US embassy cable - 04BRUSSELS4181

UNCLAS SECTION 01 OF 04 BRUSSELS 004181 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/DAS Kathleen Stephens, EUR/SCE Chuck English, 
EUR/ACE Tom Adams, Pat Nelson-Douvelis and Monica O'Keefe 
 
E.O. 12958: N/A 
TAGS: PREL, EAID, ZL, EUN, USEU BRUSSELS 
SUBJECT: THE STABILITY PACT: PRESSING REFORM THROUGH 
REGIONAL COOPERATION 
 
REF: (A) Belgrade 008 (B) Sarajevo 2208; (C) Zate-Holtzapple 
 
9/15/04 email 
 
SUMMARY 
------- 
 
1. (SBU) With South Eastern Europe facing a decisive year in 
2005, the Stability Pact (SP) continues to generate pressure 
for further political and economic reforms in the region and 
to draw the region closer to European and Euro-Atlantic 
integration.  The Pact is complementing its ongoing efforts 
in the areas of democratization, economic reform and in the 
security field with a strong push for implementation and 
regional ownership of programs and commitments undertaken by 
SEE governments.  There has been particular success on the 
economic front -- promoting regional free trade agreements 
and restoration of the regional power grid, improving the 
investment climate -- and in fostering regional cooperation 
on migration and refugee returns as well as law enforcement. 
The Pact and Senior Coordinator (SC) Erhard Busek have 
helped restore an atmosphere of cooperation among SEE 
governments and political leaders.  As intended at its 
creation in 1999, the Pact plays an important supporting 
role, as individual SEE governments, the Contact Group and 
other members of the international community work toward for 
lasting political solutions in the areas of greatest 
challenge: Serbia and Montenegro, Kosovo and Bosnia- 
Herzegovina (refs A and B).  END SUMMARY. 
 
Five Years of the Pact: Creating "Critical Mass" of Regional 
Communication 
--------------------------------------------- ------- 
 
2. (U) Launched under Presidential auspices in the aftermath 
of the spring 1999 Kosovo air campaign with the goal of 
helping restore peace and stability to the Balkans, the 
Stability Pact initially captured some 200 so-called "quick 
start" assistance programs under its umbrella.  The Pact's 
early years under the leadership of Bodo Hombach were marked 
by feverish activity and a fair measure of coordination 
challenge as it sought to bring coherence to international 
donor efforts in the war-torn Balkans.  Since 2001, with 
former Austrian Vice Chancellor Erhard Busek as Senior 
Coordinator, the Pact's activities have become much more 
streamlined and clearly focused on six core objectives (see 
para five below).  The Pact is also placing strong emphasis 
on implementation of existing agreements and commitments 
undertaken by regional governments and is pressing hard for 
further regional ownership of a range of important 
initiatives.  With evident progress in the region toward EU 
integration on the part of EU candidates Bulgaria and 
Romania as well as Croatia and most recently Macedonia, the 
Pact has contributed to achieving the twin goals of bringing 
peace and stability to the Balkans as well as further 
European integration in the long-challenged South East 
European region. The Pact also represents a useful channel 
to draw Moldova closer to the European mainstream, although 
with evident limitations on near-term prospects for 
significant progress. 
 
3. (SBU) Conversations with government officials and 
politicians confirm the sense of achievement by the Pact as 
a concerted undertaking by international donors and regional 
assistance recipients.  Both in public statements and in 
September 27 comments to Deputy Special Coordinator (DSC) 
Mozur, EU Commission Director for the Western Balkans 
Reinhard Priebe strongly praised the accomplishments and 
positive impact of the Stability Pact and stressed its role 
as a key partner for the EU in the region.  Typical comments 
from the region stress, as a leading Bulgarian 
parliamentarian recently noted to DSC, the clear benefit of 
the "critical mass of communication" created by the Pact in 
the region.  A senior Hungarian Interior Ministry official 
highlighted the Pact's success in providing a venue for 
close collaboration among regional Ministers of Interior, 
citing the stark contrast between the cordial and productive 
September 14 meeting of regional Ministers in Brdo, Slovenia 
with the icy, distrustful encounters of just a few years 
ago.  Other examples abound. 
 
4. (U) Some skeptics remain, however.  Regional and donor 
critics hit the Pact for its inability to deliver fully on 
promised infrastructure and other economic improvements and 
perceived shortcomings in assistance coordination.  On the 
former, such criticism often draws on long existing 
skepticism and opposition dating from the Pact's early days, 
when it was finding its place in the overall international 
community effort in the Balkans.  Criticism from the region 
often implies the expectation that the Pact was to serve as 
a Marshall Plan in the Balkans, rebuilding and restoring the 
region to some version of perceived pre-1990 halcyon days. 
Critics of lapses of coordination do not see the Pact's 
efforts to streamline and focus on core objectives and fail 
to recognize the extent to which assistance levels have 
decreased as peace and stability have settled into the 
region.  And there have been some bumps in the road on some 
initiatives, where results have been less than expected or 
where poor performance by  individuals has undercut 
achievement. 
 
