16 December 2002
Progress on the Stability Pact for South-Eastern Europe: enhancing security and political stability through economic co-operation
Third Parliamentary Conference on the Stability Pact for South-Eastern Europe
Tirana, Albania (14-16 October 2002)
Committee on Economic Affairs and Development
Rapporteur: Baroness Hooper, United Kingdom, European Democratic Group
The report builds on the results of the ‘Parliamentary Troika Conference’ – Parliamentary Assembly of the Council of Europe, European Parliament and the OSCE Parliamentary Assembly – that was held in Tirana, Albania, in October 2002 for the purpose of evaluating progress reached in the implementation of the Stability Pact for South-Eastern Europe and planning for the Pact’s future.
Like the “Tirana Declaration” adopted on that occasion, the report focuses particularly on three areas that it says should now be given special attention in order to ensure continuation of the region’s recent impressive progress made possible by the Pact and its closer integration with Europe as a whole: rapid completion of infrastructure projects; fighting corruption and organised crime; and removing any remaining obstacles to regional trade and the freer movement of people.
The report registers the eagerness of both donor and recipient countries – and the Stability Pact Office itself - to further speed up implementation of the Pact’s various provisions. All the more reason, the report concludes, for the three European parliamentary bodies involved to continue to follow developments closely in 2003, as the European Parliament takes over the Chair of the Parliamentary Troika from the Council of Europe’s Parliamentary Assembly.
I. Draft resolution
1. The Assembly has taken note of the report of its Committee on Economic Affairs and Development on the results of the Third Parliamentary Conference on the Stability Pact for South-Eastern Europe, held in Tirana from 14 to 16 October 2002.
2. Chaired by the Parliamentary Assembly of the Council of Europe - and with the participation of the Parliamentary Assembly of the Organisation for Security and Cooperation in Europe (OSCE) and the European Parliament - the Conference was devoted to the theme “Enhancing Security and Political Stability through Economic Co-operation: Progress of the Stability Pact for South-Eastern Europe”.
3. The Assembly fully supports the Tirana Declaration, adopted by acclamation by the Conference and attached to the present resolution. The Assembly resolves to follow the implementation of the Tirana Declaration closely, in co-operation with the parliamentary partner institutions mentioned. The Conference highlighted the need for rapid economic development and integration both between the countries of the region and in the wider European context, in order to ensure not only growing prosperity, but also political stability, peace and regional security.
4. In this context, the Assembly notes, on the one hand, the considerable frustration experienced by many of the South-East European Stability Pact members over the slow and organisationally cumbersome realisation of some of the Pact’s projects. On the other hand, it also registers the impatience felt by many donor countries and institutions over what they see as lagging progress by countries in the region in areas vital for the Pact’s success, such as effective implementation of bilateral Free Trade Agreements, the curbing of corruption and organised crime, the movement of people and the clear establishment and enforcement of property rights. It is essential that all parties concerned show the necessary preparedness to further improve their performance in all of these domains in order to keep the Pact’s credibility and momentum intact.
5. Finally, the Assembly welcomes and strongly supports the decision of the Stability Pact’s ‘Investment Compact Initiative’ to establish a monitoring mechanism for the implementation of key principles and best practices agreed by South-East European Ministers in July 2002, in order to enhance investment in South-Eastern Europe.
«Tirana Declaration »1
of the Third Parliamentary Conference
on the Stability Pact for South-Eastern Europe
“Enhancing Security and Political Stability through Economic Co-operation: Progress on the Stability Pact for South-Eastern Europe”
Tirana, 14-16 October 2002
1. The Third Parliamentary Conference on the Stability Pact for South-Eastern Europe was held in Tirana from 14 to 16 October 2002, at the kind invitation of the Albanian Parliament. Organised by the Parliamentary Assembly of the Council of Europe, currently chairing the Parliamentary Troika*, with the participation of the OSCE Parliamentary Assembly and the European Parliament, the Conference was devoted to the theme “Enhancing Security and Political Stability through Economic Co-operation: Progress on the Stability Pact for South-Eastern Europe”.
2. The Conference reiterated its full support for the Stability Pact’s work on behalf of South-Eastern Europe and welcomed its renewed emphasis on concrete initiatives and projects capable of rapidly enhancing economic growth and regional co-operation and promoting security and political stability for all.
3. The Conference welcomed the significant progress in the large majority of the countries of South-Eastern Europe - an achievement all the more remarkable considering the present more difficult economic climate at European and world level. Progress is reflected in high growth rates, enhanced regional co-operation and increased foreign investment in the region. Nevertheless, the Conference recalled the risks and challenges that the countries of South-Eastern Europe face today in their onward path towards stable democracies and honouring of European values. Major efforts continue to be undertaken by many of the countries concerned to reform their economies and institutions so as to bring them into greater conformity with European and worldwide standards. The move towards the establishment of the South East Europe Electricity Regulatory Forum (SEEERF) and the conclusion of the Sava River Basin Treaty were welcomed as part of this process.
4. The Conference expressed its wholehearted support in favour of closer relations between the countries in the region and the European Union, via the Accession Process and the Stabilisation and Association Process, in view of a future accession to the European Union as soon as circumstances permit.
5. The Conference, emphasising the crucial importance of a strong parliamentary role for the Stability Pact’s success, called for:
a) the creation of a parliamentary structure involving the countries concerned;
b) a continued push for the speediest possible completion of infrastructure projects, including in the transport, energy and water management sectors and simultaneously the systematic introduction in each sector of a strategic approach to infrastructure development in the region;
c) the timely conclusion of the remaining 10 (out of the original 21) Regional Free Trade Agreements before the deadline of December 2002, followed by their rapid implementation;
d) renewed efforts to develop, by appropriate agreements, the free movement of people, across the region;
e) an intensified fight against corruption and organised crime, including trafficking in human beings, drugs and arms;
f) creating conditions conducive to the voluntary return of refugees and displaced persons and ensuring protection of minorities;
g) UNMIK to provide conditions necessary to promote the participation of Kosovo in regional co-operation.
