Written evidence submitted by the Foreign
and Commonwealth Office
1. The Foreign and Commonwealth Office responds
to a request from the House of Commons Foreign Affairs Select
Committee for a memorandum in connection with the Committee's
inquiry into the United Kingdom's policy towards the Western Balkans,
with a particular focus on Bosnia and Herzegovina, Serbia and
Montenegro (including Kosovo) and Macedonia. For the purpose of
the Memorandum, "Western Balkans" is defined as Serbia
and Montenegro including Kosovo, Croatia, Bosnia and Herzegovina,
Macedonia and Albania.
2. The memorandum begins with an overview
of the economic and political situation in the region and our
overall objectives. It then summarises UK policy in relation to
the International Criminal Tribunal for the Former Yugoslavia,
the role of the European Union and NATO, tackling organised crime
in the region and UK policy towards improving the economy and
good governance in the Western Balkans. UK policy in the Western
Balkans is characterised by a "joined up" approach across
Government and other Departments, aside from the FCO, have the
lead on some policy issues. The memorandum then sets out the key
challenges for the future. There are three annexes: details on
policy towards Serbia and Montenegro, Bosnia and Herzegovina and
Macedonia; and summaries of UK bilateral and UK multilateral assistance
towards the region. We have not included further details on Albania
and Croatia since these countries are outside the focus of the
3. The Western Balkans continues to occupy
a prominent place on the international agenda, following the conflicts
that marked the 1990s. Since the Foreign Affairs Committee's last
inquiry into the region in 2001, the Western Balkans has made
good progress through political, institutional and economic reform
and is moving in the right direction, if not always at great speed.
A return to large-scale conflict is now unlikely, although it
cannot be ruled out. The problems of extremism and ethnic tensions
are receding, but they remain under the surface: the outbreak
of violence in March 2004 in Kosovo was a poignant reminder that
progress is fragile.
4. The major ramifications of the conflicts
(1992-95, 1999, 2001) have been largely overcome, with the exception
of Kosovo, whose fledgling self-governing institutions remain
fragile. And there are also a number of high profile war crimes
indictees still at large. The majority of political extremists
are no longer in positions of authority, although they continue
to play a distorting role in politics, for example, the Serbian
Radical Party. There are largely moderate (if sometimes nationalist),
democratically orientated governments in office who are committed
to reform. But the quality of local leadership and immature political
and economic systems frustrates progress. Governments remain vulnerable
to coalition pressures and frequent elections, and complex constitutional
arrangements in Bosnia and Herzegovina (BiH) and Serbia and Montenegro
(SaM) present their own challenges.
5. Legacies of the past continue to impact,
particularly in BiH where the issue of co-operation with the International
Criminal Tribunal for the Former Yugoslavia (ICTY) further complicates
the inter-ethnic governmental structures, and in SaM where policies
towards the ICTY and Kosovo dominate politics. A start has been
made in redressing population movements from the last decade,
particularly in relation to the large number of Internally Displaced
Persons (IDPs), but significant problems remain across the region.
Human and minority rights have vastly improved in the Western
Balkans: there is no longer the systematic discrimination that
characterised the Milosevic era. However, there is still much
that needs to be done to create tolerant, multi-ethnic societies
and institutions, above all in Kosovo. (The FCO Annual Report
on Human Rights 2003 provides more details on the human rights
situation in the Western Balkans and can be found at www.fco.gov.uk.
The 2004 Report will be published in the autumn).
6. Reform of military and security structures
in the region has, perhaps surprisingly, been a major achievement.
The armed forces of the former Federal Republic of Yugoslavia
(FRY), now SaM, have been reduced and brought under civilian control
and many of the security structures from the Milosevic era have
been dismantled. The establishment of a state level defence structure
in BiH was also an important step towards our objective of a self-sustaining
state capable, over time, of integration into NATO and the European
7. However, some organised criminals and
extremists continue to exert undue influence over government structures
and institutions, frustrate the reformers, and undermine legitimate
economic activity. Accountable law enforcement structures and
independent, effective judicial systems are now a priority in
order to bolster national capacities to tackle organised crime
8. The Western Balkans economies are largely
stable, if weak, but the region is now between post conflict and
1990s Central European style transition. Poverty and high unemployment
remains a problem (as with many countries in transition). There
will need to be major improvements in the economies of the region
if the problems of poverty are to be addressed. Improvements in
the standard of living in the Western Balkans will be important
to help maintain public support for difficult reforms and to get
the countries to a level where membership of the EU is at all
realistic. The countries need to ensure that political as well
as economic conditions are in place to attract more foreign direct
investment to stimulate development. International partners are
playing a key, supporting role in this.
9. UK policy aims to support the establishment
of security and stability in the region and make it irreversible,
bring prosperity and help the countries move towards integration
into Euro-Atlantic structures, in particular, eventual accession
to the EU. This should be underpinned with democratic and accountable
government structures, prosperous free market economies, and socially
cohesive societies. The UK is working to achieve this by promoting
the rule of law, social and economic development, democracy, security
sector reform, justice and human rights, co-operation with the
ICTY, and refugee return. We work through direct engagement and
careful co-ordination and co-operation with the EU, NATO, United
Nations, World Bank and other international organisations.
10. The Western Balkan states' aspiration
to join the EU forms the bedrock of our policy. The EU Thessaloniki
Summit in June 2003 confirmed that the Western Balkans states
are potential EU members. Croatia achieved candidate status in
June 2004 as a result of her successful reforms and improved co-operation
with the ICTY. We want to see other states make tangible progress
towards the EU and we support their EU aspirations. Integration
is conditional on the consolidation of states based on the rule
of law and democratic principles, and the implementation of responsible,
reformist policies that will help them achieve economic and social
convergence towards EU levels. Further Euro-Atlantic integration
is also conditional on full co-operation with the ICTY.
11. It will be important to maintain international
engagement in the region for some time to come, although the nature
of this engagement is changing. There is likely to be a need for
an international military presence in the Balkans for some years,
including British armed forces, although this will become smaller
scale with more limited mandates. The Western Balkans will continue
to be important to the UK: they will ultimately integrate into
Euro-Atlantic structures, becoming strategically important partners
and allies. And their stability and economic prosperity has a
domestic impact in the UK. The whole of the EU is a target market
for Balkan organised crime and economic migrants and we must continue
to work to maintain stability and security on the borders of Europe.
