required for the SEECP to gradually take on some of the tasks the Pact currently performs. These discussions need to be followed up with decisions rather soon. The SEECP needs to decide on its relationship with the Regional Co-operation Council and its secretariat, including the designation of a Secretary General from the region. This nomination should be made at the latest by the SEECP Summit in May next year. This decision-making process will be a major challenge for the Croatian Chairmanship and we of course stand ready to work closely with you as well as the succeeding Bulgarian Chairmanship along the way. 

I believe that the new regional co-operation framework should be in place in the first half of 2008.

What is required today from Stability Pact donors and all regional countries is an initial funding commitment for the 2007 transition strategy and for a lean Regional Co-operation Council secretariat from 2008 onwards. A more detailed commitment to co-financing for the RCC secretariat will be required at the Regional Table in November 2006. Elaborating such a financing scheme will require close co-ordination in the next six months and significant engagement of the countries of the region, the European Commission and those donors willing to stay engaged.

In the months to come, streamlining the Stability Pact activities and developing clear transition strategies for the various initiatives will be a major task. This can be facilitated by the Stability Pact Secretariat in Brussels but will require the engagement of everyone involved. After the debate today, I will present to you a few thoughts on the next steps ahead.

But let us return to the decisions we must take at this Regional Table today: I am convinced that the proposal in front of you is the best way forward to safeguard the legacy of the Stability Pact, to promote regional co-operation and Euro-Atlantic integration in South Eastern Europe. It is quite a crucial moment: the major stakeholders in the current Stability „Pact” have signaled their readiness to go the next step with the region to a “partnership” arrangement embodied by the Regional Cooperation Council which counts on much more regional ownership - measurable in both political and financial terms.

I count on your continued support for this approach and look forward to the discussion.