PC.DEL/14/00/Corr.1  -  24 January 2000  -   ENGLISH  Original: GERMAN

Statement by Mr. Bodo Hombach, Special Co-ordinator of the Stability Pact for South Eastern Europe, to the OSCE Permanent Council

Vienna, 20 January 2000

Madam Chairman,

Ladies and Gentlemen,

I would like to thank the OSCE for being given the opportunity again to speak to you here in the Permanent Council. Today’s meeting is not easy for me, not least after my own words at the OSCE Summit in Istanbul when I said: "We have had enough words. We have had enough conferences, enough good resolutions and analytical speeches. We must now be judged by our actions."

The first chapter of our work, the creation of a political consensus in terms of objective and method, has been successfully completed. We must now open chapter two, in which projects become concrete reality.

We are in an interim phase. For weeks we have been working hard on the preparations for the financing conference taking place on 29/30 March. I am currently collecting commitments from ministers of finance for this purpose. Yesterday I spoke with my former cabinet colleague Hans Eichel.

Co-operation with international banks has never been so good, as they themselves confirm. Only yesterday the European Bank for Reconstruction and Development assured the recently established Business Advisory Council under the chairmanship of Manfred Nussbaumer and Jérôme Monod, both highranking representatives of the business world, that it was optimistic about the prospects for the implementation of important projects in South Eastern Europe.

Although I appreciate the impatience of some, I cannot agree with criticism that the financing conference is not taking place until March.

1. By analysing and defining projects in detail we are already engaging in activities that do not normally take place until after a donor conference. After the conference in March we can set the projects in motion without delay.

2. The success of the conference is more important than its date.

I believe that those of you assembled here are in the best possible position to understand my contention in connection with the Stability Pact that the establishment of a broad political consensus is a necessary basis and important starting point for sustainable practical action.

You will know from personal experience how casually those who mock, while having no alternatives of their own, make their point with the time-honoured slogan: "Too little and too late".

The Stability Pact is under the auspices of the OSCE. At the last meeting we asked ourselves what this really means. Amongst other things it could mean that the OSCE can protect the Stability Pact from overhasty and overzealous criticism, especially in the sensitive runup period to the financing conference.

In this situation what is required is commitment and continued support by all participants and thus the OSCE in particular. I recently made the same request to the Permanent Representatives at the Council of Europe. Like the Council of Europe, the Permanent Council has personal experience of the difficulties involved in the complex multilateral process of turning good intentions into deeds.

The success I am hoping for at the financing conference in March is in our joint interest, since it is also a question of setting the projects of the Democratisation and Security Tables in motion and thus of providing you at the OSCE and others with the means of putting your good ideas into practice.

Questions about the concrete achievements of the Stability Pact and the impatience, particularly in South Eastern Europe, are justified. It is true that the Stability Pact would be worthless if its aims could not be implemented. For this reason the financing conference at the end of March marks the moment of truth for the Pact. It will show whether the declarations on democracy, economic recovery and security in the States of South Eastern Europe made at the Stability Pact summit meeting in Sarajevo will be followed by actions.

I must thank the World Bank and the European Commission, which have already expressed their willingness to organise this financing conference at the end of the first quarter of 2000. When I started my work it was by no means evident that this would be the case. I recall the first meetings of the High Level Steering Group chaired by those institutions at which my idea of a regional approach and the regional financing conference proposed by me were not particularly well received.

I speak of a financing conference rather than a donor conference because the Stability Pact, while building on the tried and tested mechanisms of the World Bank and European Commission donor co-ordination process, is employing an innovative approach aimed at widening the material basis for support in the region.

This includes the greater involvement in our work than hitherto of a partnership between the public and private sectors. It includes the involvement in the financing conference of private foundations such as the Soros Foundation, which have indicated their willingness to provide substantial resources to support democratic development in the countries of the region. It also includes discussion on improving export credit and investment guarantee instruments in those countries with economic relations with the States in the region.

In my discussions with the World Bank and the European Commission I have also been endeavouring to make this financing conference into a genuine dialogue between partners. The Stability Pact builds on the commitment by the countries of South Eastern Europe to undertake wideranging reforms in the areas of democratisation, institution building, protection of minorities, business and internal and external security. In return the international community will undertake to provide material support for these reforms, to help in the development of a regional infrastructure and to integrate the countries of South Eastern Europe in European structures. This must also be reflected in the financing conference, whose subtitle I see as "partnership for democracy and prosperity".

This will not then be a conference in which the donor countries and institutions simply throw their money into a big pot. I see the conference as being shaped in the first instance by the contributions of States in the region, which will present the reforms that they intend to carry out in the foreseeable future. I am already confident that in return the international community and other interested donors will provide adequate financial resources for appropriate initiatives that have been developed to project level.

