(Third part)

Eighteenth sitting

Tuesday 21 June 2005 at 10 a.m.



In this report:


Speeches in English are reported in full.


Speeches in other languages are summarised.


Speeches in German and Italian are reproduced in full in a separate document.


Corrections should be handed in at Room 1059A not later than 24 hours after the report has been circulated.


1.         Minutes of proceedings

2.         Voting cards and the register of attendance

3.         Association of Asian Parliaments for Peace

Statements by Mr Chaudhary Amir Hussain, President of the Association of Asian Parliaments for Peace and Speaker of the National Assembly of Pakistan, and by Mr de Venecia, Chairperson of the Advisory Council of the Association of Asian Parliaments for Peace and Speaker of the House of Representatives of the Philippines

4.         Contribution of the European Bank for Reconstruction and development (EBRD) to economic development in central and eastern Europe

Presentation by Mrs Pirozhnikova of report, on behalf of the Committee on Economic Affairs and Development, Doc. 10571

Statement by Mr Lemierre, President of the European Bank for Reconstruction and Development

Baroness Hooper (United Kingdom)
Mr Rakhansky (Ukraine)
Mr Sasi (Finland)
Mr Kucheida (France)
Mr Matušić (Croatia)
Mr Fenechiu (Romania)
Mr Elstsov (Russian Federation)
Mr Açigöz (Turkey)
Mr Dupraz (Switzerland)
Mr Kosachev (Russian Federation)
Mrs Naghdalyan (Armenia)
Mr Lemierre (President of the European Bank for Reconstruction and Development)
Mrs Pirozhnikova (Russian Federation)
Mrs Pericleous Papadopoulos (Cyrpus)

Amendment No. 1 adopted
Draft resolution, as amended, adopted

5.         Organisation of debates

6.         Address by Mr Adnan Terzic, Chairperson of the Council of Ministers of Bosnia and Herzegovina

Mr van den Brande (Belgium)
Mr McNamara (United Kingdom)
Mr Çavuşoğlu (Turkey)
Mr Gligorić (Bosnia and Herzegovina)
Mr Sasi (Finland)
Mr Mimica (Croatia)
Mr Iwiński (Poland)
Mr Jovašević (Serbia and Montenegro)
Mr Matušić (Croatia)
Mrs Durrieu (France)
Mrs Oskina (Russian Federation)

7.         Date, time and orders of the day of the next sitting

Mr van der Linden, President of the Assembly, took the Chair at 10.05 a.m.

THE PRESIDENT. – The sitting is open.

1. Minutes of proceedings

THE PRESIDENT. – The minutes of proceedings of the 17th sitting have not yet been distributed. They will be considered at a later sitting.

2. Voting cards and the register of attendance

THE PRESIDENT. – May I remind all members – including any non-voting substitutes and observers – to sign the attendance lists outside the doors of the Chamber at the beginning of every sitting.

I also remind all representatives and duly designated substitutes to ensure that they have placed their voting cards in the slot so as to ensure that the electronic system will work properly.

I emphasise to everyone present the importance of switching off mobile phones during sittings of the Assembly and during committee meetings.

3. Association of Asian Parliaments for Peace

THE PRESIDENT. – We now have the honour of hearing a statement by Mr Chaudhary Amir Hussain, President of the Association of Asian Parliaments for Peace and Speaker of the National Assembly of Pakistan.

In April I had the privilege of addressing the Senior Advisory Council of the Association of Asian Parliaments for Peace in Manila. I had been invited to present the experience of the Parliamentary Assembly of the Council of Europe in promoting political co-operation and integration on the basis of our shared values. The decision of the Association of Asian Parliaments for Peace to create an Asian Parliamentary Assembly in the next five years, modelled on our Parliamentary Assembly, is an impressive tribute to our work.

The Association of Asian Parliaments for Peace is the biggest sub-regional grouping in Asia, bringing together 40 parliaments. As I said in Manila, an Asian mechanism should, of course, reflect Asia’s own historical experience and political, social and economic realities, but the values at the heart of any such initiative are universal and apply to European as well as Asian societies.

In Manila I invited the Senior Advisory Council of the AAPP to visit Strasbourg to get first-hand experience of the work of our Assembly and of the Council of Europe in general. I am extremely pleased and honoured that you have taken up the invitation, and I welcome most cordially to our Parliamentary Assembly His Excellency Mr Chaudhary Amir Hussain, Speaker of the National Assembly of Pakistan and President of the Association of Asian Parliaments for Peace, His Royal Highness Samdech Krom Preah Norodom Ranariddh, President of the National Assembly of Cambodia, His Excellency – and my good friend – José de Venecia, Speaker of the House of Representatives of the Philippines, His Excellency Dr Bhokin Bhalakula, Speaker of the National Assembly of the Kingdom of Thailand, the honourable Sheikh Hasina, Leader of the Opposition of the Parliament of Bangladesh and President of the first AAPP General Assembly, and Mr Ji Peiding, the Vice-Chairman of the Foreign Affairs Committee of the National People’s Congress of China.

It is a great honour to have all of you here in our midst in this Assembly, and we hope that your meetings will contribute to your work on behalf of the people of Asia. I also thank the Hanns Seidel Foundation for its generous support. We look forward to hearing from you directly about your projects. I give the floor to the Speaker of the National Assembly of Pakistan, His Excellency Mr Chaudhary Amir Hussain.

Mr HUSSAIN (President of the Association of Asian Parliaments for Peace and speaker of the National Assembly of Pakistan). – Let me first of all express my heartfelt gratitude to you, Mr President, and to the Parliamentary Assembly for honouring us with the invitation to visit the Council of Europe. I should also like to acknowledge the support that we have received from you and record my appreciation for the hospitality and kindness shown since our arrival in this beautiful city of Strasbourg. Our prayers and good wishes are with the hospitable and gracious people of Strasbourg. Our thanks also go to those who have organised this visit.

We have all gathered here under the auspices of the Parliamentary Assembly of the Council of Europe so that we can meet and exchange views with our European brethren so that we can come up with useful and implementable ideas and find a way to play our part for the progress of the Asian Parliamentary Assembly (APA). We have also gathered here to address the challenges that we face in bringing peace and development to Asia. We are determined to chart a new course that will hopefully lead us towards peace and prosperity in the 21st century.

It gives me pride to mention the fact that the sense of understanding and co-operation among the participating AAPP parliamentarians resulted in the historic Islamabad Declaration. I believe that our consensus to create organisations such as the Asian Parliamentary Assembly and the AAPP anti-poverty fund will be landmark achievements of the fifth general assembly. I am sure that our will to have peace and development in Asia through inter-parliamentary dialogue and co-operation can provide a very strong basis to influence the policy-making process in our respective countries. It will enable us to realise our cherished dream of having a prosperous, peaceful and flourishing Asia that is free of all kinds of exploitation.

In the APA’s agenda, we wish to incorporate special co-operation in the development of democracy, the protection of human rights and the prevalence of the rule of law. In this regard, I am thankful to you, Mr President, for promising that the Parliamentary Assembly of the Council of Europe would conclude a formal co-operation agreement with the future Asian Parliamentary Assembly.

All of us are aware that Europe is more advanced and developed than most Asian countries. You have a more sophisticated industrial sector and more advanced education and are rich in health care and research. You are also superior in science and technology, financially strong and have the means to get optimum output from your resources. I am glad to say that progress made by the European countries in every walk of life can be a role model to follow. We must take our direction from our far-reaching and comprehensive endeavours of Europe.

Apart from the economic and social sector development, the most significant achievement of post-war Europe has been in the field of political integration. After the Second World War, the European nations realised the importance of peace and negotiated a settlement of contentious issues. This realisation commanded the sustained efforts of the European political leaders, and throughout the past 60 years, they have brought us to a stage where today we see a very closely knitted Europe, marching on the road of progress and prosperity.

We appreciate the role played by the Council of Europe and its Parliamentary Assembly in bringing about that unity among the European nations and giving sustainability to the political integration of European countries. I am sure that the Parliamentary Assembly of the Council of Europe can also play an important role in promoting democracy, human rights and good governance, as well as in preventing conflicts and promoting reconciliation. In our part of the world, we need the consultation and support of the Council of Europe in achieving the elimination of poverty and terrorism, advancing health, promoting education and human development to enable the proposed Asian Parliamentary Assembly to move in the direction of sustainable peace, particularly in Asia, as well as in the world in general. I am also very hopeful that the Council of Europe will facilitate technically, financially and morally the social sector improvement for the Asian region, based on the European experience.

We are looking to the Council of Europe for the creation of a conducive environment in which we can boost our relations with European countries for the uplifting of Asia, so as to help us to take an active share in and benefit from globalisation. Interaction can pave the road to co-operation in the field of peace, the rule of law and social science, and in science and technology, culture, archaeology and many more fields.

Notwithstanding many crises, Asian is today the hub of economic growth and dynamism. It accounts for a quarter of global exports and one third of the world’s economy. Many Asian countries are success stories, while others are fast catching up; yet many others are struggling to break away from the clutches of under-development, poverty and hunger. It is therefore essential for all of us to work towards a comprehensive, integrated and equitable social and economic development for the Asian continent. We also look to this Assembly and to all the European countries and international forums to stand in partnership for increased foreign investment, the transfer of technology, the improvement of infrastructure and human resource development in Asia, which are vital for broad-based development and in addressing disparities across the Asian continent.

