• As usual, I will refrain from presenting a comprehensive report on the activities that have been implemented under our initiatives since we last met in Belgrade and will refer you for that to our Progress Report, which is part of the folder you found on your table. I will rather try and put the spotlight on a few issues that we will face over the coming months, focussing on the substantive challenges that our initiatives are confronted with, whereas Mary, who will take the floor right after me, will present the transition strategies that have been discussed with our partners to progressively transfer the responsibility to the region. I apologise in advance to those initiatives that I will not mention; be assured that it is not at all a value judgment, but just a difficult choice to make in view of our limited time availability!
• Dr Busek and Mr. Darius Mesca have already referred to the CEFTA 2006 negotiations, but I have to add a few words, since this has been the highlight of the past semester. It has been a demanding task; I encourage you to have a look at the text and its annexes to discover the sheer volume of physical work that had to be put in it, for instance to compile all the existing trade concessions between the parties or to list all the bilateral agreements related to investment protection and promotion presently in force! It took no less than four rounds of negotiations to progressively eliminate the serious differences that existed at the beginning. I would like here to praise and thank all delegations for the professionalism and dedication with which they participated in these negotiations (Dr Busek has already paid a deserved tribute to the international advisers of the TWG).
• Now, we are so close to our goal, and yet an agreement that covers only half of its potential market can only be described as an unfinished business! Given the dedication shown to date to meeting the SEE Prime Ministers’ mandate of a modern and ambitious agreement we hope for good news in the coming weeks before the signing ceremony here in Bucharest on 19^th December to ensure the SEE can fulfil the third component of that mandate – an inclusive agreement. !  This agreement is crucial not only for boosting regional trade but also enhancing the investment climate of which we will hear more from the OECD run Investment Compact.
• In the energy sector, after the entry into force of the Energy Community Treaty, the motto is implementation, implementation, implementation. Roadmaps have been devised for each country to indicate clearly the sequence of reforms that have to be put in place to fully comply with the Treaty. Echoing the call made by Dr Busek regarding social issues, I would like to emphasize that the Memorandum of Understanding for the development of a social dimension of the Treaty should not be considered just as a nice to have, mostly to please trade unions. Rather, it is an important building block of the Treaty if we want reforms to be socially acceptable, and thus, sustainable. In order to give to this MoU the importance it deserves, all the Parties to the Energy Community Treaty should sign it.
• In the field of transport, the most salient feature is the progressive consolidation of SEETO’s role – Dr Bajrambasic will tell us more about it. We all know how difficult it is to make a choice among different infrastructure projects catering to the needs of different constituencies. It is crucial that this prioritisation be increasingly done by the countries of the region, on the basis of an agreed methodology and with due consideration for regional integration criteria. This is what SEETO is all about and it should receive our full support in this task.
• Speaking of the difficult task of setting priorities in infrastructure development, the Infrastructure Steering Group had the opportunity of reviewing the situation in the Environmental sector during its last meeting. We know that the investment needs are huge. A rough estimate of what it would cost to comply with the environmental acquis communautaire puts the bill at 29 billion euros for Romania and 9 billion for Croatia! A number of projects have been prepared to tackle at least part of the problem, but they are not given the adequate priority in the Public Investment Programme – often, these projects are not even included in the PIP! How can SEE countries expect IFIs and donors to finance such projects if they are not deemed urgent or important enough to figure in the PIP!
• Regarding the Social cohesion and the Housing and Urban Management initiatives, we took the opportunity of the last WT II meeting in Belgrade to present the transition strategies as they have been agreed upon with our partners. In both cases, organisations of the UN system play a key role: WHO, ILO and UN-HABITAT. They can provide the international network and access to best practices worldwide; they have considerable expertise. In the case of HUMI, we have established a fruitful dialogue with IFIs which do realize that there is an apparent contradiction between the considerable needs for housing (particularly social housing) and the lack of bankable housing projects and that the way to overcome this vicious circle is by strengthening urban management and project planning capabilities at central government and municipal level. IFIs are ready to provide political support – and in the case of the Council of Europe Development Bank, also a much appreciated financial support – to the Regional Capacity Strengthening Programme.   I would like to this opportunity to wish the Council of Europe Development Bank a happy 50^th birthday.
• The key limiting factor, for all these initiatives in the social sector, is funding: the sustainability of what has been achieved so far will depend on the willingness of the countries of the region to cover an increasing part of the costs and on the capacity of our colleagues in the UN system to raise funds.

This brings me to my last point, which relates to our donors. First of all, I would like to thank them for the support they have provided till now and express the hope that the results that have been achieved in terms of establishing networks and promoting regional cooperation will convince them that the money was well spent. Second, I wish to underline that we are entering a delicate phase of transfer of responsibility to our partners in the region. Many of them still lack sufficient financial, organisational or staffing capabilities to allow to simply and fully take over. Donors’ support continues to be necessary, even if on a gradually tapering basis. I will conclude by expressing the wish that your valuable support will not fail at this crucial juncture!