Doc. 8914
21 December 2000

Technological strategies for the reconstruction and economic development of south-eastern Europe

Committee on Science and Technology
Rapporteur: Mr Ivan Ivanov, Bulgaria, European People’s Party Group


      Formulating and implementing technological strategies is the key challenge for the reconstruction and economic development of south-eastern Europe. The slowdown in technological development in the region over the last decades and the conflicts caused by the break-up of Yugoslavia have led to a gradual worsening of economic conditions. In the aftermath of the Kosovo crisis, the international community has been making determined efforts to bring about the economic reintegration and the technological reconstruction of the countries concerned by moving ahead with various initiatives, the most important of which is the Stability Pact.

Technological strategies will work only if a solid foundation exists in the form of a market economy operating in a democratic society, where legislative measures and administrative practices discourage corruption and organised crime and guarantee a stable and predictable environment for foreign investment. The technological reconstruction of transport facilities and the renewal of the energy sector are the sine qua non for the rapid development of new information and communication technologies, in particular the Internet and e-commerce.

In this connection, education and research have a crucial role to play in creating a propitious environment for technological strategies. The ambitious goals of the technological strategies can only be achieved through wide-reaching and intensive co-operation among the countries of south-eastern Europe backed up by financial support from the leading international institutions for economic reforms in the region.

I.       Draft recommendation

1.       The Assembly is aware that technological reconstruction, as an essential factor of economic recovery in south-eastern Europe, is very important for peace, stability and sustainable development in the region and for its full integration into Europe.

2.       In recent decades the technological pace of the countries of south-eastern Europe has gradually slowed down and their products have become less competitive on the world market because of centralised industrial planning, political imperatives in decision-making, massive subsidisation, administrative price fixing and considerable over-manning.

3.       Since the disappearance of the “iron curtain” these countries have been forced to move directly from a centrally planned economy to an increasingly competitive worldwide market, with the difficult reforms that entails: macro-economic stabilisation, free prices, privatisation, strict budgetary discipline and technological reconstruction.

4.       The economic situation in south-eastern Europe has gradually deteriorated because of the numerous conflicts caused by the break-up of Yugoslavia and the slow pace of economic reform in the region.

5.       The crisis in Kosovo in particular has had far-reaching economic consequences: trade relations have been broken off, infrastructure has suffered extensive damage, investment has dried up, resulting in delays in structural and technological reforms.

6.       The Assembly welcomes the outcome of the presidential elections in the Federal Republic of Yugoslavia and the start of the process of democratic change in the country, which significantly speeded up the lifting of the sanctions imposed by the United Nations and the European Union.

7.       The Assembly considers that the slow-down in technological and economic development in south-eastern Europe could exacerbate economic and social inequalities, leading to the appearance in Europe of new dividing lines that undermine its stability and security.

8.       Membership of the European Union, a priority objective for the countries of south-eastern Europe, means meeting the criteria laid down in Copenhagen, which is impossible without a technological reconstruction strategy encompassing the whole region.

9.       The Assembly, recalling inter alia its Recommendation 1423 on south-eastern Europe following the Kosovo conflict: economic reconstruction and renewal, welcomes the intensification of the Council of Europe’s efforts in this field, which includes technological strategies.

10.       The Stability Pact for south-eastern Europe initiated by the European Union has demonstrated the determination of the international community to act promptly and to work towards the economic reintegration and the technological reconstruction of these countries, based on the following principles:

i.       give priority to multilateral projects to stimulate regional co-operation;

ii.       take into account the degree of economic development in each country;

iii.       keep procedures transparent in order to prevent corruption.

11.       The accession by the Federal Republic of Yugoslavia to the Stability Pact for South-Eastern Europe on 26 October 2000 means that it is now possible to intensify the measures taken to bring about the economic reconstruction of the region and implement technological strategies for all countries in south-eastern Europe.

12.        The Assembly is aware that technological strategies in south-eastern Europe will work only if a solid foundation exists, based on the following criteria:

i.        respect for democracy, human rights and the rule of law;

ii.        substantial progress in the establishment of a market economy, a fair and stable environment for firms, the liberalisation of trade and services, the opening up of financial and property markets and a healthy, efficient and transparent privatisation process;

iii.       the introduction of legislative measures and administrative practices that discourage corruption and organised crime and guarantee a stable and predictable environment for investment;

iv.       appropriate renewal of transport, energy distribution and telecommunications infrastructure, which is essential to the European integration of the countries in the region.

13.        The Assembly considers that the development of new technologies would help to reduce damage to the environment, even that caused by the recent conflicts in the region.

14.        It believes that foreign investment, vital to the economic development of the countries undergoing transition, could play a decisive role in the implementation of technological strategies in south-eastern Europe.

15.        Accordingly, the Assembly encourages the main international financial institutions - the World Bank, the European Investment Bank, the European Bank for Reconstruction and Development, the International Monetary Fund – to give their financial support to the economic reforms in south-eastern Europe, which will necessarily lead to technological reconstruction in all the important sectors - industry, infrastructure, education, research and the environment.

16.        It realises that economic reconstruction - in particular technological renewal in south-eastern Europe – must not delay plans to enlarge the European Union towards the countries of the region.

17.        The Assembly reaffirms its support for the Stability Pact, which it welcomes and considers as the proper framework for increased regional co-operation and international support for the implementation of technological strategies for the economic reconstruction and development of south-eastern Europe. It recommends that the Committee of Ministers support the swift, effective implementation of Stability Pact projects geared, in particular, to:

i.        technological reconstruction of transport infrastructure, in particular:

a. urgent removal of the debris of destroyed bridges and the resumption of international navigation on the Danube, in view of the river’s importance as a pan-European transport and regional co-operation route;

b. building of pan-European corridors (TINA) to a standard comparable to the European Union’s transport network (TEN), stressing the intermodal approach to transport and the connections needed to bind south-eastern Europe to the rest of the continent;

c. renewal of airports, river and sea ports and related installations in the region;

d. technological development of road, rail, river and marine transport facilities to make them competitive and guarantee optimum exploitation of transport systems.

ii.        technological renewal of the energy sector, in particular:

a. application of new technologies to electricity generation, to increase productivity and reduce energy costs;

b. creation of a south-east European Energy Community, based on a common approach to energy security and the development of renewable energy resources;

c. encouragement of investment in and transfers of modern energy technologies in the countries of south-eastern Europe, to boost their energy efficiency and reduce their energy consumption and dependence .

