The EU and the Western Balkans

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The EU and the Western Balkans

• 28 April 2005

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The EU and the Western Balkans

• Structure/Index
• The EU and its neighbours
• The Stabilisation and Association Process
  objectives and instruments
• The Thessaloniki Agenda
• Challenges for the future

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EU structures
Main EU Institutions
The European Investment Bank
The European Court of Justice
The Court of Auditors
The European Central Bank (ECB)
The European Parliament
Directive
European Commission
The Council of Ministers
Regulation
Committee of the Regions
Economic and Social Committee
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• The EU
• and its neighbours

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The New European Architecture

Europe Agreements
EEA Treaty
The European Union
Trade Sectoral cooperation Political
consultation
Single Market Economic Social Cohesion Single
Currency Political Union
Candidate countries

• 4 liberties
• Free
• movement of
• persons
• goods
• services
• capital

EFTA Countries
Perspective of Future Membership
Western Balkans

• Stabilization and Association Process
• Stability Pact initiatives

Stabilisation and Association Agreements
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EU relations with neighbours

• Enlargement (art. 49 of the TEU any European
  State which respects the principles set out in
  article 6(1) (see footnote 1) may apply to become
  a member of the Union)
• 1957 6 members France, Italy, Germany,
  Belgium, Luxembourg, Netherlands
• 1973 9 members United Kingdom, Ireland,
  Denmark
• 1981 10 members Greece
• 1986 12 members Spain, Portugal
• 1995 15 members Austria, Finland, Sweden
• 2004 25 members Cyprus, Czech Republic,
  Estonia, Hungary, Latvia, Lithuania, Malta,
  Poland, Slovakia, Slovenia
• Bulgaria and Romania - accession in 2007/2008
• Croatia postponement of opening of negotiations
  
• Turkey opening of negotiations on 3 October
  2005
• Albania, BiH, FYROM, SCG
• Footnote 1 Principles of liberty, democracy,
  respect for human rights, rule of law

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EU integration

• EU model based on economic interdependence,
  political will and harmonised law ? best
  example of peaceful regional integration
• 4 freedoms (goods, services, capital, people)
  cornerstone of internal market. Aim free
  circulation, non-discrimination,
• removal of barriers
• Monetary Union achieving full economic
  integration
• EU law supersedes national law and is binding

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• The EU
• and the Western Balkans

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The EU and the Western Balkans

• Recognising the importance of the Western Balkans
  the EU has
• Promoted stability in the region through its
  assistance programmes
• Supported democracy through political dialogue
• Launched in 1999 the Stabilisation and
  Association process (SAP)

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The Balkans will be an integral part of a
unified EuropeThessaloniki, June 2003

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• The Stabilisation and Association Process (SAP)

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Stabilisation and Association Process

• The SAP is the framework policy of
• the EU in the region serving to
• Promote European values and principles
• Act as an incentive and a guide for reforms
• Open the way for eventual membership of the EU

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Stabilisation and Association Process

• The SAP aims to
• Bring peace and stability to region
• Promote stable democratic institutions
• Ensure rule of law prevails
• Develop and sustain prosperous, open and
  EU-compatible economies

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Stabilisation and Association Process

• Basics
• Regional Approach 1996, after Dayton
• SAP proposed by the Commission in May 1999
• Covers Albania, Bosnia and Herzegovina, Croatia,
  former Yugoslav Republic of Macedonia, Serbia and
  Montenegro including Kosovo
• Comprehensive policy framework, bundling earlier
  EC instruments, inspired by enlargement
  methodology.
• Geopolitical rationale Stabilization of the
  region and gradual rapprochement/approximation
  with the EU.
• Prospect of full integration into EU structures
  Status as potential candidates (Feira European
  Council)
• Differentiated, progressive and benchmarked.

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Stabilisation and Association Process

• Instruments
• Trade measures
• Financial assistance
• Stabilisation and Association Agreements
• Political and economic dialogue
• Conditionality
• Annual Review Mechanism
• European Partnerships and Action Plans

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Stabilisation and Association Process

• Conditionality
• General
• Democratic principles
• Human rights, rule of law, ICTY
• Respect for and protection of minorities
• Market Economy
• Regional Cooperation
• Specific (BiH, Croatia, SCG)
• International obligations (Dayton, UNSCR 1244)

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• The
• Thessaloniki Agenda

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The Thessaloniki Summit

• Key messages
• European perspective membership as shared goal
• SAP confirmed as framework through to accession
• enriched by elements of the enlargement
  method
• 1993 Copenhagen criteria SAP conditions
  basis for progress
• Each on its own merits, each at its own speed
• Joint commitment

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The Thessaloniki Agenda

• Reinforcing the SAP
• Introduction of European Partnerships and Action
  Plans (enlargement tools)
• Political cooperation intensified
• Increased support for institution building
  Twinning, TAIEX, Regional School for Public Admin
  Reform
• Participation in Community Programmes
• Stock-taking of progress on Action plans to
  combat organised crime and corruption
• Measures to promote economic development
  (economic dialogue, diagonal cumulation of
  origin, European Charter for Small Enterprises,
  infrastructure networks, participation in tenders
  for some EU programmes)