6. The Conference devoted special attention to corruption, economic and organised crime, which are particularly acute in South-Eastern Europe as it recovers from its difficult past. The Conference emphasised that the blame for corruption cannot be laid at any one door since it results from a social climate of generalised distrust, in which different actors – public officials, domestic and foreign companies as well as the general public – may be intentionally or unwittingly involved, calling therefore for a broader approach in order to combat this affliction. The Conference considered that success in this struggle is vital to ensure continued financial support for the region by the international community.
7. The Conference called for renewed parliamentary pressure for the establishment of intra-regional legal initiatives to fight corruption and economic and organised crime. In this context, it called on the countries in the region to make full use of the work of the Council of Europe’s Agreement establishing the “Group of States against Corruption – GRECO”, including the latter’s Twenty Guiding Principles for the Fight against Corruption and its Model Code of Conduct for Public Officials, as well as existing Council of Europe conventions in this field.
8. Participants in this context recalled that the Stability Pact owed its existence in part to the tragic conflicts in the former Yugoslavia. These conflicts also led to the establishment of the International Criminal Tribunal for Yugoslavia. The Conference emphasised the need for universal and unreserved support for the newly-established International Criminal Court and for all European countries to resist any pressure or agreement weakening the Court’s full effectiveness.
9. The Conference emphasised the need to take full advantage of the work performed by those institutions, such as the OSCE Missions in the region, which are working on the ground in close co-operation with the authorities and civic society.
10. The Conference welcomed the intention of the European Parliament to give special attention to the role of civil society in rebuilding democracy in South-Eastern Europe, when organising, in the course of its forthcoming chairmanship of the Parliamentary Troika in 2003, the Fourth Stability Pact Parliamentary Conference.
11. Finally, the Conference called on all parties concerned to consider the Stability Pact as the prime facilitator of regional economic assistance to South Eastern Europe, in order to avoid the current frequent dispersion of effort and overlap between the activities of the several actors involved.
Tirana, 16 October 2002
* The Parliamentary Troika of the Stability Pact for South-Eastern Europe has been chaired by the Parliamentary Assembly of the Council of Europe since July 2002, having taken over the Chairmanship from the OSCE Parliamentary Assembly. In the Troika sponsorship system, the European Parliament will again be in the Chair as from 1 January 2003.
II. Explanatory Memorandum by the Rapporteur
III. ACHIEVEMENTS TO DATE
b. Fighting Corruption and Organised Crime
c. Progress on Trade and the Movement of People
IV. CHALLENGES AND PROSPECTS FOR THE FUTURE
1. From 14 to 16 October 2002 the Parliamentary Assembly of the Council of Europe, as the current Chair of the Parliamentary Troika2, organised the Third Parliamentary Conference on the Stability Pact for South Eastern Europe. It was held in Tirana at the kind invitation of the Albanian Parliament and also included - apart from parliamentarians from across Europe and others - representatives of the other two sponsors of the Parliamentary Troika: the European Parliament and the Parliamentary Assembly of the Organisation for Security and Co-operation in Europe (OSCE).3 The conference was dedicated to the theme “Enhancing Security and Political Stability through Economic Co-operation: Progress on the Stability Pact for South Eastern Europe”.
2. This report has a twofold purpose. First, it seeks to summarise the proceedings and outcomes of the conference in order to give an account of the Stability Pact’s progress to date as well as of the challenges facing it in the future. Second, the report aims to draw up guidelines and recommendations towards meeting these very challenges.
3. The report is based on the speeches, statements and contributions made by keynote speakers and panel participants4 as well as other conference participants. It also draws on documentation made available during the conference.
4. The report starts with a brief overview of the background to and history of the Stability Pact and continues with a summary of the progress of its activities and efforts so far, and then with an outline of its future challenges. In conclusion, the report seeks to identify recommendations for the further successful functioning of the Stability Pact.
5. Prior to addressing these issues, the Rapporteur wishes to pay special tribute to and reiterate her full support for the important work carried out by the Stability Pact on behalf of South Eastern Europe, and to thank Mr Kirilov, the Assembly’s Rapporteur for the economic renewal of southeastern Europe, for his valuable work on issues related to the Stability Pact.
6. The Rapporteur also wishes to stress the crucial significance of a strong parliamentary role for the success of the Stability Pact. European parliamentarians have a vital responsibility in acting as promoters and guardians of democracy in general as well as of European and international standards in particular. As such, they are of the utmost importance for the successful achievement of the Stability Pact’s objectives.
7. The Stability Pact for South Eastern Europe was adopted in June 19995, with the aim of strengthening the countries of South Eastern Europe in “their efforts to foster peace, democracy, respect for human rights and economic prosperity in order to achieve stability in the whole region”. Coming as it did after years of ‘reactive’ crisis intervention policies, it represented the first determined attempt by the international community to establish and develop a comprehensive and long-term conflict prevention strategy. The Stability Pact is a political declaration of commitment and a framework agreement on international co-operation, aiming to develop a shared strategy for growth and stability in the region. In particular, it seeks to encourage and reinforce co-operation among the countries of South Eastern Europe as well as to streamline existing and upcoming activities and efforts for financial, political and technical assistance.
8. Today, the Stability Pact partners include fourteen southeast European and neighbouring countries6; the fifteen EU member states and the European Commission; six other non-EU member countries7; and several international organisations8, international financial institutions9, and regional initiatives10.
9. The core of the Stability Pact lies in the conviction that self-sustaining conflict prevention and peace-building can be achieved only if there is successful and parallel progress in the following three areas: creation of a secure environment; promotion of sustainable democratic systems; and promotion of economic and social well-being. To this end, the Stability Pact is structured around three Working Tables: I) Democratisation and Human Rights11; II) Economic Reconstruction, Co-operation and Development12; and III) Security Issues13. The third Working Table is in turn divided into the two Sub-Tables of Military and Defence, and of Justice and Home Affairs.
10. All three Working Tables operate under, and are organisationally dependent upon, the Regional Table, which is chaired by the Special Co-ordinator14. The primary missions of the Special Co-ordinator are to streamline the Stability Pact partners’ political strategies and efforts; and to co-ordinate existing and new initiatives in the region in order to avoid unnecessary duplication of effort.
