southeastern europe and the european union

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Southeastern Europe andthe European UnionFraser Cameron a & Andreas Kintis ba Political counselor for the Delegation of theEuropean Commission , United Statesb Research fellow at ELIAMEPPublished online: 17 Apr 2008.

To cite this article: Fraser Cameron & Andreas Kintis (2001) SoutheasternEurope and the European Union, Southeast European and Black Sea Studies,1:2, 94-112, DOI: 10.1080/14683850108454640

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Southeastern Europe and theEuropean Union

FRASER CAMERON and ANDREAS KINTIS

The overriding concern of the European Union is to ensure peace,stability and economic progress in Southeastern Europe. Toachieve these aims the EU has invested enormous resources,established the Stability Pact and proposed a number of Stabilityand Association Agreements for the countries of the region. Theseagreements are dependent upon the progress each individualcountry makes towards the conditionality criteria establishedunder the Dayton Agreements. These include democracy, respectfor human rights, minority rights, moves towards a marketeconomy and willingness to engage in regional cooperation. Thisprocess may be viewed against the background of the EU'senlargement process involving Slovenia, Bulgaria, Romania andTurkey. The prospect of eventual EU membership is the mostimportant motive for all countries in the region. The individualstates concerned still have enormous problems to overcome butnow they all have a realistic European perspective.

The overriding objective of the European Union (EU) in Southeastern(SE) Europe, particularly in light of recent conflicts, is the creation of anarea of political stability and economic prosperity, in which all countrieswill have a realistic perspective of closer relations with the EU.

The term Southeastern Europe seems infinitely more palatable thanthe Balkans, but the problem of definition remains. For the purpose ofthis paper, SE Europe is defined as all the states between and includingSlovenia and Turkey. It is worth noting that both Moldova and Ukrainehave been keen to assert that they are also part of SE Europe.

Given the recent history and the heterogeneity of the region, the EU hashad little choice but to concentrate on bilateral relationships with countriesof the region. Some countries are involved in the enlargement process,albeit at different stages, while others have no contractual relations with theEU. Recently, the European Commission proposed specific new agreementsfor individual countries. In addition to the bilateral relationships, the Unionrecognizes the importance of the regional dimension.

Southeast European and Black Sea Studies, Vol.1, No.2 (May 2001) pp.94-112PUBLISHED BY FRANK CASS, LONDON

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SOUTHEASTERN EUROPE AND THE EU 95

The EU has its own Regional Approach, supports the RoyaumontProcess and has launched a Stability Pact for SE Europe. A priority of theRegional Approach is the successful implementation of the Dayton/Parispeace agreements, which principally concerns Croatia, Bosnia-Herzegovina and the Federal Republic of Yugoslavia (FRY). The EU hassought to assist these states to meet the conditionality requirements,which involve respect for democratic principles, human and minorityrights and good neighbourly relations among the region's countries.

Structural problems and unresolved issues in SE Europe areconcentrated mainly, but not exclusively, in the partner states of the EURegional Approach: Albania, Bosnia-Herzegovina, the FRY, Croatia andthe Former Yugoslav Republic of Macedonia (FYROM). The region isheterogeneous in every respect - ethnically, culturally, religiously,linguistically, economically and politically - and causes of potentialconflict are shared by almost all the above countries, including unresolvedterritorial and minority questions; economic backwardness anddistortion; unstable, often undemocratic political systems; reluctance toemploy peaceful conflict settlement mechanisms and confidence-buildingmeasures; and underdeveloped regional cooperation structures.

EU interests in SE Europe include the containment of violent ethnicconflict as a prerequisite for lasting stability throughout Europe; thereduction of migration motivated by poverty, war, persecution and civilstrife; the strengthening of democracy, as well as human and minorityrights; the establishment of market economy structures with stableeconomic growth to close the prosperity gap in Europe; and the increaseof economic potential (growing markets, investment possibilities).

In short, the EU has a real interest in the European perspective for thewhole of SE Europe and aims to counteract trends towards destabilizationand marginalization.

EU RELATIONS WITH THE REGION

The EU has different contractual relations with each country in theregion. Greece is a member state of the EU and plays an active role in theBalkans. With Turkey, the EU has signed a Customs Union; its successfulfunctioning is essential in Turkey's preparations for EU membership.Romania and Bulgaria have Europe Agreements with the EU and areactively pursuing their membership applications despite the obviousdifficulties both countries face. Slovenia has also signed a EuropeAgreement and is negotiating accession to the Union.

The EU's relations with the region's remaining states may be dividedinto two categories: (a) Croatia, the FRY and Bosnia-Herzegovina; and (b)

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96 SOUTHEAST EUROPEAN AND BLACK SEA STUDIES

Albania and FYROM. The first group was engaged in the Bosnian conflict,and EU policy towards these countries is based on a follow-up to theDayton/Paris peace agreements, with considerable emphasis onconditionality (support for democracy, protection of human and minorityrights, willingness to engage in regional cooperation, and willingness tocooperate with the International War Crimes Tribunal). Huge problemsremain concerning reconstruction, refugees, sharply reduced industrialoutput and the breakdown of health and social security systems. The EU haspledged one billion euros for reconstruction, with the focus on institutionbuilding (including civil society and the media), refugee return andeconomic development. Both Albania and FYROM have 'evolutionaryclauses' in their Cooperation Agreements with the EU, which allowrelations to be upgraded according to political and economic developments.

