The Bucharest-Cernavoda Road is a construction project which will improve the road link between Bucharest and Constanta, Romania's biggest port and its gateway to Danube river transportation. The project is financed by the European Investment Bank (loan of € 270 million) and has contributions by the European Commission's ISPA as well as the Romanian Government.

A free trade area with 55 million consumers as of next year, over 125'000 returned refugees in 2002 and a mechanism in place to collect small arms in illicit private possession are the major achievements of the Stability Pact this year. On a general note, Busek also informed Ministers that regional ownership within the Pact had increased, especially by the revived SEECP process which is becoming the co-ordinated voice of the region.

Here are the achievements in six priority areas:

• The creation of a free trade zone by means of 21 bilateral free trade agreements (13 signed – rest under negotiation) helps attract investments and turns the region into one market.
  
• The improved situation for refugees and internally displaced persons in Bosnia-Herzegovina, Croatia and Yugoslavia has led to record numbers of returns in 2001 and 2002. The figure of over 125'000 returns in the year 2002 so far is indicative of this success. The Pact’s return activities are conducted in close co-operation with UNHCR and the governments of the countries concerned. They will come to an end in late 2003, when refugee matters will be dealt with in the regular Stability Pact framework.
  
• The uncontrolled flow and illicit possession of small arms and light weapons in Southeast Europe can be tackled much more effectively in the future with the help of the Belgrade based Clearinghouse (opened 8 May), which is run by UNDP. Its main activity is to help develop and implement arms collection projects and related activities in all countries of SEE.
  
• The sub regional co-operation launched between SRSG Steiner in Kosovo, HR Ashdown in Bosnia-Herzegovina, EUSR Le Roy / Bruhns in FYR Macedonia is addressing practical issues such as fostering regional trade and fighting organized crime.
  
• The Regional Crime Fighting Centre in Bucharest will be reinforced by the Executive Secretariat of the Pact’s Organised Crime initiative SPOC before the end of the year.
  
• On infrastructure, a field with high public expectations, progress has been considerable and becomes more and more visible. Out of a consolidated set comprising 46 projects with a volume of € 3.46 billion, 23 have physical work started. A regional electricity market compatible with the relevant EU legislative framework is scheduled to be realized by 2005 (see story below).

The progress report was presented by Stability Pact Special Co-ordinator Erhard Busek on 21 October.
Full Report

On 20 October 2002, the Regional Arms Control Verification and Implementation Assistance Centre (racviac), in Zagreb, celebrated its second anniversary. racviac was established in 2000 by Croatia and Germany with the aim of supporting Working Table III, mainly in the field of arms control – in its widest sense - and related security matters. There are now twenty nations involved in Raviac(*), and military and civilian members from sixteen of the above nations staff this unique multinational body. racviac epitomises the expression “Regional ownership” – it is located in the region, it includes personnel from all countries in the region who fill key positions on the staff, and it exists specifically for the countries in the region.

The purpose of racviac is to provide a forum to promote regular dialogue and co-operation among the region’s states in all arms control and confidence and security building matters. racviac also continues to assist the states in the region to participate more effectively in the implementation of the arms control agreements that they have concluded and provides a multinational forum for training personnel in these activities. As a csbm in its own right, racviac enhances transparency and co-operation, and increases confidence among the states of the region. The overall direction of racviac is determined by the Multinational Advisory Group, (mag), made up of representatives from the 20 nations involved in racviac.

Raviac is located in the Vitez Damir Martic Barracks, 10 km west of Zagreb, and boasts completely modern, fully equipped offices. Its facilities include a Seminar room capable of holding up to 40 participants, including simultaneous translation capabilities, as well as two large working group rooms and high standard accommodation for 45 personnel.
In its Seminars and Training Courses, racviac deals with all confidence and security building measures and related security sector reform and security policy issues, (SALW, CoC, DCAF etc), as well as the major arms control treaties and agreements, (VD 99, Dayton Peace Accords, Aerial Observation / Open Skies, CFE). Over 1000 personnel from over 40 nations have passed through its doors, sharing their experiences and exchanging their views and ideas.

