THE POLITICS OF THE NEW BALKAN ECONOMY European Policy Summit 7 December 2004, La Bibliothèque Solvay, Brussels
FRIENDS OF EUROPE, DECEMBER 2004 THE POLITICS OF THE NEW BALKAN ECONOMY A one day international High-level European Policy Summit organised by Friends of Europe in partnership with the Konrad-Adenauer-Stiftung with the support of The Coca-Cola Company, the Business Humanitarian Forum, the Stability Pact for South Eastern Europe, the Constantinos Karamanlis Institute for Democracy and EurActiv.com 7 December 2004 La Bibliothèque Solvay Brussels 1
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FRIENDS OF EUROPE, DECEMBER 2004 CONTENTS Executive summary................................................................................ 5 The political situation......................................................................... 7 The importance of the political will for reform................................................ 7 The top political priority - Kosovo.................................................................... 9 Montenegro - held hostage................................................................................ 11 Bosnia and Herzegovina - doing its homework............................................... 13 The economic situation....................................................................15 A promising outlook for foreign investment.................................................... 15 Creating an enterprise culture.......................................................................... 17 Eight economic challenges................................................................................. 19 Croatia - increasingly competitive.................................................................... 21 Serbia - a raft of business-friendly legislation................................................. 23 Bulgaria - putting people at the centre........................................................... 25 A successful regional investment strategy - Coca-Cola.................................. 27 The international reaction.............................................................29 EU accession - carrot and stick......................................................................... 29 Help in acquiring the acquis communautaire................................................ 33 Moving forward...................................................................................... 35 Making free trade a reality............................................................................... 35 How to manage foreign investment................................................................. 37 Building trust through Euroregions................................................................. 39 A region on the move - increasing mobility.................................................... 41 List of participants............................................................................. 43 About Friends of Europe............................................................... 52 Board of trustees.................................................................................. 54 Reports and activities...................................................................... 59 3
4 The Politics of the New Balkan Economy
FRIENDS OF EUROPE, DECEMBER 2004 EXECUTIVE SUMMARY This annual one-day event brought together over 200 actors including ministers, parliamentarians, European officials, academics, investors in the region and private sector representatives. They addressed three key areas: the underpinning of political stability, creating a business culture, and making regional co-operation work. To the countries of the region, the prospect of EU membership is an important incentive to achieving political stability, which will also pay off in terms of economic development, as it makes the region more attractive to investors from abroad. Yet progress often seems frustratingly slow. In the opinion of many participants, it is up to the region s governments to demonstrate the political will to push forward the reform process. A lengthy list of structural reforms must be tackled, and there are no short cuts, as future members must satisfy the same set of conditions as the existing members of the EU. These include not only trade liberalisation, privatisation and institution building, but also more basic matters such as respect for national constitutions and international commitments, and action against organised crime and corruption. In some cases - notably in Bosnia and Herzegovina - they will involve significant constitutional simplification. The list of economic hurdles to be overcome is formidable. Yet once the outside world is convinced that the region s governments are set on the road to market democracy, the flow of inward investment may be expected to grow further. Economic dislocation also demands that the appropriate social policies be put in place. Action is required at two levels. The first necessity is to establish political stability, above all in Kosovo. Here, the meeting heard pleas for a more active stance on the part of the international community in working towards a conditional form of independence. 5
The Politics of the New Balkan Economy The second overriding need is for speedy regional co-operation to establish a free trade area, to replace the mass of bilateral free trade agreements that currently limit the free movement of goods and economies of scale. The main barriers are customs tariffs, and states need to abolish these and find alternative sources of revenue. One ambitious initiative, the Energy Community in South-Eastern Europe, may prove the pilot for the regional free trade area that is so greatly needed. An alternative approach might be to build trust by setting up small-scale cross-border Euroregions. The meeting heard the positions and recommendations of the key international institutions and governments, as well as the private sector. The international institutions made it clear that it is only the region s governments that can bring about the necessary reform processes, while the ministers were enthusiastic about meeting the challenge, but realistic given its magnitude. From business came the advice to adopt a regional approach, and to focus not on attracting foreign investment itself, but on creating an educated workforce that can form the basis of the region s own future wealth creation. 6
FRIENDS OF EUROPE, DECEMBER 2004 THE POLITICAL SITUATION The importance of political will to reform process and improving economic growth Erhard Busek, Special Co-ordinator of the Stability Pact for South Eastern Europe The prospect of EU membership is an important factor in ensuring political stability and economic growth in the Balkan region. The transformation experience of the ten new EU Member States is proving very useful to their Balkan neighbours, and the extension of candidate status to Croatia sends the important message that the stabilisation and association process does indeed lead to EU membership. Hopefully negotiations will begin in 2005. Erhard Busek It is vital that the EU emphasises the importance of the European perspective of Southeast Europe to all - the region s stability and prosperity depends on it. The administrative transfer of the Western Balkan countries from DG External Relations to the Enlargement DG sends the very helpful political message that their future clearly lies within the EU. 2005 will potentially be a very difficult year. The most prominent issue is the status of Kosovo, but political developments in Serbia and Montenegro, Bosnia and Herzegovina, and Macedonia will also have implications for the region as a whole. Politics will also affect economic development and in particular investment. Though the region secured over 5bn of foreign direct investment (FDI) in 2003, the end of the privatisation process is drawing near, and we have to redouble our efforts to attract greenfield investment. The region needs to demonstrate the political will, determination and dedication to follow-up on the political commitments that have been made. 7
The Politics of the New Balkan Economy The economic evidence is clear - implementation of reforms drives economic growth. Erhard Busek Attracting investment in today s global market is tough - indeed some investors say it is easier to invest in China or India than in SEE. Investors increasingly require large integrated markets, free of trade and foreign exchange restrictions, with reasonable regulatory frameworks and reliable legal systems. Therefore, we have to improve the image and climate of the region as a whole. Such co-operation means that the region can offer investors a market of 55 million people. Southeast Europe has a limited window of opportunity to attract its fair share of foreign capital by quickly delivering reforms. To date it is those countries that are furthest along with the reform process - Bulgaria, Croatia and Romania - that are attracting the most investment. Slow implementation of reforms is a recurrent problem, whether it stems from lack of commitment, lack of capacity or lack of continuity. In 2005 and beyond, the Stability Pact will continue to help the Southeast European countries with the reform process. For example the Investment Compact will step up the monitoring of reforms and assist with foreign direct investment and SME development. The Trade Working Group, with the support of the EU CARDS programme, will focus on reducing non-tariff barriers and improving the regulation of trade in services. Though responsibility lies with the governments, the business community also has an essential role in providing support and guidance, and thanks are due to the Network of Foreign Investors Councils, the Business Advisory Council for Southeast Europe, and others. One of the most ambitious economic development initiatives being taken is the Energy Community in South-Eastern Europe - ECSE. It is a unique political opportunity, as the European Coal and Steel Community (ECSC) was for the EU s original members, and will be the subject of a binding treaty. It will bring significant economic benefits, but will also lead to socio-economic change - including redundancies and price rises. It will therefore be crucial to build public acceptance through transparency and the early involvement of parliaments and social partners. If they are to be sustainable, economic reforms must go hand in hand with the development of appropriate social policies. 8
