The Stability Pact is an important component of U.S. cooperation with the European Union (EU) to promote peace and stability in Southeastern Europe and further integrate the region into European and trans-Atlantic institutions. Since it was launched in the summer of 1999, the Pact has been a key vehicle to foster regional cooperation, and a mechanism to coordinate international assistance. Over 90 percent of support through the Stability Pact has come from European countries. Since the Pact's inception, U.S. direct contributions of around $17 million have provided the opportunity to influence the direction of the $6 billion in assistance that the Stability Pact has mobilized for regional economic cooperation and democratic reforms, infrastructure, and cross-border security and law enforcement programs.
In FY 2004, Stability Pact leadership shifted emphasis from encouraging the region to adopt reform legislation to promoting implementation of earlier reform commitments. Stability Pact leaders, the U.S., and other donors stressed that the ultimate aim is to prepare the region to take full responsibility for existing Stability Pact initiatives.
In May 2004, Stability Pact members reaffirmed their commitment to fostering integration of Kosovo into regional activities through enhanced cross-border and cross-boundary cooperation, in compliance with UN Security Council Resolution 1244.
The Pact's activities are organized under three Working Tables: Table I -- Democratization and Human Rights; Table II - Economics, Investment, and Infrastructure Development; and Table III - Security, Law Enforcement, Anti-corruption, and Organized Crime.
Several U.S. agencies implement programs that contribute directly or indirectly to the objectives of one or more Stability Pact initiatives. From the start of the Stability Pact in 1999 to October 2004, almost $109 million in SEED funds have gone to USAID regional projects that support Stability Pact objectives.
In FY 2004, about $1.6 million from the SEED Regional Budget was allocated in direct support of Stability Pact initiatives, but more was contributed from individual SEED-country budgets and through the USAID-administered regional budget. SEED-funded programs that contributed directly to Stability Pact activities focused on the following main areas: Working Table I (local democracy and cross-border cooperation, media, reconciliation, and education); Working Table II (energy, infrastructure, trade cooperation, investment climate, and the Sava River Initiative); and Working Table III (anti-organized crime, anti-corruption, and disaster prevention and preparedness). Multiple donors support virtually all Stability Pact programs.
WORKING TABLE I: DEMOCRACY AND HUMAN RIGHTS
Through assistance activities both within and outside the Stability Pact framework, the U.S. has carried out many programs to promote democracy and human rights in Southeastern Europe. In FY 2004, the Stability Pact changed its core objectives under Working Table I. The new core objectives are local democracy and cross-border cooperation, and parliamentary cooperation, with education and youth and support for free media representing additional major priorities.
Local Democracy/Cross-Border Cooperation and Reconciliation: In FY 2004, SEED support for Table I focused on developing cross-border cooperation with local governments and civil society in critical border areas, with special focus on inter-ethnic reconciliation and citizen participation, including by women and minorities. SEED supported ethnic reconciliation with $400,000 in FY 2004 funds to the Cross-border Cooperation and Reconciliation (CBCR) project, administered by Catholic Relief Services. This project advances both interethnic reconciliation and local democracy by supporting cross-border activities determined jointly by communities straddling a border. In FY 2004, projects started at four pilot sites linking eight communities where violence and ethnic tensions had severed previously existing communication and cooperation. These pilot sites link communities in Serbia, Bosnia and Herzegovina, Croatia, Macedonia and Kosovo. At each pilot site, ethnically balanced committees and working groups with members from both sides of the border propose, design, and implement projects. The project includes training in conflict transformation skills for the local NGOs, municipalities, businesses and youth that plan and participate in project activities. Through this project, the communities are also addressing border crossing procedures and identifying joint economic development opportunities. Initial activities concluded during 2004 included soccer tournaments, riverbank cleanup, a youth media camp, cultural events, and restoration of lighting on a bridge across the border. In virtually all of these cases, this was the first time since the war that communities across the border had participated in such activities.