Racviac’s Seminars are generally designed for senior civil and / or military decision-makers in the Ministries of Defence and Foreign Affairs – i.e. the people who make the policy regarding information. Our Training Courses are aimed at military and/or civilian experts or personnel from verification agencies – i.e. – those who carry out the practical part of implementing the provisions of the treaties and agreements. In the future, our courses and seminars will be adapted for a different target audience (for example, legislators / parliamentarians) and repeated for different levels and parts of the region’s governments as necessary, and non-governmental participation as appropriate.

The main focus of racviac's programme for 2003 is of course on arms control and CSBMs, in their widest sense, but it is not limited just to the treaties and agreements; the programme for 2003 touches upon other arms control matters, security sector reform issues and related policy issues.

Racviac and the MAG nations are currently defining a medium term (4 year) strategic plan for racviac, a vision for the future, which will include:

• Responding to the needs of the regional states more flexibly
  
• Further developing the activities of Dialogue and Co-operation Division
  
• Expanding the target group outside of the specialist arms control community and armed forces
  
• Further enhancing cooperation and confidence building
  
• Financing racviac after 2003
  

Racviac will, in future, focus its activities to maintain and expand its relevance for arms control and confidence building towards a wider forum for comprehensive security dialogue in the region.

* (AL, AT, BA, BG, DE, DK, FR, GB, GR, HR, HU IT, MK, NL, RO, RU, SI, TR, US and YU)

At the Athens Ministerial Meeting, 15 November 2002, Energy Ministers of nine Southeast European Governments committed themselves to creating a regional electricity market and to its integration into the internal electricity market of the European Union. The Memorandum of Understanding, signed by Albania, Bosnia-Herzegovina, Bulgaria, Greece, FYR Macedonia, Romania, Turkey and Yugoslavia, laid the groundwork for the electricity sector to catch up with the standards of the European Union by 2005. Croatia has indicated it will sign in the near future. Through UNMIK, Kosovo associated itself to the process as well. Moldova indicated its determination, through a unilateral statement of intent, to abide by the provisions of the memorandum. The Initiative is led jointly by the Stability Pact and the EU Commission and will benefit from international donor support within the SP framework.

The South East Europe Electricity Regulatory Forum (SEEERF) aims to establish a competitive regional energy market in Southeast Europe. SEE countries committed themselves to opening their national markets by 2005, following the principles of the EU Electricity Directive (96/92), by

• establishing National Regulatory Authorities, wholly independent of the interests of the electricity industry by 2003;
  
• creating National Transmission System Operators no later than by June 2003;
  
• unbundling by 2003: transmission system operators will have to be fully independent in terms of legal form, organisation and decision making from any activity not related to electricity transmission.
  

The potential benefits of this initiative increased reliability in electricity supply, opening opportunities for private investment in the sector, lower operating costs and lower consumer prices, and reduced needs for additional investments, especially in the expensive generating hardware.

A South Eastern Europe Conference on Policy and Co-operation in Telecommunications was held in Belgrade 28-29 October, 2002 with over 300 participants. Ministers, heads of international and regional organizations, government officials, Non-Governmental Organizations, businesses and media reviewed the impact of policy, the regulatory framework and infrastructure on the development of the Information Society, economic growth and European integration in the South Eastern Europe.

Conference conclusions underlined that the world is facing a fundamental economic change, moving from the industrial society with its production of goods towards the information society with knowledge based economy. South Eastern European countries have an unique opportunity to quickly catch-up with the more developed nations by jumping to a higher level of development.

At the conference, Albania, Bosnia-Herzegovina, Croatia, Federal Republic of Yugoslavia, Macedonia, Moldova, Montenegro and Serbia, formally associated themselves with the eEurope and eEurope+ processes by signing an international agreement “eSEEurope Agenda for the Development of the Information Society”. Bulgaria and Romania as part of the region and also as members of the eEurope+ process are important links to develop a truly regional dimension for the initiative.

The implementation of the Agenda will be monitored and facilitated in the framework of the SP eSEE Working Group. Supporting countries and organization as UNDP, the Greek INA (Telecommunications and Research Institute), EC DG Information Society, UNECE, the US and other individual donors pledged to guide, support and to technically assist the process.

The eSEE Agenda and conference conclusions are to be endorsed by the Heads of States and Governments at the SEECP summit in March 2003 in Belgrade.