FRIENDS OF EUROPE, DECEMBER 2004 The top political priority - Kosovo Doris Pack MEP, Chairwoman, Delegation for Relations with Southeast Europe, European Parliament It is unfortunately true that as long as things are going smoothly, people forget you - that s life in politics. In the regional hotspot, Kosovo, the chief problem is high unemployment: 65% of population are under 35 and 60% are unemployed. If we don t do something about this, we will fail. Secondly, the EU has four institutions there: a reconstruction agency, a new delegation, UNMIK and a special envoy of Javier Solana. This is destabilising. Thirdly, not everybody lives in ^ Pristina. Most of the Kosovar population is rural, especially the Serbian minority, so we should focus on agricultural policy. Why are we not doing something to improve rural life? What is more, nobody trusts the existing government. The international community needs to act to bring about negotiations between the Serbs and the Albanians. Until it is willing to do this there will be no real peace in the region - neither in Serbia-Montenegro nor in Macedonia. The EU gives a lot of money, but is unwilling to get involved in the politics - and this it has to do. Doris Pack What Kosovo needs is a government that functions and has more powers; an idea of how to get rid of the enclaves (which only work during daytime anyway); and to stick to the process of decentralising power to the municipalities - not partition. In the end Kosovo should become independent, but under certain conditions, and the EU should take the lead in working towards this conditional independence. Accession is possible before 2020, but this depends on local politicians resolving the outstanding problems. The region is the Litmus test of our foreign policy. We should involve ourselves much more in its politics, not just money. Doris Pack 9
The Politics of the New Balkan Economy As for Bosnia and Herzegovina, how can a country divided into two entities, one of which has ten cantons, work? It has 147 ministers, who use up 67% of the budget. Structured as it is, Bosnia and Herzegovina will never enter the EU, so we should help it to overcome the situation. Albania is in a very sad situation - it has still not got over Hoxha. Two parties are struggling with each other, but for their own power and not for the good of the country. They cannot even organise an election. On the other hand Macedonia has a good chance for the future, if it fulfils the OHRID agreement. The start of accession negotiations with Croatia would be a powerful symbol. Croatia has sent nine indictees to the Hague tribunal, but one general, Gotovina, is still to be tracked down. Why not ask France to look for him, as he has a French passport? We should give Croatia a chance to start negotiations in 2005, as it deserves it. More generally, one thing we can do to help the Balkan region is to make it easier for students and business-people to get visas (this has never been a deterrent to criminals). The Parliament has also asked the Council of Ministers to open the EU s educational programmes to the Balkans, but we are still waiting for the modalities to do so. 10
FRIENDS OF EUROPE, DECEMBER 2004 Montenegro - held hostage Milo Djukanovic, Prime Minister of the Republic of Montenegro The focus of security in the Western Balkans has shifted from the military to the civil sphere. Economic growth is up and unemployment is down, and the biggest challenge is sustainability. The heart of the matter is the evolution of a stable democracy and market institutions. It is vital to build a climate of confidence. The region s attractiveness to foreign investors has risen, but there is still a need for better regulatory and judicial procedures, better energy and transport infrastructure, better border management and a clear approach to the EU. The region has reached a turning point. If progress is slow, it is not that there is no commitment, but that it is such a complex task. Unemployment remains high and foreign investment remains low, and we need to ask how the Structural and Cohesion Funds can be used in the Western Balkans. Milo Djukanovic Two interlinked processes are under way. The existential neurosis caused by war is now over, but people tend to look for immediate results. We need to communicate the We cannot talk about a secure and united Europe without ensuring Balkan stability. Milo Djukanovic long-term perspective that joining the EU entails. We know there are no short cuts to EU integration. All the Balkan countries have the goal of full integration into the EU and NATO. We know that on the way we have to make genuine progress in ethnic integration, respect for minority rights and diversity - a paradox in a region with such a multicultural past. The main problem is Kosovo. Serbia-Montenegro relations have entered a phase of joint negotiation and are no security risk. But at the Istanbul summit Montenegro was held hostage because of Serbian non-compliance with the Hague convention. In principle Montenegro will have no problem in complying with EU membership conditions - though we know that it is a long process. 11
The Politics of the New Balkan Economy Progress has been made towards creating a free trade zone and this increases the region s attractiveness to investors. A higher-quality interaction is needed between the EU and the Western Balkan countries. Firstly there are some global political biases and prejudices that need to be cleared up. Secondly certain short-comings in international policy need to be resolved. Postponing decisions has never been a solution, and we can no longer delay taking a decision on the status of Kosovo. The same applies to Serbia and Montenegro. Montenegro was one of the six states that gained independence in 1994. No one is closer to it than Serbia, but it is Montenegro that knows best how to manage its affairs. Serbia would do better to deal with its own problems first, not those of other countries. This was the principle adopted in Thessaloniki. A lot of time has already been wasted, and reform of the institutional arrangement is called for. There is a special case for the Structural and Cohesion Funds to be applied in the Western Balkans, as local resources are being used to maintain troops, as the conditions for full democracy are established. Also organised crime and corruption are an issue everywhere, not only in this region. THE BUSINESS HUMANITARIAN FORUM The Business Humanitarian Forum (BHF) is an international Geneva-based non-profit association launched in January 1999 by senior business and humanitarian personalities, with the encouragement of UN Secretary General Kofi Annan. The BHF seeks to unite the business and humanitarian communities to improve their mutual understanding and to develop cooperation in creating sustainable economic development projects in post-conflict and developing societies. With the world's humanitarian needs growing and resources from governments dwindling, the humanitarian and business worlds have much to gain from mutual cooperation. The BHF has developed a model for public-private cooperation on specific development projects which makes important contributions to the re-building economies in postconflict societies, and is constantly looking for potential partners for such projects. 12
FRIENDS OF EUROPE, DECEMBER 2004 Bosnia and Herzegovina - doing their homework Lidija Topic, Deputy Minister for Foreign Affairs, Bosnia and Herzegovina All Balkan countries agree that Balkan politics has to be based on EU politics. We accept that we have to establish European standards at the regional level. We also believe that regional cooperation is vital. We are working towards a new regional image in which reconciliation and trust-building play a very important role. The tourism industry, for instance, is best managed at regional level, as tourists pass through one country to get to another. A stable political path also gives stable economic prospects. Lidija Topic Last week witnessed the transfer of responsibility for the troops in Bosnia and Herzegovina from NATO to Our future is also a European future. Lidija Topic the EU. People ask if they will be safe. Yes they will - there have been no casualties among foreign troops since the Dayton Accord was signed. Why are European troops in Bosnia? For us, the primary reason for the transfer to the EU is our co-operation with the international tribunal. We do not have enough troops of our own to handle the full requirements of the international tribunal. If we had the resources to arrest everyone the tribunal named then we could have a transfer from NATO to Bosnian troops. The other part of the agenda is regional security. One part of the region - Kosovo - has not yet achieved political stability, and before we can reach regional political stability we have the huge task of institution building. Economic conditions in Bosnia and Herzegovina are good: the microeconomic situation is stable, inflation is under control at below 1%, the currency board acts according to the best international standards, the currency - the convertible mark - is firm and stable, and banking has in large part been successfully privatised. Foreign investment is coming in and we hope that local banks will also invest more. 13