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is a joint agenda

• Commitments by the countries
• to implement recommendations in the Commissions
  Annual Reports and European Partnerships
• to fully cooperate with the ICTY
• to facilitate the return of refugees and IDP
• to taking concrete measures to fight illegal
  migration, org crime, to improve border security
• to further develop regional cooperation
• etc

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• Trade

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Trade liberalisation

• Autonomous trade measures since 2000
• Almost complete liberalisation no duties, no
  quantitative restrictions on practically all
  goods
• Few remaining quotas fish, baby-beef and wine
• 55 to 90 of SEE trade is with the EU
• SEE exports to the EU increasing more than
  exports to the rest of the world.
• .. but full export potential not realised
• EU will account for over 70 of total trade
  (post-enlargement)
• FTAs within the region
• Challenges for Kosovo to take advantage of
  opportunity

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Trade liberalisation

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Trade - figures

• Exports (million) Change ()
• Country 1999 2002 2002/1999
• Albania 228 330 44
• BiH 358 624 75
• Croatia 1.892 2.357 25
• fYRoM 591 552 -7
• SCG 563 1.257 129
• WB total 3.663 5.150 42

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Trade figures

• Western Balkans Main Economic Trends

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• Assistance

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Financial Assistance

• What is CARDS?
• CARDS - Community Assistance for Reconstruction,
  Development and Stabilisation
• Adopted by Council Regulation 2666/2000
• Rationalised most assistance under one programme
  (Obnova, Phare)
• Underpins Stabilisation and Association Process

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Financial Assistance

• CARDS objectives
• Reconstruction and democratic stabilisation
• Institutional and legislative development,
  including harmonisation with EU norms
• Sustainable economic and social development
• Promotion of closer relations and regional
  cooperation

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Financial Assistance

• CARDS Programming
• A Country Strategy Paper (CSP) outlines in
  general terms
• Policy response
• Cooperation objectives
• Programme priorities

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Financial Assistance

• Annual programmes for each country detail
• Summary of situation
• Budget allocation per sector
• Project outline for budget year

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Financial Assistance

• National programmes are managed by
• Commission delegations in Croatia, Bosnia
  Herzegovina, and Albania
• European Agency for Reconstruction in Serbia
  Montenegro, Kosovo fYR Macedonia
• Headquarters for regional programmes, Tempus and
  CAFAO

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Financial Assistance

• Priorities 2005-2006
• Democratic Stabilisation
• - refugee return, civil society, media
• Good governance and Institution Building
• - judicial reform, police, organised crime,
  asylum and migration, public admin reform,
  customs etc
• Economic and Social development
• - trade, infrastructure, environment, education
• Participation in Community programmes

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Financial Assistance

• EC assistance 1991-1999 nearly 6 billion
• ECHO humanitarian assistance
• CARDS 2000-2006 nearly 5 billion
• Macro-financial assistance 1992-2003 1 billion
• Country programmes, regional programme
• Implementation decentralised to EC Delegations
  and the European Agency for Reconstruction
• Principles beneficiarys needs, reform
  priorities, conditionality, concentration, EC
  added value

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Financial Assistance

• CARDS 2000-2004 2005 2006
• ( million) (indicative)
• Albania 219.5 44.2 45.5
• Bosnia and Herzegovina 395.4 49.4 51.0
• Croatia 273.8 87.5 76.0
• FYROM 254.4 39.0 40.0
• Serbia and Montenegro 1132.2 198.0 191.0
• Kosovo 1000.9 59.5 54.5
• Regional support 140.2 40.4 42.0
• International Civil Admin. 129.5 36.0 35.0
• Total - approx. 3.600 554 535

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Financial Assistance
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Albania
37
FYROM
38
Bosnia and Herzegovina
39
Serbia and Montenegro
40
Kosovo
41
Regional Programme
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• Contractual Relations

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Stabilisation and Association Agreements (SAAs)

• SAA is a formal agreement providing a framework
  for
• Closer political dialogue
• Establishment of free trade area
• Enhanced regional cooperation
• Harmonisation of legislation

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Stabilisation and Association Agreements (SAAs)

• Nature of SAAs
• Binding treaty, signed with a state, contains mix
  of rights and obligations, modelled on the Europe
  Agreements, tailor-made for each country.
• Contains
• Political dialogue
• Regional cooperation, including free trade
  agreements and conventions on number of issues
• Free trade area with the EC within X years
• Four freedoms - progressive
• Harmonisation of legislation
• Cooperation, e.g. in justice and home affairs
  (visa, border control, illegal migration, money
  laundering etc)
• Cooperation policies (economic, statistical,
  industrial, banking, SMEs, customs, social,
  agriculture, transport, environment etc)
• Financial cooperation
• New Joint Bodies

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The road to an SAA and future EU Membership
EU Membership
Accession negotiations
Opinion by the Commission
Croatia
Application for membership
SAA Implementation
FYROM
Conclusion SAA Interim Agr.
SAA negotiations
Albania
Serbia and Montenegro BiH
Feasibility Report
CTF/EPD/STM
Kosovo
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• Other SAP instruments

