![](media/image1.png){width="6.490277777777778in"
height="0.4756944444444444in"}

Sixteenth Meeting of the Business Advisory Council to SECI

*March 22, 2001*

*Belgrade*

Chairman: Mr. Rahmi M. Koç

Co-Chair: Mr. Costa Carras

SECI: Dr. Erhard Busek

Ms. Vera M. Budway

Ms. Branislava Stankov

BAC Members: Mr. Çelik Arsel

Mr. Ferenc Bartha

> Mr. Giorgio Dominese
>
> Mr. Nikos Efthymiadis
>
> Mr. Samo Ivanchich
>
> Mr. Svetozar Janevski
>
> Mr. Roland Jurecka
>
> Mr. Muhtar Kent
>
> Mr. Bosko Kostic
>
> Mr. Anto Krvavac
>
> Mr. Christian Luger
>
> Mr. Michael Mix
>
> Mr. Misu Negritoiu
>
> Mr. Nermin Salman
>
> Mr. John Scherer
>
> Mr. Ivan Stancioff
>
> Mr. Piet Steel
>
> Mr. Vassili Takas
>
> Mr. Matthew Trilling

Participants: Amb. Warren Clark, Consultant, SECI Telecom Project

Mr. Zdravo Genchev, UN/ECE Energy Efficiency

> Ms. Tatiana Hadjiemannuel, HELLASPRO/BICC
>
> Mr. Peter Hasslacher, BSO Vienna
>
> Mr. Michael H. Hryschyshyn, OHR Sarajevo
>
> Mr. Will Keenan, UN/ECE
>
> Ms. Jelica Minic, SECI National Coordinator for FRY
>
> Mr. Gerald Ollivier, World Bank - TTFSE
>
> Mr. Alessandro Pasut, BSO Udine
>
> Mr. Goran Pitic, Minister for International Economic Relations of
> Serbia
>
> Ms.Bernice Powell, SECI/US Department of State
>
> Mr. Keith Sangway, European Commission
>
> Mr. Heinz Schatzmann, UN/ECE
>
> Mr. Milko Stimac, G-17
>
> Mr. Yannis Tsorbatzoglou, TTFSE

**1. *Opening***

The 16^th^ meeting of the Business Advisory Council to SECI was opened
and chaired by Mr. Rahmi M. Koç. Apologies were received from Cristina
Busi, Gunther Mittl, Florin Pogonrau, Vebi Velija and Gianfranco Zoppas.

**2. *Adoption of the Agenda***

BAC Co-Chair Costa Carras called for the BAC to adopt a resolution
condemning the violence in Tetovo and the negative impact it has on
trade and investment in the region. The resolution was drafted,
discussed and unanimously adopted. It is attached herewith.

The second issue that Mr. Carras raised is that while SECI is doing
excellent work on the ground, it needs to improve its public relations.
He suggested that SECI should seriously consider publishing a monthly
bulletin. This issue was discussed under "other business".

**3. *Adoption of the Minutes from the Fifteenth Meeting in Zagreb***

The Minutes from the Fifteenth meeting of the BAC on 6 December 2000 in
Zagreb were adopted.

## Welcoming Remarks by Minister Pitic

The Serbian Minister for International Economic Relations, Goran Pitic,
addressed the BAC and presented it with an overview of the current
status of economic reforms in Yugoslavia. He stressed that the FRY
expects to become a member of World Bank on 9 April. The Serb Republic
has prepared a package of 24 laws that will make the investment climate
more favorable to foreign investors. Priorities include financial
reform, stabilizing the exchange rate, developing an investment led
privatization law, the banking sector and fighting corruption. By June,
it is hoped to have some 50 laws prepared. This will prove dedication to
reform and change. The government is also committed to fighting
corruption.

Minister Pitic also mentioned that a VAT law will be ready by next year
but it is also necessary to educate the public so that it can be better
implemented. A package of incentives is being developed for foreign
investors and corporate income tax has been reduced from 25% to 20%.
Finally he mentioned that the law on international commercial
arbitration will be ready by April and stressed that soft loans are very
important in helping Serbia move from foreign aid to sustainable
economic development.