18.        The Assembly is aware that the new information and communication technologies can provide south-eastern Europe with very powerful new tools of technological and industrial development and, considering that co-operation in this field between the countries of the region and the European Union is quite insufficient, recommends that the Committee of Ministers invite the European Union’s member states to help the countries of south-eastern Europe:

i.       rapidly to develop the digital information and telecommunications technology sector, in order to establish a proper information technology framework, and in particular:

ii.       to set up an intra-regional network of cutting-edge technology transfer centres;

iii.       to establish and develop SMEs producing computer hardware and software;

iv.       to build science and technology parks in place of the old state research centres, which were generally out of touch with industry, taking into account the pan-European value of the scientific potential of the countries in the region.

19.        The Assembly recommends that the Committee of Ministers invite the countries of south-eastern Europe to take urgent steps in the education and research field to create a propitious environment for technological strategies and, in particular:

i.       to improve the interaction between university research and industrial technology of immediate benefit to technological development;

ii.       to encourage participation by universities in the projects of the European Commission’s 5th Framework Programme for research and development (R&D);

iii.       to set up and subsidise national research centres, organised into an intra-regional network on new information and communication technologies;

iv.       to provide teaching establishments with the equipment needed to use the new information and communication technologies, including data networks;

v.       to value and make better use of their intellectual assets and motivate people to pursue careers in the new technologies;

vi.       to encourage young people to study the new technologies in order to guarantee the continuity of technological strategy implementation in the region.

20.        The Assembly, recalling its Recommendation 1457 (2000) on new technologies in small and medium-size enterprises (SMEs), believes that SMEs play a very important part in technology transfer in south-eastern Europe and recommends that the Committee of Ministers invite the member states in the region:

i.       to encourage the creation of SMEs by experts who are aware of the need to introduce and make use of new technologies in the region;

ii.       to facilitate the construction of science and technology parks based on SMEs to foster innovation and the development of new technologies.

21.        The Assembly is aware that the efforts of the countries of the region to modernise their technologies with the help of the international community could bear fruit if intra-regional and cross-border economic co-operation was extended and intensified. In this respect, the Assembly asks the European Union and the World Bank, which are responsible for setting the Stability Pact projects in motion, to give priority to regional projects involving at least two countries of south-eastern Europe.

22.       The Assembly recommends that the Committee of Ministers invite international organisations such as UNESCO, the United Nations Economic Commission for Europe (UN-ECE), the Southeast European Co-operative Initiative (SECI), etc to strengthen co-operation with the countries of south-eastern Europe, based on projects which contribute to the region’s technological strategies.

II.       Explanatory memorandum by Mr Ivanov



I.       Introduction       1-15

II.       Principles for the implementation of the technological strategies       16-26

III.       Infrastructure base for the technological strategies       27-43

IV.       Main sectors of the technological strategies       44-50

V.       Means of action       51-86

VI.       Conclusions       87-92

Appendix 1: page 24

Appendix 2: page 24

Appendix 3 : page 25

Appendix 4 : page 26

Appendix 5 : page 27


* *


1.       In recent decades the pace of technological development in the former communist countries of south-eastern Europe has gradually slowed down and their products have become less competitive on the world market. This situation is the result of centralised industrial planning, where industry was almost exclusively under state control. Decision-making was influenced by political imperatives and corporate finances were burdened with a complex system of economically irrational production taxes and massive subsidies. Firms’ profits and losses bore no relation to their technological level or their competitivity, and had no bearing on investment decisions. The price control system did not reflect the relative shortage of capital, materials and other resources. As a result, industry was highly inefficient and considerably over-manned by people who had no incentive whatsoever to introduce and use new technologies. Industry was geared more to physical output than to users’ needs. The quality of the goods produced was poor and shortages were commonplace.

2.       The fall of the Berlin wall triggered rapid and sweeping political changes in south-eastern Europe. Certain countries (Bulgaria, Romania, Albania) began the transition to democracy, while others obtained their independence following the break-up of Yugoslavia (Slovenia, Croatia, "the Former Yugoslav Republic of Macedonia", Bosnia and Herzegovina). One of the most important tasks in the transition process was the reconstruction of the economy, including technological reconstruction. It was a matter of turning an economy made up of large loss-making firms into a viable market economy in which most industries made a profit. Industry had to be slimmed down in order to free resources for underdeveloped sectors, loss-making firms had to be liquidated, new markets found and new, more efficient production technologies introduced.

3.       Although the countries of south-eastern Europe have adopted distinctly different approaches to the problem of structural reorganisation in industry, the process demands certain essential changes:

- macro-economic stabilisation in order to establish the right conditions for structural reorganisation;

- the liberalisation of prices;

- privatisation and

- the strictest budgetary discipline.

4.       Industrial reorganisation in south-eastern Europe was also needed for other reasons that have become apparent during the transition period:

- the disappearance of the COMECON and the disintegration of regional trade relations;

- the rising price of raw materials;

- the collapse of domestic demand;

- drastic cutbacks in public subsidies, which left many firms even deeper in debt.

5.       The main development issue for all the countries of south-eastern Europe is globalisation, encouraged by the World Trade Organisation (WTO), of which most of the countries of the region are members. This is a major challenge, requiring these countries to switch directly from a planned economy to an increasingly competitive global market economy, without the lengthy transition periods that enabled the western European economies to adjust gradually to liberalisation. Two particularly salient factors are the strengthening of the trans-national dimension of the region’s economies and the increasing role of technological innovation.

6.       Over the past decade, for political, ethnic, economic and social reasons, a “brain drain” has siphoned off intellectual assets from the countries of south-eastern Europe towards North America and the countries of the European Union. Not only are these countries losing large numbers of highly skilled people, but many of these people are changing careers in the receiving countries because they can find no work in their particular fields. One way or the other their skills are lost. While fully supporting the free circulation of people, the rapporteur realises that it inevitably leads to a “brain drain”. This practice of constantly luring highly skilled people to work in the rich countries has often been criticised. Economic development and technological reconstruction are the sustainable solution to the brain drain problem and the efficient use of intellectual assets.