ENLARGEMENT

The enlargement of the EU (and NATO) is a major challenge withimportant strategic implications for SE Europe. The EU has been at painsto treat all applicants on an equal basis. Hence, the Commission'sRegular Reports on progress towards accession (13 October 1999)argued for the opening of accession negotiations with all candidatecountries that have fulfilled the Copenhagen political criteria and provedready to comply with the economic criteria, namely Bulgaria, Malta,Latvia, Lithuania, Romania and Slovakia.1 Furthermore, the Commissionproposed to conduct accession negotiations through a 'differentiated'approach, taking full account of the progress made by each candidatecountry.2 As Giinter Verheugen, Commissioner for Enlargement, put it:

This strategy will help strike the right balance between two potentiallyconflicting objectives in the enlargement process: speed and quality.Speed is of the essence, because there is a window of opportunity forenhanced momentum in the preparations for enlargement, inaccordance with the expectations of the candidate countries. Qualityis vital because the EU does not want partial membership but newmembers exercising full rights and responsibilities.3

With regard to Slovenia, the Commission's Regular Report stated thatit fulfils the Copenhagen political criteria but must continue tostreamline and accelerate its judicial and parliamentary processes.Slovenia can be regarded as a functioning market economy capable in themedium term of coping with competitive pressure and market forceswithin the Union, provided that it continues to make progress onstructural reforms. According to the Report, Slovenia maintained

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macroeconomic stability, significantly accelerated its overall legislativeapproximation effort and demonstrated impressive progress across mostsectors of the acquis communautaire. Although the adopted sectorlegislation (standards and certification, justice and home affairs, regionalpolicy) provides for the establishment of many needed administrativestructures, Slovenia has made little progress in general publicadministration and judicial reform (adoption of a civil service law, landregistration, financial control) and in the areas of banking and insurance.

Bulgaria, the Report declared, meets the Copenhagen political criteria,although it must continue efforts to strengthen the rule of law and protecthuman and minority rights, especially of the Roma population. Moreover,it must pay particular attention to the fight against corruption and judicialreform. Despite Bulgaria's continuing progress in establishing a functioningmarket economy, it is not yet in a position to cope with competitivepressure and market forces within the Union in the medium term. As theCommission pointed out, Bulgaria has maintained macroeconomic stabilitythanks to sound fiscal and income policies implemented under the currencyboard agreement. Completing privatization and more quickly restructuringthe enterprise and banking sectors should become a priority. According tothe Report, there has been no significant improvement in the area of stateaid and in the social sector, where there is widespread poverty and causefor concern in terms of public health. Finally, Bulgaria has made noprogress in committing itself to a realistic timetable for the closure of Units1—4 at the Kosloduy nuclear power plant.

As for Romania, the Regular Report stated that it still fulfils theCopenhagen political criteria, but this position will need to be reexamined ifRomanian authorities stop giving priority to the crisis in their child careinstitutions. The Commission indicated it would monitor closely governmentdecisions to provide the necessary budgetary resources and to carry out astructural reform that puts childcare on a secure and decent basis, with fullrespect for human rights. Moreover, much remains to be done to guaranteean independent, efficient judiciary, battle corruption and ameliorate thesituation of the Roma. With respect to economic performance, Romania isnot a functioning market economy and is unable to cope with competitivepressure and market forces within the Union in the medium term. WhileRomania has addressed aspects of the administrative capacity (regionaldevelopment) and the internal market (restructuring of the bank sector,public procurement, state aid), certain areas of justice and home affairs (thefight against organized crime, demilitarization of the police and bordercontrol), as well as environmental priorities, require further consideration.

With regard to Turkey, the Commission pronounced that it does notmeet the Copenhagen political criteria. The country exhibits serious

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shortcomings in terms of human rights and the protection of minorities.Torture is not systematic but is still widespread, and freedom of expressionis regularly restricted by the authorities. The National Security Councilcontinues to play a major role in political life, and despite improvements inthe independence of the judiciary, the emergency courts system remains inplace. The Report acknowledged the joint endeavour of the Turkishgovernment and the parliament to adopt some key laws regulating politicallife, the justice system and the protection of human rights. These lawsshould be extended to all citizens, including those of Kurdish origin.Moreover, the positive impact of these measures should not be negated bythe carrying out of the death sentence passed on Abdullah Ocalan.

Turkey possesses most of the characteristics of a market economy. Itshould be able to cope, albeit with difficulties, with competitive pressureand market forces within the Union, provided it attains sustainablemacroeconomic stability and progresses towards the implementation oflegal and structural reform programmes. While Turkey continues to complywith most of its obligations under the Customs Union, it must makeadditional legislative efforts to reach full compliance in the competition andcustoms fields. Alignment efforts on the acquis communautaire have beencontinuing in most of the areas identified in the European Strategy.However, much remains to be done in fields such as the internal market(especially public procurement), agriculture, transport and theenvironment.