SP Initiatives have Impact, Economic Objectives to the Fore 
--------------------------------------------- -------------- 
 
5. (SBU) A brief overview of key Stability Pact activities 
confirms success in its role of supporting a return to 
diplomatic normalcy and regional cooperation in South 
Eastern Europe.  These activities have to be viewed in 
context, against the backdrop of substantial but declining 
bilateral assistance from the US and other donors and a 
build-up of EU pre-accession assistance - focused on acquis 
requirements -- to candidates Bulgaria, Romania, as well as 
Croatia and prospectively Macedonia. 
 
-- Democratization and Human Rights (Working Table I) with 
core objectives of Media and Local Democracy/Cross Border 
Cooperation: Among key priorities, the Pact is joining 
forces with donor governments and leading NGOs to promote 
active inter-parliamentary cooperation.  The goal: to ensure 
that regional parliamentarians and staffers have the 
information, understanding and political will they need to 
ratify and implement the web of already-concluded regional 
economic agreements in trade and energy as well in other 
policy areas.  Among other SP initiatives is a media task 
force with the goal promoting responsible standards for the 
regional media and tempering corrosive and irresponsible 
journalism in tense areas.  The Pact is seeking to deepen 
regional commitment to reconciliation by proposing 
government-supported youth exchanges between Serbia and 
Montenegro, Kosovo, and Bosnia-Herzegovina (and perhaps 
others) along the lines of successful past Franco-German 
programs. 
 
-- Economic Reconstruction, Cooperation and Development 
(Working Table II) with core objectives of Interregional 
Trade/Investment Compact and Regional Infrastructure/ 
Energy: The Pact has worked extremely hard in tandem with 
the OECD, EBRD, other IFIs and such bilateral donors as the 
U.S. to win regional governments' commitment to an 
interlocking system of free trade agreements (creating a 
common market of some 60 million people), economic reform 
measures under the "SEE Investment Compact", and the so- 
called Athens Process to restore the regional power grid. 
As a supporting measure, SPSC Busek is devoting considerable 
time and effort to heighten the role and influence of the 
regional Business Advisory Council (BAC), with the US Deputy 
Senior Coordinator exploring further ways to strengthen the 
role of US business in the BAC.  All are mature and highly 
applauded initiatives.  They now demand a concerted effort 
and political push by all concerned -- most significantly by 
regional governments and parliaments -- for final 
ratification and implementation.  This task is perhaps the 
Pact's key priority for the year immediately ahead. 
 
-- Security Issues (Working Table III) with core objectives 
of Anti-Organized Crime and Migration/Asylum/Refugees:  The 
Pact has worked successfully on initiatives involving 
regional cooperation on migration and refugees, border 
cooperation, against trafficking in persons (graduating the 
initiative to the broader mandate of a special OSCE 
representative), against organized crime and corruption and 
on such military issues as arms reduction and small arms 
control.  The SP Disaster Preparedness and Prevention 
Initiative has set the stage for meaningful regional 
cooperation should a cross-border natural disaster occur in 
the seismologically unstable and infrastructure-poor region. 
An initiative addressing military "conversion" is evolving 
in tandem with NATO, the World Bank and other donors 
(possibly Nordic).  The concept posits limited regional 
cooperation in dealing with military down-sizing, base 
closing, defense plant conversion, and environmental issues, 
with Serbia-Montenegro the primary country of concern.  NATO 
SG de Hoop Scheffer agreed to explore possibilities with the 
SP and other donors during his September 15 meeting with SC 
Busek, expressing support for the undertaking while 
cautioning on NATO's clear resource constraints. 
 
Progress toward Meaningful Regional Ownership 
--------------------------------------------- 
 