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Political dialogue reform advice

• Regular political and technical visits, including
  seminars
• Consultative Task Forces / Enhanced Permanent
  Dialogue Reform monitoring and advice
• Political Dialogue under the bilateral agreements
• European Partnerships and Annual Reports
  roadmaps for further reforms
• Linkage of SAP instruments Report -gt Partnership
  -gt Advice gt Assistance -gt Reports

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European Partnerships

• Partnerships adopted by the EU.
• Identify reform priorities for short and medium
  term, help the countries prepare for further
  integration into the EU.
• Check list against which to measure progress.
• Guides Community assistance.
• Countries adopt Plans for implementation of the
  Partnership priorities.
• Progress monitored through SAP structures and
  reported in the Commissions Annual Report

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Annual Review Mechanism

• Monitoring the process - the SAP Report
• The Commission assesses progress made by the
  countries in Annual Reports
• Reports presented to the countries, the Council
  and the European Parliament.
• Structure of Annual Report
• Strategy paper
• Detailed assessment of each country
• (political, economic, implementation of SAP, EC
  assistance)
• European Partnerships

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Regional Cooperation

• A key element of the SAP
• Regional trade liberalisation
• Bilateral conventions of SAA signatories
• Regional initiatives on energy and transport
• Justice and home affairs cooperation
• Stability Pact plays an important role in
  promoting regional cooperation
• as does the SEECP as a regional forum and voice

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• Challenges ahead

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Challenges for the region

• Completing the transition democracy, market
  economy, rule of law
• Political instability and new nationalism need
  for domestic focus on EU goal
• Unresolved constitutional issues
• Promoting economic development
• Tackling organised crime and corruption
• Assuming ownership of process

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Useful web sites

• Main EU website http//europa.eu.int
• EU external relations http//europa.eu.int/comm/wo
  rld
• Western Balkans http//europa.eu.int/comm/
  external_relations/see/index.htm
• Commission/World Bank www.see.recon.org
• Legislation http//europa.eu.int/eur- lex/e
  n/search_oj.html
• Assistance/tenders http//europa.eu.int/comm/
  europeaid/tender/index_en.htm
• Publications http//europa.eu.int/comm/
• dg10/publications/index_en.htm

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• Kosovo in the SAP

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Kosovo in the SAP

• The EU dimension
• Future of Kosovo, whatever its status, lies in
  Europe
• EU-compatibility enshrined in Constitutional
  Framework (Art 5.7)
• Non-EU compatibility would drive wedge between
  Kosovo and rest of region
• EC assistance conditional on SAP principles
• Support for involvement in relevant processes

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Kosovo in the SAP

• EU support for UNMIK Pillar IV
• Financed and advised by EU (but under UN mandate
  and instructions)
• Economy is key to EU integration
• Coordination of EU integration (Europe Office,
  STM) with PISG Office of European Integration
  Processes

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Kosovo in the SAP

• EU presence in Kosovo
• European Commission Liaison Office (Mamberto)
• Personal Representative of SG/HR Solana
  (Gentilini)
• European Agency for Reconstruction (Zink /
  Bernard-Guèle)
• Europe Office (within UNMIK)
• EU Member States representatives
• EUMM

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Kosovo in the SAP

• SAP Tracking Mechanism (STM)
• To provide UNMIK and PISG with EC expertise and
  policy guidance for EU approximation
• Full commitment of PISG necessary
• Working methods monitoring tools,
  questionnaires, internal PISG/UNMIK coordination
  structures, STM meetings
• STM meetings and recommendations
• Regular meetings assess progress in political,
  economic and institutional reforms and compliance
  with SAP conditionality
• EC experts formulate recommendations for action
• EC reports regularly to Member States / Council
  on progress

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• SME development in the Western Balkans

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SMEs in Western Balkans

• SMEs biggest employers but attention to them
  often overshadowed by single large enterprises
• Various initiatives to encourage SME development
• Awareness Raising and Monitoring
• Policy Development
• Investment Facilitation

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SMEs in the Western Balkans

• Awareness Raising and Monitoring
• Agencies in all WB except BiH and Kosovo
• Monitoring done through European Charter for
  Small Enterprises
• Also
• Enterprise Policy Performance Assessment
• European Training Foundation

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SMEs in the Western Balkans

• Policy Development
• European Charter for Small Enterprises

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SMEs in the Western Balkans

• Access to Finance (for example)
• European Fund for Southeast Europe
• Micro-Lending institutions ProCredit,
  Opportunity Bank, Alter Modus, Mikroplus
• National Funds
• Small Enterprises Assistance Fund

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SMEs in the Western Balkans

• Tacis Moldova Action Programme 2003
• SME support in the rural sector - 2M over 2
  years with the Ministry for Economy
• Further support the improvement of the regulatory
  framework and harmonisation of legislation in
  line with EU practices
• Support to the development of business
  infrastructures in rural areas, in particular
  business advisory services
• Support in development of agriculture and
  off-farm SMEs