IP/04/407 Brussels, 30 March 2004 Western Balkans: launch of first European Partnerships, Annual Report The European commission has today approved the first ever European Partnerships for the Western Balkans 1 which are inspired by the Accession Partnerships that have helped prepare countries for eventual EU membership in the past. The Partnerships are based on the third Annual Reports on these countries, also published today. Since the Commission will publish shortly its Opinion on Croatia s application for EU membership, no individual country paper is published today for Croatia. In the 2004 Annual Report on the Stabilisation and Association Process (SAp 2 ) the Commission reviews progress across the region: reforms are underway in many sectors, and there has been significant development of regional co operation. However, many challenges remain to complete the transition to functioning democracies and market economies. Further efforts are needed to forge reconciliation in the region, and recent events in Kosovo show that stabilisation in certain parts of the region remains fragile. Commissioner for External Relations, Chris Patten said: Over the past year we have seen political and economic reforms continue in the region - but progress is slower than we would like, and many of the problems we highlighted last year still need to be tackled. The EU gives praise where it is due, but has to be frank about those areas where there has been insufficient action - because it is only by achieving European standards that the countries of South-eastern Europe can move towards eventual membership of the EU. I hope the new European Partnerships will help governments target their reform efforts more efficiently. The European Commission will offer all the support it can, but how far and how fast the Western Balkan countries advance towards integration is in their own hands". Modelled on the Accession Partnerships developed to prepare past aspirants to EU membership, the European Partnerships represent a milestone in the relations between the EU and the Western Balkan countries. They are tailored to each country s specific needs, setting out priorities for the short term (12-24 months) and the medium term (3-4 years). The Partnerships will help governments concentrate reform effort and available resources where they are most needed. The competent authorities will be expected to respond with a detailed plan for the implementation of its European Partnership priorities, setting out the concrete measures to be taken, a timetable, and demonstrating what human and financial resources will be devoted to the tasks involved. 1 2 The Western Balkans include Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Serbia and Montenegro, including Kosovo (as defined by the UN Security Council Resolution 1244). IP/99/350 : Commission proposes a Stabilisation and Association process for countries of South-eastern Europe
The priorities identified in the European Partnerships will also influence the allocation of the financial assistance from the EU. The 2004 Report on the Stabilisation and Association Process assesses the readiness of the Western Balkan countries to move closer to the European Union. The Commission welcomes progress made by the Western Balkan countries in the Stabilisation and Association Process in the past twelve months, notably in public administration, and in regional co-operation, particularly in the areas of energy and transport, and in bilateral and multilateral political relations. However, the Report notes that the countries of the Western Balkans need to ensure the proper functioning of democratic institutions, full respect for human and minority rights, to uphold the rule of law and fight organised crime and corruption more vigorously. The Report also stresses that several countries in the region are still not fully cooperating with the International Criminal Tribunal for the former Yugoslavia (ICTY), a legal obligation which must be respected. The administrative capacity and ability of the countries to implement and enforce legislation and reforms need to be strengthened. In the economic field, the countries of the region have to accelerate and complete reforms, improve the business climate and the competitiveness of their industries, attract foreign direct investments, widen their export base and increase their production capacity. Albania Albania has made limited progress since the last SAp report. Many issues remain to be addressed in order for Albania to successfully conclude negotiations for a Stabilisation and Association Agreement (SAA), which is the next step towards EU integration. It is important that Albania should demonstrate greater determination to fight organised crime, all types of trafficking, money laundering and corruption. The judicial system and the public administration need to be made more efficient, and free from undue political interference. The functioning of democratic institutions needs to be strengthened and electoral processes need to be improved to meet international requirements. Human and minority rights should be respected in accordance with international standards. On the positive side, Albania has continued to show a constructive attitude regarding the sensitive issues in the region, and has made further progress in concluding and implementing Free Trade Area agreements with neighbouring countries. The negotiation and initialling of a Readmission Agreement between Albania and the EU has also been an important development. In the economic sphere, Albania has continued its macro-economic stabilisation and GDP has grown at a sustained pace. Despite some progress in the privatisation process, however, further actions need to be taken to enhance fiscal sustainability, to de-monopolize the economy and to set up an appropriate legal and policy framework conducive to investment and business development. Bosnia and Herzegovina The 2004 Stabilisation and Association Report for Bosnia and Herzegovina concludes that the government at State level remains under-developed, while tensions between State and Entities still affect government business and reform. Reforms such as that of the public administration and of the defence sector have the potential, if fully implemented, to move BiH towards self-sustainability. Some progress in respect for human rights has been recorded since end of 2003. Cooperation with the International Criminal Tribunal, however, still falls short of requirements. 2
The 2003 Report argued that BiH s economic situation was fragile. That assessment remains true. Clearly, further structural reform is needed if BiH is to attract more private investment, promote growth, create employment, increase exports and compensate for falling international donor support. The government needs to establish a framework favouring investment and enterprise and effectively manage the funds at its disposal. Some progress has been made on budgetary reforms but it remains a concern that the basic tool and foundation of successful economic policymaking reliable statistics has not yet been secured. Last November s Feasibility Study recorded, a pattern of intermittent progress, interspersed with areas where crucial reform has not been completed, or in some cases even begun. This assessment remains valid, and recent successes in areas such as Council of Ministers approval of an Action Plan for Feasibility Study issues, first BiH convictions for human trafficking and initial steps in setting up the Indirect Tax Authority, are diminished by failures in other areas. It remains a concern that in too many areas where progress has been achieved, that