3. Speech on Stability Pact in Thessaloniki "A Challenge for the 21th Century", Friday, 25th of March

I. Introduction
Not only has the Kosovo war, as the fourth war in former Yugoslavia in only eight years, provoked a rethink within the Union about the region, the Balkan crisis has also speeded up the Union's process of enlargement to include Central and Eastern Europe by boosting efforts to establish security-policy stability, and - with the Cologne and Helsinki European Council decisions on creating military and civilian capabilities for independent European Union crisis management - has helped to bring about a decisive new development in European security and defence policy.

Whereas since the fall of the Iron Curtain in the upheaval of 1989-1990, the states of Central and Eastern Europe were transformed into peaceful democracies with free-market economies and sought integration into Euro-Atlantic structures, in the Balkans it was the forces of extreme nationalism and ethnic delusion that prevailed. Civic and social breakdown, war and destruction, ethnic cleansing and mass deportations were the result.

 
 

Whereas the Union was, moreover, able to use the enlargement process to deliver a historic contribution to European reunification in Central and Eastern Europe, it could only look on helplessly at the violent process of disintegration in the Balkans, powerless to take any action that might have stopped the conflict. Not only was there a complete absence of any common political will to act, neither was there any underlying policy or structure of appropriate mechanisms that might have enabled the Union to contribute to effective international crisis management.

Only with the Kosovo conflict was there a change in direction. For the first time the realisation dawned that the region's problems could not be addressed in isolation from each other or separately from those of the rest of Europe. Practical implementation of this new insight came with the Cologne decision of 10 June 1999 on establishing a Stability Pact for South-East Europe involving not only the Member States of the EU as initiator but also the USA, Russia, the international institutions and, of course, the countries of the region concerned.

 
 

From then on the region's potential for violence and instability would be met with effective preventive strategies, and as many of the countries of South-East Europe as possible – including even the Federal Republic of Yugoslavia if the necessary conditions were complied with – would be brought within the ambit of an integrationist Europe and become firmly anchored within it.

Europe holds out the only prospect that can offer the peoples of the region a genuine chance of reconciliation and lasting peace.

The European Union now faces geopolitical challenges that call for the development of a new policy and new mechanisms for managing relations with another group of countries.

 
 

In May 1999 the Commission took its 1996 regional strategy a stage further by submitting its proposals for a Stabilisation and Association process, which it considers as an important EU contribution to the Stability Pact and which is set to become an integral part of the forthcoming EU common strategy on South-East Europe.

This new-style approach, holding out the prospect of contractual relations, will apply to the five countries of Bosnia-Herzegovina, Croatia, the Federal Republic of Yugoslavia, the former Yugoslav Republic of Macedonia and Albania. A first negotiating mandate was submitted for the former Yugoslav Republic of Macedonia in September 1999.

 
 

To provide financial support for those countries, the Commission on 8 December 1999 adopted guidelines for an association and reconstruction project for the western Balkans, which are to supersede the existing Phare and Obnova regulations for those groups of countries and establish a uniform legal basis.

With the CARA Programme the Commission is seeking both to bring the countries of the region closer to the EU and to strengthen those countries' relations with each other.

 
 

My concern is to analyse in what extend EU policy on South-East Europe is suited to the assumption of leadership responsibility within the Stability Pact.

For only the EU, with its democratic and political potential, its economic power and its aid programmes, is actually capable of influencing the formation of structures in the region. If the EU and its Member States do not assume this responsibility, there will be no pacification, no democratisation, no economic development in the Balkans since there is no actor other than the EU that can meet the 'South-East Europe' challenge, which will also be in its own interests, of course.

 
 

II. The Stability Pact – Regional development as crisis-prevention
With the Stability Pact for South-East Europe created on 10 June 1999 in Cologne, the attempt is being made for the first time not only to react country by country in detecting symptoms and anticipating crisis, but also to seize the initiative by acting to forestall the potential for crisis that is a feature of the region as a whole.

The Stability Pact is to be understood as the mechanism of a developing 'culture of prevention' that will draw on the successful principles of European integration and the Helsinki process under which Western Europe has been united and the division of the continent overcome.

The Kosovo crisis has once again made it plain that the region is a part of Europe. Ethnic conflicts, the exodus of refugees and unstable national economies all massively influence the stability of Europe as a whole.

All stabilisation efforts are concentrated on the five countries of the western Balkans (Croatia, Bosnia-Herzegovina, Albania, the Federal Republic of Yugoslavia with the international protectorate of Kosovo and the crisis-threatened semi-autonomous Republic of Montenegro) with their combined population of some 25 million.

The special feature of the Stability Pact however is that this core group of particularly unstable and economically underdeveloped countries will be locked into the wider regional framework that includes neighbouring Bulgaria and Romania, Hungary and Slovenia, as well as Greece and Turkey, and that all of them together, in common with the countries of the EU, the USA, Russia, international financial institutions and international organisations like NATO, the UN, the OSCE, etc, will all sit down together at the same (regional) table.