The link between reform and support must be clear. I hope to achieve this in two ways. In the first place, the financing conference will not only deal with economic infrastructure projects in the fields of transport, communications, water, the environment and the like. Of equal importance is support for the necessary reforms brought up and being put into practice by the Working Table for Democratisation and Human Rights and the Working Table for Security Issues. I therefore hope that a financing instrument can be created, possibly a trust fund or foundation controlled by one of the donors, that will finance reform projects, such as the implementation of the Investment Charter, or human and minority rights projects.

Second, the financing conference must produce a "Quick Start Package" that will reflect the commitment of the members of the Stability Pact to provide immediate support to the countries of South Eastern Europe by way of beacon projects.

I would like to stress once again that the financing conference is not only about project financing. It is about the credibility of the Stability Pact. If the justified hopes being pinned on the conference are dashed, it will no longer be possible to present the Stability Pact as a comprehensive approach to preventative diplomacy. I at least could no longer communicate the sense of the undertaking. I therefore appeal to all concerned – in their own interests as well – to help ensure that the financing conference is a success, not least in view of the fact that crisis prevention is also cost prevention.

For me this also means that there is no alternative to the basic principles of the Stability Pact. The Pact must succeed. We must all understand that it is not only the authority of 31 heads of State and government that is at stake but also the common foreign and security policy of the European Union and the future of millions of people in South Eastern Europe.

The European Union has taken the leading role in the Stability Pact and hence in this great challenge. At the start of its presidency, Portugal accepted this challenge without hesitation, for which I would also like to express my thanks in this meeting.

It is clear that the Stability Pact is not a sprint but a marathon, as President Ahtisaari has put it. At the same time I understand and share the impatience of many. After all, the intermediate stages are also to be assessed. But impatience and stamina are both necessary. In this context, the Stability Pact, six months into its existence, has made good progress along the way and produced its first concrete results.

I would like to recall the Szeged Process embarked upon with the active collaboration of Hungary. The first meeting with more than 30 opposition mayors from Serbia with a view to arranging partnerships with towns from Stability Pact countries has given rise to numerous national activities for which I would like to thank the countries concerned. Throughout Europe the first exchanges and help campaigns have started up.

We have also made good progress in other priority areas of the Working Table on Democratisation and Human Rights. We are on the verge of turning these initiatives into projects. Next Monday the heads of the various task forces are meeting representatives of the States of South Eastern Europe in Budapest to prepare the implementation phase. I would like to thank the OSCE, which has taken responsibility for the task forces in Working Table I. The gender working group is being also sponsored by the OSCE, and the Organisation is playing a prominent role in the task forces on the media, good governance, education (enhanced Graz process), and human rights and national minorities.

New and significant initiatives have also been proposed in the Working Table on Security Issues. After the discussions held yesterday by Jan Eliasson, chairman of the Working Table, with the Government of Bosnia-Herzegovina, there is a good prospect that the meeting of the Table in Sarajevo will be a success. With regard to internal security, I would like to mention the working group under OSCE sponsorship on the prevention of trafficking in human beings and projects in the sphere of justice and home affairs for establishing a police academy and adaptation of laws to European Union standards.

As far as external security is concerned, we are building very heavily on the work already done in particular by the OSCE and by other organisations connected with security. This applies especially to the negotiations under Articles IV and V of Annex 1 b to the Dayton Agreement. The working groups on military contacts in the region – at the OSCE – on promoting the transparency of military budgets and reducing these budgets, on small arms and on demining have all made a successful start to their work.

The Working Table on Security Issues in particular shows how the Stability Pact has managed for the first time to bring together all those involved in a specific field – small arms or demining, for example – and to enable them to pool their joint expertise. In the Working Table on Security Issues there are also plans for the first time for a joint project by NATO and the World Bank for vocational training of retired officers. This is a very good example of the co-ordination and catalyst function of the Stability Pact.

I am convinced that long-term stability in the countries of South Eastern Europe will not be possible without economic recovery. Economic development, democracy, security and peace are closely interlinked. In the Working Table on Economic Reconstruction, Development and Co-operation, we have launched a number of initiatives that will result in the creation of favourable economic conditions and reforms, and with it the promotion of infrastructure, environment and other projects.

For me reform is the key to democratic development and economic recovery in the States of South Eastern Europe. I am therefore pleased that the Investment Charter project has been completed to a large extent and can be adopted at the Working Table in February. This is not just a piece of paper with noble reform promises but an action plan with a country-specific implementation timetable and clear time horizons aimed at removing existing obstacles to investment. The flow of private capital into the economies of South Eastern Europe that is being sought will be contingent on the successful implementation of this Charter.