On a more positive note, a prosperous Western Balkans could also
provide a market and opportunity for UK business. Given the improvements
on the ground since 2001, over the next few years the UK and her
international partners will now focus on resolving some key strategic
challenges: Kosovo Final Status, the future of the SaM state union
and the implementation of peace settlements in Bosnia and Herzegovina
(Dayton) and Macedonia (Ohrid Framework Agreement, OFA). But even
if we are successful, the very process of dealing with these issues
is likely to re-inject turbulence into the region.
International Criminal Tribunal for the Former
12. The UK attaches particular importance
to all the countries of the region meeting their international
obligation of full co-operation with the ICTY. The UK was central
to securing United Nations Security Council resolution (UNSCR)
1503 in August 2003 that formalised the expectation that all states
"intensify co-operation and render all necessary assistance
to the Tribunal". The Resolution highlighted in particular
the detention and trial of fugitive indictees: Bosnian Serb leaders,
Radovan Karadzic, Ratko Mladic and Croatian general, Ante Gotovina
(the "Big Three").
13. The Office of the Chief Prosecutor has
issued 125 indictments to date, of which 103 indictees have been
apprehended or are deceased. Of the 103, 46 indictees were detained
by NATO troops. UK forces were involved in 21 of these operations.
There are presently 58 accused in detention at the ICTY. A further
five have been released pending trial. 15 others have been indicted
over the last year and there still 21 at large in the region,
including Mladic, Karadzic and Gotovina. We continue to put pressure
on the respective Governments, in particular in Zagreb, Belgrade
and the Republika Srpska authorities in Banja Luka, Bosnia and
Herzegovina, to apprehend and transfer them to The Hague.
14. A further UNSCR (1534) of March 2004
called on the ICTY to meet the deadlines within its Completion
Strategy (while emphasising the UN's commitment to ensure that
the Big Three are tried in The Hague), and to ensure that any
future indictments concentrated on those considered most senior
and responsible. A further amendment to the Tribunal's Rules of
Procedure gives the judges a greater role in reviewing whether
indictments meet this requirement.
15. The UK is committed to helping countries
build domestic capacity for war crimes trials, particularly in
BiH, where the UK has pledged £2.6 million over five years
to help set up a Bosnian War Crimes Chamber, which should be operational
by mid 2005. This should facilitate the transfer of lower level
cases to domestic jurisdiction and help the ICTY to achieve the
objectives in its Completion Strategy.
16. The ICTY's most high-profile (and longest
running) case is that of former Yugoslav president, Slobodan Milosevic.
The trial has now entered its third year and the case for the
prosecution closed on 25 February 2004. Lord Bonomy was appointed
to the Trial Chamber in June, succeeding the late Judge Richard
May, who sadly had to resign due to illness. Milosevic was due
to start his defence in early July but concerns about his health
(and the Court's summer recess) have caused further hearings to
be postponed. The trial re-started on 31 August. On 2 September
the Trial Chamber assigned a defence counsel to ensure the trial
is not unduly disrupted by Milosevic's poor health.
17. We continue to support the ICTY Outreach
Unit, and have funded projects to address some of the mis-perceptions
about the ICTY in the region and contribute towards a greater
willingness to face up to the past and understand the need for
reconciliation. We have also maintained our financial and practical
support for the ICTY's Witness Protection Programme and for the
Rules of the Road project in BiH, advising the courts on domestic
prosecutions of war crimes cases and monitoring the quality and
fairness of the prosecutions. In March 2004 we became the tenth
state to sign a Sentence Enforcement Agreement with the ICTY,
which means convicted ICTY indictees may now serve their sentences
in UK prisons. The UK remains the second largest contributor to
the ICTY's extra-budgetary projects.
18. The EU's fundamental aim for the countries
of the Western Balkans is EU accession, extending to the region
the area of peace, stability, freedom and growing prosperity enjoyed
by its existing Member States. The prospect of EU membership has
proved to be the single most effective motivator of reform in
the region, including the establishment of rule of law, stable
democratic institutions and a free market economy. It is also
a driver behind increased regional co-operation, a key building
block of increased stability. In keeping with its support for
EU Enlargement, the UK supports the Western Balkans' EU aspirations.
19. The Feira Council of June 2000 agreed
that all countries of the Western Balkans (as defined in paragraph
1) were potential candidates for membership. The Council also
launched the Stabilisation and Association process (SAp), a framework
for the EU's relationship with the region designed to encourage
and support the domestic reform agenda. The process is a step-by-step
approach based on aid, trade preferences, political dialogue,
technical advice and, ultimately, contractual relations in the
form of Stabilisation and Association Agreements (SAAs). The SAp
aims to guide all these countries through to eventual full integration.
When the new European Commission takes office on 1 November 2004,
the Western Balkans portfolio will be transferred from the Directorate
General for External Relations (DG RELEX) to the Directorate General
for Enlargement (DG ELARG). This could have implications for the
way the countries of the Western Balkans progress towards EU integration,
in terms of financial and technical assistance.
20. The EU is by far the single largest
donor to the countries of the Western Balkans primarily through
its regional aid programme called CARDS (Community Assistance
for Reconstruction, Development and Stabilisation), which is designed
to support the objectives of the SAp. The programme's mid-term
review of June this year showed it be well-targeted with acceptable
delivery rates for a program of its size. Since 1991, the EU has
provided a total of more than
6 billion to the region through its various aid programmes.
By 2006, that figure will have risen to around
10 billion. The UK has long supported these commitments
and contributes about 19% of total CARDS funding. The European
Investment Bank (EIB) is planning to increase significantly its
credit to the region and will become a major source of external
finance. The FCO also supports SAp objectives through its various
programme budgets, including the Global Conflict Prevention Pool
(GCPP) and the Global Opportunities Fund (GOF).
21. The EU also runs two European Security
and Defence Policy operations in the Western Balkans. There are
EU Police Missions in both Macedonia (Proxima) and in BiH (EU
Police Mission, EUPM). The EU is in the latter stages of planning
another operation to provide an EU Force (EUFOR) to replace the
Stabilisation Force (SFOR) in BiH in December 2004.