In its structures and mechanisms the Stability Pact is equivalent to the Helsinki Final Act, being based on the fundamental insight that security, democracy and the rule of law on the one hand and economic development on the other are two sides of the same coin neither of which can exist without the other.

 
 

The three main areas of activity covered by the pact are:

Democracy and human rights, where efforts to reconstitute civil society will play a key part;

Economic reconstruction, development and cooperation on the principle that 'crisis prevention is cost prevention';

Security, including justice and home affairs

South-East Europe needs a comprehensive approach to security against threats from within and without;

 

The basic thinking underlying the Stability Pact is to promote islands of stability in the hope that these will impact favourably on the surrounding territory and so boost development of the region as a whole.

All three areas of activity were launched in autumn 1999 and a start was made on drawing up action plans and identifying projects with a regional impact. A financing conference at the end of March 2000 will establish a basis for their implementation.

The Stability Pact as such does not have any money of its own; nor does it have the organisational potential to design and implement aid or development programmes. The Stability Pact is no more than a policy and conceptual framework that depends on individual countries and international organisations or financial institutions for project proposals and their financing.

The Pact is an animator and coordinator, but not a real actor. Yet this is what is needed, and only the Commission, with its financial resources and its management potential, can take on this role. It is therefore extremely important that the Commission should assume this responsibility and play a constructive part in the Pact.

A real breakthrough will succeed only if the EU becomes involved in the Pact with all the resources it has.

 
 

III. The EU as impetus-provider and pivotal player
Until the Kosovo war, the EU had reacted – there being no question of its having 'acted' - wholly inadequately in response to the crises developing in the western Balkans since 1991.

Political and diplomatic crisis management failed to function, military crisis management was non-existent, with the result that potential diplomatic solutions could not be backed by any credible threat of military force. At a later stage, inappropriate mechanisms from the Phare programme were used for reconstruction in Bosnia-Herzegovina, mechanisms that had been designed for countries with functioning governments undergoing a transformation and reform process, but that, with their centralised procedures having to be channelled through the Brussels bureaucracy, were quite inappropriate for reconstruction in a post-war situation.

And it was only gradually, in response to criticism from the European Parliament and the Court of Auditors, that the Obnova reconstruction programme was decentralised under simplified procedures that made effective on-the-spot aid for reconstruction possible. Only with the Reconstruction Agency for Kosovo did the EU finally get round to establishing a local mechanism in the region – one that has since succeeded in delivering an effective and visible contribution to reconstruction on the basis of far-reaching independence and in cooperation with other organisations, in particular UNMIG and KFOR.

Between 1991 and 1999 the EU provided a total of over 7.5bn euro in assistance to the region. With Member State contributions added in, EU assistance, including 7.3bn euro for Romania and 3.28bn for Bulgaria amounts in total to some 19.3bn euro.

For the period 2000-2006 some 5.5bn euro are envisaged for the five countries, together with 6.2bn for Romania and Bulgaria.

 
 

1.) Regional cooperation and integration into European structures – the Stabilisation and Association Agreements
The EU sees its offer to the five countries of entering into new forms of contractual relations with it – in the form of the Stabilisation and Association Agreements (SAAs) – as its main contribution to the long-term success of the Stability Pact, thereby also holding out to them the prospect of long-term integration into the EU on the basis of the Amsterdam Treaty and in compliance with the Copenhagen criteria.

This is, firstly, an important political signal to the countries of the crisis region and a decisive impetus to the participating states. Equally important, moreover, is the principle underlying the SAAs of strengthening regional cooperation in South-East Europe, not as an alternative to or precondition of European integration, but as a way of helping to bring it about.

The objectives of the stabilisation and association process are:

- further development of existing economic and trade relations to and within the region;

(The EU is the main trading partner for all countries in the region, its share running from 55% with Croatia to 90% with Albania; at least 80% of all exports from those countries to the EU are processed free of customs duty. Intra-regional trade is at present running at only some 25 to 30% (including that with neighbouring applicant countries); with Albania it accounts for only 5%;)

- further development and partial restructuring of existing economic and financial assistance;

- strengthened support for democratisation, civil society, education and the expansion of institutions;

- cooperation in the areas of justice and home affairs;

- development of political dialogue, including that at regional level.

Right and important as the offer of these new contractual relationships is, it is only realistic to point out that it has proved possible hitherto to open negotiations only with FYROM, and that any subsequent agreement, including the ratification process, will not enter into force until the year 2004.

 
 

2.) The need for a regional stabilisation programme
The Stability Pact reflects the widespread recognition that regional problems require regional solutions. It must strive to be a comprehensive framework for political, legal and economic reform in the region. It must be emphasised once again, however, that the Stability Pact as such lacks both independent financing and the mechanisms for drawing up and implementing projects.

