House of Commons - Foreign Affairs

Select Committee on Foreign Affairs Fourth Report

AID AND RECONSTRUCTION IN SOUTH-EAST EUROPE

179. One consistent refrain during our visits to the region has been the wish among leaders and ordinary people to "join Europe." Europe is seen as an exemplar of peace, prosperity and security, and so the aim for many is to become a full part of both the political and security structures of Europe, primarily the EU and NATO. This aspiration represents the best hope for changing the way in which states in the area operate. Charles Crawford stressed to us the importance of the "European context for engaging with people and accelerating processes of reconciliation [which] we did not have 30 or 40 years ago, or even frankly ten years ago."[370] NATO has its Partnership for Peace (PfP) programme, in which a number of countries in the region are enthusiastic participants: even in Belgrade we found that participation in PfP was not ruled out in the next few years. Beyond PfP, NATO has given some indications that Slovenia and Romania might be candidates for the next wave of enlargement of NATO.[371] For many countries there are membership action plans in operation.

180. Chris Patten set out the European Commission's vision for south-east Europe:

372

Ultimately, Chris Patten told us, "What we are saying in the Stabilisation and Association Process is if you come through this then you can be a potential member of the European Union."[373]

181. The carrot of EU membership is backed up by a stick of conditionality, although the conditionality used is not as rigid as that imposed by the US Congress. Chris Patten told us that: "throughout the region, what we insist on is that in order to make these contractual agreements with the Stabilisation and Association Agreements or in order to receive our aid, countries should meet the so-called Copenhagen Criteria, should demonstrate that they are democratic societies operating openly under the rule of law with a free and independent press. We insist that they should demonstrate good neighbourliness..."[374]

EU coordination

182. As Chris Patten pointed out to us the EU is "spending in the Balkans now almost as much as we are spending in Asia and Latin America put together."[375] There have been complaints about the effectiveness of this aid. Misha Glenny told us that in order to overcome the differences of national approaches within the EU "there should be a special directorate created for south eastern Europe because...the problems [are] so difficult and so important for the future stability of Europe that the Commission and Solana and the national governments should agree to put aside their differences, a lot of which are to do with bureaucratic one-up-manship, and allow a small team with a significant executive authority to create a proper strategic vision for what we are going to be doing in south eastern Europe."[376] This is an attractive idea. As we noted in our previous report, it is difficult to see what the EU has got for the 8 billion euros it has spent in the region since 1991.[377] However, as Misha Glenny himself recognises "I know it to be a non-starter thanks to the bureaucratic jealousies that characterise the EU's policy-making apparatus."[378]

183. According to Chris Patten, the fact that the EU's system looked complicated on paper did not matter: "Dr Solana as High Representative and Secretary General of the Council is responsible for putting in place the policies which are agreed by Europe's foreign ministers. We, without being, I hope, too unglamorous, in the Commission run the back office...We are responsible for the trade, for the economic reconstruction, for the development assistance, for the political cooperation, and all of those policies, I think, support the general policy which is agreed by the General Affairs Council, by Europe's foreign ministers and by the European Council...What is interesting is that even though we have been working together for 18 months nobody has yet been able to find a single occasion when we have been in disagreement about a policy issue."[379] The personal relationship between the two men may have helped to overcome the rivalry. Against this, "I do not think it would be a wildly good idea to have any other initiatives in the south-east of Europe. On the whole one of the problems that we faced has been the 'Balkanisation' of Balkan strategies."[380]

184. Charles Crawford told us that "The answer is that not everyone wants to be coordinated, not all bilateral donors want to be coordinated. What we have done, which is a very good thing, is set up an aid coordination unit within Belgrade which is trying to get some authority so that people regard that as a onestop shop to try and make sure that, at least insofar as the big players in this are concerned, they are coordinated."[381] The extent to which donors will co-ordinate themselves is limited, and aid will be used most effectively if Belgrade starts to co-ordinate its own priorities. If the administrative machinery is working effectively, no body should be as well placed to establish Serbia's priorities as the Serbian government. The United Kingdom is therefore to be credited with helping Serbia to help itself in this respect.