6. (SBU) Achieving regional ownership of reforms and of SP 
initiatives is a leading priority of the Pact.  Here, there 
is evidence of success.  Regional governments are assuming 
costs and responsibility by seconding personnel and 
providing facilities to a number of regional initiatives. 
For example, the Sava River Commission -- involving four 
regional governments along with several donors in Sava River 
environmental management -- is opening (in October) a 
regional office in Zagreb.  Similarly, the Croatian 
government is strengthening the regional center for arms 
control and verification (RACVIAC) in Zagreb and promoting 
it as a regional center for defense conversion issues, doing 
so with support from donors and expertise from various 
quarters, including NATO.  There are other examples.  The 
regional anti-corruption initiative (SPAI) based in Sarajevo 
and the newly established regional center in Skopje to 
address migration and related issues which were formerly the 
focus of the Pact's MARRI initiative, led most recently by 
new UNMIK head Soren Jessup Petersen.  By year's end, the SP 
education reform initiative plans to move the secretariat of 
the Austrian-led "Graz process", incorporating South Eastern 
Europe into a European area of education, to Zagreb with its 
Vienna activities winding down as a result.  The SECI anti- 
organized crime center in Bucharest, now loosely associated 
with the Stability Pact due to SC Busek's lead role in both, 
is a success story, highlighted by a forthcoming positive EU 
assessment that lays out a vision of SECI cooperation and 
possible incorporation into EUROPOL over the coming decade. 
 
7. (SBU) One particular challenge: reinforcing the move to 
regional ownership by re-energizing the South East European 
Cooperation Process (SEECP).  Present chair Romania, 
distracted by its upcoming elections, could be doing more, 
although Romanian officials are hosting Foreign Ministers in 
October and are planning a regional Defense Ministerial to 
discuss issues related to defense conversion.  With an eye 
to the Greek SEECP chairmanship beginning in April 2005, SC 
Busek has already started to bolster Greek interest and 
leadership in ensuring that SEECP plays a more significant - 
- and positive -- role in the future. 
 
The Coming Two Years: Stability Pact will be a Useful Tool 
--------------------------------------------- ------------ 
 
8. (SBU) The SP can further contribute regional stability 
and progress over the crucial next years.  The context 
through 2007 is gaining clarity.  Bulgaria and Romania, 
together with the EU, are working toward the January 1, 2007 
target date for their accession to the EU.  Croatia is 
progressing along a similar path and initial discussions 
with Macedonia have started.  With such accession prospects, 
the Pact's target area will necessarily shrink.  But 
regional leverage, spearheaded by the SP, international 
partners and EU candidates in the region, will generate 
additional pressure on the remaining countries of the 
Western Balkans whose reform efforts and commitment to 
European integration are lagging.  We should use this 
evolving leverage, now and in the future, to strengthen the 
position of reformers and to press governments and political 
oppositions in Serbia and Montenegro, Bosnia-Herzegovina, 
and Albania to embrace the realistic vision of full 
integration into Europe and the EU over the coming decade. 
 
9. (SBU) With this in mind, the next two years will be 
critical for the region, particularly in Serbia/Montenegro 
(Ref A) and certainly for Kosovo, where pressure for a 
change in the status quo is building.  Ref B lays out some 
elements of the 2005-2006 picture in Bosnia-Herzegovina with 
the suggestion that a change in the IC posture in that 
country will be a significant discussion issue in this 
period.  Albania is moving ahead at times, while stepping 
back at others.  On September 14, the EU delivered a tough, 
critical message to Tirana (backed by Embassy Tirana - Ref 
C) on its mixed record and uncertain commitment on reform, 
making clear the need for Albania's 2005 elections to 
demonstrate the country's readiness to progress toward 
European integration.  With the clear challenges facing 
these countries, the Stability Pact's consistent role of 
facilitating regional cooperation and of providing steady 
regional pressure for continued reform -- linked to the EU 
and Euro-Atlantic integration and the holy grail of eventual 
EU accession -- remains essential to the international 
community's set of diplomatic tools and pressure points. 
 
10. (SBU) Like other international players and donors active 
in South Eastern Europe, the Stability Pact is assessing 
next steps and medium-term objectives.  Discussion with the 
EU on CY 2006 funding is ongoing, with initial soundings are 
upbeat.  EU officials are positive on the Pact, supportive 
of its continued work, but clear to ensure that it plays a 
supporting and complementary to the EU's main thrust of 
promoting accession for candidate countries and progress 
toward candidacy status by the others. 
SC Busek: On the Road, On Message in Advancing the Reform 
Agenda 
--------------------------------------------- ------------ 
 
11. (SBU) Through his seemingly indefatigable travels and 
his straight talk and problem solving, and a senior EU 
political figure concentrating exclusively on the Balkans, 
SC Busek has won great respect and considerable credibility 
with senior government officials and politicians throughout 
the region.  He sees Prime Ministers and senior cabinet 
ministers regularly and constantly presses hard on the 
reform agenda and on cooperation with Stability Pact 
initiatives.  His efforts underpin the Stability Pact's 
success to date and will likely ensure further positive 
regional government cooperation and action.  He and the Pact 
are working toward a successful meeting of the Pact's 
Regional Table November 18-19 in Skopje, where regional 
leaders and donors will meet to assess progress, set 
priorities, and establish the Pact's work plan for the 
turning point period 2005-06. 
 
MCKINLEY