The Kosovo crisis and its consequences

7.       The economic situation throughout south-eastern Europe has gradually deteriorated in the wake of the numerous conflicts triggered by the Milosevic regime, first in Croatia, then in Bosnia and Herzegovina and finally in Kosovo.

8.       The economic impact of the Kosovo crisis on south-eastern Europe has been substantial and far-reaching because of the magnitude of the movements of refugees, the breakdown of trade relations, the damage done to infrastructure and the sharp decline in direct investment in the region. Structural and technological reforms have been considerably hampered in consequence.

9.       The presidential elections in the Federal Republic of Yugoslavia could be regarded as the start of the process of democratic change in the country. The new President, Vojislav Kostunica, who took office on 7 October 2000, has stated clearly that integrating the country into European structures, in particular the Council of Europe, is the objective of his policy. For its part, the international community has lost no time in easing the sanctions imposed against the Federal Republic of Yugoslavia, hoping that the process of the “de-Balkanisation” of south-eastern Europe is now irreversible.

10.       The Stability Pact for south-eastern Europe, adopted on 10 June 1999, has for the first time demonstrated the determination of the international community, and in particular the European Community, to act promptly and work towards the coherent reintegration of the south-eastern region into the European economy. The second working table of the Stability Pact has focused all its attention on the overall economic strategy for the region.

11.       Although the representatives of Montenegro have attended some meetings, the Federal Republic of Yugoslavia was not initially invited to take part in the Stability Pact activities. Paragraph 11 of the Pact stated that “the Federal Republic of Yugoslavia will be welcome as a full and equal participant in the Stability Pact, following the political settlement of the Kosovo crisis on the basis of the principles agreed by G8 Foreign Ministers and taking into account the need for respect by all participants for the principles and objectives of this Pact”.

12.       The accession of the Federal Republic of Yugoslavia to the Stability Pact on 26 October 2000, which was announced by the Pact Co-ordinator, Mr Bodo Hombach, during the meeting of Heads of State of the member countries in Bucharest, now makes it possible to intensify the measures taken to bring about the economic reconstruction of the region and implement technological strategies for all countries in south-eastern Europe.

13.       The technological reconstruction process must be based on the following principles:

- guarantee that the countries of the region participate in decision-making;

- give priority to trans-national projects to stimulate regional co-operation;

- take into account the degree of economic development of each country;

- guarantee the transparency of procedures in order to prevent corruption.

14.       The European Council’s decision on 10 December 1999 in Helsinki to open negotiations with six candidates for membership of the European Union, including two south-east European countries (Romania and Bulgaria), is an event of historic importance. The opening of negotiations with these two countries encourages them to continue and boost their efforts to meet the conditions for accession to the European Union and, at the same time, helps bolster economic prosperity in south-eastern Europe.

15.       The Copenhagen criteria that must be met by applicants for membership of the European Union, include "the existence of a functioning market economy and ability to withstand competitive pressure and market forces within the Union". It is obviously impossible to meet this requirement without a technological reconstruction strategy for the two countries concerned and the region as a whole.

II.       Principles for the implementation of the technological strategies

16.       The sine qua non conditions for sustainable economic development are democracy, respect for human rights, and the rule of law. Only on this basis and in the countries where these principles are respected can technological strategies for industrial reconstruction and development hope to succeed, be it in south-eastern Europe or elsewhere on the continent.

17.       Membership of the Council of Europe should be prima facie proof of conformity with the criteria of the rule of law. In this respect ratification of the European conventions on human rights, the rights of national minorities and corruption are an essential sign of a country’s democratic stability, as is the honouring of the obligations and commitments it entered into upon joining the Council of Europe. It should be noted that all the countries of south-eastern Europe, with the exception of the Federal Republic of Yugoslavia and Bosnia and Herzegovina, are members of the Council of Europe. For three countries in the region - Romania, Bulgaria and "the Former Yugoslav Republic of Macedonia" - the monitoring procedure concerning the honouring of obligations and commitments has already been closed, which is a highly positive sign. Under the Programme for stability in south-east Europe adopted by the Committee of Ministers on 7 May 1999 in Budapest, the Council of Europe could make a substantial contribution to the development of democratic institutions in the rest of the region.

18.       Another condition for the introduction of a sustainable technological strategy in the region is noteworthy progress towards the introduction of a market economy, although the economic situation varies considerably from one country to another. The intensification of efforts to create a fair and predictable environment for firms, the liberalisation of trade and services, the opening of financial and property markets and privatisation are sine qua non conditions of sustainable technological progress.

19.       In this respect the economic conditions necessary for the successful implementation of technological strategies in the region are:

- reduced customs duties;

- competitive market environment;

- free exchange of goods, services, capital and ideas;

- rational use of the region’s human potential;

- infrastructure in proper working order;

- easy access to all points of the Balkan peninsula;

- price stability and transparency.

20.       The need for sound, efficient, transparent privatisation was stressed in the Stability Pact for south-eastern Europe and the Sarajevo Summit Declaration as an essential condition of economic progress, integration and the creation of employment. In particular the privatisation of the banking sector could play a decisive role in speeding up the financing of technological reconstruction projects. The latest developments in this sector are:

- in Bulgaria: Unicredito (Italy) and Allianz (Germany) have purchased Bulgaria’s leading bank, Bulbank;

- in Romania: the Romanian government has announced a 1.2 billion dollar privatisation programme in 2000, affecting inter alia the Agricultural Bank, the Romanian Development Bank and the Post Bank;

- in Bosnia and Herzegovina: the EBRD is acquiring shares in the banks undergoing privatisation.

21.       A good lesson to be learned from the last ten years of transition in south-eastern Europe is that corruption and disregard for the rule of law hamper economic growth, including a country’s technological development. The Council of Europe was instrumental in the preparation of two anti-corruption initiatives to combat money laundering and organised crime in south-east Europe, viz:

- the Stability Pact Anti-Corruption Initiative adopted in Sarajevo in February 2000;

- the Stability Pact Initiative to fight organised crime, based on a draft prepared by the Council of Europe.

These two initiatives involve several international organisations, under the supervision of the Office of Stability Pact Special Co-ordinator Mr. Bodo Hombach. Their application will introduce administrative practices that will reduce the possibilities of corruption and nepotism and provide a stable and predictable environment for investment in the region.

22.       It should be noted that the countries of south-eastern Europe are classified in the lower half of the table of countries in transition in terms of the quality of the climate for foreign investment – particularly with regard to corruption and dealings with the public authorities.