 

The CARA programme

With the Association and Reconstruction Programme for South-East Europe, for which the Commission intends to submit the necessary proposal for a regulation early in 2000, the attempt is being made to launch a comprehensive aid programme for the five western Balkan countries so as to establish the stabilisation and association process on a firm footing. The financial allocation for the period 2000-2006 will run to some 5.5bn euro.

Special emphasis is being placed on regional cooperation, both within the group of five recipient countries and with neighbouring countries that are Phare Programme beneficiaries, including Bulgaria, Romania, Hungary and Slovenia.

 
 

In drawing up the regulation, careful attention will have to be paid to ensuring that CARA and Phare are mutually compatible and that joint multi-country projects under the Stability Pact are not jeopardised.

The creation of a uniform legal basis that will pool the assistance received under Phare and Obnova is in principle to be welcomed. This answers to a requirement set by the European Parliament, one that it put forward repeatedly in the course of the Obnova review process.

The administrative mechanisms in particular must be made more flexible and less centralised than those of Phare, so as to ensure rapid and effective programme implementation. In that connection it would be advisable for the area of the Europe Reconstruction Agency's authority to be extended to cover the entire CARA regulation target region in addition to Kosovo, and for it to be made responsible both for programme implementation and for coordination with projects by other international donors.

In accordance with the guidelines submitted, multiple-country and cross-border programmes should be used to establish closer links between the countries of the region.

 
 

Countries, like the former Yugoslav Republic of Macedonia, will even, so need to be reassured that CARA does not represent an uncoupling from the enlargement-process countries, and that national reform efforts to comply with the accession criteria will be rewarded and not be delayed by the slower rates of development in neighbouring countries. It is entirely reasonable and understandable for the former Yugoslav Republic of Macedonia to prefer to concentrate on extending its economic ties with Bulgaria, Romania or Greece rather than with Albania or the Federal Republic of Yugoslavia.

Care must therefore be taken to ensure that the CARA programme:

- is fully integrated with the Stability Pact cooperation framework;

- is fully compatible with the Phare programme, and that existing cross-border projects between CARA and Phare countries will be continued and indeed assisted; conversely, Phare countries must be able to take part in CARA projects;

- attributes special importance to national programmes in support of a national strategy of approximation to EU structures, and is administered on a decentralised basis by the Commission representations in the countries concerned;

- allows regional cooperation in the horizontal regions to be managed locally by the Reconstruction Agency.

 
 

Concluding remarks
The obstacles to a process of stabilisation in the western Balkans continue to be Kosovo and Serbia. It is here, then, that the EU's political strategy for the Balkans must begin.

In Kosovo the EU's Reconstruction Agency will cooperate with UNMIK and KFOR in continuing the good work done by the Task Force in the past. In Serbia's case the aim is to strengthen the opposition and to weaken the Milosevic regime. Strict application of the conditions attached to EU aid, except in the humanitarian sphere, remains important. The political change taking place in Croatia has shown how appropriate the principle of conditionality is.

It must be considered whether the selective lifting of the sanctions against Serbia, as in the case of the 'democracy for energy' project with various cities in Serbia or the meetings with opposition mayors as part of the first Stability Pact table, is the only way of bringing about political change.

Pacification of the region will, nonetheless, only succeed if it is approached as a whole and Balkan reconstruction is conceived as a conflict-prevention strategy under which restoring the rule of law and strengthening the democratisation process are placed centre stage. That in turn presupposes a certain degree of internal security, in maintaining which the SFOR and KFOR presence in Bosnia-Herzegovina and Kosovo must continue to be deployed and in the medium term enlarged to incorporate a standing European policing force capable of discharging civilian security duties in cooperation with local police forces in, for example, Albania.

 
 

Democratisation in the Balkans will require the strengthening of civil society so as to counteract the generalised tendency towards authoritarianism, extreme nationalism and criminalisation.

That will require assistance with the education and training system, the development of independent media, strengthening of local government administrations (e.g. by way of city partnerships), regional forms of cooperation for businesses and trade unions, support for NGOs and religious institutions upholding tolerance and opposed to extreme forms of nationalism.

The European Parliament could itself assume a leading part in strengthening the parliamentary dimension in the region.

It is already making a significant contribution through its bilateral relations with the region's parliaments.

The European Parliament could take the initiative of extending these bilateral relations to include annual multilateral meetings under the Stability Pact, at which items of interest to more than one country could be discussed.

Security, democratisation and economic development must be considered in parallel and simultaneously.The input and coordinating function of the main areas of activity covered by the Stability Pact will be of crucial importance here.

The EU must therefore assume a key part and contribute actively to shaping the pact's structures. The Balkans will be decisive in determining whether the EU is in a position to deploy the mechanisms available under its three pillars in a coordinated and efficient manner.

The offer to these countries means integration into Euro-Atlantic structures and support for regional cooperation –not as alternatives but as a reciprocally enriching enlargement.

It will be for the peoples of the Balkan countries to take up that offer and play their own part in shaping the peace and stability process.

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