**4. *Developments in the Relationship with the Stability Pact***

SECI Coordinator Dr. Erhard Busek reported on the relationship with the
Stability Pact and stressed that there is no real overlap between the
work of the SECI BAC and the Stability Pact BAC.

Dr. Busek also took this opportunity to announce that Ambassador Larry
Napper is ultimately responsible for both SECI and the Stability Pact at
the US Department of State. He also announced that Will Keenan will be
moving to Bangkok and will be replaced by Mr. Heinz Schatzmann.

Mr. Koç thanked Mr. Keenan for his excellent work in supporting SECI
throughout the years.

Nikos Efthymiadis, who is on both the SECI BAC and the Stability Pact
BAC, felt that the two BACs should develop a closer relationship given
that the SECI BAC has a far better understanding of the region while the
SP BAC members have better connections with IFIs and have better
financial resources.

Keith Sangway from the European Commission said that the Stability Pact
would have to start working on the ground. Out of 34 infrastructure
projects, 26 of them have been started. All are funded and add up to 2.4
billion euros.

The issue of the construction of the second bridge over the Danube was
mentioned. Dr. Busek reported that the Danube Commission appointed a
coordinator, and tenders were being planned but, contrary to original
expectations that the Danube would be cleared within 2001, nothing is
expected to move this year. Dr. Busek also mentioned that the Norwegian
Government pledged 25,000 USD to SECI for the improvement of the
ferryboat services across the Danube. Mr. Sangway mentioned that the
Commission wants to see progress on Danube clearance project and has
already paid 10 million Euros for this purpose. Dr. Busek said that the
problem is not within the European Commission but within the Danube
Commission and said that pressure has to be put on the governments
represented in the Commission. He furthermore called on BAC members from
Danube commission countries to lobby with their national governments.

**5. *Status Report on SECI Projects***

Dr. Busek gave an update on the progress of SECI projects. Concerning
the SECI Crime Center in Bucharest, one third of the customs officers
are present at the Center and are currently discussing rules and
regulations. There is excellent cooperation with Interpol and WCO.
Together with the Hungarian Minister of Interior, SECI is now trying to
work on the cross border cooperation between judges and prosecutors. The
various task forces are moving ahead with their work and the Bulgarians
are starting task force on narcotics. The FBI and US law enforcement
groups back these efforts.

Samo Ivanchich was praised for his excellent work in helping establish
the SECI Center for Commercial Arbitration in Ljubljana. His efforts and
those of Miro Senica have made this project a great success. Mr.
Ivanchich reported that specific task teams have been established and
will focus on concrete issues.

Giorgio Dominese mentioned that the Department of Engineering at the
University of Trieste would like to get SECI involved in a project on
information technologies.

Zdravo Genchev reported on progress with the RENEUER energy project and
stressed that it is important to keep the project on the agenda in order
to get the proper political support for donors. Christian Luger stressed
that it is important to have concrete projects ready for potential
donors and funders.

Ambassador Warren Clark reported that the Agenda Committee approved the
feasibility study on new communications technologies and that there will
be more consultations between Greece and Slovenia. The idea is to remove
or reduce impediments in the communications sector, strengthen national
regulatory authorities in telecommunications and work towards
harmonizing laws and regulations. The study should be completed by this
summer and the ad hoc group of experts will be able to report
recommendations to SECI this fall.

6.  ***Involvement of the BAC and SECIPRO in the SECI Trade and
    Transport Facilitation Project (TTFSE) -- training of private sector
    personnel***

Gerald Ollivier from the World Bank reported on the progress of the
Trade and Transport Facilitation in South East Europe (TTFSE) project.
He welcomed the support of the BAC and SECI PRO in this effort. TTFSE is
now moving to talk with Moldova and Yugoslavia. Customs advisory teams
have been established in the four of the six countries and are trying to
raise awareness among public officials on what types of issues
transporters face. One of the main goals of this effort is to develop
standard processing time for crossing borders.