23.       Other negative factors that hinder foreign investment could be classified as follows:

- institutional and legislative obstacles to privatisation;

- underdeveloped capital market;

- inadequate advertising and information policy.

24.       These are some of the main reasons for the very poor rate of foreign investment in this region, which is slowing down the pace of technological reconstruction in the countries concerned. Investment in plant and the development of professional skills could lead to the introduction and use of new technologies, which are essential to south-eastern Europe’s long-term economic performance.

25.       The crisis in Kosovo has intensified the activities of organised crime:

- smuggling routes have opened up with the countries bordering on Yugoslavia;

- “input-output” corruption practices have developed in state-run firms, diverting resources to private firms;

- cheating the state and its partners has become common practice;

- the underground economy has grown to alarming proportions.

As a result, foreign investment, which is so essential to the successful implementation of technological strategies, has been deferred, triggering a sharp drop in confidence in the state institutions in the countries of south-eastern Europe.

26.       In spite of the positive prospects (see Appendix 1), the GDP of the countries of south-eastern Europe remains very small. This applies to the countries of former Yugoslavia of course, but also to Bulgaria and Romania. The courageous reforms in Bulgaria have not yet produced their full effects. The situation in Romania is not ripe for the implementation of clear-cut, determined solutions and is contributing to the latent economic crisis and the loss of confidence in the banks.

Per capita GDP in Romania and Bulgaria (€ 1400) is less than a quarter of that of Greece. The combined GDP of Albania, Bosnia and Herzegovina and "the Former Yugoslav Republic of Macedonia" is only a third of that of Romania or Bulgaria. Furthermore the economic situation in south-eastern Europe is such that GDP stands at only 75% of its pre-transition (1989) level.

III.       Infrastructure base for the technological strategies

27.       Proper transport, energy supply and telecommunications infrastructure is vital to the European integration of the countries of south-eastern Europe. Their technology is well out of date. Investment in this field, as well as being a technological necessity, would have immediate repercussions on economic development and job creation in these countries, where unemployment is quite high.

28.       Generally speaking, countries in the region can be divided into two categories. The first category comprises those countries which have already been promised financial support to facilitate accession to the Union, and for which it is possible to plan assistance following accession, namely Bulgaria and Romania. The cost of modernising the road networks in these countries amounts to € 10 billion. Two-thirds of this sum concerns the pan-European corridors. The international institutions are footing the bill for this infrastructure work. A substantial share of the aid to Macedonia, Albania and the Yugoslav Republic is politically motivated. In economic terms the Republic of Croatia could make good use of these funds for a motorway along the coast to cater for the tourist industry and modernise its ports in order to facilitate the region’s integration into the European economy. In all € 5 billion over a period of ten years will have a considerable impact on the countries of the region.

29.       There is no doubt that the renewal of the transport infrastructure, in harmony with that of the European Union, is an essential condition of economic reconstruction in south-eastern Europe. At present the transport network in south-eastern Europe is neither adequate nor in good working order. Furthermore, the international organisations, in particular the European Union, have underestimated the region’s infrastructure problems. One example can be found in EU bulletin N44 "Transport policy and the enlargement of the European Union", according to which, from 1990 to 1 October 1998 the European Investment Bank (EIB), which is run by the Union, invested 1.636 billion ecus in transport infrastructure in the countries of south-eastern Europe (Bulgaria, Romania, Albania and “the Former Yugoslav Republic of Macedonia"), and 1.792 billion ecus in a single central European country – the Czech Republic. The Guiding Principles for sustainable spatial development of the European continent, adopted at the 12th European Conference of Ministers responsible for Regional Planning (CEMAT) on 7 and 8 September 2000 in Hanover, was the first European document to present the pan-European corridors for Central and Eastern Europe (TINA network), which include certain countries of south-eastern Europe and are scheduled to be built by 2015, with a view to achieving a standard comparable to the rest of the European Union’s transport network. The plan is to build or upgrade 18,587 km of road network, 20,710 km of railway track, 4,131 km of inland waterways, 40 airports, 15 sea ports and 52 river ports. Ten Eurocorridors are to be built, at an estimated cost of € 86.5 billion, which means that each of the countries concerned must set aside 1.5% of its GDP per year in order to achieve this ambitious aim.

30.       The major consequences for the economic and technological development of south-eastern Europe will be:

- completion of the transport link between Europe and the Near and Middle East;

- planning could go ahead even now on south-eastern European technology policy concerning services and the creation of small and medium-size enterprises (SMEs), which play a key role in the global economy, leading to a decrease in unemployment and in emigration towards the European Union;

- with the secondary transport network accompanying the construction of the TINA network, small towns will become more easily accessible and will be able to use existing urban services and structures;

- the Eurocorridors will give a new impetus to the development of regional and transfrontier co-operation, which is at the heart of the future decentralised Europe;

- the Eurocorridors will be natural routes along which oil and gas pipelines will be built to carry oil and gas from the Caspian Sea and Central Asia, an essential component of any technology policy;

- construction will also develop along the Eurocorridors, closely linked to the forestry and building industries.

31.       The figures given above show that investment will be carefully shared among the different modes of transport in order to strike a proper balance, bearing in mind that in this region of Europe road transport is largely underdeveloped. The TINA project adopts an intermodal approach, with a particular focus on combined rail-road transport. The development of the TINA network would bring about technological progress in means of transport, reducing fuel consumption and environmental impact and increasing transport safety.

32.       The TINA network will be managed by an intelligent transport system (ITS), including navigation systems and services that will put technology at the service of enhanced mobility for people and goods.

The ITS system would thus contribute to:

- integration of the different services and modes of transport;

- improved management of existing transport networks;

- enhanced traffic flows and information exchange;

- guaranteeing the high quality of transport services.

33.       The enlargement of the TINA network is being carried out under the umbrella of the Geographical Information System (GIS), which takes into account all the relevant data for each locality. As a result, every decision concerning TINA is fine-tuned electronically in liaison with the other international and European institutions.

34.       Another information system, TIS (TINA Information System), will give users access to detailed information in graphic and text form to assist with simple reports, analyses and plans. Information on all modes of transport (motorways, railways, waterways, airports, sea ports, river ports and border posts) will show the present situation and the future situation following enlargement.