On the whole, Turkey continues to make significant progress in theareas covered by the Customs Union and to a lesser extent in areas coveredby the European Strategy. It needs to modernize its administrativestructures and increase staff training. With regard to sectors not coveredby the Customs Union or the European Strategy, effective alignment on theacquis communautaire cannot be expected at this stage. The next steps inthe alignment of Turkey's legislation with the acquis communautaire willdepend on a clear perspective of membership, which will also positivelyinfluence cooperation on Common Foreign and Security Policy (CFSP)matters.

The Helsinki European Council on 10 December 1999 welcomedthese Regular Reports and decided to convene bilateralintergovernmental conferences to begin negotiations with Romania,Slovakia, Latvia, Lithuania, Bulgaria and Malta on the conditions for theirentry into the Union and the ensuing Treaty adjustments. Turkey was alsogranted candidate status and is 'destined to join the Union on the basis ofthe same criteria as applied to the other candidate states'.4 Thereaffirmation of Turkey's European orientation, as well as the Greek-Turkish rapprochement, that lead to the signing of a series of bilateral

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cooperation agreements (on customs administrations, maritime transport,cultural cooperation, science and technology, economic cooperation,reciprocal promotion and protection of investments, combating crime,tourism and environmental protection), have paved the way for theelaboration of a more consistent EU strategy in SE Europe.

The Nice European Council on 7 December 2000 reaffirmed 'thehistoric significance of the European Union enlargement process' andendorsed 'the General Affairs Council conclusions of 4 December 2000concerning the strategy proposed by the Commission'. The EuropeanCouncil was 'pleased to see that the principle of differentiation, based oneach candidate country's own merits, and allowance of scope forcatching up are reaffirmed in those Council conclusions'. In theEuropean Council's view, 'that strategy, together with the completion ofthe Intergovernmental Conference on institutional reform, will place theUnion, in accordance with the objective set by the European Council inHelsinki, in a position to welcome those new Member States which areready as from the end of 2002, in the hope that they will be able to takepart in the next European Parliament elections. In Goteburg, in June2001, the European Council will assess progress in implementing thatnew strategy, in order to give the necessary guidance for successfulcompletion of the process.'

A NEW APPROACH: THE STABILIZATION AND ASSOCIATION PROCESS

In May 1999 the European Commission issued a Communication on theEU's future relations with SE Europe. In the report, it confirmed 'thereadiness of the EU to draw the countries of this region closer to theperspective of full integration into its structures' and specified that 'thiswill be done through a new kind of contractual relationship, taking intoaccount the individual situations of each country, including progress inregional cooperation', and providing the prospect of EU membership onthe basis of the Amsterdam Treaty and the Copenhagen criteria. The keyelement in this strategy is the Stabilization and Association Process (SAP)for the five countries of the region, namely Albania, Bosnia-Herzegovina, Croatia, the FRY and FYROM.

The SAP offers stronger incentives to these five countries but imposeson them more demanding political and economic conditions. It stronglystresses the need for regional cooperation. To develop a closerrelationship with the EU, these countries will have to gear their political,economic and institutional development to the values and modelsunderpinning the European Union: democracy, respect for human rightsand a market economy. The EU will support them in introducing the

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reforms necessary to progress in these areas. In particular, the SAP willinclude, as appropriate:• Stabilization and Association Agreements (SAA), which represent a

new dimension in the relations with these five countries, offering forthe first time a clear prospect of integration into the EU's structures;

• Autonomous Trade Measures and other economic and traderelations;

• economic and financial assistance, budgetary assistance and balanceof payment support;

• assistance for democratization and civil society, with these primaryobjectives:* to contribute to the stability of the countries' political structures,

that is, support free and fair elections and voter education,develop parliamentary practice, reform legislation and establishan independent media;

* to safeguard the rule of law with support for justice and thepolice, and provide long-term initiatives for civic education inschools and the affirmation of multicultural values;

* to enhance the effectiveness of public administration, mainlythrough anti-corruption programmes and training programmes;

* to ensure the viability of civil society, mainly by establishing aregional network of foundations for democracy;

• humanitarian aid for refugees, returnees and other persons ofconcern;

• cooperation in justice and home affairs, which mainly covers:* the promotion of an independent judiciary and legal and law-

enforcement system with effective policing;* the fight against organized crime, corruption, fraud and

smuggling;* the participation of all countries in the programme to fight drug

trafficking in SE Europe;* the strengthening of border controls;* the prevention of migratory flows into the EU (including bilateral

agreements on the reentry of nationals);

• development of a political dialogue not only on a bilateral level butalso on a multilateral and regional level. Such dialogue could takeplace at the level of senior officials or ministers, comprise theadoption of political declarations and result in the creation ofmechanisms for technical discussions (as in the case of theConsultative Task Force for Bosnia).

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TABLE 1

1991-1999 EC/EU ASSISTANCE TO BOSNIA(allocations in mi/lions of euro)

Phare &Obnova

Humanitarianaid (ECHO)

Mostar, customs,voluntaryreturn ofrefugees anddemining

MediaDemocracy and

human rightsBOP support

(DC ECFIN)*Total

'91

495.26

495.26

'92 '93 '94 '95

145.03

70.00

0.21 0.650.70

0.21 216.38

'96

230.89

142.45

65.40

1.654.80

445.19

'97

205.10

105.00

39.90

4.094.80

358.89

'98

190.64

87.95

15.00

2.241.80

297.63

'99

118.36

58.90

13.50

2.40n.a.