Yannis Tsorbatzoglou (American College in Thessaloniki) gave a report on
the training of private sector personnel component of TTFSE. Some 2.2
million USD will be channeled through local partners (Koç
University/American College of Thessaloniki/American University in
Bulgaria) to carry out this program. Koç University will be responsible
for developing the curriculum for training the trainers. The American
University in Bulgaria will develop the web site, which will contain the
entire curriculum. He stressed that the BAC can play a key role in
getting feedback from the business community on the effectiveness of the
program.

**7. *Report from the SECIPRO Meeting***

Will Keenan gave a report from the SECI PRO meeting, which had taken
place the previous day. The Yugoslav Chamber of Commerce and Industry,
which serves as the Secretariat to the newly formed YUPRO, hosted the
meeting. The Belgrade, Serbian and Montenegrin Chambers are all
represented in YUPRO. SECIPRO concluded that by focusing on the key
issue of trade facilitation, it could complement the work of the
Stability Pact working group on trade liberalization. In doing so, there
should be closer communication and coordination between national experts
in these two groups.

The SECIPRO association should adopt a conclusion that endorses Corridor
X as a priority area for development. SECIPRO should write a letter to
the governments of the region stressing the importance that should be
attached to Corridor X.

SECIPRO should develop a concrete proposal, which specifically defines
its relationship with the TTFSE project. This proposal should be
submitted for discussion prior to the next SECIPRO meeting in Sarajevo
on 23 May.

The recommendations from the results of the SECIPRO visa regime review
will be made available to the SECI Business Advisory Council and Agenda
Committee. Both these groups should put this issue on the agenda of
their next meetings

***8. Report from the Country Committees of the BAC***

**Bulgaria**

Piet Steel reported that trade facilitation is one of the most important
issues for the BAC Country Committee for Bulgaria. Other issues that the
committee is addressing include certification for food products;
creating a regional air carrier and upgrading port facilities. He
suggested that two themes that SECI can champion are "Balkans without
borders" and "zero tolerance for corruption" for the region.

**Croatia**

Roland Jurecka reported that the Croatian Country Committee is in the
process of setting priorities and is off to a good start. Dr. Busek
mentioned that the Croatian Chamber of Commerce is also promoting the
regional carrier idea.

**FYRMacedonia**

Vassili Takas announced the FYRMacedonia Country Committee is working on
the draft of the report regarding disincentives for doing business and
trying to improve the business climate. It should be able to present the
draft report by the next BAC meeting. Svetozar Janevski pointed to the
high degree of corruption in the country and the damage it has on doing
business. Mr. Carras suggested that Transparency International could be
invited to the next BAC meeting.

**Romania**

Muhtar Kent reported that the Romanian Country Committee has a
comprehensive document on the legal and legislative environment in
Romania, public administration and infrastructure, etc. He asked that
Greek BAC members for support in helping to identify a new Greek member
of the committee, since the present member does not respond.

Mr. Kent then expressed concern over SPBAC plans to also establish
country committees. It was generally agreed that there needs to be more
coordination between both BACs and between the country committees and
the Stability Pact national coordinators in order to prevent unnecessary
duplication.

Mr. Efthymiadis pointed out that the county committee issue was no
longer raised after Istanbul but rather the SPBAC initiated a series of
country visits. Dr. Busek said that he would speak with Mr.
Eckenschwieler from the SPBAC.

9.  ***Report from the SECI Business Support Offices***

The SECI Business Support Offices in Istanbul and Thessaloniki are well
established and working. Mr. Hasslacher and Mr. Pasut presented the
goals and objectives of the newly established offices in Vienna and
Udine, respectively. The BSO directors agreed to meet regularly prior to
BAC meeting. All of the offices must be linked through the SECI web
site.