22. The region's integration into EU structures
depends upon compliance with the same criteria it has applied
elsewhere. This ensures the credibility of the SAp and wider enlargement
process. Ultimately successful progress along the membership track
depends on the willingness of the countries themselves to put
in place the necessary reforms.
23. In March 2004, the European Commission
published its third Annual Progress Report on the Western Balkans'
progress through the SAp. Overall, while there has been some progress
in certain areas, the European Commission gave a sober assessment
of the outstanding challenges. The report recommended that higher
priority be given to creating fully functioning democratic institutions
based on the rule of law; administrative capacity should be strengthened
and structural economic reforms continued. It also found that
the work of the ICTY is being systematically obstructed and organised
crime and corruption remain prevalent. The position of each country
Croatia concluded an SAA in 2001.
However, the UK suspended Parliamentary ratification of the SAA
because of concerns about Croatia's co-operation with the ICTY.
Following a statement in April 2004 from the ICTY Chief Prosecutor
that there had been a significant improvement in Croatia's co-operation
with the Tribunal, the UK restarted its ratification process,
which was completed in September. Also in the wake of the ICTY
Chief Prosecutor's statement, the European Commission issued a
positive opinion on Croatia's application for membership. In June
2004, the European Council declared Croatia an official candidate,
recommending that negotiations start in early 2005 on the basis
that full co-operation with the ICTY continues.
Macedonia was the first country to
sign an SAA, which has been in force since 2004. Macedonia submitted
its official EU membership application on 22 March 2004. The European
Commission has now been tasked by the Council to give its Opinion
on the application. We expect this to issue some time next year.
Albania began negotiations for an
SAA in January 2003. However, negotiations continue and the overall
pace of reform in the country has so far been disappointing.
In November 2003, the European Commission
completed a feasibility study on Bosnia and Herzegovina's readiness
to open negotiations on an SAA with the EU. It identified 16 priority
areas where "significant progress" is requiredincluding
co-operation with the ICTYbefore SAA negotiations can begin.
There are some signs of progress and the European Commission will
assess later this year.
Serbia and Montenegro's integration
into the EU is currently on hold due in part to lack of co-operation
with the ICTY and failure to complete an Action Plan to harmonise
the two republics' economic systems. The European Commission is
considering ways to overcome this. There is a parallel Stabilisation
and Association process tracking mechanism in place to ensure
that Kosovo does not fall behind the rest of the region in EU
terms, while its final status remains unresolved.
24. Intra-regional co-operation in the Western
Balkans requires further development. For example, the countries
could work together to create a genuinely free trade area. Currently
the Western Balkans, an area of less than a quarter of million
square kilometres, has 6 bilateral free trade agreements, with
another 14 in the pipeline, but no regional agreement. The impact
of a single free trade area on the lives of individual citizens
would be immense, as would visa free travel. Currently, the countries
of the Western Balkans place restrictions on the movement of people.
The FCO aims to encourage intra-regional co-operation by funding
regional projects from our various programme budgets.
25. The Stability Pact for South Eastern
Europe was adopted, at the EU's initiative, at the Cologne European
Council in June 1999. The Stability Pact is a mechanism for co-ordinating
political reforms and reconstruction in the countries of South
East Europe. It complements the SAp and the work of regional bodies
such as the South East Europe Co-operation Process (SEECP).
26. The European Commission's third SAp
Annual Progress Report was accompanied for the first time by European
Partnerships in March 2004. These documents identify and prioritise
the immediate reform agenda for each country and will be used
to programme EU assistance. The UK played a key role in promoting
this initiative and shaping its development. The UK is working
to ensure that European Partnerships are used to help to integrate
governments' own development priorities, external assistance and
the requirements of the SAp. We are encouraging the SAp countries
to draw up Action Plans to implement the European Commission's
27. EU membership remains the main driver
of reform in the region. Since this is a distant prospect for
most Western Balkan countries, the EU and its member states need
to ensure they deliver tangible benefits throughout the integration
process and that these are conditional on political and other
reform. This should include supporting economic and social development
and nurturing a more democratic and European outlook. To avoid
disappointment, the EU also needs to help manage the gap between
political leaders' ambitions, the expectations of the public and
the likely pace of integration. They should draw on existing national
reform strategies and incorporate commitments made with other
donors, effectively bringing together the EU accession processes
and wider development priorities and opportunities. By the end
of the decade we hope all the countries might be in a position
to make a credible application for EU membership.
28. Since Dayton, NATO has regularly downsized
its military commitment in Bosnia on the basis of six-monthly
Periodic Mission Reviews. This has meant a reduction in troops
from the original 60,000 of Implementation Force, IFOR, in 1995
down to 32,000 the following year with the launch of Stabilisation
Force, SFOR, to some 10,000 at the beginning of 2004. Kosovo Force
(KFOR) was launched in June 1999 with an initial strength of 50,000
troops, and is now at 17,500.
29. NATO plans to downsize SFOR in Bosnia
from 10,000 to 7,000 troops during 2004 in advance of the deployment
of EUFOR. In Kosovo, the plan was to downsize from 17,500 to 10,000
throughout 2004, but following the March violence this will be
reviewed after the October elections in Kosovo, and is unlikely
to occur this year. We must ensure that our military engagement
is sufficient to continue to protect our investment in the region,
not least in the run up to possible future events such as Kosovo
Final Status discussions, and is based upon requirements on the
ground. But our ultimate aim remains to enable the region to ensure
its own security whilst keeping partners and allies (particularly
the US) engaged on the ground.
30. The March violence highlighted a number
of areas where the Kosovo Force (KFOR) could improve. NATO conducted
a comprehensive lessons learned exercise. We continue to push
for implementation of the findings such as improving contingents'
crowd and riot control capacity and removing national caveats
which limit or prohibit involvement in certain circumstances.
31. We need to manage carefully further
reductions in military commitments in the region. Refugee returns
in BiH are largely complete and there is no longer the same requirement
for a large scale and highly visible force. However, the maintenance
of a safe and secure environment in BiH and Kosovo still requires
an international military presence, and the international community's
ability to keep the reform agenda on track is still underwritten
by those troops.