60.00

253.16

Total

744.99

1,034.59

203.80

11.2412.10

60.00

2,066.72

Source for all tables: European Commission, '1991-1999 EU Assistance to SoutheasternEurope and Western Balkans - Figures', 24 March 2000, http://europa.eu.int/comm/external_relations/see/figures/see_balkans_support_91_99

* Balance of payments support (Directorate General of Economic and Financial Affairs

At a press conference announcing the new proposals, the thenCommissioner Hans van den Broek stated that the 'ultimate' perspectivefor these countries was 'integration in the Euro-Atlantic structures'. TheCommission's document took on board the Conclusions of the GeneralAffairs Council on the Stability Pact, which spoke 'explicitly ofmembership'. On the financing required, the following can be noted.

Bosnia-Herzegovina: From 1991 to 1999 humanitarian assistanceprovided by ECHO (European Community Humanitarian Office)totalled 1,034.59 billion euro. Since 1996 Bosnia-Herzegovina has beenreceiving assistance under the Obnova and Phare programmes to supportphysical reconstruction, institution building and refugee return (744.99million euro).5 In addition, EU member states contributed over onebillion euro in assistance between 1996 and 1999.

The main objectives of the Union's assistance are to help consolidatethe peace process and foster inter-entity cooperation; to expedite ethnicreconciliation and the return of refugees and displaced persons; toestablish functioning institutions and a viable democracy; to lay thefoundations for sustainable economic recovery and growth; and to bringBosnia-Herzegovina closer to EU standards and principles.

In December 1999, the Commission disbursed a first portion of 25

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TABLE 2

1991-1999 EC/EU ASSISTANCE TO CROATIA(allocations in millions of euro)

'91 '92 '93 '94 '95 '96 '97 '98 '99 Total

ObnovaHumanitarian 204.77

aid (ECHO)MediaDemocracy and

human rightsDeminingCustoms (DC

TAXUD)*Total 204.77

7.02 8.59 15.00 15.00 45.6138.43 21.15 14.50 6.95 8.00 293.80

0.09 0.31 0.72 1.67 0.59 0 3.390.70 2.20 0.60 n.a. 3.50

1.00 0.50 1.501.00 1.00

0.09 38.74 29.59 26.96 24.14 24.14 24.50 348.80

* Directorate General of Taxation and Customs Union

million euro of EU macrofinancial assistance to Bosnia-Herzegovina. Thisfirst portion involved a grant of 15 million euro and a loan of 10 millioneuro. The EU's macrofinancial assistance complements resources madeavailable by international financial institutions (IFIs) and bilateral donors.Its implementation takes into account progress in the country's economicprogramme under the International Monetary Fund (IMF) standbyagreement concluded in May 1998, as well as the implementation ofstructural measures. These relate to public expenditure management andreform, customs and tax reforms, promotion of the convertible marka,payments systems reforms, privatization and banking sector reform.

The macrofinancial assistance will help cover Bosnia-Herzegovina'sfinancing needs and underpin its tradition tending towards a self-sustained market-based economy within the framework of a well-definedmacroeconomic reform programme. The Commission and the Councilconsider this macroeconomic support vital to promote economicreforms and support the establishment of an open market economy,which will create jobs and improve living conditions. With one ofEurope's lowest GDP (gross domestic product) per capita levels, Bosnia-Herzegovina's economic situation continues to be fragile.6

Croatia: From 1991 to 1999 the EU provided 348.8 million euro toCroatia.7 In the difficult period of war and transition, 1991-95, the EUprovided 243.2 million euro to Croatia for humanitarian and democraticassistance. In the period 1996-98 assistance focused on reconstructionand refugee return but also supported democratization, mediaindependence and demining. The support continues: during 1999, morethan 20 million euro was provided for Croatia, including 15 million eurofor reconstruction, the return process and the development of civil

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TABLE 3

1991-1999 EC/EU ASSISTANCE TO THE FRY(allocations in millions of euro)

'91 '92 '93 '94 '95 '96 '97 '98 '99 Total

Obnova 0 0 12.70 153.90 166.60Humanitarian 170.25 36.87 23.40 13.50 11.20 205.67 460.89

aid (ECHO)Media 0.37 1.18 0.37 3.83 5.38 3.30 14.43Democracy and 1.90 0.70 0.80 2.50 n.a. 5.90

human rightsCommon Foreign 3.00 2.00 5.00

and SecurityPolicyassistance

Food security 20.90 20.90(DC DEV)*

Total 170.25 0.37 39.95 24.47 18.13 34.78 385.77 673.72

* Directorate General of Development

society and the rule of law.Following parliamentary and presidential elections in Croatia in

January 2000, the EU has launched an EU-Croatia Consultative TaskForce. This is designed to provide Croatia with expertise and technicalassistance in preparation for the SAP. The focus is on legal reform,economic matters and foreign trade policy. The EU has also started workon a feasibility report on an SAA with Croatia and upgraded the ECOffice of the Special Envoy in Zagreb to a permanent Delegation of theEuropean Commission.