The interdisciplinary anticorruption initiative, which will consolidate and put into practice the efforts to date in this field, is pursuing a similar line. Here, too, there will be a clear implementation timetable. Economic aid and the willingness to invest will depend on this timetable being kept.

I have just returned from Berlin where the Business Advisory Council has been established with high-profile business people from the States of the Stability Pact. This Council will play a significant role in the implementation of these instruments and in providing advice to governments. Yesterday it undertook to meet with the political authorities in each country of the region at least once a year to discuss strategies to improve the investment climate.

The Working Table on Economic Issues also shows the value of the Stability Pact as a stimulus and co-ordination forum for fine-tuning the tasks being undertaken. For the first time, in particular, international financial institutions have involved themselves in an institutionalised co-ordination process to promote the States of South Eastern Europe. I am looking forward to the comprehensive report by the World Bank on an economic development strategy for the region, which is due at the end of January. On the basis of that report the European Bank for Reconstruction and Development in London will submit a plan to promote small and medium-sized enterprises in the States of South Eastern Europe.

The regional infrastructure projects, submitted for the most part by States in the region, are currently being scrutinised in a finetuning process involving all international financial institutions concerned, under the direction of the European Investment Bank. Of the 400 hundred or so projects initially submitted, 118 are being subject to closer scrutiny and 89 of these are from States of South Eastern Europe in the framework of the Stability Pact, most having been developed on the basis of close mutual collaboration.

The States of South Eastern Europe deserve full recognition for these achievements. Their approach symbolises the new spirit that the Stability Pact has created in the region, but also between the countries of the region and the international community. This spirit is marked by the intensive regional collaboration by the States of South Eastern Europe, their willingness to undertake reforms and, at the same time, the stated aim of all Stability Pact States and organisations to recognise this willingness through their material support.

In conclusion I would like to say a few words about current issues and collaboration between the Stability Pact and the OSCE.

Without democracy in the Federal Republic of Yugoslavia there can be no long-term stability in the region, not least because of the country’s central geostrategic and economic position. The Stability Pact is waiting with impatience for Serbia to solve its political problem. A democratic Federal Republic of Yugoslavia that recognises the principles and aims of the Pact is welcome to join it.

I would also like to warn against the false assumption that the Stability Pact cannot function without the Federal Republic of Yugoslavia. A considerable amount can be done to stabilise the region as a whole by supporting the other States in South Eastern Europe. In addition the Stability Pact can and must make a contribution to peaceful and democratic change in the Federal Republic of Yugoslavia. With this in mind the Pact is working together with the Serbian opposition on joint projects for the future.

I am concerned about the situation in Montenegro. This country has a special status as a beneficiary of the Stability Pact. The Government of Montenegro is steering a moderate pro-European course and requires support from all of us. The preparations for the financing conference, however, have shown that there are still considerable obstacles for international financial institutions in their support of Montenegro. This self-blockade must be overcome by political means. In this regard, I am in close contact with the Government of Montenegro and major Stability Pact partners. We must succeed in including Montenegro in the support package adopted at the financing conference.

I would like to speak as well in favour of special support for Croatia. The country’s voters have emphatically expressed their desire for social and economic reforms and a European perspective. I propose to visit Zagreb as soon as possible after the government has been formed to discuss with the new government its reform plans and the possibilities within the Stability Pact. We should also remember that substantial international support may be seen as a signal to the people and opposition in the Federal Republic of Yugoslavia.

I would like to thank the Austrian OSCE Chairman-in-Office and his Norwegian predecessor for the substantial support that they have given to my work so far. I shall strive to intensify this collaboration in future and therefore propose on my travels through the region to make greater use of the OSCE infrastructure and to conduct regular discussions with the heads of OSCE missions.

The close collaboration between the OSCE and Stability Pact offers great potential and great opportunities. The Stability Pact can benefit and learn from the expertise, contacts and established procedures of the OSCE. The OSCE can heighten the awareness of its work, which is not always adequately appreciated by the public, by taking responsibility for various Stability Pact initiatives.

My offer and my plea for close collaboration also apply to the Regional Strategy for South Eastern Europe undertaken by the OSCE. I would be grateful if it could be co-ordinated closely with the Stability Pact and oriented towards its objectives and procedures. As the Pact’s co-ordinator, I would like to add that the European Union, too, is interested in devising a joint strategy for the region. Discussions between the OSCE and EU and with the Stability Pact with a view to ensuring that we all act in concert would further greatly our joint undertaking.

Thank you for your attention.

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