The SP Electronic South Eastern Europe Initiative of the Stability Pact received valuable support for this event by the US and by the Serbian Government through its Information Technology and Internet Agency.
http://www.eSEEuropeConference.org

Although there are positive developments, many problems remain for the media in Southeast Europe. This was noted at a recent Media Task Force meeting in Amsterdam. A lot is to be gained, particularly in the field of media legislation, television production and journalistic professionalism, it was said by the eight chairmen of the Media Working Groups. These groups function as advisory bodies under the auspices of the Stability Pact: they monitor developments, raise issues domestically, recommend priorities for assistance and suggest partners in projects.

Based on the input from the working groups, the MTF determined three priorities for the development of media freedom, diversity and professionalism: (1) the reform and implementation of media legislation, (2) an increase in quality television production and (3) the development of local institutions to raise journalistic professionalism.

Twenty targeted projects, carried out by respected local and regional organisations, are already underway. Examples include drafting of broadcast legislation in Macedonia, production of television programmes aimed at reconciliation and development of a regional journalism university.

The bottom-up approach of the MTF has proven successful and the MTF has developed into a strong and respected forum in which donors, international organisations and representatives from the media in Southeast Europe discuss necessary measures for reform. Media has recently been determined as one of the lead themes of the Stability Pact and the Special Co-ordinator has expressed strong support for the work of the MTF.

A Trade Ministerial of SEECP in Belgrade 7 October 2002 is proof that the countries are increasingly aware that, from the outside, SEE is viewed as one market. The Stability Pact brokered a free trade area in SEE among seven countries by early 2003. With 55 million consumers and the improved macroeconomic performance of the countries in the region have opened a new era. The framework to attract private investment in SEE is in much better shape than three years ago. Busek warned: “Business people do not know enough about it and therefore, we need to tell them. Political attention, especially in a crisis, is running high. Economic interest is more subtle, as investors can be shy, and therefore countries have to constantly improve their attractiveness”.

At an OECD organised Investment Conference in Brussels, Serbian Prime Minister Zoran Djindjic joined Erhard Busek in beating the drum for the new investment opportunities in SEE, and especially Serbia. Private Sector representatives told large audience about the potential in SEE, which is real despite the remaining shortcomings in the judicial system and some unnecessary red tape.

Busek said he was proud of the political achievement of endorsing a free trade regime in see. However, in order to translate this into practical realities on the ground, follow up is urgently needed. The challenge of implementing these ambitious agreements must now be taken on. In the coming months, issues such as elimination of non-tariff barriers, harmonising standards and simplifying border procedures, will be tackled as agreed to by the Governments of see at the July Economics Working Table meeting in Sofia, and again at the SEECP Trade Ministerial on October 7.

The members of the Business Advisory Councils of the Southeast European Co-operative Initiative (SECI) and the Stability Pact for South Eastern Europe (SP) will hold their first joint meeting in Skopje on 11 December 2002. At this meeting, the two BACs will officially merge and form the Business Advisory Council for South Eastern Europe, a body consisting of some 50 key business leaders from the region and Stability Pact partner countries.

The BAC for SEE will be a focal point for private sector involvement, economic co-operation and business support for all the efforts undertaken in South Eastern Europe. It will also serve as an advisory body to the Stability Pact, EU-Commission, IFI’s and governments of the donor countries on business matters in SEE, as well as advise governments and business communities in the recipient countries and to ensure an effective follow-up of the recommendations.

On 10 December, members of both BACs will participate in a round table discussion with the Macedonian Government, including Prime Minister Crvenkovski and Minister of Economy Filipovski, to discuss the pace of economic reform in the country.

The SEESAC (Stability Pact for South Eastern Europe Clearinghouse for the Control of Small Arms and Light Weapons) donor meeting on 20 November 2002 was organised in co-operation with UNDP. All participants unanimously supported the pro-active and efficient approach of the Stability Pact and UNDP towards the various problems related with non-proliferation of Small Arms and Light Weapons (SALW) in SEE. Participants agreed that SEESAC represents an excellent example of partnership among various international organizations, the donor countries, the states of the region, non-governmental organizations and civil society groups. SEESAC was seen as a unique mechanism, not only for concrete regional and sub regional projects development, but also for implementation of those projects and ensuring the necessary co-ordination. At the same time, it was pointed out, positive results could not be achieved without the clearly expressed willingness of donors and the contributions provided by them. It was also underlined that the efforts of the Stability Pact and UNDP are closely linked with bilateral programs on collection and destruction of SALW or ammunition, that have been launched by some donor countries.