32. We are currently working towards a successful
transition to an EU force in Bosnia at the end of 2004. This will
operate under Berlin Plus arrangements (having access to NATO
assets and planning). The UK will provide the first Force Commander
of this robust 7,000 strong force. A continuing but limited NATO
presence will focus on defence reform as well as certain operational
tasks such as counter terrorism and supporting the ICTY with regard
to the detention of indicted war criminals.
33. All Western Balkans countries aspire
to join NATO (although the current SaM government has been more
circumspect). The Membership Action Plan (MAP) process includes
scrutiny of political reforms, democratic development and the
rule of law, as well as defence and security sector reforms. Croatia,
Albania and Macedonia are all members of PfP and participants
in the MAP process, although the pace of reform is variable. However,
while the NATO Summit in Istanbul kept open the prospect of membership,
it made clear that this was unlikely in the near future. SaM and
BiH have yet to obtain PfP membership, largely due to their lack
of co-operation with ICTY. The UK Government looks forward to
welcoming SaM and BiH into PfP once they have met the established
34. Criminals exploited the vacuum created
by the conflicts of the 1990s to establish lucrative networks,
which reach far into government and retard social and economic
development. Organised crime and corruption are obstacles to the
rule of law, democratic stability, and sound and accountable institutions.
Organised crime now controls enormous resources. It is well armed
and financed. It funds political parties, including political
extremists. It often works across ethnic divides. It is a regional
phenomenon, unconstrained by geography or the new national borders
and is able to adapt to overcome market and security obstacles.
In addition to its de-stabilising impact within the region, organised
crime in the Western Balkans has a direct impact on UK streets.
The Western Balkans is a major source and transit route for organised
immigration crime (people smuggling and trafficking in human beings)
and drugs smuggling. It is estimated that 80% of heroin seized
in Western Europe has been smuggled through the Western Balkans.
35. The November 2002 London Conference
on Organised Crime placed the problem of organised crime in the
Western Balkans firmly on the international agenda. An international
strategy was adopted (the London Statement) and countries of the
region committed themselves to individual Areas for Priority Action
(APAs). The EU-Western Balkans Ministerial Summit on 21 June 2003
took stock of countries' progress against their APAs, with some
making positive advances. In order to maintain momentum, at the
inaugural EU-Western Balkan JHA Ministerial on 28 November 2003,
each country presented implementation strategies for Specific
Action Oriented Measures (SAOMs) to fight organised crime. Progress
in implementing the SAOMs is being monitored by the European Commission
and the next progress report will take place at this year's EU-Western
Balkan JHA Ministerial in December. The EU has the most significant
resources available to assist the Western Balkans in tackling
organised crime through assistance programmes and it also has
considerable leverage to encourage reform due to the EU membership
ambitions of all the governments throughout the region. From the
2 billion CARDS funding committed in 2001-03 for
the Western Balkans, over
300 million went to the broad area of Justice and
Home Affairs (JHA).
UK Strategy and Assistance
36. A UK Strategy for tackling organised
crime in the Western Balkans was agreed by all relevant Government
departments and agencies in July 2003. The main focus is on encouraging
and supporting governments in the region to develop their own
responses to organised crime and includes building popular and
political support for action against organised crime; improving
institutional capacity through more effective law enforcement
and judicial systems; disrupting organised crime structures; and
enhancing regional co-operation.
37. As well as supporting EU programmes,
the UK provides significant bilateral assistance to the region.
From the Western Balkans strand of the Global Conflict Prevention
Pool (GCPP) over £2 million has been spent on initiatives
in the region. Examples include:
£0.5 million to provide the
Kosovo Organised Crime Unit Bureau with surveillance and intercept
equipment, which has played a key part in a number of significant
drugs seizures. It has also funded the successful Crimewatch television
series in Kosovo.
The recently established Special
Chamber of Economic and Organised Crime in BiH has completed its
first major case. FCO funded British experts helped the State
Level Prosecutor to investigate and pursue the case against a
prominent criminal for charges relating to human trafficking and
prostitution. He received a nine year sentence.
38. There are also a number of other project
funds for work in related fields which contribute to the Strategy's
The FCO-administered Small Arms and
Light Weapons Fund.
The Department for International
Development's (DFID) work to improve JHA policy-making in the
Ministry of Defence (MoD) Security
Sector Reform programmes.
The FCO's Drugs and Crime Fund.
Project Reflex, a UK multi-agency
initiative chaired by the National Crime Squad, was set up in
2000 to tackle organised immigration crime and has run a number
of initiatives in the Western Balkans. Individual agencies make
substantial contributions: eg Her Majesty's Customs and Excise
has 25 officers seconded to EU customs assistance programmes,
and the UK has an extensive network of drugs and immigration liaison
officers working in the region.
Project "IMMPACT II", which
concluded in SaM in 2003, was a major capacity building and training
project for the SaM border services to help them fight cross-border
crime. Project IMMPACT II followed on from the highly successful
"Project IMMPACT I" in BiH (2001-02) and aims to ensure
a consistent regional approach to tackling illegal migration.
39. Although the macro-economic position
of the Western Balkans region has stabilised, overcoming the impact
of conflict and the unfinished transition will take some time.
Falling levels of international aid will place further serious
stress on both public finance and employment. Department for International
Development (DFID), together with the FCO, is working with the
international community to maximise the efficiency and speed of
the transition process, encourage the formation and growth of
new enterprises, discourage the emigration of vital skills, attract
foreign investment and address the social consequences of transition.
But the expectation is that the dividend from these efforts will
not come quickly and it will take some time for the current levels
of income growth to bring back the relative prosperity of the
1980s. The economic situation in Kosovo is particularly serious,
with declining external financial transfers, unsustainable levels
of public expenditure and extremely high and increasing levels
of unemployment. We are working to ensure that adequate aid resources
are devoted to economic development. This is central not just
to the alleviation of extreme poverty but also to achieving other
key objectives, in areas such as security and political stability,
immigration, organised crime, and Euro-Atlantic integration.
40. DFID is working towards ensuring sustainable
and broad based economic growth in all countries of the region.