The Politics of the New Balkan Economy 2005-10 years since the Dayton Peace Accord - will be a crucial year for Bosnia and Herzegovina. In these ten years we have moved a long way. Dayton ended the war, but it did not provide for an economically sustainable state: 65% of spending is by the public sector and polls show that 64% of young people would emigrate if they could. We are trying to create an environment to which young people will want to return, by accepting and importing EU standards and establishing a stable economy and society. Bosnia and Herzegovina has set itself the deadline of 2009 to be ready for accession. It is doing its homework, including reducing its constitutional extravagance, but this will take time and depends on the willingness of the three entities set up under the Dayton Accord. 14
FRIENDS OF EUROPE, DECEMBER 2004 THE ECONOMIC SITUATION A promising outlook for foreign investment Martin Bartenstein, Minister for Economic Affairs, Austria The Balkan countries have made considerable progress in the last few years both politically and economically, and it seems they are again beginning to understand themselves as a family, with shared interests. Economic issues are figuring more prominently on the political agenda, and this favours openness. The region seems on track for economic recovery: real GDP will grow by 4.5% p.a. in 2004 - slightly up on the 4.3% achieved in 2003, and worlds away from the 6.2% p.a. fall in the previous decade. This compares with 4.4% in Central and Eastern Europe. But how can this be sustained? The capital stock is depleted, and the region cannot fund growth by itself; it depends on outside private capital. Martin Bartenstein The FDI outlook is promising: nearly $7bn was invested in the region in 2003, compared to $4.2bn in 2002, and a 50% decrease in Central and Eastern Europe!). Austrian firms invest more in the Balkans than those of any other country - some e6bn so far - and contribute 29% of investment in Bosnia and Herzegovina and 25% in Croatia - and will also possibly soon be top investor in Romania and Bulgaria. The Compact for Reform, Investment, Integrity and Growth in Southeast Europe (known for short as the Investment Compact), adopted in 2000 as an initiative of the Stability Pact for Southeastern Europe, improves the investment environment by supporting political reform and the development of SMEs. In general, therefore, the development of FDI is on the right track. 15
The Politics of the New Balkan Economy A major share of financing the revitalisation of South Eastern Europe will necessarily fall on private capital from abroad. Martin Bartenstein However obstacles remain. Markets are generally small, and not yet integrated. There still remain problems of establishing the rule of law, effective legal procedures and flexible labour markets. This makes political integration, which is very patchy, all the more important. While EU accession negotiations with Romania and Bulgaria are almost completed, Albania still has no Stabilisation and Association Agreement. However, it is clear that in the long run all Balkan countries should become full members of the EU. To pave the way, the EU s method of bilateral agreements accompanied by substantial economic incentives works well. The mutual reinforcement of political stability and economic growth worked in Central and Eastern Europe and is the model to be followed in the Balkans. Although greenfield investment is important, in many countries privatisation may be a more concrete way of attracting inward investment. Romania, Bulgaria and Croatia are in a satisfactory position to join the EU by 2007, while the other countries lack the necessary motivation. We do not need new institutions - we have to create the momentum and push for accession before 2020. We need to put the large number of bilateral free trade agreements together to create a free trade area. 16
FRIENDS OF EUROPE, DECEMBER 2004 Creating an enterprise culture John King, Director of the Business Humanitarian Forum It is the private sector that creates most of the wealth in any country or region, employs most of the people, produces most of the goods - and pays the taxes. Aid might be essential for creating the backdrop to a business culture, but it should not be the be all and end all. Nobody ever got rich on aid. There is a saying that goes You can lead a horse to water, but you can t make it drink. If we look at business as the horse, we can see that the trough is there, in the form of laws and government structures, and it s a pretty good trough. It has even been filled with water, in the form of aid and economic credits. The big question is: where s the horse? Somehow the aid that is coming down from the top is not getting through to the grass roots. You can achieve economic growth by attracting outside investors, but the real wealth comes from SMEs that start up: nurturing enterprises and creating an enterprise culture is absolutely crucial. The funny thing is that in many cases the businesses are there - but the people running them are unaware of the opportunities available to them to expand. We have to tackle this information gap. John King The trough is there and it's full of water. The big question is: where's the horse? John King 17
The Politics of the New Balkan Economy INTERNATIONAL COOPERATION Isolation will not do, and neither will segregation. Why should we worry about somebody else's problems? - Well, we should, because problems are not held up by international borders. What happens in the Caucasus or in Central Africa, in China or on the Indian sub-continent reflects back on us. This is why it is a world wide concern to safeguard peace and freedom, consolidate democracy, combat poverty, and preserve our natural basis of existence for future generations. And this, in turn, is why international cooperation is so urgent and so indispensable. For more than thirty years the Konrad Adenauer Foundation has been cooperating with partners everywhere in the world. In more than 100 countries in Africa, Asia, Europe, and Latin America, in the Middle East and in North America, 85 foreign representatives are looking after more than 200 programmes. Our budget for these international activities amounts to more than 50 million every year. It is funded by the Federal Ministry for Economic Cooperation and Development as well as by the Foreign Office. Our partners abroad include political parties, parliaments and governments; education and research institutes; universities; industry confederations and trade unions; cooperative societies; women's, environmental, and self-help organisations; and the media. Basically, all our projects serve the goal of promoting democracy and development, improving understanding across national and cultural borders, providing help towards self-help, and combating the root causes of poverty and environmental destruction. 18
FRIENDS OF EUROPE, DECEMBER 2004 Eight economic challenges Ardo Hansson, Lead Economist, Poverty Reduction and Economic Management Unit, World Bank An examination of the Balkan region s economic balance sheet since 1999 shows that post-conflict reconstruction is nearly completed. Good progress has been made in macro-economic stabilisation, price and trade liberalisation, small-scale privatisation and banking reform, and lately also in the energy sector. As a result the private sector s share of GDP is growing. Foreign direct investment (FDI) is reaching respectable levels, inflation is under control, and most importantly economic growth has reached the respectable level of 4.5% p.a. in all countries. There are no economic tigers yet in this region, but they are growing faster than many of the new Member States of the EU. More will obviously be required to achieve income convergence with the EU and to meet very high public expectations about economic development. There are eight challenges: 1. Political uncertainty and instability: the unclear status of Kosovo is affecting investment, particularly in Kosovo s own mining sector, and uncertain land ownership slows the development of agriculture. In some countries, there are uncertainties about future constitutional arrangements, and in some there is bitter internal partisan conflict which is a cause for concern. 2. Limited creditworthiness: all of the region s countries face external debts and current account deficits simultaneously with large investment needs a shift from grant aid to non-concessional forms of finance. FDI will be important in avoiding over-borrowing. Savings are needed, so consumption will have to grow more slowly than GDP for the foreseeable future, and this is a big reform challenge. But the figures don t add up any other way. Ardo Hansson The glass is really more half full than half empty. Ardo Hansson 19
The Politics of the New Balkan Economy 3. Poor export performance: the whole Stability Pact region along with Romania, Bulgaria, Moldova and Croatia exports the same amount as Hungary does with one-sixth of the population. The positive aspect of this is that given the right regulatory and macroeconomic policies, there is enormous potential for export growth. 4. Slow enterprise restructuring: Most countries have still to reform some large state enterprises in order to release factors of production and credits to more promising sectors, particularly SMEs. 5. Slow reform of some infrastructure sectors, particularly the railways: This affects the fiscal situation as well as growth. International lenders need to ensure that credits are tied to reform and are targeted to relieve the most critical bottlenecks. 6. Inflexible labour markets: the law may have been reformed, but labour markets are still rigid, which leads to informal economic activity and unemployment, especially among young people. The underlying institutions need to be reformed and the business community needs to be more involved in labour negotiations. 7. The large public sectors, particularly in Croatia, Bosnia and Herzegovina and Serbia and Montenegro, are killing private sector-led growth, causing informalisation because of a high tax burden, and making it difficult to control budget deficits. This can only be addressed through cutting public expenditure as a share of GDP. 8. Weak governance: A World Bank survey in 2002 shows that business people continue to be deterred by corruption, while public administrations require reform if they are to be able to deliver effective public services. Finally, a word on the need for greenfield FDI. The privatisation pipeline has not yet run dry, particularly in Bosnia and Herzegovina. In many other countries there is also the potential for foreign businesses to buy enterprises that have already been privatised through faulty procedures such as voucher privatisations or sales to insiders. However the prospects for greenfield FDI depend on how well the region s countries meet the challenges of reform. 20
