The Stability Pact is the first serious attempt by the international community to replace the previous, reactive crisis intervention policy in South Eastern Europe with a comprehensive, long-term conflict prevention strategy.

On 10 June 1999, at the EU's initiative, the Stability Pact for South Eastern Europe was adopted in Cologne. In the founding document, more than 40 partner countries and organisations undertook to strengthen 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". Euro-Atlantic integration was promised to all the countries in the region. At a summit meeting in Sarajevo on 30 July 1999, the Pact was reaffirmed.

The idea for the Stability Pact arose in late 1998 and thus predates the Kosovo war. The NATO intervention acted as a catalyst in strengthening international political will for co-ordinated and preventive action in the region.

The Stability Pact is based on experiences and lessons from worldwide international crisis management. Conflict prevention and peace building can be successful only if they start in parallel in three key sectors: the creation of a secure environment, the promotion of sustainable democratic systems, and the promotion of economic and social well being. Progress in all three sectors is necessary for sustainable peace and democracy.

Special Co-ordinator, Regional Tables and Working Tables

The Stability Pact is a political declaration of commitment and a framework agreement on international co-operation to develop a shared strategy among all partners for stability and growth in South Eastern Europe. The Stability Pact is not a new international organisation nor does it have any independent financial resources or implementing structures.

Organisationally, the Stability Pact relies on the Special Co-ordinator, Erhard Busek, and his some 30-member team. His most important task is to bring the participants' political strategies in line with one another, to co-ordinate existing and new initiatives in the region and, thereby, to help avoid unnecessary duplication of work. The offices of the Special Co-ordinator are in Brussels.

The Special Co-ordinator chairs the most important political instrument of the Stability Pact, the Regional Table. There are three Working Tables, which operate under the Regional Table:

• Working Table I: Democratisation and Human Rights;
• Working Table II: Economic Reconstruction, Co-operation and Development;
• Working Table III: Security Issues (with two Sub-Tables: Security and Defence, and Justice and Home Affairs).

The structure and working methods of the Stability Pact are modelled on the CSCE process. A special feature is that at Regional and Working Tables, representatives of South Eastern European countries are, for the first time, on an equal footing with those of international organisations and financial institutions in advising on the future of their region and in setting priorities concerning the content of all three working areas.

The European Commission and World Bank were appointed to co-ordinate the economic assistance measures for the region. They jointly chair a High-Level Steering Group in which the finance ministers of the G8 countries and the country holding the EU presidency work together with the representatives of international financial institutions and organisations and the Special Co-ordinator.

What does the European Perspective mean?

In the founding document of the Stability Pact, the EU, which has assumed a leading role in the Pact, undertakes to draw South Eastern Europe "closer to the perspective of full integration ... into its structures", including eventual full membership. The European Union and its Member States are collectively the most important donors in the region.

Moving toward European structures includes the possibility of full membership of the EU. Countries wishing to be admitted must, however, first meet the conditions defined by the EU Council in 1993 concerning democratic, economic and institutional reforms (Copenhagen criteria).

As a contribution to the Stability Pact and an interim step towards membership, the European Union set up a new generation of Stabilisation and Association Agreements. These are aimed at the five South Eastern European countries which so far had no contractual relationship with the EU, i.e. Albania, Bosnia-Herzegovina, Croatia, FYR Macedonia and Serbia & Montenegro. The EU signed the first SAA agreement with FYR Macedonia in April 2001. A similar agreement with Croatia was signed in October 2001; negotiations with Albania started in late 2002.

The intention is to increase economic, political and social co-operation between the EU and the countries through a tailored instrument, the aid regulation CARDS (Community Assistance for Reconstruction, Democratisation and Stabilisation). An amount of EUR 4.65 billion is allocated over the period 2002-2006 to accompany and support the reforms of the countries concerned.

At the EU Summit meeting in Helsinki in December 1999, Bulgaria and Romania, which already have association agreements (Europe Agreements) with the EU, were admitted to full negotiations on membership with the EU. The EU-Western Balkans Summit in Thessaloniki, June 2003, reaffirmed a clear EU-membership perspective for the Western Balkans.

The Stability Pact is complementary to the SAP and the accession process, and provides a bridge between the Western Balkans, the candidate countries in SEE, and the Republic of Moldova.