I conclude by expressing confidence in the assurance of the Council of Europe and in its continuous support at every level to facilitate the creation of the Asian Parliamentary Assembly and to bring the European continent closer to Asia for the purpose of promoting peace and harmony. My confidence stems from the fact that our countries share similar sentiments about peace and prosperity in the world. To remove the stigma of terrorism from the face of the world, we have to stand together and united to root out the causes that generate and nourish terrorism.

THE PRESIDENT. – Thank you, Mr Hussain. Before I give the floor to His Excellency José de Venecia, let me express our sincere condolences to him and to the people of the Philippines on the passing away of Cardinal Sin, who played such a major role in restoring democracy in their country.

We now have the pleasure and honour of hearing a statement from Mr José de Venecia, Chairperson of the Advisory Council of the Association of Asian Parliaments for Peace and Speaker of the House of Representatives of the Philippines.

Mr de VENECIA (Chairperson of the Advisory Council of the Association of Asian Parliaments for Peace and Speaker of the House of Representatives of the Philippines). – President van der Linden, Excellencies, members of the Council of Europe and ladies and gentlemen, we bring you fraternal greetings from the Association of Asian Parliaments for Peace. Five leaders of parliaments in Asia are here with us – the mother of the AAPP, Sheikh Hasina of Bangladesh, Leader of the Opposition; Prince Ranariddh, Second President of the AAPP and Speaker of the Cambodian Parliament; the President of the Pakistani Parliament, Mr Chaudhary Amir Hussain, whom we have just heard; and the new President of the Parliament of Thailand, Bhokin Bhalakula; and the Vice-Chairman of the Parliament in China, Ji Peiding.

Founded in Dakar in 1999, the AAPP is Asia’s largest gathering of parliaments from north-east Asia, south-east Asia, south Asia, central Asia and west Asia. Already the association has grown in cohesion and unity of purpose. Last year, our Islamabad Assembly approved in principle a proposal to convert the AAPP within five years into an Asian parliamentary assembly on the model of this Assembly here in Europe, whose creation in 1949 has had such a catalytic effect on European integration. That is why we were so pleased when President van der Linden agreed to address our council at our meeting in Manila last April. Our member parliaments have recently accepted the idea of Asian integration, following precedents not only in Europe but in America and Africa. For us, the vision of a continent without dividing lines has become a possible dream.

We believe that the integration of Asia will keep in balance the three legs of the stool of global interdependence – Europe, Asia and the Americas. In our part of the world, economic integration is being induced by the market system that most of our countries have adopted despite their varying political systems. Now that the 10 south-east Asian states have been gathered into the Association of South-East Asian Nations – ASEAN – our leaders are discussing the idea of an east Asian economic group that would incorporate the ASEAN states and the three north-east Asian states of China, Japan and South Korea. The initial phase of this grand union and free trade area of the ASEAN 10 plus China began last year and should be completed by 2010.

Like the European Union, Asia is pursuing its political objectives through practical steps in economic and cultural co-operation of self-evident usefulness. We are mindful of the lessons of Monnet, Schuman, Adenauer and de Gasperi. The basic principle is that, in Robert Schuman’s words, “Europe will not be built in a day, nor as part of an overall design. Europe will be built on the practical achievements that first create a sense of common purpose.” We continue to track the progress of European solidarity, enlargement of the European Union and the creation of a common currency, and we share your anxieties about the rejection by French and Dutch voters of the draft EU Constitution. We also share your hopes that Europe’s statesmen will find a way out of that crisis.

Like you, we in Asia intend to begin with practical achievements that create a sense of common purpose. There are peace processes now taking place all over Asia, with the AAPP working especially in the Middle East, in Kashmir, in Sri Lanka, in Nepal, in southern Thailand, in Aceh in Indonesia, in Mindanao in the southern Philippines, in the Taiwan straits and in the Korean peninsula. Our association is supporting and encouraging those processes. There are also human rights initiatives to protect the rights of women, children, migrant workers and other vulnerable social groups that we must back up. Our colleague, Prince Ranariddh of Cambodia, has proposed that we draw up a charter of human rights for all Asian nations and he is leading the drafting of that charter.

The most urgent and noble cause of all is helping Asia and Africa in their battle against poverty. To aid this, we are creating an Asian anti-poverty fund and actively moving to advance the goal of an Asian monetary fund. The Asian anti-poverty fund will back the microbanks that lend working capital to Asia’s entrepreneurial poor – something that Thailand and Prime Minister Thaksin Shinawatra and our Speaker here have had great experience of. The Asian monetary fund will aid Asian countries in crisis more decisively than the International Monetary Fund was able to do for Thailand and Indonesia in 1997. Our proposed Asian monetary fund will complement and not compete with the IMF.

We hope that the European Union will endorse a practical and imaginative debt for equity conversion initiative that the Philippines is proposing to the United Nations, the rich G8 countries, the World Bank, the IMF, the Paris Club, the regional banks and other international lenders. The United Nations has spelled out its millennium development goals, including reducing poverty by half by 2015, but the poor countries will be hard put to finance their national MDG programmes, despite what we say here. Indeed, the 100-odd debt ridden countries are finding it more and more difficult to service the $2.3 trillion of official debt stock. The global community must help them shed some of this burden and we believe that the way to do so is not through debt forgiveness, cancellation or a moratorium. Specifically, the Philippines proposes that over a specified period half of all scheduled debt repayments be retained by the debtor countries to be invested in reforestation, clean water, mass housing, food production, hospital and primary health care, basic education, farm-to-market roads, ecologically sound tourism, livelihood programmes and wealth-creating and other MDG projects, in which the members will become substantial stock holders, with high investment returns and undertaken purely on a voluntary basis – no compulsion and no extra appropriations from the parliaments of Europe.

We have also come to realise that every nation is struck by anarchic forces in the world system, that poverty, oppression and despair anywhere must become the concern everywhere. To isolate those who advocate terrorism in the name of religion, my country offered the assembly a resolution co-sponsored by 24 other states to promote global interfaith dialogue – Christian-Muslim dialogue – as a way of resolving civil conflicts. Interfaith dialogue should help heal schisms between religions wherever in the world they occur.

Lastly, we see the European Union, Asia and the Americas as the tripod of global stability in this new 21st century. But beyond this, we believe that Europe’s role should be to encourage the replication of its experience in regional unification on a global scale. Please get over the recent setbacks, because Europe is where humankind’s future is being shaped. Already a new world order is being born on this continent, as states give up portions of their national sovereignty on behalf of a new civilisation venture. Even now, European stability rests no longer on the balance of power or the balances of power, but on the rejection of force and self-enforced rules of behaviour. Gradually, painfully, the whole of the global community is moving away from the perpetuation of rule by power towards communities of consent. That is likely to be a slow evolutionary process. It will unavoidably suffer the occasional setback, such as last fortnight’s plebiscite, but we have no doubt in Asia that it will be in Europe that we will first see the flowering of a full-bloomed community of consent of the type that men and women of goodwill have hungered for since our kind became established on this planet.

THE PRESIDENT. – Mr Hussain and Mr de Venecia, thank you very much for your addresses. It is our experience that democracy, human rights and the rule of law are the conditions for peace, stability and prosperity. As you mentioned, human rights are especially important to the fight against poverty and the pursuit of human dignity. You can be sure that the Parliamentary Assembly of the Council of Europe will give you all the support that you need in meeting your political target of creating an Asian parliamentary assembly. I wish you the political will and courage to make progress, step by step, in practical achievements. I hope that you enjoy and learn a lot from your programme this week at the Council of Europe. Thank you once again.

4. Contribution of the European Bank for Reconstruction and Development (EBRD) to economic development in central and eastern Europe

THE PRESIDENT. – The next item of business this morning is the debate on the report on the contribution of the European Bank for Reconstruction and Development to economic development in central and eastern Europe presented by Mrs Pirozhnikova on behalf of the Committee on Economic Affairs and Development, Document 10571, with a statement by Mr Jean Lemierre, the President of the EBRD.

The list of speakers closed at 6.30 p.m. yesterday. Fourteen names are on the list, and one amendment has been tabled.

I remind you that we agreed yesterday that speeches in this morning’s debate would be limited to four minutes.

I call Mrs Pirozhnikova, rapporteur, to take the floor. You have eight minutes.

Mrs PIROZHNIKOVA (Russian Federation) noted that the report looked at the work of the European Bank for Reconstruction and Development in 2004. The Bank had been involved in 27 countries, which stretched from eastern Europe to southern Asia. The Bank sought to help those countries that were likely candidates to benefit from EBRD help. The EBRD had political aims, as well as economic ones. The Bank promoted countries that valued human rights and democracy. In the 14 years that the Bank had been in operation, it had invested some €25 billion. Increasingly the Bank was seeking to fund private sector projects; as a result, some 86% of funds were used in that way. The aim was to reduce reliance on the state in the countries in which the EBRD operated.

Russia had been a major operation for the Bank, and a third of the Bank’s funds had been used in the country. That suggested that there was an appreciation that Russia would have a big role to play in Europe in the future. It had been noticeable that there had been a declining role for the EBRD in central Europe as the EU had been enlarged.