11. The Stability Pact represents a process, in which the representatives from the South Eastern European countries, for the first time, are on an equal footing with international organisations and financial institutions in shaping the region’s future and in agreeing on priorities. It is a two-way street. In order to receive support from the international community, the South Eastern European countries have pledged to carry out economic, political and institutional reforms towards supporting regional co-operation, growth and stability as well as fighting corruption and organised crime. In return, donors have undertaken to support the reconstruction and growth process with co-ordinated financial, political and technical assistance.
12. Although the Stability Pact is not a fundraising mechanism, it has managed to secure a total of €5.4 billion for the financing of individual projects (particularly in infrastructure) of two or more countries with a view to engaging them in regional co-operation. During the First Regional Funding Conference in March 2000, the Special Co-ordinator presented a so-called “Quick Start Package” (QSP) of 244 projects recommended by all three Working Tables. As a result, the donor community raised a total of € 2.4 billion for the implementation of these projects.15. An additional € 3 billion16 were committed at the Second Regional Conference in October 2001.
13. The QSP has proven to be an important instrument for creating momentum for the Stability Pact itself and towards mobilising additional funds for the region. Total annual bilateral and multilateral assistance exceeded € 6,6 billion both in 2000 and 2001. The Stability Pact does not, however, implement projects, but rather works as an instrument to co-ordinate and facilitate implementation by its partners.
14. Furthermore, in June 2001 the European Parliament and the Parliamentary Assemblies of the Council of Europe and the OSCE agreed to co-sponsor a parliamentary dimension of the Stability Pact by creating a ‘Parliamentary Troika’. This parliamentary co-operation aims to reinforce the parliaments’ institutional capacities as well as establish networking practices among national parliaments and the European parliamentary assemblies. One of the primary purposes of the Parliamentary Troika is to provide “democratic scrutiny of the planning, the priorities and the implementation of the projects financed following the proposals made by the Stability Pact”.17 It should hence serve as a political monitor and evaluator of the Stability Pact’s contributions and progress, the Tirana Conference being a good example.18
15. Finally, in the founding document of the Stability Pact, the EU undertook to bring South Eastern Europe “closer to the perspective of full integration … into its structures”, with the possibility of eventual EU membership for the countries concerned. To this end and as a further contribution to the Stability Pact, the EU set up a new generation of Stabilisation and Association Agreements (SAAs) aimed at the five South Eastern European countries lacking a contractual relationship with the EU, that is, Albania, Bosnia and Herzegovina, Croatia, "the former Yugoslav Republic of Macedonia”, and the Federal Republic of Yugoslavia.19 The Stabilisation and Association Process (SAP) aims to increase the economic, political and social co-operation among these five countries and with the EU and can be seen as an interim step towards membership.
16. The Stability Pact itself is an important complement to the SAP and the accession process. Its essential regional dimension should not be allowed to become of secondary importance when compared to the process of European integration. Rather, regional co-operation within South Eastern Europe must accompany any SAA.
III. ACHIEVEMENTS TO DATE
17. Overall, the majority of the South Eastern European countries have made significant progress over the last few years. Economically, their growth rates have been high (and better than those of for example Central and Eastern Europe) and capital inflows and foreign investment have increased. This achievement is all the more significant considering the current difficult European and international economic climate. Politically, they have been committed to reform and have shown great resilience despite the difficulties at the regional level and the recent worldwide economic slowdown. In line with the Stability Pact’s mandate, they have also moved closer towards consolidating their regional co-operation.
18. Under the overall theme of “Enhancing Security and Political Stability through Economic Co-operation: Progress on the Stability Pact for South Eastern Europe”, the conference proceedings were organised around the following three sub-themes: a) Infrastructure; b) Fighting Corruption and Organised Crime; and c) Progress on Trade and the Movement of People.
19. The reconstruction and development of South Eastern Europe’s infrastructure is crucial for the simultaneous processes of regional co-operation and European integration. Infrastructure investments are also important in terms of public perception and visibility. They are however very expensive and usually take a long time to implement.
20. The support to infrastructure is one of the most important contributions of the Stability Pact, which, from the very outset, has been committed to rehabilitating and modernising the infrastructure networks of South Eastern Europe. To this end, the European Commission and the World Bank set up a joint office in order to prepare a list of priority infrastructure projects for the region. 1.1 billion euros were raised for the first set of these priority infrastructure projects (as part of the QSP) during the First Regional Funding Conference in March 2000. Another € 2.4 billion were pledged at the Second Regional Conference in October 2001. The current list includes 46 projects for a total value of € 3.5 billion of secured financing from bilateral and multilateral donors.20.
21. As illustrated by the table below, most of the infrastructure projects are in the transport sector, which receives almost two-thirds of the overall financing. Out of the 31 transport projects, 23 are dedicated to roads, four to railways, three to ports and waterways, and one to airports. In addition, the six cross-border / trade facilitation projects are also in transport. The remaining projects include four energy projects (namely in electricity) and five water and environment projects (primarily in waster water management).
Regional Infrastructure Projects (as of June 2002)
22. In terms of implementation, actual work has started only on 23 projects, while another five are expected to start by the end of 2002. Although the implementation of infrastructure projects is normally time-consuming simply because of their size, the slowdown can also be attributed to regional institutional difficulties (such as the lack of a proper regulatory framework). Disappointment has consequently been voiced by many receiving countries at what they see as slow progress .
23. Over the past year, the Stability Pact’s work on infrastructure has sought to move beyond the initial start-up phase of pledging and monitoring, and on to a more strategic approach to implementation. The establishment of the Infrastructure Steering Group (ISG) in May 2001 represents an important first step in this direction. The ISG is chaired by the European Commission and includes representatives from the Council of Europe Development Bank (CEB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the World Bank, and the Office of the Special Co-ordinator of the Stability Pact. It provides international financial institutions (IFIs) with a framework within which they can agree on common policies towards infrastructure development and avoid duplication of assistance. South Eastern Europe is the only region in the world where such a co-ordinating body among IFIs exists.21
24. An important breakthrough, highlighted at the Tirana Conference, has also been reached in the electricity sector, through the establishment of the South East Europe Electricity Regulatory Forum (SEEERF) in early 2002. Through this Forum, the European Commission, in co-operation with the Stability Pact, seeks to develop an open and competitive Regional Electricity Market (REM) by 2005. This, in turn, will require the establishment of independent national regulatory authorities and national transmission system operators by mid-2003. The Stability Pact is committed to playing a key role in ensuring the timely adoption and implementation of the SEEERF, in particular with regard to guaranteeing ownership and regional co-operation.22
25. The creation of the SEEERF represents a shift from emergency support and reconstruction to a more co-ordinated and long-term approach to a regional electricity market. This new approach is to be officially approved at a ministerial meeting in November 2002 when the energy ministers of Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Greece, the “former Yugoslav Republic of Macedonia”, Romania, and the Federal Republic of Yugoslavia and the European Commission will sign a Memorandum of Understanding.