Mr. Carras raised the issue of the divergence between the BSOs. He
stressed that: 1) BSOs refer to the BAC and if there is any change in
procedure two co chairs should know; 2) there shall be no change in
mission statement without the agreement of co-chairs; 3) the new
arrangement in Italy is not commercial -- this is not a for-profit
activity.

This was agreed and Mr Dominese agreed to send any suggestion for a
change to the mission statement to the two co-chairs.

***10. Report on the Progress of Establishing the BICC***

The SECI Business Information and Clearing Center (BICC) has secured
most of its funding (150,000 USD total) but still has to define its
legal status. This office will be in Thessaloniki.

***11. New Members in the BAC***

There were no proposals for new members.

***12. Dates and Preparations for Upcoming Meetings***

The next meeting of the BAC will be in Sarajevo on 23-24 May. The fall
meeting will be held in Bucharest on 17-18 September.

***13. Other Business***

Milko Stimac from G-17 presented an idea for a SECI regional newsletter
that would focus on sectoral studies and economic analysis from the
region. Mr. Carras proposed that the BAC seriously consider this idea. A
working group consisting of Samo Ivanchich, Muhtar Kent, Piet Steel,
Vassili Takas, Celik Arsel and Vera Budway will work together with Milko
Stimac in preparing something concrete for the Sarajevo meeting.

Mr. Koç thanked Mr. Kostic for all his support and adjourned the
meeting.

Resolution

The members of the Business Advisory Council to the Southeast European
Cooperative Initiative (SECI/BAC), at their meeting in Belgrade on 22
March 2001, representing themselves as individual members and not
necessarily their companies, discussed the situation that has arisen in
recent days around Tetovo and its impact on the process of economic
development and social progress in the region.

SECI/BAC unanimously stresses that it is not just the area or the
country affected by violence, which becomes unattractive to foreign and
domestic investment as a result, but the whole region. Similarly the
three wars and one breakdown of civil order that have occurred in the
last decade damaged economic development in every country in the region
and not just those immediately affected. The result is a vicious circle
where the constructive efforts on confidence created by governments and
international institutions such as the European Union, the World Bank,
SECI and the Stability Pact, are cancelled out by the effects of
violence. This intensifies the sense of hopelessness felt by citizens,
and so increases the attraction of those who promote irredentism rather
than economic and social progress as a goal, and violence as a means to
achieve it.

SECI/BAC emphasizes the need for determination in resisting the dangers
of ethnic polarization and widespread violence, which have been created
by the action of extremists around Tetovo in the past week. We urge the
maintenance of the principle that there should be no concession to those
who engage in violence against the best interests of all their fellow
citizens, and that all those administrative and social changes that need
to be made, should be decided and implemented within the parameters of
the rule of law, free and fair elections, parliamentary discussion and
governmental compromise.

SECI/BAC believes that the international community must insist on
certain positions, specifically:

-   Ethnic or communal grievances, however justified, must not be
    allowed to challenge existing frontiers through the use of force;

-   Such grievances must be sympathetically and creatively addressed by
    all states in the region;

-   More attention should be given by donor governments and institutions
    to institutional and social reform as engines of economic
    development, including the combating of crime and corruption;

-   The current tension must not be allowed to delay efforts for
    regional economic reconstruction and development. In particular we
    are concerned at the delays in the clearing of the Danube and
    rebuilding of bridges across that river;

-   At the present time the EU and NATO's contribution to regional
    stability and hence economic development are vital. SECI/BAC hopes
    KFOR will intensify efforts to disarm extremists and to prevent
    cross border infiltration and arms smuggling, which unquestionably
    have played a significant role in Tetovo;

-   The EU's role in encouraging economic development and serving as a
    beacon for a better future based on partnership between the peoples
    of the region is vital. Given that many of the countries in the area
    already use the DM as their reserve currency, SECI/BAC request the
    EU to examine seriously and in depth the possibility of extending
    the euro zone to those countries in 2002. This would send a very
    powerful signal of the possibility of social and economic progress
    within a united Europe.