The problem of under-developed markets and the issues that were associated with this had led to the growth of extremist, radical ideology. For instance, in the Muslim world, millions of individuals under 40 years of age could not find a job. The radicalisation that sprang from such an unfortunate situation had to be avoided. The EBRD therefore had to see stability as a priority in such countries. It was not just a matter of the economy. An example of the EBRD responding in that manner could be seen in early transition countries, such as Armenia and Moldova. Such countries had seen funding grow five times between 2003 and 2004. Investment in the future would lead to integration, stability and development. Countries that showed a commitment to the free market and democracy should receive particular help.

Care had to be taken with those countries that were reliant on natural resources. In some of them it appeared that growth had occurred; but that was often due to rises in fuel prices – not as a result of structural improvement. This reflected a dependence on areas such as oil and gas. The EBRD needed to help countries develop other areas that were non-commodity based. That would avoid the deleterious effects of shocks in commodity markets. That was often a result of the state being too involved in the energy sectors. The private sector needed to be encouraged to move such economies away from such an over-reliance.

Kaliningrad was an enclave within the EU and faced many problems. The EBRD had set up a programme in 2003 which had been fully implemented by 2004. It had achieved some success, but many problems still remained. She suggested that this indicated a need for non-standard approaches by both the EBRD and the EU. Account had to be taken of the people in the area, who had a range of concerns, such as transport and infrastructure. The private sector needed to be encouraged to play its role in addressing such problems. The role of the EBRD would be key. Recent developments in the enlargement of the EU and in many states in the Commonwealth of Independent States had suggested that progress in terms of dynamism and development was possible.

THE PRESIDENT. – Thank you, Mrs Pirozhnikova.

We now have the honour of hearing a statement from Mr Lemierre, President of the European Bank for Reconstruction and Development.

Mr President, it is a great pleasure for me to welcome you in our midst again. When you were here a year ago, eight EBRD countries of operation had just joined the European Union. Today, we can look back on continued dynamic growth in those countries and excellent integration in EU structures. This, I am sure, is a source of pride and joy for you and the EBRD, as you have been a major investor and provider of advice in those and other countries of the region ever since the early 1990s.

Those countries have benefited enormously from the assistance your Bank has given to them. Now that they are mature and developed countries, they help to bring new and much-needed vigour to the EU. The large majority of other countries of operation also show encouraging growth. Europe is coming together economically every day, whatever the alarming stories in the news these days say. The EBRD plays a vital role in that process.

We are happy, Mr President, that you have found the time to come here every year since you took office in 2000. We see that there is a belief in what the Council of Europe and this Assembly are doing. Together, the Bank and the Council work to make democracy stronger across our continent. Values and economic growth are both needed. In fact, one cannot be maintained without the other.

Mr President, you have the floor.

Mr LEMIERRE (President of the European Bank for Reconstruction and Development) thanked the President for his kind words of welcome and said he was privileged to be the head of the EBRD. He thanked the rapporteur for the guidance and administration from the Council. He wanted to comment on three points in relation to the Bank. Major policies were important for EBRD and investors. Eight countries in receipt of Bank funds joined the EU last year, and that was the outcome of extraordinary work. Things were running well; however there were still challenges. The Bank would remain a presence in central Europe, but would invest to a lesser degree. He would like to see Bulgaria and Romania joining the other eight countries.

The Balkans provided a degree of uncertainty, however this was beginning to dissipate. There had been significant and fruitful dialogue and there had been important messages in regard to open discussions with the EU. He saw significant progress being made. There had been changes in Ukraine and Georgia, with general political development turning to the west. New authorities were coming to office in those countries and had an agenda to combat corruption and develop political reform. In Uzbekistan the ERBD was concerned about the outbreak of violence and underscored its commitment to promote the private sector. The Bank’s board would revisit its analysis in July 2005 and take a new position.

Turning to economic terms, he supported the rapporteur’s conclusions in the report. There had been an opening up of trade with China. There had been good macro-economic policy, with gas and oil having been well managed and there were no problems in that area. However, there were problems with diversification and Russia was looking to create activities outside the energy sector. He asked how Russia was developing, although he stated that there was a clear commitment to diversification of the economy. He was pleased with the opening of discussion to join the WTO. The region was changing in a deep-seated manner and the rapporteur’s remarks were important for investors.

The ERBD in 2005-06 was facing significant developments with the centre of gravity moving east and south-east. He questioned how to deal with poorer countries overlooked by investors. The ERBD would take greater risks in those countries. There would be further development work on small and medium enterprises, as the report mentioned. The ERBD was looking at nuclear safety, as it was important in the shift to the east and south-east. The EU had programmes to save energy. Progress had been achieved and the programmes were moving to a second decisive phase. There was great importance in the environment; one example was the pipeline project in the Caucuses. Future developments at the Bank would look to more investment which investors would regard as being a greater risk. The Bank would be able to take more risk because the accumulated reserves permitted such action.

THE PRESIDENT thanked the President of the ERBD for his speech, which provided encouragement to the Assembly.

(The speaker continued in English)

The first person on the list of speakers is Baroness Hooper, who will speak on behalf of the European Democratic Group.

Baroness HOOPER (United Kingdom). – Thank you, Mr President.

I am delighted to participate in this debate on Mrs Pirozhnikova’s report. In congratulating her on its preparation, I am also happy to say that the European Democratic Group, in asking me to speak on its behalf, fully supports her conclusions.

We all regard the European Bank for Reconstruction and Development as a unique institution with an important and evolving mandate. I add my congratulations to the Bank on its current record number of investment projects. Perhaps the speaker from the Philippines, Mr José de Venecia, could consider the EBRD as a blueprint for his plans for the future of his region. Clearly, the EBRD has made a vital contribution to the development of the wider Europe.

The relationship between the Bank and the Parliamentary Assembly, which has already been mentioned, cannot be emphasised sufficiently, since we provide the democratic forum that ensures the Bank’s accountability. That aspect of our work cannot be highlighted enough whether we are talking about the EBRD, the Organization for Economic Co-operation and Development or any of the other international and global institutions on which we report.

It is good to see Mr Lemierre here keeping faithfully to his appointment. I listened with great interest to what he had to say. The debate provides an opportunity to thank Mr Lemierre and his colleagues at the Bank for the welcome that they always extend to the Committee on Economic Affairs and Development at our annual meeting in London. As a member of the United Kingdom delegation, I am delighted that my country is a host country to the Bank, which enhances our reputation as an international financial centre.

The rapporteur has given an accurate overall description of the EBRD’s activities and operations, as well as a fair and comprehensive account of the Bank’s annual meeting in Belgrade last month. Clearly, the Bank, in its increasing number of countries of operation, is on the right track in its efforts to build functioning market economies. As the rapporteur has noted, however, that transition has been uneven across its countries of operation. From what we have heard from Mr Lemierre, the Bank is addressing that issue.

I also wish to highlight the issue of energy and its impact on all our economies. I therefore very much support the rapporteur’s request to the Bank to pay special attention to its new policy on energy projects to enhance energy efficiency and savings. As an extension to that, the amendment proposed concerning Chernobyl and the Bank’s role in overcoming the after-effects of that disaster adds an important practical point to the resolution. I support the amendment, which ties in with the EBRD’s concerns about nuclear safety.

I wish to state my support for the shift in focus by the Bank to the less-developed countries of operation, and I welcome its early transition countries initiative, to which Mr Lemierre drew attention.

Finally, looking to the future, the Bank’s 2006 capital resources review will set out its strategic direction for the next five years in more detail. I trust that the review will be evidence based, with the Bank satisfying the demands with which it was set up to deal. Of course, that means increased activity in central Asia, south Caucasus and the western Balkans. I therefore understand and welcome President Lemierre’s hope for a new business model. Thank you, Mr President.

THE PRESIDENT. – I call Mr Rakhansky, who will speak on behalf of the Group of the Unified European Left.

Mr RAKHANSKY (Ukraine) congratulated the rapporteur on the excellent report and Mr Lemierre on the improvement in the EBRD’s annual results. He noted that the report and draft resolution did not mention the Chernobyl problem. He had been highlighting that issue over the past 10 years before the Assembly and had also taken it to other institutions, such as the G8. Those efforts had not fallen on totally deaf ears and there had been some progress. Hans Blix had announced another tranche of funding for Chernobyl. Over the past 19 years the EBRD had allocated resources to deal with the problem, but those resources had been totally inadequate. The “sarcophagus” was now in a perilous state, increasing the risk of a new catastrophe occurring.

Ukraine had one hope left – that the Council of Europe would take action. He called on the Economic Affairs and Development Committee and the Committee on the Environment, Agriculture and Local and Regional Affairs to produce a report by April 2006 looking at Chernobyl 20 years on, and he hoped that the Assembly would support his amendment.

(Mr Elo, Vice-President of the Assembly, took the Chair in place of Mr van der Linden.)

THE PRESIDENT. – Thank you, Mr Rakhansky. The next speaker is Mr Sasi, who will speak on behalf of the European People’s party.

Mr SASI (Finland). – Thank you, Mr President. First, I congratulate our rapporteur, Mrs Pirozhnikova, on a good report, which gives a good basis for our discussion. I also thank Mr Lemierre. He has been in post since 2000, and it is important for parliamentarians to be able to speak to the president of the Bank and for him to hear our views. The opportunity is highly appreciated.

The European Bank for Reconstruction and Development is an important driver for economic development in Europe. As we have heard, it is active in 27 countries, its activities are growing all the time, and it now has record commitments of €4.13 billion.

As we all know, the European social model in some continental countries is a model of unemployment, and there is low growth in those countries. It is a fact that they need economic and structural reforms – but one other way to help those countries is to get high growth in central and eastern European countries. That would help to increase demand for products not only in central European countries but in all other European countries.

