Representatives of 37 countries and 32 international institutions met yesterday and today in Bucharest for the Regional Conference for South East Europe, hosted by the Romanian Government. The Conference was organised by the European Commission and the World Bank, represented by Commissioner Chris Patten and Vice-President Johannes Linn, in close association with the Stability Pact, represented by Special Co-ordinator Bodo Hombach.

The Conference marked a new stage in the development of the region, which is moving away from a focus on emergency and reconstruction to medium-term sustainable development strategies.

The international community made a strong statement of continuing support for South Eastern Europe. This support has not diminished after the tragic events of September 11, which in fact reinforced the need for regional co-operation. The countries of the region issued a declaration of their commitment to enhance and expand co-operative measures to combat all forms of international terrorism. The countries of the region made clear their determination to consolidate and expand regional co-operation, and to complete and fully implement on-going economic and institutional reforms.

Holding the regional conference in Romania, one of the countries in the region, was welcomed by participants as a strong signal of regional ownership and increased commitment.

The Conference welcomed the progress made towards regional co-operation, in the framework of the Stability Pact, both on the economic and political front. Regional initiatives for trade liberalisation, refugees and enhancing the climate for private sector activities, are among the concrete results achieved in this direction. Total donor funding for South Eastern Europe (including both regional and national flows) remain substantial, at over Euro 6 billion per annum since 1999.

The Conference highlighted the progress made towards democratic consolidation, improving the security environment, as well as macroeconomic stabilisation and structural reform since the Kosovo crisis, and the ensuing resumption of growth. Timely and substantial financial flows from the international community contributed to this outcome, as did greater efforts by the countries of the region. Structural reforms have made solid progress in most of the countries. Integration with the rest of the world and within the region itself has also made significant strides, and there is a continued momentum for trade liberalisation.

The Conference recognised the central role played by the EU pre-accession strategies and the Stabilisation and Association process in setting the direction of economic and social policies. The perspective of EU integration that is offered to countries of South Eastern Europe provides a strong anchor for democratic values and political expectations in the region. The Stability Pact reinforces this process.

Achieving further progress toward peace and prosperity requires a renewed focus on longer-term challenges. Most of the region is already moving beyond urgent reconstruction and humanitarian relief towards longer-term economic and social development issues. To this end, the Conference emphasised the need to consolidate macroeconomic stabilisation and move ahead with remaining structural reforms, in particular in the areas of public finance, fight against corruption, private sector development, and trade liberalisation. Participants have signalled strong support with regard to the implementation of the Investment compact, the Stability Pact agenda for creating a favourable environment for investments. Similarly, participants strongly supported their intention to implement the commitments they have taken in order to build a regional free trade zone by the end of 2002.

Indeed, all participants underlined the increasing role to be played by the private sector. Progress in creating an environment that stimulates private sector development is significant but uneven, and improvements in the regulatory framework are not yet fully implemented. Foreign investment inflows to the region have been disappointing. Private investors participating in the Conference stressed in particular the importance of fighting corruption and removing remaining obstacles to trade and competition as necessary to improve the business environment.

The new focus on longer-term challenges was also reflected in the development of strategies in support of key infrastructure sectors. The Conference discussed long term strategies for transport, air traffic, energy, and water, and reached agreement on the need to channel funding to projects consistent with these strategies, which would continue to be discussed in Working Table II (Reconstruction, Economic cco-operation and Development). It was noted that the process for vetting all new regional infrastructure projects is now being carried out by the newly formed Infrastructure Steering Group, under the chairmanship of the European Commission. A new set of regional infrastructure projects, with secured financing of Euro 2.4 billion has been designated and further projects will be designated, as funding becomes available. Innovative moves to facilitate private-public partnership in these areas are also necessary.

The Conference confirmed the need for a more strategic, longer-term approach to be extended beyond infrastructure. Streamlining of the initiatives under Working Table I (Democratisation and Human Rights) and Working Table III (Security and Justice) of the Stability Pact was uniformly supported and will be reflected in implementation.

Participants underlined the important contribution of the Stability Pact to helping countries move closer to European standards and enhancing their participation in the EU's Stabilisation and Association process. Co-operation on settlement of politically divisive issues is essential to improving prospects for integration into Europe. Working Table 1 of the Stability Pact, will intensify its efforts in this regard, with particular emphasis on interethnic dialog and cross-border co-operation, refugee questions, media, education and youth. Strategies in these fields are now formulated and will move to implementation. The focus will be on achieving tangible results, participation of all segments of society, especially civil society, and on a sustained process of confidence building in the region. These priorities were strongly endorsed by representatives from the region.

The comprehensive approach taken by Working Table III in the security and defence and home affairs issues, was further elaborated. The key priority areas of the working table were discussed, with detailed discussions of the Table's initiatives and projects to be considered at the Working Table III meeting scheduled for Budapest 27-28 November 2001. Emphasis was placed on the importance of co-ordination and co-operation with other international actors and regional initiatives, including the SECI crime centre and the Regional Arms Control Verification, Implementation and Assistance Centre (RACVIAC).

Considerable progress has been made in the Justice and Home affairs sector during the last two years. Regional co-operation has become a reality. The main threats of organised crime and illegal immigration/trafficking of human beings are now beginning to be addressed in a comprehensive way at regional level. National institutional development is supported by regional training projects and regional professional networking. Previous and current efforts need to be extended and co-ordinated. Judiciary has to become more efficient. In the areas of visa, asylum, migration and border control, the Stability Pact Migration and Asylum Initiative and the EU's CARDS programme, both aim to enable countries to come closer to implementing European standards.

All participants recognised the contribution made by the Stability Pact toward fostering regional co-operation, and underlined their support for the important role that the Stability Pact will continue to play in the future. In convergent messages, delegations to the Conference paid tribute to the tireless involvement of the Special Co-ordinator of the Stability Pact, Mr Bodo Hombach, in fostering progress and reform in South East Europe.