THE STABILITY PACT FOR SOUTHEAST EUROPE: ONE YEAR LATER
July 26, 2000
On July 30, 1999, President Clinton met with European leaders and heads of
multilateral institutions in Sarajevo to launch the Stability Pact to build
a more secure and prosperous future for the Southeast corner of Europe.
The Stability Pact, initiated by the European Union with strong U.S.
support and placed under the auspices of the OSCE, is based on a solid
partnership between the international community and countries of Southeast
Europe. It seeks to stabilize and revitalize the region by increasing the
pace of political and economic reform and expanding cooperation among the
countries of the region.
The United States is working with the international community to mobilize
political and financial support toward these goals, to strengthen regional
cooperation and to accelerate the region?s integration into Euro-Atlantic
institutions. This work in support of the Stability Pact?s objectives
complements efforts by the United States and others to foster peace and
security in Kosovo and Bosnia-Herzegovina.
MAJOR ACHIEVEMENTS SINCE THE SARAJEVO SUMMIT
Mobilizing International Support
? At the March 2000 Regional Funding Conference for Southeast Europe,
the international community committed approximately $6 billion in
development assistance to the countries of Southeast Europe for 2000. Over
85 percent of this assistance is being provided by European countries and
institutions, and international financial institutions.
? Of this $6 billion, the international community pledged more than $2.3
billion for over 200 ?Quick Start? projects -- covering everything from
economic development to security and democratization. Much of this package
is focused on energy, water and transport infrastructure improvements that
will have an immediate impact on people?s lives, with the longer-term goal
of improving links to the rest of Europe. More than 50 of the Quick Start
projects are already under way -- including improvements to the main border
crossing between Macedonia and Kosovo, major road work in Albania, improved
cross-border communication between parliaments and non-governmental
organizations, an expert review of history teaching to identify and
eliminate ethnic and religious stereotypes, training programs for local
police, and a wide range of demining activities.
? The Stability Pact has also established a Donors? Network for
Southeast Europe to exchange information on assistance to the region and
improve coordination of proposed projects.
Advancing Reform in Southeast Europe
? Improving the Investment Climate: Recognizing that trade and
investment are essential to long-term economic growth, the countries of
Southeast Europe have formed an Investment Compact to identify changes to
their legal and regulatory environments that will attract investment. They
have agreed to launch initiatives to create common approaches to investment
policy in six areas:
-- standardizing and improving data collection on foreign
direct investment;
-- improving adherence to international accounting
standards;
-- additional training in OECD policy norms;
-- supporting small/medium enterprises;
-- promoting regional investment; and
-- developing a regional model tax treaty.
Privatization continues across the region in banking and other sectors.
The Stability Pact?s Business Advisory Council, which includes leading
Southeast European and foreign firms, is visiting all of the countries
of Southeast Europe to offer advice on regulatory and other issues
related to investment decisions. Under new private sector initiatives,
the European Bank for Reconstruction and Development (EBRD) expects that
new private investment in the region will reach 2 billion Euros
(approximately $1.87 billion) in the next two years. The project
pipelines of the EBRD and the International Finance Corporation, two
leading institutions for mobilizing private investment, grew 22 percent
in 1999.
? Reducing Regional Trade Barriers: Macedonia has led an initiative to
reduce trade barriers within the region. As a first step, the countries in
the region are collecting data on existing trade regimes and identifying
priority areas.
? Strengthening Civil Society: The countries of the region have agreed
to a Media Charter committing them to implement principles vital to an
independent media, such as the free flow of information, the ability of
media organizations to control their own means of production and
distribution, and the independence of broadcasting regulatory bodies. In
Kosovo and in Bosnia, new regulations governing the operations of
non-governmental organizations (NGOs) have been passed. In Kosovo, the
number of NGOs has since increased from 10 to 400.
? Reducing the Threat of Small Arms: All regional countries pledged to
destroy illicit and surplus small arms and light weapons and ensure safe
storage of legitimate stockpiles. The United States and Norway have formed
assessment teams to identify what each country needs to fulfill these
commitments. A team has already visited Albania and others will soon visit
Bulgaria and Macedonia.