In that sense, economic development in Russia is one of the key questions, and Russia is one of the biggest areas of EBRD activity. As Mr Lemierre rightly said, there may be a lot of money in Russia now, but Russia needs diversification. It is essential for the Bank to help Russia in that process. I think that the shift of activities eastward to poorer countries is the right policy as well, because there is more potential in those countries, and they need more help.

Activity in the Balkans is also essential. It is still a difficult part of Europe, and if we can get high economic growth in South-Eastern Europe and the Balkans that will help to stabilise the situation there, and people in those countries will have hope for the future. That is why the Bank should be strongly represented there.

We as politicians must demand that the Bank take a political view in its activities. It should be more active in areas where governments are carrying out economic reforms and there is democratic development, where we see the rule of law improving and human rights being respected. On the contrary, where such developments are not taking place, the Bank should warn those countries and say that it will become less active there. That would be a good carrot to encourage those countries to adopt the right policies.

As Mrs Pirozhnikova’s report rightly says, it is essential that we work in favour of the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime, and also the Convention on Action against Trafficking in Human Beings.

It is also essential for the Bank to help small businesses. In a planned economy there are huge projects, but what is missing? Small companies. Creating small companies is a real driver for developing countries’ economies.

Infrastructure has to be put in place in those countries, but they often have the chance to jump one or two phases forwards. To establish a telephone network, for example, countries do not have to put land lines all over the place; they can go directly to mobile telephony.

Energy efficiency is rightly emphasised in the report. There is a great waste of energy resources in countries that produce energy, where prices are very low. We need to upgrade and renew nuclear power plants, for our own safety.

As I said, it is very important that parliamentarians are discussing, and in a way controlling, the EBRD, and this discussion is very useful for parliamentary control. Thank you for your attention.

THE PRESIDENT. – Thank you, Mr Sasi. I call Mr Kucheida.

Mr KUCHEIDA (France) said that, since 1971, the EBRD had created hope for many countries in Europe and some parts of Asia and had also helped to fight corruption. He congratulated Mrs Pirozhnikova on the report and thanked Mr Lemierre for his presentation.

Whilst the privatisation of infrastructure was currently being promoted, it begged the question why public services themselves should not be improved, highlighting the recent problems surrounding railway privatisation in some of France’s neighbouring countries. While liberalisation should be encouraged, the EBRD had promoted it too much.

In the next couple of years the EBRD would begin to withdraw from new EU member states and move eastwards. Although helping the poorest was sensible, there remained poor regions in the West that still needed the EBRD’s support, as the “No” result in the French referendum had demonstrated.

THE PRESIDENT. – Thank you, Mr Kucheida. I call Mr Matušić.

Mr MATUŠIĆ (Croatia). – In front of us is the annual report on the contribution of the European Bank for Reconstruction and Development to economic development in central and eastern Europe, which was meticulously prepared by our rapporteur, Mrs Ludmilla Pirozhnikova, and for which I would like to praise here.

The EBRD has certainly come a long way since 1991, and it has been helping many so-called transitional countries to come a long way too – a process that was, so to speak, crowned by the accession of 10 countries to the EU in May last year, a great number of which were benefiting from EBRD-sponsored projects. Croatia, which is ready to start its negotiations with the EU as soon as possible, and is also ready further to strengthen its economy and fulfil the European standards set in the acquis, is benefiting from support in projects concerning infrastructure, the environment, finance, small and medium-sized enterprises and tourism through more than 51 credit lines, with cumulative net commitments of more than €1.3 billion.

In March this year, the EBRD presented a new country strategy for Croatia, stressing that “under the coalition government led by Croatian Democratic Union (HDZ) Croatia has achieved its key objective of being candidate status by European Council. The government … has made excellent progress in improving relations with neighbouring countries and has improved co-operation with ICTY in The Hague”. Structural reforms have been resumed, and the authorities in Croatia have the ambitious target of completing small-scale privatisation by 2005. In the coming two years, Croatia is faced with important structural challenges, including the restructuring and privatisation of the remaining state-owned utilities and small enterprises in the tourism sector, and reforms in the public administration and judiciary.

Since the last country strategy, the EBRD has been significantly increasing its commitment to Croatia to an aggregate of more than €1.3 billion, with €3 billion being mobilised from co-financiers. Croatia is an important partner for the Bank, providing a significant contribution to regional economic growth; permit me also to underline that there has also been a great contribution to the stability of the region.

Each year since 1999, the EBRD has invested an average of €150 million in Croatia. Net business volume as at the end of December 2004 was €917 million, with operating assets of €591 million. In line with the previous strategy, the EBRD has substantially increased its involvement in infrastructure, including at the municipal level and in the enterprise sector. Continuous policy dialogue brought about an improvement in corporate government standards at enterprise level, enhancement of regional co-operation and the introduction of private sector concepts in infrastructure financing. In 2004, the Bank supported regional economic co-operation by financing the expansion into SMG of the largest dairy products company in Croatia.

I hope that I may briefly speak personally. The city that I come from, Dubrovnik, has benefited this year from the EBRD in receiving a €26.5 million loan for modernisation of the Dubrovnik harbour port, Gruž. The loan is part of a plan of the Dubrovnik port authority to upgrade its facilities. Basic infrastructure will be modernised, including expansion of berth capacity to accommodate as many as three of the new generation of 300 metre cruise ships at any one time. The facilities for processing waste water in Zagreb and Karlovac, as well as a part of the Rijeka-Zagreb highway, will benefit this month from EBRD financing, agreed just recently. It comes as no surprise that the report identified the fact that there is a strong relationship between reforms and economic growth, which is strikingly higher in the transition countries covered by the EBRD than the world average.

In the time that remains to me, my message to the EBRD is this: keep up the good work.

THE PRESIDENT. – Thank you, Mr Matušić.

The next speaker is Mr Wikiński. He is not present, so I call Mr Randegger. He is not present either, so I call Mr Fenechiu.

Mr FENECHIU (Romania). – I address my sincere congratulations to the rapporteur on her well-documented report. I also wish to express my gratitude to the President of the European Bank for Reconstruction and Development, Mr Jean Lemierre, for his activity and good management results as head of an institution of such international importance.

The EBRD is the largest investor in Romania, with commitments exceeding €2.5 billion. Romania is the third largest recipient of EBRD funding. The Bank’s Romanian portfolio is rapidly expanding in areas such as private sector investment and financial sector development, highly important infrastructure such as power, transport and municipal infrastructure and large-scale privatisation with strategic investors.

We know that the EBRD’s mandate is unique as it includes important political aims. As members of the majority group in the Romanian Parliament, my colleagues and I are continually supporting the ERBD strategy in Romania, aiming to encourage the private financing of infrastructure through concessions and build-operate-transfer schemes. We also highly appreciate the EBRD’s active support of the development of the non-banking financial sector in Romania. I must also mention the important help given to Romania’s transition and development process. The EBRD has been and still is involved in important Romanian projects, such as support for the privatisation in 2006 of Romania’s largest bank, the Romanian Commercial Bank; support for the successful privatisation of Romania’s oil company, Petrom; funding a barge terminal in the port of Constanţa; funding a regional transition line project, facilitating energy trade between Romania and Hungary; and co-operation with different Romanian commercial banks for SME facilities, credit lines, leasing facilities, mortgage loans and syndicated loans.

We acknowledge the steps to be taken towards Romania’s accession to the European Union. As the EBRD underlines, Romania has taken big steps towards the improvement of the country’s investment climate; implementing reforms in public sector administration and the judiciary; accelerating the implementation of the structural reform agenda, especially in the energy sector; strengthening the financial and commercial discipline in state-owned enterprises and public utilities; and promoting institution building to increase the public administration’s absorption and implementation capacity to be able to fully utilise the EU pre-accession funds.

I strongly believe in the European destiny of my country and I thank you and your countries, as well as all the European institutions and organisations involved, for the support granted to the full accomplishment of that destiny.

THE PRESIDENT. – Thank you. I call Mr. Eltsov.

Mr ELTSOV (Russian Federation) said that he wanted to speak in the debate in order to express his thanks for a very thorough report. The report had hit the nail on the head with regard to the activities of the Bank. The EBRD was a generator of reform in the world, especially in the region that the rapporteur detailed. The report covered many angles.

He also wished to thank Mr Lemierre. The EBRD had played an important role in terms of the diversification of the Russian economy. This had led to improvements in political stability and the environment. Importantly, the Bank had encouraged and supported the private sector, in particular, small and medium sized enterprises. This development was crucial for the post-Soviet economy.

There were still problems in the Baltic and in the future there was a danger of additional threats to stability in the Caucuses. He was worried that if that were not addressed it might threaten investment in those areas.

The EBRD should turn its attention to areas such as education. There also needed to be an appreciation that poor health was impacting negatively on children’s education.

He again thanked the rapporteur for her thorough report.

THE PRESIDENT. – Thank you. I call Mr Açigöz.

Mr AÇIGÖZ (Turkey). – Since its establishment in 1991, the EBRD has been making valuable contributions to the promotion of human rights and democratic principles through its country strategies and political dialogue with the authorities of its countries of operations. Thus, the EBRD’s work in Europe has a direct relevance to our overall aims of promoting long-term security and stability and preventing conflicts by addressing the causes of instability. I therefore highly value the debate we are holding today and thank the rapporteur for the report she prepared.