Media: In FY 2004, SEED provided $100,000 in assistance to the Stability Pact Media Task Force, which helped bring media legislation and implementation in line with international standards. SEED funding strengthened domestic media watchdog organizations, and enabled the Media Task Force to begin a media law monitoring project in FY 2004 that provides monthly updates on key media law issues to key governments, donors, implementers, and other interested parties. This program is a first-warning system to allow interested parties to get involved in ensuring that media law reform adopts best international practices. In FY 2004, SEED supported the Stability Pact's cross-border exchange of television programs to enhance information sharing by supporting regional co-production programs in news and public affairs, including over 30 hours of quality TV documentary co-productions by indigenous broadcasters on issues such as corruption and ethnic reconciliation.
Education and Youth: SEED did not provide additional funds to the Stability Pact Education and Youth Task Force in FY 2004, but program activities funded by FY 2003 SEED funds continued into FY 2004. In FY 2004, the Task Force promoted regional ownership of the reform process by working to establish a Regional Secretariat for the Education Reform Initiative of South East Europe (ERI SEE), to be supported and staffed by Southeastern Europe countries. The Task Force focused on implementation of education reforms, and organized seminars to promote decentralization, education development for disabled and at-risk students, life-long learning, human rights, and democratic citizenship. FY 2003 SEED funds supported the International Youth Foundation and its affiliate, the regional Balkan Children and Youth Foundation, in strengthening youth programs in Southeastern Europe through grants and workshops on a national and regional level. During FY 2004, 238 NGOs who serve youth participated in national and regional capacity-building training and provided 25 grants totaling $283,000, which introduced 32,500 children and youth, and 1,300 teachers and parents, to activities or best practices for youth employment, health, civic and vocational education, and information technology. In FY 2004, the Center for Development and Reconciliation in South East Europe (CDRSEE) used FY 2003 SEED funds to hold three workshops that developed regional concepts for youth and reconciliation. Through its Joint History and Reconciliation project, CDRSEE continued its multinational process to prepare the English version of modern teaching packs on four chapters of Balkan history. These teaching packs are supplementary materials for history teachers at the primary and secondary school levels, and will be published in January 2005. In FY 2004, CDRSEE organized the fourth Annual Junior Scholars Workshop, which brought together young scholars from across the Balkans to present, compare, and discuss new doctoral research relevant to history in Southeastern Europe. Although the School Connectivity Project did not receive new funding in FY 2004, most of its activities continued in FY 2004. Through this project, 15 secondary schools throughout the United States have been connected to 77 schools in Southeast Europe. Teachers and students can increase their understanding of shared history, citizenship, and tolerance through the use of technology and collaborative Internet communication, creating shared projects with peers in other countries.
WORKING TABLE II: ECONOMIC RECONSTRUCTION AND DEVELOPMENT
In FY 2004, SEED funds were used to support Working Table II's core objectives directly, which focus on private sector development, in particular trade liberalization, investment climate, energy and other infrastructure, and the environment.
Trade Facilitation: The Commercial Law and Development Program (CLDP) of the Department of Commerce received $400,000 in SEED funds during FY 2004. The CLDP has been instrumental in helping Southeastern European countries cooperate to reduce barriers to trade and investment, while building mechanisms for increased international and regional trade and investment. It has contributed significantly to the development of a regional network of 28 Free Trade Agreements (FTA), which now link all Southeastern European countries of the Stability Pact. The ultimate goal is to establish a regional market of 55 million consumers, creating better conditions for private investment and economic growth and facilitating the longer-term integration of Southeastern European countries into EU structures. In FY 2004, CLDP continued its technical assistance to ensure implementation of the FTA's, conformity with the rules of the World Trade Organization, and to eliminate non-tariff barriers. CLDP also trained officials to draft regulations, and provided judicial training to ensure that laws and regulations are enforced. CLDP promoted increased regional customs cooperation, and worked with ministry representatives on conforming to international standards and certifications. CLDP continued its work with local American Chambers of Commerce to focus on how AmChams can better represent their members with their respective governments.