In May 2000 the Commission adopted the feasibility report onCroatia, the first step towards the possible establishment of contractualrelations between the EU and the Republic of Croatia. The reportexamines the political and economic situation in Croatia and takes stockof different sectors of cooperation, which will be the object of an SAA.In its conclusions, the Commission commends Croatia's substantialprogress in political areas of concern, such as the return of refugees anddisplaced persons, its full cooperation with the International CriminalTribunal on former Yugoslavia, improved regional cooperation anddemocratization of the media. Croatia has taken some first encouragingsteps also in the economic sector and its although the Commissionexpresses some concern on the continuing problems that plague theCroatian economy. These will be tackled, however, by a comprehensiveeconomic reform programme, to be adopted shortly. The Commissionnotes that Croatia has already started progressive harmonization of itstechnical rules, though major efforts are needed to approximateEuropean standards. The Commission concludes that Croatia has met

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the conditions for the opening of negotiations for an SAA and will soonpresent a proposal to authorize such negotiations.8

FRY: Although the FRY has not respected the conditions that wouldenable it to benefit from large-scale EU assistance, it still receivesconsiderable assistance through the EU's programmes of humanitarianassistance and support for democratization and independent media. Inaddition, the FRY is eligible for support under the Obnova programme.In practice, this has only been given to Montenegro and Kosovo, thoughsince 1999 it has also been used for the Energy for Democracyprogramme within Serbia.9

The main objectives of the European Union's assistance are toprovide basic humanitarian support; to stimulate democratic change; tohelp with the transition toward a full-fledged democracy and marketeconomy; to help ethnic reconciliation and the return of refugees anddisplaced persons to their place of origin; and to bring the country closerto EU standards and principles.

Since 1998, a range of political and economic sanctions have beenimposed on the FRY because of the Kosovo crisis and repression of thecountry's media. In the same way that assistance was not provided to orthrough the Belgrade regime, the sanctions were, as far as possible,targeted at Milosevic's regime rather than the population (a visa ban listthat includes members of the regime and their supporters, targetedeconomic sanctions and a temporary suspension of the flight ban).Montenegro and Kosovo have been exempted from both the flight banand the oil embargo. Finally, economic sanctions have been structured soas to not preclude EU assistance (Energy for Democracy).

Following the fall of the Milosevic regime on 5 October 2000 and theensuing democratic changes in Belgrade, the European Union announcedthe lifting of sanctions; the immediate repeal of the oil embargo and theflight ban; the extension of the European Reconstruction agency toSerbia and Montenegro; its willingness to press ahead with the clearingof the Danube; its wish for member states to re-establish or normalizediplomatic relations with Yugoslavia; and, finally, its willingness tocontribute to the institutional and economic rebuilding of the FRY. Atthe Biarritz European Council in October 2000, European CommissionPresident Prodi announced an emergency package for Serbia totalling200 million euro, which included an Emergency Assistance Programmeof 180 million euro, concentrating on energy support over the winter,medicines and foodstuffs, the expansion of the European Commission'sSchool for Democracy programme to the whole of Serbia, the launch ofa new programme called Towns for Democracy and support for theindependent media. The remaining 20 million euro primarily covers

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TABLE 4

1991-1999 EC/EU ASSISTANCE TO FYROM(allocations in millions of euro)

'91 '92 '93 '94 '95 '96 '97 '98 '99 Total

Phare &Obnova

Humanitarianaid (ECHO)

MediaDemocracy and


(DC ECFIN)Total

60.00

36.52

96.52

25.00 25.00 33.00 25.00 47.00 215.00

9.15 0 0 0 39.81 85.48

0.05 0.28 0 0.21 0.28 0 0.82

0.50 0.20 n.a. 0.70

40.00 0 80.00 120.00

0.05 34.43 25.00 73.71 25.48 166.81 422.00

ongoing humanitarian aid for refugees, displaced people and vulnerablepersons in Serbia.

Montenegro has differentiated itself from Serbia by pursuing a path ofpolitical and economic reform and openness to Europe. As a result, it cameunder considerable pressure from the Milosevic regime in Belgrade, whichbadly mismanaged the economy and denied Montenegro its constitutionalrole in economic affairs. In response to the difficult situation Montenegrofaces, External Relations Commissioner Chris Patten announced on 20March 2000 a doubling - from 10 million euro to 20 million euro - of theEU's contribution to Montenegro under its year 2000 Obnova programme.This brings to 82.7 million euro the total amount made available by the EUto Montenegro since April 1998, including 17.6 million euro inhumanitarian assistance and 10.4 million euro in food security.

Kosovo: The EU is playing a prominent role in the reconstruction ofKosovo. During 1999 the EU provided 505 million euro for peoplethroughout the region affected by the Kosovo crisis - of this, 378 millioneuro went to humanitarian aid for the entire region, including 111.7million euro for Kosovo. The remaining 127 million euro of the totalwas earmarked for reconstruction assistance within Kosovo; 67.2 millioneuro had been contracted and 39.4 million euro paid as of 22 March2000. Exceptional financial assistance of 5 million euro was delivered tothe United Nations Mission in Kosovo (UNMIK) in December 1999following an urgent appeal for budgetary support by Bernard Kouchner,Special Representative of the UN Secretary General.