The increasing investment in the “early” and “intermediate” transition countries in central Asia, eastern Europe, the Caucuses and South-Eastern Europe is crucial for economic growth and reform. I therefore welcome the 2004 report which draws attention to the EBRD’s shifting focus from the advanced transition countries to the early stage transition countries. I also note that this year’s report pays particular attention to the EBRD’s involvement in several specific areas, such as the Kaliningrad region of the Russian Federation and the countries covered by the Stability Pact for South Eastern Europe. In that context, I support the EBRD’s strong emphasis on good governance and on infrastructure investment capable of benefiting general economic development. The EBRD’s efforts to involve non-European Union countries in closer regional co-operation are also welcome activities.

The Council of Europe and the EBRD complement each other in many ways; the two organisations work in many of the same geographical areas. There is thus the opportunity for more co-operation and convergence between the two. On that note, if we are to achieve better results, the Bank and the countries in which it operates should be encouraged to engage in closer co-operation with the World Bank, the European Investment Bank, the Council of Europe Development Bank and the Black Sea Trade and Development Bank. I support the call in the report for the Bank to pay special attention through its new policy on energy projects to enhancing energy efficiency and savings.

The EBRD’s policy of zero tolerance of any fraud, corruption and misconduct deserves appreciation. The issue is of particular significance to the activities in the countries in which it operates that are in their early or intermediate stages of transition.

I reiterate my appreciation of the EBRD’s activities across the 27 transition countries, although there is still some way to go to further the aims of the EBRD, and we must keep faith in the Bank to overcome the challenges ahead.

THE PRESIDENT. – Thank you, Mr Açikgöz. The next speaker is Mr Dupraz.

Mr DUPRAZ (Switzerland) said that the report gave a panoramic view of the EBRD’s range of activities in central and Eastern Europe. Everybody should be pleased with the Bank’s achievements. He thanked the rapporteur for the detail that she had included, especially on such matters as the status of Kaliningrad and economic stability.

The EBRD flanked those economies that had for too long been paralysed by centralised state control. Such economies now faced the realities of an anarchical globalised world. The €93 billion that the Bank was investing needed to be subjected to appropriate good governance, and he was confident that the EBRD would do that.

The draft resolution indicated that the Assembly supported the EBRD in its mission and its future work.

THE PRESIDENT. – Thank you, Mr Dupraz. The next speaker is Mr Kosachev.

Mr KOSACHEV (Russian Federation) supported the report and its positive assessments of the EBRD’s activities. He also thanked the rapporteur, who was a fellow Russian. The report rightly stressed important issues facing many of Europe’s regions, such as the Kaliningrad Oblast. The problems that this latter area faced suggested the need for a collective solution. European institutions such as the EBRD would need to play a full role.

The Russian Government had introduced a bill in the Russian Parliament on 9 June 2005 which would set up economic zones. He hoped that the legislation would be enacted in the near future. Such zones, as in the case of Kaliningrad, would promote the development of an area’s own resources.

Some of the problems faced by Kaliningrad were due to EU enlargement. This therefore necessitated the intervention and support of European institutions. In 2002, the EBRD had already begun to look at Kaliningrad before it became an enclave. He did not want the citizens of Kaliningrad to become the victims of enlargement. Integration was good, but it should not have losers. Collective efforts would be needed to solve the problems. He appreciated that the EBRD leadership was considering those issues and he thanked Mr Lemierre in that respect.

THE PRESIDENT. – Thank you, Mr Kosachev. The last speaker on the list is Mrs Naghdalyan.

Mrs NAGHDALYAN (Armenia) thanked the rapporteur for her detailed and thorough report. She also thanked the EBRD President and the Bank for its invaluable work. Supporting the development of market economies and democracy was essential for transition economies. However, a lot of progress needed to be made.

It was now the second decade of transition. In many such countries, social security systems had disappeared and a raft of other problems had arisen. People needed to know how long progress would take. Relevant programmes needed to be speeded up. A plentiful supply of dynamism and energy was required to speed up progress. There was a particular need for capital investment to allow the growth of structures to deliver the necessary reforms. New initiatives were required. She questioned why the Bank was not interested in developing regional projects, which could help to promote peace in the region. Support for SMEs had been very limited. The atmosphere was positive, but bureaucratic policies caused difficulties.

THE PRESIDENT. – Thank you, Mrs Naghdalyan.

That concludes the list of speakers. Mr Lemierre, would you like to respond to the debate?

Mr LEMIERRE (President of the European Bank for Reconstruction and Development). – Thank you, Mr President. Very briefly, I would like to thank members of the Assembly for the support and guidance that they provide to the Bank. I say to Baroness Hooper that we are very proud to be in London and very grateful to the British authorities for the support that they give to us.

On the various remarks that have been made, I shall deal with the main items. Important remarks have been made on energy efficiency – we agree on them; this is a key challenge for the region – and on transparency. This is a key element for us, and I might say that we are very happy that some countries in the region are now using the extractive industries transparency initiative, which has been launched by Prime Minister Blair and endorsed by many countries that are in favour of full transparency on what countries receive and what companies pay to countries, especially in the oil and gas sector and the mining sector. In the region, this is true for Azerbaijan and the KyrgyzRepublic. A few days ago, the President of Kazakhstan said that he would make the same move. These are important steps forward in order to improve transparency.

On Chernobyl, I share the views put by Mr Rakhansky. I agree with him: there is an urgent need to complete the two projects on Chernobyl. There were many technical discussions and delays for technical reasons. I think that there is a technical agreement on what should be done, especially on the shelter. There is more money, because donor countries have been very generous and have made more contributions. The chairman of the donors’ assembly, Mr Blix, had the opportunity to convey this message to Ukraine a few days ago.

My very strong commitment to you is that, as the operator of the fund, we shall do our best to deliver quickly on strong co-operation with the Ukrainian authorities. I take some confidence from the last meeting with Prime Minister Timoshenko of Ukraine and the strong commitment to co-ordinate and act as soon as possible to deliver. This is crucial.

On diversification in Russia, I say to Mr Sasi that there is a key dimension, which is the regions. Diversification in Russia means not only Moscow, but the whole country. The long-term social sustainability of Russia involves taking more risks and moving more to the regions. This is what we are trying to do now. It is a key dimension to our action in Russia.

I confirm to Mr Matušić that we shall be very active in promoting transition in Croatia.

I would like to offer Mr Kucheida assurance on two questions he raised. On central Europe, we shall not leave that region over the next two years. We shall stay longer, but do less. We shall reduce what we do, but we shall not stop. There is a wide consensus in the Bank to continue to do this.

What does that mean? It means that we will be more focused on the challenging regions where there is poverty and where transition is lagging behind. I hope that in making those remarks and referring to the strategy, Mr Kucheida will understand that we share his views.

On Mr Kucheida’s second point, which involves privatisation and the private sector, there is a clever way to use the capacity to make the public and private sectors deliver, especially the concession system, which is well known in many countries. The key point for us is the sustainability of the approach, and we pay a lot of attention to tariff policies. That is the main issue: being able to put in place for concessions good tariff policies, for example, to provide water even when people cannot pay because they are poor. That is a difficult approach, but it can be done, especially with the support of donor countries, which reduce the cost of the project at the beginning and enable us to put in place these clever tariff policies, which are needed.

I agree with Mr Eltsov on the importance of education in Russia. That country has had a high level of education, which must be kept and maintained in a modern way. That is crucial for the future of the country, and I take note of his point, because this is very important.

I say to Mr Kosachev that Kaliningrad is part of our priorities. We have already invested in Kaliningrad and we have opened a branch of the small and medium-sized enterprises bank that we have in Russia, KMB. It is beginning to deliver credit and loans to SMEs on micro-finance. Of course, we are totally ready to do more in an efficient way.

On Armenia, I want to mention two points. First it is right to say that we have perhaps not done so much in the past. We are strengthening what we do in Armenia, however. We are strengthening our resident office, and have appointed additional people, although those who were there were very good. My strong view is that we will deliver more, which we will seek to do in the private sector especially. I fully agree about the urgency of the matter, which is why, with the strong support of the governors of the Bank, the early transition countries initiative has been introduced to do more and to do it more quickly.

On the regional approach, I could not have put it better than you have done. We support the regional approach provided that countries endorse that type of approach. In the Balkans today, it is obvious that there are highways and electricity grids. In central Asia, we would like to see more done. In the Caucasus, we are beginning to see new developments, and we would like to see more.

The regional approach begins with trade. After trade comes infrastructure and energy. There is huge scope for progress and co-operation among countries and with us.

I just wanted to make those short remarks, but I wish once more to thank members of the Assembly for their support.

THE PRESIDENT. – On behalf of the Assembly, I thank you for your response.

I now call Mrs Pirozhnikova, the rapporteur, to reply. You have four minutes.

Mrs PIROZHNIKOVA (Russian Federation) thanked Mr Lemierre as the Bank’s representative and for being prepared to be open to co-operation. There had been 10 years’ experience of co-operation between the Council and the ERBD. Questions from colleagues had been answered by Mr Lemierre and participants in the debate had been thanked. In future, more reports would be able to look back to some of the wishes expressed by members during the debate. However, countries would have to understand that assistance could be given to them only if they were open to co-operation.

THE PRESIDENT. – Thank you. Does the chairperson of the committee, Mrs Pericleous Papadopoulos, wish to speak? You have two minutes.