European Partnerships and Poverty Reduction Strategies now form
an integral part of the Western Balkans governments' policy making.
DFID is supporting national governments in ensuring that the Action
Plans, designed in response to both strategies, are compatible
and well coordinated to maximise effectiveness. DFID is also working
to improve the effectiveness of international assistance to the
region by promoting better harmonisation and coordination of assistance
from the international donor community.
41. The UK and international partners recognised
the importance of economic stability in the Western Balkans as
essential to underpinning political stabilisation in the region.
In 1999, the High Level Steering Group on the Western Balkans
was established to provide a forum for donors (International Financial
Institutions, IFIs, and bilateral donors) to work together to
understand and help resolve economic problems in the region. The
IFIs are active in promoting economic stability and building the
foundations of sustained growth and poverty reduction throughout
the region. Since 1998, the UK has supported International Monetary
Fund (IMF) loans to Western Balkans countries totalling around
£950 million, through eight programmes, including Poverty
Reduction and Growth Facility programmes, in which finance is
made available at below market interest rates. In addition, the
IMF is active in providing technical assistance and policy advice
to these countries. The World Bank has also committed over $2.3
billion. International agencies and donors also recognised the
need for sustainable solutions to debt problems in the region.
As part of a debt treatment by the Paris Club, the UK has rescheduled
£5.3 million of debt in BiH, of which £2.95 million
was written off; rescheduled £620 million of debt in SaM,
of which £315 million was written off; and rescheduled £8.4
million of debt in Macedonia. Other members of the Paris Club
have done similarly.
42. UK commercial relations with the Western
Balkans are minimal. The recent conflicts continue to affect perceptions
of the region by businesses and investors. Interest from UK companies
is limited to "one-off" trade deals or specific niche
market opportunities, such as in the tourism or agriculture sectors.
Larger UK investments in the region tend to be set up through
overseas subsidiaries of UK companies. The UK's main trade partners
in the region are Croatia and SaM. Between 2002-03, UK exports
to Croatia increased by 48% to £139.9 million with the main
exports being medicinal and pharmaceutical goods, office equipment
and specialised industrial machinery. UK exports to SaM in the
same period increased by 6.5% to £65.6 million with the main
exports being specialised industrial machinery, office machinery
and chemical products. There was a downturn in UK exports to other
Western Balkans markets of between 20-48%, although imports (except
from Croatia) are on the rise and are predominantly foodstuffs
and raw materials.
43. The single biggest issue facing the
Balkans is Kosovo's future status. The UK's objective is to work
with the UN and other international partners, bilaterally and
within the Contact Group (UK, France, Italy, Germany, Russia and
the USA), to establish a multi-ethnic, democratic, stable and
tolerant Kosovo and to ensure that international partners get
the process and the conditions right for determining Kosovo's
future status. There has been growing recognition by the countries
involved in the region and international organisations that the
uncertainty over the province's future status is a source of instability
in the region and an obstacle to regional development. In December
2003, the UN Security Council endorsed a strategy, supported by
the Contact Group, to measure Kosovo's progress in raising democratic
standards, thereby establishing the conditions in which its final
status might be addressed. Under this "review mechanism"
there will be a formal review by the UN of Kosovo's progress in
mid-2005. A negative assessment would lead to a refining of targets
and the setting of a fresh review date. A positive assessment
would trigger a status process as laid down in UNSCR 1244.
44. The violence of 17-19 March 2004 highlighted
the growing frustrations of the citizens of Kosovo with the current
situation, notably poor economic opportunities and lack of certainty
about the future. The UN and the Contact Group concluded that
while international policy remained right for Kosovo, and that
it should not be deterred by extremists, there were lessons it
could learn from the March violence to make international agencies'
work more effective in Kosovo and address its underlying causes.
The UN Secretary-General (UNSG) commissioned a report into the
UN's policy on Kosovo by Ambassador Kai Eide, the Norwegian Permanent
Representative to NATO, and its recommendations are currently
under consideration by the UNSG. NATO also conducted a comprehensive
lessons learned exercise which highlighted that while reinforcements
arrived with commendable speed (particularly the UK-led NATO Operational
Reserve), there were a number of areas where KFOR needed to improve
its capabilities and that original plans for KFOR to downsize
throughout 2004 should be reviewed.
45. UNMIK has responsibility for law and
order in Kosovo and works through an international police mission.
UNMIK's International Police Officers work closely with local
officers from the Kosovo Police Service (KPS) to support KFOR
in providing security. The UNMIK Police mission consists of 3,524
international officers, to which the UK currently contributes
102 police officers. The March violence has stretched resources
and UNMIK Department of Justice have requested a further 100 international
police investigators to assist them; 73 have arrived so far. Over
350 cases have been filed by local and international prosecutors
in relation to the March violence, and more than 270 people have
46. On 16 August, Mr Soren Jessen-Petersen
(Danish) arrived in Kosovo as the UNSG's new Special Representative
for Kosovo. Petersen has reaffirmed the overall goal of creating
the conditions to enable a process to determine Kosovo's future
status. He has stated that his immediate priorities are to establish
a safe and multi-ethnic Kosovo, enhance local capacity across
the board, reform local government; address economic development
and improve international leadership.
47. Following the Belgrade Agreement in
March 2002, the former Federal Republic of Yugoslavia adopted
a new, looser federal arrangement between the two republics of
Serbia and Montenegro under the SaM Constitutional Charter of
4 February 2003. The EU, particularly Secretary General and High
Representative Dr Javier Solana, was instrumental in brokering
the new "state union" arrangement. A fully functioning
state union is a key condition for SaM's progress towards EU integration
(which is currently on hold).
48. However, progress on implementing the
provisions in the Constitutional Charter has been slow, particularly
in economic harmonisation of the two republics, whose economies
have diverged over the last decade. Domestic support for the state
union remains divided, with some political forces within both
republics pushing for independence (in particular, the ruling
coalition in Montenegro). The Charter allows either republic to
determine by referendum whether to withdraw from the state union
three years after its adoption. It is possible, therefore, that
after March 2006, two independent states will emerge. The EU believes
that it is in the interests of both republics to preserve the
union and we and EU Partners are actively encouraging the SaM
authorities to ensure the union functions. But ultimately this
is a matter for the SaM people and it will be important for any
separation not to undermine stability in the region.
