Regional Approach to Development Challenges of South East Europe

1. Regional Approach to Development Challenges of South East Europe Belgrade 15 June, 2009

2. Context: “The crisis will not detour the Balkans. The downturn is providing a major test for political and economic institutions that have little to no experience with such a magnitude of challenges.” Jens Bastian, ELIAMEP “Past good economic results were based on increased domestic demand coupled with large negative savings and investment balances, cheap international capital, low investment in equipment and low exports. Even without the crisis, this model of growth is not sustainable in the long run.” Jan Truszczynski, DG Enlargement ”Indeed, no one in Brussels seems even to have realized that the entire Balkan peninsula is rapidly turning into a cobweb of frozen conflicts...” Marcus Tanner, Balkan Insight High level political contacts in the WB intensified. Mixed signals on sectoral cooperation – expansion and deterioration.

3. The RCC’s Objectives: • Contributing to the enhancement of stability, security, mutual respect and open dialogue in South Eastern Europe. • Rebranding the image of SEE and instilling the notion of regional cooperation. • Acting as key interlocutor and operational link between the EU and the SEECP with regard to project generation and prioritization particularly in the context of the European Commission’s Multi-Beneficiary Instrument for Pre-Accession Assistance (MB IPA). • Coordinating international political, technical and financial support. • Presenting a regional forum for dialogue among different countries, international organizations, and other partners.

4. Achievements: All Western Balkan countries have either got (Croatia and the FYR of Macedonia) or applied for the candidate status (Montenegro and Albania), or signed Stabilization and Association Agreements with the EU (Serbia and BiH). Albania and Croatia became NATO members. Numerous (around 40) regional cooperation structures and initiatives have been developed since 1999. Successful transition from Stability Pact to the RCC - SEECP becoming the major political framework.

5. Activities of the RCC in the period May 2008 - May 2009: Completed transition process from the Stability Pact for SEE to RCC; Opening of the RCC Liaison Office in Brussels and nomination of the Special Envoy for relations with the Presidency of the European Council; Political consultations with RCC members; RCC presentations held in the SEE capitals; Mapping of national priorities regarding regional cooperation in SEE; Coordination and streamlining of SEE regional initiatives and structures; Initiated networking process among RCC Secretariat, members from SEE, EC and IFIs (including Multi-beneficiary IPA and IFIAG); Preparation of the Project Portfolio of the RCC; Cooperation with other regional organizations and initiatives (CEI, BSEC, AII, Danube Cooperation Process).

6. RCC PLATFORM

7. RCC achievements: • Improved exchange of information, data and expert knowledge – strengthened regional cooperation. • Bringing together all relevant stakeholders when addressing specific issues, increasing cooperation efficiency and decreasing related costs. • Added value in avoiding overlapping and duplication and in appropriate prioritization of Project Proposals. • Raising awareness on sustainable development and its importance for the region. • Facilitating fund raising for project implementation. 7

8. Challenges: • Proliferation of different support programs and regional initiatives. • Institutional competition. • Donor coordination. • Coherence of the mechanism and deliverance of crisis assistance package. • Discrepancy between regional ownership, leadership and regional program and project implementation capacity. • Moving beyond dialogue to greater results orientation.

9. Risks: Effects of the global economic crisis in the region; Slowing down of the European integration process in the Western Balkans; Deterioration of bilateral political relations in the region; Fragility of the established regional structures.

10. In its priority areas RCC will: • Act in a pro-active way based on a strategic approach and in accordance with national priorities, in particular regarding the EU accession. • Develop regional programs to be supported by relevant international organizations and other donors. • Help its SEE members and regional initiatives and task forces to acquire lacking knowledge and expertise in management of the project cycles.

11. Scenario 1: speeding up and enriching SAPHigh EU involvement in helping WB in institutional, financial and sectoral terms – long-term and emergency measures Candidate status for all WB countries White Schengen list for all Fast and focused implementation of IPA funds Additional funds for the WB (budgetary support and project oriented) Coordinated IFIs approach to big regional infrastructural projects Regional coordination in developing strategic approach and implementation of key projects

12. Scenario 2: slowing down and enriching SAPBridging the “enlargement fatigue” for 7-10 years and coping with the crisis effects with strategic approach of keeping intensity of functional integration and decided level of financial assistance, while postponing institutional integration Focus on trade, energy, transport, JHA, security and BHC Keeping business involvement (to support trade, FDI, SMEs) and sustainability of the financial systems in the region Keeping regular dialogue between EU and WB at the high level Strengthening regional mechanisms of cooperation

13. Scenario 3: postponing and freezing SAPNo change – opting for status quo • Economic collapse in the region • Massive social unrest • Security challenges • Deconstruction of established regional mechanisms