26. The Sava River Basin agreement is another important example of a successful infrastructure initiative carried out under the auspices of the Stability Pact. With the breakdown of Yugoslavia, the Sava river turned into an international waterway involving the countries of Bosnia-Herzegovina, Croatia, Slovenia, and the Federal Republic Yugoslavia. Problems of navigation, sustainable water management, hazard prevention could hence only be solved through a regional co-operation framework involving all four countries. The Stability Pact provided such a framework and two working groups with representatives from the four countries were established. The first has almost completed negotiations for an International Framework Agreement for the Sava River Basin, which will provide a clear and coherent plan for sharing sovereignty within the framework of a commission. The second working group has agreed on an agenda for priority rehabilitation and development activities and projects, which in turn will be incorporated into an action plan for the Basin.
27. Finally, the ISG has received a number of other sector studies and strategies, most notably for the transport23 and oil and gas sectors. These studies and strategies all have two points in common, namely to promote co-operation and facilitate co-ordination among donors and to prioritise regional infrastructure investments.
III.b. Fighting Corruption and Organised Crime
28. The conference devoted special attention to the problems of corruption and organised crime24, which are considered to be particularly acute in South Eastern Europe as it recovers from its difficult past and now finds itself in a period of transition seeking to consolidate its democratic structures. The fight against corruption and organised crime is considered to be absolutely central for the proper functioning of the economy and the political stability of the region.
29. To assist in the struggle against these two afflictions, the Stability Pact has launched two specific and closely related initiatives.
30. In early 2002 the Stability Pact partners launched the Stability Pact Initiative on Anti-Corruption (SPAI), acknowledging that corruption is “highly detrimental to the stability of all democratic institutions, erodes the rule of law, breaches fundamental rights and freedoms … [and] undermines the trust and confidence of citizens in the fairness and impartiality of public administration”. This initiative aims to assist the South Eastern European countries in enacting the necessary legislation, building institutions, and developing civil society components in the fight against corruption.25
31. The SPAI has now completed its first phase, which was to assist countries in putting anti-corruption measures high on the political agenda, conducting information campaigns, mobilising civil society and non-governmental organisations (NGOs), and introducing measures and structures to the countries’ institutional apparatuses.26 The next phase will be more operational, in facilitating the establishment of anti-corruption priorities and bringing these to the attention of international donors, raising the awareness of public opinion and strengthening the role of civil society, monitoring progress, providing fora for discussion, and assisting in the harmonisation of legislation.27
32. With regard to corruption, the conference stressed that the blame for corruption cannot be laid at any one door. Rather it results from a general social climate of distrust, within which many different actors, such as public officials, domestic and foreign companies as well as the general public, may be deliberately or inadvertently involved.
33. The conference also pointed to the crucial role played by parliaments in the future success of the fight against corruption, since they are responsible for setting up the legal, institutional, and organisational tools for combating corruption.
34. Second, the Stability Pact Initiative on Organised Crime (SPOC) covers the adoption of polices, strategies and legislation to combat organised crime. This initiative aims to develop mechanisms of co-ordination and co-operation among the countries in South Eastern Europe, especially with regard to the exchange of information. The Stability Pact has also reached an agreement with Interpol and has started negotiations with Europol for co-operation on the fight against organised crime.
35. Both SPAI and SPOC are supported in their implementation by the Council of Europe’s Programme against Corruption and Organised Crime (PACO) in South Eastern Europe. This programme aims to strengthen the region’s capacities in the areas of policies, effectiveness of justice, proceeds from crime, and regional co-operation. PACO complements other activities in setting standards (namely, conventions and recommendations), monitoring and evaluation (Group of State against Corruption (GRECO)28 for corruption and MONEYVAL (formerly PC-R-EV) for money laundering), and technical co-operation (the Octopus programme). There is also the Council of Europe LARA project, which aims at strengthening the criminal legalisation against trafficking in human beings in South Eastern Europe. Furthermore, in another regional co-operation effort, the South East European Co-operation Initiative (SECI) has established a Centre for Combating Trans-border Crime.
36. Under the sub-theme of fighting corruption and organised crime, the conference also discussed the International Criminal Court (ICC) for individuals guilty of genocide, war crimes, or crimes against humanity. The treaty for the establishment of the ICC entered into force on 1 July 2002 after ratification by 81 states. In this regard, the European Parliament representatives in particular expressed regret at the recent annulment by the United States of signature to the ICC Convention and the country’s efforts to conclude bilateral agreements with various European and other countries in order to secure the non-application of the Convention as regards US citizens.29
III.c. Progress on Trade and the Movement of People
37. Trade liberalisation is crucial not only for the sustainable economic development of South Eastern Europe but also for the region’s further integration into European structures and the international trading system.
38. To support this effort, the Stability Pact established a Working Group on Trade Liberalisation and Facilitation in 2000, thus providing senior trade officials from countries and international organisations with a forum in which to work together towards implementation and progress in the trade arena. The Group is chaired by the “former Yugoslav Republic of Macedonia”.