49. BiH has come a long way since the conflict
of the early 1990s, albeit with enormous assistance from international
partners, institutions and agencies. The UK objective is to ensure
progress made to date is irreversible, and that BiH continues
on the path to closer Euro-Atlantic integration. The challenge
is to balance the need to allow BiH's institutions the freedom
to grow, exposing them to normal democratic pressures, whilst
maintaining the role of international organisations and partners
in guaranteeing BiH's future and ensuring there is no return to
conflict and division.
50. The role of the Office of the High Representative
(OHR) has been central to progress achieved over the last year.
In particular, the use of the "Bonn Powers" (which enables
the High Representative (HR) to impose legislation and remove
obstructionist politicians and officials) has enabled the UN to
keep extremists in check and ensure BiH has the basic legislative
framework required for Euro-Atlantic integration. The current
HR, Lord Ashdown, is also the EU's Special Representative in BiH.
As BiH moves closer to the EU, the EU's role in BiH will become
51. The international community brokered
Ohrid Framework Agreement (OFA) set Macedonia back on a peaceful
track following the inter-ethnic conflict of 2001. The challenge
is to keep all parties committed to moving forward despite the
sensitivities involved. The current difficult debate over decentralisation
and the referendum package are testimony to the continuing inter-ethnic
tensions and risk delaying Macedonia's progress towards Euro-Atlantic
structures. The UK continues to believe that the OFA and the multi-ethnic
future it guarantees is the best model for Macedonia's future.
Foreign and Commonwealth Office
13 September 2004
1. Bosnia and Herzegovina (BiH) is gradually
normalising as a state. But nationalist politics, economic malaise,
and the restrictive constitutional structures of the Dayton agreement
make reform a difficult and painful process. Continued distrust
between the ethnic communities, combined with political corruption
and infighting, make the process of creating a viable, multi-ethnic
state all the more complicated.
2. Since general elections in 2002, nationalist
parties have been in power at both the state and entity level
in BiH. Despite this, the last two years have seen significant
progress in delivering some of key the reforms required for Bosnia's
integration into the Euro-Atlantic structures. The development
of a state-level defence structure, and agreement on single intelligence
and indirect taxation structures are particularly important examples.
But much more remains to be done, and progress still tends to
depend on the ability of the UN and international organisations
to exert concerted pressure on the parties involved.
3. The Office of the High Representative
(OHR)headed by the current High Representative, Lord Ashdownis
the main focus of international efforts in BiH. The UK provides
significant financial and practical support to OHR, and works
closely with Lord Ashdown to help deliver the OHR Mission Implementation
Plan (MIP). The Plan focuses on institutional reform, entrenching
the rule of law, strengthening state-level structures, and encouraging
good governance. The High Representative's overall objectivewhich
we backis to put BiH irreversibly on the road to Euro-Atlantic
integration. Our shared aim is that Lord Ashdown should leave
his post with the Bosnian Government in a position to take greater
ownership and responsibility for the reform process. We are working
with the OHR and other Peace Implementation Council Steering Board
partners to develop an effective exit strategyreflecting
the need to gradually reduce the UN and international organisations'
roles whilst maintaining the capacity to intervene if necessary.
4. The EU Police Mission to Bosnia (EUPM)
took over from the UN's International Police Task Force at the
beginning of 2003. It consists of around 474 police officers and
66 international civilians from EU member states and third country
contributors. The UK currently contributes 56 police officers
and 11 civilians. The mission's aim is to establish sustainable
policing arrangements under BiH ownership in accordance with best
European and international practice. It focuses on police reform
through mentoring and monitoring of mid to senior officers in
the BiH police. It has four strategic objectives: police independence
and accountability; the fight against organised crime and corruption;
financial viability and sustainability, and institution and capacity
building at management level.
International Criminal Tribunal for the Former
5. Lack of co-operation with the ICTY remains
one of the biggest obstacles to Bosnia's successful integration
into the EU and NATO. Two key milestones of that integration processmembership
of NATO's Partnership for Peace (PfP); and the opening of negotiations
on a Stabilisation and Association Agreement (SAA) with the EUare
within sight, but are likely to remain out of reach until the
ICTY issue is resolved. Full co-operation with ICTY is a pre-requisite
for integration into both NATO and the EU. The main problem lies
with Republika Srpska (RSthe predominantly Bosnian Serb
entity), which has failed to arrest a single ICTY indictee since
the end of the conflict.
6. The UK continues to be at the forefront
of political, diplomatic and operationalthrough NATO's
SFOR and in due course through the EU-led successorefforts
to ensure that fugitive indictees Radovan Karadzic and Ratko Mladic
are transferred to The Hague to face justice. We are also helping
the BiH authorities to develop the capacity to try their own,
lower-level war crimes cases. The UK is providing £2.6 million
of funding over five years towards the establishment of a BiH
State War Crimes Chamber. We hope the first trials will begin
7. The EU has confirmed that BiH is a potential
member, provided it meets the necessary political and technical
criteria. The key milestone in the process of further integration
is an SAA with the EU. In November 2003, the European Commission
concluded that BiH must make significant progress in 16 priority
areas before it could recommend the opening of SAA negotiations.
The Commission will review progress later this year. The UK fully
supports BiH's EU aspirations. But it is clear that BiH must move
from adopting legislation to a greater focus on implementation
if it is to fulfil its ambition of opening negotiations in 2005.
Full co-operation with ICTY is one of the 16 areas where BiH must
make significant progress.
8. BiH also aims to join NATO's Partnership
for Peace, after meeting the established NATO conditions. Despite
significant progress made on defence reform in the last 18 months,
NATO's Istanbul Summit declined to invite BiH to join PfP due
to concerns about ICTY co-operation. NATO identified obstructionist
elements in Republika Srpska (RS) as the main problem.
Bilateral relations and assistance
9. Bilaterally, and through our work with
international organisations and NGOs, we continue to provide support
for reform that delivers economic, social and institutional development
and enhances stability and security. This is in addition to the
UK contribution to multilateral fundingin particular through
the EU assistance programmefor BiH. The UK has provided
over £82m of bilateral assistance to BiH since 1996. Recent
examples of projects funded by the UK include retraining for demobilised
soldiers, and assistance to NGOs involved in the location and
identification of people missing as a result of the conflict.