FRIENDS OF EUROPE, DECEMBER 2004 Croatia - increasingly competitive David Sopta, Assistant Minister for International Economic Co-operation, Croatia As a candidate country for EU membership, Croatia has come a long way in adopting policies to improve the business environment and attract foreign investment. GDP growth has been averaging 4.5%, inflation has stayed under 2%, and industrial production is growing at about 3.5% a year. Foreign debt has been held at 80% of GDP and the deficit at 5%. Croatia s economic performance is comparable with that of some of the new EU Member States. In 2003 we had some $2bn of FDI, Austria, Germany and Italy being the main investors. As 65% of exports and 70% of imports are with the EU, it is clear that Croatia has a very tight relationship with the EU business community. We are clear that the main goal of our economic policy need to be improving the business culture and environment as we adopt EU standards. We are promoting transparency, reducing bureaucratic barriers to investment and securing the rule of law. We are fully aware that corruption is one of the biggest obstacles to this, and the government fully committed to combating it. David Sopta Measured by purchasing power parity (PPP), Croatia s GDP is 46% of the EU s - similar to Poland or Lithuania s and well above Bulgaria or Romania at around 30% or Turkey 28%. Indeed it is only just below Estonia, a real success story with a PPP GDP 49% of the EU average. According to the World Economic Forum, Croatia ranks 61st in the growth competitiveness index and 67th in the business competitiveness index. However in the Southeast European region, Croatia ranks 3rd in competitiveness (after Slovenia and Bulgaria). It has already taken action to set up onestop-shops for business. Croatia s economic performance is comparable with that of some of the new EU Member States. David Sopta 21
The Politics of the New Balkan Economy There are already two agencies contributing to a better business environment: the Croatian Competition Agency and the Agency for Export and Investment. The latter will be divided into two: Invest Croatia will handle FDI while Enterprise Croatia will help SMEs to invest abroad. Our country will reach the goal of becoming a fully functioning market economy and will become competitive in the region and in the world. Stability in the region is the most important precondition for economic growth. 22
FRIENDS OF EUROPE, DECEMBER 2004 Serbia - a raft of business-friendly legislation Predrag Bubalo, Minister for Economy and Privatisation, Serbia Serbia is fully committed to EU accession, and has done a lot to adopt EU standards. It is trying to increase both exports and foreign direct investment, because capital brings with it technology, know-how, better management, better use of resources and higher competitiveness - and hence exports. What can Serbia offer to investors? It has a qualified labour force, a technological capacity, relatively cheap wages and a location on the very border of the EU. Its strengths are in the IT, pharmaceutical, food, and wood sectors. Predrag Bubalo The free trade agreement has increased the size of the market, but there are three barriers that have meant the expected wave of investment has not come: Regional security: though the region s image has improved, it is still not good. Political instability: a year ago the country went three months without a government or parliament. Now, there is a minority government and it has achieved good results, passing 80 laws in eight months. A series of new business friendly laws has been adopted. Legislation on private enterprise, for instance, is now in accord with EU directives and takes account of matters such as privatisation and redundancies. A limited company can now be registered with capital of e500 payable in two instalments. Bureaucracy has been cut: for instance the length of time it takes to register a company has been cut from 72 days to five days. Bankruptcy proceedings now take not seven years but one year. A law on executive procedure has cut the delay in getting a court hearing from 50 days to less than 30 days. VAT is to be introduced in 2005. The economic environment: two agreements have been made with the IMF and three with the World Bank, and 60% of London Club debt has been written off. Growth of 8% a year is expected, and a deficit of 3.6% in 2003 is expected to fall to 1.4% in 2005. 23
The Politics of the New Balkan Economy Structural reform continues. The first large privatisation has been completed, along with a number of smaller ones (e.g. in tobacco, brewing and water), and the privatisation of 67 further companies, employing two-thirds of industrial workers, is under way. The job As more of a businessman than a politician, I believe that it s the businessmen who will make the road to the EU. Predrag Bubalo of bank privatisation has also been started. The more investment there is from the EU, the faster accession will proceed. There are two important tests of readiness: first our capacity and readiness to follow our laws and constitution, and secondly harmonisation: if we are not ready to harmonise within the region, how can we harmonise with the EU? www.euractiv.com The independent media portal on EU policies with external contributions and interviews with EU Actors Your opinions? Write to: editor-in-chief@euractiv.com Suggest specific issues for LinksDossier: Philip A. Springuel publicaffairs@euractiv.com «Efficacité et transparence des Acteurs européens» 24
FRIENDS OF EUROPE, DECEMBER 2004 Bulgaria - putting people at the centre Meglena Kuneva, Minister for European Affairs, Bulgaria Both the EBRD and ECOFIN have complimented Bulgaria on the progress it has been making in recent years. GDP growth was 4.5% in 2003 and is expected to rise to 5.3% in 2004. Exports are continuously on the rise, with the EU taking over 60% of them. FDI in 2004 will be around $2bn, a growth of 28% over 2003. Inflation is running at 2.35% p.a., while unemployment has dropped to a record low: from 18% in 2001 to below 13% in 2004. Meglena Kuneva Company surveys show that the business context is improving. Transparency International places Bulgaria 45th out of 143 countries, which is better than last year. It is matter of changing the culture, and we cannot separate business culture from national and political culture. As Jean Monet said: If I had to start now with the unification of Europe, I would start with culture. We cannot talk about the business culture without addressing corruption, administrative services and the political heritage. We cannot separate business culture from national and political culture. Meglena Kuneva Where is Bulgaria right now? We completed EU accession negotiations on 15th June, so I am almost jobless as a chief negotiator! Among the watchwords for the future would be continuity, stability and decisiveness. There should be no flirting with public opinion, no making of false promises of speedy recovery, no claims that EU membership is a panacea. Next, we must respect civil servants - they are the soul of the process. This is important for business culture, as it is for the environment. Accession is not about chapters or directives - that is the easy part. It is about the so-called horizontal issues: administrative reform, the judiciary, and in the end people. Just as the Renaissance put the human being at the centre of the universe, we should treat European integration as a very anthropocentric process. 25
The Politics of the New Balkan Economy That is why we should work with the important NGOs and welcome their support. But sometimes the NGOs stand on the sidelines, observing and criticising, instead of engaging with the passion that the process deserves. Two final remarks: it would be a mistake for us to again divide Europe - the Lisbon strategy is important for all European countries whether they are members of the EU or not. The sooner all countries engage in the process, the better for Europe. Secondly, pace Mr Priebe, the process is not boring at all. The Balkan countries should not be thought of as a block: each has its own face, and each desires and deserves to be judged on its own merits. This is not because of selfishness: it is a competitive society and I really believe in competition and our own ambitions. 26