Working Table I: DEMOCRACY

Local Democracy and Cross-Border Cooperation

The aim is to promote efficient local governance and to enhance co-operation among local actors (governmental, civic, and private sector) across national borders to foster regional co-operation in SEE. This will result in greater economic convergence, social cohesion and reconciliation. Furthermore, it is necessary to build capacity in order to enhance efficient local governance; strengthen national dialogue among government, local authorities and civil society; simultaneously promote regional cross-border cooperation networks through community-oriented projects, in cooperation with local and international partners.

Parliamentary Co-operation

In order to strengthen the democratisation process and increase the efficiency and transparency of governing structures as well as ongoing reform processes in SEE, capacity building is required for legislative bodies throughout the region.  Supporting parliaments in the region and establishing functional networks between SEE parliaments thus is a priority for the Stability Pact. Towards this end the Stability Pact aims to enhance the exchange of information on parliamentary cooperation activities between international and regional partner organisations, facilitate links between committees of different parliaments dealing with similar issues, institutionalise training programmes for newly elected MPs and parliamentary staff, as well as promoting twinning between parliaments from the region and outside.

Working Table II: ECONOMY

Energy and other Regional Infrastructure

Ensure that both the countries of the region and the international community take a regional strategic approach to infrastructure development based on co-financing and institutionalised partnerships including transport, energy and telecommunications, with a view to prioritising capital investment in order to benefit from economies of scale.

Trade, Investment and Employment

To foster a business climate conducive to investment, trade and employment, through the implementation of the free trade agreements (FTA) and the use of monitoring processes such as the critical time bound targets of the Investment Compact, thereby fostering capital and know-how transfer and thus the basis for sustainable economic development in South Eastern Europe

Working Table III: SECURITY

Fighting organised crime

Organised crime and corruption undermine the political, economic and social development prospects of the countries of SEE. Fighting organised crime is thus essential for the development of the region and requires sound judicial systems and efficient law enforcement institutions. Effective action against transnational crime requires cooperation between SEE governments and with the EU and other international partners, aiming at a comprehensive approach in combating organised crime, by facilitating regional cooperation between networks of public prosecutors, legislators, the judiciary and low enforcement officials. SP initiatives such as SPOC, SPAI and the Police Forum are offering fora for capacity building, policy advocacy and revision of legislation, supporting action at the national and regional level, in partnership with the SEECP, the European Commission and with operational support of the SECI Transborder Crime Fighting Centre in Bucharest.

Managing and stabilising population movements

Migration being one of the key challenges SEE is facing (regarding refugee return, brain drain, limited freedom of movement within the region as well as with the EU), development of regional strategies to handle population movements in a more comprehensive manner is crucial in the areas of asylum, legal and illegal migration as well as border management. By establishing the MARRI Regional Forum in April 2004, the Migration, Asylum, Refugee Return Initiative has effectively moved towards regional ownership, while the Stability Pact will remain involved. Under the Ohrid Border Process the five SAP countries are moving towards integrated border management in accordance with European standards. Travel restrictions within the region are a major impediment to economic development and normalization of relations in SEE.Democratisation and Human Rights.

June 2005

Against this backdrop, initiatives undertaken by Working Table II include:

• Formation of an Infrastructure Steering Group (ISG), comprising the European Commission, the International Finance Institutions and the Stability Pact, fostering development of sectoral strategies (transport, energy, water supply and environmental protection) for the development of regional infrastructure in SEE. By end of 2003, the ISG for SEE has secured financing for 53 projects, with a total value of EUR 4,01 billion.
• The Investment Compact, adopted in Feb-ruary 2000, has now entered the imple-mentation phase including identification and monitoring of priority reforms, high-level political support and private sector in-volvement, all designed to improve the climate for investment.
• The Initiative for Social Cohesion attempts to ensure the sustainability of the re-form process by underpinning economic re-form with improvement in the social sector and to improve the social systems through-out SEE countries. Implementation has started with projects in the following areas: health, social protection, employment & la-bour market policy, social dialogue, as well as housing policy.
• The Business Advisory Council comprises senior executives from companies in the European Union, the USA, Canada, Japan, Turkey and Southeast European countries, advising the SP on how to improve the business climate. In December 2002, this body merged with its partner organisation of SECI to become the SEE Business Ad-visory Council.
• The Regional Environmental Programme for SEE (ReRep) established under the SP and led by the EC is implementing a comprehensive regional environmental programme. More recently, the Stability Pact facilitated the elaboration of an Action Plan of the sustainable development of the Sava River Basin.
• The E-South East Europe Initiative focuses on improving the legal and institutional framework in order to build information societies in the countries of SEE and to seize opportunities offered by new technologies.

