Documents

Conclusions by the Chairman Fabrizio Saccomanni and the Co-Chair Fuegen Ok

The Working Table on Economic Reconstruction, Development and Co-operation held its third meeting on 16 and 17 October, in Istanbul. The meeting was formally opened by Turkish Minister of Foreign Affairs I. Cem, who summarised Turkey's role in South Eastern Europe and underlined that the collapse of the autocratic administration in the Federal Republic of Yugoslavia promised a positive development for the reinstallation of stability in Europe.

In his introductory remarks, Chairman Saccomanni praised the political changes in the Federal Republic of Yugoslavia (FRY) and welcomed the election of President Kostunica as a real perspective for a new democratic FRY. He particularly welcomed the fact that FRY joined the community of Stability Pact partners and introduced Mr. Antic and Mr. Stimac, representatives of President Kostunica at the meeting, as Guests of the Chair.

The EU Presidency stressed that with the new developments in FRY, a perspective of rapprochement towards the EU is now open to all countries in the region, without any exception. That perspective will be further elaborated on at the upcoming Zagreb Summit. The EU Presidency announced the intention of the EU to extend its preferential trade regime as well as the future CARDS regulation to FRY. Concerning the Table itself, the EU Presidency underlined the fact that international aid will not have a lasting effect if far-reaching structural reforms are not implemented.

Chairman Saccomanni invited Mr. Antic to present to the Working Table the intentions of the newly elected President and his Crisis Committee. Mr Antic underlined the importance for his country to be integrated as soon as possible into the European and International mainstream, starting with the Stability Pact. He affirmed President Kostunica's readiness to accept all the objectives and responsibilities connected with full membership of the Pact. Furthermore, Mr Antic expressed his country's wish to bear full responsibility in the stabilization of the region and to fully participate in the development of South Eastern Europe as a prosperous, stable and peaceful part of an integrated Europe. He also mentioned that Belgrade was ready to fully co-operate in the implementation of the Danube clearance project in Novi Sad as a clear signal of good will. The statement by the FRY delegation was welcomed by neighboring countries as a first but important step to achieve sustainable regional stability.

In the margins of the Working Table a meeting between the FRY delegation and representatives from the financial institutions took place in order to have a first exchange on future co-operation and outstanding problems with regard to FRY accession to these institutions. At the end of the two-day session the Special Coordinator Bodo Hombach, while commending EU Commissioner Patten's support, underlined the need to fight slowness and bureaucracy in the implementation of Stability Pact projects and initiatives. On the subject of FRY he stressed that the International Community must take the outstretched hand of the Serbian people without delay. The Stability Pact, as a tried and tested instrument, was the right institution to start the reintegration of FRY. In order not to create regional imbalances, the international community had to create new resources for the FRY.

Stabilisation and Association Process and the CARDS regulation

Co-Chair F. Ok recalled the leading role of the EU in the Stability Pact which had been stressed in the Agenda for Stability approved at the Regional Table Meeting earlier this year. The European Commission stressed that, for the first time, the European Union has given a clear perspective of long term integration into its structures to the region as whole. Negotiations on a Stabilisation and Association Agreement (SAA) with the FYR of Macedonia are near completion and could be initialled at the EU summit in Zagreb on 24th November. The European Commission would increase its efforts to open negotiations for the same kind of agreement with Croatia in the margins of the Summit. Feasibility reports on opening negotiations with Albania have been presented, and an ambitious agenda for reform in Bosnia and Herzegovina as set out in the EU's road map for that country would be pursued.

The Working Table noted with satisfaction that the future CARDS regulation will address certain problems that have hampered assistance to the region and have been a factor in causing delays, such as slow implementation and cumbersome procedures. The European Commission emphasized that the Stability Pact is a "two ways street" based on full commitment to reform of the countries of the region.

Progress on the Quick Start Package

The Joint Office of the WB and the EC presented a report on the status as of June 30, 2000 of pledges to the March 2000 Regional Funding Conference. The Working Table noted with satisfaction that donors made good progress in committing pledged funds to specific projects in all Working Tables. Out of the total pledges of 2.4 billion Euro, 2 billion Euro was committed to Stability Pact projects (including support for Near Term Projects), 321 million Euro for related projects and 61 Million Euro still remained to be allocated.

The Office of the Stability Pact provided an updated report on all projects undertaken under Working Table II. Apart from the infrastructure projects and the programs in Private Sector Development, which are proceeding very well, the other activities of Working Table II (Trade liberalization, Investment Compact, Environment) are related to continuous processes. Most of them are not directly connected to the Quick Start Package. All of these processes have made significant steps forward.