The UK is also a long-standing contributor to de-mining activity
10. The UK also maintains a high-level of
bilateral contacts with the BiH authorities. Both the Bosnian
Defence Minister, Foreign Minister and Prime Minister have all
recently visited the UK, and both the UK Minister for Europe and
the Minister for the Armed Forces have been to Sarajevo this year.
11. Serbia has yet to recover fully from
the assassination of Prime Minister Djindjic, in March 2003. The
pro-reform Democratic Opposition of Serbia (DOS) coalition continued
in power until December 2003, before being brought down by scandals
and unpopularity. Early parliamentary elections in December 2003
left the ultra nationalist Serbian Radical Party with the highest
vote (27%) but unable to form a government. This left the second
largest party, Kostunica's conservative Democratic Party of Serbia
(DSS), to lead negotiations. After months of wrangling, on 3 March
2004, a minority coalition government, led by Kostunica and with
outside support from Milosevic's Socialist Party of Serbia, was
12. This Government is faced with a daunting
set of challenges, a small parliamentary majority, lack of public
support (the last poll recorded a total of only 20% support for
the government), divergent views held by the various parties and
little experience. Many analysts predict that the new government
may last only a year or less. However, the election of the reformist
Boris Tadic in June as Serbian President has created a more positive
political atmosphere in Serbia. Despite leading the pro-reform
Democratic Party (DS) (Djindjic's former party) in the opposition,
Tadic has pledged to promote stability and to work with the government
in constructive co-habitation. The next hurdles are local and
provincial elections in September.
13. The Government in Montenegro has been
in power since October 2002 and is likely to remain in power at
least until the 2006 Montenegrin Parliamentary elections. This
continuity may be due more to a fractious opposition (who have
been boycotting parliament since May 2003), than wide public support
for the Government. A British Office opened in Podgorica in 2003
and HMA Belgrade makes regular visits.
14. Despite significant progress, especially
in terms of legislation and macro-economic reform, both republics
need to continue with in-depth reforms on rule of law and institution
building as well as to deal with a large and unsustainable state-owned
sector. This will help them tackle the problems of organised crime
along with corruption and unemployment. SaM's relationship with
her neighbours is improving, but there continues to be the threat
of internal instability in South Serbia where an armed revolt
by local Albanian extremists in the Presevo Valley in 2001 was
peacefully resolved by the Serbian Government working in close
co-operation with international partners and organisations.
International Criminal Tribunal for the Former
15. The ICTY continues to be the most difficult
issue for SaM. There was some, albeit insufficient, co-operation
from the previous DOS government, including a number of arrests
and extraditions (most famously Milosevic), but co-operation largely
came to a halt in autumn 2003. Despite SaM's progress towards
the EU and NATO being conditional on her co-operation with the
ICTY, in May 2004 SaM's co-operation with the ICTY was described
by the ICTY Chief Prosecutor, Carla Del Ponte, as "virtually
non-existent". She has reported to the Security Council that
General Mladic and other indictees are spending at least part
of their time in SaM, including three army and police generals
who are still living openly in Belgrade despite having been indicted
last September. The recent reconstitution of SaM's Council for
Co-operation with ICTY is a late but encouraging development and,
along with positive statements from the new Serbian President
and SaM Foreign Minister, has generated hope for some concrete
progress in the near future. We continue to urge SaM to meet her
international obligations and to promote public awareness of war
crimes committed in the region.
16. The EU responded to SaM's poor ICTY
co-operation by holding back SaM's EU integration (see below).
Meanwhile on the 31 March this year, the US suspended the outstanding
financial aid due to SaM. Around a quarter of the annual allocation
of $100 million was held back due to SaM's lack of co-operation
with the ICTY (the suspension did not apply to that used for humanitarian
aid, aid for democratisation and aid for Kosovo and Montenegro).
17. Serbia is working to increase its capacity
to carry out domestic war crimes trials. In March 2004 the first
trial began in the new special war crimes court, of six Serbians
accused of involvement in the 1991 Vukovar massacre in Croatia.
We support these efforts. However, according to the Organisation
for Security and Co-operation in Europe's assessment, the Serbian
judiciary lacks the capacity to conduct fair war crimes trials
in accordance with international standards. We are urging the
Serbian authorities to reform the judiciary and to implement witness
protection programmes to ensure the trials are effective and meet
international standards and have offered assistance in this regard.
18. A Stabilisation and Association Agreement
with the EU, as a first step towards joining the EU, is the key
foreign policy priority for SaM and its constituent republics.
But SaM's progress towards the EU is currently stalled. The key
stumbling block is non-co-operation with ICTY and the failure
of the Serbian and Montenegrin republics to complete the process
of harmonising customs tariffs as part of creating a single market.
19. Under the Belgrade Agreement (signed
in February 2002) and the Constitutional Charter of March 2003,
the Serbian and Montenegrin republics agreed to form a State Union
and not to call a referendum on independence for at least three
years. The State Union is headed by President Marovic, from Montenegro,
and contains five Ministers, for Foreign Affairs, Defence, Human
Rights and Internal and External Economic Affairs. However, the
pro-independence ruling coalition in Montenegro continues to suggest
that the State Union is not working and that Montenegro may call
a referendum before 2006 (some prominent Serbian politicians also
argue for dissolution of the union).
20. SaM is seeking membership of PfP but
will need to meet the established NATO conditions: full co-operation
with ICTY (in particular the arrest and transfer of Mladic and
Karadzic), the case dropped against eight NATO allies at the International
Court of Justice (ICJ), and continued improvements in international
and regional relations. At the NATO Summit in Istanbul June 2004,
NATO Allies pledged to assist SaM by including her in selected
PfP activities. But only action against remaining ICTY indictees
and dropping the ICJ case will pave the way for rapid movement
on PfP. The UK has a significant bilateral defence reform programme
with SaM (including a 2 star General advising SaM's Ministry of
Bilateral relations and assistance
21. The UK values good bilateral links with
SaM, characterised by rich bilateral exchanges and developing
economic/trade relations. Among others, the following have visited
SaM in recent years: Minister for Europe, Dr Denis MacShane, as
part of a regional tour in April 2004; the Attorney General, Lord
Peter Goldsmith, in November 2003; the Foreign Secretary, Jack
Straw, in November 2002. We have also hosted visits to the UK
by SaM Defence Minister, Boris Tadic, in November 2003; SaM Deputy
Foreign Minister, Igor Luksic, in June 2003; FRY Foreign Minister,
Goran Svilanovic in October 2002; Serbian Prime Minister, Zoran
Djindjic, in April 2002; and FRY President, Vojislav Kostunica,
in November 2001.