Strengthening of Internal and External Security

Through its two Sub-Tables, Working Table III deals with questions of both internal and external security. The aim is to establish a stable security environment in the region and to promote regional co-operation in fighting organised crime and corruption and on migration issues.

The Sub-Table on Security and Defence deals, primarily, with developing regional co-operation on defence conversion issues, with emphasis on the following areas:

• The often-painful process of right-sizing regional military sectors by assisting, in partnership with NATO, in the development of programs to retrain demobilised personnel and seek productive civilian purposes for former military bases and facilities.
• The Ohrid Process, in co-operation with NATO, OSCE and the EU Commission, aims at establishing secure and well-managed borders in the Western Balkans.
• Small arms and light weapons (SALW) are a threat to regional security and stability. A Regional Implementation Plan and a Regional Clearinghouse in Belgrade, operated by UNDP, help to stem the illicit flow and the destruction of such weaponry.
• Arms control issues and confidence building measures are promoted through the Stability Pact initiated RACVIAC Centre in Zagreb, with 20 countries participating.
• The Regional Mine Action Group (the Reay Group) is a forum for co-ordinating regional participation in the Ottawa process.

The Sub-Table of Justice and Home Affairs deals primarily with the following:

• Intensified efforts by the countries of the region to implement the UN ‘Palermo’ convention on fighting organised crime and corruption, a.o. within the framework of the Anti Corruption Initiative (SPAI), the Stability Pact Fight against Organised Crime initiative (SPOC) and the Task Force against Trafficking in Human Beings.
• Police training and regional co-operation of police and border police forces has been supported by training courses, covering drugs, illicit weapons, police management and crime investigation.
• Disaster Preparedness and Prevention Initiative (DPPI) is a framework for regional co-operation in the field of identifying risks, improving preparedness and prevention capabilities against natural and man-made disaster

Drawing Lessons from Post-war Reconstruction Efforts

In the implementation of the Stability Pact, important lessons are being drawn from post World War Two reconstruction programs, as well as the Helsinki process (CSCE/OSCE). The Stability Pact works as a two-way street. In order to receive support from the international community, the recipient countries must implement appropriate reforms. South Eastern European governments have undertaken to carry out economic reforms (dismantling of trade and investment barriers) and to fight corruption and organised crime within the context of the Stability Pact. In exchange, donors support the reconstruction process in a co-ordinated way through assistance and credits.
It is not the amount of the money that is decisive for the success of aid. Rather, it depends on the activities to which the funds are directed. In other words, as far as support is concerned, it is not so much a matter of "how much" but "what for".

This has been a guiding principle for the Stability Pact since the outset. Financial pledges have been always linked to concise strategies and projects.

Overall Assistance to the Region - Two Regional Conferences

The first Regional Funding Conference took place on 29 and 30 March 2000 in Brussels. The Special Co-ordinator presented a "Quick Start Package" (QSP) to the donor community. The Package consisted of 244 projects, from all three Working Tables, with a value of EUR 1.8 billion. Most of the projects were proposed by the South Eastern European countries and in most cases involved more than one country. The implementation of the projects was to start within 12 months.
At the financing conference, the donor commu-nity provided EUR 2.4 billion to finance the QSP. The sum pledged exceeded all expectations. One year later, the implementation of QSP was fast underway (82% started); beginning of 2002, 97% of the projects had started. The process has proved to be a very important instrument to generate momentum for the Stability Pact and to mo-bilise additional funds for the region.

The second Regional Conference was held on 25-26 October 2001 in Bucharest. Key infrastructure sectors – transport, energy and water – and a new set of 27-infrastructure projects received donor financing of EUR 2.4 billion. More than EUR 500 million were pledged for refugee matters.

All in all, donor funding for the region has been substantial since the creation of the Stability Pact. The overall bilateral and multilateral assistance to South Eastern Europe (macro financial assistance and budget support, reconstruction and economic development aid, humanitarian assistance) amounted to approximately EUR 6 billion in 1999. It exceeded EUR 6.6 billion both in 2000 and in 2001.

February 2004