FRIENDS OF EUROPE, DECEMBER 2004 A successful regional investment strategy - Coca-Cola Sandro Baricevic, External Affairs Manager, Coca-Cola Adria, Croatia What a difference a year makes! At the previous edition of this seminar last year the main topic of discussion was trade barriers and other hard-core business environment issues - whereas today we are discussing when the Balkan countries will join the EU. First, I would say that this is the right forum for the corporate world to listen to politicians and to try to influence policy-making, which is fundamentally important: I would agree with Mr Bubalo that business people are pushing harder for accession than politicians are. Sandro Baricevic ^ In the last seven years, Coca-Cola has invested e300m and created 2,300 direct jobs in five factories and 28 distribution centres. I am glad to say that business is healthy and profitable, and we have become the leading alcohol-free beverage company in the region. The landscape in the western Balkans has changed since last year: all the region s countries have ratified a bilateral agreement (though not all have yet been implemented). The region s FDI inflow has reached e5bn, last year Serbia obtained $1bn in privatisation revenue, and as regards FDI per capita Serbia is clearly outperforming Poland. Unfortunately, the main drivers of FDI have been geographical proximity and cultural links. The countries that understand the region - Germany, Austria and Italy - have been the main investors, and the region has not registered as an investment platform more broadly. However most of the region s governments are doing what they can to improve the business environment. Competitiveness is one of the biggest challenges of the region. Sandro Baricevic ^ 27
The Politics of the New Balkan Economy We like to use the Stability Pact, and more precisely the Investment Compact, as a good framework to benchmark the business system and to predict political developments, so today s discussion on the revision of the Dayton Accord has been valuable. Not all countries have benefited from the Investment Compact, because of economic and political instability. Competitiveness is one of the biggest challenges of the region. Several key challenges remain: improving education: governments like to claim that their citizens are well educated, but many have only secondary school qualifications introducing VAT trimming large public sectors: in Bosnia the public sector employs nearly half the working population reform of the legal system: this is now speeding up, but the focus needs to be on implementation cutting bureaucracy: this is being tackled through one stop shops fighting corruption: this is one of the biggest problems, and it takes a lot of political will to do it well fostering innovation and technology transfer and increasing internet access levels, which are patchy regional economic co-operation: this can increase consumer demand, and stimulate the development of support industries What is good is that European investors are more optimistic about the region - they see new export platforms, lower-cost production, fresh acquisition targets and growing markets. We are proud to have been an early and fairly successful investor in the region, and have adopted a regional perspective - not only in our thinking but in our initiatives, for instance regarding supply chains. We believe that this is what has enabled us to retain a competitive edge in this challenging region. Increasing competitiveness within the region is a conditio sine qua non for joining the EU. 28
FRIENDS OF EUROPE, DECEMBER 2004 THE INTERNATIONAL REACTION EU accession - carrot and stick Reinhard Priebe, Director Western Balkans, Enlargement DG, European Commission The EU s overall policy position is clear: we want all the countries in the region to become members of the EU, and they want it too. The stabilisation and association process we have created has three pillars: trade liberalisation a considerable assistance budget of e5bn over 6 years contractual relationship based on association agreements; these have already been concluded with Croatia and Macedonia, and negotiations have been opened with Albania. Reinhard Priebe The so-called Thessaloniki agenda of 2003 has enriched this process, in that some enlargement instruments have been extended to countries that are not yet candidates. We need to be clear that this agenda is that of the countries concerned, not the EU. But though they say they are committed to this process, in some countries politicians are - to put it diplomatically - distracted by other things, and this is slowing progress. As far as economic policy goes, we are all frustrated that economic progress is too slow, but we should not forget the amazing progress that has been made. First the problems have to be overcome - and then the outside world has to be convinced that the problems have been overcome. Reinhard Priebe 29
The Politics of the New Balkan Economy The basic message is that Brussels can help with advice and some money, but reform has to be undertaken by the countries themselves. Economic strategies cannot be made in Brussels - the countries have to take control. The region also has to work on its image: first the problems have to be overcome - and then the outside world has to be convinced that the problems have been overcome. The reform agenda comprises a number of issues: On trade liberalisation, a free trade area is needed (even though it has taken existing EU members 40-50 years to get to the free trade area we now have - and we still have problems!) Markets need to be at regional level, whereas in two countries there is not even a single market at national level! Institutions such as the judiciary, legal system, customs offices, veterinary offices, land registries etc. need to be built Some basic infrastructure is still needed Organised crime and corruption need to be tackled, as the EU will not accept membership of countries in which they are widespread We need workable and affordable state structures. If they want to achieve EU membership, some countries will need to simplify their governmental systems, so that reforms can be implemented. It is worth noting that some existing EU members exhibit constitutional extravagance, and it is these that tend to lose structural funding because they are unable to absorb it. We have to resolve the remaining problem of instability in Kosovo, which overshadows everything. It must be remembered that there are political and economic conditions attached to EU membership, that is to say the Copenhagen Criteria. There is no political will to make the path that the Balkan countries will have to travel any less arduous than that of the preceding 19 accession countries, and one stumbling block to credible negotiations may be the relaxed attitude of some countries with regard to their own constitutions and international obligations. 30
FRIENDS OF EUROPE, DECEMBER 2004 There are some concluding observations: Should we go on using post-crisis instruments, or can we switch to preaccession ones? We might need to adapt the classical enlargement policy in the case of countries for which the transition will last some time. Economic issues have to be addressed at the level of the whole Southeast European region. The EU is hesitant to get involved in social policy (even if it is linked to economic policy). There is no readiness to open the Structural Funds or Cohesion Fund to non- Member States - and any contrary advice should be ignored. To sum up, what we are looking for is a lack of excitement - because if the whole process gets boring, the countries are on the right track. In discussion, Muhamet Mustapha, President of the Institute for Development ^ Research in Pristina, commented that the main problem is to improve governance. For instance, though five institutions claim to be in charge of the power utility KEK, none of them take the responsibility for ensuring a reliable electricity supply. Europe s and Kosovo s taxpayers have to ask who is responsible. Reinhard Priebe commented that in Kosovo what is crucial is that everyone sticks to the arrangements that have been made. Governance does need to be improved, and the Commission is pushing UNMIK to transfer more competences. But although there is much talk of wanting more competences, there is less willingness to take responsibility. KEK is a good example: e350 million has been invested, but no one is collecting payment of the electricity bills. The Commission is certainly thinking that accession will take place before 2020. Its policy remains that each country proceeds at its own pace, though it wants to avoid a situation in which one or two countries are left far behind the others. There is no need for a new policy, we should work through the painful steps of our existing policies. As the EU draws up a new constitution, our starting point should be the interests of the countries concerned, not our institutional wellbeing. 31
The Politics of the New Balkan Economy THE COCA-COLA COMPANY The Coca-Cola Company, founded in 1886, is the world's leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups, which are used to produce more than 230 beverage brands. The Company's headquarters are in Atlanta, with local operations in nearly 200 countries and 38,000 employees around the world. The Central Europe, Eurasia & Middle East Group, headquartered in Vienna, oversees the Coca-Cola business in 51 countries with a combined population of exceeding one billion. In the Group, as around the world, the business consists of The Coca-Cola Company, which owns the trademarks and provides the concentrate for its products, and authorised bottling partners, which produce and sell the finished beverages locally in each country. In addition, a local service office focuses on the marketing of the beverages in each country. While The Coca-Cola Company is a global company with some of the world's most widely recognised brands, our beverages are produced locally, we employ local people, and we are deeply involved in the life of communities in which we operate. As an early investor in South East Europe, the Coca-Cola business system is committed to the long-term development of the region. Our company and bottling partners have invested nearly 750 million in Adriatic, Balkans and East Mediterranean Region, directly employing more than 6,500 people in 17 production plants and 53 distribution centres across the seven countries (Bosnia and Herzegovina, Bulgaria, Croatia, FYR Macedonia, the Republic of Moldova, Romania and Serbia and Montenegro). The strengthening of links with the European Union will enhance South East Europe's economic and business environment, and stimulate growth and greater competitiveness. South East Europe has embarked on the journey towards becoming functioning market economies and in this process will stimulate GDP growth, consumer demand and ultimately prosperity. As a business we offer our expertise and resources in support of the process of integration with EU business legislation and practices. Our activities include advocating in favour of foreign direct investment, supporting the development of local training initiatives, and providing expertise on harmonisation of legislation related to our industry. 32