progress has come only thanks to international pressure. Former Yugoslav Republic of Macedonia fyrom has made real efforts to make progress in the SAp in 2003. Implementation of the Framework Agreement remains essential to sustain stability and guarantee the development of fyrom as a unitary and multiethnic State. Many major reforms are needed in the areas of good governance, rule of law, the fight against corruption and organised crime. A special reference is made to the need to introduce a comprehensive reform of the judiciary. fyrom has been successful in maintaining a stable macro-economic framework. Maintaining this will be a decisive factor in conducting the economic reforms needed, but a functioning market economy, an improved business climate, stronger competitiveness and the enforcement of property rights are also necessary. The transformation of the public administration into a modern and accountable public service is remains a priority. The country is progressing in approximation of its legislation to EU laws, but more efforts are needed regarding implementation. Serbia and Montenegro In the political field in 2003, there was steady progress in army reform; further progress in the areas of minority rights and regional co-operation; slower than hoped-for reform of the police and judiciary with a reversal of the progress previously seen in Serbia. Serbia and Montenegro is still failing to comply fully with its international obligations concerning co-operation with the International Criminal Tribunal for the former Yugoslavia (ICTY). Strengthening the rule of law and democratic institutions and full compliance with the country s international obligations are key points for further political reform and essential for closer relations with the European Union. Economic stability has been preserved. However, the pace of structural reforms has slowed considerably, mainly due to the political disputes that have influenced the functioning of the institutions. These structural reforms need to be reinvigorated to preserve the accomplishments of recent years and lay the basis for economic prosperity. 3
The State Union was established, but the implementation of the Constitutional Charter is still incomplete. Disagreements about the new constitutional arrangements reflect the lack of overall consensus on the future of the State Union. This weakens the joint institutions and policies which are indispensable for progress with political and economic reforms and for developing Serbia and Montenegro s relations with the EU. The Internal Market / Trade Action Plan, adopted during the year, has not been fully implemented, and remains incomplete on key issues such as agricultural tariff harmonisation and the full functioning of the internal market. Kosovo as defined by United Nations Security Council Resolution 1244 The UN key decision to operationalise the Standards for Kosovo, and the launch although amidst difficulties of the Dialogue between Pristina and Belgrade on issues of common concern, were the main positive developments over the reporting period. However, the ethnically motivated violent incidents that occurred in March 2004 marked a serious a setback to the establishment of a secure, democratic and multi-ethnic Kosovo. In particular, the late and inadequate reaction of the Provisional Institutions of Self-Government (PISG) to the events of March 2004 raises serious concerns. Over the reporting period, the performance of the PISG and public administration has started to improve, but significant deficiencies still need to be addressed. Since the transfer of non-reserved competencies from UNMIK to the PISG has been completed, the PISG need to make full use of the transferred competencies to take greater responsibility for the reforms and their implementation. While some efforts were made notably in the second half of 2003, substantial and sustainable return of displaced persons to Kosovo was hampered by the unfavourable socio-economic conditions and precarious security situation Despite some improvements, the economic situation remains a major cause for concern: Kosovo s economy is still heavily dependent on foreign aid and is far from being viable. Structural reforms need to be speeded up. The March 2004 incidents also show that Kosovo needs to be firmly anchored in the Stabilisation and Association Process and that Kosovo people and the PISG need to engage seriously in the process. In this respect, the European Partnership which is not a contractual relationship but an EU policy tool to encourage reforms - will contribute to provide the necessary guidance to ensure a stable future for a secure, democratic and multi-ethnic Kosovo with its place in Europe. Due to the situation of Kosovo (under UNSCR 1244), the Commission has therefore proposed a specific list of priorities and recommendations, based on the Standards for Kosovo, be addressed to the competent authorities. 4
Background At the Thessaloniki Summit in June 2003, the Stabilisation and Association Process was confirmed as the overall policy framework for the European course of the Western Balkan countries, all the way to their future accession. At Thessaloniki it was determined that the SAp should be bolstered by methods based the experience of previous enlargements of the EU. The chief of these is the introduction of European Partnerships. The European Partnerships are submitted to the Council for approval. Based on the assessments made in the 2004 report, the European Partnerships identify priority measures for the short and medium term, and are designed to help the countries with their reforms and preparations for future EU membership. The Stabilisation and Association Process is underpinned by substantial EU financial assistance: over 5 billion for the period 2000-2006. The EU will deploy all means at its disposal political, technical, financial to support reform in the Western Balkans. However, the rate of progress within the Stabilisation and Association process will depend on the sense of political ownership for the reform process which the Western Balkan countries will show, and on the performance of the countries themselves in a wide range of reforms. Progress of Western Balkan countries within the Stabilisation and Association Process Two countries have negotiated Stabilisation and Association Agreements (SAA) with the EU. fyrom s Agreement will come into force on 1 st April 2004, while ratification of Croatia s Agreement is still on-going. The Commission has begun negotiations for an SAA with Albania. A Feasibility Study into opening negotiations for an SAA with Bosnia and Herzegovina has been carried out, and BiH is working on implementing the priority areas identified in that report. Serbia and Montenegro has made progress towards a closer relationship with the EU through the adoption of a Constitutional Charter and an internal market and trade Action Plan. Applications for EU membership All the countries of the Western Balkans have been offered the prospect of EU Membership, conditional on their carrying out the reforms necessary to qualify as candidates. The Commission is preparing an Opinion on Croatia s application for membership, and the European Partnership for Croatia will be published at the same time as the Opinion. The former Yugoslav Republic of Macedonia has also recently presented an application for EU membership. The reports can be found at: http://europa.eu.int/comm/external_relations/see/sap/rep3/index.htm For further information: The EU's relations with South Eastern Europe (Western Balkans) Overview: http://europa.eu.int/comm/external_relations/see/index.htm 5