QSP of Infrastructure Projects

The EIB, the EC, the WB and the EBRD reported on the progress achieved in financing and implementing the Quick Start Package of 34 infrastructure projects. The Joint Office of the WB and the EC presented a consolidated report as of end-September 2000, which underlines that the QSP on infrastructure is well underway. Six months after the Regional Donor Conference, all except one of the quick start projects and studies with a total cost of 1221 million Euro have fully identified sources of funding. The remaining gap of 29 M Euro (one project in Bosnia and Herzegovina) is very likely to be closed soon. One study in Bosnia and Herzegovina has been cancelled because the World Bank, as the lead agency responsible, reported that sufficient information was found to be available to go ahead with the related project without a new study.

It is expected that almost all of the projects will proceed as scheduled, some projects are even ahead of schedule. Works on the ground, which have started for 6 projects, will be intensified during the next construction season. For one third of the projects tendering has already started or is completed. However, in order to minimise possible delays in the implementation of the quick start projects, there is a need to urgently improve in some cases the sectorial, regulatory and legislative framework and to address specific issues such as expropriation procedures for land acquisition, transparency in tendering procedures and appropriate measures for environmental protection.

Monitoring of the QSP and preparation of the next package

The Working Table supported the statement of the Chairman on the necessity to continue a tight monitoring process as the only way to minimize delays. Co-Chair Ok emphasised the need to insure transparency in the implementation of projects, including fair and non-discriminatory tender procedures. It was agreed that for all activities of the Working Table lead agencies would provide, on a quarterly basis, a brief report on the status of their projects or initiatives. The Office of the Stability Pact will continue to produce consolidated reports every three months.

Concerning the preparation of the next package of infrastructure, the Working Table underlined the necessity to first ensure that significant progress on the QSP is achieved before launching a new set of projects. However, it was also stressed that the preparation of such an important program of infrastructure projects requires several months. The Working Table further emphasised the methodological difference between the QSP and the next package. While the QSP of infrastructure was mainly guided by a political will to show early progress, good co-ordination and increased efforts by the international community, the next package of infrastructure projects should result from a comprehensive regional strategy. To that end, sectorial studies in transport (EIB/European Commission) and energy (European Commission) will be carried out in the next months. These studies will have to take into account recent developments in the FRY. Preliminary results will be presented at the next meeting of the Working Table. This will then allow the process of project identification, already started with the selection of the "near term "package, to proceed until completion, taking into account the new regional dimension. Chairman Saccomanni informed the Working Table that he intends, by the end of the year, to call for a meeting of the infrastructure steering group to discuss the preparation of the next package of projects.

Environment

The European Commission as co-chair of the Task Force of the Regional Environmental Reconstruction Programme for SEE underlined that efforts had been made to transform initial ideas, which had been presented at the previous meeting of Working Table II in Skopje, into concrete actions. A framework for environmental actions at a regional level has been developed. The EC stressed that this Regional Programme should be used to streamline all environmental actions that fall within its scope. A total of =807.5 million including the EC contribution of 5 million are now firmly committed to the Programme. However, donor efforts should not be relented.

The representative of the United Nations Environment Programme noted with satisfaction that good progress had been made with regard to the three Quick Start projects led by UNEP, namely "Post-conflict environmental clean-up in the FRY", "Environmental Assessment in Albania" and "Environmental Assessment in the Former Yugoslav Republic of Macedonia". Co-Chair Ok noted that the work undertaken by UNEP in the field of environment is very topical, especially in the light of the recent changes in the Federal Republic of Yugoslavia. She expressed her belief that the new leadership of FRY and interested donors could get together to strengthen this Stability Pact Initiative. She also welcomed the additional financial contribution by the Netherlands.

Trade

The European Commission presented the new regulation recently adopted by the EU to significantly enhance the current preferential trade regime, thus offering an almost complete duty-free treatment for imports from the Western Balkans countries. In the light of the experience and the success of European integration, the EC is convinced that trade cooperation and liberalization will substantially strengthen the economic process and will contribute to peace and reconciliation. However, the establishment of a Free Trade Area with the European Union is linked to the commitment of the partner countries in SEE to also establish Free Trade Areas with the other countries linked to the SAA. Finally, the European Commission welcomed the work undertaken by the Working Group on trade liberalization and facilitation and announced its intention to play in the future a more active role. The Chairman of the Working Group on trade liberalization and facilitation, Mr. Bogojevski, reported about progress to date: work on the studies on Free Trade Agreements and on Non-Tariff-Barriers had began and a secretariat supporting the Chairman had been set up.

Chairman Saccomanni welcomed the analytical work, which is being carried out, but stressed at the same time that more emphasis should be put on concrete measures. He urged the Working Group to use the Trade Conference planned for December as forum to agree on concrete steps to reduce trade barriers. He pointed out that the positive example by the EU in opening its market to SEE should now be followed by ambitious regional initiatives. This would be also an important step to attract foreign investments. It was decided that the Chairman of the Working Group will conduct consultations together with the Chairman of the Working Table and the Office of the Special Coordinator in order to renew the political will in that field and to initiate concrete measures which can be finalised within a few months. A detailed report on these measures should be presented at the next meeting of the Working Table.