35.       The Danube is a navigable waterway of paramount importance for south-eastern Europe (Eurocorridor N7). Thanks to the Rhine-Main-Danube canal it offers a cheaper means of transport for the Union European and above all one which is less harmful to the environment. The enhancement of the Danube as a transport route is sure to benefit the region’s technological development.

36.       It is most regrettable that the Committee of Ministers has not yet adopted the Parliamentary Assembly’s draft European Charter of the Danube basin (Recommendation 1330 (1997), Doc. 7797).

37.       The Danube’s dimension as a Eurocorridor can easily be assessed from the present situation, where navigation on the river is completely paralysed by the bridges destroyed in the recent conflict in the Federal Republic of Yugoslavia.

38.       It is impossible to speak of the role of transport in technological development without stressing the importance of maritime transport, which is becoming increasingly competitive. South-eastern Europe is a riparian region with three European seas: the Mediterranean, the Adriatic and the Black Sea. To obtain a high technological level of maritime transport, the countries of south-eastern Europe should encourage research on devising maritime transport systems that are more effective from the point of view of both energy and the environment, on the one hand, and speed and reliability on the other, while emphasising the renewal of port infrastructure and relevant facilities in the region.

39.       The liberalisation of the energy market and the arrival of competition are the two main factors for stepping up technological renewal in this branch of industry in south-eastern Europe.

40.       Most of the power stations in the region are obsolete; they must either be upgraded to make them more energy-efficient or replaced by plants run on natural gas. Apart from improving power station efficiency, these measures would result in a reduction of emissions of green-house gases, especially carbon dioxide, as well as of fine particles. Natural gas power stations release half as much carbon dioxide and one third the level of fine particles of coal-fired power stations.

41.       The new technologies would make it possible to reduce the adverse impact of power stations on the environment in south-eastern Europe by:

- economising electric power, given that current technologies in the region have an inordinately high energy consumption (twice as much for steel production as the same industries in European Union countries and 30% more for the chemical industry);

- promoting the use of renewable energies (wind, solar etc.);

- ensuring intra-regional and interregional co-operation in order to earn or sell emissions reduction units by carrying out joint projects to cut back harmful emissions, in keeping with the recommendation in the Kyoto Protocol.

42.       The technological reconstruction of south-eastern Europe’s nuclear energy sector is proceeding too slowly. Bulgaria is to a large extent dependent on nuclear energy. Its Kozloduy nuclear power station has six reactors, the first four of which are the VVER 440/230 type. Immediate measures to improve safety have been taken, but these are Russian reactors of the first generation, for which the only proper solution is dismantlement in carefully co-ordinated timeframes with the Bulgarian authorities and the construction of a new reactor based on the latest technology according to the needs of the country.

43.       Accordingly, there is reason to welcome the initiative of the European Commission, which through the intermediary of the EBRD is prepared to finance the dismantlement of the three most dangerous nuclear power stations in central and eastern Europe, including the Kozloduy facility. Financing, as decided by the Vilnius donors conference in June 2000, will be in the form of three long-term funds amounting to € 500 million over the next ten years. This is a considerable contribution to the technological strategy for the energy industry in the south-eastern European region. The EBRD also has a € 260 million nuclear safety account for funding nuclear safety projects, including in south-eastern Europe. In addition to improving nuclear safety, which remains the priority, corresponding measures will help rebuild and upgrade the energy industry in these countries.

IV.       Main sectors of the technological strategies

44.       The transition to the information society will demand fundamental industrial changes in the countries of south-eastern Europe. The rapid development of information and communication technologies is becoming a vital technological strategy for the economic reconstruction of the region. The countries concerned will have to make major investments in network digitisation in order to meet the demands of the information era. GSM networks have been established in almost all of the countries in the region, but they only cover the major towns and the services provided are relatively expensive.

45.       The privatisation of national telecom networks in south-eastern Europe is almost the only way of “fast-tracking” the digitisation of communications in the region, where most networks currently use analogue technology. For this reason, all the national telecom companies in the region, except those in Bulgaria and “the former Yugoslav Republic of Macedonia”, have already been privatised in part or in full.

46.       As south-east European countries have skilled workforces that are available at competitive rates, the establishment of firms producing new information products is growing rapidly. Both hardware and software are involved here. It should be noted that Bulgaria has considerable experience in this area, as it specialised in the production of information systems even before the change in the political regime – under the COMECON system during the communist era.

47.       The large-scale introduction of digital technology in industry in south-eastern Europe demands substantial efforts, given the difficult financial situation facing most countries in the region and the under-development of their information and communication systems infrastructure:

-       there are no more than ten personal computers for every one hundred inhabitants;

-       under 5% of the population have Internet access;

-       there are fewer than thirty-five telephone lines for every one hundred inhabitants;

-       the availability of digital communications is inadequate.

48.       The development of information and communication technologies in the countries of south-eastern Europe would allow the Internet to spread to all areas of activity such as industry, the service sector, education and so on. In particular, it should be stressed that the Internet would play a decisive part in facilitating the growth of e-commerce in the region, provided that appropriate technical and legal solutions to the problems of security are sought at all times.

49.       Biotechnologies are another area of technological development in the south-eastern European region. They are at the intersection of the life sciences and technologies, and their applications are part of the technological revolution in medicine, pharmaceuticals, the environment and agriculture. These sectors (health care, agro-food and industry), which have an environmental component, will be increasingly transformed by advances in biotechnologies.

50.       The countries of south-eastern Europe, which have long traditions in pharmaceutical and agricultural production, might, as part of various intra-regional and interregional projects develop new biotechnologies quite rapidly, while respecting human dignity, intellectual property, the precautionary principle, environmental balance and European Union standards.

V.       Means of action

51.       In recent decades, higher education in the countries of south-eastern Europe was virtually cut off from industry. At the same time, many research institutes (nearly 100 in Bulgaria) worked on research that generally had no technological application. The countries of south-eastern Europe must take urgent measures in education and research to create a climate favourable to technological strategies:

- co-operation between chambers of commerce and industry and small and medium-sized firms in training students in the new technologies;

- large-scale co-operation between universities, notably at intra-regional level;

- reform of educational systems and opening of possibilities for students from these countries to study and train in Europe;

- co-operation with local authorities on staff training and cross-border co-operation.