In addition, the European Agency for Reconstruction of Kosovo wasset up in January 2000 to ensure that the reconstruction programmes inKosovo are implemented rapidly and effectively. The agency has itsheadquarters in Thessaloniki and its operational centre in Pristina. Thisputs it in direct contact with the local population and international

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TABLE 5

1991-1999 EC/EU ASSISTANCE TO ALBANIA(allocations in millions of euro)

'91 '92 '93 '94 '95 '96 '97 '98 '99 Total

Phare 244.00Humanitarian 41.13

aid (ECHO)FEOCA(DC 120.00

AGRI)*Food security

(DC DEV)Democracy and


(DC ECFIN)*Total 368.13

88.00 53.00 68.90 42.50 101.50 597.901.15 1.65 16.30 11.00 104.07 138.30

0 0 0 0 0 120.00

10.80 0 5.50 16.30

1.00 0.60 0.40 0.80 n.a. 2.80

20.00 20.00

90.15 55.25 96.40 54.30 231.07 895.30

* European Agricultural Guidance and Guarantee Fund (Directorate General of Agriculture)

organizations present on the ground. It has taken over from theEuropean Commission's Task Force, which has been installed in Pristinasince July 1999, responding to the most urgent reconstruction needs andlaunching projects that total 127 million euro. The agency's task is todraw up programmes for reconstruction and the return of refugees toKosovo, submit these to the Commission for adoption and make suresuch programmes are implemented. The agency may also look after theimplementation of any reconstruction and refugee return programmesentrusted to it by the member states and other donors.10

FYROM: Both during the Kosovo crisis and during the breakup offormer Yugoslavia (1992-95), the country experienced severe disruptions.ECHO has provided emergency assistance: food aid, health care, waterand sanitation and fuel oil. By the end of 1999, this assistance hadamounted to more than 39 million euro. Additionally, the EU provided 40million euro in 1997 and 80 million euro in 1999 to support the balanceof payments in order to cover refugee-related additional costs in the areasof health, education and the social sector, as well as to ease the burden onthe authorities with regard to the Kosovo crisis.11

In September 1999, the Commission adopted a Recommendation fora Council Decision authorizing it to negotiate an SAA with FYROM.12

The Recommendation included: establishment of a political dialoguewith FYROM; provisions on enhanced regional cooperation, includingfree trade areas with the region's countries; the perspective of theestablishment of a free-trade area between FYROM and the EU withinten years after the entry into force of the Agreement; provisions on themovement of workers, freedom of establishment, supply of services,

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current payments and movement of capital; a commitment by FYROMto approximate its legislation with that of the EU, notably in the internalmarket; and provisions on cooperation with FYROM in a range of fields,notably justice and home affairs. On 7 March 2000, FYROM became thefirst country to start negotiations with the EU to conclude an SAA.

Albania: From 1991 to 1999 the EU provided 895.3 million euro toAlbania. In humanitarian assistance alone, ECHO has provided 138.3million euro. Twenty million euro has also been provided in balance ofpayments support to help the IMF-designed stabilization and adjustmentprogram."

The main objectives of the EU's assistance is to help the Albaniangovernment achieve comprehensive administrative and institutionalreform; to help the Albanian authorities establish a full-fledgeddemocracy and the rule of law; to facilitate economic and socialtransformation towards a market economy; to stimulate economicdevelopment through the improvement of infrastructure; and to bringAlbania closer to EU standards and principles, preparing the country forgradual integration into the EU within the SAP framework.

Future assistance to Albania will continue focusing on institutionbuilding and investment in areas such as public administration reformand the rule of law (judiciary, customs, police, public administration,statistics) and investment in infrastructure and economic development,to help the country meet conditions spelled out in the SAP. The EU willalso increase its attention to local development and social issues.

In May 2000, the European Commission adopted a proposal for aRegulation on assistance to the countries of the Western Balkans. ThisRegulation unifies - on one legal basis and a single set of uniformprocedures - assistance to the entire region in order to simplify and speedup its provision. In all, a maximum of 55 billion euro will be earmarkedfor 2000-2006. In more concrete terms, the assistance will go to:

• reconstruction and stabilization in the region;

• support for democracy, rule of law, human rights and minorities;

• economic development and market-economy oriented reforms; and

• development of closer relations between recipient and applicantcountries and the EU countries.

The assistance will be programmed in close collaboration with theauthorities concerned, who will have to persist in reforms so that theassistance is fully effective in meeting the EU's objective: the fullest possibleintegration of the region's countries into the political and economicmainstream of Europe. A proposed political conditionality stipulates

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respect for the principles of democracy, rule of law, human and minorityrights and other fundamental freedoms as preconditions for eligibility forassistance. To accelerate implementation of the operations, it has beenproposed that the management committee assisting the Commissionshould give opinions only on financing decisions that exceed 10 millioneuro (compared with the current 5 million euro threshold for Obnova).14

THE STABILITY PACT FOR SOUTHEASTERN EUROPE

The idea of a Stability Pact for SE Europe is not new. It was alreadymooted when the more limited Royaumont initiative was launched in1997. But the Royaumont Process has been slow to take off, which partlyreflects the level of mistrust in the region. With the appointment ofPanagiotis Roumeliotis as the Royaumont coordinator in December1997, the number of EU-financed projects increased, but the impact hasnot been widespread. The same might be said for other initiatives suchas the Southeast European Cooperative Initiative (SECI), the Black SeaEconomic Cooperation (BSEC), the Central European Initiative (CEI)and the Southeastern Europe Cooperation Process (SEECP).