? Combating Corruption: Under an Anti-Corruption Initiative, the
countries of Southeast Europe have committed to make domestic government
procurements more transparent, take specific measures to promote public
service integrity and establish a review body to monitor integrity in the
administration of foreign aid programs and national anti-corruption
efforts.
? Fighting Cross-Border Crime: Under the Southeast European Cooperative
Initiative, countries in the region are cooperating to combat cross-border
crime. This fall, a Center will be operational in Bucharest to serve as a
central regional clearinghouse on cross-border crime issues. The countries
in the region are also establishing joint task forces on three critical
issues: trafficking in human beings, customs fraud and smuggling, and
narcotics trafficking. The work of the human trafficking task force has
already contributed to the rescue of several trafficking victims in the
region.
Strengthening Regional Cooperation
? In the past year, the countries of Southeast Europe have signed
several bilateral agreements, including a border treaty between
Croatia and Bosnia-Herzegovina; a cooperation agreement between Romania and
Moldova; trade agreements between several countries including
Bulgaria, Macedonia, Albania and Croatia; and an agreement resolving
the long-standing debate between Romania and Bulgaria over the location of
a new bridge over the Danube.
? Under the ?Szeged Process,? Hungary has worked to bring local
municipalities from other Southeast European countries and donor
countries (including four U.S. cities) together with Serbian municipalities
led by the democratic opposition. These partnerships support
the opposition-led Serb municipalities in providing effective
services to their constituents by working with them on the details of local
government from budgets to contracting. The ?Szeged process? is also
working to strengthen independent Serb media.
Integrating the Region into Europe and International Institutions:
International leaders are delivering on their commitment from Sarajevo to
help the countries of Southeast Europe integrate more deeply into
Euro-Atlantic structures.
? The European Union has opened accession negotiations with Romania and
Bulgaria. It has also established a process of Stabilization and
Association Agreements for countries not yet involved in accession
negotiations, and has begun discussions with Macedonia and Croatia on
these agreements.
? The World Trade Organization (WTO) has approved the accession of
Albania and Croatia as new members. The WTO has also established
working parties to consider membership applications by Macedonia and
Bosnia-Herzegovina.
? Croatia has joined NATO?s Euro-Atlantic Partnership Council and
Partnership for Peace programs.
U.S. SUPPORT FOR THE STABILITY PACT
The U.S. has moved quickly on President Clinton?s commitment last July to
support economic development and reform throughout Southeast Europe with
several concrete initiatives.
Increasing Investment in the Region
? The Overseas Private Investment Corporation (OPIC) today launched a
$150 million equity investment fund that will be managed by Soros
Private Funds Management. It will invest in companies in the region in a
range of sectors, including telecommunications, light manufacturing,
distribution and consumer goods.
? The United States and the European Bank for Reconstruction and
Development (EBRD) have created a $150 million fund to provide
technical assistance and lending in cooperation with local financial
institutions to promote micro, small and medium enterprise
development in Southeast Europe. The United States will work with the
EBRD to expand the operation of this fund and other activities to
Montenegro.
? In March 2000, OPIC and the Government of Montenegro signed an
Investment Incentive Agreement authorizing the operation of
OPIC programs in Montenegro.
? The United States has identified more than $220 million in existing
equity funds supported by the EBRD and International Finance
Corporation available for investment in sectors ranging from
small-enterprise and tourism to communications. The United States has
worked with the multilateral banks and Stability Pact?s Investment
Compact to raise awareness of these resources.
Promoting U.S. Business Involvement
? Then Secretary of Commerce William Daley, the President of the
Overseas Private Investment Corporation (OPIC) George Mu?oz,
Trade and Development Agency (TDA) Director J. Joseph Grandmaison and a
senior representative of the Export-Import (EXIM) Bank led a
commercial mission to Sofia, Bulgaria in October 1999. Over 250
matchmaking meetings between 76 American and 62 regional firms were held.
? The United States expanded its commercial presence in the region by
opening a joint OPIC/EXIM/TDA office in Croatia and a new commercial
post in Thessaloniki, Greece.
? OPIC and EXIM provided new financing for U.S. investments in the
region. EXIM, for example, provided a $77 million guarantee for
Westinghouse?s participation in the overhaul and modernization of the
Kozloduy nuclear power plant in Bulgaria. Overall, EXIM has provided
approximately $500 million in loans and guarantees in support of
U.S. exports to Southeast Europe in the past year. OPIC has already
surpassed the $200 million target set last year for credit and
insurance projects ranging from power generation to agri-business
investments.