39. In January 2001, the Group organised a Trade Policy Forum, which was followed by a ministerial meeting at which seven countries30 endorsed a Statement of Intent to liberalise trade in the region. Following this meeting, the Working Group assisted the countries in the preparation of a Memorandum of Understanding (MoU) on Trade Liberalisation and Facilitation in line with EU and World Trade Organisation (WTO) obligations, as well as with the political realities of the countries involved. The MoU was signed in June 2001 by all seven countries and had been negotiated by and for the signatory countries.31
40. The MoU is an ambitious document, through which the signatory countries undertake to complete a network of bilateral free trade agreements (FTAs) with each other by the end of 2002. This network of FTAs would result in a virtual free trade area involving at least seven countries and 55 million inhabitants. At the writing of this report (November 2002) only 11 out of a total 21 FTAs have already been finalised.32 An additional eight are under negotiation.33
41. Apart from the direct economic benefits resulting from trade liberalisation, the FTAs also serve as an important political tool to ease tensions between the countries of South Eastern Europe as well as towards transferring ownership of the Stability Pact activities to the beneficiary countries themselves. They will also test the region’s institutional capacity to implement EU (as well as international) standards and regulations, and hence assist them in moving closer to the EU.
42. While the application of the FTA network is a significant economic and political achievement and represents an important step towards trade liberalisation and facilitation, it is only an initial one. To this end, the MoU also commits the signatories to: identifying and abolishing all non-tariff barriers (NTBs) to trade; assessing the potential for regional co-operation with regard to trade in services; harmonising legislation in a number of areas related to trade; increasing co-operation in a number of trade related areas, such as quality and standards, competition and intellectual property rights; and maintaining open trade regimes and seeking further trade liberalisation within the context of the WTO.
43. Furthermore, at a ministerial meeting in June 2002, the South Eastern Europe countries outlined and endorsed three priorities for 2003. The first– implementation of the FTAs - includes that they be in conformity with FTA and WTO regulations, elimination of non-trade barriers to trade, the application of common rules of origin, and simplification of customs procedures (especially at border crossings). The second priority – deepened integration – involves liberalisation of trade in services, harmonisation of standards and mutual recognition, and harmonisation of competition policies. The third priority – promotion of new opportunities to the international business community – consists in actively utilising the free trade area as a catalyst for increasing trade and for enhancing the region’s attractiveness to foreign investment.
44. The Working Group on Trade Liberalisation and Facilitation wants to mobilise further resources toward these objectives. For example, it has commissioned a study on trade in services in South Eastern Europe, to serve as a basis for future recommendations for the region.
45. Overall, while trade liberalisation is not an easy political option and while its implementation often requires difficult and complex decisions, most of the region’s government are clearly committed to the process of trade liberalisation and facilitation. To show this, the ministers of trade of the countries of the South East Europe Co-operation Process (SEECP) signed a joint statement in October 2002, reaffirming their commitment to the original MoU as well as their determination speedily to implement the legislative and institutional changes required.
46. Trade liberalisation and facilitation also indirectly support another Stability Pact initiative, the Investment Compact. As trade liberalisation increases the region’s economic interdependence, it should also, it is hoped, reduce the risk of political instability so often associated with South Eastern Europe. This, coupled with continued improvement in the institutional, legislative and regulatory framework, should in turn improve the climate for foreign investment.34
47. Unfortunately, progress on the free movement of people has been less tangible, as stringent visa regimes continue to restrict free travel. It was suggested during the conference that the Parliamentary Troika assign a task force to address this problem.35
IV. CHALLENGES AND PROSPECTS FOR THE FUTURE
48. Although it is difficult to measure the progress of a region-wide process such as the Stability Pact, much has improved since its establishment in 1999. Over the past three years, substantial progress has been made towards enhancing regional co-operation and economic growth as well as towards promoting security and political stability. In this regard, the conference, and the Rapporteur, particularly welcomed the Stability Pact’s renewed emphasis on concrete initiatives and projects.
49. South Eastern Europe is clearly committed to the Stability Pact and most of the countries have made strong efforts to follow through on its various initiatives. They have taken important steps towards reforming their economies and institutions, bringing them into greater conformity with European (and international) standards, which in turn also serves the Stabilisation and Association Process (SAP) with the EU. Furthermore, the ownership of the process of regional co-operation has gradually shifted to the countries of the region.
50. While the Rapporteur lauds the progress made to date, it is important to bear in mind that, much remains to be done. South Eastern Europe in particular and the other Stability Pact partners in general continue to face a number of challenges and future regional co-operation needs to focus on them.36
51. The first and foremost challenge is the translation of political willingness and commitment into actual implementation and practical effort. The first step of establishing and solidifying the regional political commitment needs to be followed by concrete and effective actions. This was emphasised by several speakers, panel participants and other contributors during the conference.
52. A second challenge, related to the first, is to establish a realistic timetable. It is hard to reconcile high expectations with the need to allow for actions to mature. While change takes time and patience is needed in order to see actual and concrete results, it is, however, important for the process to keep its momentum. The Stability Pact and the SAP are both step-by-step processes which take time, but each step needs to be taken for them to move forward.
53. The Rapporteur recognises that reform and modernisation are difficult processes and that they often lead to economic and social tension, especially within the context of a more difficult world economic climate. Nevertheless, also here action needs to be taken to ensure that progress continues. The prospects of joining the EU and other international structures (such as the WTO) should remain strong incentives for South Eastern Europe in this regard.
54. A third challenge consists in looking beyond recovery. For real and sustainable progress to take place, efforts need to move from reconstruction and rehabilitation of infrastructure and institutions to continuous and consistent development.
55. Fourth, once regional ‘ownership’ has been consolidated, it needs to develop into practical regional leadership. Proactive regional ownership and leadership are essential for the success and sustainability of the Stability Pact.
56. A fifth challenges lies in the proper integration of Kosovo into the region’s co-operation. Although the Stability Pacts does not have mandate to work on the political situation, it needs to support the involvement and efforts of the United Nations Mission in Kosovo (UNMIK) to ensure that Kosovo does not remain a blank spot on the map.37
57. A sixth challenge involves the consolidation of the still re-emerging and highly fragile civil society in South Eastern Europe. The involvement of civil society is essential to ensure democratic transparency of and support for the Stability Pact and SAP processes, especially in the fight against corruption and organised crime.
58. With regard to infrastructure, it is essential that we can move beyond the initial start-up phase of pledging for individual projects towards a more comprehensive and co-operative methodology and strategy for South Eastern Europe’s infrastructure. The establishments of the ISG and the SEEERF38 as well as the conclusion of the Sava River Basin initiative are welcome efforts in this regard. Future projects should be selected only if they contribute to, and are part of, a more strategic approach to develop the regional infrastructure network. Institutional and regulatory frameworks need to be strengthened in order to support this change in approach, and in order to facilitate start-up and implementation of already selected projects.