52.       The new technologies, EDP and telecommunications are bringing about a real revolution - prepared by education and training - in activities associated with production and work. Education must effectively convey, on a large scale, more and more knowledge and adaptable skills that are tailored to the new technologies. An objective analysis of the current situation shows that the following measures can help overcome inadequate education in science and technology:

- developing lifelong education, the key to the 21st century. This ties in with the idea of an educational society or might be an opportunity to learn and keep up with the extremely fast pace of discoveries in science and the new technologies, which create a new need for retraining and updating of knowledge for citizens of all ages;

- constantly refreshing teachers’ knowledge and skills. Their professional life must be organised in such a way that they are able and, indeed, under an obligation to improve their qualifications so as to defend their role in the information and technology society;

- taking specific measures to awaken the interest of young girls and women for education in science and technology. The principle of equity requires a particular effort to eliminate all gender inequality in education in the new technologies, which is at the root of lasting disadvantage that weighs on women all their lives, in particular in the countries of south-eastern Europe.

53.       Putting the above ideas into effect will avert the great risk of creating new cleavages and imbalances between south-eastern Europe and the rest of the continent. Such imbalances may emerge between those who are able to keep up with developments in the computer world and those who are not, owing to a lack of financial resources, qualified teachers, relevant curricula and sophisticated teaching materials and who will be left out of the world of work.

54.       There can be no doubt that small and medium-sized enterprises (SMEs) are crucial to the success of the region’s technological strategies. They are flexible and mobile and do not have large workforces. SMEs encourage competition and diversification in a market economy, which is vital to the transition countries of south-eastern Europe. The countries in the region should take measures to establish transparent, straightforward and stable legislation so as to free SMEs from administrative hurdles and the effects of corruption and racketeering. In this connection, it should be noted that Bulgaria has recently passed legislation on SMEs and on technology parks.

55.       The main problem facing SMEs in the region is competitiveness. It is strongly recommended that they introduce new technologies in their operations. Accordingly, your rapporteur fully approves of the set of measures adopted by the Parliamentary Assembly (Recommendation 1457 (2000)), which are valid for technological strategies in south-eastern Europe. Particular emphasis should be placed on the importance of the co-operation programmes between the European Union and the countries in the region. The projects must cover all activities from education to technological innovation and marketing of the products of the technology. The introduction of new technologies in SMEs in this part of Europe would make a decisive contribution to solving the problems of technological convergence, economic stability and environmental protection.

56.       Science and technology parks are an ideal means of establishing high-tech SMEs and modernising existing firms. They facilitate contacts between science and industry. Interaction between the scientific communities in south-eastern Europe and their counterparts in industry has been extremely limited for many years. Academic research is too far removed from the needs of industry, and this hampers the process of innovation. From this point of view, one solution lies in the conversion of the region’s many research centres into science and technology parks, which should make it easier to exploit the results of academic research commercially and speed up the technological reconstruction of the countries in the region.

57.       The border regions of south-eastern Europe might play a very important role in the technological strategies of the region. Until 1989, they were virtually cut off from each other, without any economic ties, and sometimes embroiled in ethnic conflicts. An important factor in speeding up the development of these regions lies in their ability to prosper and form Euro-regions, an idea which met with broad support at the 7th European Conference of Border Regions in Timisoara in October 1999.

58.       Regional co-operation, so important for technological renewal in south-eastern Europe, is very limited. At present, trade between the two neighbours Bulgaria and Romania accounts for only 1% of their total commercial exchanges, and trade with other countries of the region is hardly any greater. Albania has virtually no trade with the region.

59.       The international financial institutions, such as the IMF, the World Bank, the EBRD and the EIB, can play a crucial role in implementing technological strategies in south-eastern Europe. They are in a position to devise a coherent policy of international aid for the region to help the countries concerned define their economic priorities and technological strategies.

60.       The European Investment Bank (EIB), the European Union’s financial institution, has been involved in the central and eastern European economic reconstruction process since 1990. Its investments are mainly in infrastructure, in particular transport (48%), telecommunications (15%) and energy (7%). At the Brussels conference (29-30 March 2000), the EIB undertook to provide € 531 million for transport projects (TINA network) as well as other infrastructures in south-eastern Europe. That makes it the main partner for rebuilding the region’s infrastructure.

61.       The EIB conducted a study of the technological strategy needs for infrastructure in south-eastern Europe; the findings were as follows:

- 35 projects as part of an immediate Quick-Start programme, costed at € 1,131 million;

- 50 projects as part of a Near-Term programme, costed at € 2,735 million;

- 60 projects as part of a Medium-Term programme, costed at € 6,000 million.

62.       The World Bank and the European Union (through the European Commission) are responsible for donor co-ordination and for an overall approach to regional development in south-eastern Europe. The World Bank is active in several such regional projects. Reference can be made in particular to the project to improve trade and transport in south-eastern Europe (TTFSE), which calls for building or renovating a number of border posts in the region, including Quafe Thane (Albania - “the former Yugoslav Republic of Macedonia”), Slavonski Brod (Croatia - Bosnia and Herzegovina), Deve Bair (“the former Yugoslav Republic of Macedonia” - Bulgaria). This project promotes regional co-operation and is helping bring about simpler, faster and more transparent border formalities.

63.       The EBRD is the world’s sole financial institution to have been given political terms of reference under its constitution, which requires it to work in countries that adhere to democracy and pluralism. Its economic objective is to foster the transition from a planned to a market economy in central and eastern Europe, including in the countries of south-eastern Europe. Its investments have played a tangible role in advancing and broadening technological strategies in the region.

64.       The EBRD increasingly seeks to encourage the start of new businesses and the growth of small and medium-size firms, in close -co-operation with local and regional partners, through the creation of banking sectors. To achieve these goals, the Bank devotes 60% of its operations to the private sector. Another very important EBRD activity is improving the region’s obsolete and inadequate infrastructure in the areas of the environment, energy, nuclear safety, transport and telecommunications. As a result, the Bank reduces risks for foreign investment, which is so important for south-eastern Europe.

65.       All told, the Bank has contributed € 2.7 billion to the region and was the biggest investor in the private sector of the six countries of south-eastern Europe. It has accelerated the privatisation of the telecommunications sector in Romania and the banking sector in Bulgaria. In Croatia, it has improved the public services of the local authorities. In Bosnia and Herzegovina, the Bank has obtained good results in helping small and medium-sized firms and backing infrastructure projects (airports, ports and telecommunications). In Kosovo, the EBRD has made a major contribution to the start of the first accredited bank since the end of the conflict, giving access to monetary transfers and micro-credits, particularly for small businesses, which are the driving force behind growth and technological reconstruction in a market economy.