Energy Community for Southeast Europe: In FY 2004, $1.5 million in SEED funds through the USAID regional budget supported Stability Pact efforts to develop a Southeastern Europe regional energy market integrated with the Western European system, including EU-compliant institutional and regulatory systems and modernizing capacities to facilitate expanded trade and investment. SEED funds have promoted the implementation of the two Athens Memoranda of Understanding signed by Southeastern governments, and negotiations on a legally binding agreement begun in July 2004. In December 2004, Ministers and representatives from all Southeastern European members of the Stability Pact, including Turkey, and from the 25 EU member states agreed on the principles of a draft text of a treaty formally to establish this energy community among them - the Energy Community for Southeast Europe (ECSEE). The Energy Community will create a single regulatory space for energy in Europe, which would allow electricity and gas imports and exports from anywhere in Europe and would increase trade, private investment, financial transparency, competition, efficiency, and reliability of energy. It would also contribute to reducing emissions and climate change by fostering more efficient energy generation, transmission, and consumption. While a number of details remain to be resolved, delegations expect to sign the treaty formally during 2005. Success in integrating the energy sector would pave the way to expand the scope of the treaty to other kinds of critical infrastructure, such as transport and telecommunications.
U.S. assistance has focused on developing independent national energy regulators and their proposed participation under the Treaty in a Regional Regulatory Board, harmonizing energy laws and market rules, furthering commercial energy efficiency project financing, identifying regional priorities for investments in the transmission system and related interconnections, and addressing the needs and options of low-income and vulnerable populations. U.S. efforts are also furthering the development of gas markets in Southeast Europe, including potentially for gas imports from the Caspian region, as part of the overall diversification of European gas imports and movement to cleaner fuels. All SEE signatories to the "Athens MOU" have now established energy regulatory agencies. USAID is working on a set of regional regulatory standards that all countries must meet. SEED funds supported integration of Kosovo into such regional efforts, such as through a seminar in May 2004 on the needs of the energy sector in Kosovo.
Regional Energy Efficiency Initiative: The Stability Pact has promoted a regional financing approach to energy efficiency by focusing on leveraging financing from commercial and international financial institutions for municipal projects, including heating systems. In FY 2004, $500,000 in SEED funds supported this initiative, including with technical assistance to support World Bank and EBRD loans testing models for private sector participation in district heating, and loans for energy efficiency improvements to public facilities and households. In FY 2004, U.S. technical assistance in Bulgaria supported $30 million EBRD and $26 million World Bank loans to Sofia municipality for the rehabilitation of the Sofia district heating system. This assistance concerned private sector participation in the district heating company, and support for procurement of a tender for a private management contract. In Serbia during FY 2004, U.S. technical assistance helped design a $10 million World Bank fund for school and hospital projects, which are now being implemented, and a fund for household efficiency improvements. In Bulgaria, U.S. technical assistance helped in establishing a Development Credit Authority (DCA) facility, providing partial loan guarantees to United Bulgaria Bank (UBB) for a $10 million lending facility for municipal projects. Associated U.S. technical assistance included preparation of two projects that were approved for UBB financing, and seven projects under preparation. To build local capacity, U.S. technical assistance helped prepare energy plans at the national level in Macedonia and the local level in Croatia to examine cost-effective strategies for more efficient end-use; obtaining heat and energy services through traditional supply sources; and alternative sources, including fuel substitution, combined heat and power, decentralized systems, and renewable energy. FY 2004 SEED funding enabled the NGO Alliance to Save Energy to examine the use of energy efficiency to protect low-income consumers from rising energy prices. SEED funds supported analyses of the impact of rising energy costs on low-income populations in Albania, Bulgaria, Macedonia, Romania, and Serbia, which initiated discussions with relevant government ministries. In Macedonia and Albania, the Alliance helped prepare national policies to promote energy efficiency, including laws, strategies, codes and standards. This effort included preparing a comparative analysis of energy efficiency laws throughout Central and Eastern Europe.
The Investment Compact: In FY 2004, $100,000 in SEED funds supported a range of OECD activities to implement the Stability Pact's Investment Compact for Reform, Investment, Integrity, and Growth. These activities included technical assistance, promotional events, and development of instutional structures. The Investment Compact's objective is to lay the economic and structural policy foundations for sustained growth and development in Southeastern Europe. In FY 2004, the Compact continued its targeted strategy of calling on countries of the region to commit to a number of specific policy actions that will result in an improved investment climate in a limited period of time. The peer review and monitoring mechanism built into the Compact have been instrumental in keeping Southeastern European governments focused on necessary economic reforms. The development of local Foreign Investors Councils (FICs) has strengthened private sector involvement in the reform process and has brought constructive, practical advice. Several FICs have produced "White Books" on the investment climate in their respective countries, and presented these reports to governments as input to policy development. In July 2004, an independent evaluation of the Investment Compact by AT Kearney confirmed that the Compact is a good value for the money "that has clearly contributed to improvement in the investment environment and increasing private investment and employment in the region."