FRIENDS OF EUROPE, DECEMBER 2004 Help in acquiring the acquis communautaire Hasso Molineus, Head of Programming and Quality Assurance, Unit for Serbia and Montenegro, European Agency for Reconstruction (EAR) The European Agency for Reconstruction was set up by the EU in February 2000 as an aid mechanism to cope with the results of the ^ Kosovo crisis, and after the fall of Mr Milosevic its mandate was extended to cover Serbia and Montenegro. Today it also covers Macedonia. Over the four years of its existence it has built up a portfolio worth 2.3bn, of which 88% has been contracted and 73% dispersed. It has been favourably evaluated in late 2004 and its mandate has recently been extended till the end of 2006. It was initially created to provide emergency assistance, but subsequently supported infrastructure and other economic rehabilitation programmes and now focuses increasingly on institutional development, public administration, good governance, municipal development and aspects of regional integration. The Agency is also heavily involved in helping the countries in which we operate to prepare them for the process of European integration. Topics include: quality infrastructure standards, ISO, food safety standards and similar legislation, regional co-operation on matters such as sharing speciality laboratories, etc. refugees and IDPs, migration and asylum property rights organised crime, illegal migration, money laundering, integrated border management training, civil service reform statistics - a common methodology infrastructure (development of regional energy markets, transport links) the new neighbourhood initiative agriculture - disease control, animal control etc. Hasso Molineus 33
The Politics of the New Balkan Economy All these are issues which are best tackled at the national and regional level. In many cases they simply cannot be addressed by each country in isolation. In implementing free trade, we have to be patient - so many elements need to be put in place: rules of origin, standards, an integrated border management strategy etc. Current statistics show that regional trade accounts for much less Many issues simply cannot be addressed by each country in isolation. Hasso Molineus than trade of the SEE countries with the EU, essentially because many of the policy and market conditions are not yet in place. 34
FRIENDS OF EUROPE, DECEMBER 2004 MOVING FORWARD Making free trade a reality Mike Ahern, President of the Foreign Investors Council of Serbia and Montenegro The Foreign Investors Council of Serbia and Montenegro is a nonprofit organisation made up of 90 large companies, whose role is to work with government to create an environment that is conducive to foreign investment. A large FIC exists in Romania, new FICs have also been set up in Croatia and Moldova, and one will soon be set up in Bosnia. Their primary objective is to increase foreign direct investment in the region. Important issues in Serbia at the moment are to help the network of free trade agreements to grow over time into a free trade area, and to the country accede to the WTO and eventually the EU. Free trade agreements cover two areas: duties have largely been abolished for industrial products, whereas agriculture is a much more sensitive area. The regime applies to goods that originate within the country concerned, but does not extend to services such as transport, finance or telecommunications. Mike Ahern From a Serbian perspective, the barriers that are most important to address concern customs. The whole mindset of the customs authorities has Implementation is everything in respect of free trade agreements. Mike Ahern to change from carrying out border inspections to doing post-import control and looking at statistics. Serbia is also going to adopt new tougher standards, and this will require training. 35
The Politics of the New Balkan Economy A big commitment will be required from the Serbian government, as customs duties (together with excise) are probably its largest source of revenue. It needs to position itself to make the transition to relying instead on the corresponding increase in business tax revenue. Civil service reform comes into this area, and finally some private companies need to accept free market rules and stop hiding behind various barriers. I should like to see the business community dialoguing with the multilateral aid agencies and at the same time putting pressure on governments to ensure that we do not just pay lip service to free trade agreements, but turn them into a regional free trade area. In discussion, Muhamet Mustapha, President of the Institute for Development ^ Research in Pristina, noted that the main obstacles with free trade agreements relate to customs and infrastructure. But other difficulties remain: Kosovo is outside the network of free trade agreements, which causes immense problems. Kosovo has removed tariffs, but its neighbours have not reciprocated. Kosovo is also outside the European transit corridors, despite its central geographical position. And the overall situation in Kosovo is the main issue that needs to be addressed - yet it is not represented here. European institutions need to think about this. Eberhard Rhein, Trustee of Friends of Europe, commented that the region cannot have an economic future without a regional free trade approach based on European rules of origin. There is no reason the Western Balkans should not do the same as the North African countries did when they adopted the Agadir approach. 36
FRIENDS OF EUROPE, DECEMBER 2004 How to manage foreign investment Primoz Karpe, Deputy Director, Mobitel, Slovenia The ICT sector is made up of two segments, information processing and telecommunications, which are subject to network effects - that is, the more users there are, the bigger the returns on investment are. Therefore the first thing foreign direct investors look for is network effects - things such as pipelines, power and telecommunications infrastructure. One must therefore be very prudent in handling investment in telecommunications. Primoz Karpe Almost all countries in the region have privatised telecommunications, or are in the middle of doing it. But what no one has mentioned so far is how to judge whether these investments are positive. First, governments should stimulate only those investments that bring new knowledge and new know-how into the country. Secondly, not every takeover is good per se: there is no point in turning a public monopoly into a private monopoly! Markets should be liberalised before privatisation. Thirdly, there is the question of how to use proceeds from the sale of national assets? A lot of countries have used them to stimulate consumption and imports. This is why privatisation revenue correlates with increased FDI - but it also correlates with current account deficits. So it is important to have the capacity to absorb the know-how that an investor brings in. This is the difference between greenfield investment and takeovers - greenfields have much more potential as they integrate local companies to a much greater extent. The cost of know-how is the key factor, not wage cost. The region should focus on educating its workforce. Primoz Karpe 37
The Politics of the New Balkan Economy There are five spillover effects to look for from foreign investment: the need for restructuring of a company: in the case of telecoms this is almost always needed the likelihood of privatisation causing reductions in the workforce the stimulation of competition, which is generally but not automatically a consequence of FDI the creation of human capital is important, so keep the R&D departments at home the productivity gains that are available Not all markets are small (e.g. Romania) and even small markets like Albania or Macedonia can be very lucrative. Nowadays market size is less important than the cost issue. In high-tech, it is the relative cost of the know-how of the local workforce that is the factor, not the wage cost. This is why the region should focus on educating its workforce. A well-educated workforce can absorb the knowledge that a foreign investor brings in, and is able to build a new investment cycle by itself, based on that knowledge. 38