66.       With the help of a fund financed by the United States, the EBRD recently launched a new loans programme in south-eastern Europe for countries applying for admission to the European Union as well as those in an initial or intermediate transition phase.

67.       To increase the rate of investment in south-eastern Europe, the EBRD uses three techniques, which must be encouraged:

- cofinancing with other international financial institutions;

- priority for cross-border co-operation projects, especially intra-regional and interregional infrastructure projects to further the process of reconciliation between ethnic groups and help restore mutual trust and political stability;

- transparent procedures so as to prevent corruption, a real scourge of the public sector in the countries of the region.

68.       The Central European Initiative (CEI) has mounted a number of joint projects with the countries of south-eastern Europe, many of which are closely linked to economic development and the technological renewal of the region:

- road construction (starting with corridor 8) in Albania (USD 2 million);

- TIS (TINA Information System) for the TINA network of pan-European transport corridors;

- technical assistance for EBRD-funded projects - railway lines in Bulgaria and Romania, roads in Croatia and airports in Macedonia and Croatia;

- repair of Sarajevo international airport;

- participation in the creation of an industrial park in Durres (USD 2 million), (cofinancing with the EBRD);

- technical assistance in upgrading a number of industrial sectors: glass-bottle production in Bulgaria, glass and tile production in Croatia, honey production in Croatia etc.;

- reconstruction of the electrical system in Bosnia and Herzegovina.

69.       The close economic co-operation between the countries of south-eastern Europe and the Central European Free Trade Association (CEFTA) might make a useful contribution to implementing the region’s technological strategies. The CEFTA could serve as a link between the Balkans region and the European Union. Two countries in the region are already members of the CEFTA (Romania and Bulgaria), and a number of others would like to join, which they can do if they meet two admission criteria: they must be members of the World Trade Organisation (WTO) and must have signed an association agreement with the European Union. Admission of other south-eastern European countries in the future would make for closer co-operation, which would promote a faster technological renewal of the region.

70.       UNESCO’s contribution to implementing technological policies in south-eastern Europe reflects the growing importance of science and technology for the economic development and well-being of the societies in the region. Research and development (R&D) is a direct part of two of the Organisation’s five main areas of focus:

- encouraging the transfer and dissemination of new technologies through research, training and education;

- conducting forward-looking studies on scientific models.

71.       “Major programme II”, entitled “The sciences in the service of development”, might be geared to south-eastern Europe’s technological strategy needs, primarily in the following initiatives: “Environment and sustainable development”, “International hydrological programme” and “Development of computer infrastructures”. Active participation by the countries of the region would enhance regional co-operation and help bind closer ties between industry and the universities, thus furthering sustainable development.72.

72.       “Major Programme IV”, entitled “Communication, information and informatics”, opens vast horizons for co-operation and the transfer of the new information and communication technologies which would enable effective use to be made of the intellectual potential of the region, historically strong in these areas. For this programme to be successful in south-eastern Europe, two very useful initiatives would need to be strengthened:- l

- lifelong education for all as a sine qua non for computer technologies and telecommunications;

- actively involving women in drawing up this policy, because women are often underestimated in some countries in the region (Albania, Kosovo, Bosnia and Herzegovina etc.), which is unacceptable in a new information society.

73.       At the regional funding conference for south-eastern Europe (Brussels, 29-30 March 2000), the donors undertook to provide the sums needed for funding the Quick-Start programme in full. The priorities include communication and transport infrastructure.

74.       Democratic control over the distribution and utilisation of funds is a very important question. A large part of this € 1.8 billion is taxpayers’ money. The national parliaments of the region, the European Parliament and the Council of Europe’s Parliamentary Assembly might verify whether the considerable sums involved usefully serve the technological reconstruction of the Balkan region.

75.       Attended by representatives of 44 countries, including virtually all the European countries as well as the United States, Japan and Canada, the Brussels conference was chaired by the European Commission and the World Bank. The donors and financial institutions raised € 2.4 billion for the economic recovery of south-eastern Europe (see Appendix 3). They agreed to fund projects starting in the next 12 months (“Quick-Start” programme) worth over € 1.8 billion. More than 35 of these projects concern infrastructure (bridges, water treatment plants, airports, border posts etc.), which are closely associated with the technological reconstruction of the region.

76.       The philosophy of the conference, which is also that of the Solidarity Pact, is based on the following two principles:

- as a condition for continuing assistance, the donors require that the countries of south-eastern Europe show intra-regional solidarity and co-operate. The conference confined consideration to projects common to at least two Balkan countries.

- the donor countries and the Balkan countries have a shared interest in stabilising and gradually integrating south-eastern Europe into the European Union. To attain this objective, which is still far off, the former must step up their assistance and the latter must make a firm commitment to political and economic reforms.

77.       In the longer term, the European Commission hopes that the region of south-eastern Europe will receive some € 12 billion in assistance over the next six years, including € 6 billion for Romania and Bulgaria (European Union applicants) and about € 6 billion for Croatia, Bosnia and Herzegovina, “the former Yugoslav Republic of Macedonia”, Albania, Kosovo and Montenegro.

78. As part of the Stability Pact, the main infrastructure projects of regional importance for Bulgaria are as follows:

Railway lines:

- electrification of the Karnobat-Sindel line (123 km, USD 125 million);

- reconstruction of the line between Radomir and Gyeshevo (88 km, USD 100 million);

- construction of the line between Gyeshevo and the Macedonian border (2.5 km, USD 10 million);

- electrification of the Doupnitza-Koulata line, Greek border (part of the N4 Pan-European corridor) - 119 km, USD 30 million;

Bridge over the Danube, Vidin-Kalafat (USD 190 million);


- repair of the Sofia-Koulata road, Greek border;

Sofia international airport, € 184 million;

Bourgas international airport, USD 66 million;

Port of Bourgas with 5 border posts;

Oil pipeline: Ihtiman-Kumanovo (110 km, USD 40 million);

Border posts: Stoumiani-Berovo, Simitli-Pehchevo, Kyustendil-Delchevo.