SALW, in all its complexity, still represents a challenge for SEE since it is directly linked with human security, sub-regional and regional security and stability. That is why the participants welcomed a presentation of an overview of SEESAC Funding Briefs (containing 26 projects; total project funds requested: US$ 2'704'500). During the meeting, donor countries expressed their readiness to provide a concrete financial contribution, either immediately or in the near future. Donors also indicated that they will provide funding for concrete projects contained in SEESAC Funding Briefs, but wanted to consult with their capitals first.

The meeting was co-chaired by the Chairman of Working Table III of the Stability Pact Ambassador Vladimir Drobnjak, Mr. Jacob Simonsen (Deputy Director, bureau for Europe and the CIS, UNDP NY) and Mr. Georg Charpentier (Deputy Director, Bureau for Crisis Prevention and Recovery /BCPR/, UNDP Geneva). General H. J. van der Graaf, Team Leader of SEESAC spoke on the function and activities of SEESAC since its establishment on 8 May 2002. The representatives of the donor countries actively contributed to the success of the meeting.

Pension System Reforms

Pension systems are fundamental for social cohesion, poverty reduction and solidarity. As the pension systems of South Eastern Europe must be restructured, these topics were addressed at a conference 4-5 November 2002 in Ljubljana. The Ministry of Labour, Family and Social Affairs of Slovenia, the Council of Europe, the International Labour Organisation, and the French Government jointly hosted the event. The aim of the conference was to provide a forum for discussion between government officials responsible for policy formulation and administration of pension systems and social partners from the region. Representatives of the European Commission, USAID, and the World Bank also attended. The debates focused on different examples of reform carried out in the 1990s in the neighbouring countries of Central and Eastern Europe, as well as on methodology to strengthen the contributions collection mechanisms.

Dubrovnik Process on Public Health

The fifth South Eastern Europe Health Network meeting was held on 14-16 November 2002 in Belgrade. The lead countries reported progress on regional projects developed to meet priority health needs, as defined at the Health Ministers Forum in Dubrovnik (September 2001). Main results: a) on Food Protection and Nutrition Services, special links with the agricultural field and the strengthening of a free trade market were identified, b) a Control and Surveillance of Communicable Diseases mechanism will enhance the outreach to the most vulnerable groups, c) Mental Health will be the topic of a ministerial conference hosted by the forthcoming Greek EU-Presidency, and d) Public Health curricula were developed for master degrees in public health in connection to the renewed School of Public Health.

OeGB hosts Workshop in Vienna

Hosted by the Austrian Federation of the Trade Unions (OeGB), a workshop on the development of trade unions in South Eastern Europe and the strengthening of social dialogue in transition times was held on 26 November 2002 in Vienna.

The pivotal role of the Stability Pact in fostering social cohesion and economic development in SEE was recognized. The SEE Trade Unions expressed readiness to increasingly work within this framework, while regional co-operation and co-operation with TUs of EU member and other states remains vital. The Austrian Federation of Trade Unions expressed its willingness to contribute to the activities of the Balkan Forum, co-ordinated by the European Trade Union Confederation (ETUC).

The participants agreed that the governments of SEE should increase their commitment to the development of the social sector. Equally, the role of the employers, one of the pillars of social dialogue, should be strengthened.

The workshop agreed to support much needed training of journalists and experts in the field of social sector reform and participants promoted the development of vocational training programs. The establishment of an advisory body to improve the consultation process to the SP activities in the economic and social areas as well as on national level was deemed necessary and useful. Delegations of SEE Trade Unions and of the ETUC also participated at the event.

An Investment Compact report concludes that the countries of South East Europe are showing renewed determination to build a more stable and investment-friendly economic environment. Close to 50% of specific measures targeted by the SEE countries in the last two years and listed in the previous monitoring report in June 2001 have been implemented.