59. With regard to corruption and organised crime, their complex nature also calls for a broader and more co-ordinated approach. Success in this struggle is vital not only to ensure continued financial support from the international community, but also for the overall stability and development of the region. Despite numerous initiatives in this area, progress has been fairly slow.
60. Thus, many international conventions to combat corruption and organised crime have not yet been ratified, much less implemented. This also holds for three important Council of Europe Conventions. The 1999 Criminal Law Convention on Corruption came into force in July 2002. Today, however, only 14 countries have ratified it39, while 27 signatures have not been followed by ratification. The related Civil Law Convention on Corruption has not even entered into force for lack of ratifications. The 1990 Convention on the Laundering, Search, Seizure and Confiscation of the Proceeds from Crime came into force in 1993. At present, a total of 38 countries have ratified it40, but several have not yet even signed. 41
61. In addition to these conventions, numerous legal instruments have been developed to assist countries in the fight against corruption and organised crime. The Council of Europe’s 1997 Twenty Guiding Principles for the Fight against Corruption provides a comprehensive and effective strategy against corruption. The Council’s 2000 Model Code of Conduct for Public Officials invites governments to promote it as an outline for national codes of conduct. Although these guiding principles and codes of conduct are not legally binding, they carry political weight and are, like the conventions, monitored by GRECO.
62. Apart from the adoption and ratification of existing (and future) conventions and legal instruments, further efforts need to be made towards their incorporation into national legal systems and their implementation through the adoption of specific legislative enforcement measures. Parliaments, as the central institution in a democracy, play an essential role in this regard. Parliamentarians can assist not only by making sure that scarce resources are used properly, but they can also set examples through their own behaviour and through the legislation they adopt.42
63. Monitoring mechanisms also play an important role. Private sector development, especially via foreign direct investment (FDI), is essential for sustainable economic development in South East Europe (SEE). According to the EBRD, FDI flows to SEE for 2002 remained virtually unchanged since 2001. It is therefore vital for the general investment climate to improve, since this could mobilise much needed investment also for start-up companies and supplementary funds gained in the privatisation process. A significant step to improve the investment climate was taken by eight countries of SEE in July 2002, when they signed the Declaration on Attracting Investment to South Eastern Europe: Common Principles and Best Practices. The Declaration was signed in the framework of the Stability Pact’s Investment Compact initiative, and was accompanied by the establishment of various monitoring instruments. Furthermore, the Tirana conference suggested an inter-parliamentary investigative mechanism for the assessment of the enforcement of conventions through law-making and the adoption of concrete legislative measures at country level.43
64. Political determination is also needed on free trade and the movement of people. FTAs are “symbols of political willingness” and “must be translated into actual improvements on the ground”.44 All 21 FTAs need to be finalised and applied. Decisions for the continued improvement of the legislative and institutional framework should be taken to facilitate further regional integration. It is important that the South Eastern European countries align their visa and entry policies with current EU standards, and that they intensify co-operation initiated in the asylum field with the adoption, in March 2001, of the Sarajevo Joint Declaration.
65. The prospect of potential EU accession in the future should not delay the implementation of a coherent regional approach for the movement of goods and people also within South Eastern Europe. This is so because potential EU membership in some cases is not for the immediate future, but also because the countries of the region are likely to remain each other’s principal trading partners even after membership due to their geographical proximity.
66. One main challenge for the Stability Pact as a structure, and indeed for its Special Co-ordinator, lies in supporting and coordinating the numerous efforts and initiatives of its partners, in order to use potential synergies, avoid duplication and make efficient use of available resources. Co-ordination and streamlining within a framework of regional co-operation and the transfer of ownership and leadership to that region must remain the Stability Pact’s main mission. Valuable lessons can also be learnt by further sharing experiences not only within the region but with Central and Eastern European countries.
67. Finally, the Rapporteur wishes to emphasise that efforts need to be made not solely in the countries of South Eastern Europe, but also by the Stability Pact partner countries. For example, countries at the receiving end for drugs and trafficked humans also need to take proper action to fight organised crime. They must also ask themselves if the present Common Agricultural Policy of the European Union and similarly protectionist and subsidising agricultural policies elsewhere in western Europe really serve the interests of the countries of southeastern Europe. The latter not only cannot export much of their agricultural produce to western Europe, but they are indeed often flooded by subsidised exports from there.
68. In conclusion, the Rapporteur again congratulates the Stability Pact and its partners on the progress made to date and at the same time urges further efforts to overcome remaining challenges. She also commends the so-called “Tirana Declaration”, which was adopted by acclamation at the end of the Conference and is included in the Appendix to this report. 45
69. The present report also takes into account many earlier adopted texts and reports emanating from the Committee on Economic Affairs and Development and other committees of the Council of Europe’s Parliamentary Assembly.46 The Rapporteur is particularly grateful for the valuable comments made at the meeting of the Committee on Economic Affairs and Development in November 2002, when the draft Resolution was unanimously adopted, and on which occasion the Committee held rewarding exchanges of views with Stability Pact and World Bank representatives. These were all the more welcome considering that the Rapporteur had to prepare her report rapidly following the Tirana Conference in order to meet the deadline for the presentation of the report to the Parliamentary Assembly of the Council of Europe already in January 2003.