Infrastructure: The Stability Pact's Infrastructure Steering Group continued to be the main coordinating body for activities by the international financial institutions to support regional infrastructure. In June 2004, countries of the region and UNMIK/Kosovo signed a Memorandum of Understanding on the Core Transport Network, which summarized an agreed regional strategy for the transport sector. The Infrastructure Steering Group and the countries of the region had developed this strategy over the past two years, based on a European Commission study of the Western Balkans transport infrastructure. In July 2004, the Stability Pact brought together partners to work in an information task force on Public-Private Partnerships in order to expedite use of such partnerships in the region. In February 2004, the Infrastructure Steering Group expanded its mandate to cover environmental infrastructure, especially water management.
SEED funds supported valued technical assistance to Stability Pact efforts to improve regional infrastructure. In FY 2004, $500,000 in SEED funds supported USAID's Regional Infrastructure Project (RIP), which facilitated infrastructure projects while improving regional capacity for sustainable management in water, energy, and transportation services. The program is designed to leverage lending from European and multilateral institutions. FY 2004 results included approval by the International Financial Corporation Board and Austria, Greece, Italy, the Netherlands, Norway, and Switzerland of a $10 million revolving fund (The Balkans Infrastructure Development Facility -- BIDF) to prepare public infrastructure projects in water, transport, and energy for private sector investment. The BIDF will initiate activities in early 2005. SEED funds also supported the Balkans Infrastructure Investment Guarantee Facility to support private sector infrastructure investment.
Sava River: Using $300,000 in FY 2004 SEED funds, the United States provided critical legal and technical expertise and secretariat support, through the Stability Pact, to the Sava River riparian states to create a framework for negotiating and concluding an International Framework Agreement to reopen navigation and protect the environment and natural resources of the Sava River Basin. By the end of 2004, representatives of the four countries ( Bosnia-Herzegovina, Croatia, Serbia and Montenegro, and Slovenia) completed the ratification process formally to establish the International Sava River Commission, which will provide a means to reopen navigation, establish sustainable water management, and prevent or mitigate floods, spills, drought, and similar disasters.
WORKING TABLE III: JUSTICE AND HOME AFFAIRS/ SECURITY AND DEFENSE
Initiatives under Working Table III are divided into two sub-tables: Justice and Home Affairs and Security and Defense.
Justice and Home Affairs
In FY 2004, the United States pursued three main priorities under this sub-table: the fight against organized crime and corruption; migration and asylum (including trafficking in persons); and law enforcement/institution building.
Organized Crime: The Stability Pact Initiative to fight Organized Crime (SPOC) was designed to strengthen regional anti-organized crime capacities, in accordance with internationally recognized standards. The Initiative focuses on adopting policies, strategies, and legislation; developing multi-disciplinary, inter-agency co-ordination mechanisms; encouraging the establishment of specialized units; and enhancing regional and international cooperation. During FY 2004, the SPOC focused on revising its agenda better to reflect the needs of the region. The U.S. provided $70,000 in FY 2004 SEED funds to support the organization and operation of the SPOC Secretariat. The SPOC Secretariat is co-located in Bucharest, Romania, with the Regional Center to Combat Trans-border Crime, which is under the Southeast European Cooperative Initiative (SECI). The SPOC Secretariat is tasked with advancing the development of legislation in the region aimed at facilitating witness protection and allowing for the processing and protection of personal data for law enforcement investigations. In addition, the SPOC creates greater awareness of the threats posed by organized crime through public relations.