The pace of economic reform remains uneven, both across the region and across the various policy areas. Over the last 12 months, Romania, Bulgaria, Croatia, as well as Serbia, Albania and Montenegro have achieved positive results in terms of reforms implemented. The pace of reform was slower in Bosnia-Herzegovina, Moldova and the Former Yugoslav Republic of Macedonia.
In an effort to accelerate reforms, each country has identified a maximum of three concrete actions that they have committed to implement within a period of 6-12 months. These targeted policy measures are intended to have a significant impact on the environment for business and investment.

The report was presented to media by SC Busek and OECD Secretary General Johnston. At the same time, the Investment Compact Project Team meeting in Paris, on 19 November, decided that Romania will be the regional co-chair for 2003. An Action Plan for 2003 was discussed at the same meeting.

Report in full

Over 130 participants at the Osijek conference on “Cross-border Co-operation in South Eastern Europe: Obstacles and Opportunities for Euro regional Co-operation” demonstrated the force behind cross-border regions in SEE. They represented Euro regions already in existence and encouraged new cross-border regions to be established. An action-oriented analysis of operational and policy obstacles / opportunities for Euro regional co-operation in SEE was the overall aim of the event.

Existing SEE Euro regions and triangles of cross-border co-operation are:

• The Danube - Drava - Sava Euro regional Co-operation (including the Novi Sad - Tuzla - Osijek micro-region);
  
• The Danube - Körös - Maros - Tisza (HU / RO / YU) Euro region;
  
• The Danube 21 Euro region;
  
• The Euro region including the border areas of FRY, former Yugoslav Republic of Macedonia and Bulgaria; and the Preshevo / Gnilan-Giljane / Kumanovo micro-region initiative;
  
• Prespa / Ohrid Euro regional Co-operation;
  
• The Southern Adriatic Transfrontier Co-operation Initiative (between the border areas of Croatia, BiH and Montenegro).
  

Participants identified the following key policy challenges and obstacles to cross-border co-operation in SEE: a) lack of EU policy instruments for regional development and convergence in SEE, b) varying levels of institutional capacity and social development from country to country within SEE, c) customs procedures which hinder the movement of goods across borders, d) visa regimes between the countries of SEE which hamper the movement of people across borders, e) the Schengen visa regime of the EU and the upcoming Enlargement of the Schengen borders with the risk of new dividing lines and f) varying or inadequate levels of policy and fiscal competency of local and regional authorities throughout SEE; this results in co-operation across borders having to be brought down to the lowest ‘common denominator’ level or being subject to excessive central government control.

Conference Conclusions

Solutions for Displaced and Refugees – now less than 1 million DPs and Refugees remaining in the region

More than 135'000 people have either returned or locally integrated since the beginning of the year. More than 90'000 are so-called minority returns in Bosnia and Croatia. This is the first time since the beginning of the crisis that displacement figures fall below one million! Once more, the pace of return exceeds by far the available resources to assist the returnees with shelter and other re- integration support.

Sarajevo Housing Project

The Pact's Regional Return Initiative established contact between an Austrian Housing Association which had expressed the interest to transfer investment capital out of the EU, and the Sarajevo Canton faced with housing shortages. As an immediate result, the Austrian GPA invested 7 million Euro for construction of 164 apartments in Sarajevo. Works started end of July, and the two apartment blocks will be roofed in December 2002. This very interesting model of public-private investment has met great interest in the region and with potential investors

Podgorica Municipal Upgrading Project for Illegal Settlements

The feasibility study commissioned by the municipality of Podgorica with the German NGO Help has been now been finalized and is being launched. The project which will require start-up capital, but should ultimately generate a revenue for the city, is combining the resolution of urban infrastructure and development needs, through investment with displacement matter, thus demonstrating the potential of such partnerships.

Serbian Housing Secretariat now operational

The inter ministerial Taskforce and its secretariat is now operational and its efforts to develop a comprehensive national capacity building project are being supported by the RRI housing support team and the Danish South Eastern European Housing Initiative (SEHI), a consortium of 6 Danish Companies. Germany will provide additional expertise.