Stability Pact

185. We outlined the work of the Stability Pact for South Eastern Europe in our previous report on Kosovo. Many are critical of the Stability Pact, perhaps because of the great expectations which were generated at its creation. Misha Glenny told us that "it is too micro; it does not have an overall political vision of where we are going and a lot of the economic projects it is involved in seem to be having real difficulty getting off the ground."[382] On the other hand, Chris Patten told us that he thought the Stability Pact had generated additional funds outside Europe for aid to the Balkans.[383] One of the welcome developments which has resulted from the change in government in Belgrade has been the admittance of Yugoslavia to the Stability Pact. As we noted in our previous report, Yugoslavia is at the heart of the Balkans, and the Pact's effectiveness was limited by the influence of Milosevic's Yugoslavia.

186. Some in the region are suspicious of the Pact, seeing it as an attempt by the EU leave the region to sort out its own problems, failing to take due notice of the differences between the states of the region. It is certainly the case that a differentiated approach is necessary when considering membership of the EU and NATO, but at the same time a regional perspective through organisations such as the Stability Pact is required.

Intra-regional trade

187. The EU has now adopted a regulation which enhances its preferential trade regime with south-eastern Europe, allowing tariff-free access to the EU market for all industrial and most agricultural goods, and on 20 November 2000 it extended this to Yugoslavia.[384] Oxfam identify the new EU trade measures as one of the two most significant contributors to economic recovery in the region (the other being the fall of Milosevic).[385] However, if business people are to see the region as an attractive place to invest, the substantial barriers to intra-regional trade must also be addressed. DFID have co-sponsored a number of studies on intra-regional trade.[386] A priority of the Stability Pact is to encourage the development of bilateral free trade agreements between the countries of the region and the elimination of non-tariff barriers. Chris Patten told us that "We insist that if they are to have open access to the European market, which they do for pretty well all products, a few agricultural products are exempt but they do for most agricultural and industrial products, then they should lower their barriers to trade among themselves."[387] Developing trade in the region is the best way to ensure that economic growth becomes self-sustaining, rather than dependent upon continuing large-scale aid. While it may be expecting too much for supranational cooperation to develop in the region in the near future, it is reasonable to expect good inter-governmental cooperation, including the development of free trade agreements, in return for almost free access to EU markets.

The Danube

188. One of the most important development issues facing the region is the clearance of the Danube, which was closed by the destruction of bridges in Novi Sad during the NATO bombing campaign. The Milosevic regime then refused to cooperate with the clearance of debris from the river, and at this time the Danube remains closed to commercial traffic. The new administration in Belgrade brought a new attitude towards the Danube Commission, and expressions of interest have now been requested for projects to clear the river.[388] Charles Crawford told us that re-opening "the Danube will make an enormous difference."[389] In 1996, 50m tonnes of cargo[390] was carried on the Danube, down from 113m tonnes in 1990.[391] These figures reveal the extent to which trade will be stimulated by the restoration of navigation, and peace in the region. The Danube is connected to the Rhine by canal, and its closure has therefore affected trade across Europe. The EU will pay 85 per cent of the total cost of the restoration of navigability, up to a ceiling of £13m.[392] The FCO informed us that the Danube should be open to commercial traffic in summer 2001.[393] Trade Partners UK have supported the installation of a new water pipeline across the new Varadin bridge in Novi Sad which is being built to replace the bridge destroyed during the NATO campaign in 1999.

189. We heard during our visit to Novi Sad that there was concern about delays in the work on the clearance of the Danube. The FCO notes that work will not start until the spring, when water levels have fallen, and that the EU has moved rapidly to push the project forward, by for example drafting several of the tenders in advance and by reducing deadlines under EU procurement rules to a minimum.[394] We also heard during our visit that the Danube Commission was dealing only with the Federal Government in Belgrade, while the future of the river is of course important for Vojvodina as well as the Federal Government, particularly as the obstacles to the restoration of navigability lie in Vojvodina. We recommend that the FCO and Trade Partners United Kingdom remain in close touch with the Danube Commission and update the Committee on progress on clearing the Danube to commercial traffic.

370 Q230. Back

371 Following the Madrid Summit in 1997, which accepted the membership applications of Poland, the Czech Republic and Slovakia, the Secretary-General said that "we recognize with great interest and take account of the positive developments towards democracy and the rule of law in a number of Southeastern European countries, especially Romania and Slovenia." Speech available on: www.nato.int/docu/speech/1997/s970708e.htm. Back

372 Q235. Back

373 Q238. Back

374 Ibid. Back

375 Q248. Back

376 Q96. Back

377 Kosovo report, para 288. Back

378 Ev. p.5. Back

379 Q239. Back

380 Ibid. Back

381 Q224. Back