Private Sector Development

EBRD Program

The Working Table welcomed the progress report given by Mr. Russell from the EBRD on the specific initiatives in this field. It was encouraging to note that some of the initiatives, like the EBRD's Trade Facilitation Programme and the IFC's Balkan Enterprise Facility were already having an impact on the ground. The Working Table noted with satisfaction that, according to the EBRD, the Stability Pact has already had a very definite impact by generating incremental resources to the operations and programmes in Private Sector Development, which were managed by the IFIs.

Investment Compact

Mr. Alter (OECD), as Co-chair of the Investment Compact, briefed the Working Table on the very encouraging developments in this field. The third phase of the Compact, the implementation and monitoring of policy reform, was well underway. A number of Regional Flagship Initiatives has been approved and will be implemented swiftly. Country missions were currently being carried out by the OECD in each of the SEE countries to assist in implementing the proposed measures. Chairman Saccomanni underlined that it was important that regional countries provide more detailed implementation schedules and progress reports for the next Project Team Meeting (1 December 2000, Brussels). It was also stressed that more input from the European Commission would be welcomed, all the more since the objectives of the Compact and the Stabilisation and Association Process were very similar.

Business Advisory Council (BAC)

Mr. Yves-Thibault de Silguy, Co-Chairman of the BAC, reported about the progress since the last meeting in February. The BAC held meetings in Vienna and Stuttgart and participated in the Regional Funding Conference. The fourth meeting of the BAC was held back to back to the second day session of the Working Table in Istanbul. In July a BAC delegation, headed by Co-Chairman Mr. Nussbaumer, joined the Special Coordinator on a country visit to Bulgaria. The results of this visit were very encouraging and therefore it was decided to continue with these efforts. Mr. de Silguy also elaborated on the useful concept of Public-Private-Partnership and on the need to support the development of SME's in SEE.

The Working Table noted with satisfaction the proactive role the BAC is willing to take in the future and welcomed the announced country visits to SEE.

Investment Promotion Activities

The Working Table heard a report by the Stability Pact Office on the different activities which are planned and ongoing to attract investors to SEE. This included investment conferences outside the region to introduce the potential of the region, but also investment missions to SEE. Another element was the compiling of Investment Guides (like the Guide recently published by the Bulgarian Foreign Investment Agency).

Proposed new activities

Social cohesion

The International Labour Organisation presented, on behalf of an informal working group, the concept of a potential initiative on social cohesion in the region. Concrete regional projects could be elaborated over the next few months with regard to (i) improving access to social infrastructure, (ii) strengthening relations between governments of the region and social partners as well between social partners themselves, (iii) integrating marginalized groups of society. The Chairman concluded that issues related to the social field are important and could not be left behind the general trend of progress. There was indeed a need to see how such important considerations could benefit from the framework of the Stability Pact. He invited partners who had put together a proposal for a new Initiative for Social Cohesion to proceed with their work, in order to streamline the current proposal into a number of concrete objectives and thus achieve tangible and realistic results, also taking into account the existing activities in this field carried out bilaterally and in the framework of the Stability Pact. He asked the informal working group to submit the blueprint of an action plan to the next meeting of the Working Table.

Financial sector reform

The representative of the Central Bank of Greece presented a proposal for a Financial sector reform inititive, which aims at giving a new impetus to the institution building process in SEE. Four goals have been identified : strengthening the cooperation between central banks of the region; foster appropriate conditions for commercial banks and other financial institutions; promote an improved legal and institutional framework to facilitate private sector initiatives in banking, financial markets and investment and monitor and coordinate technical assistance. Relevant IFIs reported about their own activities in this field, and several members of the Working Table expressed support for the inititive. The Chairman proposed to set up an informal Working Group of interested members to examine ways to achieve the presented objectives and invited them to report at the next meeting of the Working Table.

Energy coordination

The Chairman informed the Table that preliminary meetings between interested parties had led to a consensus that the existing Management Committee for the Regional Electricity Market, led by the European Commission, will be extended to all interested members and will serve as a forum for co-ordination of policies and studies. The Working Table welcomed this agreement and asked the Coordination Group to report to the next Working Table Meeting.

E- Balkan initiative

The UK briefly presented the E-initiative, which intends to help countries of the region to seize opportunities offered by new technologies and to promote the equal integration of new technologies within the region. The Chairman welcomed this initiative and invited the informal Working Group, currently composed of the UK, US and Sweden, to continue its work, under the chairmanship of Sweden, to identify ways and means to achieve the objectives presented in the concept paper and report at the next meeting of the Working Table.

Date and venue of the next meeting

The next meeting of the Working Table will take place in spring 2001 in Albania, at a date and venue that will be announced after consultations with the Albanian authorities.

Other Business

The Chairman and the participants of the Working Table warmly thanked the Turkish authorities for the excellent organisation of the meeting and for the generous hospitality extended throughout.