79. Construction of the N8 Pan-European corridor is the biggest project in “the Former Yugoslav Republic of Macedonia” in coming years. Its importance in the areas of the economy and communication is unquestionable. The corridor will also improve communications between Albanians, Macedonians, Bulgarians and Turks, who will get to know each other better; this may help overcome certain historical prejudices.

80.       The main projects in connection with the N8 corridor are as follows:


- the Skopje ring road (23 km, 75 USD million);

- reconstruction of the Struga-Kafasan road, Albanian border (6 km, USD 6 million);

Railway lines:

- construction of the Kumanovo - Bulgarian border line (54.5 km, USD 335 million);

- construction of the Kicevo - Albanian border line (35 km, USD 400 million).

Power lines:

- 220 kV high tension line “Vrutok-Bureli (Albania)” (48 km, 12.5 USD million);

- 400 kV high tension line “Shtip-Blagoevgrad (Bulgaria)” (70 km, USD 13.7 million);

Border posts:

- reconstruction of the Stenje, St. Naum, Blato and Kafasan border posts.

81.       In Albania, the main infrastructure projects of regional importance are as follows:


- construction of the Tirana - Macedonian border road (110 km, USD 120 million);

- construction of the Tirana - Rinas airport road (6.5 km, USD 9.5 million);

- construction of the Tirana - Elbasan road (35 km, USD 80 million);

Railway lines:

- link between Albania and Macedonia (2.8 km, USD 5 million);

Border posts:

- reconstruction of the Blato and Gorice border posts.

82.       The international community’s commitment to economic and infrastructure reconstruction in Kosovo was clearly set out in paragraphs 11 and 13 of United Nations Security Council Resolution 1244.

83.       The European Union has announced financial assistance of the order of € 200 million to meet the Federal Republic of Yugoslavia’s most urgent needs. The programme began in November 2000. It is geared primarily towards public health, infrastructure and environmental protection.

84.       Bulgaria and Romania have responded positively to the appeal from the new government of the Federal Republic of Yugoslavia and have begun to supply the country with the electricity it needs to cope with the problems of the coming winter.

85.       In that connection, there is reason to welcome the decision by the European Union to earmark € 500 million in the year 2000 for the economic and technological reconstruction of Kosovo. The member states of the European Union will contribute to the reconstruction of Kosovo separately.

86.       The International Labour Organisation (ILO) is also involved in technological reconstruction projects in Kosovo, in particular in the area of infrastructure (about USD 11 million for repairing the road network and for the “Beautiful Kosovo” Programme), the micro-funding of small businesses (USD 6.2 million) etc.

VI.       Conclusions

87.       The technological reconstruction of south-eastern Europe is very important to the peace, stability and sustainable development of the region and its integration into the rest of Europe. The conflicts caused by the break-up of Yugoslavia, including the Kosovo crisis, have slowed down the region’s technological development and worsened the economic and social disparities in Europe.

88.       The Stability Pact for south-eastern Europe is a crucial vehicle for the international community’s efforts to bring about the technological reintegration of the region into Europe, based on the principles of regional co-operation and transparency of procedures so as to prevent corruption.

89.       Economic reforms in south-eastern Europe will necessarily involve technological reconstruction of all the key sectors in the region: industry, transport infrastructure, the energy sector, digital information and communication technologies and environmental protection.

90.       Small and medium-sized enterprises (SMEs) and science and technology parks can play a very important role in fostering innovation, in particular the introduction and use of new technologies in the region.

91.       In order to create a propitious environment for technological strategies, it is necessary to improve interaction between academic research and industry and, accordingly, to encourage young people to study new technologies so as to guarantee continuity in the implementation of technological strategies in the region.

92.       The leading international financial institutions such as the World Bank, the European Investment Bank, the European Bank for Reconstruction and Development and the International Monetary Fund can make a significant contribution to the success of technological strategies in the region through the projects carried out under the Stability Pact.

Appendix 1

1.        Improving prospects. Development of GDP (in %) in the countries of south-eastern Europe**










- 5.4

- 3.2







- 0.3

- 0.3






Total for central and

south-eastern Europe




*       forecast

**       source: EBRD, May 2000.

Appendix 2

2.       Comparison of average income with the European Union (1999)*





European Union

Situation in comparison with EU average





Situation in comparison with 1990

(base: 100)





*       source: Presentation by Dr Richter, Vienna Institute for International Economic Studies, IFRI colloquy of 19 June 2000.

Appendix 3

Appendix 4

Appendix 5

Pacte de stabilité pour l'Europe du Sud-Est

Conférence régionale de financement

Liste des projets d'infrastructures de base

Projets régionaux de démarrage rapide par pays

Cofit total : 1131 millions d'Euros

Total Cost: 1131 M

Reporting committee: Committee on Science and Technology.

Reference to committee: Doc. 8469 and Reference No. 2414 of 3 September 1999.

Draft recommendation unanimously adopted by the committee on 29 November 2000.

Members of the committee: MM. Rakhansky (Chairman), Birraux (Vice-Chairman), Tiuri (Vice-Chairman), Lekberg (Vice-Chairman), About, Asciak, Bartos, Brunhart, Bulic, Cherribi, Cioni (Alternate: Martelli), Colla, Cunliffe (Alternate: Etherington), Damanaki, D’Aron, Dolazza, Duka-Zolyomi, von der Esch, Mme Faldet, M. Fayot, Mrs Fernandez Capel, Gligoroski, Guardans (Alternate: Mrs Torrado), Ivanov, Jackson, Kitov, Kittis, Kjaer, Kolb, Kurucsai, Leers (Alternate: Dees), Lengagne, Libane, Liiv, Lotz, Maass, Marmazov, Mateju, Melnikov, Minarolli, Monteiro, Moreels, Moynihan-Cronin, Mozgan, Mrs Nabholz-Haidegger, MM. Niculescu, Nigmatulin, Nikologorsky, Patarkalishvili, Pawlak, Plattner, Mrs Ragnarsdottir (Alternate: Olrich), MM. Rapson, Raskinis, Riccardi, Roseta, Scheer, Steolea, Tanik, Turini, Wittbrodt, Wurm, Yürür, Zissi.

N.B.The names of members present at the meeting are printed in italics.

Secretaries of the committee: Mr Lervik, Mr Torcătoriu.