Reporting committee: Committee on Economic Affairs and Development
Reference to committee: Bureau decision of 6 November 2002
Draft resolution unanimously adopted by the committee on 20 November 2002
Members of the committee: Mrs Zapfl-Helbling (Chairperson), Mr Kirilov, Mrs Burbiene (Vice-chairpersons), Mr Adam, Mr Agius, Mr Agramunt, Mrs Akgönenç, Mr I. Aliyev (Alternate: Mr. Abbasov), Mr Anacoreta Correia, Mr Arnau, Mr Assis Miranda, Mr Berceanu, Mr Billing, Mr Braun, Mr Brunhart, Mr Budin, Mrs Calner, Mr Cerrahoglu, Mr Cosarciuc, Mr Crema (Alternate: Mr Rigoni), Mr Djupedal, Mr Duivesteijn, Mr Elo, Mr Eyskens, Mr Galoyan, Mr Grachev, Ms Griffiths, Mr Grignon, Mr Gülek, Mr Gusenbauer, Mr Haupert, Mrs Hoffmann, Mr Hrebenciuc, Mr Kacin, Mrs Kestelijn-Sierens, Mr Klympush, Mr Lachnit, Mr Le Guen, Mr Liapis, Mr Makhachev (Alternate: Mr Slutsky), Mr Masseret, Mr Melcak, Mr Mikkelsen, Mr Naumov, Mr O’Keefe, Mr Palis, Mrs Patarkalishvili, Mr Pavlidis, Mrs Pericleous-Papadopoulos, Mrs Pintat Rossell, Mr Pleshakov, Mr Podgorski, Mr Popa, Mr Popovski, Mr Prokes, Mr Puche, Mrs Ragnarsdottir, Mr Ramponi, Mr Reimann, Mr Riccardi, Mr Rivolta, Lord Russell-Johnston, Mr Rybak, Mr Schmitz, Mrs Schoettel-Delacher,, Mr Schreiner, Mr Seyidov, Ms Smith, Mr Stefanov, Mr Tepshi, Mr Torbar, Mr Tosic, Mrs Vadai, Mr Voog, Mr Walter (Alternate: Baroness Hooper), Mr Wielowieyski, Mr Wikinski, Mr Zhevago, Mr Zvonar
N.B. The names of those members present at the meeting are printed in italics
Head of Secretariat: Mr Torbiörn
Co-Secretaries to the committee: M. Bertozzi, Ms Ramanauskaite and Mrs Kopaçi-Di Michele
1 Approved by acclamation by Conference participants.
2 See further Section II. Background below.
3 Other participants included the Office of the Stability Pact’s Special Co-ordinator for South Eastern Europe and members of the Albanian government, as well as representatives of several international organisations, national parliaments, non-governmental organisations (NGOs), and diplomatic representations in Tirana.
4 Including: Mr Erhard Busek (Special Co-ordinator of the Stability Pact for South Eastern Europe); Mr Giuseppe di Gennaro (Chairman of the Stability Pact Anti-corruption Initiative); Mr Mikko Elo (Chairman of the Sub-committee on International Economic Relations, Committee on Economic Affairs and Development, Parliamentary Assembly of the Council of Europe); Mrs. Daniela Gressani (Lead Economist for Europe and Central Asia of the Vice-president’s Office, World Bank); Mr Orhan Güvenen (Chairman of the Governing Board, Council of Europe Development Bank); Mr Goran Klemencic (Economic Crime Division, Directorate General of Legal Affairs, Council of Europe); Mrs. Ermelinda Meksi (Head of the Albanian Parliamentary Delegation to the European Parliament); Ms. Elena Mizulina (Chair of the General Committee of Democracy, Human Rights and Humanitarian Questions, Parliamentary Assembly of the OSCE); Mr Alfred Moisiu (President of the Republic of Albania); Baroness Nicholson of Winterbourne (Member of the European Parliament and Vice-chairperson of the Committee on Foreign Affairs); Mrs. Mary O’Mahony (Expert, Stability Pact Working Table II); Mrs. Doris Pack (Member of the European Parliament, Chair of the Parliamentary Delegation for South Eastern Europe); Mr Servet Pellumbi (Speaker of the Albanian Parliament); Mr Jannis Sakellariou (Member of the European Parliament); Mrs. Adriana Poli Bortone (Member of the European Parliament); Mr Jack Reversade (European Investment Bank); Mr Lutz Salzman (Delegation of the European Commission in Tirana); Mr Peter Sanfey (Senior Economist, European Bank for Reconstruction and Development); Mr Peter Scheider (President of the Parliamentary Assembly of the Council of Europe); Mr Bernard Snoy (Director of Stability Pact Working Table II); Mrs. Rita Süssmuth (Vice-president of the Parliamentary Assembly of the OSCE); Mr Ahmed Tan (Vice-president of the Parliamentary Assembly of the OSCE); and Mrs. Rosmarie Zapfl-Helbling (Chair of the Committee on Economic Affairs and Development, Parliamentary Assembly of the Council of Europe).
5 And later reaffirmed by the Heads of State and Government on 30 July 1999.
6 Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, "the former Yugoslav Republic of Macedonia”, Moldova, Poland, Romania, Slovak Republic, Slovenia, Turkey, and Federal Republic of Yugoslavia.
7 Canada, Japan, Norway, Russia, Switzerland, and United States of America.
8 The Council of Europe, the North Atlantic Treaty Organisation (NATO), the Organisation for Economic Co-operation and Development (OECD), the OSCE, the United Nations, and the United Nations High Commissioner for Refugees (UNHCR).
9 The Council of Europe Development Bank (CEB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the International Monetary Fund (IMF) and the World Bank.
10 The Black Sea Economic Co-operation Initiative (BSEC), the Central European Initiative (CEI), the South East European Co-operation Initiative (SECI), and the South East Europe Co-operation Process (SEECP).
11 Currently chaired by Mr Alexander Rondos.
12 Currently chaired by Mr Fabrizio Saccomanni.
13 Currently chaired by Mr Vladimir Drobnjak.
14 Since 1 January 2002, Mr Erhard Busek.
15 97 percent of which had commenced by the beginning of 2002.
16 € 2.4 billion for infrastructure projects and € 500 million for refugee matters.
17 Mr Peter Schieder, President of the Parliamentary Assembly of the Council of Europe.
18 The Parliamentary Troika is organised in a sponsorship system with a six-months rotating Chair. The Parliamentary Assembly of the Council of Europe took over the chairmanship from the Parliamentary Assembly of the OSCE in July 2002 and will hand it over to the European Parliament in January 2003. Within this framework, the Parliamentary Troika organises parliamentary conferences to monitor the progress of the Stability Pact, boost co-operation on common problems, exchange views, and share experiences. The First Parliamentary Conference was held in Brussels in September 2001 and was chaired by the European Parliament, while the Second Parliamentary Conference was held in Bucharest in June 2002 and chaired by the Parliamentary Assembly of the OSCE.