Mrs PERICLEOUS PAPADOPOULOS (Cyprus). – I congratulate the rapporteur and all contributors to this lively debate.

It is true that, over the past 14 years, the European Bank for Reconstruction and Development has fostered the transition towards open market-oriented economies, promoting private sector initiatives. It is true, too, that it has been committed to multi-party democracy, the rule of law and human rights and to the environmental sustainability concept, assisting many countries in that direction.

This Parliamentary Assembly, in its role as the parliamentary forum for the EBRD, annually reviews the Bank’s performance and activities and notes with satisfaction that the Bank has succeeded in being the largest investor and agent for change and has been highly successful in operating its mandate in central and eastern Europe and the Commonwealth of Independent States. Moreover, it has succeeded in opening markets and promoting stable structures and institutional reform, economic diversification, modernisation and fiscal discipline, which have yielded positive results over time.

Today, the Bank continues its activities, stretching over 27 countries of operation from central Europe to central Asia. The Bank’s performance in key activities in 2004 are indicative of its successes – a record commitment to financing, a record number of investment projects, and economic growth in transition countries as well as political stability and economic progress. Moreover, it has been involved in substantial co-financing with other partners. The fact that eight of its countries of operation are now among the 10 new European Union members demonstrates its big success. That provides an excellent example for other transition countries seeking European integration.

We encourage the EBRD to strengthen its involvement in central Asia, to develop small business in Russia, and to assist south-east Europe with its Stability Pact. We also encourage it to work more to strengthen democracy. I congratulate the Secretariat and the rapporteur and give special thanks to Mr Lemierre for being here today for this debate.

THE PRESIDENT. – The debate is closed.

The Committee on Economic Affairs and Development has presented a draft resolution to which one amendment has been tabled.

I remind you that speeches on amendments are limited to one minute.

We come to Amendment No. 1, tabled by Mr Anatoliy Rakhansky, Mr Mats Einarsson, Mr Dumitru Prijmireanu, Mr Ivan Melnikov, Mr Tiny Kox, Mr Abilio Dias Fernandes and Mr Boris Oliynyk, which is, in the draft resolution, paragraph 8.iv, after the words “energy efficiency and savings”, add the following words: “and, taking into account that the EBRD is one of the main donors and managers of the Chernobyl Fund, asks the Bank to pay special attention to a considerable time lag accumulated vis-ŕ-vis the terms agreed on earlier as to the financing of the Chernobyl Shelter Fund, and of the construction of the ‘confinement’ sarcophage (Hayat-2), and of other facilities related to overcoming of the after effects at the Chernobyl Power Plant”.

I understand that Mr Rakhansky wishes to move his amendment in a modified form, by deleting the words “one of the main donors and managers” and inserting the words “the manager”. The amendment text would therefore start “and, taking into account that the EBRD is the manager of the Chernobyl Fund”.

Is there any opposition to the amendment being moved in that form?

I call Mr Rakhansky to support Amendment No. 1 in its modified form.

Mr RAKHANSKY (Ukraine) thanked the President and said that the amendment would provide excellent support for Ukraine and the ERBD. He thanked Mr Lemierre for his frankness and openness. However, there were shortcomings which had to be removed.

THE PRESIDENT. – Does anyone wish to speak against the amendment? That is not the case.

What is the opinion of the committee?

Mrs PERICLEOUS PAPADOPOULOS (Cyprus). – In favour.

THE PRESIDENT. – The vote is open.

Amendment No. 1 is adopted.

We will now proceed to vote on the whole of the draft resolution contained in Document 10571, as amended.

The vote is open.

The draft resolution in Document 10571, as amended, is adopted.

5. Organisation of debates

THE PRESIDENT. – There are nine speakers on the list for the current affairs debate this afternoon, but there are 30 on the list for the debates on the Middle East and 29 on the list for the debate on Kosovo. The current affairs debate will therefore be concluded a little earlier than planned and the debate on the Middle East will begin at about 3.45 p.m.

It will then be necessary to interrupt the list of speakers in the debate on the Middle East at about 5.05 p.m. in order to allow time for the replies and votes. The debate on Kosovo will begin at about 5.45 p.m. and it will be necessary to interrupt the list of speakers at about 7 p.m.

We will interrupt the debate on the disappearance of women and girls in Mexico at 8.20 p.m. in order to finish by 8.30 p.m.

Is that agreed to? It is agreed to.

(Mr van der linden, President of the Assembly, took to Chair in place of Mr Elo.)

6. Address by Mr Adnan Terzic, Chairperson of the Council of Ministers of Bosnia and Herzegovina

THE PRESIDENT. – We now have the honour of hearing an address by Mr Adnan Terzic, Chairperson of the Council of Ministers of Bosnia and Herzegovina. After his address, Mr Terzic has kindly agreed to take questions from the floor.

Mr Prime Minister, as we approach the 10th anniversary of the end of the war, and the start of the implementation of the Dayton general framework agreement, Bosnia and Herzegovina takes stock of its achievements in its efforts to build a functioning pluralistic democracy, and a state governed by the rule of law and respect for human rights. We are all very keen to hear more from you about progress to date.

Within a year of its accession to the Council of Europe, Bosnia and Herzegovina fulfilled almost all major formal commitments. We hope that you will show the same determination in implementing the adopted legislation and all the Council of Europe’s standards. The recent increase in the number of voluntary surrenders and transfers of indictees from Bosnia and Herzegovina to the International Criminal Tribunal for the Former Yugoslavia is to be welcomed. The Council of Europe and this Assembly urge you to continue co-operation with the ICTY to ensure that all indictees who continue to evade international justice are brought before the tribunal. The way to the future of Bosnia and Herzegovina goes through The Hague.

We all hope that the 10th anniversary of the massacres at Srebrenica on 7 July will be an occasion to foster reconciliation and move forward. The way forward is not an easy one; significant hurdles remain to be overcome for Bosnia and Herzegovina to be fully integrated in Europe. I assure you that the Parliamentary Assembly of the Council of Europe stands steadfastly at the side of the people and the authorities of Bosnia and Herzegovina in their efforts to find their rightful place in the European family and build a better future for their country.

Mr Prime Minister, you have the floor.

Mr TERZIC (Chairperson of the Council of Ministers of Bosnia and Herzegovina) (Translation). – Mr President, members of the Parliamentary Assembly, your excellencies, ladies and gentlemen, it is a great honour for me to be able to attend your June part-session. Please allow me to thank you first for giving me this opportunity to address you on behalf of the Council of Ministers of Bosnia and Herzegovina.

The activities of the Council of Europe and the efforts of its members, invested over half a century already, have now brought us to the point where we are closer than ever to a true European community, based on democracy, human rights and the rule of law. The fact that we are close, and continually moving even closer, to achieving this goal with each new day is certainly encouraging, but also brings obligations, both for the institutions of the Council of Europe and for each of the member countries individually.

What is encouraging is that the message is clear: the entire European continent is committed to democracy instead of dictatorship, to human rights instead of discrimination, to the rule of law instead of autocracy, and to co-operation instead of isolation. On the other hand, our obligation is to cease to tolerate “black holes” on our continent, as their bare existence, regardless of their isolated nature, holds huge destabilising power. The region from which I come used to be a black hole in Europe. It is my great pleasure to say here that, thanks to many, including the institutions of the Council of Europe, this is no longer the case.

I am aware that you are all familiar with the facts that are now but a chapter in “The history of 20th century Europe”. However, I cannot and will not omit the fact that only 10 years ago, in 1995, the situation in Bosnia and Herzegovina was completely different. What happened there 10 years ago can be summarised in two words – two words for two cities: Srebrenica and Dayton. Over 8 000 were murdered – children and men. That is the horrible truth of the crime that took place 50 years after the fighters for a free Europe dismissed Auschwitz and said “Never again”. Today, as we face the memorial gathering on the 10th anniversary of the Srebrenica genocide, Europe and the world are again in a position to utter a decisive “Never again” directed to all crimes against humanity. I would like to believe that this will be the last such vow the world will have to make.

The peace agreement drafted in Dayton and signed in Paris, usually cited for its complicated and non-functional solutions, stopped the war and enabled freedom of movement. It was a new beginning for the state of Bosnia and Herzegovina. Over the past 10 years, this agreement never lacked either criticism nor praise, especially criticism on the part of those who never wanted it in the first place, and who were never too eager to implement it. But that agreement offered a light at the end of the tunnel. Obvious limitations imposed by the Dayton framework could and should be removed by introducing generally accepted European standards, prescribed by the Council of Europe and applied by the European Union.

Only the European reforming agenda can be the light at the end of the tunnel, the driver of reforms and the contribution to the political environment that is oriented towards relieving ethnic tensions and fears. Such a reforming process requires, as well as decisiveness on our side, an impartial and positive attitude on the part of the international community. Just as you expect the Bosnian authorities compellingly to lead the way in the process of adopting European standards, so we expect the European leadership to avoid having second thoughts about future enlargement after the double “no” to the European Constitution. This new development should be treated as just another impetus for us to build our unity even stronger, and to make our mutual understanding even more obvious.

We in Bosnia and Herzegovina have done more over the past three years in terms of reintegration and state building than others have done over the first seven years after the war. In April this year, Bosnia and Herzegovina celebrated its 3rd anniversary under the auspices of this oldest of European institutions. This is to say that there is a clear correlation between the acquisition of full membership in the Council of Europe and the fulfilment of obligations that follow. There is a correlation between encouragements and obligations on one side, and the reforming tidal wave on the other.