Encouraging Participation of Local Firms in Reconstruction Work
? The United States spearheaded the creation of the Southeast European
Business Network to provide procuring offices an easily accessible
database of local firms providing products and services. In the last year,
the number of firms listed on the Network has doubled to over 4,500.
? The United States has worked with the World Bank to complete a
schedule of procurement assessments for all the countries of the
region by 2001. The EBRD is currently considering the creation of a new
facility that will provide working capital and information to local
contractors and suppliers. These projects will assist local firms to
compete for procurement opportunities.
Creating Conditions for Increased Trade
? Officials from the office of the U.S. Trade Representative and the
Department of Commerce have trained regional officials on World
Trade Organization (WTO) procedures and standards to help aspiring and new
WTO members take full advantage of their membership.
? The United States negotiated intensively with Croatia and Albania to
complete their accession to WTO.
? The U.S. Agency for International Development has financed the
establishment of a Trade Development Center in Bulgaria to promote
exports and facilitate business-to-business relations in the region.
? The Administration has transmitted to Congress the ?Southeast Europe
Trade Preference Act? which, when enacted, will extend duty-free
treatment to additional products of Southeast European countries, with
several countries eligible for over 80 percent duty-free entry.
Supporting the Stability Pact?s Quick-Start Projects
The United States has pledged funds to support more than 50 different
projects in the Stability Pact?s Quick-Start package. More then half of
the projects funded by the United States are already under way and the rest
will begin prior to the March 2001 deadline.
NEXT STEPS
The United States will continue its strong support for the Stability Pact
and broader stabilization efforts. The critical challenge for the
Stability Pact in the coming months is to advance implementation of the
commitments made by regional countries and by the international community.
While both sides of the partnership have already achieved much, progress on
all fronts should be accelerated.
Countries in the region must continue to tackle the challenges of economic
and political reform. The Stability Pact will continue to provide these
countries with important assistance, particularly through the Investment
Compact and the Anti-Corruption Initiative, to identify priority reforms
and implement the necessary changes. Donor countries and institutions will
work closely with the countries of the region to review their reform
efforts and facilitate coordination.
Donors should fulfill their funding pledges. All Stability Pact partners
must work together to ensure that the rest of the Quick Start projects
begin as soon as possible, and not later than the March 30, 2001 deadline.
The Stability Pact must also focus greater attention on the implementation
of several other initiatives, including:
? a Refugee Return Initiative that promotes returns within, to and from
Bosnia and Croatia, to which the United States has pledged $18.5
million;
? a Disaster Preparedness and Prevention Initiative that will help fill
the gap in national disaster preparedness capacities by forming a
network of regional cooperation leading to the establishment of a regional
coordination center;
? the strengthening of contacts and cooperation among regional
non-governmental organizations;
? more intensified efforts to combat human trafficking through enhanced
cooperation at the Bucharest
Anti-Crime Center; and
? further steps toward a developing a regional electricity market and
integrating it into the Western European
market.
The United States will continue the efforts it has launched to expand
business and investment opportunities in Southeast Europe. The U.S.
commercial presence on the ground provides even greater opportunities to
bring U.S and local businesses together and help the region take full
advantage of the trade and investment programs that donors have
established. The Trade and Development Agency will sponsor a transport and
energy conference this fall to promote greater U.S. investment in those
sectors. In addition, the Export-Import Bank will review its operations in
the region and explore ways to expand the range of its activities,
particularly with the private sector.
A key factor in the transformation of Southeast Europe remains progress
toward deeper integration with the rest of Europe and transatlantic
institutions. The United States applauds efforts by the European Union to
play a leading role in the Stability Pact and welcomes closer relations
between the EU and the countries of the region, which are vital to
anchoring the region more firmly in Europe. The United States is urging
the EU to strengthen these important ties and to act quickly on proposals
to further open its markets to Southeast European products. The United
States also remains strongly committed to working with allies in Southeast
Europe to help them become stronger candidates for NATO accession and to
realizing the full potential of NATO?s Southeast Europe Initiative.
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