19 To date, two of these five countries have signed SAAs with the EU, namely "the former Yugoslav Republic of Macedonia in April 2001 and Croatia in October 2001. Negotiations with Albania are set to start in the near future, while significant progress has been made also with regard to the remaining two countries, Bosnia and Herzegovina and the Federal Republic of Yugoslavia.
20 The projects were selected on the basis of a number of agreed criteria, such as technical feasibility, economic and environmental viability, presentation by one or more countries, and marked regional, i.e. trans-national, character.
21 The ISG’s specific mandate includes: identifying new projects; addressing and supporting implementation problems; consulting and broadening consensus with other bilateral and multilateral agencies; assisting in putting together financing packages involving the private sector; and verifying that appropriate institutional, regulatory and sector frameworks are developed to assist and accelerate the creation of regional markets. This last point is particularly important, as an inadequate or inappropriate institutional environment often delays or even jeopardises successful project implementation.
22 The potential benefits of the SEEERF include: increased reliability in the supply of electricity; lower operating costs; reduced needs for additional capacity investments (especially in electricity generation); new opportunities for private investment in infrastructure; improved opportunities for intra- and inter-regional trade; and lower prices for consumers.
23 Including the Transport Infrastructure Regional Study (TIRS) and the Balkans Regional Transport Study.
24 Including human trafficking, drug smuggling, cyber crime, as well as money laundering, bribery, tax evasion and other types of economic crime.
25 SPAI specifically encourages the participating countries to: Adopt and implement recognised European and international instruments; Promote good governance and reliable public administration; Strengthen legislation and promote the rule of law; Promote transparency and integrity of business operations; and Promote an active civil society.
26 The region has also benefited from co-ordinated technical assistance based upon individual country assessments.
27 The principle of ownership will also be strengthened through the co-chairing of the SPAI Steering Group by a representative from one of the region’s countries and the location of the secretariat in Sarajevo.
28 GRECO was established by the Council of Europe in May 1998 to provide mutual evaluation and peer pressure for compliance with the undertakings by Member States in combating corruption and organised crime. It became operational in May 1999 and in 2002 counted 34 participating countries.
29 Furthermore, a recent report on the SAP by the Committee on Foreign Affairs and Human Rights of the European Parliament recommends that, in order to proceed further and possibly also in order to receive financial assistance, the countries concerned will have to comply with four basic political conditions. The second of these conditions is the non-conclusion of bilateral agreements with the USA contrary to the purpose and aims of the statute of the ICC.
30 I.e., Albania, Bosnia-Herzegovina, Bulgaria, Croatia, the “former Yugoslav Republic of Macedonia”, Romania, and Yugoslavia.
31 Since then, Moldova has also associated itself to this process, although with an extended deadline.
32 Namely those between: Albania and Croatia; Albania and the “former Yugoslav Republic of Macedonia”; Bosnia and Herzegovina and Croatia; Bosnia and Herzegovina and the “former Yugoslav Republic of Macedonia”; Bosnia and Herzegovina and Yugoslavia; Bulgaria and Croatia; Bulgaria and the “former Yugoslav Republic of Macedonia”; Bulgaria and Romania (through CEFTA); Croatia and the “former Yugoslav Republic of Macedonia”; Croatia and Romania; and the “former Yugoslav Republic of Macedonia” and Yugoslavia.
33 Hungary and Slovenia are also active participants in this process and are likely to join the network of FTAs in the near future.
34 Furthermore, in July 2002 a Declaration on Common Principles and Best Practices on Attracting Investment to South Eastern Europe was issued by the countries in the region to demonstrate the need to act decisively, and in co-operation, to improve the region’s investment climate.
35 Mrs. Süssmuth.
36 Mr Tan.
37 In this regard, it should be noted the UNMIK is already part of the Working Group on Trade Liberalisation and Facilitation.
38 Still, the region’s electricity sector faces considerable challenges, including: the adoption of numerous new laws and regulations; the setting up of independent regulatory agencies; the training of staff; the introduction of new business concepts and practices; and the protection of vulnerable consumers once tariffs and national subsidies come down (Mr Bernard Snoy).
39 Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Hungary, Latvia, Lithuania, "the former Yugoslav Republic of Macedonia”, Slovak Republic, and Slovenia.
40 Albania, Andorra, Australia, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, "the former Yugoslav Republic of Macedonia”, Malta, Moldova, The Netherlands, Norway, Poland, Portugal, the Russian Federation, San Marino, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, and Ukraine.
41 There are also the EU’s Convention of Corruption by Officials and the OECD’s Convention on Bribery of Foreign Public Officials in International Business Transactions.
42 Mr Mikko Elo.
43 Ms. Elena Mizulina.
44 Mr Erhard Busek.
45 Conferences such as the one in Tirana should provide an incentive for parliamentary co-operation also within the region itself. They should be held to promote a feeling of regional ownership underpinned by a parliamentary support structure closely interlinked with, and forming part of, the Stability Pact Parliamentary Troika.
46 Reports include: Population Displacement in South-eastern Europe: Trends, Problems, Solutions, 15 July 2002 (Doc.9519); Situation of Refugees and Internally Displaced Persons in the Federal Republic of Yugoslavia, 4 June 2002 (Doc. 9479); Europe’s Fight against Economic and Trans-national Organised Crime: Progress or Retreat?, 6 April 2001 (Doc. 9018) Implementation of the Economic Aspects of the Stability Pact for South-eastern Europe, 13 December 2000 (Doc. 8905); Parliamentary Contribution to the Implementation of the Stability Pact for South-eastern Europe, 16 March 2000 (Doc. 8665 revised); Role of Parliaments in Fighting Corruption, 18 February 2000 (Doc. 8652); Economic Reconstruction and Renewal in South-eastern Europe following the Kosovo Conflict, 7 September 1999 (Doc. 8503 + addendum); Democracy and Economic Development, 8 July 1999 (Doc. 8458); Need for Intensified Economic Co-operation among the Countries of South-eastern Europe, 24 March 1999 (Doc. 8358); and Threat to Europe from Economic Crime, 22 December 1997 (Doc. 7971).