22. The UK continues to provide support
for reform that delivers economic, social and institutional development,
and look to maximise the effectiveness of economic and other assistance.
We support the Government's poverty reduction strategies and also
encourage donor harmonisation related to nationally owned reform
strategies. We provide assistance both bilaterally (£8 million
annually for SaM) and multilaterally.
23. The EU provides technical assistance
through its CARDS programme. The CARDS Management Committee approved
the 2004 action programme for SaM, amounting to around
230 million (as an EU member state, the UK provides
19% of the overall funding for CARDS). CARDS regulation supports:
good governance and institution building; economic recovery; and
social development and civil society (including recognition of
the need to tackle poverty). The EU has also provided macro financial
assistance in 2002 and 2003 (
40 million and
65 million respectively). A further
25 million is likely in 2005.
24. Policy and progress on Kosovo will be
covered in more detail in a later memorandum following key international
meetings in September, as agreed with the FAC.
25. Macedonia has made significant progress
since the inter-ethnic conflict of 2001. Much of the legislation
linked to the Ohrid Framework Agreement (OFA), which brought to
an end the 2001 violence, has now been passed. However, decentralisation,
one of the OFA's key components, has been highly contentious,
particularly in July and August 2004. It sparked demonstrations
and the collection of the 150,000 signatures necessary to force
a referendum against the parliament approved decentralisation
package. The referendum has further delayed the municipal elections
planned for autumn 2004. This issue highlights that tensions remain
between the ethnic groups. Whether the OFA is perceived to deliver
much needed change (for ethnic Albanians) or deliver too much
(for the ethnic Macedonians) will continue to affect stability
in Macedonia. Work on equitable representation in the public sector
and on language use rights continues.
26. The current government coalition was
led by Prime Minister Branko Crvenkovski until he was elected
President, following the untimely death of former President Boris
Trajkovski in a plane crash in February 2004. Former Minister
of Interior Hari Kostov became the new Prime Minister. The coalition
is multi-ethnicthe ethnic Albanian contingent DUI is made
up of the former insurgents from 2001.
27. Although inter-ethnic politics dominate
the agenda, the principal challenge in Macedonia is the economy.
Inflation, government expenditure and external debt are increasingly
under control, helped by an IMF programme, but official unemployment
stands at more than 35%. Although this is mitigated by the large
grey economy, urgent action is required to create jobs. Attracting
foreign direct investment (FDI) will be key to boosting Macedonia's
economic prospects. A properly functioning judicial system is
necessary to stimulate the economy, especially for FDI. It should
also help to confront organised crime, which, as elsewhere in
the region, is a major problem in Macedonia. But further high-level
political commitment is required to make progress. This applies
equally to tackling the commonplace allegations of corruption.
To this end, the UK funds a small project enabling a team of five
experts to monitor the judicial process in corruption related
cases in order to develop recommendations for legal and institutional
28. With the withdrawal of the EU's first
military mission, Operation Concordia on 15 December 2003 there
are now no international peacekeeping troops in Macedonia. Neither
the end of Operation Concordia, nor the publication of the contentious
census results in December 2003, nor the March violence in Kosovo
triggered significant security incidents. However, the security
situation remains fragile. We continue to monitor the situation
closely through working in concert with other international actors.
29. The EU Police Mission (EUPOL Proxima)
was launched on 15 December 2003 with a one year mandate. This
followed a request from the late President Trajkovski for EU help
in bringing the Macedonian police up to European standards. Proxima's
key role is to mentor, monitor and advise the Macedonian police.
Its presence also acts as reassurance for the local population.
The UK currently provides seven of the mission's 200 or so personnel.
International Criminal Tribunal for the Former
30. The ICTY asserted primacy over five
cases in Macedonia relating to the 2001 inter-ethnic conflict.
Nobody has yet been indicted by the ICTY for any of these cases.
31. The Macedonian Government is committed
to a future within the EU, demonstrated by Macedonia's application
to join the EU, submitted on 22 March 2004. Macedonia signed a
Stabilisation and Association Agreement (SAA) in April 2001, which
entered into force on 1 April 2004. The first EU-Macedonia Stabilisation
and Association Council is scheduled for 14 September 2004. Macedonia
also seeks to become a member of NATO joining Partnership for
Peace in 1995 and the Membership Action Plan (MAP) process in
1999. In order to achieve this, they will need to implement the
OFA in full as well as fulfil SAA and MAP conditions. Progress
is being made, although significant challenges remain such as
further ethnic integration and downsizing of personnel and equipment
in the armed forces. The UK fully supports Macedonia's aspirations
to join both the EU and NATO when the relevant criteria are met.
We focus our efforts on helping the Macedonians themselves make
Bilateral relations and assistance
32. Between 2001 and 2003, the EU pledged
131.3 million in CARDS money to Macedonia, of which
the UK contributes approximately 19%. Bilaterally, the UK has
spent approximately £6.33 million from 2002-03 to 2003-04.
In addition to this, at the Donors' Meeting for Macedonia in March
2002, the UK pledged an additional £3 million for Balance
of Payments support.
33. We have a strong bilateral defence relationship
including English-language training and staff courses. A British
Brigadier heads up NATO's in-country presence, double hatted as
special defence adviser to the Macedonian Government.
34. The Macedonian Speaker is due to visit
in the autumn following visits from Deputy Prime Minister Xhaferri,
Culture Minister Stefanovski and Foreign Minister Mitreva earlier
this year. The Minister for Europe, Dr MacShane, visited Skopje
in April as part of a regional tour, following a visit to attend
the late President Trajkovski's funeral in March.