FRIENDS OF EUROPE, DECEMBER 2004 Building trust through Euroregions Pantelis Sklias, Head of the International Co-operation Office, Constantinos Karamanlis Institute for Democracy Making regional co-operation work in the Balkans is a complex job. We should remember that it took the EU 25-30 years to achieve the level of economic integration we have today - and we still have to achieve political integration. What s more, this was given relatively good conditions. The EU has benefited from a strong political consensus to create a common market, a commitment to develop the institutions that it relies on, a minimum level of economic development, a certain complementarity between the economies, political stability both within the Member States and between them, and a commitment from the richer states to assist the weaker ones. Pantelis Sklias Compare the situation in the Western Balkans today: no less than 28 free trade agreements have been signed, but we still have no common market. It seems obvious that this essentially economic issue is determined by political conditions. Today, the economic integration of the western Balkans is hindered by: bad communications (roads) political instability requiring external intervention in FYROM unstable relations between Serbia and Montenegro Let's put the Balkans back on the political agenda of the international community. Pantelis Sklias the limited rule of law in Kosovo, as regards the right to return, the rights of minorities, and even basic rights such as the principles of participation, transparency and good governance a generally low level of economic development, together with high unemployment and limited social safety nets 39
The Politics of the New Balkan Economy So the conditions are not good. Bilateral donors (not the European institutions) have now largely left the Balkans, so initiatives such as this series of seminars, and the programmes of my institute, are needed to put it back on the political agenda of the international community. Big projects involving big amounts are not necessarily the solution: small-scale schemes can bring neighbouring peoples together. Euroregions could be a basis for development - mini-free trade areas, with support for joint initiatives among entrepreneurs, business incubators etc. Finally the efficiency and accountability of international bodies such as UNMIK and K-FOR need to be further increased. Constantinos Karamanlis Institute for Democracy (CKID) The Constantinos Karamanlis Institute for Democracy (CKID) was founded in Athens in January 1998. It is a non-profit organisation which focuses on the study and analysis of political, economic and social issues. Its objective is to promote the ideas of liberal democracy, private enterprise, good governance and transparency. It is administered by a thirty-member Board of Directors coming from the academic, business, foreign policy and military communities. 40
FRIENDS OF EUROPE, DECEMBER 2004 A region on the move - increasing mobility Ansgar Kauf, Director of Programmes of the International Road Federation (IRF) Road transport is growing in importance in the Balkan region. The 80/20 intermodal split between rail and road is reversing, and roads are now carrying around 60% of traffic. Roads are a major indicator of how well regional co-operation and regional exchanges are working. The IRF is a non-governmental organisation with members from both the public and private sectors, and our mission is to promote innovative road development, but particularly from a social-economic viewpoint rather than a technological one. We work closely with organisations such as the Stability Pact and the World Bank (which is one of our members). To briefly address the challenges we see, it is of course important to improve the physical road network in Southeast Europe, because major parts of it are missing, but it is even more important to remove the non-physical barriers, as otherwise physical investment is wasted. you may be surprised that countries levy tariffs that discriminate between different countries, and these need to be harmonised. border crossing procedures need to be speeded up international links need to be co-ordinated (given that come countries want to build not a road to their neighbour but a bridge to the EU) continuity of government commitments is needed - contracts must be honoured when the government changes transparent planning is needed, to allow countries to collaborate with their neighbours Ansgar Kauf It is important to remove the non-physical barriers, as otherwise physical investment is wasted. Ansgar Kauf 41
The Politics of the New Balkan Economy accounting transparency is also needed, to allow co-operation between private and public sectors with the private sector investing and providing, and the public sector regulating more consideration should be given to the users: they are the drivers of integration 42
FRIENDS OF EUROPE, DECEMBER 2004 LIST OF PARTICIPANTS Mike Ahern President Foreign Investors Council Giorgio Aliberti Counsellor, Policy Unit, Western Balkans Task Force Council of the European Union: Directorate General for External Economic Relations, CFSP Nick Allen Information Assistant South East Partners Niels-Ulrik Amdal Adviser Confederation of Danish Industries Ruggero Arico European & International Affairs Manager Ente Nazionale Energia Elettrica (ENEL) Ventsislava Atchova Attaché Mission of Bulgaria to the EU Zana Bajrami Student Katholieke Universiteit Leuven (KUL) Radka Balabanova-Ruleva Third Secretary Mission of Bulgaria to the EU Miklos Barabas President of the EESC contact group on Western Balkans European Economic and Social Committee (EESC) Sandro Baricevic Communication & Public Affairs Manager Coca-Cola AB Region Elaine Barry Project Executive Chamber of Commerce of Ireland Martin Bartenstein Federal Minister for Economic Affairs Ministry for Economic Affairs and Labour, Austria Klaus Becher Senior Research Associate King's College London Centre for Defence Studies Katarina Bergkvist Desk Officer Bosnia and Herzegovina European Commission: Directorate General for Economic and Financial Affairs Dragan Blagojevic Journalist BETA News Agency Ludger Blasig Press Officer European Commission: Directorate General for Enlargement Mirela Bogdani Department of Politics Cardiff University School of European Studies Uliana Bogdanska Counsellor Mission of Bulgaria to the EU 43
The Politics of the New Balkan Economy Christoph Borucki IHK Nord Predrag Boskovic Deputy Minister Ministry of Foreign Affairs, Serbia and Montenegro Lena Boskovic Journalist TVin Åse Botha Consultant Swedish Trade Council Carl-Johan Breitholtz Federation of Swedish Farmers Mia Brozovich Second Secretary Mission of Croatia to the EU Predrag Bubalo Minister of Economy and Privatization Ministry of Economy, Republic of Serbia Elvir Bucalo Journalist South East Europe TV Exchanges (SEETV) Marko Bucik Member of the Executive Bureau Young European Federalists (JEF) Erhard Busek Special Coordinator Stability Pact for South Eastern Europe Geert Cami Deputy Secretary General Friends of Europe Susanne Canzler Manager EU Enlargement Information Centre Bo Caperman Desk Officer European Commission: Directorate General for Environment Theodoros Chartomatsidis Principal Advisor Union of Hellenic Chambers of Commerce Agnes Chaudron Adviser Assemblée des Chambres Françaises de Commerce et d'industrie (ACFCI) Dusan Chrenek Policy Unit & Military Operations Council of the European Union: Policy Planning and Early Warning Unit Kaja Ciglic Research Assistant International Crisis Group (ICG) Brussels Office Silke Conrad Department Assistant DaimlerChrysler Representative Office for European Affairs Steven Cordas Correspondent Tanjug Souleymane Coulibaly Economist Nestlé Robert Cox Trustee Friends of Europe Simone Cuomo European Atomic Energy Forum (FORATOM) Fatmir Cupri Student Katholieke Universiteit Leuven (KUL) 44
FRIENDS OF EUROPE, DECEMBER 2004 Niels Dahlmann Honorary Consul Consulate of the Republic of Latvia Efpraxia Dalakiouridou European Commission: Directorate General for Enterprise Marc de Geyer Assistant Commission of the Bishops Conferences of the European Community (Comece) Francis Degryse Relationship Manager Fortis Bank Kálmán Dezséri Senior Research Fellow Institute for World Economics Susanna Di Feliciantonio Account Manager DLA Milo Djukanovic Prime Minister Cabinet Office of the Republic of Montenegro Gordana Djurovic Minister for European Integration Ministry for European Integration, Montenegro Vita Dobele Head of Division Ministry of Foreign Affairs, Latvia Olivera Drazic Adviser, European Government Affairs BP Europe Petra Drobne Programme Leader Small Business Development Centre George Ellis Ruano Director Gellis Communication Rainer Emschermann Administrator, Balkan Directorate European Commission: Directorate General for Enlargement Franz Eppe Charles Faid Youth Work Development Assistant European Youth Forum (YFJ) Christian Falkowski Director, External Service European Commission: Directorate General for External Relations Cornel Feruta Director, Western Balkans Ministry of Foreign Affairs, Romania Ireneusz Fidos External Relations Permanent Representation of Poland to the EU Mark C. Fischer Assistant Director Konrad-Adenauer-Stiftung (KAS) Brussels Office Ladislav Fnouka Head of Office South Bohemia Permanent Office Eran Fraenkel Regional Director, South East Europe European Search for Common Ground (ECCG) Toshiro Fukura Senior Economist Japan External Trade Organization (JETRO) Nathalie Furrer Director Friends of Europe Kurt Gaissert Advisor for Regional Cooperation Representation of the Land Baden- Württemberg to the EU 45
The Politics of the New Balkan Economy Viron Gjymshana European Correspondent Deutsche Welle Albanian Service Paola Gosparini Head of Brussels Office Development Researchers' Network (DRN) Xanthi Gousta Director Euroconsultants Grigor Gradev Coordinator Balkans Stability Pact European Trade Union Confederation (ETUC) Radmila Grozganic Executive Director Chamber of Commerce and Industry Serbia and Montenegro Goran Gvozdinovic Director, EU Department Ministry of Foreign Affairs, Serbia and Montenegro Sarah Hackaj Head of Office European Centre for Kosovo Hans David Hahn Representation of Bavaria to the EU Ardo Hansson Lead Economist, ECSPE The World Bank Headquarters Tessa Harris Human Rights and Democratisation Unit European Commission: Directorate General for External Relations Mikko Hautala First Secretary, Western Balkans Stability Pact Permanent Representation of Finland to the EU Kristian Hedberg Member of Cabinet, Bulgaria, Romania, Pre-Accession Instruments, Competition, State Aid & Regional Policy European Commission: Cabinet of Commissioner Rehn Rainer Hellmann Journalist Europäische Zeitung Ann Herd Second Secretary Commercial Permanent Representation of the United Kingdom to the EU Katalin-Tünde Huber Executive Assistant Stability Pact for South Eastern Europe Amela Hubic Student Université Libre de Bruxelles (ULB) Ewa Hübner Project Associate APCO Europe Frederike Jansonius Stability Pact for South Eastern Europe H.E. Mr. Pavle Jevremovic Ambassador Mission of Serbia and Montenegro to the EU Miodrag Jocic Deputy Minister for Capital Investments Ministry of Economy, Republic of Serbia Toby Johnson Freelance Journalist Nahila Justo European Affairs International Road Federation (IRF) 46