It was largely in response to the Kosovo crisis that the GermanPresidency proposed an EU-sponsored Stability Pact for SE Europe. ThePact was formally adopted in Cologne on 10 June 1999 at a ministerialconference involving some 30 countries and many internationalorganizations. The final text stated:

lasting peace and stability in Southeastern Europe will only becomepossible when democratic principles and values, which are alreadyactively promoted by many countries in the region, have taken rootthroughout, including in the Federal Republic of Yugoslavia.International efforts must focus on consolidating and linking areasof stability in the region to lay a firm foundation for the transitionof the region as a whole to a peaceful and democratic future. Wedeclare that the Federal Republic of Yugoslavia will be welcome asa full and equal participant in the Stability Pact, following thepolitical settlement of the Kosovo crisis on the basis of the principlesagreed upon by G-8 Foreign Ministers and taking into account theneed for respect by all participants for the principles and objectivesof this Pact [the initial draft had stated that lasting peace andstability would not be possible if the FRY 'persists in behaviour thatresults in its alienation from the international community'].

The Stability Pact also noted:

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to draw the Federal Republic of Yugoslavia closer to this goal,respecting its sovereignty and territorial integrity, we will considerways of making the Republic of Montenegro an early beneficiary ofthe Pact. In this context, we welcome involvement in our meetingsof representatives of Montenegro, as a constituent Republic of theFederal Republic of Yugoslavia. We also note the intention of theEuropean Union and other interested participants to continue towork closely with its democratically elected government.

During his press conference on the Pact, Joschka Fischer, Germany'sForeign Minister, made it clear that there now exists the 'prospect of thewhole of Yugoslavia returning to Europe' and that 'Montenegro deserves oursupport for its courageous attitude'. Regarding the possibility of cooperatingwith Slobodan Milosevic, Fischer said that if the Stability Pact is to be asuccess, one must 'invest in good structures', which must be democratic inpractice. He then went on to outline the Pact's main mechanisms.

The first is the establishment of the Southeastern Europe Regional Tableto ensure coordination of activities of and among three Working Tables ondemocratization and human rights; on economic reconstruction,development and cooperation; and on security issues. These tables comprisethe participants of the Stability Pact, namely EU member states, theEuropean Commission, Albania, Bosnia-Herzegovina, Bulgaria, Croatia,Hungary, Romania, the Russian Federation, Slovenia, FYROM, Turkey, theUS, the OSCE Chairman in Office and the Representative of the Council ofEurope. The tables also include 'facilitator' states and institutions, such asCanada and Japan, the UN, the UN High Commissioner for Refugees(UNHCR), NATO, the Organization for Economic Cooperation andDevelopment, the Western European Union, the IMF, the World Bank, theEuropean Investment Bank and the European Bank for Reconstruction andDevelopment. Participating in the tables also are Representatives of theRoyaumont Process, the BSEC, CEI, SECI and SEECP.

The Pact's second mechanism is the appointment of a SpecialCoordinator (Bodo Hombach), designated by the European Union afterconsultation with the OSCE Chairman in Office and other participantsand endorsed by the OSCE Chairman in Office. The Special Coordinatorchairs the Southeastern Europe Regional Table and is responsible forpromoting achievement of the Pact's objectives within and between theindividual countries, in close cooperation with the governments andrelevant institutions of the countries concerned. The SpecialCoordinator provides periodic progress reports to the OSCE.15

In its first three months of work, the Stability Pact has launched anumber of concrete initiatives, namely:

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• an Investment Compact that includes firm commitments by theregion's countries to improve their investment environment;

• an anti-corruption initiative, part of the overall fight againstorganized crime;

• a Business Advisory Council composed of senior executives fromStability Pact countries, which will be closely involved in issues suchas the Investment Compact process and will advise on private sectordevelopment;

• a process to identify the priorities for infrastructure improvementand the private sector initiatives that will enable the Stability Pact toadvance concrete proposals at a regional funding conference, withthe emphasis on projects of regional importance;

• an initiative by the region's countries to intensify efforts to seize illicittransfers of small arms and light weapons, destroy weapons seized byinterdiction or that exceed legitimate defence needs, and take allnecessary measures to secure small arms and light weapons stockpilesnecessary to their defence; and

• concrete, integrated action plans by operationally oriented task forceson good governance, education, freedom of the media, gender issues,ethnic minorities and refugees (the UNHCR had requested that thePact help create overall conditions conducive to refugee return andresettlement through integrated efforts by all three Tables).

The EU provides strong political support and major financial backing tothe work of the Special Coordinator. The European Commission also hasmade valuable contributions to the Working Tables including: proposalsfor a regional network of civil society organizations; an environmentalaction plan for the region; and an initiative in support of Romaminorities. It is taking the important step of examining ways to promotetrade between SE Europe and the EU, as well as intraregional trade. TheEuropean Investment Bank's contribution to regional infrastructureassessment and financing is also significant.

The Stability Pact acts as a catalyst for enhanced coordination amonginternational organizations and structures. Moreover, the Pact has beenaccepted as a highly visible, comprehensive forum in which the region'scountries can work cooperatively with one another and with theinternational community. Finally, it offers a balance between significantshort-term projects and more ambitious medium- and long-term processes.