In becoming a member of the Council of Europe, Bosnia and Herzegovina agreed to fulfil 73 obligations and was given the first blueprint for the implementation of reforms. The obligations from the first year have been completed in full and in time; 21 obligations are finalised; another 15 are running according to the agreed timeframes; and 37 of them are processes that need continuous activity. This third year of our membership was the hardest one. We were completing the tasks from years one and two, and we adjusted our whole agenda to the requirements of the third year.

I want especially to draw the Assembly’s attention to the fact that we never lacked the political will to fulfil the obligations, and that delays in certain fields are due to lack of finance and qualified personnel. All political forces in Bosnia and Herzegovina remain completely unanimous in one thing: membership of the Council of Europe is the best choice for our country along the way to achieving full and true democracy, and actual embracing of standards, norms of the rule of law and respect for human rights and fundamental freedoms. The main priority of the Council of Ministers, which I chair, is the continuous harmonisation of the entire domestic legislation with the European conventions, and especially with the European Convention on Human Rights. Today, political figures from all nations and all political options in the country are unanimous: the only way to have a stable Bosnia and Herzegovina is to integrate into the big European family. Bosnia and Herzegovina has now moved from Dayton towards Brussels, thanks to Strasbourg. These things are not merely the decisions of a few politicians; they are the attitude of the general public. According to surveys, 80% of the Bosnia and Herzegovina population support the idea of an EU future.

The European Bosnia and Herzegovina that I stand for will have a single economic space, Schengen-like borders, an independent judiciary, efficient police, an internationally recognised education system, a credible health and social care system and professional media, and above all, functional democratic institutions that guarantee full equality and an equal starting point for all.

What have we achieved since we became members of the Council of Europe, during this short but intense period? Let me start with the 2002 elections. Bosnia and Herzegovina proved that it can organise and hold efficient general elections, according to the highest international standards. A new feature on local elections was the possibility to vote for mayors directly, which strengthened local self-governance. The key feature of the reforms implemented so far is that they were achieved through political agreement, and not by means of international pressure or impositions on the part of the High Representative. The entities have agreed to transfer their powers to the state. The establishment of a single economic space is the most important feature for the benefit of citizens, alongside the merger of two customs departments into one and the initiative of entity governments to adopt a single sales tax at the state level.

Equally important is the merger of entity intelligence services into one state-level agency, which is now operating for the first time under strict parliamentary supervision. Furthermore, the establishment and functioning of the state-level Ministry of Defence was the key step in meeting the preconditions for the Partnership for Peace. The whole series of institutions and bodies in the field of phytosanitary protection were shifted up to state level as well. We are in the final phase of preparations for the introduction of fixed-rate VAT, aiming to improve the business environment required in terms of foreign investments. Over the past two years, we have marked a continuous growth of foreign direct investment, and as yet another illustration of our economic success, I wish to tell you that during 2004, our GDP growth was 6%, which sets the record in the region. Through judicial reform, we established the State Prosecutor’s office and the Court of Bosnia and Herzegovina, as well as the High Judicial and Prosecutorial Council, which is in charge of introducing the rule of law according to the best European standards and practices. Bosnia and Herzegovina is the first country in the region to meet the international standards for processing of war crimes cases. The state council is expected to operate according to best practices and under best technical conditions.

Our reform in the electric power sector enabled one of the most important regional projects to come true: the creation of the energy community of South-East Europe. This was the first ever official connection of our region with the EU, and it will impact on stable economic growth in the region, as well as resulting in the adjustment of the entire regional energetic sector to that of the EU. The signing ceremony for this project will be held in London shortly.

The 16 conditions from the feasibility study are implemented almost in full, under a tight schedule with shortened deadlines that we set ourselves. Two things stand in the way of Bosnia and Herzegovina in terms of launching the stabilisation and association agreement negotiations – police reforms and the law on the public broadcasting service. There is still chance for those two tasks to be completed in time, and we must do everything possible not to lose this chance.

I would also like to bring to the Assembly’s attention the significant change in the form of international military presence in Bosnia and Herzegovina. The arrival of the European Union Force in Bosnia and Herzegovina and the beginning of the EU-led Althea mission send out a clear message in their slogan, “From stabilisation towards integration”. I believe that there is widespread international understanding of the fact that the Althea mission is not there to establish or keep the peace. The current international military presence in Bosnia and Herzegovina is a message to the entire region that it is not yet fully organised according to NATO standards. I would like to use this opportunity to thank all the countries whose troops were part of the stabilisation force, as well as those whose troops will either come to or stay in Bosnia and Herzegovina as EUFOR.

Another subject that I want to mention here is the recent opinion of the Venice Commission on the constitutional conditions and the authorities of the High Representative in Bosnia and Herzegovina. Since the end of March, when the opinion was published, it has been the most frequently read document in the political life of Bosnia and Herzegovina.This points to the credibility, properness and timeliness of the publishing of the said opinion. With this in mind, I would like to thank the Parliamentary Assembly for passing Resolution 1384 on strengthening of the democratic institutions of Bosnia and Herzegovina, back in 2004. In this resolution, you requested that the Venice Commission come out with an opinion. As this is a convenient time for all segments of society to take part in commenting on the opinion, we would welcome once again the knowledge and the experience of the Council of Europe in organising debates, seminars and workshops, even conferences, on items that are vital to the success of reforms and the transformation of Bosnian society.

The encouragement and the support of the integration processes in Bosnia and Herzegovina are a clear message to the rest of the region that democratisation pays, that embracing of European standards is in itself a valuable progress and to the benefit of citizens. It is also a way to be recognised in regional and international terms, and it is a path towards a European future. Bosnia and Herzegovina especially welcomes the fact that the Warsaw declaration underlines the commitment of the Council of Europe to establishing a creative community, open to knowledge and different cultures, a civil community based on respect for human rights, democracy and the rule of law. These are long-term goals of Bosnia and Herzegovina, at both a domestic and an EU level.

The achievement of these goals, as envisaged in the action plan, requires the full engagement of all Council of Europe institutions, individual member states, and inter-state and inter-institutional co-operation with organisations that promote core European values and interests, such as the EU and the Organization for Security and Co-operation in Europe. The examples of reforming activities in Bosnia and Herzegovina stand witness to the efficiency and necessity of having the Council of Europe, the EU and the OSCE act together.

Mr President, members of the Parliamentary Assembly, your excellencies, ladies and gentlemen, I thank you once again for giving me this opportunity to address you, and thank you for your attention. It will be my pleasure to answer your questions now.

THE PRESIDENT.– Thank you very much, Mr Terzic, for your interesting and encouraging address to the Assembly. Members have expressed a wish to put questions to you.

I remind them that questions must be limited to 30 seconds and no more. Colleagues should be asking questions and not making speeches.

The first question is from Mr Van der Brande.

Mr VAN DER BRANDE (Belgium).– The next monitoring report of the Parliamentary Assembly on Bosnia and Herzegovina is due to be debated in June next year. I am convinced that there are many challenges you must face, but we must honestly say that there has been little progress in fulfilling a number of important Council of Europe commitments, such as the reform of higher education, public service broadcasting and the merger of the ombudsman institution. What are the priorities for a concrete plan to fulfil those commitments?

THE PRESIDENT.– Mr Terzic, would you like to answer this question?

Mr TERZIC accepted that the three issues that Mr Van den Brande had mentioned were obligations that Bosnia and Herzegovina had not yet fulfilled. However, the lack of fulfilment was only partial. All three areas had been adopted by the Council of Ministers. In the case of higher education, the Constitutional Court had ordered that certain changes needed to be made and that was being worked on. Co-operation had also been sought from the Council of Europe, the Organization for Security and Co-operation in Europe and the EU with regard to laws on public broadcasting. The Council of Ministers had introduced measures which were now subject to parliamentary procedures.

It had to be appreciated that Bosnia and Herzegovina was in effect three nations. Often that meant compromise, as efforts were made to harmonise legal texts that could be agreed by all parties. On the question of progress on an ombudsman, again the Council of Ministers had submitted proposals which were the subject of parliamentary procedures. He was certain that obstacles would be overcome. He again reiterated the difficulties of reaching agreement in sensitive areas, such as education, in a multi-ethnic state. Reaching a consensus was often a painstaking and time-consuming process.

THE PRESIDENT. – Thank you. I call Mr McNamara to ask the next question.

Mr McNAMARA (United Kingdom). – We listened to your encouraging words about the development of the rule of law and the rights of the courts in Bosnia and Herzegovina. It is with regret that I have to ask you about the progress that has been made in getting the six citizens of your country who are unlawfully detained in GuantánamoBay returned to Bosnia and Herzegovina, in particular because they were transferred from the country unlawfully against the direct orders of the Supreme Court and the Human Rights Chamber. This is a very serious matter, both in principle and more particularly for those men who are suffering seriously, including possibly grievous torture and inhuman treatment.

THE PRESIDENT. – Mr Terzic, would you like to answer this question?