5th tri-lateral consultations

Officials from Croatia, Bosnia and Yugoslavia (Serbia & Montenegro) met in Vienna on 28 November to discuss further regional and bi-lateral co-operation in regard to the resolution of the refugee situation. This meeting was held as part of the regular dialogue engaged in by countries of the region since the launching of the Agenda for Regional Action in 2001.

London Conference against Organised Crime

The attendance of several ministers at this conference in London showed the importance of this subject to governments in and outside the region. SC Busek very much welcomed this timely initiative, which supported the Pact’s activities in the field of organized crime. The London declaration will give the Stability Pact the political tool to implement a number of agreed measures in a concrete fashion:

• Participants committed themselves to supporting the Bucharest Regional Centre to fight trans-border organised crime in SEE. This should be a first and important step for European integration of the region and its Centre. By implementing European standards, the Centre will be able to work closer with Europol and to finally exchange information across the whole of Europe.
  
• The SEECP proposal to create an "Association of SEE Police colleges" received wide support. This could be developed into a sustainable organisation with the aim to promote law enforcement networks and cooperation as well as the build-up of capacity, necessary to successfully fight organised crime.
  
• Harmonisation of legislation to allow countries in and outside the region to exchange information and to use this information to successfully prosecute perpetrators.
  

Participants recognised Stability Pact expertise in these areas and the Special Co-ordinator pledged to support all the above-mentioned efforts.
On a political level participants invited the EU (Institutions and Member States) to play a more active role. This request was reflected in the presentations given by High Representative Solana as well as in those of Commissioner Patten and Vitorino. The Danish EU Presidency and the incoming Greek presidency confirmed their willingness to strengthen EU's efforts to fight organised crime in SEE.

The Stability Pact will closely work with the Presidency and the Commission in the preparation of the Thessaloniki Conference in June 2003 to ensure follow-up to the London Conference.

At the SPAI Steering Group meeting, held in Rome September 25-26, the streamlining of the management system was decided. Further to the discussions between the SPAI country delegations, the Steering Group adopted the decision to propose to the Regional Table the creation of an Executive Secretariat in Sarajevo. The seat of Sarajevo was selected, after a comparative evaluation with other possible locations, following a request of the members of the Steering Committee representing the Republic of Bosnia and Herzegovina

The current leading agencies (CoE, OECD) will remain the key players in providing legal assistance to the Executive Secretariat.

Chairman Giuseppe di Gennaro will step down, with effect from 31 December 2002. The participants expressed their gratitude for the Chairman’s valuable contribution and competent work, which was reflected by the achievements of the first phase of the SPAI.

The proposal of a co-chairmanship from the region was welcomed, which could take place on a rotating basis (6 months) by alphabetical order.

A training curriculum has been elaborated by a multi-agency project group under the framework of the SP Task Force on Trafficking in Human Beings. With the objective to assist the countries of South Eastern Europe to further develop sustainable police training structures in a regionally harmonized way, national trainer teams (specialist investigators, police academy trainers and NGO representatives) adapted the core training material to specific country needs during a regional validation seminar held on
18-29 November 2002 in Austria. The seminar participants were coached by international experts. As a next step, pilot-training programmes will be delivered in each SEE country in order to test the material for subsequent finalization. This programme is funded by Austria, Germany, the USA and the EU STOP Program and implemented by the SP Task Force partner ICMPD. It forms part of the SP Task Force comprehensive anti-trafficking strategy for SEE.

UN agencies and partners met to discuss common strategies related to disaster management for the first time in Sarajevo, in November.

The United Nations Disaster Management Training Programme (DMTP) in close co-operation with the Stability Pact’s Disaster Preparedness and Prevention Initiative (DPPI) and the International Federation of the Red Cross (IFRC) organised a four-day Regional DMTP workshop in Sarajevo, 5-8 November. The workshop established a collaborative platform for improved emergency and disaster management co-ordination in South Eastern Europe and promoted co-operation in the region for building regional risk management capacity.

National and international representatives from Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Federal Republic of Yugoslavia, Former Yugoslav Republic of Macedonia, Romania and Slovenia were present at the workshop. Representatives from several UN agencies, namely UNDP, OCHA, WHO and UNMIK as well, as representatives from the IFRC and HELP, together with their national counter-parts, held valuable discussions on current risk management issues in the region.