The Stability Pact has raised high expectations that must be met.Sponsoring agencies, organizations and countries have been appointedfor all the initiatives and are expected to move these initiatives forwardand provide clear action plans tied to specific benchmarks.

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CEPS PROPOSALS

The academic and research world has also devoted increasing attentionto a long-term EU-led stabilization plan. A recent example was thepublication by the Centre for European Policy Studies (CEPS) in Brusselsof its proposals, 'A System for Postwar SE Europe.'

Written by Michael Emerson, the paper was the result of a WorkingParty on 'The Future of Southeast Europe', chaired by Erhard Busek andPanagiotis Roumeliotis. The paper, which was warmly welcomed byCommission President-elect Romano Prodi, argues that the EU needs topropose a much more powerful, proactive and comprehensive approach toSE Europe. The report distinguishes the states that are more progressive ineconomics than in politics (Croatia) and those that are more progressive inpolitics than economics (FYROM and Montenegro, should the latteremerge from the Kosovo crisis as an independent state). It also cites the caseof 'territories needing protection', such as Bosnia-Herzegovina, Kosovo andother parts of Yugoslavia, like the Muslim enclave of Bihac, Sanjak and 'evenVojvodina'. It then suggests two possible statutes: that of 'Autonomous Stateof the EU', which means existing as a recognized state (though not a micro-state) with the prospect of becoming a full member of the EU 'but not formany years'; and that of 'Autonomous Region of the EU', that is, the countrycould be a micro-state but with no prospects of becoming a full member ofthe Union, except as 'part of a larger eligible State'.

The report makes fairly detailed suggestions at the institutional level(electing members to the European Parliament who initially would nothave had a right to vote, taking on junior professional lawyers at theCourt of Justice who could become judges 20 or 30 years later) and theeconomic level (proposing that countries that can do so join the EuropeanMonetary Area and a new European Economic Area). CEPS notes that,for some time now, most of the region's countries have been using thedeutsche mark as 'an important parallel currency'. It proposes that theeuro 'could play an important role in Southeast Europe in communicatinga sense of inclusion in the EU'. In addition, the report suggests includingthe countries concerned in new cooperation programmes relating tojustice and home affairs, with the option of concluding Special SecurityAgreements. According to CEPS, the cost to the EU would be some 5billion euro annually, well within the resources available in its budgetfollowing the Berlin decisions on Agenda 2000, even if exceptional post-war reconstruction costs could raise the bill.16

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CONCLUSION

SE Europe has moved to the top of the international agenda, and the EUhas a difficult task ahead in contributing to a stable and secure SE Europe.Its present mix of bilateral relationships and a regional approach based onstrict conditionality has been supplemented by new initiatives, including anew form of contractual relations that offers the perspective of eventualEU membership, a Stability Pact for SE Europe and a Common Strategyfor the Western Balkans. Whether or not these initiatives succeed, the EUwill have to become much more involved in the region's affairs for manyyears to come. The individual states still must overcome enormousproblems, but now they all have a realistic European perspective.

NOTES

The views expressed are personal and are not an official position of the EuropeanCommission or the Hellenic Ministry of Foreign Affairs.

1. The 'Copenhagen criteria' are the conditions set out at the European Council inCopenhagen in 1993 for becoming a member of the European Union. According tothese criteria, membership requires that the candidate country has achieved:institutional stability guaranteeing democracy, the rule of law, human rights and respectfor and protection of minorities; a functioning market economy and the capacity tocope with competitive pressures and market forces within the Union; the ability toundertake the obligations of membership, including adherence to the aims of political,economic and monetary union; and conditions for its integration through theadjustment of its administrative structures, so that European Community legislation istransposed into national legislation implemented effectively through appropriateadministrative and judicial structures.

2. The Regular Reports of the Commission are available on-line at the Europa site,www.europa.eu.int.

3. European Commission, 'Regular Report from the Commission on Progress TowardsAccession by Each of the Candidate Countries', 13 March 1999, IP/99/751.

4. Paragraph 12, Helsinki European Council, Presidency Conclusions.5. See Table 1.6. European Commission, 'Commission Disburses 25 Million Euro of Macrofinancial

Assistance to Bosnia and Herzegovina', 22 December 1999, IP/99/1021.7. See Table 2.8. European Commission, 'Commission Recommends Negotiations on a Stabilization and

Association Agreement with Croatia', 25 May 2000, IP/00/526.9. See Table 3.

10. European Commission, 'New European Agency for Reconstruction of Kosovo: FirstMeeting of the Governing Board', 17 January 2000, IP/00/37.

11. See Table 4.12. European Commission, 'Commission Adopts Draft Negotiating Directives for a

Stabilization and Association Agreement with the Former Yugoslav Republic ofMacedonia', 8 September 1999, IP/99/656.

13. See Table 5.14. European Commission, 'Commission Proposes to Simplify and Accelerate Assistance to

the Western Balkans', 10 May 2000, IP/00/456.15. On 30 July 1999, the Heads of State and Government of the participating and

facilitating countries of the Stability Pact and the Principals of participating andfacilitating International Organizations and Agencies and regional initiatives gatheredin Sarajevo and endorsed the purpose and principles of the Stability Pact.

16. For the latest version of the CEPS report, see their Internet site at www.ceps.be.

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southeastern europe and the european union

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