Mr TERZIC was pleased that the question had been raised as it demonstrated the progress that had been made in terms of democracy in his country. It was correct that those six individuals had been taken to GuantánamoBay against the wishes of the Constitutional Court. The Council of Ministers had written to the United States Secretary of State to request their release. Before that, a delegation had been despatched to GuantánamoBay to see that the six Bosnia and Herzegovina citizens had been treated well. He had also written to the United States Secretary of State to enquire what evidence was being used to authorise the detention of the six citizens. A month and a half later, a reply had been received in which the United States expressed its view that the six detainees held vital intelligence information. The previous day he had spoken to the lawyers representing the six detainees and agreement had been reached on how best to proceed to secure their eventual release. The Parliamentary Assembly’s resolution of April 2005 in relation to human rights had been of help in suggesting to the Bosnia and Herzegovina Government how best to act in the interests of its citizens.

THE PRESIDENT. – Thank you. The next person on my list is Mr Çavuşoğlu.

Mr ÇAVUŞOĞLU (Turkey). – We observe with great appreciation the positive steps that have been taken in your time towards Bosnia and Herzegovina’s integration with Euro-Atlantic institutions. However, we also observe some obstacles to the reform process, as we have recently seen with regard to the national police. What is your opinion of the effect of those obstacles on the institution-building process in your country and of the possible ways to eliminate them?

THE PRESIDENT. – Thank you. Mr Terzic, you have the floor.

Mr TERZIC said Bosnia and Herzegovina faced many obstacles. Every citizen of his country faced the daily challenge of contributing to the solutions that would solve these problems. He was perhaps more aware than most of the difficulties that that would involve.

His country had no alternative to the EU road. Since the early 1990s all progress in Bosnia and Herzegovina had led towards a democratic society which was respectful of the highest standards to be found across Europe. Since his government had come to power in 2003 it had proposed many democratic reforms, in areas such as the rule of law and full equality; that was what Bosnia and Herzegovina needed. His country was going down the EU road not to foist itself upon the EU, but because that process would help foster a society with the most modern democratic standards. The steps that would need to be taken to become part of the EU would help stabilise the economy and lay the basis for a successful society.

Many of the reforms that had so far been implemented were economic. The Dayton Agreements had in effect created two economic states, but within two years those two states had been integrated. That had been achieved by applying European standards, and indicated that Bosnia and Herzegovina had matured as a nation. However, more politically sensitive reforms, such as reform of the police, would be harder. He had spoken to the prime ministers of many other European countries on the question of police reform. They had told him that it took at least three years. Taking that into account, one could not, therefore, expect Bosnia and Herzegovina to achieve faster results.

The solutions to such problems needed to be seen through the prism of EU integration and not through the prism of the collapse of the old Yugoslavia, with its winners and losers. EU integration would be a case of a win-win situation. He believed that, even given understandable fears in Bosnia and Herzegovina, constitutional changes would start within a framework. That would also meet other needs.

THE PRESIDENT. – Thank you, Mr Terzic. The next questions are from Mr Gligorić, Mr Sasi and Mr Mimica. These questions have been grouped.

Mr GLIGORIĆ (Bosnia and Herzegovina) asked Mr Terzic how he intended to continue constitutional reform despite dismissing some ministers. Could Mr Terzic see a way out of the crisis, and would there be new elections and even his own withdrawal from office?

THE PRESIDENT. – Thank you, Mr Gligorić. The next question is from Mr Sasi.

Mr SASI (Finland). – Although the co-operation with the ICTY has improved somewhat over the last few months with the voluntary surrender of a number of indictees, Karadzic and Mladic are still on the run. Do you think that police reform, which has been blocked so far by Republika Srpska, would improve the chances of arresting them?

THE PRESIDENT. – Thank you, Mr Sasi. The next question is from Mr Mimica.

Mr MIMICA (Croatia). – There should be no dispute over the right to have public information in your own language. That represents a basic right of a national minority, let alone a constituent people, in any state.

Political representatives of Croats in Bosnia and Herzegovina have been constantly voicing their concerns, claiming that current legal arrangements and practice on the national and federation public TV channels deprive Croats in Bosnia and Herzegovina of their constitutional right to unhindered and full access to public information in the Croatian language.

How do you assess the possibility of addressing those concerns by legal amendments that would ensure a comprehensive solution of introducing a public TV channel, either national or federal, using the Croatian language?

THE PRESIDENT. – Thank you, Mr Mimica. May I ask you, Mr Terzic, to answer those questions in five minutes, if possible, so that the others who want to ask a question get the opportunity to do so?

Mr TERZIC said the hardest questions were from the Council of Europe representatives. This was a situation where he could not be sure that the Council of Europe should be involved. It was his choice to choose or dismiss ministers. He hoped that with every new election there would be better positions and constructive opposition.

Defence reforms illustrated that police reform could be the hardest issue to tackle without causing huge political damages or turbulence. The first package had been agreed with NATO. The military reform process was going smoothly; police reform was progressing, with obstacles. Police had more authority and had taken a greater part in hiding and assisting indictees. Representatives of the international community did not understand. It would have to be made clear to citizens that the issue was about creating complete security.

Mr Terzic said that it was sad that Mr Mimica had asked his question about public broadcasting services. There needed to be a balance. Croats in Bosnia and Herzegovina were not a minority; they were a constituent nation with a constituent language. The Constitution of Bosnia and Herzegovina said there were three constituent nations and languages. Broadcasts could only be made in line with the constitution, and many services were operated privately outside direct control.

THE PRESIDENT. – Thank you. I call Mr Iwiński of the Socialist Group.

Mr IWIŃSKI (Poland). – In some legal analogies, Bosnia and Herzegovina is perceived as a sort of protectorate of international organisations. Putting aside the question of whether such an attitude is true or completely distorted, what are the prospects of the path to the full sovereignty of Bosnia and Herzegovina?

THE PRESIDENT. – Thank you. The next question is from Mr Jovašević of the Group of the European People’s Party.

Mr JOVAŠEVIĆ (Serbia and Montenegro). – A great many citizens of Bosnia and Herzegovina have limited political, social and economic rights as a result of the decisions of the High Representative, which were passed without the proper legal proceedings and contrary to the European Convention on Human Rights for the protection of fundamental freedoms such as the freedom to vote and freedom of conscience. What has the Council of Ministers of Bosnia and Herzegovina, and you as its chairman, undertaken to do to remove those legally unfounded deprivations and limitations of human rights and freedoms? Mr Terzic, do the courts in your country provide judicial protection to such individuals?

THE PRESIDENT. – Thank you. The next question is from Mr Matušić of the Group of the European People’s Party.

Mr MATUŠIĆ (Croatia) said that there were talks of changes taking place. What would those changes look like, and how would human rights be monitored?

THE PRESIDENT (Translation). – The last question is from Mrs Durrieu of the Socialist Group.

Mrs DURRIEU (France) said she was optimistic because of remarks that had been made about Bosnia and Herzegovina and asked what the position was between Bosnia and Herzegovina and Kosovo.

THE PRESIDENT (Translation). – Thank you; really, the last question is from Mrs Oskina of the European Democratic Group.

Mrs OSKINA (Russian Federation) asked when measures would be taken to initiate war crimes investigations.

THE PRESIDENT. – Thank you. I now give the floor to Mr Terzic to answer the questions.

Mr TERZIC said that Bosnian authorities should make decisions and that they had completed 90% of the tasks arising from the feasibility study. That was a good scenario for the Office of the Higher Representative and its mandate in terms of solving problems. Ten years after Dayton was too soon to discuss dismissing the Higher Representative. There should be political agreement between Bosnia and Herzegovina and Brussels, and only after agreement could the Higher Representative cease to exist.

In respect of human rights and political freedoms, Bosnia and Herzegovina could ratify every convention that came from Europe, but that was not feasible. However, Bosnia and Herzegovina had ratified the Social Charter from the Council of Europe.

He could not speak about the judiciary directly, but considered reform of the judiciary to be the best reform implemented so far. Monitoring carried out by the Council of Europe did not agree with that and he admitted that judicial violations had occurred in Bosnia and Herzegovina. The Council of Europe could help the Bosnia and Herzegovina Government to secure a better legal system, for the benefit of its citizens.

In response to Mr Matušić he said there was no chance of a change in the Dayton Agreements, which had been signed by three parties and five witnesses. Bosnia and Herzegovina was just one eighth of that combination. The agreement had stopped the war and started a peace. Bosnia and Herzegovina could only change its own constitution and had to define what was good for generations to come.

In response to Mrs Durrieu he said that Bosnia and Herzegovina had been taking effective measures against war crimes, and had been doing so for years. There had been over 180 verdicts in war crimes cases. Republika Srpska police had caught six people accused of war crimes. Results had been achieved; however, there were a huge number of active cases and more needed to be done. It was expected that by the end of 2005 Bosnia and Herzegovina would be given four or five cases and would initiate procedures. He was proud that Bosnia and Herzegovina was described by The Hague Tribunal as the only country in the region to which it could transfer cases.

In response to the question from Mrs Oskina, he could only give a personal opinion. Bosnia and Herzegovina did not like independence for Kosovo. There had been waste in developing key standards for Bosnia and Herzegovina. He predicted that there would be a smooth resolution to the problems and said that basic human rights must be respected.

THE PRESIDENT. – Thank you very much. That brings us to the end of questions to Mr Terzic. I thank him warmly on behalf of the Assembly for his address, and for his extensive and precise answers to questions.

7. Date, time and orders of the day of the next sitting

THE PRESIDENT. – I propose that the Assembly hold its next public sitting this afternoon at 3 p.m. with the orders of the day which were approved yesterday.

Is that agreed? It is agreed.

The sitting is closed.

(The sitting was closed at 1.05 p.m.)