FRIENDS OF EUROPE, DECEMBER 2004 Nenad Kalezic Cameraman TVin Gisela Kallenbach Member European Parliament: Committee on Regional Development Carola Kaps Economic Correspondent for CEE & SEE Frankfurter Allgemeine Zeitung (FAZ) Franz Kaps Special Representative World Bank Office for South East Europe Primoz Karpe Deputy Director Mobitel John H. King Director Business Humanitarian Forum Martina Klisovic Second Secretary Mission of Croatia to the EU Darja Kocbek Correspondent Delo Petar Kraljevic First Secretary Mission of Bosnia and Herzegovina to the EU and NATO Michael Kuhn Staff Officer Commission of the Bishops Conferences of the European Community (Comece) Igor Kuzelka Attaché Embassy of Serbia & Montenegro to Belgium Maarit Laurila Administrator European Economic and Social Committee (EESC) Jean Benoit Leblanc Counsellor Economic and Trade Policy Mission of Canada to the EU Mira Lenardic Secretary General National Competitiveness Council Mattias Lindström Consultant Swedish Trade Council Alexander Lioutyi Regional CORA Manager - Central & Eastern Europe British American Tobacco Company (BAT) Ludmila Majlathova Adviser Union of the Electricity Industry (EURELECTRIC) Nives Malenica Minister Counsellor Mission of Croatia to the EU Robert Manchin Chairman and Managing Director Gallup Europe Peer Mannes Senior Adviser Ministry of Foreign Affairs, Norway Philippe Mannoni Executive Secretary Gas Transmission Europe (GTE) Jasna Maric Second Secretary Embassy of Croatia to Belgium Claude Mariotte EU Representative France Télécom EU Office 47
The Politics of the New Balkan Economy Bozidar Marot Head of Marketing and Financial Division Small Business Development Centre Peter Martin Administrator European Commission Micol Martinelli Adviser International Affairs Eurochambres H.E. Mr. Zdenko Martinovic Ambassador Embassy of Bosnia and Herzegovina to Belgium Dragica Martinovic Head of Office Croatian Chamber of Economy, Brussels Office Bozidar Masanovic Permanent Correspondent Delo Romualdo Massa Bernucci Head of Western Balkans and Cyprus Division European Investment Bank (EIB) Giles Merritt Secretary General Friends of Europe Kalman Meszaros Commercial Counsellor Embassy of Hungary to Belgium Klaus Meyerhorn Honorable President Deutscher Schulverein Bruessel Susanne Michel European Association of Public Banks (EAPB) Gauthier Mignot Counsellor Balkans Permanent Representation of France to the EU Slavica Milacic Adviser Cabinet Office of the Republic of Montenegro Goran Miljtinovic Journalist TV Montenegro Klaus Milz President Bombardier Transportation European Affairs Katarina Mitrovic Director Chamber of Commerce and Industry of Serbia and Montenegro Brussels Office Hasso Molineus Programming Director European Agency for Reconstruction (EAR) Belgrade Office Muhamet Mustafa President Institute for Development Research - RIINVEST Michail Myrianthis Executive Member of the Board Hellenic Petroleum Cristian Negrila First Secretary Mission of Romania to the EU Piret Nommela Second Secretary Permanent Representation of Estonia to the EU Gergana Noutcheva Research Fellow Centre for European Policy Studies (CEPS) 48
FRIENDS OF EUROPE, DECEMBER 2004 Rahman Nurdun Consultant Organisation for Economic Cooperation and Development (OECD) Investment Compact for South-East Europe Doris Pack MEP Chairwoman European Parliament: Delegation for Relations with the Countries of South-East Europe Maarit Paloviata Consultant Interel European Public Relations and Public Affairs Sheri Perelli European Search for Common Ground (SFCG) Gernot Pfandler Second Secretary Permanent Representation of Austria to the EU Celine Pfister Junior Advisor Siemens EU Affairs Simona Pilko Economic Adviser Slovenian Business and Research Association (SBRA) Mihaela Pop Third Secretary Mission of Romania to the EU Marija Popovic Assistant Chamber of Commerce and Industry of Serbia and Montenegro Brussels Office Reinhard Priebe Director Western Balkans European Commission: Directorate General for Enlargement Mateja Prosek Project Manager, Balkan Youth Project European Youth Forum (YFJ) Andrija Rackovic Editor in Chief Daily Newspaper "Pobjeda" Tamara Radenkovic Freelance Interpreter Ilir Rama Executive Assistant to the Advisor to the Prime Minister Government of Kosova Tone Rand Principal Administrator European Parliament Véronique Renoulet Second Secretary Embassy of France to Belgium Michaela Rentl Trainee Konrad-Adenauer-Stiftung (KAS) Brussels Office Peter Reuss National Expert, Unit "Co-ordination of policies" European Commission General Secretariat Eberhard Rhein Trustee Friends of Europe Sebastian Richter Director Federation of German Construction Industries Werner Ruess EU Corporate Affairs Deputy Manager Michelin EU Corporate Affairs Michael Ruoff EU Policy Adviser CDU/EVP 49
The Politics of the New Balkan Economy Julian Schaub Lawyer European Association of Public Banks (EAPB) Lars Schmidt Counsellor Permanent Representation of Sweden to the EU Barbara Schweighofer Head of Office SME Union Radu Serban Minister Counsellor Embassy of Romania to Belgium Pantelis Sklias Head of International Cooperation Office Constantinos Karamanlis Institute for Democracy David Sopta Assistant Minister for International Economic Cooperation Ministry of Foreign Affairs Vlatko Stankovski First Secretary Mission of the Republic of Macedonia to the EU Sebastjan Stjepanovic Consultant SPEM Communication Group Stefan Straesser Confederation of German Employers' Organisations (BDA) Peter Strempel Project Officer Friends of Europe Tatjana Sukovic Journalist TV Montenegro Zsofia Szilagyi Political Advisor Stability Pact for South Eastern Europe Andrei Tarnea Director Romanian Information Centre Martin Taylor Chairman Toyota Bas Tonnaer Head of the BAT Representative Office to the EU British American Tobacco Company (BAT) Lidija Topic Deputy Foreign Minister Ministry of Foreign Affairs, Bosnia and Herzegovina Miriam Toplanska Third Secretary Permanent Representation of the Slovak Republic to the EU Lene Topp Consultant PLS Ramboll Management Gjeraquina Tuhina Journalist Radio Free Europe Istvan Tussai Sofia Tzantzalou-Patakias Press Attaché Permanent Representation of Greece to the EU Tzvetina Tzvetkova Attachée Mission of Bulgaria to the EU 50
FRIENDS OF EUROPE, DECEMBER 2004 Jelena Udicki Stakeholder Manager, BAT South East Europe British American Tobacco Company (BAT) Patrick Voller Secretary General SME Union Milan Jezic von Gesseneck President Chamber of Commerce Belgium- Luxembourg and South Eastern Europe Heinrich Von Moltke Senior Advisor European Policy Centre (EPC) Peter R. Weilemann Director of the European Office Konrad-Adenauer-Stiftung (KAS) Brussels Office Martina Westhues Access and International Regulatory Affairs Deutsche Telekom Nicholas Whyte Europe Programme Director International Crisis Group (ICG) Brussels Office Ute Wiegand Assistant to Dieter Koch MEP European Parliament Annerose Zacherl Manager EU Affairs MAN Aktiengesellschaft Erisa Zykaj Correspondent News 24 TV 51
The Politics of the New Balkan Economy ABOUT FRIENDS OF EUROPE Friends of Europe (FoE) is Brussels' liveliest think-tank, aiming to stimulate new thinking on the future of Europe and broaden the EU debate. It is nonprofit, with no national or political bias and a membership base that is as youthful as it is influential. Our goal since 1999 has been to take discussion of the key issues confronting the EU outside the charmed circle of the Brussels elite by linking up with major think tanks and media in Europe's national capitals. Two issues have formed a leitmotif of our debates and publications: reform of EU-level decision-making and ways of improving the EU's information and communication. These themes underpinned two ground breaking FoE publications: Blueprint for a Reform and Getting the Message Across in May 2001 and Can EU hear me? in October 2004. In addition, Friends of Europe's activities cover a wide range of topics and aim to take stock of the state of play in many of Europe's key policy areas. FoE's style and ethos is to provide an open forum for EU and national policymakers, business leaders and NGOs. As well as appealing to EU policymakers, our events are popular with the youth, MEPs, government representatives, researchers and professional consultants who do so much to help shape legislative initiatives. Friends of Europe's activities are directed by a Board of Trustees that is chaired by Viscount Etienne Davignon and made up of senior figures contributing to the process of European integration who include Jean-Luc Dehaene, Giuliano Amato, Javier Solana, Michel Barnier, Pat Cox, Antonio Vitorino, 52
FRIENDS OF EUROPE, DECEMBER 2004 Carl Bildt, Pascal Lamy and Baron Daniel Janssen. Trustees also contribute to FoE publications such as Salvaging the Wreckages of the European Constitution. If you are interested in further information on Friends of Europe and its membership, please do not hesitate to contact us. Friends of Europe - Les Amis de l Europe La Bibliothèque Solvay Leopold Park, Rue Belliard 137, B-1040 Brussels Tel : (+32 2) 737 91 45 - Fax : (+32 2) 738 75 98 E-mail : info@friendsofeurope.org - Internet : w w w.friendsofeurope.org 53