Anti-Corruption: The Stability Pact's Anti-Corruption Initiative (SPAI) is based on four principles to develop institutional mechanisms and lay the foundations for the sustained fight against corruption in Southeastern Europe: country ownership; regional cooperation; civil society involvement; and international coordination. Since the Initiative's inception, there has been significant progress. All countries in the region have signed the SPAI Anti-Corruption Compact, committing themselves to specific actions to fight corruption, including working closely with civil society on reform. All countries have appointed Senior Representatives to oversee implementation of the Compact and have developed National Action Plans to combat corruption. In FY 2004, the United States provided $300,000 in SEED funds, including for technical and financial assistance to the SPAI's Regional Secretariat Liaison Office (SPAI-RSLO). SPAI countries opened the RSLO in FY 2004 in office space donated by Bosnia and Herzegovina in Sarajevo. The RSLO will gradually assume the secretariat functions provided by the OECD and Council of Europe, fostering the U.S. priority of promoting regional ownership and leadership of this initiative. The RSLO serves as an information-clearing house, has a newspaper to keep all parties informed, and organizes training programs for member countries. Initial RSLO programs in FY 2004 included regional workshops on conflict of interest at the local government level and an effort to bring the legal systems of the countries of Southeastern Europe into accord with the UN Convention on Anti-corruption. The RSLO has signed a MOU with a separate Southeastern European organization, the Southeastern Europe Cooperation Process (SEECP), in order to play a substantial role in that forum's fight against corruption. In FY 2004, SEED funds also supported country-specific anti-corruption projects.
Human Trafficking Task Force: This Stability Pact task force disbanded at the end of 2004 with its activities passing to the OSCE. The United States did not contribute to the Stability Pact Human Trafficking Task Force in FY 2004, but assisted in the transition of many Task Force functions to the OSCE Coordinator for Human Trafficking.
Migration, Asylum, Refugees Return Initiative: In FY 2004, Albania, Bosnia-Herzegovina, Croatia, Macedonia, and Serbia Montenegro took over full responsibility for jointly implementing the objectives of the Stability Pact's Migration, Asylum, and Refugees Return Initiative (MARRI). MARRI transferred from the Stability Pact to the auspices of the Southeastern Europe Cooperative Process (SEECP). The MARRI Regional Secretariat opened in Skopje, in space donated by the Government of Macedonia. MARRI seeks to resolve problems of population movements in the Western Balkans by promoting closer regional cooperation and a comprehensive, integrated, and coherent approach to the related issues of asylum, migration, border management, visa policies, and refugee return and settlement. Under its Action Program, MARRI is developing a number of projects aimed at reaching lasting solutions to the problems of displacement in the Western Balkans. The projects include regional dialogue on migration/asylum/refugees; capacity building and training with a regional and integrated focus; information exchange and better access to documentation; targeted cooperation among source, transit, and destination countries to reduce irregular migration; data exchange; housing; and closure of collective centers related to refugee return and settlement. A major strategic objective is to focus more on freedom of movement, citizenship, and non-discriminatory access to rights. The U.S. contributed a total of $100,000 to the MARRI in FY 2004 funds for support for a regional information exchange and workshops on refugee and asylum issues.
Security and Defense
In FY 2004, SEED support to this sub-table related primarily to disaster preparedness and prevention.
Disaster Preparedness and Prevention: Southeastern Europe is prone to natural disasters that transcend borders or overwhelm the capacity of a single country to cope. Since the level of preparedness to deal with these threats varies from country to country, and regional cooperation does not exist to the extent needed, the Stability Pact's Disaster Preparedness and Prevention Initiative (DPPI) provides a framework for developing regional cooperation in cases of fire, flood, earthquakes, and other natural disasters. In concert with contributions from the governments of Switzerland and Norway, the United States provided $145,000 in SEED funds in FY 2004 to fund the operations of a two-person expert DPPI Secretariat and support a number of specific projects. A Joint Fire-Fighting Unit (JFFU) was established to include Bosnia- Herzegovina, Croatia, and Serbia and Montenegro to develop rapid, cross-border procedures to facilitate a joint response capability in case of emergency. The DPPI conducted training events and management courses in support of its Disaster Management Training Project for Southeastern Europe, and organized a joint fire-fighting exercise among Bosnia-Herzegovina, Croatia, and Serbia and Montenegro in May 2004.
